This week: Health care reform in 2012

A doctor examines a patient.

Tess Vigeland: In case you haven't heard it enough -- Happy New Year! All kinds of new laws took effect as of this week, especially at the state level. But we're going to start today with a look at year three of the health care reform law. As you may know, most of the really big changes don't come around until 2014.

But our health care reporter Gregory Warner is here to outline a couple of things to keep an eye on right here in 2012. Hey Gregory.

Gregory Warner: Hi there Tess.

Vigeland: Happy New Year.

Warner: Thank you. Happy New Year.

Vigeland: So how does a medical reporter spend his New Year's Eve?

Warner: My New Year's Eve was spent, well, getting free babysitting from my in-laws.

Vigeland: Nice!

Warner: You know, it's incredible how far you'll drive for free babysitting. I realized that being a new dad.

Vigeland: Well, we wanted to talk to you as the new year starts, because, of course, as we just said, there seems to be all these kinds of benchmarks that come along in the health care reform act that was passed a couple of years ago. So we're kinda wondering what's in store for us in 2012?

Warner: Yeah, I'll give you two of them: First -- and I'm going to start this one with a little mystery, I know you like a good mystery, right Tess?

Vigeland: I do.

Warner: This represents how hospitals are going to be changing in 2012.

Sound of knocking

Vigeland: OK, that just sounds like somebody knocking on a door.

Warner: And you would be right!

Vigeland: Oh thank you!

Warner: It is someone knocking on a door. But here's the thing: That door is not in the hospital. That door is in a low-income housing development in west Philadelphia.

Woman: Happy New Year's! How are you?

Man: All right!

Warner: The person behind that door, the person answering that door, his name is Reggie Wimes. He's an Army vet, formerly homeless, he's now on Medicare. And he's got this thing called chronic obstructive pulmonary disease, COPD. It means he gets these spasms, he ends up not being able to breathe, he has to call the ambulance over and over again, like clockwork, once a month.

Vigeland: What causes this? Is he a smoker?

Warner: He is, exactly. But, the thing is, once he leaves the hospital, doctors don't know what to do. All they can tell him is, "Hey, don't smoke," and then just wait for him to return. Of course, that costs the system an enormous amount of money. Here's what Reggie has to say:

Reggie Wimes: But sometime when I go back into the hospital, I be feelin' so embarrassed, 'cause I'll be going back and forth so much.

Vigeland: So he says he's embarrassed. Wow.

Warner: Right. He's embarrassed. Meanwhile though, tax payers are paying tens of thousands of dollars in Medicare dollars every time he goes back to the hospital and all the hospitals can do at this point is tell him, "Hey, don't smoke," and then wait for him to return.

Vigeland: So what does this have to do with how hospitals are changing because of the health care law?

Warner: OK, it goes back to that knock on the door. So the health care law is going to start fining hospitals when they allow Medicare patients to readmit within 30 days. So now, the hospital has this financial interest to make sure that Reggie doesn't come back to the hospital too soon. So now, Penn Hospital, in this case, is actually sending a community health worker to Reggie's house. Her name is Sharon McCollum and she's gonna deal with his medical issues, but she's also going to deal with his financial issues.

Sharon McCollum: Besides medical, they were also stressed with the bills, the rent. They didn't have no phone. So we had to budget in a spreadsheet that I had created for them to show where your money's going, this is what's coming in, this is what's going out. So, his stress level has come down and is keeping him from going back and forth to the hospital.

Vigeland: Wow, interesting story.

Warner: So Reggie went from six hospital visits in six months to just two. That saved the system money.

Vigeland: And I guess that's good for his finances too?

Warner: Yeah, sure. He's got fewer medical bills, he's connected with all these services, some of which pay for his medications. But it's also good for tax payers, because that means fewer Medicare dollars spent.

Vigeland: OK. Well, so you might expect a knock on the door folks. So, you mentioned there are two ways the health care law may change things this year. What's the second?

Warner: OK, this one -- now tell me if you've had this experience -- I call it "doing the shuffle."

Vigeland: I do it all the time! I'm a dancer! But that's not what we're talking about, is it?

Warner: No, I'm a health care reporter Tess. But this shuffle is when you go to the doctor and then she sends you for lab work, so you make that appointment. And then you're back to the doctor's office, that's a third appointment. And then you're at the specialist...

Vigeland: This is sounding very familiar. Yes, this is quite the pain.

Warner: Now, this is not only a pain; it also costs the system a huge amount of money.

Vigeland: Hm.

Warner: And there's a money side to this too, which is that hospitals and doctors, the way they're paid is per procedure, or per test.

Vigeland: Right. This has been a common criticism of the system, the way it operates.

Warner: Exactly. And this is what you hear about our fragmented system, there's this uncoordinated care that causes patients pain and also costs a lot of money. So the health care reform law, it takes that on and it basically sets up these organizations. They're called "accountable care organizations," ACOs, we're gonna hear that word a lot in 2012. These systems basically work kind of like the Mayo Clinic or the Cleveland Clinic. Doctors are on salary, the hospitals and doctors share the bill and they don't pay per procedure; they pay per disease. So out of that sum, the doctors and hospitals kind of figure out what to do, it rewards efficiency and basically, means you and I are spending less time running around making appointments. And the idea is to create this one-stop shopping experience in the hospital.

Vigeland: And this all goes into effect this year?

Warner: Yeah, and the first 32 of these ACOs started this week, actually. They're called the "pioneers." We might see hundreds more later this year.

Vigeland: OK, thank you! Marketplace's Gregory Warner joining us to talk about health care.

Warner: Thanks Tess.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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