Here are critical legislative initiatives needed for 2009 and forward

With the funding provisions of the bill signed by Obama on February 17, there are several areas that focus on healthcare provisions. Some of the money in the act provides funding for the Office of the National Coordinator of Health Information Technology’s office and are expected to be used to fiscally support healthcare information technology changes, especially related to development and expansion of electronic medical records (EMR). There are provisions in the funding to facilitate research at the National Institutes of Health and related efforts to drive individual electronic health records (EHR) and to facilitate health monitoring of individuals on an ambulatory basis.

To move these initiatives forward, significant efforts likely will be devoted to funding IT adoption with links to incentives similar to those used to foster use of e-prescribing provisions in recent legislation. In the midst of all this, systems must be linked, and supply costs for use of implants and other items must be captured, potentially by the use of tags from the U.S. Food and Drug Administration’s Unique Device Identifier (UDI) initiatives, and linked to reimbursement by CMS and insurers. Certainly, these are just the highlights of the critical and time sensitive issues that need to be addressed to meet the Obama Administration’s goals of healthcare reform. At the top of the list are pressing needs to expand healthcare coverage for underinsured and uninsured – a situation that has been exacerbated by the economic crisis and exploding unemployment rate. Of course, it is also noteworthy that Congress recently passed the extension of State Children’s Health Insurance Program (SCHIP or CHIP) providing for the needs of children. This $32.8-billion bill will provide coverage for an additional 4.1 million children for a total of about 11 million children. The bill is primarily funded by a 62-cent increase in the federal tax on cigarettes and proportional increases for other tobacco products. CHIP is only one step forward in meeting the objectives of the new administration.

Healthcare costs simply cannot be allowed to continue to grow at the current pace. Other initiatives that must be addressed include the Medicaid Payment Reductions targeted for April 1 and the Medicare Payment Reductions Act targeted for action by Jan. 1, 2010. Of course, both of these programs could impact payments to hospitals, skilled nursing and long term care facilities, home healthcare agencies, etc.

As with every new administration, the best time to chart a course for change is in the first year of office. This is certainly true for President Obama as 2010 will see a shift in focus to mid-term elections and the continuing thrust for economic reforms. The current national economic crises will no doubt be viewed as a difficult time to be successful with bringing change in the U.S. healthcare system. However, the current state of affairs and some of the funding included in The American Recovery and Reinvestment Act of 2009 provides drivers for healthcare reform with special emphasis on the needs of medically underserved as well as controlling spiraling healthcare costs.

There is no doubt that part of the thrust for healthcare reform will include some impacts and adjustments to payment and reimbursement methodologies. This is essential to reducing, or at least stabilizing, healthcare costs. This effort will be based in part on selective comparisons of benchmarked costs across integrated delivery network (IDN) members as well as regionally. It will also incorporate expansion of the EMR capabilities and is likely to include impacts on supply chain costs through analysis of evidence-based medicine and reduced reimbursement for hospital acquired infections (HAI).

Other impacts will include data mining for quality outcomes and pricing impacts, bundling of payments for selected patient care procedures and, of course, reduction for payments. Last but not least, the expected promulgation of the FDA’s UDI regulations will likely be linked to patient records and billing/reimbursement systems both to track items for possible recalls as well as to ensure healthcare dollars are spent in the most effective treatment for specific diagnoses.

It is a fact that the U.S. spends more in healthcare than other nations, and yet the overall health of our population is not as good whether compared from longevity, infant mortality, etc. According to CMS statistics as published by Time Magazine in its inaugural report on the nation’s health, in 2005 the U.S. spent 16 percent of our GDP in healthcare, equating to $7,028 spent per capita annually. In spite of these expenditures placing us in the top spot, we rank 34th in terms of life expectancy (77.9 years) and have the dubious distinction of "higher infant mortality rates" than many other developed nations at 29th in the world. As pointed out in this report, part of the problem is that the U.S. healthcare enterprise is directed toward treating illness, not preventing it.

In a recent and related article, Peter Orszag, Obama’s Director of the Office of Management and Budget, commented that much of the future growth in healthcare costs will be linked to Medicare and Medicaid spending. In his comments excerpted from his keynote address to the Kaufman Hall Financial Leadership Conference in October 2008, he notes that "healthcare contains the largest inefficiencies in our economy" and the evidence is that spending more does "not generate better health outcomes than the more efficient approaches." He goes on to stress the fiscal imperatives that make healthcare reform essential – not only for the health of our citizens but as a major key to ensuring our return to financial stability and future economic well-being. Simply stated, it is essential that we put in place the capabilities (informatics) to analyze the costs (procedures, supplies, technologies, etc.) and the outcomes achieved (quality of health, longevity, etc.) to drive reforms for enhancing quality of care and reducing healthcare costs. To foster rapid adoption, the informatics efforts must link incentives, collaboration in evaluating outcomes, and payment and reimbursement reforms.

During the campaign leading to his election, healthcare reform was third on President Obama’s list, after dealing with the economy and the financial crisis and energy. When Hillary Clinton tackled healthcare reform 15 years ago, there was a virtual firestorm of protest from healthcare insurers that derailed her and President Bill Clinton’s efforts. The protestations made tackling the issues "toxic" until now. In a related article in Time, James Carney identifies three factors as key to defusing the previous toxic nature of healthcare reform by creating a truce favoring reform action now, including: 1) the climbing number of uninsured/underinsured; 2) the continuing escalation of insurance premiums costs to employers and employees; and, 3) shifting public sentiments on the issues and acceptability of reform.

While President Obama has achieved early success in his legislative initiatives for economic recovery, there are still many issues that must be addressed in the months ahead. Legislative reform initiatives for healthcare will include implementation of EMR capabilities and these must provide links to supply technology use and billing/reimbursement systems. There will need to be incentives to adopt technology and drive economic impacts to reduce costs. Clearly the globalization of healthcare manufacturing linking manufacturers, distributors and providers will make standards efforts and the FDA’s UDI initiatives critical considerations for enhancements to today’s legacy supply chain information systems. And finally, education and elevation of supply chain professionals is essential due in part to continuing increase in supply and service costs now approaching 28 percent of total hospital expenditures.