At a CEO forum last week in New York, many of the industry leaders reported feeling mugged by Congress in the health care reform process. Certainly our members are frustrated and angry about the recent Medicare proposed rule -- that’s a real mugging. But, it seems everybody -- hospitals, insurers, pharma, device companies, nurses, businesses, consumers -- feels like somebody’s raining on their parade. Nobody seems happy with where we may be going yet. But I question the notion that there have been many muggings thus far:

Hospitals
Hospitals have agreed through the American Hospital Association to pony up $155 billion over 10 years as their collective commitment to the costs of reform. That’s only $15.5 billion a year, folks. Hospitals get more than $10 billion a year ($100 billion over 10 years) just from DSH (‘dish,’ or disproportionate share) funds for covering uninsured persons. Cutting that is logical. The additional $5 billion a year they need to make this up isn’t going to be a big deal, and they know it. That’s not a mugging. That’s a good deal.

Of course, bigger problems for hospitals might be related to reducing admissions and re-admissions if payment reform comes into place and if payment reform shifts toward capitation or global budgeting. Reductions in inpatient care (resulting from better outpatient care and prevention) could put real skids on hospitals’ ability to capitalize equipment and facilities in the future. Paul Levy, M.D., CEO of Beth Israel Deaconess, told me his board is worried about Massachusetts moving toward capitating private coverage again. He thinks doctors may do fairly well under a new version of global budgeting, but not hospitals in his state, and he fears that Partners (which Levy feels has a monopolistic market share) has the upper hand.

PhRMA
PhRMA seems to have successfully convinced the Obama Administration to put Medicare negotiation of drug rates on the back burner for now, using their pledge for $80 billion in savings over 10 years as the means of encouraging that. That’s no mugging either. Given that Obama is very committed to science and research, I think PhRMA and the device world are not in such a bad position going forward, unless the regulatory side of government in this administration and era becomes more aggressive. But PhRMA also pledged $150 million in pro-reform advertising to the administration last week also, and that sounds like they are pretty happy.

Insurers and AHIP
Insurers and AHIP see the certainty of more insurance regulation as survivable, assuming their dreaded public option doesn’t manifest -- but in many ways, the 'party's over' related to the heyday of 20 and 30 percent returns on investment, and they know it. That doesn’t mean they can’t do very well over the long term with more stable yet lower margins (as the investor owned life insurance industry has). Non-profit insurers like many of the smaller BC/BS and Kaiser plans may have a new advantage here.

But, I have believed all along that even if a public option is included in reform legislation at the behest of the liberal Democrats, private insurance will find a way to out-compete the government plan and to ensure that Congress won’t give a public option unreasonable financing advantages. In fact, the greater likelihood is that Congress could underfund a public option -- think Medicare and Medicaid reimbursements -- that would be my worry.  Regardless, the insurers haven’t been mugged either. They get cuts in the huge added incentives they secured in Medicare Advantage plans, yes -- but, they also get millions of new insureds to cover presumably.

Doctors and Patients
There will be an enormous amount of new money going into health care benefits for the millions of patients who are now uninsured or under-insured, and a significant part of that will end up in the pockets of physicians and other providers; but as all know, there will be winners and losers there too. The primary care incentives will so far not do much of anything -- and they shouldn’t be created by slashing specialty payments (the flawed CMS Medicare Payment Rule proves that nothing yet is being done rationally -- although the CMS Rule has nothing to do with health care reform bills; it’s just indicative of a broken system of flawed formulas and administrative and payment nightmares).

As I have stated earlier, the coming pandemic of CV disease and consumer respect for cardiology is certain to make cardiology an attractive and in-demand professional venue for decade to come. Prevention and earlier intervention to reduce what’s in the pipeline may be the only ways prevent a veritable burn-out of cardiovascular professionals due to the impending high-volume demand on the horizon. Patients are going to be holding hands with doctors as reform progresses, because our fates are likely to be linked. I think that bodes well for the profession.

*** Image from Flickr (dirac3000). ***

We had a meeting before the holidays with Chris Dawes, key staffer for the Senate Finance Committee, to talk about stimulus, health IT and physician payment reform. In terms of stimulus, they’re still thinking about how best to spend the dollars, but Dawes agrees with the College that some of the money needs to go to promote the business case for adoption and quality improvement, not just grants and loans. The trick is that not too many other physician organizations would agree with us on that.

In terms of payment reform, Dawes and his boss, and Liz Fowler (their boss is of course Sen. Baucus), are really frustrated with the difficulty of how to structure bundling payments to improve chronic disease management and promote value. Everybody agrees in quality incentive payments (based on either outcomes or adherence to guidelines), but reducing administrative bureaucracy through bundling or some other approach is easier said than done.

Here’s an interesting twist: Congressional policy people are starting to talk again about capitation or “capitation light” again. While 49 states might offer an obscene gesture at such a suggestion, the great (weird?) state of California still uses capitation to cover close to 10 million beneficiaries in HMO products. In that left-coast state, even many solo doctors in all specialties (including cardiology) participate in Independent Practice Associations (IPAs) under capitation. For many of my former colleagues at the California Medical Association, quality improvement incentive payments can be as much as $20,000 annually in some networks. The problems with capitation in the '90s were primarily two: First, the perverse incentive to provide less than needed care to maximize income was a horrific ethical dilemma; second, insurers gamed the system to maximize their profits and make capitation rates unacceptably low for frustrated doctors (unless they were in very large and powerful networks).

While a lot of doctors in California still talk dirty when they refer to capitation, one could hardly claim it isn’t working there to some extent. From the point of view of some pundits in Congress, some modified version of capitation, at least to cover expensive chronic disease, might work if it was coupled with quality of care measurements to ensure that patients were treated fairly and effectively. It is true that capitation in its first round of failed models in most jurisdictions had no such quality of care protection. So, gird your loins. We may be going back to the future.