UnitedHealth’s gaming of Medicare is now in court

Posted by on Friday, Feb 17, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Scheme Tied to UnitedHealth Overbilled Medicare for Years, Suit Says

By Mary Williams Walsh
The New York Times, February 16, 2017

UnitedHealth Group, one of the nation’s largest health insurers, is accused in a scheme that allowed its subsidiaries and other insurers to improperly overcharge Medicare by “hundreds of millions — and likely billions — of dollars,” according to a lawsuit made public on Thursday at the Justice Department’s request.

The accusations center on Medicare Advantage, a program through which people 65 or older agree to join private health maintenance organizations, or H.M.O.s, whose costs the government reimburses.

The program was created in 2003 after UnitedHealth and other insurers said that managed care could help contain the overall cost of Medicare, which has strained the federal budget by rising faster than the rate of inflation.

Instead of slowing Medicare costs, UnitedHealth may have improperly added excess costs in the billions of dollars over more than a decade, according to the lawsuit, which was unsealed in Federal District Court in Los Angeles.

The newly public accusations were first made in 2011, when a former UnitedHealth executive, Benjamin Poehling, filed a complaint under the False Claims Act, a federal law that allows private citizens to take legal action when they believe a government program has been defrauded.

The Justice Department’s court notice that it was joining the case involving UnitedHeath was filed by Chad Readler, a lawyer who joined the agency’s civil division as part of the Trump administration.

Mr. Poehling was finance director for UnitedHealthcare Medicare and Retirement, a subsidiary that works with the Medicare Advantage program. His complaint describes “a corporate culture that demands and rewards financial success from its employees,” including initiatives to increase a billing practice known as “risk adjustment.”

Mr. Poehling said that he and other employees were given “risk adjustment” targets and their performance was evaluated based on how well they achieved them.

Attached to his complaint was an email message from his division’s chief financial officer, Jeffrey J. Knutson, urging staff members “to really go after the potential risk scoring that you have consistently indicated is out there.”

“Let’s turn on the gas!” Mr. Knutson wrote. “What can we do to make sure we are being reimbursed fairly for the members and risk we take on more than what we are currently doing.

“When we meet next on our steering committee, I’d like to see what it would take to add another $100M to our 2008 revenue from where we are. What would be doable? What resources would you need? What technology would you need?”

Medicare initially paid the H.M.O.s a fixed rate per member, no matter what chronic conditions members had. That made the H.M.O.s avoid signing up unhealthy people, because they required more care, reducing the companies’ profits.

The approach changed in 2003, when the Centers for Medicare and Medicaid Services added a “risk adjustment factor” to its reimbursement schedules for managed care. That made H.M.O.s more willing to sign up unhealthy people, but it also gave them a new incentive: to make people appear sicker than they were. UnitedHealth had a unit that helped its subsidiaries and other insurance companies perform risk adjustment calculations.

Medicare Advantage’s rules require that for patient care to qualify for risk adjustment factors, a patient’s condition must be verified in person on a regular basis by a qualified professional.

But Mr. Poehling said that coding specialists would instead mine patient records, looking for hints of a possible long-term condition. When they found one, they would request the higher payment without going through the required in-person evaluation.

The realization that medical records could be mined for extra money appears to have given rise to a cottage industry of consulting firms offering to screen patient histories and look for indications of long-term health problems that could be used to increase Medicare reimbursements.

https://www.nytimes.com…

Innumerable studies that we’ve written about have shown that the private Medicare Advantage plans have gamed the system at the expense of taxpayers by surreptitiously selectively enrolling healthier, less costly patients, and then, when risk adjustment was introduced to correct for this favorable selection, the plans upcoded to qualify for higher payments by making the patients appear sicker than they really were.

Finally, the legal system has caught up with them. First a whistleblower suit was filed under the False Claims Act, and now, under the Trump administration, the Justice Department has joined in that action.

UnitedHealth contends that they complied with the program rules. Technically, that may be true. The Bush and Obama administrations along with Congress were complicit with efforts to ensure success of the private Medicare Advantage plans as a first step toward eventually privatizing the Medicare program. Insurance innovation has been praised by the privatizers. In this instance, innovation is enhanced by interpreting quite loosely the federal regulations on favorable selection and risk adjustment.

We need a little perspective here. There is no question that the insurers manipulated the system to gain a greater return than the actual health of their enrollees warranted. But private for-profit corporations have a responsibility to their shareholders to do precisely that – maximize returns – and they will every time.

Whether or not there is a technical violation of the regulations, it is the insertion of a rent-seeking intermediary that is the fundamental flaw here. Gaming favorable selection and risk adjustment does not occur in the traditional Medicare program. Gaming the system is expensive because it requires more administrative efforts to pull it off. The private plans have about five times the administrative costs of the traditional Medicare program, and we taxpayers are footing the bill.

