PM&R
Volume 1, Issue 6 , Pages 511-515, June 2009

A New Era in Health Care: Opportunities and Challenges

  • Richard E. Verville

      Affiliations

    • Powers Pyles Sutter & Verville, P.C., 1501 M Street, 7th Fl, Washington, DC 2005-1700†
    • Corresponding Author InformationAddress correspondence to: R.E.V.
    • ,
  • Peter W. Thomas

      Affiliations

    • Powers Pyles Sutter & Verville, P.C., Washington, DC‡

Received 4 April 2009; accepted 4 April 2009.

Article Outline

 

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Introduction 

The stars appear to be aligning on national health care reform, the first time this has occurred since the failed effort in the early 1990s. Proposals have been put forth by President Obama and Congressional leaders that include expansion of health insurance coverage, reform in the delivery system for care and the insurance paying for it, wellness initiatives, and research. Recent public pronouncements from the major stakeholders in the health care reform debate all point to key areas of consensus emerging on meaningful policy issues, including expansion of health insurance to cover all Americans while “bending the curve” on health care costs over time. However, this emerging consensus from a variety of stakeholders, including interest groups that flatly opposed health care reform in the past, is occurring in an environment in which tangible legislation has not yet been introduced. It may be easier to speak of being constructive and supportive of reform when the debate is still at the conceptual level. This article summarizes the emerging consensus in Washington and analyzes the impact of health care reform proposals with special emphasis on people in need of medical rehabilitation and the physicians and providers who serve them.

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The Economic Setting 

To see opportunity for major change and expansion in health care when our national deficit is unmatched, unemployment has reached the highest level since the early 1980s, and the gross domestic product fell by almost 4% in 2008 certainly requires optimism. Furthermore, leading economists predict a worsening of the unemployment and gross domestic product data in 2009. Economic data directly affecting health care and rehabilitation are similarly daunting. Since 2000, health insurance premiums have doubled, whereas wages have lagged far behind, suggesting further loss of insurance coverage nationally. Nearly 48 million Americans are uninsured and an additional 25 million are considered underinsured, with rehabilitation therapies and devices being particularly affected by underinsurance. Bankruptcies have increased dramatically in the past year and medical expenses have caused more than half of personal bankruptcies. Where is the silver lining that might enable opportunities in health care and rehabilitation and specifically in PM&R [1, 2, 3]?

In President Obama's first 2 months in office, he has proposed and signed into law a reauthorization of the State Children's Health Insurance Program, expanding health care coverage to 4 million uninsured children over the next 5 years. He also signed into law the American Recovery and Reinvestment Act (ARRA) to stimulate the economy through expenditures related to jobs and tax cuts related to consumer spending. This legislation included significant investments to foster long-term change in health care such as the move toward electronic medical records and research, with a particular emphasis on comparative effectiveness research regarding methods of diagnosis and treatment. Shortly thereafter, the President proposed a 10-year budget plan that laid out major reforms of health, education, and energy programs as well as an effort to reduce the size of the deficit significantly over the next several years.

These beginnings offer some hope and history provides encouragement. President Roosevelt took office in 1933 amidst a depression of more than 3 years' duration and proposed and signed sweeping spending legislation to create jobs and reform our approach to social security and the operation of the banking and securities sectors. Together with the spending generated by World War II, the reforms assisted in recovery and fostered an era of unusual growth. In the early 1980s, the nation suffered with unemployment rates of approximately 9% and severe inflation. Then newly elected President Ronald Reagan proposed an economic stimulus package that relied on tax cuts and a program of economic reform through deregulation. These initiatives, together with the leadership of Paul Volker and the Federal Reserve, produced prolonged economic growth [4, 5]. Although it is far too early to tell whether past will be prologue, there are clear parallels between today's challenges and the most difficult times in the past century.

