Update on Health Care Reform

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‘Year of Healthcare Reform’ <strong>Update</strong> By Bill Barcellona, Vice President of Government Affairs, CAPG The “Year of Healthcare Reform” is technically over, but the job is not yet completed. As usual, we go to press once again in the middle of a chapter. The cynics keep predicting the demise of the plan, and the leadership continues to bring the ball back into play. Most recently, the governor and the speaker reached a compromise agreement and passed a bill out of the Assembly on December 17. Big, splashy news reports issued forth and politicians declared victory. We were there, but many remained on the sidelines, skeptical of last minute changes to the bill that were written in secret by legislative staffers. Standing in the Capitol Rotunda, I was struck by the large number of insiders who were standing beyond the press cameras, watching but not participating. Then, on December 28, the administration and speaker filed a ballot measure that comprises the funding piece of the comprehensive plan. The recently introduced 1 4 | CAPG HEALTH WINTER 2008 funding plan was drafted in secret and was still under review when this article was written. The State Senate will hear the plan on January 23, after we go to press. A final plan has to pass the Senate and be signed by the governor for the new ballot measure to move forward. It was clear immediately that major stakeholders in the reform process were not happy with the ballot measure or the final version of the bill. Some of this angst has been ameliorated since December, some has not. It still appears that there is significant opposition to the reform plan by stakeholders, and even some senators. What is also abundantly clear, is that if Californians don’t do health reform for Gov. Schwarzenegger applauding assembly vote on landmark health care reform. legislative update The pending 2008 state budget shortfall of somewhere between $12 and $20 billion has driven a stake through the heart of the increased provider payment concept. themselves, others in Washington, DC, will do it for them. If the California process has been scary at times, the Washington process will be downright terrifying. The pending 2008 state budget shortfall of somewhere between $12 and $20 billion has driven a stake through the heart of the increased provider payment concept. In 2008, the Legislature will struggle the harsh reality that state-sponsored programs will most likely have to be cut, not expanded. The governor has announced that he will declare a fiscal emergency on January 10, triggering a 45-day legislative session in which the Legislature must pass a bill that “addresses” the current budget shortfall. The fiscal emergency declaration is based on recent legislation that is untested. It’s uncertain how the special 45-day session will impact efforts to continue health care reform. Health care reform is still a work in progress. The problems proved far too complex to resolve in a single legislative session. And so, even though 2008 is an election year, the process will continue. Look for increasing federal intervention in the California reform process — especially in the discussion of the impact of ERISA pre-emption. While all this effort was going on in Sacramento, a federal court found San Francisco’s play-or-pay reform program violative of ERISA preemption laws. An appellate court panel
just recently gave the plan a thumbs-up, and so Healthy San Francisco lives on to fight another day. The event underscores the roller-coaster ride that is health reform in California. One day you’re up, the next down, and the beat goes on. Several major stakeholders have been alienated by the last minute, secretive drafting of the reform plan and the companion funding measure. History will judge whether this approach was warranted or not. If the plan ultimately succeeds, then it will appear beneficent. If not, it will be likely be characterized in the same way that HillaryCare was castigated in the 1990s. Events have moved too quickly in many instances for there to be a thorough vetting of the concepts in the plan, and there are many, many unanswered questions and concerns. Some of this ill will is the result of a failure by stakeholders to participate in the early think tanks that were collecting and discussing information on the system and evaluating solutions. CAPG always attempted to participate and provide ideas about how health care can be done better, safer and more affordably. Much of the final reform plan reflects thinking that systems of care are necessary to improve California medicine. Many of the programs that are anticipated in ABX1 1 will rely heavily on coordinated care provider systems to implement successfully. You can’t discount the progress that was made on the plan in 2007, mostly through the sheer will of the governor and the speaker. California has just about got a reform concept in place. Perhaps it will have to linger a little longer while we all scratch our heads on the funding mechanism. But significant progress has been achieved, and the rest of the country has taken note of our example. In early 2008, we’ll look for a Senate vote confirming the plan, and a desperate effort to obtain the necessary one mil- lion signatures to qualify the companion funding measure for the November general election. Both efforts will be heavily opposed by stakeholders who believe the plan threatens the status quo. Should the California economy, and that of the nation as a whole, continue toward a recession, the voters will most likely continue to keep health care affordability and accessibility at the top of their agenda. Regulations: We are hoping that 2008 will be a quieter year for DMHC regulatory development. In 2007, CAPG was forced to mount significant opposition to the timely access to care regulation. Two prior drafts of the regulation were lengthy, cumbersome and unworkable. It took a massive turnout of CAPG member groups and their clinicians to argue for a standard that was more reflective of current access systems. This past December, the DMHC issued a third version that sets performance-based access targets, rather than rigid, proscriptive standards. CAPG provided final written comments on December 26. While the regulatory package is still pending as of press time legislative update for this article, we anticipate that further tweaks to the format of the regulation will be necessary to make it more reflective of industry capability. The department also reissued a balance billing regulation in August. CAPG provided clinicians to testify and offered written comment. The principal problem with the regulation is similar to earlier legislation this past year (SB 981), in that the regulation set a default payment rate of 150% of Medicare for non-contracted emergent services. We anticipate that the department will reissue a revised version of the regulation sometime during 2008 and that there will be further opportunity for CAPG groups to comment. It is also likely that the Legislature will take up the consideration of SB 981 bill again after the 2008 session begins on January 7. That bill would impose a 190% of Medicare default payment rate. This is a controversial mechanism that has drawn opposition from all sides of the physician community in California. Regardless of the argument of default payment rates, CAPG remains committed to achieving the statutory prohibition of patient balance billing. ■ CAPG HEALTH WINTER 2008 | 15
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Update on Health Care Reform

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