The inferiority of the private Medicare plans is not a newly discovered fact. My very first Quote of the Day (before I realized what I was starting) was Congressman Pete Stark’s response to Karen Ignagni of AAHP (precursor to AHIP) who was boasting about Medicare + Choice plans (precursor to Medicare Advantage). She said that the the early results of the plans provided proof that the private sector could provide higher quality at lower costs. (In fact the evidence was the opposite in that Medicare + Choice plans soon began to pull out of the market because they could not deliver on that promise. But the market was saved by converting to Medicare Advantage on terms much more favorable to the insurers.) Pete Stark, not known for mincing words, responded to Ignagni’s praise of private Medicare plans by saying, “She’s full of more s*** than a Christmas goose.”

Obviously the insurers violated what should have been the intent of the laws and regulations. But they will always do that if it accrues to their benefit. The solution is simple: throw them out, fix Medicare, and then expand it to include all of us. An immediate benefit is that it would also end discussion of all of the flawed policies being considered under repeal and replace.

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Dismal projections for national health expenditures and the numbers of uninsured

Posted by on Thursday, Feb 16, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

National Health Expenditure Projections, 2016–25: Price Increases, Aging Push Sector To 20 Percent Of Economy

By Sean P. Keehan and colleagues at the CMS Office of the Actuary
Health Affairs, February 15, 2017

Abstract

Under current law, national health expenditures are projected to grow at an average annual rate of 5.6 percent for 2016–25 and represent 19.9 percent of gross domestic product by 2025. For 2016, national health expenditure growth is anticipated to have slowed 1.1 percentage points to 4.8 percent, as a result of slower Medicaid and prescription drug spending growth. For the rest of the projection period, faster projected growth in medical prices is partly offset by slower projected growth in the use and intensity of medical goods and services, relative to that observed in 2014–16 associated with the Affordable Care Act coverage expansions. The insured share of the population is projected to increase from 90.9 percent in 2015 to 91.5 percent by 2025.

http://content.healthaffairs.org…

Over this decade, with no further changes in our health care financing system, national health expenditures are expected to increase to one-fifth of our GDP. Unfortunately, our current health care financing system remains incapable of containing health care costs.

Perhaps more alarming is that this decade will reduce the numbers of uninsured by only six-tenths of one percent. Eight and one-half percent of the population will remain uninsured in 2025. Without change, our system will continue to fail to ensure that health care is a right for all.

On a personal note, our daughter-in-law is in Taiwan – her native country – where today she had major surgery for cancer. All went well.

Our son just sent a photo of the mission statement that is posted on the wall of her post-op room.

It begins,

Objective: To promote the basic human right of health

If only President Trump and his colleagues in the District of Columbia truly supported that concept and would act upon it…

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New CMS rules take good care of insurers

Posted by on Wednesday, Feb 15, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

CMS Issues Proposed Rule to Increase Patients’ Health Insurance Choices for 2018

Centers for Medicare & Medicaid Services (CMS), Press release, February 15, 2017

The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule for 2018, which proposes new reforms that are critical to stabilizing the individual and small group health insurance markets to help protect patients. This proposed rule would make changes to special enrollment periods, the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements; and announces upcoming changes to the qualified health plan certification timeline.

“Americans participating in the individual health insurance markets deserve as many health insurance options as possible,” said Dr. Patrick Conway, Acting Administrator of the Centers for Medicare & Medicaid Services. “This proposal will take steps to stabilize the Marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options. They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

The rule proposes a variety of policy and operational changes to stabilize the Marketplace, including:

Special Enrollment Period Pre-Enrollment Verification:  The rule proposes to expand pre-enrollment verification of eligibility to individuals who newly enroll through special enrollment periods in Marketplaces using the HealthCare.gov platform. This proposed change would help make sure that special enrollment periods are available to all who are eligible for them, but will require individuals to submit supporting documentation, a common practice in the employer health insurance market. This will help place downward pressure on premiums, curb abuses, and encourage year-round enrollment.

Guaranteed Availability:  The rule proposes to address potential abuses by allowing an issuer to collect premiums for prior unpaid coverage, before enrolling a patient in the next year’s plan with the same issuer. This will incentivize patients to avoid coverage lapses.

Determining the Level of Coverage:  The rule proposes to make adjustments to the de minimis range used for determining the level of coverage by providing greater flexibility to issuers to provide patients with more coverage options.

Network Adequacy:  The proposed rule takes an important step in reaffirming the traditional role of states to serve their populations. In the review of qualified health plans, CMS proposes to defer to the states’ reviews in states with the authority and means to assess issuer network adequacy. States are best positioned to ensure their residents have access to high quality care networks. Also plans will now be required to include only one0fifth of essential community providers (ECPs) within their networks, removing from the patient the option of receiving care from the other four-fifths of ECPs.

