Okay, Let’s Do This: Kentucky’s Healthcare Industry implements ObamaCare


By Josh Shepherd

While politicians attempted to use “ObamaCare” as leverage to unseat President Barak Obama last year, Kentucky’s healthcare industry leaders were not waiting to see how the struggle would play out. Among industry leaders, the sense was always that the national healthcare system didn’t work anymore. Regardless of which party would occupy the White House, there was already movement afoot in the Bluegrass to prepare for a fundamental change to healthcare.

“Everyone involved in healthcare knew that some kind of change had to happen,” said Ardis Dee Hoven, MD, president-elect of the American Medical Association and a practicing internist and infectious disease specialist with UK Healthcare in Lexington. “The current state of the system was not sustainable.”

Russ Cox, Executive Vice President and Chief Operations Officer for Norton Healthcare in Louisville, echoed Dr. Hoven’s comments. Norton, along with all other healthcare systems in Kentucky, has been actively implementing aspects of the Patient Protection and Affordable Care act since it became law back in January 2010. “The act has been around for three years already. There may have been some who waited for the Supreme Court ruling that upheld the insurance mandates, but I know that we [Norton Healthcare] were moving forward with changes long before the high court ruling and it’s pretty obvious that so was everyone else,” said Cox.

Still, plenty of eyes are looking ahead to 2014 when major provisions of the healthcare act, particularly mandatory insurance coverage and the expansion of Medicaid to noninsured and indigent patients, will go into effect. There has been a lot of discussion among industry leaders over the fiscal formulas to keep the Medicaid program solvent, providers adequately compensated, and manage the expansion of membership.

Details also remain to be worked out concerning Kentucky’s version of the American Health Benefits Exchange, which is supposed to help small businesses provide basic health coverage to their employees.

According to Nancy Galvagni, senior vice president of the Kentucky Hospital Association, Kentucky is one of the few states that will see most of its underinsured population enrolled into Medicaid rather than qualify for basic health insurance. And this fact has many of Kentucky’s healthcare providers concerned.

Because the general per capita income in Kentucky is so low, the Bluegrass state already has a significant section of the population receiving Medicaid benefits. That population is expected to grow significantly in 2014.

 “When it is time to implement the health insurance mandate, Kentucky will have a disproportionate share of its population to go on Medicaid. That is going to put Kentucky at a disadvantage with other states,” Galvagni said.

Ideally, the state Exchange programs will absorb the majority of its underinsured population to some form of commercial insurance plan. But there is a very real concern that the exact opposite will happen in the Commonwealth.

“The KHA supports expanded coverage. We want to see a system where everyone is covered.  With regard to the amount of uncompensated indigent care that Kentucky’s urban and rural hospitals provide, it will be good to receive some level of reimbursement,” Galvagni said.  However, Medicaid only pays about 80 percent of the cost of care in Kentucky. The formula for service reimbursement for Medicaid is still being developed, but she argued that the formula must take into account that Kentucky’s hospitals serve a disproportionate share of families that have no insurance or resources to cover their care.

Dr. Hoven’s also commented on these concerns and they echoed the sentiments of the KHA. “Any expansion of Medicaid in Kentucky must be viable. Compared to other states, Kentucky’s 80 percent reimbursement of cost is a bit better than, for example, New Jersey, which only reimburses at 40 percent. But that is because Kentucky serves a much heavier Medicaid population. Eighty percent is not adequate to keep up with the rising costs of delivering healthcare and that aspect of the formula must be dealt with,” Dr. Hoven said.

However, Dr. Hoven did offer one small silver lining in this area of the Affordable Care act. The act does raise Medicaid reimbursement to primary care providers to 100 percent of Medicare, which indicates that the federal government seems to be “acquiring some understanding of the relative value that physicians perform for uninsured patients and that is a good thing for Kentucky in general and for a segment of Kentucky’s physicians in particular.”

Stephanie Moore, the CEO of White House Clinics, a series of Federally Qualified Health Clinics (FQHCs) based out of Richmond, Kentucky, had slightly different concerns when it came to the question of expanding Kentucky’s Medicaid population. An FQHC, or other federally designated form of health clinic, exists to serve the healthcare needs of low income and underinsured populations.

Because of that mission, White House Clinics serve a patient population composed of many Medicaid and indigent care recipients. Moore anticipates that the increase of Medicaid patients in the state is going to strain the ability of Kentucky’s specialists to serve, especially in areas where our state’s physician shortage is most acute.

“Many times our uninsured patients, lacking the ability to pay, don’t even try to schedule appointments with specialty providers outside of an emergency. They do this often in spite of physician’s orders,” Moore said.

In the current system, access to specialty services requires making appointments weeks in advance. Increasing the Medicaid enrollment will increase the likelihood that these patients will follow their doctor’s advice and try to schedule specialty services. This influx of demand could translate into even longer wait times to just see a specialist.

“One of the long term results of the Affordable Care act has to be increases in the numbers of providers, both in primary care and specialties, and incentives to set up practice in shortage areas. The act must keep to its commitments to fund the loan repayment incentives through the National Health Service Corps and expand their eligible recipients to include high demand specialties,” Moore said.


