The Once and Future Challenges of Implementing Health Reform

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We are rapidly approaching the halfway point between enactment and implementation of the most sweeping provisions of the Affordable Care Act. While many changes are already underway, the work ahead for the public and private sectors is both daunting and thrilling. It is also abundantly clear that this reformation remains essential. As demonstrated in the recently released report by the Commonwealth Fund Commission on a High Performance Health System, the current U.S. health system gets a barely passing grade of 64 percent on a series of rudimentary benchmarks, and in a number of critical areas, its performance has deteriorated since the previously released report card.

At the federal level, thousands of pages of regulations are at various stages of adoption. The recent changes to the accountable care organization (ACO) final rule are a reminder of how difficult it is to craft regulations to apply across the entire country with sufficient flexibility to allow for innovation, and enough rigor to protect the public purse and trust. Time will tell if the final balance on ACOs is the correct one, but clearly this will not be the last time regulatory changes will be needed. We can only hope that the U.S. Department of Health and Human Services (HHS) and the rest of the federal rule makers remain attentive to comments about unintended consequences.

Equally challenging is the difficulty federal agencies sometimes have in coordinating their efforts across silos. The Affordable Care Act places huge expectations on agencies and departments to act as one and to do so swiftly. Truth be told, I am surprised at how well managed that process has been, at least from an outsider's perspective, but there remain many difficult regulations and implementation steps to go.

The greatest federal-level challenge to reforming the delivery system, however, is the dysfunction in the political process, most evident in the inability to fundamentally address the deficit reduction imperative.

For states, the challenges are more immediate. Leaving aside the politics of health reform (which is a big ask), the work of implementation has largely been about time and money (there not being enough of either). Even in states where there is a desire to rethink how coverage can work—moving from a system focused on keeping people out to one that embraces a culture of insurance—it's a challenge to thoroughly redesign long-entrenched systems and processes. For many states, the eligibility infrastructure is antiquated and anything but patient or client friendly. The creation of insurance exchanges also require significant IT investment, and even if the funds are coming from the federal government, states are using procurement and personnel systems that they hadn't planned to need until later, particularly around large IT purchases. Exchanges also compel state agencies to work together with other public and private partners that they never knew existed, often with culture and language barriers (think Medicaid and economic development agencies).

This, of course, is all happening in a dismal state fiscal environment. Most states are caught between the four-way squeeze of balanced budget requirements, loss of enhanced Medicaid matching funds, increased enrollment because of the downturn, and limits on permissible approaches to find savings. Even those states that want to use the crisis to change the delivery system for Medicaid are finding it difficult to do so.

At the provider level, health reform is taking on a whole different meaning. Whether or not all the components of the Affordable Care Act are implemented, there are a range of forces that have been unleashed that are independent of what the Supreme Court or the electorate decide next year. Even if providers chose not to become Medicare ACOs, most understand that they must become far more accountable organizations. The landscape is shifting quickly as payment changes and delivery system reconfigurations alter the roles of the players and how they interact.

Despite all this, I remain optimistic. Never has the time been riper to advocate for re-forming our system. There is a creative energy that I am sensing about what is possible and a clearer understanding of where we need to go—among payers, providers, and policymakers.

The analogy I am most fond of these days is that of crossing a river. The Reform River is a raging torrent. Just as we are not likely to get across by leaping in a single bound, we cannot change these systems and incentives in one fell swoop. Nor are we able to dive in and swim across the river—rushing headlong into change without a plan or an appreciation of the risks. What we must do is find the rocks we can jump to in order to make our way to the other side. We need to identify the components that serve as stepping stones that will get us to a high performance health system one step at a time.

This post is a commentary on The Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey on Health Spending and Reform Implementation.

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