President Obama's budget proposed a $634 billion reserve fund for the purpose of paying down a large chunk of what national health care reform is expected to cost. The reserve would be funded through a combination of tax increases on wealthy Americans and reforms to the Medicare program, including bundling of post-acute care and other major proposals. The President has consistently spoken of the need to reform the nation's health care system as a necessary component of economic recovery. This cuts two ways. It casts reform of the health system as fundamental to achieving long-term economic growth and prosperity and, thereby creating greater political pressure to actually achieve long-sought reforms. But it also leaves the President vulnerable to criticism if he is not able to deliver on health care reform by the next election, limiting his ability to argue that under his leadership the economy is on a path toward long-term growth and that the cost of health care spending will be brought under control.

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Emerging Consensus on Health Care Reform 

Although spirited opposition is expected to arise over the course of the health care reform legislative process, there appears to be a fairly strong consensus emerging across the spectrum of health care stakeholders, including big business, small business, health plans, doctors' groups, provider organizations, labor interests, consumer groups, and the disability community, around several key reform proposals. This is somewhat surprising considering the significant scope of these reforms, especially because many of the stakeholders that appear now to be aligned in concept are the very same stakeholders who orchestrated the demise of the health care reform effort 15 years ago. These consensus proposals include the following.

•Universal Coverage: Coverage in the private insurance market would be vastly expanded through an individual mandate to have insurance or pay some type of penalty, likely enforced through the tax code. Private insurance would be accessible through an “Exchange” along the lines of the method used by the Federal Employee Health Benefits Program to assure that a range of health plans would compete for the business of individuals, small employers, and perhaps even large employers. The individual mandate would complement the existing employer-based health insurance system, which would remain the backbone of the private insurance market. Employers who do not provide coverage would have to contribute in some manner as yet to be determined to ensure that everyone is covered.

•Insurance Reforms: A mandate for every person to maintain health insurance would be a boon to the private health insurance industry. This explains, in part, why America's Health Insurance Plans have agreed that reforms of the health insurance market would be a necessary component of the individual mandate. This includes guaranteed issue for all comers, with a prohibition of medical underwriting based on health status (ie, no more pre-existing condition exclusions). No longer would individuals be “medically uninsurable.” Modification of rating practices would also be necessary to ensure that individuals with health conditions are not priced out of the market, although this provision will be the subject of significant debate. Although there seems to be consensus that premium rating based on health status would no longer be permissible, prohibiting rating practices based on age appear to have less support, especially from the insurance industry and business groups.

•Benefit Package: It is not likely that Congress will define the details of a standard benefits package through the political process, but some definition of what constitutes a benefit package that will meet the requirements of the mandate for coverage will be necessary. There are a number of options to assist Congress in defining this standard and to avoid the criticism lodged during the last health care reform debate of a “one-size-fits-all” approach. Suffice to say, however, that the benefits most likely at risk of not being covered when the cost of the legislative package is calculated are the very benefits that people with physical disabilities tend to rely on the most, including rehabilitation therapies delivered in a variety of settings as well as durable medical equipment, orthotics, prosthetics, and supplies. It will be important for advocacy efforts to focus on inclusion of benefits that improve function such as the rehabilitation benefits referred to above, not simply traditional medical benefits. Alternative models to ensure access to rehabilitation therapies and devices may need to be considered, such as reinsurance and other mechanisms to spread risk.

•Subsidies and the Role of Public Programs: To make insurance affordable to those who cannot afford it, federal subsidies would be available on a sliding scale; however, the details of these subsidies and the levels at which they would become available will be subject to the cost of the overall health care reform proposal. It is expected that Medicaid will be expanded to cover everyone up to a certain percentage of the federal poverty level, regardless of whether the person qualifies under the existing Medicaid eligibility categories. New populations being considered for Medicaid eligibility include individuals below 100%, 133%, or 150% of the federal poverty level. These proposals, of course, involve state governments as a major source of funds to achieve universal coverage, a prospect that is unclear at this time. In addition, there will likely be an option to buy into the Medicare program at some point between ages 55 and 65. There is also widespread support for the elimination of the Medicare 2-year waiting period for those who qualify for Medicare as a result of inclusion in the Social Security Disability Insurance program.