Qualified Health Plan (QHP) Certification Calendar:  In the rule, CMS announces its intention to release a revised proposed timeline for the QHP certification and rate review process for plan year 2018. The revised timeline would provide issuers with additional time to implement proposed changes that are finalized prior to the 2018 coverage year. These changes will give issuers flexibility to incorporate benefit changes and maximize the number of coverage options available to patients.

Open Enrollment Period:  The rule also proposes to shorten the upcoming annual open enrollment period for the individual market. For the 2018 coverage year, we propose an open enrollment period of November 1, 2017, to December 15, 2017. This proposed change will align the Marketplaces with the Employer-Sponsored Insurance Market and Medicare, and help lower prices for Americans by reducing adverse selection.

https://www.cms.gov…


CMS Proposed Rule:

https://s3.amazonaws.com…

CMS today released a new proposed rule allegedly designed to “protect patients” by stabilizing the plans offered in the ACA insurance exchanges. A cursory reading of the press release would tend to confirm this intent, but a careful reading of the release and especially the executive summary of the proposed rule will reveal that the rule is designed to improve the market for the insurers with a detrimental impact on potential enrollees of the insurance plans.

Revising the CMS rhetoric to match more accurately the actual impact on patients:

* Special Enrollment Period Pre-Enrollment Verification: Qualifying categories for special enrollment will be reduced, and documentation requirements increased. This will reduce the number of individuals with greater needs that the insurers would be required to accept outside of open enrollment – reducing adverse selection, but it will prevent many individuals who missed open enrollment because of the administrative burden from becoming insured.

* Guaranteed Availability: Insurers may apply premiums paid as a credit against unpaid premiums for the prior year, and then deny coverage because of non-payment for the current year. This will protect insurers from individuals who have difficulty paying the premiums, but at a cost of leaving individuals uninsured in spite of a good faith effort to pay current premiums.

* Determining the Level of Coverage: The insurers will be allowed greater flexibility in the variation of the actuarial values for the metal tiers. This greater flexibility will likely translate into less generous benefits for the beneficiary.

* Network Adequacy: The responsibility for regulatory oversight of network adequacy would be further shifted to the states. Although that would reduce the regulatory burden for the insurers, it would also threaten the adequacy of provider networks in states that have relaxed standards of how many physicians and hospitals would have to be included in the networks. Patients may find access to be impaired.

* Qualified Health Plan (QHP) Certification Calendar: Insurers would be allowed more time to incorporate benefit changes and maximize the number of coverage options available to patients. Allowing insurers more time to manipulate the benefits would allow them to reduce services more likely needed by the beneficiaries while increasing coverage for those services less likely to be used.

* Open Enrollment Period: The open enrollment period will be terminated six weeks earlier. This will protect insurers from many individuals with greater health care needs who often enroll later in the open period. This reduces adverse selection for the insurers but at a cost of leaving uninsured more individuals who have greater needs.

It is not only CMS that is catering to the insurers. Right now Congressional staff members are negotiating with representatives of the insurance industry to help write the replace and repair provisions promised by the politicians. It appears that the legislative proposals will be designed to protect and enhance the market for insurers, though at a cost of reducing the adequacy of coverage for the patients.

Why are we taking such good care of the insurers? We don’t even need them. We need a program that takes good care of patients – all patients. That would be an improved Medicare that includes everyone.

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We still know little about accountable care

Posted by on Tuesday, Feb 14, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Moving Forward With Accountable Care Organizations

By Carrie H. Colla, PhD; Elliott S. Fisher, MD, MPH
JAMA Internal Medicine, February 13, 2017

During the past 4 years, we have made great strides in advancing our understanding of the changes that hospitals and physician groups implement in response to changes in payment and how providers perform under alternative payment models. Accountable care organization contracts, one type of alternative payment model, hold groups of health care professionals responsible for the cost and quality of care delivered to patients. Accountable care organization programs attract a diverse array of providers with differing legal and governance structures, varied contracts, and mixed capabilities that span service dimensions. These capabilities may include care management personnel and programs, adoption of advanced analytics (eg, to estimate the risk of hospitalization), or support for shared decision making. On average, ACO patients are spending modestly less on health care services and are associated with improved patient satisfaction and other patient-reported measures, with gains often concentrated in high-need, high-cost populations. Previous exposure to risk-bearing contracts, greater numbers of dually eligible or disabled patients, and higher initial financial benchmarks have been associated with greater savings. At the same time, these results mask variation in performance, with some ACOs saving while others spend over their benchmark following ACO formation. In addition, these modest savings have come at a net cost to the Medicare program (both program costs and shared savings rewards) and, although some quality measures have improved, many have not.

The research presented in this issue of JAMA Internal Medicine provides insights from 3 different ACO payment models: the Medicare Shared Savings Program (MSSP), Colorado’s Accountable Care Collaborative, and Oregon’s Coordinated Care Organizations. All 3 programs show some degree of success, although the results continue to be modest in magnitude.

