More healthcare providers drop out of Medicaid

Posted by on Friday, Feb 27, 2015

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.

Medicaid Acceptance by Healthcare Providers Drops to 1-out-of-3

By Kev Coleman
HealthPocket, February 26, 2015

When HealthPocket first investigated Medicaid acceptance in 2013, it found that only 43% of the healthcare providers examined were formally listed as accepting Medicaid. Since the original 2013 study, Medicaid enrollment has continued to rise as the Affordable Care Act has led many states to increase the income eligibility range for the program. Medicaid, along with the Child Health Insurance Program (CHIP), currently covers approximately 1-in-5 people in the United States. This year, the temporary increase in Medicaid payments to primary care physicians discontinues with only 15 states indicating that they intend to maintain the payment increase (fully or partially). The reduction in Medicaid reimbursement to primary care physicians has brought with it a concern that Medicaid acceptance, already low among healthcare providers, will drop further.

HealthPocket found that in 2015 only 34% of the healthcare providers examined were listed as accepting Medicaid insurance. This represents a 21% decrease from the listings of Medicaid acceptance found in the 2013 data for the same categories of healthcare providers.

Since both the 2013 analysis and 2015 analysis relied upon the same government data source and provider record parameters, the marked decline in Medicaid acceptance is significant. In particular, the data calls into question whether the temporary increase in Medicaid payments to primary care physicians effected any lasting improvements to Medicaid acceptance.

Why Do Some Healthcare Providers Avoid Medicaid?

A common explanation given for Medicaid lower acceptance is the program’s reimbursement rate to healthcare providers. Medicaid typically pays 61% of what Medicare pays for the same outpatient physician services. To make matters worse, the Medicare payment benchmark is already lower than payments for the same services from private insurers. It is estimated that Medicare typically pays 80% of what commercial health insurers pay. Consequently, in comparison to commercial health insurance from private insurance companies, Medicaid payments represent a reduction on a reduction.

One of state governments’ responses to the problem is the use of managed care organizations to serve some portion of a state’s Medicaid population. However, as a 2014 Health & Human Services study noted, state standards regarding the ratio of primary care physicians to Medicaid managed care enrollees can vary widely (1-to-100 to 1-to-2,500) as do their methods for determining compliance with these standards. Consequently, Medicaid enrollees can face the prospect of long distances and/or long waits to access care under the program.

From the Conclusion

HealthPocket’s comparison of Medicaid acceptance listings from 2013 to 2015 illuminates an alarming trend for those dependent on Medicaid for their healthcare: a reduction in Medicaid acceptance occurring during a period of Medicaid enrollee expansion. How federal and state governments will reverse this trend remains to be seen. The temporary increase in Medicaid payments to primary care physicians from 2013 to 2014 does not appear to have produced a lasting increase in Medicaid acceptance and the expiration of this increase may contribute to further healthcare provider attrition from the Medicaid program.

http://www.healthpocket.com/healthcare-research/infostat/medicaid-accept…

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Guest Comment:

By Richard Gottfried, Chair, Committee on Health, New York State Assembly, and sponsor of A05062 (S03525), “The New York Health Act”

If the Medicaid recipient’s doctor were paid the same as my doctor, this wouldn’t be a problem.  And if we were all in the same health plan, the wealthy and well-connected would see to it that their doctors were paid fairly, and the rest of us (and our doctors) would share the benefit.  If we’re all in the same boat, we’ll all do better.

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Obamacare at Age Five: Access to Care

Posted by on Friday, Feb 27, 2015

by John Geyman, M.D.
Author of How Obamacare is Unsustainable.

Now that Obamacare (the Affordable Care Act or ACA) is just turning five years since its enactment in 2010, it is time to assess its progress and shortfalls. This is the first of three posts that will deal with its experience toward its major goals—expanding access to care, cutting costs and making care more affordable, and improving the quality of care. A fourth post will follow that deals with the takeaway lessons from this five-year experience.

The initial goal of the ACA was to extend health insurance to 32 million more people by 2019, about one-half of that number through expansion of Medicaid. Online insurance exchanges were to be set up by states or the federal government to allow people to comparison shop for new coverage. Most uninsured with incomes above 138 percent of federal poverty level (FPL) would be required to purchase insurance or face penalties. In order to help them to afford new coverage, those with incomes between 138 and 400 percent of the FPL ($32,913 to $95,400 for a family of four) would receive federal subsidies. New requirements were to be established for insurers, including prohibiting them from denying coverage based on pre-existing conditions, requiring them to cover 10 categories of defined benefits, requiring them to cover at least 60 percent of health care costs (actuarial value of the bronze plan, leaving patients responsible for the remaining 40 percent of costs), requiring insurers to accept every individual and employer that applies for coverage, and others.

Now, five years after the ACA’s enactment, these are some of its major accomplishments so far:

  • Federal health insurance exchanges have been set up in 37 states through the HealthCare.gov. marketplace, together with state exchanges in the other states.
  • After the first enrollment period ended in February 2014, there were 9.5 million fewer uninsured, with the uninsured rate among adults dropping from 20 percent to 15 percent; the uninsured rate for people in poverty fell from 28 percent to 17 percent in states that expanded Medicaid, but from only 38 percent to 36 percent in non-expanding states. (1)
  • In the second open enrollment period ending in February 2015, about 11 million people signed up, three-fourths in federal exchanges and the others through state-run exchanges; this number, however, includes many who were automatically re-enrolled from the first year and will likely drop a bit in coming months for failure to pay premiums, as occurred after the end of the first enrollment period.(2)
  • About 85 percent of the newly insured are expected to be eligible for subsidies, unless the U.S. Supreme Court rules them out, in which case it is expected that as many as 8 million will drop coverage in a chain reaction that would send premiums soaring. (3)

Although these sign-ups reflect significant progress, the ACA will fall far short of its goals, as shown by these examples:

