Annals of Long Term Care

Change is coming—in the form of the Stimulus Package, as well as President Obama’s healthcare reform plan. Actually, change is clearly upon us. The elements of this change have been happening slowly over the last several years, of course. Much occurred well before President Obama’s Stimulus Bill, the American Recovery and Reinvestment Act of 2009, was signed into law.

In 1993, key members of Congress led by Senators Max Baucus (D-MT) and Edward Kennedy (D-MA) agreed on four principles that appear to remain as the foundation for our current round of reform. These principles are:

• The healthcare system has to cover every American.
• The health insurance model has to be revamped so that insurers compete based on price and quality, not on who’s better at shedding risk.
• Cost savings have to be realized through using health information technology (IT) and increasing efficiency throughout the system.
• Prevention must be emphasized at every step along the way.

Many of these elements remain today in the President’s plan for healthcare reform. However, the Medicare system has actually been changing and testing different systems to gain control on access, quality, and cost. Of course, the major focus has been, and will continue to be, on cost.

Recently, AARP examined Medicare attempts to cut costs and identified the key findings below. These findings point to a future approach aimed mainly at significant changes to the physician fee schedule, as well as dramatic reductions in Medicare Advantage payments.1

AARP Demonstration of Savings Results for Medicare

Positive Savings:

• Changing the incentives from a cost-based system to episode payment has resulted in measurable and ongoing savings.
• The physician fee schedule can be an effective tool to reduce spending on physician services.

Mixed Results:

• Although bundling fee-for-service (FFS) payments across provider types and competitive bidding show promise for cost containment, this comes with a significant administrative cost.
• Home health agencies responded to the prospective payment system by increasing the efficiency of their operations and shifting their mix of patients.
• Further savings from prevention of fraud and abuse will require investment in IT and more program oversight.

Not Shown to Produce Positive Savings:

• Prospective payment for nursing facilities has not been successful.
• Despite the logic in focused professional support for those with chronic conditions, the Medicare demonstrations have not shown a reduction in costs.
• Medicare Advantage plans, on average, are paid more than FFS Medicare, thus not demonstrating any cost savings.

With all of this change going on, it’s vital that healthcare professionals stay on top of the legislative and regulatory changes that will impact their work. An examination of the Stimulus Package shows four key areas of focus that will impact our work—and perhaps not as one would expect.

Funding for Primary Care Professionals

Despite the Institute of Medicine (IOM) report painting a dire outlook for our geriatric workforce, it appears the situation is not poised for improvement. Currently, commercial payers are reimbursing physicians 10% more than Medicare. For example, the average commercial reimbursement for a new patient visit (99203) is $109.51, while the Medicare reimbursement for the same visit is just $91.03. For existing patient visits (99213), the difference is even greater, with commercial reimbursement at $71.67 and Medicare $59.80.2

While this difference is likely to remain the same—given the proposed Medicare Advantage cuts presented in President Obama’s State of the Union address—overall physician reimbursement is expected to decline for both commercial payers and Medicare.

This is at the same time that the Stimulus Package includes $500 million to promote primary care professional development in underserved areas.