The New Health Dialogue

Just when we thought health care reform had a clear roadmap, the specific directions are getting harder to interpret. At a March 31 event at the Newseum, Bloomberg Government brought together several health care and insurance leaders to discuss health care’s “Iron Triangle”—cost, access, and quality—as the implementation of the Affordable Care Act moves into its second year.

After an introductory address by House Ways and Means Oversight Subcommittee Chairman Charles Boustany, Jr. (R-LA), a panel discussion led by Bloomberg’s Mike Riley quickly turned to issues of cost containment in the post-ACA environment.

Karen Ignani, CEO of America’s Hospital Insurance Plans, highlighted the challenge of cost control within the existing fee-for-service (FFS) reimbursement model, saying, “My cost containment is someone else’s revenue reduction.” Under FFS schemes, lowering costs by reducing procedure rates or relying on more preventive care means that facilities, specialists, and other downstream stakeholders will see their own volume-based income decline. The system rewards unnecessary care by incentivizing overutilization at all levels of care delivery, which incentivizes specialists to practice medicine that is economically inefficient, but also potentially harmful to patients. Hospitals likewise lack financial incentives to lower admission rates or to rely on primary care physicians to minimize utilization of expensive—and highly profitable—inpatient services and procedures.

The current zero-sum game guides practice patterns as well as much of the public discourse around cost control. The ACA strives to change this calcifying calculus by allowing providers to directly benefit from cost savings in the care of their patients.

HHS Secretary Kathleen Sebelius spoke later at the event, and was able to address one of the ACA’s big guns in this fight, the long-awaited Accountable Care Organization (ACOs). ACOs are the latest example of an integrated care model designed to bundle services and payments in an efficient, high-quality care delivery system. The model encourages this dual focus by specifically allowing payers, providers, and patients to share savings realized through cost control. Sebelius briefly described the official ACO design regulations—which were publicly released several minutes into her talk—as allowing two pathways for organizations to begin addressing issues of cost control, quality, and access during a multi-year development period.

In addition to the large-scale landscape shifts driven by ACOs, the panel discussion highlighted possibilities for smaller scale improvement during the reform implementation period that continues through 2014. Karen Ignani rejected the idea of a “silver bullet” mentality in the reform process, noting that smaller efforts could yield large reductions in overall cost. She suggested that malpractice reform could be one of these “small steps” toward improving quality and lowing cost by reducing the practice of unnecessary defensive medicine.

While some studies have suggested that defensive medicine plays a minor role in driving the cost of care (see this recent article in Health Affairs), malpractice reform could set the stage for the wider implementation of shared decision-making (as Ben Moulton argued in the American Journal of Law & Medicine). Shared decision-making may vastly improve the quality of care delivery at a relatively low cost by including patients in the consideration of various treatment options.

“We should give physicians protections if they are using best practices,” Ignani said.

While political gridlock seems likely to impede further legislative progress within the Beltway, the ACA has already set forth numerous new tools to help advance the inexorably linked parts of the Iron Triangle. Only a year old, the various experiments authorized by the ACA hold the promise of an aggressive response to the challenges of twenty-first century medicine.