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Commentary – Quality and Value Initiatives in Health Reform

By Jessica DeMartino, PhD, Policy Fellow

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, focuses on the establishment and ongoing maintenance of quality-related initiatives in various aspects of health care.  Many elements of health reform are also aimed at increasing value within the health care system for patients.  By putting greater emphasis on value and quality, savings can be achieved while outcomes are improved.  Much of this health care legislation focuses on key areas for improving quality and value – including restructuring the care delivery system and instituting alternative reimbursement systems.

For complex diseases like cancer, coordinated delivery of needed services can be difficult to manage for most physicians and patients.  Costs of treating complex diseases can increase with the duplication of tests and other services due to fragmentation across the care spectrum. The Patient Protection and Affordable Care Act introduces accountable care organizations (ACO) on a voluntary basis for Medicare beneficiaries by directing the Secretary of Health and Human Services (HHS) to develop a Medicare Shared Savings Program (implemented January 1, 2012).  The purpose of this program is to encourage investment in infrastructure and redesigned care processes for high-quality and efficient service delivery aimed to reduce expenditure growth and to improve health outcomes through accountable care organizations.  The Medicare Payment Advisory Committee has defined ACOs as a group of physicians (possibly including a hospital) that assumes responsibility for annual Medicare spending for a defined patient population.  To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries (not fewer than 5,000 individuals), to have adequate participation of primary care physicians, to define processes to promote evidence-based medicine, to report on quality and costs, and to coordinate care.  ACOs would require hospitals and doctors to work closely together and to share financial risk as well as potential profits.

A large majority of health care in the United States is billed and paid for on a fee-for-service basis. In fee-for-service, doctors and other providers receive a fee for each service (e.g., an office visit, test, procedure, or other health care service). Critics of fee-for-service argue that such a billing model encourages physicians to adopt new technologies and order more tests and procedures to increase their revenue stream. Physicians are not rewarded for spending time with patients, but rather for giving “more” treatment. The Patient Protection and Affordable Care Act establishes a national Medicare pilot program which develops and evaluates bundled payments for acute, inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care that begins three days prior to a hospitalization and spans 30 days following discharge. The episode-of-care or bundled-payment system is the reimbursement of providers on the basis of expected costs for clinically-defined episodes of care.  Advocates of bundled payments note that bundled payment discourages unnecessary care, encourages coordination across providers, and could potentially improve quality.

The program will be focused on up to eight medical conditions selected by the Secretary of HHS. Quality measures will be developed in consultation with the Agency for Healthcare Research and Quality (AHRQ).  If the pilot program achieves stated goals of improving (or not reducing) quality while reducing spending, Medicare will develop a plan for expanding the pilot program. The pilot program will be established by January 1, 2013 and, if appropriate, the program will be expanded by January 1, 2016.

Physicians and patients will need to wait a few years for the implementation of these quality and value initiatives. Once implemented, will these programs improve quality of care and patient outcomes while lowering costs? That remains to be answered.

Sources:
1. The Patient Protection and Affordable Care Act, http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf

2. The Henry J. Kaiser Family Foundation, Summary of New Health Reform Law, http://www.kff.org/healthreform/upload/8061.pdf (Accessed June 28, 2010).