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Health law’s hidden agenda is cost control

Critics of the Affordable Care Act have focused on the “individual mandate” to buy health coverage. But industry leaders say the most far-reaching and incendiary part of the health law could be its shift in the way Americans pay for health care.

Rewarding value – good outcomes, cost-effective practices – is likely to have the most potential long-term impact, say experts meeting in Orlando this week.

Digital technology will make it possible to track performance and report it to both the payers and the public.  Woe be unto those health-care providers who do either too little or too much—their pay will get dinged.

“This is a revolution, not reform,” consultant Michael Millenson said at Tuesday’s opening of the 2012 Florida Health Care Symposium.  “This is a complicated future, not an easy one. But it is better for all of us – patients, payers and for our country.”

Because it involves a shift of power and money away from specialists and toward primary-care groups, it will generate a huge backlash and lobbying effort. But those entrenched interests will run into an equally powerful force: the desperate need to cut health-care spending.

"There's only one group bigger and more powerful than the health-care industry," said consultant Brian Klepper of Atlantic Beach. "That's everybody who's not in the health-care industry."

'This is hard stuff'

Graphs tell the story: Health inflation has eaten up all of the increase in worker compensation for the past decade. The percentage of employers dropping coverage keeps growing. Health spending in the U.S., now about $2.5 trillion a year, runs far above the per-capita spending of other industrialized countries, yet the World Health Organization shows the morbidity and mortality results as mediocre.

(Editor's note: The $2.5 million spending estimate was released on Thursday in a brief by the National Institute for Health Care Management. This article originally listed a lower figure.)

 Infant mortality is particularly bad, with the U.S. coming in 49th, said Lillian Rivera, director of the Miami-Dade Health Department. "Other countries have invested in primary care and prevention. We have not."

Speaker after speaker reiterated the situation: If health-care spending remains on its current track, soon it will gobble up everything else. Meanwhile, estimates of waste in the system run 30 to 40 percent.

An antidote promoted by the health law is the “Accountable Care Organization,” which is given responsibility for a group of patients and a budget to manage their health-care needs. The outcomes are tracked, and if they’re good, the organization prospers.

While that may sound a lot like the managed care of the 1980s and ‘90s, the ACO would be governed by hospital-and-doctor groups, not insurers. At the clinic level, primary-care doctors would call the shots, working in teams with other health professionals.

If it works the way it’s envisioned, there will be empty hospital beds, since the ACO will find it more profitable to treat patients in the clinic and at home. Power will shift to primary-care doctors, while many specialists could find less demand for their services.

“This is going to be challenging,” said Barbara Gray, vice president of the consulting firm Premier, which is helping about 200 hospital and doctor groups to form ACOs. “It will take leadership. This is hard stuff. We are turning the business model on its head.”

'Straddling two paradigms'

While many groups in Florida have been talking about forming ACOs, most haven’t yet applied, and only two have received certification from federal health officials. There are a couple of reasons for the delays, Gray said.

The first set of regulations that emerged from the Centers for Medicare and Medicaid Services didn’t offer enough rewards to  make the effort worthwhile, she said.

When CMS rewrote the rules, interest perked up. But now it will take time for hospitals and doctor groups to restructure their contracts with insurers and employers so that everyone is marching in the same direction.

Gray called it “straddling two different paradigms” to have some fee-for-service contracts and others that reward savings.

“They have to move in step-wise fashion, wait until they have the contracts in place,” she said.

There’s also the question of what happens to ACOs if the Supreme Court throws out the law that set them up.

Florida and more than two dozen other states have appealed the Affordable Care Act, saying its individual mandate and expansion of Medicaid are unconstitutional. The court heard arguments in March and is expected to rule next month.

Even if the law is thrown out in its entirety, taking ACOs down the drain with it, something will have to replace them, the speakers said.

“Health care costs have become so egregious, so out-of-control, that they’re driving everything,” Klepper said.  “If you don’t think (change will) happen, you’re seriously deluded.”

The symposium this week at the J.W. Marriott in Orlando is sponsored by the Florida Sterling Council, a non-profit corporation formed in 1992 to promote excellence in both public and private sectors.

The organization honors outstanding performance each year. This year’s recipients of the Sterling Award are Florida Hospital Memorial Medical Center in Daytona Beach and the Miami-Dade County Health Department.

Other recent winners in the health care sector include Florida Hospital-Orlando, James A. Haley Veterans’ Hospital and Clinics in Tampa, South Miami Hospital, Shands Jacksonville Medical Center and St. Johns County Health Department in St. Augustine.

--Health News Florida is an independent online publication dedicated to journalism in the public interest. Editor Carol Gentry can be reached at 727-410-3266 or by e-mail at


Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.