•Prevention and Wellness: There is widespread recognition that coverage of prevention benefits coupled with promotion of wellness strategies will lead to health spending reductions in the long term and lead to a healthier populous. The costs of focusing on prevention benefits are significant in the short term, but many agree that such investments are necessary to a well-functioning health care system that reduces health care costs over time. How robust the package of preventive benefits will be depends on how the costs and savings from prevention will be estimated by the Congressional Budget Office.

•Payment Reform and Improvements in Quality: Another key area of agreement appears to be the use of health care payments to encourage reduction in waste and inefficiency and improvements in the quality of care. Such payment proposals take a number of forms, including post-acute care bundling under Medicare to reduce costs, comparative effectiveness research intended to influence coverage policies, and payment incentives to reward quality care.

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More Controversial Reforms 

In addition to the areas of consensus, there are other provisions under consideration that are far more controversial. Principal among them is the notion of having a public plan available, either offered through the health insurance Exchange or independently available. Such a plan would be run by the government and may or may not be patterned on the Medicare program. Such a plan could permit the government to use its bargaining power to negotiate fees for services, devices, drugs, and other treatments and serve as a benchmark plan to maintain broad benefits and hold down costs. Opponents fear the public plan will unfairly compete with private plans in the Exchange and will lay the foundation for nationalized health care. Providers have good reason to fear that payment pressures will be considerably heightened across the system if a public plan is created and flourishes. Without a public plan, proponents argue, private insurers will continue to raise premiums and limit benefits, thereby failing to bend the growth curve of health care costs over the longer term.

Another controversial policy issue is whether to include provisions in health care reform to address the growing problem of long term services and supports in this country. Proponents are rallying around a voluntary system of pretax contributions to a long-term care trust fund administered by the federal government. After a minimum of 5 years of individual participation, the trust fund would pay out a cash benefit to assist individuals with functional deficits in obtaining the long-term services and supports they need to remain functional and living independently—and preferably out of long-term care institutions. This proposal would also lessen the crushing burdens on the Medicaid program created by current demand for long-term care.

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Opportunities and Challenges for Medicine 

In addition to the $634 billion health care reserve fund proposed in the President's budget, the New Era budget includes a funding reserve to pay for the elimination of payment cuts generated by the Medicare sustainable growth rate (SGR) formula in years 2010 through 2019. The reserve of $329 billion is sufficient to eliminate all cuts in payment predicted for the next 10 years to the physician fee schedule, including a cut of 20% scheduled in 2010, essentially eliminating the impact of SGR. Although not addressing the increased costs of practice annually, the reserve does provide some predictability in payment which has been lacking and security against draconian Medicare cuts. Additional reforms in payment that are intended by the Administration are less clear. The budget indicates that: “The Administration believes the current physician payment system, while it has served to limit spending …, needs to be reformed to provide incentives for quality and efficiency” [3]. The focus is on incentives or bonuses for care that is considered high quality, not payment penalties for care that is not. Options for physician payment presented by the Congressional Budget Office in recent budget analyses include the following.

1.A medical economic index to increase payments annually

2.Limits on the volume of care (eg, SGR) applied to specific areas of practice such as imaging or surgical procedures but not to cognitive services

3.Bonus payments for the coordination of care for chronic conditions such as cancer, stroke, and chronic obstructive pulmonary disease. This initiative could be significant for physical medicine and rehabilitation (PM&R) physicians where chronic conditions require rehabilitation services [3, 6].