  • At best, there will still be at least 30 million uninsured in 2019, plus  unknown millions more, especially those in the young adult 18-34 age  range who find the costs of insurance too high.
  • As a result of 22 states choosing not to expand Medicaid, almost 5  million people fall into the “Medicaid coverage gap,” earning too  much to be covered by existing Medicaid and too little to be eligible for subsidies (4); most non-expanding states require parents to earn less than 50 percent of the FPL ($11,925 for a family of four) in order to be eligible for Medicaid  (5), while some are even more restrictive (e.g. Alabama, which cuts off Medicaid eligibility at incomes of just 18 percent of FPL, just $4,293 for a family of four).(6)
  • Small businesses with less than 50 full-time employees, though eligible to purchase coverage through the Small Business Health Options Program (SHOP), have shown little interest in doing so, with many instead  dropping previous coverage and offering raises to employees as they seek coverage on the exchanges. (7)
  • As insurers seek to contract with lower-cost hospitals and physicians, they disrupt many patients’ choices and relationships with them. Networks are shrinking all over the country, with many patients unaware of whether their doctors and hospitals are in-network, vulnerable to high out-of-network deductibles and out-of pocket costs, and often having to change physicians.
  • With a shortage of at least 45,000 primary care physicians, and with only 20 percent of U.S. physicians practicing primary care, it is difficult for many people newly insured under the ACA to gain access to comprehensive care; a 2013 study found that only two-thirds of U.S. primary care physicians would accept new Medicaid patients, partly due to low reimbursement rates (8); and a December 2014 report found that one-half of 1,800 physicians listed by 200 private Medicaid plans in 32 states would not accept new Medicaid patients or were unavailable at their last known address. (9)
  • In order to gain eligibility for subsidies, most people signing up for coverage on the exchanges select “silver” plans with actuarial values of 70 percent; but that still leaves them responsible for 30 percent of their health care costs, which pose a financial hardship for many.
  • For many patients insured through the exchanges, constant changes in coverage and networks often result in surprise bills that are so confusing that they avoid going to the doctor. (10)
  • While the ACA requires coverage of “pediatric services,” they are so poorly defined that most states exclude coverage of children with special health care needs. (11)
  • The ACA has been very friendly to the health insurance industry, allowing them wide latitude to game expanded markets in their pursuit of profits. These examples make the point—permitting insurers to exclude 70 percent of essential community providers from their networks, allowing them to market limited benefit plans that pay a one-time cash benefit of as little as $10,000 or $20,000 upon diagnosis of a critical illness, and protecting them from losing money through a “risk corridor” program.

Based on the above, together with trends going forward, it is clear that the ACA has failed to remedy the nation’s access to care problem. In the next post, we will see how well it is doing in containing costs and making health care more affordable.

Visit John at: www.copernicus-healthcare.org and www.johngeymanmd.org

References:

  1. Collins, SR, Rasmussen, PW, Doty, MM. Gaining ground: Americans’ health insurance coverage and access to care after the Affordable Care Act’s first open enrollment. The Commonwealth Fund, July 10, 2014.
  2. Pear, R. Obama cites health plan tally of 11.4 million. New York Times, February 17, 2015.
  3. Alonzo-Zaldivar, R. As sign-up deadline nears, a new risk for Obama health law. Associated Press, February 13, 2015.
  4. Rau, J. Some seeking insurance told they didn’t qualify, others balked at cost, poll finds. Kaiser Health News, January 29, 2015.
  5. Glied, S, Ma, S. How states stand to gain or lose by opting in or out of the Medicaid expansion. The Commonwealth Fund, December 2013.
  6. Dispatches. The Progressive Populist, February 15, 2015, p. 22.
  7. Janofsky, A. Small businesses spurn health exchanges. Wall Street Journal, January 8, 2015: B 4.
  8. Decker, SL. Two-thirds of primary care physicians accepted new Medicaid patients in 2011-12: A baseline to measure future acceptance rates. Health Affairs 32 (7): 1183-1187, 2013.
  9. Pear, R. Half of doctors listed as serving Medicaid patients are unavailable, investigation finds. New York Times, December 8, 2014.
  10. Rosenthal, E. Insured, but not covered, New York Times, February 7, 2015.
  11. Grace, AM, Noonan, KG, Cheng, TL et al. The ACA’s pediatric essential health benefit has resulted in a state-by-state patchwork of coverage with exclusions. Health Affairs 33 (12): 2136-2143, December 2014.

Adapted in part from my new book, Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015.

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The soaring complexity of administrative processing systems

Posted by on Thursday, Feb 26, 2015

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.

Market Guide for Healthcare Payers’ Core Administrative Processing Systems

By Constance Sjoquist
Gartner, January 28, 2015

Payer CIOs need to enhance, append or replace their existing core administrative systems to more effectively compete in an increasingly complex healthcare environment. Vendors are developing newer or re-engineering existing solutions to meet this demand.

Market Direction

Historically, the vendor options for core claims administrative systems have been somewhat limited. A handful of legacy solutions have dominated the payer space for years. Often highly customized to a payer’s unique business environment or utilized only for a specific line of business (LOB), core administration systems have been expensive and difficult to replace, upgrade, enhance or consolidate without incurring significant risk or downtime.

In the last several years, an enormous amount of change has occurred in the healthcare market and is impacting payers’ requirements of their core administrative solutions. New demands include the need to comply with an increased number of regulatory requirements, manage a growing number of contractual arrangements and support new distribution channels. Payers are finding it necessary to make the shift from a historical group to a largely individual membership base and are seeking new and differentiated capabilities that will help ensure they can remain relevant and competitive.

In response, vendors in the healthcare core administrative space have begun to significantly shift their product strategy or market focus to address new payer challenges. While this has brought about innovation and choice, it has also led to a disparate market, causing confusion over what exactly the essential elements of a core administrative system are. Vendors that once dominated the market have recently merged or have been acquired, causing uncertainty around their future product road maps. Some vendors have completely dropped their product offerings for a particular LOB or have shifted their technology strategy to offer only nonlicensed software solutions.

Gartner receives a steady volume of inquiries and requests for information on core administrative vendors, as these run the business applications that necessitate an enormous amount of a payer’s IT resources and budget. Healthcare payers are looking to modernize their application portfolios, comply with government regulations and lower their cost of doing business. Payers are also seeking functionality that will allow them to support new health models, such as accountable care organizations (ACOs), pay for performance (PFP) and value-based networks (VBNs). Inquiries focus on who can provide new technology approaches to the development, deployment and management of existing core administrative applications, as well as which vendors offer solutions to support future payer needs.

Core administrative vendors are challenged to adapt and develop their solutions to address these disruptive changes in the healthcare industry, as well as to adapt to rapid advancements in technology.

