Largest exchange insurers have 75% higher premium increases than other insurers

Posted by on Monday, Aug 31, 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.

Larger Issuers, Larger Premium Increases: Health insurance issuer competition post-ACA

By Eugene Wang and Grace Gee
Technology Science (Harvard University), August 11, 2015


The Patient Protection and Affordable Care Act (ACA) has substantially reformed the health insurance industry in the United States by establishing health insurance marketplaces, also called health exchanges, to facilitate the purchase of health insurance. The ACA has increased transparency in insurance pricing and in issuer pricing behavior. Using 2014 and 2015 Unified Rate Review (URR) data, this study examines changes in health insurance premiums made by individual health insurance issuers in 34 federally facilitated and state-partnership health insurance exchanges.

Results summary: Our study shows that the largest issuer in each marketplace had a 75% higher premium increase from 2014 to 2015 compared to other same-state issuers. On average, the largest issuers raised rates by 23.9%, while the other issuers only raised rates by 13.7%. Moreover, the largest issuers’ premium increase affects a larger proportion of plans and do not seem justified from the standpoint of incurred claims-to-premium ratio. Projected Index Rate from the rate review process is used as a summary of an issuer’s premiums across different plans and Projected Member Months as a proxy for on-exchange market share. Our findings suggest that even after the Affordable Care Act, the largest on-exchange issuers may be in a better position to practice anti-competitive pricing compared to their same-state counterparts.

From the Results

But can the largest issuers justify their higher premium increases in 2015 by claiming that they had higher incurred claims relative to collected premiums in 2014, compared to other issuers? To test this hypothesis… (technical details available at link)…

Note that this is very similar to the Medical Loss Ratio (MLR) as formulated in 45 CFR §158.221, which is used to calculate the MLR rebates issuers have to give to consumers if the MLR falls below 0.80 (i.e. they spent too little on medical expenses) in the experience period. But the MLR calculation would require the denominator to include only premiums collected in the experience period net of taxes, licensing and regulatory fees, which data is unavailable in the URR (Unified Rate Review public use files).

To test if the largest issuers in each state have higher incurred claims relative to premiums in 2014, the following null hypothesis was tested… (technical details available at link)…

After omitting states where data on the largest issuer was not available (the largest issuers having only joined the exchange in 2015) and omitting issuers without experience data (issuers can choose not to input experience period claims and premiums data if they deem that the data they have collected is not substantially representative), the test statistic is eventually calculated… (technical details available at link)…

… with a mean of 0.02, which means that the largest issuer has a higher claims ratio of only 0.02. Figure 9 shows that the claims-to-premium ratio for the largest issuers is 0.85 while that for the other issuers is 0.83. Since the test statistic is 0.50139 with a one-tailed p value of 0.31092, we conclude at 5% significance level that there is insufficient evidence to reject the null hypothesis in states where this ratio could be calculated. The claims-to-premium ratio of the largest issuer is not statistically significantly higher than other same-state issuers. Even if it were significant, a 2.5% higher claims-to-premium ratio is unlikely to be sufficient to justify the 75% higher premiums increase that the largest issuer incurred.

From the Discussion

Overall, this study is important in light of recent market consolidation efforts in the health insurance industry. This paper provides evidence that even after ACA, the largest on-exchange issuers may be in a better position to practice anti-competitive pricing compared to their same-state counterparts. This evidence should be prudently considered in any antitrust debate.


CMS seeks emergency review of request for more insurance information

AMA Morning Rounds, August 31, 2015

Congressional Quarterly (8/29, Subscription Publication) reported that the Centers for Medicare and Medicaid Services “is seeking an emergency review of its request to collect more information from health insurance companies in connection with the medical-loss-ratio data and risk corridor regulations, which both are part of the agency’s effort to fully implement the 2010 health law.” The agency said it found a “number of significant discrepancies in the 2014 benefit year submissions that insurers made.” CMS officials said in a filing with the Federal Register “that they are concerned that the agency ‘will be unable to verify the accuracy of the submission and validate the data needed to operate the MLR or risk corridors programs’ if it doesn’t get additional information.”

