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President Barack Obama meets with healthcare reform stakeholders in the Roosevelt Room at the White House on May 11, 2009. Official White House Photo by Pete Souza


Published 10/1/2009
Mary Ann Porucznik; Nick Piatek

The shifting shape of healthcare reform

Despite President’s remarks, reform remains uncertain

“It is clear from President Obama’s remarks (to the Congress on Sept. 9, 2009) that he is determined to press forward with healthcare reform legislation—with or without the support of key stakeholders, including most physicians,” said William J. Robb III, MD, chair of the Board of Specialty Societies.

“Innovation supported by physician leadership, however, remains the essential and critical element of meaningful healthcare reform,” continued Dr. Robb. “The physician community must remain dedicated to the design and implementation of effective healthcare solutions, despite our president’s and legislators’ failure to engage the medical community to date.”

Indeed, the American Association of Orthopaedic Surgeons (AAOS) continues to seek out opportunities to engage legislators and other stakeholders in dialogue and action to shape the final bill. But significant differences exist between House and Senate versions of reform, hundreds of amendments have been proposed, and it would appear that no proposal has, at this writing, sufficient support to pass.

Basic goals of reform
Based on the outline provided by President Obama, his “healthcare” reform program has more to do with reforming health insurance than it does with reforming health care. The president’s proposals are aimed at achieving the following three goals:

  • New security and stability for those with health insurance
  • An insurance exchange for those without health insurance
  • Slowing the increase in healthcare costs

“There’s lot to like in the president’s proposals,” said Board of Councilors Chair Thomas C. Barber, MD. “But there are some significant issues, and one major aspect (medical liability reform) that is inadequately addressed.”

To address the security and stability of coverage for those with health insurance, the AAOS supports the guaranteed renewability of coverage, the elimination of lifetime caps on benefits, and the elimination of pre-existing medical condition clauses. But to provide these benefits, insurance companies say that a coverage mandate is needed, to get everyone into the system.

Dr. Barber agrees. “Without a mandate, we cannot achieve the insurance reforms that I see as critical. I realize this is controversial due to the overall costs, but I think it is the only way to provide meaningful insurance reforms without causing a crisis.”

Mandates, however, will necessitate the inclusion of some form of subsidy to help low-income people afford coverage. The AAOS supports subsidies, in the form of tax credits or vouchers, to help people afford coverage. But there’s no agreement yet on when subsidies would apply or what form they’d take.

Both the Senate Health, Education, Labor and Pension (HELP) Committee plan (Afforable Health Choices Act) and the House Tricommittee plan (America’s Affordable Health Choices Act of 2009), for example, would make subsidies available to individuals and families with incomes of up to 400 percent of the federal poverty level ($88,000 for a family of four). The bill introduced by Sen. Max Baucus (D-Mont.) from the Senate Finance Committee (America’s Healthy Future Act) stops subsidies at 300 percent of the federal poverty level. Although Dr. Barber would like to see the cut-off at 200 percent of the poverty line, the AAOS hasn’t taken a stance on this aspect of the reform package.

A public plan or a co-op?
The AAOS does not support a single-payor healthcare system, and one no longer seems likely. Attention has shifted to two other approaches for providing coverage to those without health insurance. The Baucus bill, for example, would create nonprofit, member-owned cooperatives to compete with private insurers, while the House bill would create a public option within an insurance marketplace known as a Health Insurance Exchange. Only a limited number of Americans who can’t get insurance any other way would be able to access the exchange.

Regardless of the form, such a plan would need to function on a level playing field with private insurers, be independent of the federal government, and be based on voluntary participation by healthcare providers, without requirements that they participate in other government programs, if it hopes to win support from the AAOS.

One argument for a public option is that it would address the lack of competition in areas dominated by a single insurer. But there are other ways to provide competition without establishing another government-run program, counter many critics.

Controlling costs
Although slowing healthcare costs is the president’s third goal, it’s a primary concern to many Americans. According to the National Coalition on Health Care—a nonprofit, nonpartisan alliance—insurance premiums for employer-sponsored health care have increased 120 percent and continue to increase despite a nationwide recession.

Physicians continue to make the case for medical liability reforms as necessary to reduce the practice of defensive medicine, which contributes to increased costs. “We were glad to hear [the president] address malpractice reform,” said John J. Callaghan, MD, AAOS first vice president, “but we’re very concerned that the proposals do not go far enough to truly bring about the necessary reforms.” (See “Let’s get real about tort reform”)

Dr. Barber agrees. “We know that the only proven way to reduce malpractice costs and deter defensive medicine is to provide caps on noneconomic damages. The president proposes Medicare pilot projects over the next few years to see if structural changes can reduce costs. The experiment has already been done—caps on noneconomic damages work and should be supported.”

AAOS responds to House proposal
The House Tricommittee plan includes several reform measures that would directly affect the physician community, and the AAOS has taken steps to respond to these proposals (
Table 1).

In the area of physician payment reform for Medicare, for example, there would be two “buckets” or expenditure targets—one for primary care, preventive services, and all evaluation and management codes, regardless of what type of physician provided the service, and the other for specialty services. A third bucket, outside of the two physician payment buckets, would be established for Accountable Care Organizations. Expenditure targets have not yet been defined.

