From the editors
It was yet another year when the health care industry made more than its share of headlines. From the halls of the Supreme Court to the dusty roads of the presidential campaign trail—questions about health reform, debate over hospital mergers, and announcements of amazing clinical breakthroughs dominated the national news agenda.
In our annual review, the Daily Briefing team outlines the top 12 issues for hospitals in 2012.
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The Supreme Court upholds the Affordable Care Act
On June 28, the health care community—and most of the nation—waited with bated breath to hear the Supreme Court’s decision on the Affordable Care Act. Just after 10 a.m., the high court surprised many pundits when it announced its decision to uphold the law and its controversial individual mandate. The decision prompted hospitals nationwide to ramp up implementation efforts and preparations for upcoming changes to the health care industry.
But when Chief Justice John Roberts handed down the 5-4 decision, he significantly altered the law's planned Medicaid expansion: Each state would now have the option to refuse it without forfeiting all its federal Medicaid funding. So far, governors in nine states have said they will not participate in the expansion, while many remain undecided on the matter. -- Paige Hill
States chose their paths on health reform
As federal health reform moved forward in 2012, each state needed to make its own key choices on the Affordable Care Act, too.
First, the Supreme Court ruling on the law gave state lawmakers the choice to opt out of the law’s Medicaid expansion, and in the second half of 2012, nine governors did just that. Second, states were asked to select a health insurance exchange model. On decision day, 18 states and the District of Columbia chose to create their own exchanges, while 25 states opted to let the federal government run it for them.
Meanwhile, some states took different reform paths altogether. In Massachusetts, lawmakers passed first-of-its-kind legislation to control health care costs and build on the state’s landmark 2006 reform law. On the other side of the country, Oregon passed legislation to create coordinated care organizations for Medicaid patients, a model that the federal government pledged $1.9 billion to support. -- Juliette Mullin
With 2012 election, nation charts four-year path for health care
For most of 2012, voters in the United States were presented with a choice between two distinct visions for the nation’s health care system.
A second term for President Obama would likely guarantee full implementation of the Affordable Care Act, sustain the law's Medicaid expansion, and preserve Medicare's current structure. However, GOP challenger Mitt Romney promised that he would repeal the ACA, push for changes to Medicare's model, and introduce a block-grant system for Medicaid.
After months of campaigning and fiery debates over the future of health care, Americans on Nov. 6 voted to reelect President Obama, eliminating the possibility that the Affordable Care Act would be completely repealed and charting a four-year path for the U.S. health care system. -- Juliette Mullin
Health care employment continues to boom
Amid all of health care’s changes in 2012, there was one constant: Every month, the nation's jobs report announced that the industry had grown by thousands of employees. The health care sector continues to add staff at a faster pace than the rest of the economy, with 2012 shaping up to be an especially strong year. -- Dan Diamond
Goodbye fee for service? New payment models come online
In 2012, CMS launched the Affordable Care Act’s ACO program and designated 116 Medicare Shared-Savings ACOs to join its 32 Pioneer ACOs. Although some had expressed concern about the model’s ability to improve efficiency, a new study in Health Affairs this year found that a global payment pilot in Massachusetts—precursors to the ACA’s ACOs—cut costs by 3.3% within two years—a promising finding for proponents of the payment model.
Meanwhile, providers—and employers—nationwide embraced new payment models. For example, both Boeing and Wal-Mart launched bundled-payment agreements with hospitals like the Cleveland Clinic and the Mayo Clinic to provide certain services for its employees.
Also in 2012, CMS prepared to launch bundled-payment pilots, which will go online in 2013. -- Neeraj Hotchandani
Hospitals move forward with EHR adoption
The meaningful use program for electronic health records was created by the 2009 federal stimulus package, which meant it was protected from the legal uncertainty surrounding the 2010 Affordable Care Act. As a result, many hospitals and other providers moved without delay to adopt EHRs.
As of November 2012, the federal government had doled out $9.2 billion meaningful use dollars to 177,100 eligible health care providers and hospitals. Compliance is high, too, as about two-thirds of the 83% of hospitals that registered for the program have received incentive payments, according to federal officials.
