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Myth-Busting the Reform Law: Sea Change or Scapegoat?

The federal health reform law contains dozens of key, industry-shaping provisions.

Sometimes it seems the law has spawned that many myths, too.

Several of the most egregious rumors — from talk that the law would create so-called “death panels” or require all Americans to have microchips implanted — were quickly debunked by mainstream media.

However, less outrageous and more pervasive contentions have mounted in the months since the law was enacted. Several insurers have argued the law has forced them to raise premiums or even pushed them out of business. Employers say that they’ve taken large write-downs on health benefit spending.

In several cases, these newer claims have been debunked, but most remain unclear or a matter of perspective. Observers suggest that some organizations have invoked the reform law to camouflage changes that would’ve happened anyway or that they have pushed for some time.

Today’s “Road to Reform” reviews three recent claims offered up by some insurers, physicians and nurses and examines both sides of each argument.

Myth? The Law Will Cripple Medicare Advantage

Under the law, the government has begun to tamp down federal subsidies for private health plans that administer Medicare Advantage plans, which offer Medicare beneficiaries a managed-care alternative to traditional fee-for-service Medicare. Democratic lawmakers said the cuts — which are forecast to save $145 billion across the decade — were necessary and that insurers were being overpaid to offer MA plans. Republicans and insurance industry executives argued that trimming MA subsidies would raise premiums, lower benefits and force out many of the 11 million Medicare beneficiaries who rely on the plans.

The MA market appears untouched: According to the Washington Post, the new enrollment period has offered an early test of the dueling predictions. Although fewer MA plans are available for 2011 — which the Post says is unrelated to the reform law — the plans’ premiums and benefits remain largely unchanged.

Let’s wait and see: Opponents of the payment cuts have said that the reform law’s full impact will not be understood until 2012, when MA subsidies begin to be ratcheted down across several years. “It’s not going to be possible to keep current [MA] benefit levels and premiums where they are today when these massive cuts go into effect,” according to Robert Zirkelbach, a spokesperson for America’s Health Insurance Plans. Congressional budget analysts predict that MA plans will shed three million customers by 2019.

Myth? Physicians Will Be Forced Out of Independent Practice

The reform law encourages providers to reduce utilization of high-cost services through a variety of reimbursement changes. For example, Medicare is setting total-cost-of-care targets for a given population of patients; the concept will initially be voluntary but is meant to eventually encompass the entire Medicare population. 

The law is transforming a pillar of physician behavior:  The reform law will likely force physicians out of independent private practice and into hospital employment, part-time arrangements, “concierge” practices or even retirement, according to a report by physician recruiter Merritt Hawkins. The report drew on a national survey of 2,400 physicians and further revealed that 67% of respondents had unfavorable reactions to reform. Most physicians said that the law will increase their caseload and decrease profitability. According to Lou Goodman, president of the Physicians’ Foundation, which commissioned the report, “Doctors strongly believe the law is not working like it needs to — for them, or for their patients.”

The changes would’ve happened anyway: Pointing out that many physician- and patient-related provisions have yet to take effect, NPR’s Julie Rovner also notes that Merritt Hawkins’ study includes a caveat from its physician advisory panel: that the reform law was “necessary and inevitable” and included many changes that would have happened organically. “In other words, things were changing anyway, with or without the passage of the Patient Protection and Affordable Care Act. Blaming the new law just gives doctors a convenient scapegoat,” Rovner adds.

Myth? Expected Patient Surge Means Nurses Need More Authority

Many nurse organizations have seized on a new report from the Institute of Medicine, which reviewed industry challenges in the wake of health reform. According to the IOM report, advanced practice nurses should take on more independent roles with less physician oversight in order to advance health care quality in the post-reform era. The report urged states and the federal government to eliminate “regulatory and institutional obstacles” that narrow APNs’ scope of practice, recommending that Medicare and Medicaid equally reimburse APNs and physicians for providing the same care, among other suggestions. Moreover, patient demand is expected to surge as millions of U.S. residents gain eligibility for health coverage, and nurses may be well-positioned to emerge as primary care providers.

Nurses must play crucial part in care delivery: Industry officials “cannot expect vast new buildings and legions of additional staff to accompany this [patient] influx,” according to Cheryl Hoying, senior vice president of patient services at Cincinnati Children’s Hospital Medical Center and president-elect of the American Organization of Nurse Executives.  Instead, Hoying and others say that nurse practitioners, who tend to have both a bachelor’s and master’s degree in nursing, are well-suited to fill ongoing and worsening primary care physician shortages. About 90,000 NPs currently focus on primary care and thousands of them already work in rural areas — like Modesto, Calif. — that tend to be underserved by PCPs, KALW reports.

Regardless of the law, nurses still aren’t doctors: Professional organizations like the American Medical Association acknowledge that reform will lead to rising patient demand but have noted that NPs lack the same level of education as physicians, who generally spend at least seven years in medical school and residency programs. Some physician advocates also say that nursing groups are seizing on the reform law to advance long-held goals to broaden nurses’ scope of practice. NPs in California and 25 other states must work under a physician’s supervision. According to Dr. Albert Ray, a past president of the San Diego County Medical Society, physicians aren’t “trying to be rulers over the NPs,” but just want to ensure high-quality care.