These findings are relevant to 3 major considerations facing policymakers: (1) concerns about the harms of consolidation, (2) the amount of risk bearing needed to produce changes in behavior, and (3) how to manage potential conflicts between alternative payment models.

Consolidation between clinical providers, such as purchase of physician groups by hospital systems, and striking the proper balance between facilitating clinical integration and limiting market power is a major concern. Many believe that continued survival of independent practices is critical, yet economic incentives favor consolidation due to higher reimbursement for the same service in a hospital-based office compared with a physician office. Hospital-physician group consolidation can also raise prices in less-competitive commercial markets through increased bargaining power vis-à-vis insurers.

Accountable care organizations are defined by their accountability for the cost and quality of care, but the degree of accountability for spending varies dramatically across contracts. The amount of financial risk bearing necessary to achieve behavior change is an important area of inquiry, in part because so little is known. The incentives in most existing alternative payment models, including ACOs, are commonly considered insufficient to result in behavior change.

A third issue concerns potential conflicts between Medicare alternative payment models and the poorly understood interplay of incentives across these reforms. Currently, hospitals retain savings within inpatient-initiated bundles for patients attributed to an MSSP ACO. Although incentivizing value within a bundle, bundled payment models do not eliminate the incentive to provide more bundles. As the Centers for Medicare & Medicaid Services expands alternative payment models, it is possible that bundled payment programs will undermine overall savings.

In summary, we still have much to learn. Accountable care organizations have been established across diverse market settings, using a multitude of organizational structures and approaches to governance and operations, and this heterogeneity is reflected in the heterogeneity of their performance. The 2 articles published in this issue add to a growing body of evidence on overall performance, several dimensions of quality, and spending. Nevertheless, we know little about the effects of ACOs on patients’ health and quality of life. Perhaps most important for ACO leaders and the long-term success of these programs, we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts. Although the Centers for Medicare & Medicaid Services has conducted rigorous evaluations of the Pioneer program, generalizable findings tailored to organizational contexts are few. A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform.

http://jamanetwork.com…

This lesson on accountable care, from the Dartmouth Institute, shows us that we still have much to learn. The respected authors state that a long-term commitment to alternative payment model evaluation is necessary. In the meantime, “we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts.”

We actually do have quite a bit of information, and it is unimpressive. What we cannot do is to allow a protracted course of many years or decades of studying accountable care to distract us from the urgent need to make changes that will ensure that everyone has affordable access to health care while dramatically reducing the profound administrative waste in our system.

The Affordable Care Act made some improvements, but not nearly enough as witnessed by the tens of millions uninsured and underinsured, by the failure to make health care affordable for too many of us, and by the perpetuation of the costly administrative excesses.

The next phase of reform being undertaken by our current Congress seems to be pending enactment of policies that would make markets work better for insurers but at a cost of leaving patients exposed to excessive out-of-pocket spending. They do not seem to be even pretending that accountability in shifting from volume to value is anything more than rhetoric (and the studies to date suggest this is true).

First things first. Let’s do what really works – enact a single payer national health program, an improved Medicare for all. It is a far better infrastructure to tease out data that might be used to actually improve quality while containing costs. But let’s not stall any longer on enacting the fundamental reform that we really need to make health care affordable for all of us.

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Republicans are now supporting the private insurers in the exchanges

Posted by on Monday, Feb 13, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Republicans, Aiming to Kill Health Law, Also Work to Shore It Up

By Robert Pear
The New York Times, February 12, 2017

After denouncing the Affordable Care Act as an abomination for seven years, Republicans in Congress, working with the Trump administration, are urgently seeking ways to shore up health insurance marketplaces created by the law.

While President Trump said as a candidate that “Obamacare is certain to collapse of its own weight,” Republicans fear such an outcome because, now that the fate of the health law is in their hands, they could be blamed by consumers and Democrats.

The administration is poised to issue a proposed regulation to try to stabilize insurance markets, and House Republicans are drafting legislation with a similar purpose. The regulation and the bills are intended to hold down insurance premiums and to lure insurers back into the public marketplaces from which they have withdrawn in the past couple of years.

https://www.nytimes.com…

There could not be better evidence that the Republicans never did have an effective plan to replace the Affordable Care Act than the fact that they are now advancing legislation to protect the private insurers in the ACA exchanges – reinforcing them rather than shutting them down.

So their strategy has changed from repeal and replace, and then to repeal and repair, and now simply to repair – repair that will protect the private insurers.

Many of the legislators are facing angry citizens at their town hall meetings who do not want to lose the health care benefits that they may have gained through ACA. That partially explains why they failed to deliver on their promise to “repeal Obamacare on day one.”

