The health of healthcare

New Paltz Chamber of Commerce President Michael A. Smith. (photo by Lauren Thomas)

New Paltz Chamber of Commerce President Michael A. Smith. (photo by Lauren Thomas)

The movement toward implementation of the federal Affordable Care Act will continue in 2013 as one of the very biggest issues in American society. It’s going to be as big an issue in 2014, and in 2015 as well. And every year beyond that for perhaps a decade. So we might as well be prepared to deal with it.

Health insurers and most provider organizations are better prepared than they were a couple of years ago. The provisions of the federal legislation require them to come to terms with the subsidized healthcare benefit exchanges scheduled to go into business in every state of the nation less than a year from now.


Other deadlines are looming, too. The players are scrambling to participate in a variety of experiments, figuring out how most effectively to find their niche in cooperation with other healthcare organizations. Most if not all are also wrestling with the implementation of electronic health records and other tools of information technology.

By October 31 of this year, health insurers will be competing for New York customers in the state-run health benefit exchange. This is no small enterprise. New York, one of the most aggressive states in setting up its state-run health benefit exchange, is getting tens of millions of dollars in the form of federal grants to fund implementation.

According to the 2009 American Community Survey, some 121,000 of the medically uninsured in the seven counties of the mid-Hudson region (Westchester, Putnam, Rockland, Dutchess, Orange, Sullivan and Ulster counties) will gain coverage as a result of the ACA. With the state health benefit exchange in place, the uninsured in the region will decrease from 15 per cent to nine per cent of the population.

How’re we doing?

The national debate has finally changed. Just saying no to Obamacare no longer seems a viable solution for its opponents. “Just saying no and doing nothing in return is a recipe for disaster,” Forbes blogger Avik Roy (who also writes for National Review) advised a couple of months ago. “First of all, our healthcare entitlements continue to grow unabated, and solutions to this problem are even more urgent today than they were yesterday,” Roy wrote. “Second, the growing unaffordability of healthcare is one of the biggest challenges facing lower-and-middle-income Americans…The rising cost of health insurance is the reason that middle-class wages have been stagnant for a decade.”

With 15 per cent of Americans lacking health insurance and many more teetering on the edge of losing their coverage, voters with insecure health insurance are a huge political constituency. What Republican policies are directly targeted to this group? “If you are a voter who will get subsidized insurance under Obamacare in 2014,” Roy asked rhetorically, “will you vote for someone in 2016 who seeks to take those subsidies away without a better solution in their place?”

In recent weeks, the RAND Corporation, which had previously published a study predicting great healthcare savings, issued an assessment which made the network television news. Digital health records won’t create the kind of cost savings predicted in the earlier RAND study until the technology is far more widespread and is being used to its full potential, a pair of RAND researchers concluded. “We’ve not achieved the productivity and quality benefits that are unquestionably there for the taking,” said Dr. Arthur Kellermann, one of the recent study’s authors.

Late last month Brookings healthcare expert Henry J. Aaron wrote a piece warning that the political storms over healthcare reform were far from over. He claimed not to be the partisan of either the pessimistic or the optimistic view. “The major challenge will be to make sure that the system works in enough places and fast enough to permit supporters to point to the successes and explain that the inevitable glitches are reparable,” Aaron wrote. “It is also worth noting that were Congress not neck-deep in a swamp of partnership legislators could find ways to minimize the problems that remain.”

It helps to have a long view. Remember all the economic studies of the 1970 and 1980s that failed to find productivity improvements due to investments in computers and in information technology? Most economists have attributed the unexpected spurt in the nation’s productivity growth rate in the 1990s to the investment of the previous decades.

Assessing electronic records

Well, do electronic health records (EHRs) improve healthcare performance or don’t they? Several early large studies of the effect of electronic records on ambulatory care have been inconclusive.

A group of five researchers this past October published a thorough study of ambulatory practices in the Hudson Valley, comparing the performance for nine quality measures of 204 doctors using electronic records with that of 262 using paper systems. For five of the nine quality measures, they found a positive association between EHRs and ambulatory quality in a community-based setting. EHR use brought a higher quality of care.

Though evaluation of single studies is always difficult, this one was sufficiently rigorous that it was published in the Journal of General Internal Medicine.

Since the data was gathered, the proportion of Hudson Valley physicians to have adopted EHRs has increased to over 90 per cent.

Information technology

May 6 will be a big day for John Finch, chief information and community officer for HealthAlliance of the Hudson Valley (HAHV). It is the day he hopes to finish implementation of the McKesson computer software systems that will meet the first-stage “meaningful-use” standards of the federal government. July 1 is the actual deadline when the system “goes live.” Successful implementation of the new software will make HAHV eligible for $12 million in federal reimbursement, payable over the next four years.

“We’ll get support if we do it right,” said Finch.

The federal government has been spending tens of billions of dollars on the adoption of information technology by healthcare providers. Individual doctors were incentivized approximately $40,000 apiece to adopt information systems that could communicate electronic records to other providers (“interoperability”). The primary-care providers of the Hudson Valley have been among the most aggressive adopters of information technology under this legislation.

“People need to become aware,” said Kevin Dahill, president of the Suburban Hospital Alliance of New York State, a consortium of 51 not-for-profit and public hospitals on Long Island and in the Hudson Valley. “There’s massive transformation going on.”

