KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Health Bills Include Proposals For New Physician Payment System

NPR explains the proposed changes to the physician payment system.

"The health care overhaul bills on Capitol Hill do not upend traditional 'fee for service' payment for doctors, but they do include financial incentives for doctors to cut medical costs and improve patient care. Both the House and Senate bills include provisions to encourage the creation of accountable care organizations, or ACOs, as a way to test their viability. The ACO project would be limited to Medicare." ACOs work by having primary care physicians, specialists and hospitals work together in the hopes that if "their financial fates were somehow connected, almost like business partners, you'd get better care and it wouldn't cost as much." NPR profiles the Redlands Family Practice in Redlands, Calif., a three-doctor practice that is a "reluctant poster child for ACOs" (Varney, 1/4).

Crain's Chicago Business reports on Illinois hospitals that are concerned that "deals to hold down the costs of reform and win final Senate passage don't favor Chicago-area hospitals, in particular, with their relatively high number of patients who lack insurance." The hospitals are generally pleased that the public option was dropped in the Senate version, but the bill "falls short of the House bill and the Obama administration's vision for covering the uninsured, the fundamental issue for Chicago hospitals."

Specifically, "[u]nder the assumption that health care reform will reduce the number of uninsured, the House and Senate bills clamp down on larger Medicare payments that have gone in the past to hospitals with an above-average number of beds filled by those who can't pay for their care, which helps Stroger Hospital and many of Chicago's other safety-net hospitals stay afloat. However, the Senate bill would cover only 94% of U.S. citizens by 2019, up from 85% now but millions fewer than the Obama administration or the House bill aim to cover. The net effect of lower Medicare payments and fewer people gaining coverage could reduce Illinois hospital revenues below expectations from an earlier White House health care reform proposal, setting up a final round of intense lobbying" (Merrion, 1/4).

The Dallas Morning News: In Texas, where there is also a high number of uninsured residents, hospitals have similar concerns. Texas Health Resources, Inc., the Dallas region's largest hospital company, is concerned that "current health bills in the House and Senate will insure 91 percent of the uninsured," which is 3 percent less than hospital administrators had pushed for. "Though the gap is only 3 percentage points, it is equivalent to 5 million uninsured people, and potentially millions of dollars in uncollected medical bills, [Barclay] Berdan [senior executive vice president at Texas Health] said. It also underscores one of Texas Health's challenges in pushing for reform in concert with hospital systems nationwide" (Roberson, 1/4).

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