Industry disruptions include:

 

  • * The shift from a wholesale (group) to a retail (consumer) decision maker requiring greater support for user-specific preferences
  • * Demand for transparency tools to support member enrollment, care and payment decisions
  • * Providers becoming risk-bearing entities requiring real-time information on payment and reconciliation in their provider applications that parallels payers’ application status
  • * Establishment of payer/provider contractual arrangements requiring increased coordination of information and workflows and greater accountability of services and payments
  • * Ongoing regulation and compliance changes requiring timely updates, audits and reports
  • * The expanding number of distribution channels requiring increased support for enrollment and related services

 

The healthcare market is expected to continue along a path of rapid change and innovation. There is great uncertainty as to where the market is headed and what technologies will be necessary to adapt and succeed. Core administrative vendors are aggressively vying for position and are competing to manage current expectations and address future client demands.

http://www.gartner.com/technology/reprints.do?id=1-28X3CQW&ct=150129&st=sb

This report from Gartner is instructive in that it demonstrates the profound increase in administrative complexity in health care, much of which is directly attributable to a dependency on markets as opposed what we would have under a publicly administered single payer system. Administrative functions in health care are essential, but it is the private sector that has created a bureaucratic quagmire. Gartner is just trying to help the private sector make sense of it.

This does not let the government off the hook. By supporting the current fragmented, dysfunctional model of health care financing, the government is placing a greater burden on the private sector. We are all paying the price in higher costs and in bearing the the burden of systemic inefficiencies. By design, a single payer system would reduce this administrative complexity.

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Majority must refund a portion of their ACA premium tax credit

Posted by on Wednesday, Feb 25, 2015

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.

Taxpayers Following ACA Rules, Refunds Take a Hit

H&R Block, February 24, 2015

So far in the 2015 tax season, H&R Block (NYSE: HRB), the world’s largest consumer tax services provider, is seeing a majority (52 percent) who enrolled in insurance via the state or federal Marketplaces paying back a portion of the Advance Premium Tax Credit (APTC). The average amount paid back is $530, decreasing the tax refund on average by 17 percent, according to analysis almost six weeks into the 2015 tax season.

The average tax penalty for not having insurance was $172, an indication that most taxpayers are paying more than the flat-fee of $95 per uncovered adult penalty many consumers anticipated.

“The level of payback of the Advance Premium Tax Credit is significant in that it’s costing taxpayers a large percentage of their refund – a refund many of them count on to pay household expenses,” said Mark Ciaramitaro, vice president of H&R Block health care and tax services.

For next tax filing season, it is important to note that the base penalty will increase to the greater of $325 or 2 percent of household income for 2015.

http://newsroom.hrblock.com/hr-block-taxpayers-following-aca-rules-refun…

So far, 52 percent of those receiving a tax credit last year to help pay their premiums for the ACA exchange plans are having to pay back an average of $530 – certainly an unpleasant surprise for individuals subsisting on modest budgets.

Fortunately, for most individuals that repayment will be through a reduction in their tax refunds rather than an additional payment to be made from funds on hand. Nevertheless, many people look forward to receiving their tax refunds in order to be able to meet other important expenses.

Under a single payer system, there is no premium to be paid and thus no need for subsidies based on income. It is much simpler and even more equitable to fund the entire system through progressive taxes.

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Why provider consolidation is not a cure-all

Posted by on Tuesday, Feb 24, 2015

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.

Research says hospital consolidation isn’t a cure-all for health care

By Tim Vogus, Associate Professor of Management at Vanderbilt University
The Conversation, February 23, 2015

In his new book, America’s Bitter Pill, Steven Brill dives deep into the history of the Affordable Care Act (ACA) and how it was passed. He concludes that, although providing more Americans with health insurance is worthy of praise, the ACA does far too little to address the costs of health care.

And he makes his own proposal for bringing costs down: consolidation. As hospital systems expand and eye ways to grow even more, Brill proposes that these systems start to insure patients as well as treating them. If the hospital system is the insurer, he reasons, it has an incentive to keep costs down. And these new integrated systems would treat all their patients’ needs from primary care, to surgery and more. In short – treating the whole patient.

Economists and other researchers have been looking at what consolidation, big integrated systems and dwindling competition mean for health care. And so far, it looks like consolidation isn’t a cure for high costs or a way to improve care. In fact, it might make it harder for hospitals to deliver care well.

Consolidation is already happening

Hospital consolidation is either “horizontal,” like buying a hospital and reducing the number in the market, for instance, or “vertical,” like buying clinics and physician practices.

The truth is that hospitals are already a long way down this road. Both kinds of consolidation are happening and in recent years there has been unprecedented consolidation, with more planned for 2015.

And the ACA creates an incentive for organization to consolidate and offer insurance by encouraging the development of Accountable Care Organizations (ACOs). These are networks of doctors, hospitals and other care providers that coordinate care for patients. The idea is that they save money by increasing efficiency because they care for all of the patients health needs. That means everything from primary care to specialists, hospital services and more. ACOs are especially prominent in Medicare, but the Department of Health and Human Services (HHS) is pushing for more of this quality- and value-based contracting over traditional fee-for-service.

Some critics say that consolidation in general means that hospital systems have a tremendous amount of market power – something that isn’t known for keeping costs down. But Brill argues that any concerns about the market power these systems would hold can be overcome by simple regulations to ensure minimum competition.

So in other words, both Brill and the ACA would push health care delivery toward large integrated entities that would manage the entire spectrum of patient needs from insurance to primary care checkups to cancer treatment to managing chronic disease. But research shows that consolidation has a poor track record of keeping costs down and that very large organizations have trouble delivering care and working efficiently.

Consolidation doesn’t have a track record of keeping costs down

Earlier attempts to control costs through consolidation did not succeed. In the 1990s integrated delivery networks attempted to lower costs, but failed due to financial losses from purchasing physicians practice, difficulties with integration and managing risk. Researchers argue that new attempts to control costs through consolidation are likely to experience similar disappointing results.

Martin Gaynor of Carnegie Mellon and Robert Town of the University of Pennsylvania’s Wharton School summarize recent research indicating that increases in consolidation – and the resulting lack of competition – lead to higher health care costs. And these increases are especially high in consolidated markets with few hospitals.

Beyond higher costs, consolidation can also reduce the quality of care provided. Research from outside the US suggests that increases in consolidation can have a negative impact on survival from heart attack. Concentrated markets also mean less choice for patients when it comes to choosing hospitals or doctors, and research indicates that more choice can lead to better health outcomes for procedures like coronary artery bypass graft surgery.

Bigger systems don’t always make for better care

Brill also ignores another major problem: integrating and operating a very large or consolidated health system is hard.

In research at a large, academic medical center, Brian Hilligoss and I found even simple, everyday care transactions and decisions are fraught with problems. Different units, like general medicine and emergency, have different workplace cultures and different ways of operating, which can make integration difficult. Units might be interdependent, but their administration is separated. And the physical size of these organizations matters too. The hospital we studied occupied over 6 million square feet putting a lot of physical distance between units and between doctors and patients. In our study we found that these factors led to a heavy reliance on technology to coordinate care rather than direct communication.