This is scandalous. The co-authors of this article, Eugene Wang and Grace Gee (with Harvard degrees in Applied Mathematics), have shown that the largest insurance issuer in each federally-facilitated and state-partnered ACA insurance exchange had a 75% higher premium increase this past year than did other insurers in the same states. But what is really shocking is that they have shown that, based on claims-to-premium ratios, these excess premium increases are in no way warranted.

This should not have happened since the Affordable Care Act requires that at least 80% of the premiums be spent on health benefits (the medical-loss ratio). Now we learn that the Centers for Medicare and Medicaid Services found a “number of significant discrepancies in the 2014 benefit year submissions that insurers made” regarding medical-loss-ratio data. CMS is seeking an emergency review of its request to collect more information from the health insurers.

With the current merger activity of the nation’s largest insurers, we should be very concerned about their too-big-to-follow-the-rules attitude. The insurers contend that they need higher premiums because of their claims experience, yet they have failed to provide CMS with adequate, accurate data to show that they are spending at least 80% of the premiums on health care. This study strongly suggests that they are not.

It’s time to throw out the crooks and establish our own single payer national health program – one owned by the people. We aren’t going to cheat ourselves.

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Moody’s revises outlook for not-for-profit/public health care sector

Posted by on Friday, Aug 28, 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.

Moody’s revises US not-for-profit healthcare outlook to stable from negative as cash flows increase

Moody’s Investors Service, August 26, 2015

Moody’s Investors Service has revised the outlook for the US not-for-profit and public healthcare sector to stable from negative due to improvement across the industry’s fundamental business, financial and economic conditions. The outlook had been negative since 2008.

Following several years of flat growth, operating cash flow growth increased to 12.3% in 2014 from 0.3% in 2013.

Moody’s says factors driving the stronger operating cash flow are increases in the number of insured individuals and a reduction in bad debt, particularly in states which expanded Medicaid eligibility.

The outlook change to stable from negative expresses Moody’s views for the sector will neither erode nor significantly improve materially for the 12 to 18 months. Looking beyond that horizon, pressures linger.

“The not-for-profit and public healthcare sector industry faces long-term challenges stemming from who pays for care, how providers are reimbursed, and changes in patient behavior. These risks may weigh on profitability and growth,” says (Moody’s Vice President — Senior Analyst Daniel Steingart ).…

It seems ironic to celebrate profits in the not-for-profit and public health care sector, but at least this Moody’s report does show that the not-for-profit/public sector has moved from negative to stable as cash flows increase. That is reassuring.

Nevertheless this industry still faces long-term challenges, especially based on uncertainties of future funding.

This sector is particularly important since it serves as the primary safety net for those who have impaired access for reasons such as being uninsured. So it is essential that a reliable source of adequate funding is always available.

How can we do that? Simple. Establish a single payer national health program which will fund the entire health care delivery system equitably. Part of that process involves converting the investor-owned, for-profit delivery system to not-for-profit status. Why? The primary mission of non-profits is patient service whereas the primary mission of for-profits is creating wealth by achieving a maximum return on investment. The former works better for patients than does the latter.

Although it is nice that the not-for-profit/public sector has temporarily stabilized, we could be assured of more funds in the future if the administrative waste of our entire system were eliminated. Single payer would ensure stability in our system well into the indefinite future… and beyond.

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Readmission penalties dodged by placing patients on observation status

Posted by on Thursday, Aug 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.

Quality Improvement: ‘Become Good At Cheating And You Never Need To Become Good At Anything Else’

By David Himmelstein and Steffie Woolhandler
Health Affairs Blog, August 27, 2015

The Centers for Medicare and Medicaid Services (CMS) has trumpeted the recent drop in hospital readmissions among Medicare patients as a major advance for patient safety. But lost amidst the celebration is the fact that hospitals are increasingly “observing” patients (or treating returning patients in the emergency department) rather than “readmitting” them. But while re-labeling helps hospitals meet CMS’ quality standards (and avoid costly fines), it probably signals little real quality gain and often leaves patients worse off financially.

