High Court Can’t Stop Some Key Health Care Reforms
Life + Money

High Court Can’t Stop Some Key Health Care Reforms

Reuters/Allison Joyce

The Supreme Court may rule some or all of the Affordable Care Act unconstitutional today, but its decision will have little impact on the quiet revolution that is already transforming how many of the nation’s hospital and physician networks deliver care – changes that parallel the reforms contained in the law.

Even conservative states leading the legal challenge to Obamacare are moving toward implementing bundled payments, “medical homes” and accountable care organizations. Many have already moved beyond the law’s pilot project phase to institute system-wide changes.

In South Carolina, for instance, the state’s $6 billion Medicaid program under Republican Gov. Nikki Haley has restructured its payments to insurers that manage care for the nearly one million women, children and impoverished elderly enrolled in the program. It created incentives for primary care physicians to become medical homes that actively oversee patients with multiple chronic conditions. The state has offered to share savings with the physicians if they can figure out ways to reduce referrals and unnecessary hospitalizations.

“If I’m a doctor and I have a way to lower hospital admissions, I receive no benefit for doing that now,” said Anthony Keck, director of the South Carolina Medicaid program. “More people in managed care allows you to be flexible in who gets the dollars.”

Some insurers and providers in the state are moving rapidly to set up broader accountable care organizations, which are the centerpiece of delivery system change contained in Obamacare. Greenville Health Systems and Blue Cross-Blue Shield of South Carolina have created a “virtual” health system that integrates the insurer and the health system’s provider network, which includes both hospitals and community practice physicians. The new group will be paid a capped fee for each enrolled Medicaid patient.

“The insurer shares the risk with the medical home network,” said Keck. “It will open up spending more on the primary care side and saving money on the hospital side.”

The changes underway in South Carolina mirror the changes being promoted by the Center for Medicare and Medicaid Innovations (CMMI) set up inside the Centers for Medicare and Medicaid Services by the ACA. The bill earmarked $10 billion to CMMI over the next ten years to promote changes in the delivery system that are likely to lower the long-term costs of government-funded health care programs.

Donald Berwick called the innovations center “the crown jewel” of reform when he was interim director of CMS. Republicans on Capitol Hill, who refused to confirm Berwick, have repeatedly tried to eliminate the grants program, which is funding hundreds of pilot projects across the U.S.

Most public opposition to reform and the core of the 27 states’ argument before the Supreme Court focused on the mandate, which requires individuals to purchase insurance if not covered by their employers or eligible for an expanded Medicaid. Reforms to the insurance market such as guaranteed issue for people with preexisting conditions depend on universal participation since some people will simply decide to wait until they get sick or injured before buying guaranteed coverage. The law also called for setting up insurance exchanges in states where people without coverage could go to get coverage, which would be subsidized for the near poor.

But only part of the 906-page law was devoted to obtaining coverage for 30 million uninsured Americans. (About 20 million people would remain uninsured after reform goes into effect.) The rest of the law focused on improving the health care system to deliver higher quality care at lower cost.

Even if the Supreme Court strikes down the entire law, the changes in how care is delivered will continue. “The fiscal realities in Medicare, Medicaid and the cost of health insurance have pushed us to the point of Stein’s law in health care: what can’t go on forever, won’t,” said Steven Lieberman, a former OMB official who is now a health care researcher and consultant. “There’s clearly a perception (among providers and insurers) with the economy, the fiscal crisis and the affordability of employer-sponsored health care that the world is changing.”

A new survey from Leavitt Partners identified 221accountable care organizations across the U.S., up from 164 just a year ago and virtually none five years ago. Just 59 were created to serve Medicare clientele, which means most ACOs across the country are serving either privately-insured patients or state Medicaid programs.

“These entities exemplify the belief that the focus of health care should move beyond merely providing care and billing for services, and should instead focus on influencing the health and wellness of a defined population,” the report said.

While the survey suggested the ACA wasn’t crucial to the creation of ACOs, Lieberman believes many may not survive a negative high court ruling. “A lot of hospital CEOs will tell you they’re doing just fine under fee-for-service medicine,” he said. “So they’re straddling the two worlds. ACOs are a good idea as a building block. But in a non-ACA environment, they’re an option, not mandatory.”

But that’s not how they see it in Colorado, where local officials have been working on setting up accountable care “collaboratives” in each of the state’s seven regions for nearly six years. In that period of time, they’ve moved their Medicaid population from 85 percent covered by unmanaged fee-for-service medicine to 95 percent enrolled in managed care.

About 20 percent of the state’s 600,000 Medicaid enrollees have recently enrolled in the new collaboratives, which unify insurers and provider networks into a single group that receives a bundled or capped fee for each enrollee.

“We were really pleased that many of the things in the ACA were already in our model,” said Laurel Karabatsos, deputy director of Medicaid for the state. “We’ll continue with our ACO program regardless.”

The ACOs initially focused on reducing emergency room visits, hospitalizations and use of high-cost imaging services, which numerous studies have shown can be curtailed without harming care. In fact, better primary care, better coordination and less use of more expensive services usually leads to better outcomes, studies show. While first year data isn’t in yet for Colorado’s ACOs, “it looks like a very positive trend on all of those metrics,” Karabatsos said.