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.