Jim Shmerling, DHA, FACHE, President and CEO of Children's Hospital Colorado
Patient Protection and Affordability Care Act
Some of the most significant and potentially impactful changes created in the Patient Protection and Affordability Care Act (PPACA) center around insurance reforms. Insurance companies will be precluded from imposing lifetime limits on coverage, there will be no exclusions based on pre-existing conditions, the doughnut hole for Medicare prescription drugs will be filled, there will be no annual limits on and coverage of preventative services and no cancellation of insurance coverage when someone becomes sick.
Of all these insurance reforms, the most significant, at least from a child health provider's perspective, is that the PPACA requires that children under two years of age be covered without regard to pre-existing conditions.
It also requires that insurance companies cannot exclude treatment for the child's pre-existing condition.
Children's Hospital Colorado sees hundreds of children every year who are born with congenital heart defects or other anomalies who have been denied insurance coverage because of that pre-existing condition. This places a tremendous burden on the family as well as the child's medical care provider. Effective this September, the insurance companies will no longer be able to burden these families nor the pediatric providers who care for these fragile children.
Also, a high-risk insurance pool will be created for uninsured people with medical issues to purchase coverage at discounted rates. This pool will be replaced in January 2014 when the reform bill's provision that no one can be denied coverage begins.
One other little-noticed provision allows parents to include dependent children up to the age of 26 years on their health insurance. The current Children's Hospital employee coverage includes dependents up to age 25. We will revise our plan this year, well ahead of the mandate.
Reforming industry practices
In spite of how divisive the health reform debate has been, there seems to be a clear consensus around the need for reform of insurance industry practices. Reform of the health care system is more ambiguous. While health care economists, and hospital and medical providers agree that the existing delivery system is in dire need of repair, there is no consensus around the cause much less the cure. Consequently, PPACA includes various provisions hoping to improve the quality and efficiency of health care delivery while also reducing the exponential growth in costs.
A Center for Medicare and Medicaid Innovation (CMI - not to be confused with "case mix index") will be created to encourage and test development of payment and service delivery models. The CMI should be up and running by no later than January 2011. There will also be an Independent Payment Advisory Board (IPAB) to recommend strategies to reduce medical spending. However, it won't be permitted to ration care, raise beneficiary premiums and cost sharing, or restrict benefits and eligibility.
Accountable Care Organizations (ACO's) encourage hospitals and physicians to work together to collaboratively manage patient care in a coordinated fashion and then subsequently keep and share some of the cost savings that result.
Value-Based Purchasing (VBP) establishes a program for paying hospitals based on their performance on quality-reported measures. The specifics are to be defined in 2011, with implementation in 2012 and payments distributed in 2013.
In addition to providing reimbursement incentives to improve the delivery of care, there is one provision that penalizes payments to hospitals when a patient acquires a preventable infection. Beginning in 2015, a 1% penalty will be assessed for hospitals in the top quartile of rates of Hospital Acquired Conditions. To give you a feel for the impact and prevalence of such conditions, the estimated reduction of payments for this one provision alone is $1.5 billion over ten years.
Finally, there are a few obscure but still significant other provisions I should make note of. One is a competitive grant program within the National Institutes of Health. It is called the Cures Acceleration Network. It authorizes up to half a billion dollars a year to translate research into treatment (thank you Dean Krugman, at the University of Colorado School of Medicine, for pointing this one out to us!). There is another provision that created a *congenital heart disease registry and NIH research provisions.
These reforms are those that stood out to me while trying to cull through this transformative bill. I'm sure there are many other reforms I failed to mention, so if you would like to share any of your own discoveries, please let us hear from you.
Next up: Impact on Children's Hospital Colorado and children's health providers.