In another study Hilligoss found that this poor integration between different units in the hospital means that doctors rely on an elaborate process of “selling patients” to other departments in order to transfer them. One department has to make a case for the patient to be transferred to another department, even if that is where they objectively need to be. And inpatient services have the right to refuse transfers.

We found that physicians have to consistently engage in elaborate workarounds to carry out their work. And nurses face similar challenges in complex organizations. Anita Tucker of Brandeis University documents how, like doctors, they frequently encounter operational failures like missing materials and information that require workarounds.

Mergers don’t always mean coordinated care

The consolidation encouraged by Brill exacerbates all the challenges identified in this research. For example, in her book Code Green, Dana Beth Weinberg documents how the merger of Beth Israel and Deaconess hospitals in Boston had profound effects on the way care was delivered at the bedside. The merger prioritized cost reductions through higher patient loads for each nurse which undermined Beth Israel’s comprehensive and influential primary nursing model. In practice that meant shifting critical patient care tasks away from highly skilled registered nurses to less skilled aides which compromised care quality.

And early evidence from Accountable Care Organizations suggest that is difficult for different organizations to integrate their cultures. Sara Kreindler of the University of Manitoba and colleagues examined early Accountable Care Organizations and found that in no case did these organizations see themselves as integrating different groups into one whole. In fact, the organizations studied painstakingly avoided the idea of integration.

While Brill’s work offers a compelling personal narrative and a provocative and thorough recounting of the development and passage of the ACA, it has substantially less to offer as guidebook for change. He fails to sufficiently grapple with existing economic research, earlier attempts to achieve similar aims, and the real difficulties posed by consolidation for those doing the hard work at the point of care delivery.

(The article includes links to resources cited plus a response by Steven Brill and a reply by the author.)

http://theconversation.com/research-says-hospital-consolidation-isnt-a-c…

Considerable attention has been directed to the phenomenon of provider consolidation. It is celebrated by some as a means of providing greater efficiency and quality by means of integration of services, advancing the model of accountable care organizations. Others have criticized consolidation because of its anti-competitive influence on markets, driving prices ever higher.

This article by Professor Tim Vogus is presented in its entirety since it explains why we need to look elsewhere than provider consolidation if we truly want to improve value delivered by our health care system.

If we had publicly-administered health care financing through a single payer system, then consolidation would not be a tool of gaining greater market leverage and thus higher prices. Rather, consolidation would occur only if it improved the delivery of care. Single payer is a much more effective way of achieving our goals of improving quality while controlling costs.

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Evaluation of the Comprehensive Primary Care Initiative: First Annual Report

Mathematica Policy Research, January 2015

In October 2012, the Center for Medicare and Medicaid Innovation of the Centers for Medicare and Medicaid Services (CMS), in a unique collaboration between public and private health care payers, launched the Comprehensive Primary Care (CPC) initiative to improve primary care delivery in seven regions across the United States. …The substantial transformation … is expected to achieve better health care, better health outcomes, and lower costs.

http://www.mathematica-mpr.com/our-publications-and-findings/publications/evaluation-of-the-comprehensive-primary-care-initiative-first-annual-report  p. xiii

Some managed care proposals lack evidence but can be subjected to testing to see if they work. Other managed care proposals lack evidence and cannot be tested because they are too vaguely described. The “patient-centered medical home” (PCMH) is an example of the latter. The Comprehensive Primary Care Initiative, a test of the PCMH “model” being conducted by the Center for Medicare and Medicaid Innovation (CMMI), illustrates the problem. It tests too many vaguely defined variables at once.

First, a word about labels. The CMMI chose the label “comprehensive primary care” (CPC) rather than “medical home” for an insubstantial reason: It wanted to involve multiple insurers in the experiment, and in their view previous “home” experiments used only single insurers. But “CPC” is clearly just the PCMH concept with a different label. CMMI tells us the CPC Initiative “builds on the ‘medical home’ concept,” and that it is authorized by Section 3021 of the Affordable Care Act, which mentions the “patient-centered medical home” but not “comprehensive primary care.”  Not surprisingly, the CPC Initiative is widely seen as a test of the PCMH concept.

Here is how the CMMI defines the CPC experiment:

Over the next four years, the Comprehensive Primary Care Initiative will evaluate whether a core set of comprehensive primary care functions, coupled with payment reform, enhanced data to guide practice improvement, and the meaningful use of health information technology, can achieve better health, better health care, and lower costs through continuous improvement.  (p. 1)

Notice first that four variables are being tested at once:

• “a core set of … care functions” (i.e. the usual “features” attributed to “homes”)
• “payment reform,”
• “enhanced data,” and
• “meaningful use of HIT.”

Multiple components within the thing being tested – the intervention, the drug, etc. – is not necessarily an impediment to testing. Scientists often test entities or methods that contain multiple variables; the “Mediterranean diet” and the Diabetes Prevention Program are examples. What makes the CPC “model” untestable is the vagueness of all four of the variables. Any one of these variables alone would be impossible to test. Bundling all four into a single “model” creates a conceptual mess.

To grasp how messy this “model” is, please click here and view the circular diagram.  Viewer discretion is advised. At first glance you think you’re looking at a mandala from the cover of a Grateful Dead album. Upon closer examination you realize you’re looking at an attempt by your government to explain the “logic” of the CPC Initiative. This mandala bears the title, “Comprehensive Primary Care Initiative Logic Diagram.” (You can find this title if you click here and scroll down to “additional information.”)

The mandala attempts to explain each of the four elements of the CPC “model,” but further explanation only deepens the viewer’s sense of being drawn down a rabbit hole where you hear words coming out of people’s mouths but they’re not making sense. For example, we discover that the first variable – “comprehensive primary care functions” – consists of five “functions.” These functions have labels we have heard before from “home” advocates such as “patient and caregiver engagement” and “coordination of care across the medical neighborhood.” How do we operationalize (reduce to measurable components) “engagement”? How would we know that patient X is “engaged” while patient Y is “unengaged”? How do we operationalize “coordination” and “medical neighborhood,” much less coordination “across” said medical neighborhood?

CMMI’s mandala is no better at explaining the other three elements of the CPC “model.” To take one example for each of those elements:

• “enhanced accountable payment” somehow consists of “strategic use of practice revenue”;
• “continuous improvement driven by data” somehow consists of “culture of improvement”; and
• “use of HIT” includes “continuous improvement of HIT.”

