Effort to Eliminate Waste Coming Soon

It’s not that the Patient Protection and Affordable Care Act doesn’t contain any provisions aimed at reducing the cost of medical care – it’s that it doesn’t have enough of them. Still, what it has should be acknowledged. For example, Politico Pulse has reported that a unit of Health and Human Services will soon announce a package to incent providers to “disseminate effective practices and foster the spread of new knowledge on patient safety to the hospital community.” According to Spencer Health Strategists, who obtained a copy of a draft memorandum a few weeks back, the goal is to dramatically cut the estimated $50 billion spent each year on preventable hospital readmissions and hospital-acquired conditions.

The grants are designed to get private hospitals to improve patient safety and improve outcomes. Instead of developing new approaches or dictating specific practices, financial incentives will be to encourage hospital-generated innovations and to share best practices.  For example, the Innovation Center within the Centers for Medicare and Medicaid Services within HHS will support “states and large systems to developed networked learning project.” Those networks that achieve specified results will get additional resources to expand their efforts.

This focus on the private sector links the effort to improve safety and reduce readmissions underway within Medicare. According to the memo posted by Spencer Health Strategies, by 2013 six percent of hospital payments from Medicare to providers will be tied to public reporting of errors and the provision of safer, more reliable care ….” Over the next 10 years, $70 billion of Medicare hospital payments will be tied to hospitals’ “delivery of high quality care.” Medicaid will introduce similar provisions.

None of this is “official” yet, but based on the Politico Pulse report, it appears the Obama Administration will be launching this initiative soon. The potential of the program is to save billions of dollars and to do so relatively quickly. Even more significantly, the program could save thousands of lives. There’s a lot wrong with the PPACA, but this is an example of something that it gets right.

8 thoughts on “Effort to Eliminate Waste Coming Soon

  1. Interesting post!

    I actually think what would save us money in the health care law is if government would not try to get into all of these aspects of health care

    For the consumers, what would save money is not mandating the purchase of health insurance.

    Mark Cohen

    • For this consumer, what would save money is if the PPACA actually comes on line in 2014 in a form that is not too terribly far off from the Henry J. Kaiser Family Foundation’s health reform calculator projection of costs. http://healthreform.kff.org/subsidycalculator.aspx

      A bit of background: My health insurance premiums for a family of four in the individual market was just bumped up to $2014.50 per month. Each member of our family has a $500 deductible, then the insurer covers 80 percent of the next $4,500 in charges. Our out of pocket maximum is thus $1400 per person, or $7000, on top of the $24,174 a year in premiums. I am trying to hold onto our house till 2014 rolls around.

      At that point, I will be 61, at which point the calculator predicts “an unsubsidized health insurance premium” of $25,100 a year for the four of us. Assuming our gross adjusted income is fairly stable, we will need to pay $1982 per year in 2014, with a maximum out of pocket of $4167.

      This is for the “silver” plan–even cheaper “bronze” options will be available.

      Alan, how realistic do you think this calculator is?

      Am I correct in assuming that income is adjusted gross–i.e., after applying any business losses, taxes, etc.?

      Even if my current income were to double in the next three years, we would still be paying (in terms of premiums and out of pocket) less than half of what we are currently paying.

      Is this one of those “too good to be true” scenarios?

      If it’s not total pie-in-the-sky wishful thinking, why would brokers not be enthusiastic about this, especially those who want to help their customers in the individual market find affordable care?

      Even at nearly twice the median household income, it seems most older self-employed people, as well as those whose insurance is not subsidized by employers, will see a huge benefit from the PPACA.

      Isn’t this what brokers want?

    • Interesting article Curt. The especially enjoyed the quote from Gov. John Lynch, which states that hospitals use their “excess cash” to “spend it on advertising, trying to attract market share from each other, buying physician and laboratory practices across the state, and then increasing overhead charges to patients” instead of attempting to reduce health care costs for their patients. With insurance carriers required to meet the 80% medical loss ratio in an individual market as a result of PPACA, are there are minimums that the health care industry is required to meet?

    • Good grief – this makes the second article in such a short period of time from yet another left-leaning publication that I darn near had a seizure:

      http://www.latimes.com/business/la-fi-hospital-cost-20110306,0,1549848.story

      Imagine that: The rising costs of health insurance are directly related to the spiraling costs in healthcare services….go figure…

      Gee I can’t wait for the light bulb to go off over some genius politician’s head that perhaps PPACA didn’t do what it was supposed to do to deliver affordable health insurance to the masses.

      Wow two articles in the space of a week or so from two of the most far left publications I can think of that actually are willing to consider that the underlying issue here just may be healthcare costs themselves. I think I see a flicker of light from that light bulb….

    • Oh I always love the use of the anchor text signature. It makes my heart go pitta patter….

  2. This would be nice IF the government actually pocketed savings and worked towards eliminating our country’s crippling deficit and worked towards a consistently balanced budget. But as we all know that’s not how the story goes – in point of fact I’d be willing to bet that some enterprising budget analyst in the Obama admin is busy right now taking that “supposed” X number of billions in PROJECTED (**COUGH** COUGH** MAKE BELIEVE!!!**COUGH**COUGH**) savings and using it creatively to plug yet another hole in the dam.

    Alan if you believe we actually “save” anything anymore when it comes to Medicare I got a bridge to sell ‘ya. 🙂

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