On the Horizon: NOLC Speakers Detail Changes in Payment Models

U.S. baby boomers could push ‘cross-border shopping’ for health care in Canada to 15 percent

A symposium presented at the National Orthopaedic Leadership Conference in June reviewed current payment models, both in the United States and abroad, as well as possible changes on the horizon. The symposium’s moderator, Basil Besh, MD, chair of the Board of Councilors, introduced the three speakers and reviewed the single-payer healthcare model, which has become a litmus test for the modern progressive wing of American politics.

Next, Ross Leighton, MD, of Dalhousie University in Halifax, Canada, examined the strengths and weaknesses of the Canadian healthcare system. Dr. Leighton explained that Canada has a mixed public-private system, in which the “private sector delivers healthcare services, and the public sector is responsible for financing those services.” In fact, 57.8 percent of Canadian physicians practice in a private office or clinic compared to only 35.8 percent in a community hospital.

Andrew N. Pollak, MD, describes the Maryland all-payer model as “an experiment in population health management.”

Generally, a provincial government establishes overall hospital budgets and reviews the major financial decisions of hospital boards. One strength of the Canadian system is the low death rate related to acute care presentation, such as trauma. Nevertheless, wait times for elective procedures, especially orthopaedic care, are notoriously daunting. Although the costs for both the Canadian and American systems are comparable, the Canadian system “might actually be more expensive if it did not limit access.”

In response to an audience question about the impact of “cross-border shopping” on the Canadian system, Dr. Leighton explained that about 9 percent to 10 percent of patients now engage in cross-border shopping, which represents a “big gain to the pro-privatization movement in Canada.” Dr. Leighton further predicted that it will be 10 percent to 15 percent in the next 5 years because “Boomers aren’t as patient waiting for health care.”

David Cannon, MD, of Germantown, Tenn., provided background on the largest integrated healthcare network within the United States—the Veterans Health Administration (VHA), what he called “single-payer USA.” Although Dr. Cannon pointed out that innovation is difficult in the VHA system, advantages of being in the system include decreased exposure to malpractice claims and no Maintenance of Certification requirements.

Troublingly, the challenge of navigating the VHA produces a system where patients are sorted into those who stay in the system and those who can afford to go outside the system. Notably, the VHA estimates that only 36 percent of those enrolled receive all their care within the system. Of the 21 million eligible members, only 9 million are enrolled, only 6.8 million use the system, and just 3.3 million do so exclusively.

A major challenge the VHA still faces is Congressional gridlock, which could also impact any future public manifestations of single-payer health care. Given its dependency upon federal funding and the agenda of its secretary (or president), frequent changes in either can deter efficiency and quality of care. According to Dr. Cannon, accountability and affordability are at their strongest in a first-party payer system in which patients purchase something they know they can afford and there is greater price transparency for unexpected items.

In the last talk, Andrew N. Pollak, MD, of the University of Maryland School of Medicine, introduced attendees to the Maryland all-payer payment model, as well as the Health Services Cost Review Commission (HSCRC), which was created in 1971 and regulates Maryland hospital rates. In 1975, HSCRC established rates for nongovernment payers. By 1977, Maryland’s Medicare waiver received federal approval, and the HSCRC began setting rates for all payers in the state.

Among the key benefits of the HSCRC are the abilities to equitably finance uncompensated care, eliminate cost-shifting occurring in other states, allow for enhanced federal payments for inpatient and outpatient hospital services, and afford a high level of predictability and stability in hospital revenue streams. According to Dr. Pollak, the new waiver mandated by the Affordable Care Act focuses on a more value-based hospital payment system. The new waiver, reworked and approved in 2014, will be implemented in two phases. Between calendar years 2014 and 2018, its main financial focus will be to control and reduce the rate of growth in per capita hospital expenditures for Maryland residents. Beyond calendar year 2019, its focus will pivot to controlling and reducing the rate of growth in total per capita healthcare expenditures for Maryland residents.

Dr. Pollak closed by cautioning that Maryland and the Department of Health and Human Services have collaborated to engage in “an experiment in population health management.” He said, “[Maryland residents] are largely uninformed regarding the nature of the experiment, its potential risks and benefits to them as study subjects, and the potential value of the experiment to the country and society as a whole.”

Shreyasi Deb, PhD, is the senior manager of health policy in the AAOS Office of Government Relations (OGR).

Matthew Snider, Esq., is the regulatory advocacy coordinator in the AAOS OGR.

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