2010 Testimony

2009 Testimony

I am Tim Ohrum, Director, Legislative Services, for the Hospital & Healthsystem Association of Pennsylvania (HAP).

HAP represents and advocates for more than 250 acute and specialty care hospitals and health systems across the state, and the patients they serve. We appreciate the opportunity to present the views of our member hospitals and health systems regarding the impact that the Patient Protection and Affordability Act will have on health care delivery, as well as HAP’s perspective on the state’s priorities for successful implementation of the federal reforms. I have divided my remarks into two segments, first how reform impacts Pennsylvania hospitals, and second, implementation priorities.

Health Reform Impact on Hospitals

I have attached a summary of the major provisions of importance to hospitals in the reform package for your review. However, in an effort to be sensitive to the committee members’ time, I will focus on the delivery system reforms that will have the most significant implications for hospitals.

Delivery system reforms include Accountable Care Organizations, Bundling of Payment, Readmissions Policy, Value Based Purchasing, and Medical Homes, all of which provide a very different way of thinking for physicians who treat patients, and for hospital leaders who must reconfigure existing care models. No longer can the two groups work independently of one another. Moving forward hospital and physician reimbursements will be tied to quality as opposed to the number of procedures they order—quality over quantity.

To better understand these delivery system reforms I will provide you a very brief explanation of each.

Value Based Purchasing (VBP):
The law establishes a VBP program to begin in FY 2013 to pay hospitals for their actual performance on quality measures, rather than just the reporting of those measures. The VBP program applies to all acute-care prospective payment system hospitals except certain ones which do not have a sufficient number of patients with related conditions. A demonstration project will be created for critical access hospitals (CAH), which is important to Pennsylvania since we have thirteen federally qualified CAHs.

Measures will be selected from those used in the Medicare pay-for-reporting program, including measures for heart attack, heart failure, pneumonia and surgical care, and measures assessing a patient’s perception of care. The Health and Human Services (HHS) Secretary is directed to include measures on health care-associated infections, and measures assessing efficiency, including measures of Medicare spending per beneficiary, which will be adjusted for differences in age, sex, race, severity of illness and other factors.

Payment Bundling:
Beginning in FY 2013, the HHS Secretary will establish a national voluntary pilot program on bundling of payment in order to improve the coordination, quality and efficiency of health care services. The pilot program will be conducted initially for five years and can be continued longer if the Secretary determines the program does not reduce quality, but does reduce cost. Entities comprised of groups of providers including hospitals, impatient rehabilitation facilities, long term care hospitals, physician groups, skilled-nursing facilities, and home health agencies may apply to participate in the pilot.

Accountable Care Organizations (Shared Savings Program):
Beginning in January of FY 2012, groups of qualifying providers, such as physician group practice arrangements, networks of practices, hospital-physician joint ventures, and hospitals employing physicians and other clinical professionals (physician assistants, nurse practitioners or clinical nurse specialists), will have the opportunity to form Accountable Care Organizations (ACO’s) and share in the cost savings they achieve for the Medicare program.

To earn incentive payments, ACO’s must meet certain quality thresholds. Reporting measures will be set by the HHS Secretary and include:

1. Clinical processes and outcomes.
2. Patient and caregiver perspectives on care.
3. Utilization and costs.

The ACO will then be able to share in the savings generated to the Medicare program at a rate determined by the Secretary.

Hospital Readmissions:
Beginning in FY 2013, inpatient prospective payment system (IPPS) hospitals with higher than expected readmissions rates will experience decreases in Medicare payments for all Medicare discharges. This provision is to be enacted two years from the legislation’s passage, which is March 23, 2012. Prior to that time, the HHS Secretary will make available a program for eligible hospitals to improve their readmission rates through patient safety organizations. Performance evaluation will be required on the 30-day readmission measures for heart attack, heart failure, and pneumonia, which are currently part of the Medicare pay-for-reporting program. In 2015 the HHS Secretary may expand the list of conditions to include chronic obstructive pulmonary disorder and several cardiac and vascular surgical procedures, as well as any other condition or procedure the Secretary chooses.

