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Legislative Goals of Federal Healthcare Reform

August 3, 2010 | Comments Off on Legislative Goals of Federal Healthcare Reform
Posted by Sharlene Hunt

I recently attended the American Health Lawyers Annual Meeting in Seattle.  Much of the focus of the Annual Meeting this year was on the federal healthcare reform legislation and its impact on healthcare providers.  Over the coming months and years, many of our blog posts will address the healthcare reform legislation, the implementing regulations, and their impact on providers, employers, and consumers of healthcare.  One of the programs I attended at the Annual Meeting focused on the essential provisions in the legislation, and it forms a good background for understanding the many and varied provisions in the legislation.

This interesting program spelled out the three primary goals of healthcare reform.  It is easy to see how many of the provisions in the healthcare reform legislation are intended to take a step toward accomplishing these goals, although it is obvious that further reform will be necessary before they will be attained.  The first goal is to obtain universal coverage for all Americans through shared responsibility.  The second goal is to improve the quality of healthcare in this country and to improve the overall public health.  The final goal is to lower the costs of healthcare.

There are several provisions in the healthcare reform legislation aimed toward the goal of increasing coverage.  Some of these provisions include limiting health insurance coverage waiting periods to 90 days, prohibiting lifetime limits, requiring plans to cover adult children up to age 26, and a prohibition on rescissions of insurance policies.  Other legislative provisions geared toward increasing coverage include provisions designed to foster the development of state health insurance exchanges where individuals in small businesses can compare and purchase health insurance, the establishment of high risk pools to provide coverage to individuals with preexisting conditions until the launch of the health insurance exchanges, as well as federal subsidies to be provided to low income Americans to purchase health insurance.  Increases in Medicaid program coverage are also supposed to increase coverage to 16 million additional beneficiaries.

On the quality front, Medicare payments will be adjusted based on certain quality standards, and a five year pilot program to develop payment bundling based on episodes of care will encourage coordination of care across the spectrum of clinical services.  Medicare will provide payments to accountable care organizations, which are to be established to share cost savings related to quality benchmarks and care coordination for those beneficiaries that are assigned to the accountable care organization.  The establishment of medical homes is another mechanism designed to promote quality, which is focused on primary care.

The third goal of lowering costs is also being addressed on a number of fronts.  Programs such as the accountable care organizations, bundling payments and medical homes could have the extra benefit of lowering costs as well.  In addition, market basket updates and disproportionate share hospital (DSH) payments will be reduced.  Hospitals in the top quartile for hospital acquired infections will receive reduced payments, and hospitals with an excess readmission ratio will suffer payment penalties.  The law also requires group health insurance plans to spend at least 80% of their premiums for small group and individual plans and 85% for group coverage on medical care and other quality improvement activities (medical loss ratio spending).

How these various programs will be implemented will be addressed in regulations to be issued.  Whether or not they will accomplish the goals of healthcare reform remains to be seen.


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