An essential next step for healthcare reform: Ensuring the future of safety net institutions

Aug. 17, 2016 / By Richard Fuller, MS, Norbert Goldfield, MD

In the past few weeks, the Journal of the American Medical Association (JAMA) published an article and the National Academies of Sciences, Engineering and Medicine (the Academies) released a report that offer insights critical to improving the health of all Americans. President Barack Obama was the author of the JAMA article, “United States Health Care Reform: Progress to Date and Next Steps.”1 The Academies, with Professor Don Steinwachs, PhD from Johns Hopkins Bloomberg School of Public Health as the chair, just published an equally important document entitled Accounting for Social Risk Factors in Medicare Payment: Criteria, Factors, and Methods.2 This blog focuses on the key insights related to ensuring equity and fairness for safety net institutions included in these two documents.

President Obama in his policy review article appropriately begins by focusing on the impact of the Accountable Care Act on the number of uninsured. He highlights the decline in the rate of uninsured especially in those states that decided to expand Medicaid eligibility. This dramatic increase in the numbers of insured occurred particularly in those states that used federal support (90/10 match that decreases over time) to increase coverage via expansion of Medicaid eligibility. As President Obama states in his article, “Since the ACA became law, the uninsured rate has declined by 43 percent, from 16 in 2010 to 9.1 percent in 2015, with most of that decline occurring after the law’s main coverage provisions took effect in 2014” (ibid).

The increase in the number of insured individuals is sustainable if healthcare costs can be controlled. As we have stated numerous times in this blog, healthcare costs can be controlled if we focus on and implement adequately risk-adjusted payment incentives for a small number of outcomes. A small number of outcomes is critical for consumer understanding and will facilitate healthcare delivery change. The outcomes we advocate, such as Potentially Preventable Readmissions and Potentially Preventable Complications, can all be “translated” into dollars. President Obama highlights the likely impact of the ACA on readmissions and complications. While we applaud a focus on these two outcomes, we are not certain of the ultimate impact of the readmission and complication policies, particularly as they  pertain to safety net institutions.3,4  In addition, we also recommend a more thorough evaluation of the reported decline in pressure ulcers over the past few years. A critical component of these outcomes is the inclusion of pharmaceuticals. We have recently published a proposal that ties reimbursement for pharmaceuticals to improved outcomes.6  Lastly, we also would recommend further improvement in risk adjustment, particularly for readmissions and complications alternative payment models as well as for Medicare Advantage.7,8  These improvements should take into account the significant advancements in data elements, notably ICD-10, which was implemented within the past year.9  While the Centers for Medicare and Medicaid Services (CMS) has begun to increasingly focus on outcomes, there is still  a mishmash of CMS-promulgated process and outcomes measures which are not transparent, are difficult to validate, and may very well negatively impact safety net institutions.

The just-published Academies report on Socioeconomic Disparities thoroughly describes the circumstances in which socioeconomic factors should be utilized as part of the risk-adjustment based on the desired outcome. For example, in the case of readmissions, the report examines whether socioeconomic factors such as homelessness, poverty level or health literacy should be considered for increasing payment to institutions taking on a higher percentage of these individuals. As we have discussed extensively in these blogs, the answer is yes – for a limited period of time. We have recently suggested exact formulations of how to calculate how much of a bump in payment and for how long it should be provided to safety net institutions taking on individuals disadvantaged by socioeconomic disparities.10

At the end of the day, healthcare reform can and will lead to health improvement for individual human beings (ibid). Everyone hopes that the number of uninsured continues to decrease. Building on the progress in coverage that has recently occurred and the recommendations of the recently published Academies report, we are confident that this can occur if CMS can firmly grasp the outcomes mantle in a transparent manner with incentives that are fair to all healthcare providers, especially safety net institutions.

Richard Fuller, MS, is an economist with 3M Clinical and Economic Research.

Norbert Goldfield, MD, is medical director for 3M Clinical and Economic Research.


  1. Obama B. United States Health Care Reform: Progress to Date and Next Steps. JAMA. 2016;316(5):525-532. doi:10.1001/jama.2016.9797.
  2. Committee on Accounting for Socioeconomic Status in Medicare, Health PPB on PH and P, Medicine; PB on HCSI of, National Academies of Sciences, Engineering and M. Accounting for Social Risk Factors in Medicare Payment : Identify Social Risk Factors.; 2016.
  3. Fuller RL, Goldfield NI, Averill RF, Hughes JS. Is the CMS Hospital-Acquired Condition Reduction Program a Valid Measure of Hospital Performance? Am J Med Qual. April 2016. doi:10.1177/1062860616640883.
  4. Fuller RL, Atkinson G, Hughes JS. Indications of biased risk adjustment in the hospital readmission reduction program. J Ambul Care Manage. 2015;38(1):39-47. doi:10.1097/JAC.0000000000000061.
  5. Averill RF, Hughes JS, Fuller RL, Goldfield NI. Quality Improvement Initiatives Need Rigorous Evaluation: The Case of Pressure Ulcers. Am J Med Qual. 2016;Accepted for publication.
  6. Fuller RL, Goldfield N. Paying for On-Patent Pharmaceuticals: Limit Prices and the Emerging Role of a Pay for Outcomes Approach. J Ambul Care Manage. 2016 Apr-J   Jun;39 (2):143-9.
  7. Rahman M, Keohane L, Trivedi AN, Mor V. High-Cost Patients Had Substantial Rates Of Leaving Medicare Advantage And Joining Traditional Medicare. Health Aff (Millwood). 2015;34(10):1675-1681. doi:10.1377/hlthaff.2015.0272.
  8. Fuller RL, Hughes JS, Goldfield NI. Adjusting population risk for functional health status. Popul Health Manag.
  9. Averill RF. J AHIMA. 2016.
  10. Goldfield NI, Fuller RL, Vertrees JC, McCullough EC. How Encouraging Provider Collaboration and Financial Incentives Can Improve Outcomes for Persons With Severe Psychiatric Disorders. Psychiatr Serv. 2016.