Editor: Is it a surprise to you that the Court failed to uphold the Patient Protection and Affordable Care Act (PPACA) on the basis of the Commerce Clause, the underpinning since the ‘30s for upholding broad federal powers?
Lieber: I think everyone was surprised. There are many ways to interpret the fact that it was upheld based on the taxing power of Congress. There are wiser minds sorting out the implications of how the Supreme Court chose to uphold the law. From a healthcare system standpoint, the fact that the law was upheld is the most critical result, and truthfully we’re relieved that there is more clarity on the law.
Editor: What benefits do you see proceeding from the Court’s decision?
Lieber: We have a national healthcare system that is not sustainable in terms of Medicare spending. The Affordable Care Act creates a roadmap to solving this cost issue. There’s interesting wisdom in the Affordable Care Act. Many previous attempts to reign in healthcare costs have been unsuccessful.
Healthcare is a very unusual economic model – taking standard economic models and applying them to healthcare does not work. The Affordable Care Act has several demonstration projects in order to try different models with the goal of improving quality and reducing expenses. Since healthcare is such an unusual model, it’s a wise policy decision to try these different approaches, to try accountable care organizations, to try bundling, to create centers for innovation, to try new ways of providing healthcare without locking in on one solution.
Unfortunately, that’s not the wisest political decision because the real benefits are down the road. In terms of how the Supreme Court arrived at its conclusions, that is less relevant, at least in the short run, than the fact the Court kept this roadmap. If the law had been overturned, it is likely that rates to all providers would have been drastically cut. This would have led to hospital closures and nursing home closures, as well as physicians declining to accept Medicare. The Act is very complex with a lot of moving parts that will need to be corrected over time. Everything has now stopped until the election because it has become such a partisan issue.
Editor: Have there been study groups or outside consultants working with either Overlook or Atlantic Health System, your parent company, to find ways to eliminate costs and improve care?
Lieber: We’ve been very proactive about trying to do things that prepare us for a future where there is limited Medicare funding and greater demand for quality care. Overlook has participated in a Medicare demonstration project called NJCIC, a 12-hospital demonstration project sponsored by the New Jersey Hospital Association. This project allows us to share the hospital’s Medicare payment with physicians who work with us to both improve quality of care and reduce costs.
Editor: Tell us about the background of this effort.
Lieber: The New Jersey Hospital Association worked with a consulting organization called AMS. While the demo project went through some revisions, it has been in effect for three years and has now been expanded to a series of gainsharing projects with different models. One is essentially the same model that will be available nationally. We are also going to participate in a slightly different model that includes total cost of care for 90 days for certain selected diagnoses – in our case, Overlook will participate in a bundled payment for knee and hip joint replacements.
The original demonstration project has been quite successful, with 100 physicians participating. We’ve been able to keep our costs essentially flat over the last three years by engaging our medical staff in managing patient care.
Editor: What other innovative programs have Overlook Medical Center and Atlantic Health System undertaken?
Lieber: Atlantic Health System has created a program called Leading the Way Home, where we have integrated all of our post-acute care services following an acute hospitalized stay. We coordinate the provision of the following services: nursing home visits, rehabilitation home visits, hospice, inpatient acute rehabilitation services, sub-acute rehabilitation services and durable medical equipment. We’ve tried to create a seamless connection for physicians and for patients to be able to access all of those services through a 1-800 number. Often patients can remain at home if all of this work is coordinated versus coming into the hospital, and this is a better approach that keeps them safer and more comfortable.
One provision in the Affordable Care Act provided for the creation of accountable care organizations. In April we launched two accountable care organizations: Atlantic Accountable Care Organization (AACO) and Optimus Healthcare Partners (Optimus). AACO has about 47,000 Medicare recipients and 1,200 participating physicians participating. Valley Health System is also an owner/member. Optimus, which was formed by a group of independent physician organizations that came together, is a second organization that we partner with. There are about 27,000 Medicare recipients and 550 physicians who are part of that accountable care organization.
We’ve been very proactive in trying to integrate healthcare in our very fragmented healthcare system. The Stark Law provisions (see §1877 of the Social Security Act Amendments of 1994) provide key guidance in our effort to separate the economic interests of physicians and hospitals, in particular, but also nursing homes and hospices. That separation has created challenges, particularly as patients transition from different care settings, and has produced disincentives to care coordination. Our gainsharing projects and the accountable care organizations are about trying to create more continuity of care between particular physicians and hospitals.