The most significant quality of care initiative included in the ARRA is the investment of $1.1 billion in comparative effectiveness research for 2009 and 2010, administered by the National Institutes of Health (NIH) and the Agency for Healthcare Research and Quality. Combined with the investment of $19 billion in technology for electronic medical records, the comparative effectiveness research fund provides a basis for informing consumers, providers, and payers about the effectiveness of various health care interventions. How this research is used to influence coverage and payment of health care services is less clear. The legislation indicates that the research shall not be used to mandate coverage, reimbursement, or other policies of public or private payers. “It shall focus on the comparison of clinical outcomes, effectiveness, risk and benefits of two or more medical treatments and services” [7]. The language of the ARRA legislation and the Administration's budget materials do not refer to cost as an element of the effectiveness analysis. To date, effectiveness research has been in areas of substantial cost to Medicare and Medicaid. The areas affecting PM&R that might be encompassed in the effectiveness research initiative are likely to be conditions such as back pain, stroke, and traumatic brain injury. The Institute of Medicine is mandated by the ARRA to study and report to Congress and the Department of Health and Human Services by June 30, 2009, after receiving public input on priorities for expenditure of the comparative effectiveness research funds. Opportunities exist for the Academy to provide leadership in quality of care research addressing function and thereby assure that the field is involved in efforts to deal with quality of care issues in a proactive way [3].

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Opportunities and Challenges in Research and Rehabilitation Service Programs 

In his March presentation regarding stem cell research, President Obama signaled his intent to enable the scientific community to determine the policies for science and shield this endeavor from politics. In the presidential campaign and in speeches since his election, the President indicated the importance of science to enhancing America's place in the global economy. This commitment to research is also reflected in the ARRA. The ARRA includes a $10 billion increase for NIH research over a 2-year period beginning in 2009, in addition to the $1.1 billion added for comparative effectiveness research, of which NIH will administer at least $400 million. NIH research without the ARRA funding is $30 billion in 2009 and at least $35 billion in 2009 and 2010 with the ARRA funding included.

The NIH initiative in the ARRA was bipartisan and was led by Congress as well as the Executive Branch. Senator Specter (Democrat from Pennsylvania), joined Senator Harkin (Democrat from Iowa) in leading the charge for this new funding. The challenge presented by the 17% annual increase is that funds will be available for only 2-year projects and have to be committed by the end of fiscal year 2010. Funding for 2011 and succeeding years will drop back to the level of about $31–$32 billion, reflecting annual increases of only 4%–5% unless Congress adds substantial funds, which is problematic given the size of the annual deficit. Typical NIH research grants customarily last 3-5 years and, therefore, ARRA funding will not generally be devoted to long term projects.

The research community in rehabilitation medicine, like the scientific community in general, must seek creative ways to use 2-year money. The NIH and National Institute of Child Health and Human Development websites include details of how the ARRA funds will be allocated. Of the $10 billion for the 2-year period, $7.4 billion will be allocated to each of the Institutes and independent Centers on a proportional basis, with the National Institute of Child Health and Human Development receiving $330 million. The funds are to be used for 2-year research grants. NIH will supplement existing grants and fund new research grants through the Institutes, which will use their existing research priorities. The supplementation of existing grants is the simplest way to spend the influx of short-term funds in the allotted timeframe. A total of $1.3 billion will be allocated to support construction, equipment, and shared instrumentation for existing grantees of the NIH.

Most of the remainder will be allocated by the Director's Office in NIH and support the new NIH Challenge grants, which are also described in detail on the NIH website. Challenge grant priorities identified by NIH include a number of areas of interest to rehabilitation medicine researchers including clinical research on chronic pain, quality of life measures, impact of physical exercise of different types on the elderly, prevention and risk factors for persons with disabilities, and improved interfaces for prostheses to improve rehabilitation. Challenge grants will also support clinical trial capacity development. The available funding could be a special opportunity for PM&R to enhance its capacity to conduct clinical research and to perform comparative effectiveness research on its most significant modes of treatment.

There is also encouraging news for Rehabilitation Act programs. National Institute on Disability and Rehabilitation Research funding increases by $2 million in FY 2009, the first increase in a number of years, and the ARRA increases the state vocational rehabilitation and independent living programs by $680 million for the 2009 and 2010 periods. The ARRA funds represent a 60% increase for independent living programs that were funded at about $127 million before the ARRA. These programs have had no real increases for many years. The importance of these initiatives for PM&R relates to the needs of patients with disabilities for independent living support in the community and job training and placement, both of which supplement medical rehabilitation services.

