5 Rings of Healthcare Reform

Congressional Legislation, Presidential executive orders, and State-level actions, will come and go as we reshape the U.S. healthcare system. At the core of this transformation are five initiatives that are massively reforming the healthcare system. We refer to these initiatives as The 5 Rings of Healthcare Reform. If your team can grasp these programs and the impact they will have on the delivery of healthcare in the USA, your organization will understand the core of this massive transformation and how to best leverage reform for survival and growth.

The 5 Rings interlock to form a system that is poised to become a much more efficient and effective healthcare network, and inch closer and closer to a single payer system, at some point in the future. It’s a very long and arduous road as the state of Vermont can well attest. As a trailblazer, Vermont is working out the painful kinks of a single payer system.

Meantime, the process moves forward nationally with reimbursement changes at the Centers of Medicare and Medicaid (CMS). Like reform itself, reimbursement changes are simple in essence but extremely complex to implement.

In a series of upcoming posts, we’ll highlight the 5 main reform initiatives and how they affect the business of healthcare. Here’s a summary of each.

RING ONE: CMS Value-based Purchasing.

Value-based purchasing is designed to re-shape the behaviors of US Medicare providers. Hundreds of millions of dollars are at stake. Healthcare providers, especially hospitals, have been overhauling their systems to deliver cost-effective patient care else they lose a piece of the lucrative pie. Ultimately, the new standards will eliminate sub-par providers. Read more about how to succeed in a value vs. volume purchasing paradigm.

RING TWO: Readmission Rates.

CMS seeks a decrease in readmission rates for Medicare patients. They evaluate hospitals for the percentage of some patients being readmitted within 30 days for the same or related condition. Hospitals with higher than average readmission rates are penalized and their Medicare reimbursement rates are reduced. Current solutions include sending nurses to patient homes after discharge to ensure that aftercare is followed by the patient as prescribed.

RING THREE: IT Solutions and Electronic Medical Records (EMR)

The electronic medical records mandate requires that eligible providers who fail to adopt and demonstrate meaningful use of EHR technology by 2015 will have Medicare reimbursements reduced. Fee schedule reductions start at 1 percent in 2015; 2 percent in 2016 and 3 percent in 2017.

RING FOUR: Bundled Payments and Episodes of Care.

Episode of Care refers to services required to manage a specific medical condition of a patient over a defined period of time. Bundled payment is not a new concept but it is broader that previous concepts and creates new challenges for providers and suppliers.

RING FIVE: Accountable Care Organizations (ACOs).

ACOs are groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high quality care to a population of patients assigned to them. Successful ACOs will depend on clinical excellence while controlling costs at the same time. Suppliers who can help providers achieve efficiencies will thrive.

The 5 Rings contain the core initiatives of healthcare reform that all businesses will need to understand to thrive. We’ll explain more about each ring – what it is and how you can leverage it – in upcoming posts. Stay tuned.

By Gunter Wessels