5 Stories That Changed Acute Care Forever in 2013

Ellis Weeker , MD, FACEP

Published December 21, 2013

Everyone expected 2013 would be a year of unparalleled change for healthcare, and it certainly hasn't let us down. But as usual, some of the most important stories didn't make the headlines. Or if they did, journalists didn't necessary grasp the full implications.

It's too bad, because, these unsung regulatory decisions, business transactions and ballot initiatives might have a huge impact healthcare in the future. In no particular order, here are five acute care stories of 2013 whose impact will likely be felt for years to come:

1. Proposed collapse of ED facility level E/M codes

"Upcoding" has become a dirty word. In 2012, a Center for Public Integrity probe lambasted hospitals for "grabbing at least $1 billion in extra fees for emergency room visits." Presumably, EDs accomplished this by exploiting certain loopholes in Medicare's payment system that let them legally code non-emergent visits at the highest acuity levels.

"They are learning to play the game."

— Donald Berwick, former administrator of the Centers for Medicare & Medicaid Services, quoted in the Center for Public Integrity report

In August, CMS fought back. Citing a need for administrative simplification, it proposed collapsing the five emergency visit levels into a single level. EDs would now receive a flat reimbursement for every patient encounter, from an earache to a stroke.

After receiving public comments, CMS opted to delay its decision. However, the potentially drastic implications make this proposal one to watch in 2014. A shift to flat rates would likely have a negative impact on the financial viability of many EDs, especially those serving a higher-acuity patient mix. Level I trauma centers and academic institutions, which tend to handle more serious cases, would be particularly vulnerable.

An interesting aside: coding expert Jim Strafford makes a compelling case that rather than upcoding, EDs are actually regulating their acuity levels toward the mean.

2. Lawyers take a swing at California's medical tort reform statute.

Trial lawyers in California have been on a decades-long crusade to raise MICRA's $250,000 cap on noneconomic damages to a cool million or so — and thereby make malpractice suits profitable once again. After years of being rebuffed by the lawmakers and courts, they're taking their crusade directly to voters in the form of a ballot initiative.

The lawyers' groups failed to garner enough signatures this year, but they say they will redouble their efforts in 2014.

The battle over MICRA has stirred up an interesting debate on whether victims' rights should take precedence over access to medical care. Certainly it's a difficult dynamic to resolve. No other country (except perhaps Canada) shares our American obsession for malpractice suits.

But what lawyers aren't telling consumers is that raising the damage cap would likely reduce healthcare access — especially for the growing Medicaid population. A blow to MICRA could have serious consequences for the underserved in California and could spark similar challenges to medical tort reform laws across the country.

**3. Time expose drives demand for increased transparency.**

On March 4, journalist Steven Brill's "Bitter Pill" hit the newsstands — and "chargemaster" became a household word. For the first time, consumers learned why some hospitals bill insurance companies $12 per cotton ball — and why the current payment system hits the uninsured hardest.

In response to Time's expose, the US government released a mountain of Medicare data highlighting the variability of hospital pricing.

"Bitter Pill" changed the way patients — especially the uninsured and those on high-deductible plans — think about their healthcare. They want to know upfront what that blood test will cost. They want to know if they could get that surgery cheaper elsewhere.

This sea change has led some states to beef up existing transparency laws, and Orbitz-style sites that allow healthcare "comparison shopping" are in the works. But while transparency is generally a positive thing, heavy-handed application could create a nightmare for emergency physicians who need to focus on saving lives fast.

Will policymakers be able to walk this tightrope? Stay tuned.

4. Consolidation, consolidation, consolidation.

Bigger may not necessarily be better when it comes to meeting the demands of healthcare reform, but that's the way today's hospitals appear to be betting.

This year saw a flurry of high-profile mergers. Hospitals, health systems and physician groups say they are moving toward greater vertical integration in hopes of providing better quality, lower cost care for patients. Yet many also view consolidation as an opportunity to protect their markets and leverage higher reimbursements from health plans. Will the new age of data transparency make it impossible for underperformers to fly below the radar? Only time will tell.

Consolidation is a double edged sword. We all hope it will improve healthcare and reduce expenses, but experiences in many parts of the country have not borne this out. Analyses suggest that Sutter Health (which following a flurry of takeovers now owns about a third of the hospital beds in some parts of Northern California), can leverage its market share to charge payers 40 to 70 percent more than its competitors. And worries that healthcare "monopolies" will lead to higher prices have sparked antitrust suits across the country.

The ACA did little to address the very real regulatory, cultural and practical barriers to integration. And in the case of hospital-based physician groups, quality often suffers after a sale to a big public company. Just months after the Monarch HealthCare IPA merged with Optum (a subdivision of United Health Care), payers sued, charging that some existing patients were refused care or were pressured to change doctors and insurance policies. (Meanwhile, while Optum's never disclosed its financial arrangements with Monarch, it's likely the Monarch principals made millions in the transaction.)

5. RAND report underscores the value added by EDs.

"It is not just an emergency department, and it hasn't been for 20 years."

- Arthur Kellerman, coauthor, The Evolving Role of Emergency Departments in the United States.

On a positive note, EDs got a big boost this year in the eyes of hospital administrators, policymakers and the public. A 10-year retroactive analysis by RAND found that costly hospital admissions are actually growing more slowly than expected thanks to intervention and coordination by acute care providers.

The report also provided compelling evidence that EDs are the true medical safety nets that are crucial to the health of our communities — especially given our aging population and shortage of primary care physicians. Hopefully these findings will encourage policies that keep EDs across the country healthy and strong.

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