Hospitals Largely Unaffected by PPACA Ruling, Will Continue With Medicare Reforms

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By Nathaniel Weixel  

The U.S. Supreme Court's ruling June 28 that upheld the Patient Protection and Affordable Care Act largely had no impact on Medicare, experts and industry stakeholders told BNA (NFIB v. Sebelius, U.S., No. 11-393, 6/28/12).

As a result, hospitals will continue moving forward with delivery system reforms like accountable care organizations and bundled payments, and PPACA-created entities like the Center for Medicare & Medicaid Innovation (CMMI) will continue to function as designed.

“The ruling means that there's zero impact on Medicare. It's like the case never happened,” John Gorman, founder and chairman of Washington-based Gorman Health Group, said in statement. “This removes a lot of uncertainty for the industry.”

Joseph Piemont, president and chief operating officer of Carolinas HealthCare System in Charlotte, told BNA that hospitals will “continue to look for innovative and transformative ways to deliver care.”

Implementation of the Medicare Shared Savings Program's (MSSP) ACOs will continue to go forward, Piemont said. Delivery reforms like ACOs and hospital value-based purchasing “were meant to provoke change, rather than mandate it,” Piemont said. “Industry needs to lead the transformation.”

American Hospital Association President and Chief Executive Officer Richard Umbdenstock told reporters during a June 28 conference call that the decision “means that hospitals now have much-needed clarity to continue on their path toward transformation.”


“This removes a lot of uncertainty for the industry.”  


--John Gorman, Gorman Health Group

No More Hesitation.

Organizations interested in forming ACOs have cited barriers to participation, including that Medicare ACOs involve too much financial risk for providers with not enough return on investment and the uncertainty of what would happen to the ACO program if PPACA was overturned.

Non-binding letters of intent for organizations that wish to participate in the MSSP ACO program in 2013 are due by June 30.

However, now that the Supreme Court has upheld PPACA, organizations may be more willing to participate. Brian Ewert, president and chief executive officer of the Marshfield Clinic in Wisconsin, told BNA that the decision “adds stability” for organizations like Marshfield that may have been on the fence about forming an ACO.

Ewert said there are still ongoing internal discussions about whether to become an ACO. The clinic is still participating in the Physician Group Practice (PGP) Transition demonstration project, a two-year program that follows up the clinic's success in the original PGP demonstration. The PGP demonstration ended in 2011.

Forming an ACO requires a “large commitment of resources and people,” Ewert said. “It's good to know the ACO model will still be there, because that makes it financially feasible.” The payment incentives will not be going away.

According to Piemont, even though the Medicare reforms “seemed to be a smaller part” of PPACA, they “nudged everyone in the right direction” towards value and population-based care.

The advantage of ACOs and demonstrations like bundled payments are known to providers. The clarity the ruling provided can let hospitals and physicians focus on the business of preparing for what comes next, Piemont said.

The Centers for Medicare & Medicaid Services was beginning to move slowly away from traditional fee-for-service (FFS) Medicare even without PPACA, and ACO participants can be innovators at lowering costs through a new delivery system. Those who feel the risk is worth the rewards have signed up to participate in the first wave of the program.

CMS in April announced it had selected 27 accountable care organizations to participate in the first wave of the MSSP (23 MCR 413, 4/13/12). Participation in the program began April 1.

What Comes Next.

Carly Kelly, a director at Avalere Health's reform practice, also spoke to the stability the ruling gives to providers. She said programs like CMMI “can confidently move forward.”

Kelly told BNA that the CMMI will now be much more free to focus on transforming the health care delivery system without the threat of losing funding. “More providers will be exploring” what the innovation center can offer, she said.

However, the political spotlight on the innovation center “will be brighter,” she said, as lawmakers challenge almost every aspect of its spending.

For example, Rep. Charles Boustany Jr. (R-La.), chairman of the House Ways and Means Subcommittee on Oversight, recently said he was concerned about a lack of transparency in the CMMI's grant program that recently awarded nearly $123 million to organizations with the intent of improving the quality of care (23 MCR 668, 6/15/12).

Kelly also said providers should shift their focus to the possible sequestration--cuts in programs--that could take effect in January 2013, as well as the payment cuts that could happen in 2013 as a result of the Medicare sustainable growth rate physician payment formula.

By Nathaniel Weixel  

The Supreme Court's opinion is at

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