To improve healthcare quality and lower costs, Norton Healthcare’s Russ Cox said that the Affordable Care Act has created the foundation for those with a stake in the success of the industry to form partnerships that did not exist before, especially among formerly competitive entities or even those where an adversarial relationship once existed.

In the past year, Cox argues that ObamaCare has inspired the development of several new partnerships in Kentucky. It is true that Kentucky’s independent hospitals have made strategic decisions to partner with larger Kentucky healthcare systems. Trover Health Care in Madisonville, Kentucky, for example, merged its’ assets with the Baptist Health Care System because the regional provider’s leadership felt the partnership better positioned Trover for future growth.

The act is likely to have influenced the partnership between the Jewish Health Care System based out of Louisville and the Saint Joseph Healthcare System to create Kentucky One Health.

Russ Cox credits the healthcare act for inspiring a joint partnership between the not-for-profit Norton Healthcare and the for-profit Lifepoint Hospital organization to provide medical and administrative support to Scott Memorial Hospital, a 25-bed Critical-Access Hospital in Scottsburg, Indiana.

The Affordable Care act is also forcing many in the healthcare industry to consider creating partnerships that has not been the traditional norm of the industry before. The clearest example is the Accountable Care Organization that Norton and the Humana insurance company established two years ago through a pilot program from the Brookings – Dartmouth Institute.

“The ACO model has allowed us to merge our clinical data with their payer data and use that information to streamline the delivery of healthcare to our patients,” Cox said. “Basically, we are using the combined data to raise healthcare quality and reduce costs.”

In the first two years of the ACO, the organizers have noted areas where clinical delivery of care was adding unnecessary costs. Having access to that information and utilizing a care coordinator to organize a patient’s visit, the potential is raised for eliminating unnecessary and duplicative diagnostics and testing. “If we can improve a patient’s encounter within the healthcare system so that care is delivered seamlessly, the patient gets better care, the doctor or specialist is paid better, and we eliminate cost from the system,” Cox said.

That same shared clinical and payer data can also help with concerns over federal reimbursement penalties for readmissions. The Affordable Care act has provisions to reduce reimbursement levels for patients readmitted to the hospital for the same diagnosis. The reductions would mean a considerable loss for large healthcare systems.

Using payer data, researchers have found that over 70 percent of readmissions were caused in part by a failure on the patient’s part to follow care orders and complete prescriptions. Either patients did not get the prescription their physician ordered or they had not adequately completed the prescription.

“By reviewing payer data, a care coordinator can find out if a patient had filled their prescription. We then have an opportunity to follow up with that patient and assist them with following through on their physician’s order,” Cox said.

Growing support for a Coordinated Care approach to healthcare delivery is an idea grown out of the Medical Home model, which is something that White House Clinics have practiced for years.  White House Clinics operates a patient-centered medical home based on the National Committee for Quality Assurance (NCQA) model. The Medical Home is another of the models for patient care delivery that the Affordable Care act promotes.

Keeping up with certain care models that the Affordable Care act is encouraging, Stephanie Moore has been pleased with the way that the law emphasized that caregivers seek new ways to work together to connect patients to programs they need. “Much of what we do as an FQHC organization is provide services to our patients that have not been traditionally well compensated by the industry,” Moore said.

Dr. Hoven added to Moore’s argument. Under the Affordable Care act, America’s healthcare industry can no longer operate as unconnected silos. There will not be such separate distinctions between primary care providers, specialist group, hospital, long term care provider, and so on. To thrive within the new environment of healthcare as it is currently developing is to develop partnerships and improve shared communication. Shared technology and information will make it possible for providers to address issues of caregiving.

And it’s not just caregivers that will have the responsibility of controlling healthcare costs. Employers will be given incentives to promote a healthier workforce through reductions in the cost of healthcare insurance rates. They will be able to cut their costs as a reward for taking proactive strides to promote a healthier workplace.

“One of the best things about the Affordable Care act is that it funds the front end of care that we need and not just the back end of care,” Dr. Hoven said. “There have been more rewards and better reimbursement for sick care in our industry than there ever has been for well care.”

Providers and industry leaders have long professed that healthcare quality in the United States could be improved and costs driven down by making the market viable for front end care. One of the developing trends in healthcare delivery is improved rewards for health and wellness programs. “We already have clear evidence of this trend coming. Approximately 730,000 have acquired insurance coverage for wellness services and they have got that service with no co-pays or cost sharing,” Dr. Hoven said, citing the example of insurance coverage for flu vaccines in the past year.

But to develop a profitable healthcare delivery program designed to emphasize health and wellness, “we cannot expect revenues in a traditional sense of accounting. It just won’t show in a year. This is a long term cultural change,” Russ Cox added.

There is a lot of work to do, Dr. Hoven said. The reform act is far from perfect and there are still many questions about how Kentucky’s healthcare industry will organize itself to thrive.

“What we are creating in the United States is something unique, something distinctively American. We are doing what we do best – creating a system that best serves Americans,” Dr. Hoven said.

“There are still many things to work out when it comes to the Affordable Care act. But we’ll figure it out … we always have,” Cox said.