“Accountable payment”? “Strategic use?” “Culture of improvement?” “Improvement of HIT,” continuous or otherwise? How would we recognize these things (sorry, “thing” is the best descriptor I can come up with) if we happened to stumble over one?

CMMI attempted to operationalize the four variables by listing a series of tasks each “practice” must complete. (In the “medical home” rabbit hole, there are no “clinics” anymore. They are all “practices.”) CMMI calls these tasks “milestones.” The “milestones” become more numerous and specific over the course of the four-year demonstration (click here to see all the “milestones”). Here are the nine “milestones” for the first year (2013) as reported by Mathematica in their report on the first-year of the CPC experiment:

• Estimate CPC revenues and develop a plan for their reinvestment in the practice.
• Stratify patients by risk status and provide care management to high-risk patients.
• Ensure 24/7 access to the medical record for the practice’s providers.
• Assess and improve patient experience with care by conducting a patient survey or forming a patient and family advisory council … that meets quarterly.
• Use data to guide care improvement by selecting one quality and one utilization measure on which to focus.
• Improve care coordination in the medical neighborhood by selecting one area for focus.
• Improve patient shared decision-making capacity by selecting one decision aid.
• Participate in the regional learning community.
• Attest to Stage 1 meaningful use. (Table 6.1, p. 82)

Mathematica assures us these tasks not mere busywork. “While the Milestones themselves are not evidence based,” writes Mathematica, “they are rooted in strong conceptual thinking about what activities a practice needs to pursue to achieve comprehensive primary care.” (p. 81) This is classic managed care gibberish. The key phrases are so abstract they could mean anything, and the logic is circular. (The “milestone” requiring use of a decision aid is in fact evidence-based, but it is the only one.)

These milestones are more specific than the mushy labels in the CPC “logic” mandala, but they are still so vague they leave enormous latitude for clinics to react with diverse activities – activities so diverse that the uniformity of behavior necessary to test any milestone is impossible to achieve. Is the “patient and family council” (PFAC) a bona fide council if it consists of one patient and one family member? How would a clinic know when it has “focused” on its “one quality measure” or on “coordination in the medical neighborhood”?

Here, from the Mathematica report, is an example of how the amorphous “milestones” encourage diverse behaviors:

Among the 100 practices that choose to form a PFAC to help assess and improve patient experience with care, all reported having more than one patient on the PFAC. … The most common area of focus – communication – was chosen by 59 percent of practices. (p. 85)

So some PFACs will have more than two patients, some won’t. Some will “focus” on “communication,” whatever that means, and others will “focus” on something else. (Incidentally, do two-patient advisory committees reveal “strong conceptual thinking?”)

The CPC Initiative, like all tests of the “medical home,” attempts to assess the impact of too many vaguely defined variables at once. It is time to terminate experiments testing the fuzzy “home model” and shift the funds to experiments that test more plausible and more testable hypotheses. If the goal of the PCMH movement is simply to strengthen primary care, then let’s funnel more resources into primary care. If the goal is to take better care of chronically ill patients, then let’s conduct research on specific services for specific types of patients and, for those services that are shown to work, let’s invent a billing code for them and pay for them.

Kip Sullivan, J.D., is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.

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Government endorses Medicare Advantage upcoding fraud

Posted by on Monday, Feb 23, 2015

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 pitches 1.1% boost to Medicare Advantage payments

By Bob Herman
Modern Healthcare, February 20, 2015

The CMS has proposed increasing health insurers’ Medicare Advantage payment rates by 1.05% for 2016, a move that kicks off a 45-day dogfight in Washington before the rates are cemented.

The base rate was an 0.95% average decrease, but “when combined with expected growth in plan risk scores due to coding,” Advantage plans will actually receive the 1.05% hike in revenue next year, according to a release from the CMS posted late Friday afternoon. Risk scores relate to how Medicare pays for the health status of beneficiaries. CMS pays more for patients who have more health conditions and less for those who are healthier.

Like last year, Advantage plans that earn at least four stars out of five will receive a 5% bonus payment in 2016, the CMS said. Any plans with 3.5 stars or fewer will continue to get no additional payments.

Breaking from proposals in the previous two years, the CMS said it will not propose any adjustments to the use of home visits for patient risk assessments. Many Advantage plans diagnose the severity of patients’ illnesses at home instead of in a physician’s office. But this has raised concerns that many plans are falsely inflating the diagnoses in a bid to warrant higher payments for sicker members, a process called upcoding.

Medicare Advantage’s risk-assessment process has been under fire from policymakers and consumer advocates who argue private insurers are purposefully bilking money from the program, which covers 17.3 million people as of this month. The Medicare Payment Advisory Commission has said the risk scores of Advantage patients have grown more rapidly than those of regular fee-for-service beneficiaries, and the current risk-score payment reductions mandated by the Affordable Care Act may not be enough.

Humana, one of the largest Advantage insurers in the country, disclosed this week that it is facing increased scrutiny from the U.S. Justice Department for its risk-adjustment practices.

Health insurers have already begun their Medicare Advantage lobbying campaign in the hope of extracting higher rates come April. The Coalition for Medicare Choices, part of America’s Health Insurance Plans, has aired several ads featuring seniors advocating for the private plans.

Many members of Congress have also weighed in on the process. A bipartisan group of 53 senators, led by Chuck Schumer (D-N.Y.) and Mike Crapo (R-Idaho), sent their own letter to Tavenner this week urging the agency to “minimize disruptions for beneficiaries enrolled in the MA program by maintaining payment levels and providing a stable policy environment for 2016.”

The health insurance industry also happens to be one of the top financial backers of Schumer and Crapo. Since 2009, health insurers have given more than $493,000 to Schumer’s campaigns and more than $234,000 to Crapo’s, according to OpenSecrets.org.

http://www.modernhealthcare.com/article/20150220/NEWS/150229988

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CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans

CMS Press Release, February 20, 2015

The Centers for Medicare and Medicaid Services (CMS) today released proposed changes for the coming year for the Medicare Advantage (MA) and Part D Prescription Drug Programs that will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

The proposed changes reflect the commitment to a Medicare program that delivers better care, spends health care dollars more wisely and results in healthier people.

http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Pre…

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NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter

CMS, February 20, 2015

Section H. Medicare Advantage Coding Pattern Adjustment

Below we offer three analyses that strongly suggest that the health status of MA enrollees is no worse, and more likely is better, than the health status of FFS beneficiaries of similar age, gender, Medicaid, and institutional status. These include analyses of self-reported health status and mortality rates, as well as Part D drug information.

