Healthcare Reform is Here!

Healthcare reform has already started. How fast it will move and how substantial the changes will be are questions that cannot be answered at this time. In part, the speed and magnitude will depend on the state of the economy. However, and it is worth repeating again, healthcare reform is underway.

The passage of the economic stimulus bill started the healthcare reform movement in earnest with 16% of a “stimulus” bill dedicated to healthcare. Perhaps most significantly was the $1.1 billion set aside to initiate comparative effectiveness research. The Senate version of the stimulus bill clarified the intent of this by referring to this as clinical comparative effectiveness research but the clinical reference was stripped out of the final bill signed into law. So, that is a pretty good indicator that cost effectiveness will be a part of the comparative equation. Additionally, the $17 billion allocated for incentive payments for physicians and hospitals to adopt health information technology is equally significant. The resolve to introduce health IT is such that medical providers not participating by 2015 will have to pay by being penalized by Medicare.

The next step is now the President’s budget, which was submitted late last week. There are several articles posted on the Community Oncology Alliance (COA) website detailing the healthcare portion of the budget. In summary, the budget proposes writing a $634 billion check as a down payment towards meaningful healthcare reform that will “bring down costs and expand coverage.” The $634 billion will be deposited in a healthcare reserve fund that will be financed half by new tax revenue and half by cuts to insurers, providers, and pharmaceutical companies. Of note are the following cuts:

• Eliminating the Medicare Advantage subsidy to insurers — $177 billion

• Changing payments to hospitals relating to readmissions, care coordination, and quality delivery — $38 billion

• Changing payments to home health agencies — $37 billion

• Expediting the approval of “biosimilars” (biotechnology drugs deemed to be biologically similar) — $9 billion

What the press generally did not report was the creation of “radiology benefit managers,” presumably to curb imaging utilization as was recommended to the Centers for Medicare & Medicaid Services (CMS) by the Government Accountability Office (GAO) in a June 2008 report to the Congress. Additionally, the budget includes a line item that proposes to motivate physicians to form “voluntary groups” to coordinate care.

The budget assumes that Congress will fix the broken physician fee schedule, which is scheduled to cut physician payments by 21% in 2010. However, the devil is in the details of exactly how Congress will address this problem.

Community oncology practices are now realizing increased payments for Evaluation and Management (E&M) services, which directly correlate to decreased drug administration service payments. That is why community oncology has to fight its own battles! 



On Thursday of this week there will be a summit at the White House dedicated to healthcare reform. It will be interesting to hear what comes out of this gathering of the President, his Administration, Members of Congress, and others. 



Yesterday, President Obama nominated Kansas Governor Kathleen Sebelius to serve as Secretary of Health and Human Services (HHS). President Obama also announced that he was nominating Nancy-Ann DeParle, Commissioner of the Department of Human Services in Tennessee, as the Director of the White House Office for Health Reform. These announcements are likely to speed up the pace of healthcare reform.