Editor: Will you have to inaugurate any new systems at the hospital or take on new personnel either currently or in 2014 when more provisions of the Act become effective?
Lieber: There are additional data reporting requirements, particularly around quality measures, which may or may not be part of PPACA, issuing from Centers for Medicare & Medicaid Services. The newest directive relates to value-based purchasing requiring healthcare systems to meet certain benchmarks or have funds withheld. Another sensitive area relates to readmissions relating to three diagnostic groups. If we don’t meet certain tests, Medicare can withhold funds. This is an area we have been focusing on for some time as a means of improving transitions of care as well as quality of care.
Editor: Have you needed to add more personnel for quality control?
Lieber: There are more people doing data collection. If we are focusing on a particular program, we add nurses to provide care coordination with the hope that we are reducing overall cost. Our wish is not to add full-time professionals, but rather reposition the work and, in the long term, reduce the overall cost of care.
Editor: How does the implementation of the Act affect overall costs at Overlook Medical Center?
Lieber: There are Medicare take-backs built in each year. Part of the calculus is that if more patients are insured, this should offset the take-backs, but the truth is that Medicare pays us less than it costs us to take care of a Medicare patient, and Medicaid pays even less. Those take-backs are starting to hurt.
Editor: A recent article in The New York Times indicated that in spite of the Florida governor’s announcement that Florida would not accept the extension of Medicaid, an option left open by the Court’s decision, there are many in Florida, such as the hospitals, that will resist turning down federal Medicaid dollars. How do you think New Jersey will react?
Lieber: New Jersey will be an interesting situation because there are real and substantial dollars associated with participating in the expansion of Medicaid and creation of healthcare exchanges, although less so in New Jersey than in some other states because we have had rather expansive Medicaid eligibility. Ultimately, there is potential increased funding from the federal government to move uninsured citizens to become insured citizens. It is in the state’s best interest to accept those federal dollars, even though the governor has stated that New Jersey would not participate in the Medicaid extension. A lot depends on what happens in the election in November, assuming that the law holds up under scrutiny on other counts. If New Jersey does participate, there is the likelihood that some patients who have been uninsured will move to Medicaid. The New Jersey Hospital Association has estimated that about 1.3 million people in New Jersey do not have insurance today and that with full implementation of PPACA that number would drop to about 800,000. It’s hard to know exactly how many of those 500,000 people live in the areas Atlantic Health System serves, but I suspect the shift would affect more patients in other areas. It will be interesting to see what conclusion the governor ultimately comes to on these complex issues.
Editor: How far along is New Jersey in setting up health insurance exchanges?
Lieber: Because of the governor’s opposition to the measure, New Jersey has not set up exchanges. In contrast, New York moved headfirst and has been working diligently in setting up exchanges, and I know other states, including Utah, have had exchanges for some time. The community is happy with having it because it has created accessibility to lower-cost insurance products for some of the individuals who had chosen not to buy insurance.
Editor: What are the increased “wellness incentives” under the Act? Does Overlook’s current wellness program provide a good example for other institutions?
Lieber: There are a couple of key components to the wellness program at Overlook. We touch about 40,000 community members every year through adult and student education programs and screening programs in about 26 communities. There is an Overlook Downtown program in Summit where we provide integrated medical services as well as training and education. We offer courses to adults and teens with overweight problems. In educating students in the schools in the area, we show them the workings of the heart with a giant, inflatable, walk-through heart. The Act also makes provisions for patient engagement, particularly in these accountable care organizations.
Editor: How much of the burden of paying for charity care will be removed now that all persons (with a few exceptions) will be required to obtain coverage under the exchanges or pay a fine? What percentage of the local population do you estimate will need government subsidy?
Lieber: In New Jersey, fewer than half of the people who are uninsured will become insured, so there will still be uninsured patients who require care. In Atlantic Health Care’s catchment area we provide about $50 million worth of charity care a year and only get reimbursed $4.5 million, so any shift of those patients from charity care will be helpful. However, we anticipate that we will still have a substantial charity care burden. That’s part of our mission.