James Capretta

AAOS Now

Published 6/1/2013

NOLC Assesses Impact of ACA Implementation

Speakers address organizational, financial, and healthcare delivery issues

Mary Ann Porucznik, G. Jake Jaquet, and Elizabeth Fassbender

The National Orthopaedic Leadership Conference (NOLC), held May 1–4 in Washington, D.C., brought together more than 300 orthopaedic surgeons—members of the AAOS Board of Councilors and the leaders of orthopaedic societies belonging to the Board of Specialty Societies—to address issues of concern. In addition to individual and group visits with members of Congress and their staffs, NOLC attendees also heard from government representatives and experts from a variety of fields on topics ranging from fee-for-service to the impact of new taxes and the prospects for reform.


Richard Gilfillan, MD

Fee-for-service
During the first session, on the future of fee-for-service (FFS) payment models, Richard Gilfillan, MD, director, Center for Medicare and Medicaid Innovation, reviewed the multiple programs being tested in the shift from producer-centered, volume-driven to people-centered, outcomes-driven payment models. In several, he noted, physicians can choose from a variety of delivery transformations and receive rewards based on the degree of risk they assume.

Jack Bert, MD, adjunct clinical professor, University of Minnesota School of Medicine, made the case that FFS is not the problem. He noted that, as care becomes centralized in hospitals or similar organizations, the higher overhead can lead to higher costs.


Michael J. McCaslin, CPA

Entitlement reform
James Capretta, senior fellow at the Ethics and Public Policy Center, explained the importance of entitlement reform, given the pressure that Medicare and Medicaid place on federal finances. He also referenced the upcoming retirement of the baby boomer generation as an issue.

Rep. Tom Price, MD, (R-Ga.) focused on the potential for entitlement reform in Congress. He insisted that any discussion on entitlement reform must include a discussion of the Affordable Care Act (ACA). He also emphasized that current entitlements are not sustainable and pointed out that even the strongest proponents of the ACA are concerned about its complexity. According to him, repeal of the medical device tax, the Independent Payment Advisory Board, and the sustainable growth rate formula have the highest probability for legislative movement.

Potential policy proposals for merging Medicare Parts A & B were covered by Rachel Feldman from the Moran Company, a healthcare research and consulting firm. She noted that all current proposals share two common features: cost-sharing structures are equalized across programs, and beneficiaries get “stop-loss” coverage similar to that available under the present Medicare Part D program.

Taxes and transparency
Two key aspects of the ACA affect the orthopaedic device industry: the 2.3 percent medical device excise tax that went into effect on Jan. 1, 2013, and the Physician Payment Sunshine Act.

According to J.C. Scott, senior executive vice president, government affairs, for the industry group Advanced Medical Technology Association (AdvaMed), the Congressional Budget Office expects that the medical device excise tax—paid on gross sales of devices by companies, not simply profits—will generate $30 billion in payments to the U.S. Treasury Department over the next 10 years.

James Capretta
Regardless of where health care is delivered, physicians control (directly or indirectly) many of the associated resources, said Michael J. McCaslin, CPA, a principal partner at Somerset CPAs, Indianapolis. He called for a shift in how physicians view themselves—from providers to managers of care—and said that physicians should be rewarded for the savings resulting from their stewardship.

Device companies have respond-ed to the tax by cutting jobs, research and development (R&D), capital investment, and expansion. As a trade association, AdvaMed supports repeal of the tax and Mr. Scott anticipates that support for repeal of the tax will gain traction.

The Physician Payment Sunshine Act requires that manufacturers of drugs, medical devices, and biologics that participate in U.S. federal healthcare programs report most payments and items of value given to physicians and teaching hospitals. Andy Van Haute, associate general counsel for AdvaMed, noted that companies must begin tracking payments and gifts on Aug. 1, 2013; beginning in 2014, the data must be reported by March 31 and will be publicly available on Sept. 30.

Mr. Van Haute pointed out that both literal payments such as consulting fees and honoraria and “transfers of value,” such as when a company pays for travel, accommodations, and meals during a training event, must be reported. Grants for continuing medical education likely will not be reported as a “transfer of value” to attendees, but payments to physician faculty associated with a company-conducted education session will be.

Transfers of value of less than $10, provided they do not total more than $100 in a single year, are not reported. Physicians will have a 45-day window prior to the public release of the data to review and approve or dispute the data.

Specialists and ACOs
According to Paul B. Ginsburg, PhD, president of the Center for Studying Health System Change, specialists may be able to interact with accountable care organizations (ACOs) in several ways. He noted that an ACO can be a single provider, such as a medical group or hospital with employed physicians, or an organization created through contracts. He also pointed out that changes being implemented today are part of a lengthy transition to payment mechanisms that reduce the role of FFS payment models.

Kevin J. Bozic, MD, chair of the AAOS Council on Research and Quality, provided the orthopaedic perspective, concluding with a summary of AAOS activities in the arenas of quality and value.

Strategic planning
During the final session, Second Vice-President David Teuscher, MD, focused on “AAOS Strategic Planning.” Participants were assigned to one of five work groups: Advocacy, Education, Quality & Value, House of Orthopaedics, and Membership. Each work group addressed three questions, specific to the topic, and the results were summarized and presented to the entire group. The materials will be used in developing the AAOS’s next strategic plan, AAOS Vision 2020.


Reps. Andy Harris, MD (R-Md.) and Dan Benishek, MD (R-Mich.).

Keynote speakers
The first keynote speaker, Jeffrey E. Shuren, MD, director, U.S. Food and Drug Administration, Center for Devices & Radiological Health, provided a forward look at changes currently underway at the FDA to speed device approvals without compromising patient safety. He was followed by Jonathan Blum, acting principal deputy administrator, Centers for Medicare & Medicaid Services, who reviewed the anticipated outcomes for medical practice as the ACA is implemented.

During the luncheon, attendees heard from two physician members of Congress, Reps. Andy Harris, MD (R-Md.) and Dan Benishek, MD (R-Mich.).

Future issues of AAOS Now will present a more in-depth analysis of the speakers and presentations. For more information on these issues, visit the AAOS office of government relations website at www.aaos.org/dc

Mary Ann Porucznik is managing editor, AAOS Now; G. Jake Jaquet is executive editor, periodicals; and Elizabeth Fassbender is the communications specialist in the AAOS office of government relations.