Health Homes for Medicaid Enrollees with Chronic Conditions:
The health reform law requires the HHS Secretary to award State Planning Grants to establish a Health Home Program for eligible enrollees by January 1, 2011. Eligible participants must have at least two chronic conditions, such as asthma, diabetes or mental health issues, and must select a designated provider to serve as a health home. States will provide payment for the health homes except during the first eight fiscal year quarters in which the FMAP is at 90 percent. States also may propose alternative methods of payment. States must include the following in their proposal:

1. Requirement for hospitals to refer participants who seek emergency care to his/her health home provider.
2. Plan for coordinating with the Substance Abuse and Mental Health Services Administration.
3. Methodology for tracking readmissions.
4. Proposal for using health IT.
5. Report quality measures.

State Implementation Priorities

While states vary in the ways in which they approach public policy issues, all states will be confronting many of the same challenges and asking many of the same questions. The National Academy for State Health Policy has published a briefing paper that identifies and describes ten aspects of federal health reform that states must “get right” if they are to be successful in reform implementation. Not all are specifically targeted to hospitals, but all are important in ensuring Pennsylvania has a high quality, cost efficient health care delivery system. The ten areas are:

1. Be Strategic with Insurance Exchanges.
2. Regulate the Commercial Health Insurance Market Effectively.
3. Simplify and Integrate Eligibility Systems.
4. Expand Provider and Health System Capacity.
5. Attend to Benefit Design.
6. Focus on the Dually Eligible.
7. Use your Data.
8. Purse Population Health Goals.
9. Engage the Public in Policy Development and Implementation.
10. Promote and support quality and efficiency initiatives of the health care system.

Expanding provider and health system capacity may be the most difficult issue for hospitals to address, and certainly has the ability to impact patient access to high quality health care.

Studies have determined that on average people without health insurance use about 60 percent of the health care services. Expanding coverage will increase demand for services, which will strain the capacity of those parts of the health care system that are already under pressure. Of particular concern is primary care, internal medicine, obstetrics/gynecology, general surgery, orthopedic surgery, radiology, cardiology, emergency department care, and pediatrics.

Pennsylvania faces a significant shortage of physicians. Studies demonstrate that Pennsylvania needs to take steps now to ensure an adequate supply of physicians on an ongoing basis. Physician workforce levels in Pennsylvania are not nearly sufficient to meet the increased demand for physician services that will result from our aging population, and increased insurance coverage. The fact that there is also evidence that the nation faces a physician shortage makes the challenge for Pennsylvania even greater.

If physician supply and use remain the same, the United States will experience a shortage of 124,000 full-time physicians by 2025, according to the Association of American Medical Colleges. This is largely driven by population growth, an aging population and aging physicians, and increased physician visits. In Pennsylvania the difficult medical liability environment further complicates and worsens the problem.

One of every four physicians in Pennsylvania is 60 years or older; only one in five is under the age of 40 with the average age being 48.9 years. One out of every three physicians who completed their medical degree in Pennsylvania remained in the state to practice, ranking Pennsylvania 32nd among all states. It also is worth highlighting that twenty percent of those primary care physicians in the state say they will leave Pennsylvania in five years or less.

What can the General Assembly do to improve access to quality physicians in Pennsylvania:

1. Retire the MCARE fund.
2. Expand loan forgiveness programs.
3. Make Pennsylvania “physician-friendly” by offering incentives to encourage physicians to practice in the state’s rural areas and develop programs that encourage more residents who are training in Pennsylvania to remain in the state as clinical practitioners.
4. Make Pennsylvania a leader among states in the delivery of high-quality health care services through the use of health information technology, including in physician practices.
5. Raise physician fees paid by Medicaid and commercial insurers so Pennsylvania is as competitive as other states nationwide.

Summary

HAP continues to carefully analyze the Patient Protection and Affordability Act, and is working closely with Pennsylvania hospitals to implement the key priorities I have outlined today. We are committed to helping policymakers understand key consequences in the reform bill such as the potential shortage of quality physicians, and identifying ways in which you can assist in helping address these problems.

Thank you for this opportunity to testify and to provide the hospital community’s perspective on the Patient Protection and Affordability Act. I am happy to answer your questions.

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