Many voters were supportive of repeal and replace, but the politicians and the voters had different objectives. The Republican politicians wanted to repeal the expansions of ACA and thereby reduce government spending on health care. Voters wanted changes (replacement) that would ensure that they could always receive health care that was affordable.

Considering this, it is understandable why the Republicans have not moved immediately forward with their replacement proposals. Reducing Medicaid funding through block grants would cause millions to lose their coverage. Switching Medicare to a voucher program would create greater financial burdens for Medicare beneficiaries. Changing market rules to promote bare-bones private plans is the Republican version of providing “access,” but that would make actual health care truly unaffordable for a majority of Americans with significant medical needs because the very high out-of-pocket expenses would be beyond the capabilities of most American family budgets.

The simmering anger is because ACA was inadequate for too many Americans, and it appears that the Republican “replace” proposals will leave millions worse off. The “replace” that people want is affordable health care, but not merely a continuation of the inadequate policies of the Affordable Care Act. What they really want, though some do not realize it, is an equitably funded, universal health insurance program – an improved Medicare for all. That would give all of us affordable access to health care, and not just access to nearly worthless private health plans.

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Tom Price confirmed as HHS Secretary

Posted by on Friday, Feb 10, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

How the GOP wants to fix health care

By Rep. Tom Price (Confirmed as HHS Secretary at 2:00 a.m. today)
Politico, July 30, 2009

I can attest that nothing has had a greater negative effect on the delivery of health care than the federal government’s intrusion into medicine through Medicare.

http://www.politico.com…

Man your stations.

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Health care is top concern of American families

Posted by on Thursday, Feb 9, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

3-in-10 struggling to maintain current financial situation

Monmouth University Polling Institute, February 7, 2017

Paying for health care has emerged as the top concern of American families, according to the latest national Monmouth University Poll. Two years ago this concern was clustered with job security and other household bills as causing the most anxiety for American households.

Currently, 1-in-4 Americans (25%) report that the cost of health care is the biggest concern facing their family right now. Two years ago, 15% reported this as their family’s primary concern. Anxiety about meeting health care costs now outpaces job and unemployment worries (14%) as well as concerns about paying everyday household bills (12%). Health care is the top concern of American families regardless of income level or partisan identity. A variety of other concerns register in the single digits, such as school costs (4%) and taxes (4%).

“The top three concerns were clustered together just two years ago. Now, health care has jumped to the top of the list as Americans grapple with balancing their household budgets,” said Patrick Murray, director of the independent Monmouth University Polling Institute in West Long Branch, New Jersey. “It’s also worth noting that issues that have been dominating the news, such as immigration and national security, rank very low on the list of items that keep Americans up at night.”

19. Turning to issues closer to home, what is the biggest concern facing your family right now? [LIST WAS NOT READ]

25% – Health care costs

14% – Job security, unemployment

12% – Everyday bills, groceries, etc.

4% – College tuition, school costs

4% – Taxes

3% – Housing, mortgage, rent

3% – Social Security, seniors

3% – Family illness, health

3% – The economy

3% – Safety, crime

3% – Immigration

3% – Civil rights

2% – Retirement saving

2% – Terrorism, national security

1% – Quality of government

1% – Education policy

1% – Trump as president

1% – Climate change, environment

2% – Other

10% – Don’t know/No answer

https://www.monmouth.edu…

Without being given a list of choices, when asked “what is the biggest concern facing your family right now,” the most common response was “health care costs” (25%). That places this concern well in front of job security (14%) and household bills (12%) with which it was tied two years ago. Although the improvement in the economy has reduced other concerns, health care has become the top concern of American families.

Although the Affordable Care Act did bring improvements, concerns have not been allayed. As the Republicans fumble around with their rhetoric of “replace,” “repair,” and “access,” it becomes ever more clear that they do not have a program that will reduce the health cost burden on most American families. In fact, many of the policies they support will increase the financial burden on individuals and families.

House Speaker Paul Ryan says that they will have a proposal in place by the end of next month. We know that the policies under consideration will not provide individuals with relief from the high costs of health care.

Since health costs are the number one concern of Americans, it is imperative that we intensify our message that the current financing system, even with the Republican tweaks, will leave the public vulnerable to high health care costs. But we have an answer! A well designed single payer national health program – an improved Medicare for all – will ensure that everyone has access to all essential health care services without being burdened by unaffordable premiums or out-of-pocket costs.

For those who would benefit from an elevator speech:  We can pay for it by reducing the profound administrative waste of our fragmented, multi-payer system (the waste of private insurers and the burden they place on the system); we can each afford it by funding the system through equitable tax policies (contributing based on ability to pay), and we can eliminate the perversities of high deductibles and narrow provider networks, eliminating surprise bills while giving us free choices of our health care professionals and hospitals.

Let’s get the word out ASAP. Congress is getting ready to move!

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Can high deductibles save money if the patient-consumer is informed?

