Aside from being an extraordinarily messy compromise, the fiscal cliff bill passed by Congress this week offers a preview of what we can expect in the way of healthcare policy in the next year or so.
Both Democrats and Republicans are criticizing the bill as a stop-gap measure that just postpones tough decisions on spending cuts. That is certainly true, but the bill also begins to chip away at some of what is considered waste and inefficiency in our healthcare system.
Just as it does every year, Congress balked at Medicare physician pay cuts. But they did pass a bill that will cut billions from hospitals, pharmacies and dialysis clinics, in a way that actually adheres to the spirit of the Accountable Care Act, whose aim is not only to provide insurance for most of the uninsured, but also to cut out waste and streamline provider reimbursement. It's an oversimplification to say that Congress was being especially noble about healthcare in all this; the cuts were among the least distasteful they could pass at the 11th hour, and they?re not willing to deal with physician reimbursement yet.
But the bill does make some significant changes; one is reducing Medicare payments to hospitals by $10.5 billion over 10 years by requiring hospitals to more accurately document the severity of patients? illnesses. It also aims to save $4.9 billion by repricing end-stage renal disease payments, in response to a Government Accountability Office report that says the feds are overpaying for ESRD treatment.
In an effort to inject market forces into the diabetes test strip market, the bill calls for a competitive bidding process for diabetes strips bought at retail pharmacies (they currently run about $1 each, regardless of brand). That is expected to save $600 million.
Another big-ticket item is extending cuts in Medicaid payments to hospitals that serve large numbers of low-income people, estimated to save $4 billion in 2022.
The American Hospital Association, Federation of American Hospitals, and National Association of Public Hospitals and Health Systems are all critical of the bill, saying it will hamstring hospitals and hurt care. They can certainly make the argument that some hospitals ? especially safety-net ones ? run on thin or negative margins, but they will have a hard time defending the hospital wars that drive up costs or the lack of preventive care that results in unnecessary hospitalizations and emergency-room visits.
The fiscal cliff bill barely chips away at waste and inefficiency in the healthcare system, but it does make a start. Medicare and Medicaid account for more than 20 percent of federal spending. Hospitals, which for many years have made up about a third of healthcare costs (despite shorter hospital stays), should brace themselves for additional cuts as the fiscal cliff drama continues.
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