Here’s a look at what other health reform issues have been making news recently.

Challenging the Overhaul

  • Florida Attorney General Bill McCollum (R) recently sent letters to 13 newly elected governors and attorneys general requesting that they join the multistate lawsuit challenging the constitutionality of the federal health reform law, if they have not already done so. McCollum invited all 13 to come to Florida for oral arguments on Dec. 16 and is anticipating receiving the court’s permission to add new states. Of the attorneys general to which McCollum wrote, those who are not already plaintiffs in the suit include AGs in Kansas, Maine, Oklahoma, Tennessee, Wisconsin and Wyoming (Norman, CQ HealthBeat, 11/18).
  • Meanwhile, Senate Minority Leader Mitch McConnell (R-Ky.) and 32 Republican senators recently filed an amicus brief in support of the multistate lawsuit against the overhaul. In the filing, McConnell wrote of the individual mandate, “Congress legislates without authority, it damages its institutional legitimacy and precipitates divisive federalism conflicts like the instant litigation.” Many Republican senators-elect, who have not yet been sworn in, have not yet signed on to the amicus brief because it is considered an official Senate communication (O’Brien, “Healthwatch,” The Hill, 11/18).
  • Last week, the Obama administration and opponents of the federal health reform law filed court papers in the multistate lawsuit challenging the constitutionality of the overhaul. The Justice Department has asked Roger Vinson, the judge presiding over the case, to throw out the lawsuit. The motion filed last week stated that striking down the individual mandate “would allow insurers to refuse to cover millions of Americans who have some prior medical problem at the time they seek insurance, leaving them and their families at risk of financially ruinous medical costs” (Bunis, CQ HealthBeat, 11/24).
  • In related news, GOP lawmakers are planning to use the Congressional Review Act — a 1996 law that allows Congress to kill agencies’ proposed regulations — to fight implementation of the federal health reform law. The act allows senators to hold an up-or-down vote on a rule within 60 calendar days of its being published in the Federal Register or after the administration submits it to Congress. It also limits floor debate to 10 hours and prohibits filibusters, amendments or motions to proceed (Adams, CQ HealthBeat, 11/24).
  • Key health care industry players increasingly have become wary of the prospect of GOP-led efforts to repeal and replace the federal health reform law. Richard Umbdenstock, president and CEO of the American Hospital Association, said, “No one has said what this bill would be replaced with,” adding, “But doing away with [the reform law] would certainly be the wrong thing.” Helen Darling, president of the National Business Group on Health, said, “It takes a long lead time to execute any policy, so at this point having a lot of uncertainty and policy volatility really works against helping us to move toward solving the problems of the country” (Rovner, NPR, 11/19).

Rolling Out the Reform Law

  • About 20 organizations recently met with HHS officials to discuss creating health care co-ops with funding from the federal health reform law. The overhaul includes $6 million to create co-ops and gives HHS the authority to distribute grants and loans for the organizations starting on July 1, 2013. John Jemison, a Texas-based entrepreneur at the meeting with HHS officials, said he aims to launch co-ops nationwide starting in spring 2011. A document outlining his plan — the Workers Cooperative National Association — requests about $3.5 million in HHS funding to establish a co-op. Jemison aims to first market to employers in Alabama, California and Texas, followed by Florida, Georgia and Tennessee (Reichard, CQ HealthBeat, 11/16).
  • The federal health reform law will provide $290 million to a loan repayment program through the National Health Service Corps. Under the program, primary care medical, dental and mental health workers can receive up to $60,000 to help pay back student loans they acquired if they work for two years in a medically underserved area. The rewards are higher than they have been in previous years, and the new program gives doctors the option of working half-time to fulfill the hourly requirement. It also will give them credit for teaching hours (CQ HealthBeat, 11/22).
  • Kentucky Insurance Commissioner Sharon Clark has ordered all health insurers operating in the state to offer an open enrollment period in January for Kentucky residents under age 19, effectively requiring them to offer child-only plans. Kentucky’s Public Protection Cabinet ordered Clark’s action after an Oct. 13 meeting to question insurers in the state about why they stopped offering child-only policies after Sept. 23, when the federal health reform law began requiring insurers to provide coverage to all children regardless of pre-existing medical conditions. After the hearing, the state insurance department ruled that insurers’ decision to stop offering child-only plans was a violation of state law (Truman, Lexington Herald-Leader, 11/18).