Posted by on Wednesday, Feb 8, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

I’ve put my family on a health insurance experiment. It’s been a challenge

By Ashish Jha
STAT, February 6, 2017

Enrollment in high-deductible health insurance plans has exploded over the past five years. I’m learning the hard way how these plans do — and do not — work.

About one-third of American workers covered by health insurance are now in high-deductible health plans, in which the policy holder pays a substantial portion of the cost of health care services out of pocket before insurance coverage kicks in. Many economists and health policy experts believe that these plans are a promising way to reduce health care spending.

So when a high-deductible plan became available through my employer, Harvard University, a couple years ago, I decided to enroll my family in it. If this is going to be a big national experiment, I thought that I, as a physician and a health policy scholar, ought to know what it’s like to live with this kind of health insurance. Debra, my wife, was not convinced.

My family is now in its second year under a high-deductible plan. That means we are responsible for paying the first $6,000 of our health expenses for the year, for everything from a doctor visit for a flu shot to surgery.

It has been an educational enterprise.

Our experiment is showing me again and again that it’s extremely hard to be a health care consumer in Massachusetts — just as I’m sure it is in other states. Want to know how much a particular type of health care costs, like a visit to a specialist or getting a minor surgery? Good luck figuring it out. My insurance company’s online tool was hard to use and, even as a physician, I could almost never guess what sets of services a visit to the doctor might generate.

The second lesson was that being a health care consumer is stressful, at least the way the system is currently set up. Here’s an example. Our son had surgery last year. We got a call saying it was time for his one-year follow-up. Deb stressed for nearly two months over whether or not to make the appointment. Of course she wants our son to get the care he needs, but did he truly need this follow-up? That’s both the promise and the peril of high-deductible plans — they are supposed to make you think twice about consuming health care.

She eventually went with our son for his one-year follow-up — they spent two minutes with the surgeon — and paid $465 for the visit. I’m not sure my son, or my spouse, felt any better afterward. There were many examples like this sprinkled throughout the year, but the most profound one was the one I experienced for myself.

I have supraventricular tachycardia, a common heart rhythm problem. When it hits, my heart races at about 180 beats per minute. It comes on a couple of times a year, lasts a few minutes, and usually isn’t a big deal. But one morning I woke up with my heart racing. After 30 minutes, I wondered if I should go to the emergency department, knowing that I’d probably get stuck with a multi-thousand-dollar bill. So I kept waiting. After an hour, during which my heart kept beating furiously, my chest started to hurt. I knew what that meant — I was at risk of having a heart attack.

Deb asked me what I would tell a patient in this situation. That was easy: I’d tell him or her to call 911. But I kept waiting. Finally, about 15 minutes later, the abnormal rhythm finally broke and I felt my heart calm down. I was lucky — I had rolled the dice and things had worked out.

If we continue with high-deductible health plans the way they exist today, more and more people will experience what my family did — the stress of having to make medical decisions with little information and few choices. At best, we’ll have a health care system that might save a little money — but at the risk of harming the health of our citizens.

Ashish Jha, MD, is an internist at the VA Boston Healthcare System, and a professor of health policy at the Harvard T.H. Chan School of Public Health.

https://www.statnews.com…

There are two potential adverse consequences of requiring high deductibles in health insurance plans. Developing a serious medical problem can expose the individual to financial hardship. Even more serious is that the potential for financial exposure can cause an individual to make a terribly consequential decision in electing to forgo medical care because of the deductible.

Some say that we merely need to provide the patients with adequate information and then patients can make their own informed decisions. That is a fundamental principle in consumer-driven health care. But the rhetoric does not match the real world.

In this instance, a noted physician and professor of health policy, Ashish Jha, made a decision to protect his personal finances even though that decision could have cost him his life! As an optimally informed patient-consumer, he made the wrong decision, even though fortunately he escaped the worst consequences.

Several other nations that cover everyone at a cost much lower than ours are able to provide care with first dollar coverage – no need to use high deductibles in a misguided effort to contain spending. Surely the United States could do the same.

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Medicare Advantage coding intensity could cost taxpayers $200 billion

Posted by on Wednesday, Feb 8, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years

By Richard Kronick
Health Affairs, February 2017

Abstract

Over the past decade, the average risk score for Medicare Advantage (MA) enrollees has risen steadily relative to that for fee-for-service Medicare beneficiaries, by approximately 1.5 percent per year. The Centers for Medicare and Medicaid Services (CMS) uses patient demographic and diagnostic information to calculate a risk score for each beneficiary, and these risk scores are used to determine payment to MA plans. The increase in relative MA risk scores is largely the result of successful efforts by MA plans to identify additional diagnoses, also known as coding intensity, and not of changes in enrollees’ true health. In this article I estimate the effects of coding intensity on Medicare spending over the next decade. Under the moderately conservative assumption that coding intensity will decelerate, Medicare expenditures are expected to increase by approximately $200 billion. CMS has implemented a variety of strategies since 2010 that lessened the impact of coding intensity on Medicare spending; it has a variety of policy responses at its disposal to mitigate the impact going forward. The problem could be largely solved if CMS adjusted for coding intensity using the principle that MA beneficiaries are no healthier and no sicker than demographically similar fee-for-service Medicare beneficiaries, returning to the budget-neutrality approach that was introduced in 2004 and later abandoned.

