Dr. Ezekiel Emanuel, who was a special adviser to the Obama Administration during the writing of the Affordable Care Act, says that while some parts of the health care system still cling to fee-for-service, most of the industry is already being transformed by new “value-based” care models.

And it’s working because the health care system is starting to get a grip on its data, he says.

Emanuel, who is brother to one-time White House chief of staff and current Chicago mayor Rahm Emanuel, spoke to a group of 1,500 health care professionals and investors at the J.P. Morgan Healthcare Conference in San Francisco Tuesday.

Under the rules of the Affordable Care Act, care providers can be paid a fixed amount upfront to care for a certain population of Medicare patients. The provider then pays out of pocket for all services patients use during the contract period. The government has also introduced programs to deal with infections in hospitals and to cut down on medical errors, Emanuel said.

To control costs, it’s vitally important that patients be kept well. So many providers have become focused on the 10 percent of chronically ill patients who cost the system the most. Care providers have begun to implement programs that reach out to these patients before they get so sick that they have to come back to the system and begin utilizing costly services.

This doesn’t sound so different than the “managed care” programs in the 1990s, in which doctors were paid a certain amount per patient per month and asked to control the use of services. The J.P. Morgan analyst who interviewed Emanuel here asked why we should expect that the result should be better this time around.

Emanuel says the difference is that today’s health care providers have the benefit of far better data, and they are learning how to use it.

Under the Affordable Care Act, the pool of people who are eligible for Medicare benefits is enlarged, and providers (called Accountable Care Organizations) are increasingly paid a fixed amount to manage the care of whole populations.

Providers are using analytics platforms like Aledade, Evolent Health, and Strata Decision Technology to gather data from billing systems, electronic health records, and other sources to zero in on the costliest patient segments. They can then create outreach and wellness programs to keep those patients from utilizing expensive services.

“Many [ACOs] are going to fail, many of them are going to succeed, and we have to learn the best practices used by the successful ones,” Emanuel said.

The successful ones, he said, will establish clear standards of care, and they’ll implement preventative services for people with chronic illnesses.

Emanuel believes that the old fee-for-service model of paying for health care is what has led to the United States paying far more as a percentage of GDP than other developed nations. Hospitals and insurance companies have been doing a costly dance where getting “the heads in the beds” and dishing out expensive services was rewarded handsomely.

Aside from incentivizing caregivers to keep whole populations healthy, Emanuel told the crowd here that the Affordable Care Act has also had a profound psychological effect on the health care delivery system.

“The most important things it did was change everybody’s psychology,” he said. “It gave everybody in health care the idea that there is something revolutionary going on.”

Of course, not everybody is convinced.

“There are still parts of the heath care system that thinks that health care reform is ephemeral — that it’s not really going to happen, and they’re sticking to fee-for-service,” Emanuel said. “We’ve got to change that.”

And it’s no secret that the Republican Party intends to take down the ACA in the next term, possibly by eliminating the medical device tax that provides some of the funding for health reform.

There may also be another Supreme Court challenge to the Act. But Emanuel believes that the high court will resist even hearing the case. If the court heard a challenge to the constitutionality of the ACA now, it would appear “overly political,” a perception the court very much wants to avoid.

There’s also the chilling fact that if the ACA were overturned, 80 million who bought health insurance through one of the exchanges would suddenly be uninsured.

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