Observation Status

In most cases, observation patients receive care in a regular inpatient unit, and get treated just like other inpatients. And in many cases, observation stays stretch out to several days: in 2012, 26 percent lasted two nights and 11 percent at least three. But from Medicare’s point of view, this is outpatient care, which leaves patients responsible for more of the bill, and ineligible for Medicare-paid rehab or skilled nursing care.

Hospitals started designating more stays as “observation” after Medicare’s auditors began disallowing the entire payment for some brief hospital “admissions.” Even though “observation stays” pay less than inpatient admissions, hospitals took a better safe than sorry approach, classifying many brief stays as “observation.” Between 2006 and 2013, observation stays increased by 96 percent, accounting for more than half of the apparent decline in total Medicare admissions during that seven-year period.

Observation Classification

Medicare’s recent adoption of penalties for readmissions offered hospitals a new incentive to shift some patients returning within 30 days of their discharge to observation status. A patient stay labeled “observation” doesn’t count as a readmission, allowing hospitals that might otherwise be fined for having too many readmissions to skirt the penalty.

About 10 percent of all hospital stays occurring within 30 days of discharge are now classified as “observation;” a quarter of hospitals classified 14.3 percent or more of all repeat stays as “observation.” Moreover, analysis of time trends in observation stays makes it clear that they account for a significant chunk of the reduction in readmissions. Between 2010 and 2013, 36 percent of the claimed decrease in readmissions was actually just a shift to observation stays.

Emergency Department Use

And it’s not just observation stays that have been on the increase. More of the recently discharged patients are being treated in emergency departments (EDs) — without being admitted — as well.

Factoring in the 0.4 percent increase in ED visits within 30 days of discharge, the fall in the percent of discharged patients returning to hospitals for urgent problems is only 0.3 percent over the past three years — less than one-third of the improvement that CMS claims. And even this 0.3 percent overall fall may be partly an artifact of hospitals’ “upcoding” (exaggerating the severity of patients’ illnesses), which boosts diagnosis-related group (DRG) payments, and could also corrupt the formula used to risk-adjust expected readmission rates.

Medicare’s readmission penalties are among the growing number of pay-for-performance (P4P) and value-based purchasing initiatives that offer bonuses to high performers and/or penalize the laggards. We previously pointed out that the evidence for this carrot and stick approach is unconvincing. More recently, a long-term follow-up of the English hospital P4P program found that P4P generated no improvement in patient outcomes, damping the enthusiasm generated by the rosy short-term findings, and reinforcing the need for skepticism.

Adopting unproven everywhere P4P strategies that have been proven nowhere risks quality failure on a monumental scale. It pressures hospitals to cheat, saps doctors’ and nurses’ intrinsic motivation to do good work even when no one is looking, and corrupts the data vital for quality improvement.

As the graffiti artist Banksy once said: “Become good at cheating and you never need to become good at anything else.”…

In lieu of adopting comprehensive health care financing that actually would improve value – a single payer system – our national leaders have elected to continue with our current dysfunctional system and try to make it work. One measure that has been introduced is the assessment of penalties for patients who are readmitted within 30 days of being discharged from a hospital – on the theory that the patients should be fully stabilized at discharge with followup arranged that would prevent the need for readmission.

Physician and hospital administrators do not want patients readmitted soon after discharge. Their efforts are directed at providing the best care appropriate to improve patient outcomes. But there are some clinical conditions that are inherently unstable, or that can have unavoidable complications, that can result in the need for readmission. Also, in spite of outreach efforts, socioeconomic variables can result in destabilization of the patient’s condition. Some readmissions are absolutely inevitable.

This report is important because it shows that the improvement in lowering readmission rates that occurred after the introduction of penalties is not so much due to improved inpatient and post-discharge management, but rather is due to gaming rules that are characteristic of pay-for-performance (P4P) schemes.

Specifically, there has been a dramatic increase in placing patients on observation status instead of formally admitting them to the hospital. The care may be identical – provided in the inpatient service departments – but by not certifying the patient as being a formal readmission within 30 days of the last admission, the penalty is avoided. Medicare comes out ahead since outpatient services are priced lower than inpatient services, even if they are identical services – thus the trumpeting by CMS of another success in their reform efforts. But the patient loses since the cost sharing requirements for outpatient services are much higher than they are for inpatient. But then who ever said that health care reform was to benefit patients?