From the Introduction

In the three decades that Medicare has been contracting with health maintenance organizations and other health plans, figuring out how to pay the plans accurately and fairly has posed a persistent challenge. Rapid growth in enrollment in Medicare Advantage (MA) plans has raised the stakes involved in getting the answer right: Over 30 percent of Medicare beneficiaries are enrolled in Medicare Advantage and account for an estimated $200 billion in Medicare payments in 2017, or approximately 1 percent of the gross domestic product.

House Speaker Paul Ryan’s proposal to convert Medicare into a premium support system raises the stakes even further. In such a system, beneficiaries might be required to pay a larger premium for traditional Medicare than for Medicare Advantage. It is critically important that any premium differential between traditional Medicare and Medicare Advantage under premium support reflect differences in efficiency, quality, and covered benefits, and not differences in risk selection or coding practices.

The inclusion of diagnoses in the payment system creates strong incentives for MA plans to report as many diagnoses as they can legitimately support—incentives that are not present in traditional Medicare. As a result, the average risk score for MA enrollees has increased by approximately 1.5 percent per year more than the average risk score of fee-for-service (FFS) Medicare beneficiaries over the past decade, with little indication that the relative morbidity of MA enrollees has actually increased. If this remarkably consistent rate of increase in relative Medicare Advantage risk continues over the next decade, Medicare payment will increase dramatically.

Despite the attention given to coding intensity by CMS and Congress over the past decade, unless there is a further policy response, Medicare will substantially overpay MA plans over the coming decade—likely to the tune of hundreds of billions of dollars.

From the Discussion

Political And Technical Obstacles

The political obstacles to a robust solution are formidable. Aggressive action to mitigate the effects of coding intensity would raise the ire of the Medicare Advantage industry and might well engender a lobbying effort involving the spectacle of buses circling the Capitol, with multitudes of MA enrollees imploring members of Congress to protect their benefits. The Medicare Advantage industry and enrollees would be angered by the prospect that aggressive response to coding intensity would increase premiums or reduce supplemental benefits enabled by the rebates that plans receive for bidding below their benchmarks.

In addition, aggressive action to mitigate the effects of coding intensity might raise concern among some policy makers about the stability and growth of the Medicare Advantage program.

The technical obstacle is determining how to accurately measure coding intensity. As discussed more fully in the Appendix, various reasonable approaches exist to measure the effects of coding intensity.

Budget-Neutrality

As originally conceived, the budget-neutrality adjustment was not designed as an adjustment for coding intensity, but it could serve that purpose well moving forward. It rests on a simple principle: namely, that MA enrollees are no healthier and no sicker than demographically similar FFS Medicare beneficiaries. If one accepts that principle, then it follows that aggregate payments to MA plans should be equal to the amount that would have been paid using demographic risk adjustment. As shown in this article, if CMS were to calculate the coding intensity adjustment using this principle, payments to MA plans would be approximately $200 billion less over the next decade than if the coding intensity adjustment remained at the statutory minimum of 5.91 percent.

Although there is evidence that the introduction of diagnostic risk adjustment using diagnoses from ambulatory care encounters in 2004 reduced favorable selection into MA plans, analyses by Joseph Newhouse and colleagues show that favorable risk selection into Medicare Advantage likely remains to some degree. More recent evidence provided by Pete Welch and me, and extended in Exhibit A-2 of the Appendix to this article, also suggests that MA enrollees are no sicker, and may well be healthier, than demographically similar FFS Medicare beneficiaries. Thus, the budget-neutrality method of calculating the coding intensity adjustment will result in payments to Medicare Advantage that are at least fair, if perhaps still slightly too generous.

Conclusion

The analysis presented in this article cannot solve the political problem of creating support for a robust response to the problems created by differential coding in Medicare Advantage. I hope, however, that this work will create the foundation for a solution to the technical problem by fostering a discussion of how best to measure and adjust for differential coding between Medicare Advantage and fee-for-service Medicare. Solving this problem is an important prerequisite to the establishment of a stable and equitable future for the current Medicare Advantage program, and even more important if Congress were to convert Medicare into a premium support system.

http://content.healthaffairs.org…

Some long-time readers of these messages may be bored by yet another article confirming that the private Medicare Advantage plans have been successful in being paid significantly more than we are spending for comparable patients in the traditional fee-for-service Medicare program, but it is crucial to understand that this is a major part of the strategy to privatize the Medicare program, and we taxpayers are being cheated as they pull off their scheme.

