The American Hospital Association (AHA), the national organization that represents nearly 5,000 hospitals and health care networks in America, as well as 40,000 individual members, has a clear vested interest in health care reform, as it could change everything from hospital administration to patient care delivery to profitability.
The AHA has expressed concern about some of the reforms included in the ACA, such as the Independent Payment Advisory Board (IPAB) and hospital readmissions penalties. The AHA has also called for a permanent fix for the Medicare physician payment formula, which was not included in the ACA.
Independent Payment Advisory Board (IPAB)
The Affordable Care Act (ACA) establishes an Independent Payment Advisory Board (IPAB), composed of 15 members appointed by the president and confirmed by the Senate, whose job will be to recommend savings in the Medicare program with fast-track congressional approval procedures. The IPAB’s recommendations with be binding—meaning that recommendations will quickly move to Congress for consideration; if Congress does not act in the required timeframe, the secretary is required to implement IPAB’s recommendations on a fast-track basis. This is one of the most contested creations of the ACA, as physicians and hospitals worry that it puts important payment and policy decisions in the hands of an independent and unelected body—essentially giving the IPAB too much authority. AHA President and CEO Richard Umbdenstock explained that the AHA opposes the IPAB because hospitals have already agreed to have $155 billion of future payments cut and redeployed to pay for coverage of more Americans. Therefore, it does not want to be subjected to an additional annual rate-cutting process by the IPAB. Thus, the AHA hopes to see a repeal of the IPAB in 2012, and is particularly concerned with the impact it will have on critical access hospitals.
Avoiding admission and reducing readmissions are some of the most effective ways to save on hospital expenses, according to the Physician Group Practice (PGP) Demonstration initiative. This initiative was developed in 2005 by the Centers for Medicare & Medicaid Services (CMS) and created a group of 10 provider organizations and physician networks to test shared savings. PGP Demonstration providers were incentivized to coordinate care delivered to Medicare patients. By year three of the program, five providers collectively received more than $25 million in bonuses as a share of $32 million in Medicare cost reductions.
Based on the results of this study, the ACA has instituted financial penalties for hospitals with “excessive” readmissions. The AHA acknowledges that reducing readmissions is important and notes that, “Hospitals are being very creative with strategies to address readmissions, such as sending social workers or nurses to patients’ homes, or providing scales to heart failure patients in their homes—all free of charge. Some hospitals have been advised by their lawyers that they cannot provide free services to patients who leave their hospital because it is viewed as an inducement to provide potentially unnecessary services.” Thus, the AHA has issues with the readmission penalty and seeks to fix the readmissions policy, which it deems to be “faulty.”
Lack of Fix for the Medicare Physician Payment Formula—the Sustainable Growth Rate (SGR)
The Sustainable Growth Rate (SGR) calculates the percentage reimbursement that Medicare providers receive, primarily based on the growth of the rest of the economy. In recent years, the growth rate of Medicare spending has consistently exceeded gross domestic product (GDP) growth; therefore, the SGR is consistently being reduced. In order to avoid dramatic reductions in physician reimbursement rates, Congress passes a “doc fix” at the end of each year and essentially stalls the cut. The American Hospital Association supports a permanent fix to Medicare physician payments; however, the group wants to make sure that goal is not achieved at the expense of hospital payments.
Why Was the American Hospital Association (AHA) So Interested in the Creation of the Affordable Care Act?
Which Provisions of the Affordable Care Act Does the American Hospital Association Support?
What Is the Sustainable Growth Rate (SGR) and How Does It Impact Physicians?
Why Are Hospitals Focused on Reducing Readmissions?
Why Is the Independent Payment Advisory Board (IPAB) So Controversial?