AdvaMed: Why and how healthcare reform will stick this time

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 - Changes

BOSTON—While U.S. healthcare has undergone major overhauls in the past, the changes will be more lasting this time because the Centers for Medicare & Medicaid Services (CMS) is uniquely engaged, explained David A. Gregory, MPA, executive vice president of healthcare management consulting firm Presscott Associates, during a presentation Oct. 2 at the 2012 AdvaMed conference in Boston.

Giving a breakdown of the U.S. health insurance environment of 305.2 million Americans, he demonstrated that private payers still have the majority stake:

  • Employer-sponsored insurance: 49 percent;
  • Medicare: 12 percent (Medicare Advantage falls under employer-sponsored insurance);
  • Medicaid: 17 percent;
  • Private non-group: 5 percent; and
  • Uninsured: 16 percent.

“While many organizations tend to think in a CMS-centric fashion, Medicare is only a small piece of the insurance pie,” said Gregory, who also noted that the Medicaid population is expected to grow and the insured population is expected to decrease under the Patient Protection and Affordable Care Act (PPACA).

“It’s still important to remember that private payers are very important in this process of change,” he added. “Certainly, the government can lead the way in terms of change—and they are—because their current business models are not sustainable.”

Looking from a historical perspective, he pointed out the cyclical process of healthcare reform, and said that new reform efforts should be considered in light of the past. For instance, PPACA of 2010 may be the new HMO Act of 1973; accountable care organizations may be the new physician-hospital organizations/independent practice associations/medical services organizations; evidence-based medicine is the new form of disease management; and finally, payment innovation is the new attempt at transferring risk in a mutually beneficial way.

“Despite all these efforts, we’re still in the business of treating sickness, as opposed to preventing sickness,” Gregory said. “We haven’t made a lot of progress.” While some providers are willing to accept risk, most are not, he added. 

Why do we think change can stick this time if previous attempts at reform have proven to be passing fads? Answering his own question, Gregory said, “The status quo is no longer an option, and prior efforts did not have CMS at the table in any serious way. This time around CMS is serious, regardless of the outcome of the presidential election. The train has left the station, and we cannot go back.”

However, he acknowledged that the initial efforts won’t be perfect and will require refinement.

He suggested some benefits to refining these processes may come from improved partnerships between industry and payers. He pointed out a few prohibitors to greater engagement between these two parties, including commonly held perceptions; for instance, that health plans see all new technology as iterative and cost additive and that medical device or diagnostic companies perceive health plans to care only about profits.

“We need to find a way to get past the adversarial nature of those relationships,” Gregory said. “Certainly, there will always be tension there, but there is also room for greater alignment." He also pointed to the similarities of the missions of medical device companies and payers, including a focus on improving patient outcomes and cost containment.

In his conclusion, Gregory pointed to successful partnerships of payers and industry, namely, between Aetna and Medtronic to address chronic heart failure and diabetes; Geisinger Health Plan and AMC Health, readmissions; and Aetna and HeartWare, heart failure.