Time keeps on ticking into the future

Yesterday, the Department of Health and Human Services dropped a major proposed rule on how it interprets the Stark Act.  The Stark Act prohibits self-dealing in Medicare unless there are clear exceptions.  Yesterday’s proposed rule is in response to Accountable Care Organizations (ACO) asking for more clarity as to how they should interpret the Stark Act when they redesign care pathways under the ACO regulations.  This is a reasonable ask.  And my colleagues at Duke-Margolis are going through the proposal right now and so far, this is a reasonable draft.

I want to highlight one thing from the pre-amble:

HHS has taken two major regulatory swings at the Stark Act. The first had a published proposed rule in 1992. That rule went live in 1995. the second major rule-making episode started in 1998 and was finalized in 2007. There have also been smaller Stark Act rule-makings as part of the regular fee schedule, compliance and fraud and abuse efforts.

This July, we looked at an overly optimistic timeline for rule-making and system deployment on complete rebuilds:

Plumbing matters.  Complexity matters for project timelines and launch dates.

I’m going to give a set of scenarios that are in the 95th percentile of GOOD NEWS.  

Major Revamp

Any major revision of the US Healthcare system will need significant rule making from federal agencies.  The federal agencies need to take what Congress has written and figure out how to actually make it work.  The ACA had several hundred instructions of the “Secretary Shall…” and those ranged from when open enrollment periods should be, to how calories were to be counted, and what the de minimas allowable actuarial variation in metal bands could be.  Rule making (at least rule making that will stand up in court) requires notice and comment.  Let’s be super-optimistic and say the major rules are drafted in six months.  This is fast….

Once the draft rule is completed, it has to go through internal governmental review and then it goes out to the public for notice and comment for at least thirty days.  Here the public can comment on the proposal rule.  Some of those comments will be insightful, evidence based and useful, others will be rote repetitions of ideological direction.  The rule making entities has to read and respond to all the comments.  A good rule making process will use this as an opportunity to learn and adjust.  This learning process will take another four to six months to produce a final rule that is neither arbitrary nor capricious.

We’re at a year now….

In the ACA, rule-making took several years. The Medical Loss Ratio (MLR) rule took two years for the initial rule to be finalized. The preventive services rule took two years. The initial rule-making on exchange/marketplace construction only took nineteen months from draft publication to finalization.

Rule-making takes time.  It takes time when it is an expansion of a pre-exisiting rule to deal with new policies and programs.  It takes time for new rules to be created for brand new policies.  It takes time to develop rules that will give a program a decent chance of success while standing up to legal scrutiny.

When thinking about the timelines for major system transformation, standard rule making will eat up a couple of years.  This is important to remember when thinking about transitions.

2 replies
  1. 1
    stinger says:

    Thank you, David.

  2. 2
    jl says:

    Thanks for interesting post.
    Below is a link to a post from Tim Taylor, on new estimates of waste in the US health care system, and some interesting international comparisons I haven’t see before. Taylor is the editor of Economic Perspectives, which the American Economic Associations journal of economic surveys and reviews, so he has a good perch to see what is going on in different areas of economics.

    Waste and Worse in US Health Care Spending

    I won’t have time to look through all the linked studies until this weekend, so I’ve just glanced at them so far.
    One studies claims that the percentage of money spent on medical care doesn’t differ around the high income industrial economy world, the difference is that since the level cost of US health care is very high, and is an outsize percentage of US GDP, the absolute cost is far higher than in other countries. I am skeptical of some of those conclusions, so will be interested to look through the study in detail.

    To the extent that those conclusions are true, I think more evidence at a major problem in the US is that the real prices of insurance and medical services in the US is that the prices are too damn high, or as the late Uwe Reinhardt’s famous paper put it “It’s the Prices, Stupid”. And some of the linked studies point to rent seeking, local monopoly power and insurance market equilibrium destroying cherry picking producing churn and problems with continuity of care. None of those issues are properly addressed with the extreme overemphasis on how to finance health insurance that completely dominates the health care debate in the US. Maybe for good political reasons. Groups that represent professionals who are increasingly treated poorly like machines and drones, like physicians and pharmacists are slowly coming around to supporting good health care reform proposals. And nurses have been on board for a long time.

    Large corporate interests, such as corporate hospital changes, big pharma, medical equipment suppliers, and specialty clinical chains, will never come around and will attack any health care reform that hurts their rent seeking and local monopoly profits. And that is in addition to the health insurance industry,. But the public has a much better perception of providers than insurers, and can be difficult for voting public to distinguish between kindly local primary care doc and a ruthless corporate run provider exploiting its local monopoly power.


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