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Implications for the Field of PM&R 

In the short term, it is clear there is additional money in the Federal budget for medical research including rehabilitation and a major priority for research comparing the effectiveness of diagnostic tools and treatment methods. These funds present opportunities for the field to enhance its capacity to improve the quality of care through research and to establish the efficacy of PM&R methods of diagnosis and treatment. With respect to physician payment, the field will need to be participants in advocating for long-term solutions for physician payment under Medicare but should be comforted by the fact that the long-range budget proposal of the new Administration assures funds to at least eliminate the constant threat of significant cuts in fees. Developing appropriate quality measures related to effectiveness will be necessary in the long term as the government and private insurers focus on the purchasing of quality care.

PM&R will need to be actively involved with organized medicine, associations of rehabilitation facilities and, most importantly, consumer organizations, such the disability community, in assessing the impact of the proposals for universal health care coverage and reform of care to assure that any legislation that is enacted is a net benefit to patients, and includes adequate coverage and payment for rehabilitation services. Some very dangerous proposals have surfaced related to Medicare payment for all post-acute care furnished within 30 days after discharge from an acute hospital. Under these proposals, the regular diagnosis-related group payment for acute care would be combined with a single post-acute care payment made to the acute hospital, which would have to affiliate with—or own—post-acute care providers. The rate paid for post-acute care in at least one proposal would be the average of the costs of all post-acute settings, including the inpatient rehabilitation, skilled nursing, home health, and outpatient hospital care levels of care. This approach would seem to incentivize the acute care hospital to provide the least costly, least intensive, post-acute care. It is for this reason that the bundling proposal, if not restructured, would be harmful to inpatient rehabilitation facilities and patients. Other possible problems to which the field must be alert include approaches to universal coverage, which have the potential to reduce the availability of rehabilitation services in suggested health insurance benefit packages. But there are also possibilities for major improvements in coverage of rehabilitation services for persons with disabilities such as the elimination of medical underwriting in the private insurance market and the elimination of the 2-year waiting period for Medicare beneficiaries faced by persons with disabilities eligible for Social Security Disability Insurance cash benefits. Universal coverage itself may dramatically reduce the need for “charity” care and cost shifting to insurance sponsors, including Medicare and Medicaid, which currently create financial problems for those programs and those furnishing care to these programs' beneficiaries. Threats and opportunities are the watchwords of the day, and it will be but a matter of time before the path unfolds and the implications for PM&R become clear.

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References 

  1. In: Wall Street Journal. 2009;p. 1–2March 3
  2. Evans K, Blackstone B. Obama, Fed see economy in bleak light. In: Wall Street Journal. 2009;p. 4;March 4
  3. A New Era of Responsibility, Renewing America's Promise, Budget of the U.S. 2010, Office of Management and Budget. Washington DC: US Government Printing Office. ISBN: 978-0-16-082552-1; p. 5-13.
  4. Brands HW. Traitor to His Class, The Privileged Life and Radical Presidency of Franklin Delano Roosevelt. New York, NY: Doubleday; 2008;
  5. Wilentz S. The Age of Reagan, A History 1974-2008. New York, NY: Harper Collins; 2008;
  6. December In: Congress of the United States Congressional Budget Office, Budget Options, Volume I Health Care. 2008;p. 96;112-118
  7. Conference Report (American Recovery and Reinvestment Act (ARRA), Part A, HHS Department). 2009;Rehabilitation Services and Disability Research, Washington, DC: Congress of the United States
  • † Disclosure: nothing to disclose
  • ‡ Disclosure: nothing to disclose

 Disclosure Key can be found on the Table of Contents and at www.pmrjournal.org

 Power Pyles Sutter & Verville is the AAPM&R's Washington-based lobbying firm.

PII: S1934-1482(09)00397-9

doi:10.1016/j.pmrj.2009.04.005

PM&R
Volume 1, Issue 6 , Pages 511-515, June 2009

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