What Do You Think of Obamacare Now?

John I. Allen, MD, MBA, AGAF

John I. Allen, MD, MBA, AGAF

Medical Director for Quality, Minnesota Gastroenterology, St. Paul; Clinical Councillor, AGA Institute Governing Board  


As a physician, I am often asked by friends and family what I think of Obamacare. As an AGA officer, I will say that the Patient Protection and Affordable Care Act (PPACA) will expand access and reduce barriers to care (good goals), but we are concerned about cost, unproven reimbursement methodologies, lack of liability reform and the reliance on federal regulation. I will refer to excellent summaries on the AGA website, www.gastro.org/HealthReform, outlining AGA’s specific concerns (Independent Advisory Payment Board, sustainable growth rate, ambulatory surgery center reimbursement, access to specialty care and the fundamental legality of congressional power to mandate coverage).

As a practicing gastroenterologist, my fears run deeper. I see gastroenterology practices built over a generation now disappearing. In 2010, less than 50 percent of U.S. medical practices were physician-owned. This trend will accelerate in the next few years and I fear patients will lose cherished options. Four overarching trends concern me the most.


PPACA will drive up costs, and savings will come out of physician practices via reduced reimbursements. During the debate preceding PPACA, hospitals, pharmaceutical companies, the device industry and integrated health-care systems all organized themselves to carve out protections. Physicians fought amongst themselves, and independent physicians in particular were marginalized. Within PPACA, there are regulations and requirements that will drive practice overhead so high that small independent practices (the bedrock of gastroenterology care for the last generation) will struggle to survive. Meanwhile, our reimbursement is scheduled to fall by 10 to 30 percent (initial effects by 2014). Many gastroenterologists already have sold their practices to hospital systems. Others are considering a national GI practice model — more on this in the AGA Washington Insider, a policy blog for GIs (www.agapolicyblog.org).


The 16th Amendment to the Constitution (creating the income tax) is 30 words long. Currently, there are 3.7 million words in the tax code (regulations stemming from the actual law). The PPACA has 234,812 words. Go figure. Investors and entrepreneurs detest ambiguity, and clarity about health care will not emerge for a decade as regulations are written. No rational investor (or physician) will develop new business models if the threat of regulatory annihilation is imminent. Last December, the legal march to the Supreme Court began concerning the constitutionality of the individual mandate. In anticipation of the final ruling, policy makers on both sides of the argument were preparing “what if” scenarios. Talk about ambiguity creating paralysis! This is a glimpse of the next decade.


Physician practices, hospital systems, insurers, and pharmaceutical and device companies are all rapidly consolidating. In my mind, that will mean fewer choices for patients, more corporations delivering care, reduced innovation, a diminishing role for the physician-patient relationship, and increased costs. With the expansion of Medicaid and Medicare, we will have a virtual single payor and a real single source for health-care regulation. Whether this is good or bad will not be known for a generation. At a regional level, we are witnessing rapid consolidation of health care into hospital-centric health-care systems, all in anticipation of fundamental changes in reimbursement.


Our biggest threat (and potential opportunity) is the emergence of accountable care organizations (ACOs). Regional ACOs have been created in multiple cities and will be accepting risk contracts in 2012. Although we all have heard of ACOs, many believe this is simply another fad. I would suggest that we not be fooled into complacency. By the time you read this, CMS officials will have announced Medicare ACO rules, and Medicare beneficiaries will begin entering the world of ACOs. Both Donald Berwick, CMS director, and the president’s Debt Reduction Commission have urged CMS to aggressively pursue ACO formation under the pilot program within Medicare. Get ready.

When an ACO forms in your town, your choice will be to join or be cut out of large market shares. You will negotiate for reimbursement with your local hospital administrator, not national payors. ACOs are theoretically good (increased cooperation, reduced costs, coordinated care), but the implications for gastroenterologists are profound — specialists will have a diminished role in ACOs, and one target for cost reduction will be unnecessary procedures. In our city, there are three emerging ACOs — each is hospital-based and the formula for income distribution is worrisome. You will likely get paid (at first) on a fee-for-service basis (discounted by withholds for later distribution based on performance). When final accounting occurs, the ACO would (theoretically) have generated savings compared to anticipated budget. The payor or purchaser will take 50 percent of the savings. Then the hospital system will take 30 percent, primary care gets 10 percent, and all remaining providers (all specialists) will share the final 10 percent. Cooperation is not the word that comes to mind. A recent article in the Journal of the American Medical Association (JAMA 305:602, 2011) points out worries that the AGA has been articulating: that two consequences of ACO formation will be to consolidate market share (for hospitals) and transfer revenue from specialty care to primary care.

AGA Resources

The AGA Governing Board created the AGA Think Tank on the Future of Practice (www.gastro.org/thinktank), a group of GI opinion leaders from across the country. Membership is open and we are actively recruiting! Here, practicing physicians share their personal experiences with ACOs and other issues of importance to the future of practice, and help us understand how we might respond.
So what do I think of Obamacare? I don’t like the way PPACA was passed — it is too complex, it will be costly and it will change how gastroenterology is practiced — but it’s time to look ahead. We have an obligation to patients to be sure we can continue to provide the care they deserve. 

— Originally published on the AGA Washington Insider blog.