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Health Reforms will Survive Court Ruling

POSTED: June 19, 2012, 12:00 am

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The 2010 health law launched what insurance executive Brad Wilson calls "the revolution" — unprecedented efforts to expand coverage, contain costs, cut waste and improve care.

So Blue Cross and Blue Shield of North Carolina, where Wilson is CEO, started paying bonuses to doctors who improve efficiency, nudging consumers to shop around for treatment, urging caregivers to communicate with patients via email, paying doctors to install computerized records and even going into business with doctors and hospitals.

Now the Affordable Care Act is in jeopardy, but many of the reforms it encouraged aren't, Wilson says. Soaring costs, tight budgets, better technology and industry consolidation ensure health care won’t go back to 2009 no matter what the court or Congress do, say analysts and industry officials.

If the law is thrown out, "will you have to go back and recalculate? Of course," Wilson said. "But the genie is out of the bottle. We’re far enough into the revolution now that I don’t see how the political leadership can completely sweep it away."

A decision to strike down all or part of the law would threaten the expanded coverage that many see as its signature feature. But the act also triggered new attempts to move away from "fee for service" insurance, in which medical providers are paid for each visit and procedure, and toward rewarding efficiency and quality.

While some of these efforts began years ago, the law accelerated and multiplied them. Looming costs associated with an aging nation ensure they’ll continue no matter what, said Chas Roades, chief research officer with the Advisory Board Co., a health care consulting firm.

"Whatever else the Supreme Court does, they can’t overturn the aging process, and they’re not going to strike down chronic disease," Roades said. "Those are factors that are at the root of our health care crisis, and we’re going to have to continue to figure out ways to address them."

Doctor practices will increasingly be owned by hospitals or insurers — or at least work more closely with them, analysts say. Hospital systems and health insurers are likely to continue to merge. Consumers' choice in physicians and hospitals may shrink as plans steer patients toward lower-cost care.

That sounds like the "managed care" of the 1990s, when employers and insurers tried to control expenses through restricted networks and alternative payment models. Those efforts fizzled when patients rebelled and a healthy economy enabled industry and government to absorb rising medical costs with relatively little pain.

Many doubt the new managed care, delivered through networks known as accountable care organizations and medical homes, will control costs any more effectively. Accountable care organizations could give dominant physician and hospital groups a new way to raise prices and profits, some worry.

"I’m very skeptical" that accountable care groups will save money, said Glenn Melnick, a health economist at the University of Southern California. "The ACO may in fact be able to manage care more efficiently, but that doesn't mean those savings are going to be passed on…. You may have consumers getting less service at higher prices."

Others believe cost control has a better chance this time thanks in part to high-deductible plans that expose patients to more up-front costs and prompt them to seek less expensive treatment. Computerized health records to coordinate care and a sharp focus on patients with chronic illness such as diabetes are also expected to improve the odds of savings.

At the same time, higher-than-ever medical costs have increased pressure for reform. The poor economy has reduced society's wherewithal to pay for care as well as workers’ leverage to resist changes.

The health act set guidelines for experimental accountable care organizations in Medicare. Those became models for similar projects involving commercial insurers.

"There are now something like 50-plus ACOs in Medicare alone," said Dr. Mark McClellan, who ran Medicare under President George W. Bush. "There are probably 250 nationwide— not just public but private. No question the Medicare legislation on this issue has led to more adoption of these payment reforms."

A few months ago Wilson’s Blue Cross group opened a Durham clinic with the University of North Carolina to serve 5,000 members, most of them chronically ill. Instead of being reimbursed only per visit or procedure, its primary-care doctors collect bonuses for quality and efficiency.

Patients don't need appointments. They can talk to a doctor, a nurse or a nutritionist — or a Blue Cross official, to find out where to get a low-cost MRI, for example. Which they might want to do if they subscribe to one of Blue Cross’ growing high-deductible plans, which make consumers bear more of the cost.

If patients miss a visit they get a call to reschedule. If they fail to pick up a prescription computers alert the office. Thanks to wireless glucose readers, their doctors increasingly know about dangerous blood-sugar spikes soon after they happen.

Because these kinds of efforts "never became sound bites in the political discussion," they're likely to persist regardless of what happens in Washington, said Paul Ginsburg, president of the Center for Studying Health System Change. At the same time, Medicare has authority to continue payment reform even if the health act is struck down, experts said.

Industry may continue implementing some of the law's popular prescriptions, analysts said. For example, insurers UnitedHealthcare and Aetna said recently they would continue covering dependents up to age 26 and avoiding lifetime limits on coverage —even if the statute disappears.

Some of the act's controversial provisions might also outlive a negative Supreme Court ruling. Many states are likely to continue developing health insurance exchanges in the absence of federal support, analysts said.

"For the first time, there's actually recognition of the issues that are facing us — the pressure on health care cost trends," said Ana Gupte, who follows health insurance stocks for Bernstein Research. "A train has been set in motion around delivery system reform, provider system reform, and I don’t think it will just go away."

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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