A variation of this gaming is to manage the followup hospitalization completely within the emergency department, perhaps even holding the patient overnight. The result is essentially the same as holding them on observation status.

This P4P-type gamesmanship is really a form of cheating. But it works. Instead of shifting to a much more efficient financing infrastructure – a single payer system – we can continue to follow the Banksy dictum – “Become good at cheating and you never need to become good at anything else.”

Maybe we should start to think about becoming good at financing health care instead.

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Californians support extending Medi-Cal to undocumented residents

Posted by on Wednesday, Aug 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.

Results from the 2015 Cal Wellness–Field Health Policy Survey – Part 1

By Mark DiCamillo, Director, The Field Poll
The Field Poll, August 26, 2015

Increasing voter support for extending Medi-Cal to undocumented residents

The current survey repeated a question first posed to California voters last year about whether the state’s Medi-Cal program should be expanded to provide preventive health services to undocumented residents, who are not currently eligible for coverage under the ACA. The results show that 58% of the state’s registered voters now favor extending Medi-Cal for undocumented residents, while 39% are opposed. This represents a significant increase in voter support from last year when supporters outnumbered opponents by a narrower 51% to 45% margin.

However, there are big differences in voter opinions about this proposal by party. Democrats favor the idea four to one (78% to 19%), while Republicans are opposed nearly three to one (72% to 25%). No party preference voters largely reflect overall voter sentiment, supporting the proposal 60% to 38%.

When examining voter opinions by race and ethnicity, registered Latinos report the highest level of support for extending Medi-Cal to undocumented immigrants, with 77% in favor. However, the proposal also now receives majority support from the state’s white non-Hispanic, African American and Asian American voters.

Topline findings

10. I am going to read some proposals that have been made to expand or modify the way the health care law is implemented in California, and please tell me whether you favor or oppose each one. Do you favor strongly, favor somewhat, oppose somewhat or oppose strongly this proposal?

a. Expand the state’s Medi-Cal health care program for low income residents to provide preventive health services to undocumented residents who are not eligible for coverage under the current health care law.

35%  Favor strongly

23%  Favor somewhat

14%  Oppose somewhat

25%  Oppose strongly

3%  Don’t know/Refused

One of the major deficiencies in the Affordable Care Act is that undocumented residents were deliberately excluded from mandated coverage. It has been estimated that roughly one-third of the 30 million or so who will remain uninsured are these undocumented residents. Was Congress following the wishes of the people when they excluded these individuals from coverage? Not if you judge by the views of Californians: 58% support expanding Medi-Cal to low-income undocumented residents.

In fact, every racial group of California voters polled is in support: Latino, white non-Hispanic, African American and Asian American voters.  The only group opposed is not racial, but rather political: Republicans, with 72% opposed, while 78% of Democrats are in support.

At Physicians for a National Health Program, we support health care reform that advances health care justice through sound health policies, devoid of politics. Although we can expound on the virtues of those policies, it is unfortunate – no, tragic – that our voice is muffled in the tainted arena of politics.

Conservatives frequently chastise progressives for accusing them of supporting mean-spirited policies. Well? Prove us wrong. You can do that by supporting the replacement of our inequitable, fragmented, dysfunctional system of financing health care with a single payer system that ensures equitable access and affordability for everyone, including our undocumented residents.

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Claxton and Levitt on the Cadillac plan tax

Posted by on Tuesday, Aug 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.

How Many Employers Could be Affected by the Cadillac Plan Tax?

By Gary Claxton and Larry Levitt
Kaiser Family Foundation, August 25, 2015

As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.

The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on. Some of the things that employers can do to reduce costs under the tax include:

  • Increasing deductibles and other cost sharing;
  • Eliminating covered services;
  • Capping or eliminating tax-preferred savings accounts like Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), or Health Reimbursement Arrangements (HRAs);
  • Eliminating higher-cost health insurance options;
  • Using less expensive (often narrower) provider networks; or
  • Offering benefits through a private exchange (which can use all of these tools to cap the value of plan choices to stay under the thresholds).

