HR 676 - The Good and the Bad - Part 5

Continued from Part 1, Part 2, Part 3, and Part 4.

"Non-profit health maintenance organizations that actually deliver care in their own facilities and employ clinicians on a salaried basis may participate in the program and receive global budgets or capitation payments as specified in section 202."
"Other health maintenance organizations, including those which principally contract to pay for services delivered by non-employees, shall be classified as insurance plans. Such organizations shall not be participating providers, and are subject to the regulations promulgated by reason of section 104(a) (relating to prohibition against duplicating coverage)."

Ugly
So, these sections serve to clarify how different HMOs will be treated. Non-profit HMOs that provide care will be treated as service providers that can qualify for reimbursement by the federal plan. Other HMOs will be treated as insurance plans.

This probably has to do with cost containment and standardization, making it easier to prevent outsourced and possibly for-profit doctors or clinics from indirectly charging the federal plan for services that would be harder to efficiently monitor. We're still on section 103, and have not gotten to the later sections that explain payment more thoroughly. On the face of it, this seems potentially unnecessarily restrictive, and may strong-arm doctors to become salaried or capitated employees of non-profits. I admit to an incomplete understanding of HR676's rationale for requiring salaried or capitated providers. I will explore different payment types and their consequences in the future.

"Patients shall have free choice of participating physicians and other clinicians, hospitals, and inpatient care facilities."

Good
Most hospitals will be participants from the beginning. Many more will make the transition. Most people who already have health insurance are already familiar with "in-network" versus "out-of-network" providers, so this idea will not be confusing. The difference will be that "in-network" with HR676 means most facilities throughout the whole country.

Freedom of choice will also put pressure on facilities to be more competitive with regard to quality. Since services will be free to people under HR676, service differentiation (covered services) will involve quality instead of price. Low quality providers will be less able to rope in clients by cutting deals with third-party payers.

Bad
I am at a loss.

HR 676 - The Good and the Bad - Part 3

Continued from Part 1and Part 2.

No institution may be a participating provider unless it is a public or not-for-profit institution.
Investor-owned providers of care opting to participate shall be required to convert to not-for-profit status.
The owners of such investor-owned providers shall be compensated for the actual appraised value of converted facilities used in the delivery of care.
There are authorized to be appropriated from the Treasury such sums as are necessary to compensate investor-owned providers as provided for under paragraph (3).
The conversion to a not-for-profit health care system shall take place over a 15-year period, through the sale of U.S. Treasury Bonds. Payment for conversions under paragraph (3) shall not be made for loss of business profits, but may be made only for costs associated with the conversion of real property and equipment.

Okay, this is a bit confusing, and not something that's been covered much in the media compared to the prior points. Fifty-nine percent of America’s non-federal hospitals are not-for-profit (Government Accountability Office (2008)). With a single-payer system, hospitals and other service providers will be practically forced to obey the requirements of that payer in order to stay in business. For-profit service providers will either shrink and offer only premium services at high cost to private payers (uncovered procedures or immediate procedures without waits), or they will have to make this conversion to not-for-profit status.

What do they have to convert? A common difference between for-profit (FP) and not-for-profit (NFP) hospitals is the presence of an emergency room (ER). ERs are expensive and tend to lose money, but are required for NFP status. The trade off is providing a lot of uncompensated emergency care instead of paying taxes. To work with HR 676, many FP hospitals would have to build ERs. The bill would have Treasury Bonds sold to pay for this construction, along with any other conversion costs, though I am not sure what else would be involved. They have 15 years to convert.

Good
NFP hospitals are generally more efficient than FP hospitals. It sounds like the government will pay FP investors for the conversions. 15 years is a fairly long amount of time for conversion. After transition, we will have a more efficient system overall that cares more about health care provision and less about profit.

Bad
Everyone who currently profits from their FP facilities is going to fight the bill. They will not be compensated for "lost profits". FP facilities and private insurance companies will suffer immediately as many of their customers switch insurance. NFP facilities may not be able to accommodate a sudden rise in customers. There will be a stormy transition in which we do see a temporary increase in wait times for people with the federal insurance, which the opposition will capitalize on in their complaints, and an increase in misinformation as providers and private insurance providers compete.