Self-Reported Health Status. Analysis of self-reported data on health status and on whether the respondent has ever been diagnosed with one of a variety of conditions from the 2006-2011 Medicare Current Beneficiary Survey (MCBS) suggests that the average risk for MA enrollees is approximately 96% of the average risk for FFS beneficiaries.

Mortality Rates. Mortality rates for MA beneficiaries are significantly lower than mortality rates for FFS enrollees. For example, in 2012, the mortality rate in MA was 81% of the mortality rate in FFS. (It is possible that lower mortality rates result from better quality of care in MA, but it seems more likely, given the size of the difference, that this reflects, at least in part, relative health status.)

Part D Drug Information. MA enrollees are significantly less likely than FFS beneficiaries to be prescribed drugs that are predictive of high expenditures. HHS has used information from Part D data to construct risk scores for MA and FFS enrollees, and has found that MA enrollees are at significantly lower risk than demographically similar FFS beneficiaries.

Of the three sources of information that are independent of the diagnoses reported by MA plans, each suggests that MA enrollees are at similar or lower risk than demographically similar FFS beneficiaries.

CMS Advance Notice (172 pages): http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Down…

Letter from U.S. Senate members to Marilyn Tavenner, CMS Administrator:http://www.usatoday.com/story/news/nation/2015/02/20/medicare-advantage-…

The 2016 base rate for private Medicare Advantage (MA) plan payments was to have decreased by 0.95%, phasing in a correction of the overpayments that have been made to the MA plans. Instead, CMS will increase the payment rates by 1.05%, a full 2.0% increase over the projected base rate. This is the fourth year in a row that CMS has violated the intent of ACA and other legislation to bring MA rates down to the equivalent of payments made in the traditional fee-for-service Medicare program.

CMS’s Advance Notice provides three sources of evidence demonstrating that the MA patients are a healthier subset of patients than those in the traditional Medicare program. Since this results in adverse selection in the traditional Medicare program, the rates paid to MA plans should be even lower than payments made in the traditional program, not higher.

The record is now clear that the MA plans have been using various methods of upcoding the severity of illness of their customers (known to us as patients) thus qualifying for higher risk adjustment payments. One of the latest schemes is to make home visits, not to provide more care but merely to try to find more diagnoses to be used in inflating risk adjustments – diagnoses that do not appear in the billing documents from physicians and hospitals! Although this abuse is widely recognized, CMS said “it will not propose any adjustments to the use of home visits for patient risk assessments.” This is at a time that the Justice Department has increased its scrutiny of these likely criminal acts.

As if we didn’t have enough reason to be disgusted with our government, over 50 Senators have sent a letter to CMS Administrator Marilyn Tavenner requesting preservation of the overpayments made to the MA plans. The rhetoric of the letter is clearly that of America’s Health Insurance Plans (AHIP) – the lobby organization for the health insurance industry. To no surprise the lead signers of the letter, Senators Mike Crapo and Charles Schumer, between them have received from the insurance industry close to three-quarters of a million dollars.

The Coalition for Medicare Choices has already begun its intense campaign to drum up public support for MA overpayments, of course disguised as protecting Medicare. It surely surprises no one that this organization is headquartered not only in the same building as AHIP, but it even shares the same suite.

Perhaps even more ominous is the statement in the CMS press release that states that the proposed changes “will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.” And the the Senators’ letter that states, “At the time of broad agreement on the need to shift U.S. health care to focus on care coordination, quality, and value-based payments, it would be counterproductive to jeopardize a program that is already driven by and aligned toward those goals.” This political support of MA plans clearly advances the agenda of privatizing Medicare – only one step away from converting to a defined contribution premium support (voucher) program – the dream of the private insurance industry.

So who is paying the higher costs of these private MA plans? We, the taxpayers, and the beneficiaries in the traditional Medicare program who are paying higher Part B premiums to help fund this gift to the private insurers.

If there were even a thread of moral fiber left in D.C., instead of shamelessly supporting overpayments to the private insurance industry, our representatives would be advocating for using those funds to improve benefits for all Medicare beneficiaries. Under that scenario, the private insurers who are keeping three-fourths of the overpayments, would be dismissed. But then Crapo and Schumer would likely decide that three-quarters of a million dollars is too dear of a price to pay for a strand of moral fiber.

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Why high-risk pools won’t work

Posted by on Friday, Feb 20, 2015

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.

Why High Risk Pools (Still) Won’t Work

By Jean P. Hall
The Commonwealth Fund, February 13, 2015

As the new Congress convenes and the Supreme Court prepares to hear arguments in the King v. Burwell case challenging tax subsidies for insurance purchased through the federally facilitated marketplaces, proposals to repeal and replace the Affordable Care Act (ACA) are resurfacing. Many of these rely on high-risk health insurance pools to cover people with preexisting health conditions.

In fact, the risk pools are suggested as a viable alternative to the ACA’s ban on preexisting condition exclusions in the individual market and the marketplaces. My recent analysis of high-risk pools, however, explains why these entities simply are not a realistic alternative to coverage requirements under the ACA. In a nutshell, high-risk pools:

  1. are prohibitively expensive to administer,
  2. are prohibitively expensive for consumers to purchase, and
  3. offer much less than optimal coverage, often with annual and lifetime limits, coverage gaps, and very high premiums and deductibles.

Recent proposals to replace ACA reforms with high-risk pools focus on using state-based programs, but historical experience with 35 state-based high-risk pools and more recent experience with the national Pre-Existing Condition Insurance Plan (PCIP) illustrate the problems with this approach. Even though state-based high-risk pools charged premiums of up to 250 percent of those charged to healthy beneficiaries in the individual insurance market, premium revenues paid just 53 percent, on average, of program costs. In addition to these high premiums, enrollees in state-based high-risk pools faced annual deductibles as high as $25,000 and annual coverage limits as low as $75,000. Past research indicated that high costs and limited benefits associated with high-risk pool coverage resulted in delayed or forgone care and adverse outcomes for enrollees. Many also accrued medical debt despite having insurance.

For these reasons, use of high-risk pools in lieu of marketplace and Medicaid expansion coverage would result in greater state and federal costs, fewer people with preexisting conditions able to obtain coverage, and coverage that fails to meet the often greater needs of people with chronic conditions.

http://www.commonwealthfund.org/publications/blog/2015/feb/why-high-risk…

Brief: Why a National High-Risk Insurance Pool Is Not a Workable Alternative to the Marketplace

http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2…

Those who wish to repeal or at least drastically reduce the provisions of the Affordable Care Act realize that they must come up with a replacement.