To transition to this new model, the House has proposed that the payment update for 2010 be increased at the rate of the Medicare Economic Index (MEI). It would also rebase the Sustainable Growth Rate (SGR), both very positive steps for the physician community. In addition, both clinical laboratory services and drugs would be removed from the spending calculations. Payment updates in subsequent years would be based on the gross domestic product (GDP).

The AAOS believes that comprehensive health reform efforts must include a permanent fix to the SGR and has submitted a response to the House, in conjunction with the surgical community and the Alliance of Specialty Medicine, reinforcing that position.

The House plan also includes a “Physician Payments Sunshine Provision” that would require industry to report contributions made to “a sponsor of a continuing medical education program” and “an organization of health care professionals.” The AAOS continues to review this provision and its impact on the physician community.

The AAOS also continues to oppose the inclusion of language that would establish an independent medical advisory council (IMAC) into any final proposal. The AAOS believes that the creation of an IMAC-like entity would severely limit Congressional oversight of the Medicare program and replace the transparency of Congressional hearings and debate with a more opaque process and minimal accountability. This change would also move important Medicare policy decision to a small number of unelected officials who would be largely unaccountable to the public.

The AAOS also opposes any efforts to remove computed tomography (CT), magnetic resonance imaging (MRI), and positron emission tomography (PET) scans from the list of services for which physicians can refer under the Stark in-office ancillary exception. To date, these efforts have been successful and will continue.

AAOS responds to Senate proposal
The Senate Finance Committee proposal includes insurance reform, co-ops, an independent Medicare commission, accountable care organizations, value-based purchasing, and physician payment. The AAOS has responded to various aspects of the proposal (
Table 1).

To address health insurance reform, the proposal calls for health insurance exchanges and requires hospitals to list standard changes for all services and Medicare diagnostic-related groups. In addition, it allows states to form “health care choice compacts” in 2015 to purchase across state lines. The plans sold must cover a wide variety of options, including surgical care, diagnostic imaging, and emergency care. This section requires individuals to have health insurance through their employer, Medicaid, Medicare, the State Children’s Health Insurance Program or another qualified source by 2013. Individuals who meet certain income restrictions can apply for an exemption.

Unlike the House plan, the Senate proposal does not eliminate the SGR. It provides for a 0.5 percent increase in physician payments in 2010; if not addressed again, physician payments would be cut by more than 25 percent in 2011.

Primary care and rural general surgeons would receive a 10 percent bonus in payment; due to the budget-neutrality requirement, all other providers, including orthopaedic surgeons, would receive additional payment cuts. AAOS has strongly opposed budget neutral bonuses because they will exacerbate other physician shortages, including those in orthopaedics.

The proposal would also establish a panel of healthcare providers and experts to identify overvalued services and enable the Secretary of the Department of Health and Human Services (HHS) to adjust rates. To ensure Medicare sustainability, the annual market basket for Part A providers and for Part B would be reduced. A national pilot program on payment bundling would allow providers to share in the savings. Payment penalties to hospitals with high rates of hospital acquired infections and readmissions would begin in 2011. All unused residency slots, regardless of specialty, would be reassigned to primary care, without removing the current residency caps.

Like the House bill, the Baucus proposal establishes an independent Medicare commission, which the AAOS opposes. In addition, physicians and all other Physician Quality Reporting Initiative (PQRI) eligible professionals would be required to participate in quality measures by 2011. “Quality is very important,” agreed Dr. Callaghan. “But it would be very important to have the right people at the table, and the AAOS would want our experts in the field involved.”

The Senate proposal would create a nonprofit institute to conduct comparative effectiveness research. Included in this is a provision that explicitly prohibits the HHS Secretary from using research to ration care.

Instead of a public plan, the bill calls for consumer-operated and -oriented plans (CO-OPs) that would serve individuals in one or more states. CO-OPs would be allowed to enter into collective purchasing agreements for some services and items. The federal government would provide loans to offset initial start-up costs. In addition, the proposal defines Accountable Care Organizations (ACOs) as a group of providers who work together to deliver care to Medicare beneficiaries. It would allow ACOs to keep half the savings they achieve over a 3-year period.

The measure also includes limitations on specialty hospitals; the AAOS remains opposed to provisions that restrict physicians’ ability to invest in hospitals and choose the most appropriate setting in which to treat patients.

A continuing dialogue
“The AAOS welcomes the efforts to pass meaningful, effective legislation that addresses the shortcoming of the current healthcare system,” said AAOS President Joseph D. Zuckerman, MD. “We will continue to convey our positions to ensure that patients have access to affordable, quality specialty care.”

For more on AAOS efforts to help shape healthcare reform legislation, visit the AAOS office of government relations Web site or see the links below.

Mary Ann Porucznik is managing editor of AAOS Now; she can be reached at porucznik@aaos.org

Nick Piatek is communications specialist in the AAOS office of government relations. He can be reached at piatek@aaos.org

Additional Links:

AAOS Advocacy Now: (member-sign-in required)

AAOS position statements on Principles of Health Care Reform and Specialty Care, Principles of Medicare Reform

Talking points on healthcare reform

Patients and healthcare reform

Letter to House leadership on medical liability reform

Letter to Senate leadership on medical liability reform

Letter to Congressional leadership on addressing specialty care in healthcare reform