Rehab Legislative Update

I’ve just returned from a conference in Seattle that was jointly sponsored by NWARF (the regional association of rehabilitation facilities) and AMRPA (the national association of rehabilitation facilities). Most of the focus of the conference was on national and regional legislation and the politics affecting healthcare, and on the effects for rehabilitation providers in particular. It was a great conference, but also one that left most of us with questions and anxiety about the future.

The morning sessions

At the national level, the big issues center on the development of ACOs (“accountable care organizations”), which are a key element in healthcare reform. As the Medical Director of Harborview Medical Center’s rehab units said in the opening speech, “we’re all gearing up to participate in ACOs even though we have no clue what they are.”

On one hand, ACOs are a bit like capitated managed care organizations. But they differ in that the ACO is responsible for—and paid for—the cost of care of a population of people, not for “insured lives” as is done with managed care.  It’s a subtle difference, but it implies that there will be a much stronger incentive to keep the population healthy using early interventions at the primary care level in order to avoid hospitalizations and other expensive care later. Managed care, on the other hand, focuses on limiting benefits (e.g., denials of admissions or outpatient therapies) or cutting payments for services through contracts with providers. If ACOs act like managed care organizations simply through service cuts, that could have big negative impacts on rehabilitation at all levels. We just don’t know yet how that will unfold.

There was considerable discussion about the issue of restriction of benefits. That same medical director in his speech gave the example of a recent TBI patient admitted to their unit who was given one week of rehab benefits by his managed care plan. (Imagine if Congresswoman Giffords were told that she had only seven days of rehab after the gunshot wound to her brain!)

Much concern was focused on the political and legal landscape at the moment. Regardless of how ACOs and the rest of the healthcare reform act was or will be written into regulations, the political climate now is focused on deficit reduction. Since entitlements such as Medicare and Medicaid represent a huge portion of federal and state budgets, there will need to be cuts in those programs’ budgets. We are already seeing providers opt out of government programs and refusing to accept patients who are funded by them. That might work well for physicians, I suppose, but hospitals do not have the option of choosing who will be their patients.

In addition there is the issue of legal challenges to the healthcare reform law. Several states have filed lawsuits to nullify certain portions of the legislation that they feel are unconstitutional. Regardless of how those lawsuits are settled, one very problematic issue is that the law was not written with a “severability clause.” If it had a severability clause, then finding one portion of the law unconstitutional would still preserve the rest of the law. However, as written, if one portion is found unconstitutional, the entire law would be struck down. Since some aspects of the law are already in force and others just around the corner, this creates a huge area of uncertainty for all players in the healthcare arena. The process of preparing for these reforms takes months and years, so anything that injects uncertainty into planning is going to be wasteful and problematic.

And the “cherry” on this healthcare cupcake is this:  No matter what any side of the political arguments feels about the design of healthcare reform, the law does include very significant cost reductions to the budget of Medicare. If the law is struck down, de-funded, or voted out, Congress will have the task of finding ways to make comparable budget cuts of some sort. Any replacement programs would need to be passed into law in a contentious and fractured political climate; lack of consensus is never the best way to find a rational solution to an incredibly complex problem. As a whole, those designing the law are not people with a vision for comprehensive healthcare reform, in my opinion. These are people who focus on dogma, power balances and being re-elected.

Regional Sessions

The afternoon sessions were devoted to the effects of healthcare reform in Washington state and Oregon. One speaker was the President of the Washington Hospital Association, himself a former administrator of rehabilitation facilities. The initiatives in Washington state have more to do with budget cuts (they are drastic!) than with reform. I saw a lot of stricken looks on people’s faces around the room when he presented the outline of the cuts in the Washington state budget. Particularly affected were hospitals with disproportionate shares of indigent or Medicaid patients, but of course many many human service agencies will see very significant cuts or ends to their funding.

The report on Oregon was fascinating, and to be honest, a source of some pride. Oregon is plowing ahead with actual reform, and is seen nationally to be about two years ahead of Washington D.C. in the planning and implementation process. This does not negate the issues around our own inevitable budget cuts, but it does bring our (future) system into a bit of a more rational framework that providers can plan to address. This Oregon version of healthcare reform will likely happen regardless of how ACOs are eventually developed (or not). The fact that our Governor is passionate about healthcare reform, and that he is himself a physician, has helped produce a workable plan. In addition, our state Senator from Southern Oregon, Alan Bates (a family practice physician), is also very active in the reform process.

Oregon’s reform has two elements: The first is the insurance exchange. I’m over-simplifying, but basically it will be a “place” where the uninsured and others can purchase health insurance. Some people will receive subsidies, and others may choose to buy insurance themselves. The purpose is to reduce the number of uninsured in the population and to standardize insurance packages while fostering competition among insurance companies.

The second element is the Oregon version of ACOs, which our state has chosen to call CCOs (Coordinated Care Organizations). My understanding is that these are a more evolved form of ACOs. For example, these organizations may employ “navigators” who are available to visit members with chronic illness and assist them in getting timely help if their conditions deteriorate, if they need access to needed medication, or for monitoring of blood pressure, blood sugar and so forth. This approach is very much aligned with the strategy of avoiding high cost, end-stage care.

These CCOs will be regional within the state, and will include providers (hospitals, doctors and so forth) who become responsible for the health and wellness of their populations.

One theme throughout the day was, “The devil is in the details.” Nearly every speaker used that phrase. The details are slowly becoming clearer, but the regulations are not fully developed. Those final details will determine what the impacts will be for rehab providers.

What about us?

What does this mean for those of us toiling away in rehab? I have a short list of thoughts on that topic:

• It’s too soon to tell. I can visualize a scenario where it’s “good” for the rehab industry, and scenarios where it’s “bad.” I’m defining good and bad in very narrow terms, primarily meaning our workload and our jobs. But if we assume that our workload is equivalent to valuable services for patients, then bad for us is likely bad for patients. The crucial issue will be if healthcare reforms do  or do not compromise access to care by those who need it.  It is worth writing to your lawmakers about this issue.

• There will be more emphasis on the value of services. The choice of venue (acute hospital, outpatient, home, rehab facility) will be based on the value equation, i.e., quality divided by cost. We will be under pressure to measure and justify both the numerators and denominators of that equation.

• Affiliation with a successful ACO or CCO will be critical. This would seem to present particular challenges to the independent outpatient therapy providers, and potentially shift workload to hospital-based providers. On the other hand, if we cannot deliver on the value equation as efficiently as external providers do, the organization might decide to contract with our external competitors (“outsource”).

The best thing we can do for the moment is

• Critically examine our costs within our departments, and look for ways to eliminate waste. Some areas of waste are likely to be where “we’ve always done it that way” without proof of value. Or where what we do is valuable but no longer affordable. In other words, our own little sacred cows. This self-examination will be on-going.

• Focus on best practices, results-oriented therapies. Is 3 times per week better than 5 times? Two better than three? Is BID better than QD? Is iontophoresis worth the high cost? Do we provide seven days of coverage in the IRC, or not? And so on.

• Focus on community based, morbidity reducing interventions even if the reimbursement does not exist currently. Examples that come to mind are for rehab experts to be involved in programs for diabetics or the obese, balance improvement (fall prevention), and lymphedema early intervention, to name a few.

• Embrace the inititives to implement electronic medical records within Asante. This will require months of investment in time and energy, but is really an essential component of being successful under healthcare reform.

• And overall, align ourselves with the Triple Aim of healthcare reform: Improve patient outcomes, enhance the patient experience, and reduce costs of care.