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The House Health Reform Bill: Delivery System Reforms And Other Provisions

October 31st, 2009

Editor’s Note: Tim Jost wrote 3 posts analyzing the House health reform bill HR 3962. The first looks at financing reforms, the second post delves into the public option, health insurance exchanges, and more. A new 4th post analyzes what changed in the bill the House approved Saturday night.

In this final post, I will explore the remaining 1600 pages of HR 3962.  Although these provisions have received less attention (except from the interest groups immediately affected by them), they will in fact work important changes in the American health care system.

First, however, I will mention a few provisions buried in the health care financing reform provisions—the first 400 pages of the bill—that are worth noting.  First, the “compromise” worked out on abortion in the Energy and Commerce Committee is included in the bill. Currently federal funds cannot be used to pay for abortion except in cases of rape, incest, or life endangerment.  But, according to some reports, most private insurance plans cover abortion. If private plans are to be more heavily regulated and funded through premium subsidies, what affect will this have on abortion?

HR 3962 prohibits the requirement of abortion as an essential service that must be covered by private health plans or by the public plan.  The bill also prohibits the use of affordability subsidies to pay for an abortion, although the bill does not contain the accounting procedures that the Senate Finance bill uses to implement this requirement.  The federal and state governments may not discriminate against providers or plans for refusing to cover, provide, or refer for abortions (although the government is not prohibited from discriminating against those that do).  Exchanges may not discriminate against plans that cover or refuse to cover abortions.  Federal and state abortion and conscience protection laws are expressly not preempted.  In sum, the abortion issue is addressed but neither side of this contentious issue is likely to be satisfied.

Repealing The Insurance Industry’s Antitrust Exemption: Less Than Meets The Eye

Second, the legislation purports to repeal the McCarran-Ferguson antitrust exemption for insurers.  The repeal includes a number of exceptions, however, that largely cover most of the insurer conduct protected by the current exemption, so the repeal will have virtually no real effect, other than to annoy the insurance industry.   

A third interesting provision tucked in the insurance reforms states that none of the standards or guidelines developed under any of the provisions of the Act, including the Medicare quality provisions, may be used to establish the standard of care in a malpractice case.

So, having completed the first 400 pages, what is in the rest of the bill?

Improving The Health Care Delivery System

First, the Medicare amendments contain a laundry list of virtually every idea for improving the delivery, enhancing the quality, or controlling the cost of medical care now current.  It is like they read through the table of contents of every Health Affairs for the past five years.  (See, for example, Bending The Cost Curve, The Crisis In Chronic Disease, and Overhauling The Delivery System.)  Accountable care organizations, bundled payments for hospitals and physicians, medical homes, incentives to reduce hospital readmissions, increasing payments for primary care, quality and efficiency incentives for Medicare Advantage plans, comparative effectiveness research,  promotion of shared decision-making, gainsharing, reporting on infections acquired in hospitals and ambulatory surgical centers, and more—it is all in there.  While some of these programs are funded as demonstration projects, a number of them like accountable care organizations and medical homes are authorized as “pilot programs,” meaning that HHS can extend and expand them if they prove successful.  

The legislation would also expand health information technology, and, as always, fight waste, fraud, and abuse.   The CBO credits few of these measures with cost savings, and indeed projects that some will increase costs.  The innovations are also not explicitly extended to the private sector.  But they are the state of the art in health care improvement and some may work.

One of the bill’s initiatives is the creation and funding of a Center for Medicare and Medicaid Innovation in CMS, which would research, develop, and test new payment and delivery models.  These could then be expanded if they proved successful at improving quality or controlling cost.  Another new idea is to commission the Institute of Medicine to do a comprehensive study of geographic variations in medical care, considering all of the factors that might influence variations.  The IOM is supposed to submit a report to HHS, which is then to design an implementation program to address geographic variations.   That plan will be reviewed by MedPAC and the GAO, and then sent to Congress for an up or down vote.  The analogy of the base-closing commission is overused, but here is unavoidable, although here not only local but also special provider interests are at stake.

Medicare Payment Changes

The legislation includes a number of new Medicare benefits mentioned in my first post.  It also makes significant reductions in payment updates or changes in payment methodologies for some providers, as well as a $154 billion reduction in Medicare Advantage rates over 10 years as they are brought back in line with traditional Medicare payments.  Finally, it salves a wound that has been troubling Democrats since the Medicare Modernization Act passed in 2003, finally giving HHS the power to negotiate prices with pharmaceutical companies for Part D drugs (although the CBO does not credit this provision with any program savings.)

Prevention And Wellness Initiatives

Contained within the bill are also a number of prevention and wellness initiatives.  The legislation would improve coverage and remove cost-sharing barriers to access for clinical preventive services in Medicare, Medicaid, and private insurance plans. $15.4 billion is appropriated for the next five years to fund task forces on clinical and community prevention services, prevention and wellness research, research on incentivizing healthy behaviors, and community prevention and wellness service grants.

HR 3962 contains a number of provisions addressing the needs of special populations.  Several programs are included to improve Medicare services in rural areas.  Other provisions are intended to provide Medicare payment for culturally and linguistically appropriate services and improve access to care for beneficiaries with limited English proficiency.  The final 350 pages of the bill involve improvements of the health care services provided to Native Americans.   Grants would also be provided for school-based and nurse-managed health centers.

Transparency In Industry Payments To Providers

The legislation would establish a comprehensive program for reporting,

  • financial relationships with or payments (including gifts in excess of $5 in value) by,
  • manufacturers and distributors of drugs, devices, biologics, or medical supplies,
  • that are paid for by Medicare, Medicaid, or CHIP,
  • to physicians, other health care professionals and researchers, patient advocacy groups, CME programs, or health care institutions

to a publicly searchable database.  Physician ownership of hospitals and other health care facilities would also be reportable.  This provision follows up on recommendations by MedPAC and the Institute of Medicine earlier this year, and is even more comprehensive than comparable provisions in the Senate Finance bill.