On the Hill

  • Senate Finance Committee Chair Max Baucus (D-Mont.) recently said the bill (S 3946) he introduced to repeal a tax-reporting requirement in the federal health reform will not offset nearly $19 billion that the mandate was designed to generate to pay for the overhaul over the next decade. The bill initially appeared to be slated as part of a package of year-end legislation during the lame-duck session, which would include a continuing resolution to fund the government and a delay to the Medicare physician payment cut. However, Baucus said the bill is “just straight up as is,” adding, “Just repeal [the reporting mandate]. Get rid of it. It’s not needed” (Ethridge, CQ Today, 11/16).
  • During the first congressional hearing since his appointment in July, CMS Administrator Donald Berwick told the Senate Finance Committee that the federal health reform law will improve Medicare and other health services. At the hearing, Berwick said provisions in the reform law strengthen funding for preventive services and provide CMS with opportunities to experiment with more efficient and coordinated care. He said, “When we raise the quality of care for Medicare beneficiaries, we raise the quality of care for everybody” (Stephenson, Reuters, 11/17).
  • On Wednesday, the Senate Commerce, Science and Transportation Committee is scheduled to hold a hearing on issues related to “mini-med” plans. In September, HHS granted waivers to 30 companies and groups, exempting them for one year from a provision in the federal health reform law that prohibits caps on health benefits. Wednesday’s hearing could examine large insurers that offer mini-med plans, such as Aetna and Cigna. Critics of mini-med plans say the coverage misleads consumers into thinking they have health insurance when such policies have numerous loopholes and pay little for hospital visits (Adamy, Wall Street Journal, 11/30).

ACOs in the Spotlight

  • New mergers between hospitals, clinics and physician groups seeking to garner incentives under the federal health reform law are coming under criticism from patient advocacy groups because they could reduce competition and drive up costs. Thomas Greaney, heath care and anti-trust law expert, said the development of such accountable care organizations could create an environment in which dominant providers and insurers exercise their market power together or separately. Critics also are concerned that ACOs could cause physicians and hospitals to control costs and abuse the system, since they could potentially hand-pick healthier patients (Pear, New York Times, 11/20).
  • Sutter Health, one of the leaders in the development of ACOs, is poised to become one of the largest health systems in California after opening its $618 million Mills-Peninsula Medical Center last week. While feedback from Sutter executives has been positive, analysts worry that not-for-profit hospital systems are exerting growing leverage in negotiating rates paid by insurers, employers and patients. Health Access California Executive Director Anthony Wright said, “As Sutter gets bigger, it can dictate higher prices and is less accountable for ensuring good quality because it has a lock on certain markets” (Rau, Kaiser Health News/NPR, 11/21).
  • Last week, the Medicare Payment Advisory Commission sent a letter to CMS suggesting that accountable care organizations could improve quality and lower costs in the Medicare fee-for-service program, but also noting that careful structuring will be necessary. The letter stated that ACOs could help Medicare beneficiaries “become more engaged with their care management, particularly if beneficiaries are informed when they are assigned to ACOs.” However, MedPAC also wrote that ACOs cannot just be given bonuses for meeting goals of controlling costs and improving quality. Instead, they must also pay some of the runoff costs if they go over their target budget, the letter stated (Reichard, CQ HealthBeat, 11/22).

Eye on the Industry

  • Health insurance lobby America’s Health Insurance Plans in 2009 donated $86.2 million to the U.S. Chamber of Commerce for efforts to oppose the federal health reform law, according to tax records and sources familiar with the situation. The amount exceeded AHIP’s 2008 budget and made up 40% of COC’s 2009 spending. According to Tom Collamore, spokesperson for COC, the money financed advertisements, polling and grassroots events dedicated to opposing the overhaul. COC officials said that it used the funding to “advance a market-based health care system and advocate for fundamental reform that would improve access to quality care while lowering costs” (Armstrong, Bloomberg, 11/17).
  • In related news, health sector political action committees largely supported Democrats in the midterm elections. According to the not-for-profit Center for Responsive Politics, 122 health-sector PACs gave $42 million this election cycle, 58% of which went to Democrats, while 41% went to Republicans. However, the spending seemingly was not wholly effective. A Kaiser Health News analysis found that of the top 20 health PACs giving money in the 94 most competitive House and Senate races, half of them supported lawmakers who lost (Vaida/Weaver, Kaiser Health News/Politico, 11/17).
  • Health insurers and lobbyists are encouraging state regulators to apply for adjustments to medical-loss ratio regulations under the federal health reform law. HHS spokesperson Jessica Santillo said, “While no states are exempt from the requirements and there are no waivers, states can ask for a temporary adjustment to the ratio if they can show there is a reasonable likelihood that market destabilization, and thus harm to consumers, will occur” if they obey the new MLR rules. HHS Secretary Kathleen Sebelius will have 30 days to respond to states’ requests for adjustments (Kliff, Politico, 11/30).

In Public Opinion

  • A majority of U.S. residents want Congress to keep or expand the new health care law, according to a recent McClatchy Newspapers-Marist poll. The poll, which involved 1,020 adults, found that 51% of registered voters want to preserve or expand the law, while 44% want it weakened or repealed. Meanwhile, the law’s least popular element is the mandate that all U.S. residents must obtain health insurance, with 65% of respondents calling it unconstitutional. The poll also showed that registered independents are evenly divided on support for the law (Thomma, Miami Herald, 11/23).
  • A majority of voters believe that members of Congress who campaigned against the federal health reform law should reject the medical insurance offered to them as federal employees, according to a poll released on Tuesday by Public Policy Polling. According to the poll, 53% of respondents said members who won the election due to their opposition of the reform law should turn down the insurance and one-third said they should accept the insurance (Epstein, Politico, 11/23).

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