Already wrestling with implementation deadlines, the hospitals are also struggling to build secure, accurate and up-to-date electronic health records that will share data among patients, payers and providers. These are tasks not accomplished in a day. It takes years of preparation to build an information system worthy of a high degree of public confidence. One horror story can be enough to undermine years of careful preparation.

The accurate sharing of critical information among healthcare providers is particularly important in so-called “transitions of care” such as a referral from a primary-care provider to a specialist or the discharge of a patient from a hospital. “Critical information is required for the next provider to appropriately care for the patient,” said Dr. Holly Miller, chief medical officer at MedAllies, a Fishkill-based organization specializing in the implementation of medical health records, “but today that doesn’t always happen.” Research shows, Miller added, that patients retain about half the information given them by healthcare providers.

Early on, MedAllies has been involved with other providers and payers in building two of the foundation stones needed to safeguard and transmit medical records. John Finch said HAHV has participated in both.

The Connect project is a state-led effort to assure the electronic communication of secure records. The Direct project defines protocols for sharing health information; in 2010, the Hudson Valley became one of seven pilot sites in the country chosen to demonstrate the use of Direct standards within health information exchanges.

Building a more closely integrated system out of a series of disconnected, fragmented parts, like the American health system is struggling to do, will take a very long time. There unfortunately is no magic wand that will allow the work to go faster. The evolution of a series of tools over considerable time will eventually provide a more precise common language for American healthcare.

Medicare reimbursement

Medicare last month took a shot across the bow of America’s hospitals. It disclosed that it was giving bonuses and penalties of almost a billion dollars tied to the quality of care provided to hospital patients. The payments, which began this month, mark the federal government’s most extensive effort to hold hospitals financially accountable for what happens to patients. Medicare said it was rewarding 1557 hospitals with more money and reducing payments to 1427 others.

The assessment used two vastly different quality standards. One dealt with whether hospitals utilized value-based purchasing strategies. The other was based on the ratio of hospital readmissions.

The federal program will expand each year for at least the next four years.

The payment change was created by the federal health law.

Some states fared well. Others, like New York State, came out the worst.

Harold Miller, a healthcare expert in Pittsburgh, doubted the money would be enough to change the way hospitals function. “It’s better than nothing, but it’s not what is necessary,” Miller said. “It doesn’t fix the underlying problem, which is fee for service.”

One local hospital, Northern Dutchess, received a bonus of 0.09 per cent. The other results, in descending order, were Benedictine Hospital (-0.27 per cent), Columbia Memorial (-0.37), St. Francis (-0.46 per cent), Vassar Brothers (-0.92 per cent), Saint Luke’s Cornwall (-1.02 per cent), Kingston Hospital (-1.22 per cent), and Orange Regional Medical Center (-1.27 per cent).


Some local hospital administrators claimed that differences in coding practices and in patient load accounted for many of the discrepancies in performance among hospitals and among states.

Health benefit exchange

Michael A. Smith, president of the New Paltz Area Chamber of Commerce, is a certified healthcare compliance professional and a member of the governor’s recently established regional advisory committee for the Mid-Hudson, Capital and Northern New York region of the state health benefit exchange recently provisionally approved by the federal government.

Smith takes a business perspective. He quotes governor Andrew Cuomo in espousing the goal of health exchanges bringing true competition to the healthcare market, driving down costs by organizing a competitive marketplace in which consumers will shop for coverage by comparing choices on benefits, prices, service quality and costs.

Smith last month submitted a short article identifying the state’s healthcare benefit exchange as the key vehicle for ACA implementation. He also recommended a governmental website (

Here’s Smith synopsis of what he sees as the highlights of the exchange structure in New York State:

Serve as a facilitator to enroll the purchase and sale of qualified healthcare plans to small businesses and individuals and enable them to receive tax credits and cost-sharing subsidies.

Small businesses with less than 25 full-time employees may be eligible to receive tax credits for those having average annual wages below $50,000 and pay half the cost of their healthcare coverage.

Small businesses will have the choice to purchase insurance through the Small Business Health Option Program (SHOP) Exchange or continue to buy insurance through the marketplace.

NYS will have the option to define small businesses either as one to 50 employees or one to 100 full-time employees.

In 2016, all businesses having 100 or more full-time employees can buy insurance through the SHOP Exchange.

Businesses having 50 or less full-time employees will be exempt from penalties; those with 51 or more full-time workers, excluding the first 30, will face fines of $2000 per employees if no healthcare insurance coverage is offered for those averaging 30 or more hours per week as of 2014.

A user fee of 3.5% will be added to premiums, through the exchange, for administrative costs.

A non-deductible 40% excise tax will be imposed to employers who offer high value or premium health benefit plans that cost more than $10,200 for single or $27,500 for family.

Individuals pay 2.9% Medicare tax on their wages will have another 3.8% added on investment income, including profits from home sales, for individuals making more than $200,000 or married couples above $250,000. An added Medicare payroll tax of 0.9% on wage income above these same thresholds, starting this January.

Health insurers will be paying an annual fee to offset a portion of the cost to the insurance plan premium subsidies and tax credits starting in 2014.

Exchanges need to be financially self-sustaining by January 1, 2015.

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