Most of the proposals would grant much greater flexibility to insurance products while reducing regulatory oversight. The problem that creates is that individuals with high medical expenses tend to be shut out of the insurance market. To ensure coverage for these individuals, high-risk insurance pools have been proposed.

This article and the brief that it is based on explain why high-risk pools are not a satisfactory solution. The premiums are unaffordable, and the pared-down benefits are unsatisfactory. These over-priced plans do not provide the financial protection that patients with chronic disorders need.

Even with the Affordable Care Act, enrollment in the temporary high-risk pools had to be closed early because they proved to be too expensive, threatening depletion of the allotted funds. They provide poor coverage at a very high cost.

With a single payer system this problem disappears. Funding is based on ability to pay, through the tax system, and not on the basis of anticipated medical expenses. Everyone receives the care they need, regardless of their health status. The fragmented plans supported by the repeal and replace people cannot do that.

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Student activism for single payer

Posted by on Thursday, Feb 19, 2015

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.

Report Back from the 4th Annual Students for a National Health Program (SNaHP) Summit

The 4th annual SNaHP summit took place on Saturday, February 14, 2015, on the medical campus of the University of Illinois-Chicago. More than 170 medical and health professional students from over 50 schools gathered to discuss single payer, develop their activism and advocacy skills, and create a national strategy for achieving Medicare for All. There were students from states that had never been represented before including, among others, Alabama, Florida, Tennessee, and North Carolina. The fact that so many students, more than double the number that attended the prior year, flocked to Chicago on Valentine’s Day is a testament to the growing commitment of health professional students to achieving equitable and universal access to health care. Click on the link below to view presentations and photos from the conference.

http://www.pnhp.org/student-summit

Guest Comment:

By Scott Goldberg, MS3 

I had the honor of delivering the opening address – entitled “Where We’ve Been and Why We’ll Win – at the 4th annual SNaHP summit. The talk focused on the century-long struggle for national health insurance, what we can learn from these efforts, and why students are well-positioned to spark a broad, social movement for single payer. Here is an excerpt from the speech:

“Now, I’m not disillusioned by the 100-plus year history of failing to achieve national health insurance. In fact, there are important lessons that can inform our efforts and that give me hope that we will be successful where those before us were not.

First, the AMA has opposed single payer since 1917. But while the AMA could honestly say it represented the voice of doctors, it no longer can. Only about 20 percent of physicians are members. This provides an opening, for another physician organization to step into the void that speaks on behalf of what is just and right for patients. You may see where I’m going with this – but this is where Physicians for a National Health Program comes in. PNHP is the only physician organization dedicated to the sole purpose of transforming American health care by passing NHI. And the organization can only grow. If there are 800,000 active doctors in this country, then about 2.5% of them are members of PNHP. This means we, as students and future doctors, have a lot of work to do to get our colleagues to sign up. We should be doing this on a daily basis. Think about all the time you spend with fellow students, residents and even attendings. Think about how many times the issue of insurance comes up and you want to scream out: “If we had single payer, this would not be an issue!” Now, every time that thought comes to mind, do something about it. Mention single payer and encourage those around you to sign up for PNHP. These conversations are not, at the core, political. They are essential to the foundations of our profession, and we must normalize them. I want you to recruit at least one new colleague to PNHP each month. It’s a modest ask, but if everyone here does it we’ll have nearly 2,000 new members in a year. Then, we can start to envision a future where PNHP will usurp the AMA as the organization that speaks on behalf of doctors.

While the AMA might have been a major barrier to NHI in the 20th century, our biggest barriers now are private health insurance companies and Big Pharma. You all know that we are facing one of the most well-financed and formidable opponents in American history. Both have fought tooth and nail against single payer with their army of lobbyists and have contributed heavily to candidates for public office to protect their position and maximize their profits. It is no secret that they spent $173 million to defeat the public option, which amounted to about a million dollars a day during the debate over health reform. So when we talk about single payer, we must talk about the massive profits reaped at the expense of patient care. The neoliberal corporate agenda has infiltrated health care and we must vigilantly fight back against the idea that health care is a commodity and, instead, declare that health care is a public good that all Americans, regardless of race or class, should have access to.

But I am not discouraged by our well-resourced foes for three reasons. One, their arsenal of smear tactics is dwindling. The fear of “socialized medicine” is waning. Communism coming to America is an outdated notion. Two, these companies are universally despised. A recent poll demonstrated that almost all Americans believe that private insurance companies are the biggest problem in our system. So there’s our message right there – we must get rid of private insurance companies to have real health reform. Three, ultimately, the system cannot function without us. If we remain silent, we will only allow these companies to continue to reap massive benefits at the expense of our patients and our professional code of ethics. If we, as health care providers, are united in opposition, we will not be defeated.

You may believe that after 100 years of struggle we will never achieve single payer. But let me tell you why we will win and what we have to do to get there.

I want you to look around you. Our movement is growing exponentially. There are now 35 student PNHP chapters, with 10 new ones in the last year alone. There are 19,602 PNHP members, 731 of whom are students. The second SNaHP summit had 40 students, the third had 80, and the fourth has 160. I emphasize this growth because, historically, students have been the stimulus and source for broader activism. Just recently in Chile, following three years of nationwide student protests, the country will make college tuition-free and are paying for it with a 27% tax on corporations. Look at the civil rights movement in the US. It was the Student Nonviolent Coordinating Committee (SNCC) that spearheaded the civil rights movement. The Freedom Riders, not all, but the majority were young people and students. Over time, it grew and became a mass popular movement and achieved historic things. We don’t know the names of the leaders of SNCC, but that is the point with movements. We know the name of Martin Luther King Jr, but who do you think organized the marches, the talks, the sit-ins? Members of SNCC did. They did the heavy lifting of organizing, going door to door, and putting their lives on the line. Our movement does not need a figurehead. It needs unified direct action.

As Noam Chomsky has said: ‘Direct action carries the message forward in a very dramatic fashion. Direct action means putting yourself on the line. It indicates a depth of commitment and clarification of the issues, which often stirs other people to do something.’ Achieving single payer will require resistance and civil disobedience. All the great movements in history have. Look again at the civil rights movement. Institutional segregation had been going on for hundreds of years, but what sparked the movement? A couple of incidents of direct action. Rosa Parks insisting on sitting in the front of the bus. Black students sitting at a lunch counter in Greensboro. Without these actions, the movement would probably never have happened. You can make as many speeches as you like but they will never have the effect of those actions. And while the movement started with students, it became broad-based and diverse. Just like the movement for single payer, we must reach out to and build ties with labor unions (over 600 have already endorsed HR 676), civic and faith-based movements, and even small businesses. While businesses may seem like natural allies of the private insurance companies, many of them feel the strain of paying to insure their employees and would clearly benefit from government-run health insurance.

