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First Exercise of Major Obamacare Denial of Treatment Provision

by | Jul 21, 2015

By Jennifer Popik, JD
Robert Powell Center for Medical Ethics

obamacarerationingre   A widely under-reported Obamacare feature that is integral to the law’s rationing of healthcare is now being invoked by the Obama Administration’s Department of Health and Human Services (HHS).

In her July 10, 2015, New York Times story, “Obamacare Flexes Muscles With New Medicare Payment Plans,” Margot Sanger-Katz writes,

Jennifer Popik, JD

Jennifer Popik, JD

For the first time, the Obama administration has deployed an important new power it has under the Affordable Care Act: proposing to pay doctors and hospitals based on the quality of care they provide, regardless of whether they want to be paid that way.

   While Medicare already had the ability to set payments, the Administration has proposed a new rule showcasing a whole new payment approach.  This first proposal only relates to hip and knee replacements,  but is also no doubt only the first step to what will become the widespread trend – using so-called “quality measures” in an attempt to reduce what is spent on healthcare.

While the term “quality” certainly sounds like a  positive way to enhance health care, the “quality measures” Obamacare gives HHS to power to impose on health care providers  can, in effect, be used to limit the healthcare Americans receive – even those willing to pay for it themselves.

   Under the language of the law, the term “quality measures” is a euphemism for preventing treatment that the government feels drives up cost too much – no matter what the patient and their doctors want. 

While this ability to use quality measures to reduce healthcare spending originally was to be based on recommendations from  the Independent Payment Advisory Board (IPAB), the law gives the Obama Administration’s Department of Health and Human Services the authority to impose them regardless of whether IPAB recommends them.

And because of IPAB’s controversial nature, the 18-member board has yet to be seated, or make any rulings.  In light of this, the Administration has indeed gone ahead, issuing its own rules.

According to Sanger-Katz

[The Administration] introduced two such programs this week. One would require all hospitals in 75 metropolitan areas to accept a flat fee for the costs associated with a hip or knee replacement — including the costs of surgery, medications, the joint implant and rehabilitation. And if the quality of the care is not judged to be good, Medicare will take back some of the money it paid.

   In practice, this can have some very dire consequences.  Hip and knee replacements are easy costs for bureaucrats to pinpoint.  These administration bureaucrats might see some hospital centers have different average costs than others.  Some hospitals might do mostly laparoscopic surgeries while others perform a mixture of different procedures that are pricier on the whole, but have better outcomes.

The judgment whether or not the “quality” is good will be essentially only  be about doing the operations in the cheapest way possible.  As in other government reimbursement models, the outcomes–meaning how well people recover function–is secondary. By reimbursing at a flat rate, the government deliberately creates an incentive for health care providers to make sure they do not provide expensive treatment that would, on average, exceed the flat rate.

This means that a treatment a doctor and patient deem advisable to save that patient’s life or preserve or improve the patient’s health–but which would push the cost over the government-imposed limit –will likely no longer  be provided.

Ominously, according to the New York Times article,

Joshua Seidman, a senior vice president at the consulting firm Avalere Health, said he’s been waiting for the administration to start using its power to reshape how Medicare pays doctors, hospitals and other medical services.  “How are they going to expand these programs and scale them? That’s the question now,” he said. “It’s obviously got huge potential to shape how future payment is made.”

   Documentation on this and other rationing provision can be found at

It is more important now than ever to keep this debate alive and elect a pro-repeal Congress and President in 2016.

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