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February 28, 2013

Health care delivery greatly improved under PPACA

By Jenny M. Burke, JD, MS

The delivery of health care is markedly different today than three years ago, prior to the passage of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). Before the Senate Finance Committee on February 28, Jonathan Blum of CMS testified to the significant impact and improvements in health care delivery and quality due to reforms put into place by PPACA. Blum testified that a distinct focus has been put on avoiding costly mistakes and hospital readmissions, keeping patients healthy, rewarding quality instead of quantity, and creating the health information technology infrastructure that enables new payment and delivery models to work. So far, data shows that PPACA might just be successful in what it set out to do.

Slower spending. In the past three years, health care spending grew more slowly than in any other year in the past 51. Medicare spending per beneficiary grew just 0.4 percent per capita in fiscal year 2012, continuing the pattern of very low growth in 2010 and 2011. Medicaid spending per beneficiary also decreased 0.9 percent in 2011, compared to 0.6 percent growth in 2010. Family premiums for employer-sponsored insurance have remained consistent, as well; the average annual increase was 6.2 percent from 2004-2008, 5.6 percent from 2009-2012, and 4.5 percent in 2012 alone. CMS estimates another $2.1 billion in savings as a result of PPACA’s medical loss ratio policy and its strengthened rate review program.

Health outcomes. CMS credits provisions of PPACA with a showing of better health outcomes, exemplified by a decrease in hospital readmission rates. Incentives to reduce readmissions, such as financial penalties that Medicare imposes on hospitals with high readmission rates, as well as extra funding and incentives for hospitals and outpatient providers to do a better job of coordinating care for patients after they head home seem to be contributing toward better health outcomes. The nationwide rate of hospital readmissions of Medicare patients within 30 days of discharge declined to about 17.8 percent by last November after spending five straight years at 19 percent and likely for decades prior to that. CMS noted this translates to about 70,000 fewer readmissions in 2012.

Also, now that Medicare beneficiaries have access to information on health outcomes and health care quality, they have become educated “shoppers” and can use that knowledge when looking for or enrolling in a Medicare Advantage plan. According to CMS, more seniors are able to choose from a broader range of higher quality Medicare Advantage plans, and more seniors have enrolled in these higher quality plans, as well. Since PPACA, enrollment in Medicare Advantage has increased by 30 percent and premiums have fallen by 10 percent.

Paying for value. Reforms put into place by PPACA are enabling the public to pay for value in health care, not simply the quantity of care provided, while patient safety is promoted and care is better coordinated. This is due in part to successful implementation of programs such as the Hospital Value-Based Purchasing Program and the Hospital Readmissions Reduction Program. CMS has also implemented a number of reforms to crack down on fraud and ensure that payments are accurate. According to CMS, Medicare is effectively becoming “an active purchaser of high-quality, affordable care.”

Better care and safety. Many other programs put into place by PPACA are also showing improvements in health care delivery. CMS has undertaken several efforts to promote better care and improve patient safety, focusing on programs that assist health care providers in delivering coordinated, high quality care to their patients. Electronic health records, Partnership for Patients, Strong Start for Mothers and Newborns, Hospital Compare, and the Community-Based Care Transition Program are just a few of the programs demonstrating success with marked improvements in care. Blum commented “These programs not only will help save money for patients and taxpayers, but we believe they will save lives.”

CMS’ Center for Medicare and Medicaid Innovation, charged with testing innovative payment and service delivery models to reduce expenditures in Medicare, Medicaid, and CHIP, and at the same time, preserving and enhancing quality of care is already engaged in projects with more than 50,000 health care providers to improve care. The Innovation Center is focused on finding ways for continuous quality improvement.

Cost reduction. New programs are also in place to reduce unnecessary costs. CMS is working to implement and expand competitive bidding for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), which enables the Medicare program to pay a fairer and more accurate price for equipment used by beneficiaries. The CMS Office of the Actuary estimated that the program would save the Medicare Part B Trust Fund $26.2 billion and beneficiaries $17 billion between 2013 and 2023.

Another way to significantly reduce costs is through the elimination of fraud and abuse. PPACA strengthened CMS’ ability to step up efforts to prevent and detect fraud and crack down on individuals who attempt to defraud Medicare, Medicaid, and CHIP. This has resulted in a record level of recoveries—$4.2 billion in fiscal year 2012—and a record return on investment—$7.90 for every dollar invested. CMS estimates that the total recoveries over the past four years were $14.9 billion compared to $6.7 billion over the prior four years.

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