In closing, Americans are literally dying for equitable, universal health care access. And so I know that deep down you feel, as I do, that the time has come for direct action. The question is – when do we get started? Here’s one idea – Medicare’s 50th birthday is coming up and a nationwide coordinated action would be a powerful first step.

When I talk to people about single payer, I often hear: “Oh yeah, I support single payer but it will never happen in this country.” I tell them that people once thought the abolition of slavery and women’s suffrage could never be won – that these were “unrealistic” dreams. And yet both of these “unrealistic” dreams were ultimately won. While moderates were advocating for incremental change, the activists pushed for revolutionary change and were successful. What seemed impossible yesterday is something we accept as a given today. So next time someone says single payer will never happen, tell them this: “If you believe it won’t happen, it never will. But if you believe that the only way it will happen is to actually do something about it, then I am sure you will make the only choice that a moral and principled person would, and that is to join me in this struggle.”

Thank you.”

Scott Goldberg is a medical student at the University of Chicago Pritzker School of Medicine and a member of the board of directors of Physicians for a National Health Program.

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Cost of PCSK9 Inhibitors, and the president’s Precision Medicine Initiative

Posted by on Wednesday, Feb 18, 2015

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.

In The Debate About Cost And Efficacy, PCSK9 Inhibitors May Be The Biggest Challenge Yet

By William Shrank, Alan Lotvin, Surya Singh, and Troyen Brennan
Health Affairs Blog, February 17, 2015

Health care reform is intended to lower costs, but they are still rising, albeit less steeply than in the past. Moderation is not however the case in the area of specialty pharmacy. The medications to treat Hepatitis C are the most cited examples of a general inflationary trend, but the pipeline of expensive medications is extensive.

Yet, policymakers and payers appear unwilling to undertake significant cost controls on medication pricing. Indeed the controversy over the $84,000 price tag for Sovaldi (sofosbuvir) has largely faded, suggesting a certain resiliency in our system’s ability to absorb costs.

We believe that resiliency is about to be challenged in a manner unlike we have seen in the past, at least in the area of pharmaceuticals. A number of pharmaceutical manufacturers are developing a new class of medication to manage high cholesterol — the PCSK9 (proprotein convertase subtilisin/kexin 9) enzyme inhibitors.

The PCSK9 inhibitors will be specialty medications and likely priced as such. While we will not know exact pricing until the first generation of these medications is approved for use by the Food and Drug Administration sometime in mid-2015, estimates of annual pricing for these injectable drugs are in the range of $7,000 – $12,000. Given the number of people potentially eligible for treatment with the PCSK9 inhibitors will number in the millions, the potential overall expenditures by payers are huge.

As this is chronic therapy, PCSK9 sales could be expected to persist and grow over time, and will likely be the highest selling class of medications in history. Plus, as a biologic agent, there will not be a simple pathway to cheaper generics in a 10-15 year timeframe. Even in a system that costs $4 trillion per year, a single therapy adding $100-200 billion in costs annually is extraordinary.

Managed pharmacy care, indeed the health care system, has never seen a challenge like this to our resilience in absorbing costs. Payors, the employers, and health insurers, will first be shocked, then expect action. Action will take the form of compliance with clinical guidelines, and careful managed care oversight.

But in addition, perhaps the costs of PCSK9 inhibitors will push us to develop some consensus about the pricing of new specialty medications, as part of a more thoughtful discussion about the use of scarce resources on behalf of patients.

(The authors are from CVS Caremark and CVS Health.)

http://healthaffairs.org/blog/2015/02/17/in-the-debate-about-cost-and-ef…

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President Obama’s Precision Medicine Initiative

The White House, January 30, 2015

Building on President Obama’s announcement in his State of the Union Address, today the Administration is unveiling details about the Precision Medicine Initiative, a bold new research effort to revolutionize how we improve health and treat disease.  Launched with a $215 million investment in the President’s 2016 Budget, the Precision Medicine Initiative will pioneer a new model of patient-powered research that promises to accelerate biomedical discoveries and provide clinicians with new tools, knowledge, and therapies to select which treatments will work best for which patients.

Public-private partnerships:

The Obama Administration will forge strong partnerships with existing research cohorts, patient groups, and the private sector to develop the infrastructure that will be needed to expand cancer genomics, and to launch a voluntary million-person cohort.  The Administration will call on academic medical centers, researchers, foundations, privacy experts, medical ethicists, and medical product innovators to lay the foundation for this effort, including developing new approaches to patient participation and empowerment.

http://www.whitehouse.gov/the-press-office/2015/01/30/fact-sheet-preside…

In the United States, innovation and research in health care have been well rewarded… too well rewarded. The hepatitis C drugs, and now the PCSK9 inhibitors for high cholesterol are cases in point.

Our obsession with letting the market perform its miracles has led to a culture in which we accept and even expect the medical entrepreneurs to be rewarded with the maximum prices that the market will bear. In fact, prices have been pushed up well beyond what any normal functioning market would bear simply because the new products are able to bury their prices in the risk pools established by the private insurers and the pharmacy benefit managers.

Prices are so outrageous that now even the pharmacy benefit managers are complaining, as in the article by Shrank, et al. It is interesting that they suggest, as a solution, “careful managed care oversight.” Yet it is the intermediary “care managers” that have permitted this outrage. Besides, the private insurers are using these high prices to their advantage by placing these drugs in tiers that shift much of the costs to patients, thereby chasing away patients that would have higher health care costs.

President Obama’s Precision Medicine Initiative, as proposed, should have us all concerned. He calls for public-private partnerships that include medical product innovators. You can be assured that these biomedical innovators have already plotted to share in this lucrative market, knowing that their products will be introduced with prices in the stratosphere after they complete the nuisance stage of developing the products for the market.

The government already plays a role in taxpayer financed research. The public has a vested interest in these products and the government should be protecting our interest. When markets go awry it is the government that has the responsibility to step in and right the wrongs. Since the private insurers and pharmacy benefit managers have served us so poorly, we should replace them with our own public program – a single payer national health program. That would end our culture of developing new products that have outrageously high prices built in as an essential component.

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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