≡ Menu

Health Care Reform 2009: How the House bill controls costs

House leaders

Before we started reading the House health care bill (HR 3200), our plan for this post was to try and explain each of its cost-saving proposals, one by one.  But 1017 pages later, we’ve come to the conclusion that this was basically impossible.  Apparently, Congress decided to include every health care reform suggestion ever made in the past ten years (aside from those who would scrap the current system entirely), which is well… a lot of stuff.  So instead of examining every cost saving measure in the bill, we’re going to skip over some of the smaller stuff (the part changing the upfront payment option for certain types of motorized wheelchairs under Medicare for instance) and provide a brief, brief, brief overview of the most important money saving ideas in the bill. (Did we mention that it would be brief?): 

Reducing Medicare Payments to Certain Health Care Providers
There are a few ways the bill will reduce payments to the providers of certain types of health care services, although it’s buried under some technical language:

  • Market Basket Updates: This sounds complicated, but it’s really not that bad.  Medicare automatically increases the amount it pays hospitals, nursing facilities, etc. every year by a certain percentage to account for inflation.  The House bill would reduce or eliminate that automatic increase for hospitals, psychiatric hospitals, skilled nursing facilities, and home health agencies.
  • Potentially Misvalued Codes: This one makes way more sense if you replace the word “code” with “services.”  This part of the bill would give the Secretary of Health and Human Services the authority to review how much Medicare pays for certain services to determine if it’s overpaying or underpaying for those services.  So if, for example, some new technology came out that made x-rays way cheaper, the HHS Secretary could review how much Medicare is paying for x-rays to make sure it’s not getting overcharged.
  • Reducing payments for potentially avoidable hospital readmissions: Sometimes after a hospital releases a patient, mistakes, infections, or complications might require the patient to be readmitted. These things are bound to happen occassionally, but right now it’s out of control- 1 in 5 Medicare patients ends up back in the hospital within a month of being discharged, costing billions of dollars a year. Many of these readmissions are avoidable, but hospitals that have to readmit patients actually get paid more money than hospitals that do it right the first time.  Bad hospitals get paid to treat both the original sickness AND the complications.
  • If this provision is passed, hospitals with an excessive amount of readmissions will get their Medicare payments reduced.
  • Hospitals would also have to report health care-associated infections to the Centers for Disease Control and Prevention.  Consumers would be able to see which hospitals have the highest rates of infections after treatment.  This would also hopefully encourage hospitals to take steps to reduce avoidable complications.

Simplifying Health Insurance Administration

Right now, health care providers spend a ton of time and money trying to figure out whether or not patients are covered for a specific service with a specific physician at a specific facility.  Matt Taibbi explains:

There are currently more than 1,300 private insurers in this country, forcing doctors to fill out different forms and follow different reimbursement procedures for each and every one. This drowns medical facilities in idiotic paperwork and jacks up prices: Nearly a third of all health care costs in America are associated with wasteful administration. Fully $350 billion a year could be saved on paperwork alone if the U.S. went to a single-payer system — more than enough to pay for the whole goddamned thing, if anyone had the balls to stand up and say so.

The House bill doesn’t make administration as easy as a single payer system, but it should help some, by including:

National Standards:  Insurance companies would still have their own forms and reimbursement rules, but there would at least be national standards for them. Which means that hopefully, staff at hospitals and doctors’ offices won’t have to spend hours on the phone with insurance companies trying to figure out how to complete their forms.

Electronic proof of coverage: Doctors and hospitals should be able to electronically find out almost instantly whether or not you’re covered, saving a ton of money and time on administrative paperwork.  Also, there’s a provision allowing for electronics funds transfers- meaning that hospitals and doctors could get paid by insurance companies almost instantly.  (This DOES NOT mean that the government will be able to take money out of your bank account– that was a rumor started by anti-reform groups.)

No Surprise Bills: These proposals would save money in administrative costs, AND they would mean that you wouldn’t have to worry about getting a surprise bill from your doctor a month later saying you have to pay more because the insurance company denied your claim.

While all of this sounds great, the bill doesn’t lay out exactly how to implement them- and the details are important.

Reducing Medicaid DSH Payments
Hospitals that serve an unusually high number of low income patients now receive extra Medicaid payments- called Disproportionate Share Hospital (DSH) payments- to cover the cost of unpaid medical bills from patients that can’t afford them.  This bill assumes that because of health care reform few people will be uninsured, so many of these extra payments will be unnecessary.

Comparative Effectiveness Research
Comparative effectiveness simply means comparing two or more treatments for a given disease or condition.  This type of research could save vast amounts of money- according to the Congressional Budget Office, roughly $700 billion each year goes to health-care spending that can’t be shown to lead to better health outcomes.

This bill would create a Center for Comparative Effectiveness Research, which would figure out which procedures are the most effective and cost the least.  Research would be carried out by public and private organizations approved by the Center and made available to clinicians, patients, and the public.

To be continued…. Ok, I know this is getting kind of long.  We promised brief (although, really, compared to the 700 pages of cost cutting legal language in the bill, this post is nothing) so we’ll finish up with the House bill next time.

{ 0 comments… add one }

Leave a Comment