March 11th, 2013

The Affordable Care Act: The Carrots Are Becoming Sticks

Several Cardiology Fellows who are attending ACC.13 in San Francisco this week are blogging for CardioExchange. The Fellows include Tariq AhmadMegan CoylewrightJeremiah DeptaKumar Dharmarajan Payal Kohli, and  Sandeep Mangalmurti. View the previous post here and the next one here.

I attended an attention-grabbing discussion this morning on the continuing effects of the Affordable Care Act (ACA) on cardiology. Obamacare is here to stay, and it is transforming before our very eyes. Cardiologists and hospitals need to evolve along with it or eventually face financial extinction.

Part of this evolution is deliberately built into the infrastructure of the ACA. The motivation for health reform is well known; health care costs continue to increase at an unsustainable rate. There are multiple drivers of these costs, but the fee-for-service model might be the heart of the problem. As we are all aware, it financially incentivizes volume of care, not quality of care. Since its implementation, the ACA has attempted to change this incentive structure by increasing reimbursement when certain quality goals are met. Some institutions have made these desired changes and have reaped the promised financial rewards. Over the next several years, the rewards will end, and the punishments will begin. Failure to meet these benchmarks will automatically result in a reimbursement cut. In some cases, such as heart failure readmission rates, the magnitude of these cuts will increase with each passing year.

Eventually, a large percentage of cardiology groups will be compensated by Medicare using a model known as “Value Based Purchasing.” Under this model, the government will collect information on quality and performance from providers nationwide and use it to create a “value based modifier” to individually adjust an organization’s compensation from Medicare. Eligible organizations that refuse to participate in the Value Based Purchasing model will be automatically punished with lower reimbursement amounts. There’s that stick again!

Sometimes the ACA doesn’t even need the stick. Take for example, the continuing integration of small cardiology practices into hospitals. One important cause of this integration has been the ACA deliberately setting different reimbursement levels, depending on whether the procedure or visit occurs in a hospital or private office. For example, as mentioned in today’s session, reimbursement levels for echos in a hospital or health network approach $450, compared to $180 in doctor’s offices. Naturally, this carrot is working…more and more cardiology care is moving towards the former. Much of this movement will be permanent; once a private practice integrates with a hospital, it’s hard to un-ring that bell. However, future compensation will likely not have this disparity; everyone will be compensated equally, at the lower rate. Massive cost savings for the government….no stick necessary.

For more of our ACC.13 coverage of late-breaking clinical trials, interviews with the authors of the most important research, and blogs from our fellows on the most interesting presentations at the meeting, check out our Coverage Headquarters.

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