This year we will see intensified efforts to convert to a premium support program (vouchers) which will enrich private insurers as costs are transferred onto the backs of Medicare beneficiaries, with the goal of privatizing the entire Medicare program. Insurers win, patients lose, and the libertarian ideologues snicker in the background.

There are two methods by which the private insurers are overpaid. They engage in favorable selection – using devious methods to enroll healthier patients – thus spending less than they would if their enrollees were of average health. They also have gamed risk adjustment – qualifying for extra payments by submitting claims indicating that their enrollees are sicker than they actually are.

About one-third of these extra payments are used to enhance benefits, thus enticing seniors to enroll in their plans instead of the traditional Medicare program. You can imagine how attractive lower deductibles could be to individuals who just turned 65 and are used to dealing with private plans. By marketing heavily to them they further improve their favorable selection since those just 65 years old are the healthiest and least expensive members of the Medicare population.

And that other two-thirds of the extra payments? They keep that to help pay for their high administrative costs that characterize the unique waste in the U.S. health care financing system.

But why should Medicare Advantage patients receive more benefits than those remaining in the traditional program? If the same extra payments were used to reduce deductibles and coinsurance in the traditional program then there would be no reason to select the private plans, especially since there are no network restrictions such as those instituted by the private plans. More choice, at no extra cost.

You say you don’t want to increase taxes to pay for better benefits in the traditional Medicare program? Then, for the sake of fairness, at least decrease the overpayments to the private Medicare Advantage plans to the same level that we are paying for the traditional program. Of course, because of their administrative excesses, they could never compete, and they would just go away (just as they were doing under the Medicare + Choice program that was discontinued when the insurers proved that it was impossible for them to provide higher quality at a lower cost).

The study author, Richard Kronick, suggests that we switch to a budget neutrality method of correcting the overpayments. That might reduce the problem of differential coding for risk adjustment, but we could still face the deceptive, opaque methods the insurers use to gain favorable selection.

Regular readers know what the solution is. Throw out the private insurers, improve the traditional Medicare program, and then use it to cover everyone – greater value while ensuring health care access for all.

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Cutting the underfunded Medicaid program

Posted by on Monday, Feb 6, 2017

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

How Would Republican Plans for Medicaid Block Grants Actually Work?

By Aaron E. Carroll
The New York Times, February 6, 2017

There are only so many ways to cut Medicaid spending.

You can reduce the number of people covered. You can reduce the benefit coverage. You can also pay less for those benefits and get doctors and hospitals to accept less in reimbursement. Or you can ask beneficiaries to pay more.

None of those are attractive options, which is why Medicaid reform is so hard. Medicaid already reimburses providers at lower rates than other insurance programs. How do you reduce the number of beneficiaries when the vast majority of people covered are poor children, poor pregnant women, the disabled, and poor older people? Which of those would you cut?

Reducing benefit coverage has always been difficult because most of the spending has been on the disabled and poor older people, who need a lot of care. Beneficiaries don’t have much disposable income, so asking them to pick up more of the bill is almost impossible.

That doesn’t mean that states haven’t tried. As I’ve discussed in past columns, a number are attempting to increase cost sharing. But this isn’t really a solution because it doesn’t change overall spending much at all.

The fiscal magic behind a block-grants approach is that the federal government can then set how quickly the amount they’re responsible for will increase over time, regardless of how quickly medical spending grows. If a gap develops between how much a state needs to spend, and how much the block grant provides, it’s up to the state to make up the difference.

A recent New England Journal of Medicine article provides some perspective on how this might work by looking at what happened before Medicaid was created in 1965. Care for the poor in the 1950s was done through direct reimbursements to providers. It was calculated on a per-capita basis — the average cash and medical needs of those the programs covered. Those amounts were capped, based on age and demographics. This is quite similar to how many Republican proposals might function.

When these capped amounts weren’t enough to pay for the programs, states had to make cuts. They began to restrict who would be covered, what would be covered and how much care beneficiaries could use. Some states refused to cover children at all. Others didn’t cover doctors’ visits or drugs.

There’s no magic in how Congress reduces spending under a block grant mechanism. It just says it will do so, and leaves the hard decisions to others.

Why should Medicaid be a separate program for low-income individuals? Or Medicare for the elderly and those with long-term disabilities? Or a multitude of private plans based merely on employment status? Or, as the Affordable Care Act attempted to address, having to turn to the highly dysfunctional individual insurance market by default?

The most popular of these alternatives is Medicare. Why don’t we simply improve Medicare and then provide it for everyone? As a welfare program representing individuals with a weak political voice, Medicaid is vulnerable to budget hawks. If we had one program representing all of us, politicians would be motivated to protect the program rather than hacking it with a blunt cleaver.

https://www.nytimes.com…

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