In addition, e-prescribing—which research this year found can help cut prescription errors by as much as 60%—was on the rise in 2012 and now accounts for 35% of all prescription filled.
But, while EHRs made significant gains in 2012, costly challenges remain—specifically, upcoding and data breaches. For example, one study this year found that between EHR upcoding added $11 billion in physician Medicare fees from 2001 to 2010. -- Neeraj Hotchandani
Quality matters: Report cards and value-based pay
From new report cards to patient experience scores, hospital quality in 2012 came under the microscope—and, for the first time, facilities who did not meet certain benchmarks were expected to pay up.
In October, CMS began tying hospital Medicare reimbursements to performance on quality metrics, including patient experience scores. At the same time, the agency started penalizing hospitals for excess readmissions.
Meanwhile, public scrutiny of hospital quality increased. For the first time this year, The Leapfrog Group handed out hospital safety grades under a new scoring methodology, giving nearly 150 facilities "D" and "F" grades. -- Paige Hill
Revenue pressures on hospitals tighten
Revenue pressures on U.S. hospitals continued to tighten in 2012, as federal and state budgets grew more strained and commercial payers sought to reduce costs.
According to Fitch Ratings, hospital performance remained stable despite those pressures because of continued focus on operating efficiency, stable reimbursements, and modest rate increases for managed care.
However, the agency warns that 2013 may be the last year of stable performance for hospitals as they run out of ways to improve efficiency and cut costs. Similarly, Moody’s Investors Service has maintained a negative outlook for the not-for-profit health care sector amid growing uncertainty over Medicare and Medicaid funding levels in the aftermath of the Supreme Court ruling on the Affordable Care Act. -- Juliette Mullin
America gets older, sicker
As America's baby boomers grow older and live longer thanks to myriad medical advances, health experts say that common chronic conditions—including diabetes and heart disease—will steadily rise. About 80% of Medicare beneficiaries in 2008 had a chronic condition according to the American Hospital Association.
What do we have to look forward to if we don't change course? Experts say that nearly half of us will be obese by 2030 and, by 2050, one in four Americans will be 65 or older, causing health care costs to surge. -- Paige Hill
In clinical breakthroughs, a big year for genomics
This year saw major gains in various clinical technologies and treatments, including genome sequencing, regenerative medicine, and advanced prosthetic devices.
Genome sequencing technology was unavailable to consumers only a decade ago, but can now be performed within hours and at a price that is become increasingly consumer-friendly. Advances in sequencing recently have led to major discoveries and breakthroughs, including a study this year that identified four distinct types of breast cancer.
Meanwhile, Johns Hopkins scientists created an ear out of a patient's rib cage cartilage by incubating it in his forearm—one of several major breakthroughs for regenerative medicine.
One of the year's most amazing stories was the tale of Claire Lomas, a paralyzed woman who completed a marathon with the help of a bionic exoskeleton that she controlled simply by shifting her weight. Now, scientists are working to perfect prosthetic devices that operate through a brain interface. For example, engineers recently trained a quadriplegic woman to command a robotic arm with 92% accuracy using only her thoughts. -- Neeraj Hotchandani
More mergers, new alliances
At this point, it's not news when hospitals and physicians choose to align, but two trends stood out in 2012:
- First, the handful of hospital mega-mergers, such as the planned Baylor Scott & White super-system in Texas; and
- Second, the non-traditional partnerships between insurers, doctors, and even major industry players like DaVita, which teamed up in hopes of crafting new care delivery models.
And there's every expectation that 2013 will see a similar wave of alignment activity. -- Dan Diamond
New programs roll out as ACA implemented
A number of ACA-related provisions came online in 2012, with the Health Care Innovation Challenge among the law's ambitious efforts to transform payment and care delivery. Meanwhile, providers turned to grant programs like the Patient-Centered Outcomes Research Institute and the Partnership for Patients in hopes of winning new funds for research into quality and comparative effectiveness. -- Dan Diamond