Workforce Initiatives

The bill would further enact important workforce initiatives.  National Health Service Corps loan repayment benefits are increased.  Indirect and direct medical education payments are extended for training residents in nonprovider settings.  New programs are established to encourage training in primary care, dentistry, public health, nursing, cultural and linguistic competence, and interdisciplinary care, as well as for training students from disadvantaged backgrounds.  Several of the workforce initiatives would go into effect immediately in hopes of having an expanded primary care workforce beginning to come on line as health coverage is expanded when most of the reforms come into force in 2013.

Food And Drug Regulation Changes

Finally, HR 3962 makes significant changes in food and drug regulation.  Chain restaurants would have to put the calorie content of foods on their menus and make other nutritional information available.  Settlement agreements between brand and generic drug manufacturers that result in delaying, limiting, or preventing competition would be forbidden.  Finally, a new licensure pathway would be established for biosimilars, expediting the availability of “generic” biologics.  These last two reforms have been under discussion for years and should lower the cost of therapies involving drugs and biologics.

Little of this will make the newspapers, evening news, or leading news websites.  Nevertheless, many of these provisions will have a profound effect on health care throughout the United States.  Some provisions could in fact work revolutionary changes, although others will come to be regarded as fads or narrow special interest legislation.  But, in combination, they represent the most massive change in the American health care system in the past four decades.  Only time will tell how many make it through the House, conference committee, and votes in both houses to the President’s desk, and are actually implemented without being repealed.

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6 Responses to “The House Health Reform Bill: Delivery System Reforms And Other Provisions”

  1. Thync Ingman Says:

    I love the “Tort Reform” discussion. It is so self serving. Tort reform works well for the insurance industry and the tortfeasor. What, though, about the injured party?

    “Tort reform” proponents blame plaintiff lawyers for the “high cost” of medical malpractice insurance premiums. Interestingly, however, I cannot remember one medical malpractice case which alleged that the plaintiff lawyer left a sponge in a patient, cut an aorta or other blood vessel causing death or serious injury, performed a surgery on the wrong knee, or otherwise caused physical harm to a medical patient. Perhaps the narcissistic physician’s groups should look at each other and demand that their irresponsible peers take responsibility for their errors, compensate the victims, and avoid the high cost of litigation driven by the insurance industry’s effort to retain possession of its premium dollars.

    A truly impartial analysis of the cost of personal injury caused by health-care providers and the multiplication of those costs caused by vehement defense of physicians, drug manufacturers or other irresponsible medical players would surely show the truth behind the “tort reform” discussion in the context of health care. You people need to get a life. “Tort reform” translates into “economic decision making”; it does not correct anything.

    Thync Ingman

  2. Timothy Jost Says:

    Yes. The CBO estimated .2% for the direct costs of malpractice, .3% for defensive medicine. I am all in favor of malpractice reform, but would like to see solutions that are fair to patients who are victims of malpractice as well as to doctors. I was a member of a medical licensure board for 5 years, and for 2 years was one of the two members in charge of the complaint investigations and licensure actions. There are in fact doctors out there who cause serious damage to their patients. I have seen them. But our current system is dysfunctional. If you want to discuss it further, email me.

  3. MKirschMD Says:

    Tim, there may be less daylight between us than you think. I do challenge your .5% estimate that tort reform would save on health care dollars. The cost of defensive medicine is inestimable. Were you factoring this in your calculation?

  4. Timothy Jost Says:

    I did not mention section section 2531 providing incentives for liabilty reform because I, like Dr. Kirsch, do not regard it to be a serious effort to address this issue. I also agree with the Congressional Budget Office, however, that malpractice liabilty is not a major driver of health care costs, and enacting the reforms favored by Dr. Kirsch would probably decrease health care costs by at most half a percent. Moreover, capping noneconomic loss and attorney’s fees without more is like capping doctors’ incomes at a fixed amount per year; perhaps an effective way to control health care costs but a blunt instrument that can hardly be regarded as fair. I think that our malpractice system is seriously flawed–doctors hate it, it leaves most patients injured through medical error uncompensated, it does little to deter error, and it has very high administrative costs (and malpractice insurers are at least as much to blame as lawyers). I join Dr. Kirsch in wishing that Congress could come up with better solutions to this problem, although I think we would disagree on what those solutions should be.

  5. james mcniff Says:

    While the debate raged about the number of people uninsured and insurance mandates , the Hospital industry was being radically changed before our eyes. The Pharmaceutical companies and insurers will find the deep pockets to get through their “cost” contributions but hospitals will be forced to evolve into some other type of delivery system or face reduced rates from the federal,state and private payers and eventually extinction. Reform may have appeared to be insurance reform but in fact was delivery reform. When studies continue to come out stating that the waste in the delivery system could foot the reform bill,you have to worry if you are a hospital..

  6. MKirschMD Says:

    Why didn’t you devote a syllable to the House bill’s pseudo tort reform proposal? Pelosi offers states incentives to pursue tort reform so long as it doesn’t include caps on non-economic damages or restraining legal fees. That’s like directing a physician to treat a severe pneumonia with all available tools and remedies – except antibiotics! If relieving the medical profession of the unfair burden of the medical malpractice system is not a sufficient reason to support tort reform, then consider the tens of billions of dollars wasted on defensive medicine each year. Interestingly, Pelosi won’t permit states that have enacted tort reform to receive the incentives. In other words, a state is punished for having done the right thing. See.

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