Consumers Union expects healthcare reform will save billions of dollars

Healthcare reform will save billions of dollars, the Consumers Union said Wednesday.

The non-profit publisher of Consumer Reports highlighted provisions in the law aimed at reducing costly hospital readmissions and reducing Medicare and Medicaid payments to providers with high rates of medical harm.

"Millions of Americans are harmed every year by medical errors and healthcare acquired infections that are preventable," said Lisa McGiffert, director of Consumers Union's Safe Patient Project. "The new healthcare reform law will save lives and dollars by arming consumers with information about each hospital's patient safety record and leveraging federal healthcare dollars to give hospitals a stronger incentive to prevent needless suffering and deaths. More reforms are needed to protect patients from preventable medical harm, but the new law creates a solid foundation that will help to ensure that the healthcare we are paying for is safe."

The Institute of Medicine estimated in 1999 that as many as 98,000 Americans die each year from medical errors. The Centers for Disease Control and Prevention has since estimated that almost 100,000 Americans die from hospital-acquired infections alone. The CDC estimates that hospital-acquired infections add as much as $45 billion to hospital costs paid each year by taxpayers, insurers and consumers.

Consumers Union lists nine ways in which the new law aims to improve patient safety:

1. Paying hospitals for improving care, including reducing hospital-acquired infections: Hospitals currently are paid more under Medicare if they report how well they follow practices that improve the quality of patient care (for example, procedures shown to reduce the incidence of surgical infections).  Beginning in October 2012, non-rural acute care hospitals that meet or exceed performance standards established by the Department of Health and Human Services for at least five measures will receive higher Medicare payments from a pool of money collected from all hospitals. These measures must include certain hospital-acquired infections listed under a federal infection prevention action plan.
2. Reducing costly hospital readmissions: The new law requires HHS to calculate the actual and predicted readmission rates to hospitals for several different health conditions that are associated with a high number of readmissions or high costs (such as heart failure or pneumonia). Patients who develop hospital-acquired infections and other complications often have to be readmitted to the hospital for additional costly care. Starting in October 2012, hospitals with high readmission rates for patients with these conditions will have their Medicare payments reduced. In 2014, HHS must expand this policy to cover four additional health conditions. Each hospital's readmission track record for these conditions will be published. The Congressional Budget Office estimates that this provision will save $7 billion over the next 10 years.
3. Restricting Medicaid payments when hospitals harm patients: The federal government already restricts Medicare payments to hospitals for the extra care required to treat Medicare patients harmed by certain preventable infections and medical errors (for example, serious bed sores, catheter associated urinary tract infections and certain types of falls and trauma). The new law expands this policy to Medicaid so critical public funds will no longer pay hospitals when patients covered by Medicaid are harmed during their hospital stay.
4. Reducing Medicare payments to hospitals with high rates of medical harm: The new law requires HHS to track the hospital-acquired conditions occurring at each hospital. Beginning in October 2014, HHS will reduce Medicare payments by 1 percent for those hospitals with the highest rates of medical harm (the top quartile). The CBO estimated that this provision would save $1.4 billion over 10 years.
5. Reporting medical harm to the public: Beginning in October 2014, HHS will report on its Hospital Compare Web site each hospital's record for medical errors and infections covered by Medicare's policy of nonpayment for hospital-acquired conditions. This limited reporting will cover only Medicare patients with certain errors or infections for which the hospital was not paid.
6. Requiring insurers to emphasize quality care with hospitals and other providers: By 2012, insurers must include quality improvement efforts in their contracts with healthcare providers, including actions that help reduce hospital readmissions and improve safety using health information technology, evidence based medicine and other best practices. Each year, insurers must report progress on these efforts to HHS and to policyholders. Beginning in January 2015, insurers participating in the newly created health exchanges will be allowed to contract only with hospitals that have a comprehensive program to ensure safety and proper discharge of patients (excluding small hospitals). HHS is to develop quality requirements for other healthcare providers (like physicians) to meet in order to contract with qualified health plans. The health exchanges must develop a rating system for insurance plans based on quality and price and publish these.
7. Emphasizing comparative effectiveness research: The new law creates the Patient-Centered Outcomes Research Institute, administered through a private foundation, to conduct research on what drugs, medical devices, and medical procedures work best and most safely. The institute's comparative effectiveness research aims to help doctors and patients make better decisions, help reduce treatment implications and hospitalizations, and reduce spending on inappropriate and harmful treatments (HR 3590, Title VI, Subtitle D, Sec 6301, p.609).
8. Establishing a Center for Quality Improvement and Patient Safety: The center will support research, identify practices and disseminate information that will improve the quality and safety of healthcare delivery. In particular, the center will focus on identifying research-supported practices proven to prevent healthcare-acquired infections, including those caused by antibiotic resistant superbugs, improve ICU care and reduce preventable readmissions
9. Reporting gifts that medical device and pharmaceutical companies give to physicians and teaching hospitals: In March 2013, device and drug manufacturers must begin reporting details about gifts and payments over $10 to doctors and teaching hospitals.  After a healthcare provider receives more than $100 from a company in one year, all payments and gifts must be reported. In September 2013, this information will be published on a searchable public Web site with details about the gifts and payments.