Healthcare reform explained

Sep 10 2009

A bevy of legislation is flooding Capitol Hill on healthcare reform. With President Obama’s speech kicking debate on these initiatives into high gear, Eric Zimmerman, a partner in the Health Law Department of leading law firm McDermott Will & Emery, weighs in on the issues:

Q: How will healthcare service providers be impacted by healthcare reform?

A: Healthcare reform legislation will impact healthcare service providers in many ways. In addition to across-the-board blunt-instrument reimbursement reductions, lawmakers are also looking to infuse new incentives into reform to shape service provider behaviors. For example, more emphasis will be placed on healthcare quality, and more federal program reimbursement will be linked to reporting and achieving quality objectives. Those providers that already have sophisticated quality data gathering and reporting mechanisms in place will be at an advantage. Those that have genuine quality improvement programs that utilize nationally recognized measures will be even better off.

Q: What are some of the key reimbursement issues at play?

A: Healthcare reform legislation will necessarily need to be financed at least in part on the backs of healthcare service providers. Congress is not going to be able to come up with astronomical sums to finance this simply by looking to insurers and pharmaceutical manufacturers. Congress will need to reduce payments to hospitals, physicians, labs, home health agencies, skilled nursing facilities, DME suppliers and others. Cuts will be across-the-board cuts as well as more targeted reimbursement reductions.

Q: How should healthcare service providers prepare for reform?

A: Service providers of all types should budget using conservative assumptions, and predicting little to no growth, and maybe even 2 percent to 5 percent reductions in federal program payments. Service providers of all types also should begin dedicating considerable resources to measuring and improving quality using nationally recognized quality measures.

Q: If Congress fails to enact healthcare reform, what becomes of the many expiring Medicare provisions?

A: Congress will need to address many expiring Medicare provisions through some legislative vehicle, if not through health reform. The current conventional wisdom is that Congress will advance a Medicare bill, if consensus evaporates on healthcare reform. However, the timing of the collapse of healthcare reform may make it difficult for Congress to advance Medicare-only legislation in 2009. As such, many of these expiring provisions may actually expire, at least for a little while.

Q: What are the practical implications of advancing reform legislation through a reconciliation process? What is the real effect/meaning of the Byrd rule?

A: There are many political implications to advancing legislation through a reconciliation process, but there also are many practical implications. Current Senate rules prohibit the Senate from advancing revenue neutral provisions in a reconciliation bill, which means all provisions must either spend or save federal dollars. Gone from the bill therefore would be many of the reform proposals, and many of the "goodies" that have encouraged healthcare providers to support reform proposals to this point.