For the most part these changes will result in employees paying for a greater share of their health care out-of-pocket.…

During the markup process for the Affordable Care Act it was common to hear our legislators talk about patients demanding too much health care as an explanation for why our health care spending was so high. They blamed health plans that provided extra-rich benefits – plans they labeled Cadillac plans. The problem is that their premise was wrong.

These supposedly extra-rich benefits were merely standard benefits characteristic of the older employer-sponsored indemnity plans such as Blue Cross and Blue Shield. These were not plans with Cadillac benefits but rather they were plans with standard benefits, but benefits that are now provided at Cadillac prices because of our failure to adopt a health care financing system that would slow the rate of health care inflation.

In recent decades, plan purchasers in the individual market became less able to afford the high premiums commanded by the ever-increasing health care costs. In order to keep their premiums affordable, insurers reduced benefits and increased patient cost sharing, making health care less affordable even for those who were insured. Medical debt became a significant contributor to personal bankruptcy and having insurance often no longer prevented it.

Our legislators, after being spoon-fed by lobbyists and the policy community, decided that these inferior plans on the individual market would become the new standard, and the more traditional plans that provided more effective coverage would suddenly become Cadillac plans.

Thus the advent of the high-cost plan tax (HCPT) – often referred to by the misnomer, Cadillac plan tax – a 40 percent tax on plan costs above a certain threshold. This tax was intended to disincentivize the selection of full coverage plans. By having out-of-pocket money at stake with less comprehensive coverage, patients would be forced to decide which of their medical problems they would want managed and which they would decide to live with (or die from). What a terrible way to reduce spending.

In retrospect, both Republicans and Democrats in Congress have decided that this tax should be repealed, but for different reasons. Republicans are simply opposed to any taxes, and Democrats are concerned about additional tax burdens on lower income individuals with employer-sponsored plans that provide reasonable coverage (assuming the tax is paid by forgone wage increases). Hurdles to the repeal of this tax include reluctance to compensate for the loss of these government revenues by either assessing new taxes (Republicans opposed) or by cutting spending on other programs (Democrats opposed), plus a reluctance for a highly polarized Congress to work together on anything.

The important policy issue is not the tax, it is the decision to control spending by erecting financial barriers to care through the design of the insurance product – consumer-directed health care. This prevents patients from getting care that they should have while exposing them to financial hardship. Instead we should be providing everyone with prepaid health care while controlling spending through more humane, proven policies that are in use in many other nations. Of course, these are the policies that are inherent in a well-designed single payer national health program.

Forget the Cadillac imagery. Let’s talk about providing affordable health care for everyone.

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“Direct primary care” and the future of family medicine

Posted by on Tuesday, Aug 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.

New Program in Coachella Valley Seeks Affordability in Personalized Primary Care

By Lauren McSherry
California Healthline, August 24, 2015

Joseph Scherger, a primary care physician at Eisenhower Medical Center in Rancho Mirage, opened an email one morning earlier this month with an update on one of his patients who had recently suffered a heart attack.

The email had been sent directly by the patient, who wanted to put Scherger in touch with the cardiologist who had treated him while he had been traveling out of state.

Scherger, Eisenhower’s vice president of primary care, often uses email to correspond with his patients. In fact, email tends to be a big part of the day-to-day job for some of Eisenhower’s primary care physicians. Through a program called Eisenhower Primary Care 365, patients pay an annual fee to have direct email access to their doctors and other benefits.

Scherger calls the E365 program a new direct primary care model, one of many that have been popping up across the nation in recent years. It is intended to be a more-affordable version of expensive concierge medicine, in which patients pay a fee for 24/7, unlimited access to their primary care doctors.

Jay W. Lee, California Academy of Family Physicians president, said doctors involved in the program see it as a way to equalize and democratize care.

“What I’m most excited about is that we’re starting to innovate,” he said. “It’s clear that this has resonated with a population of clinical physicians. What I’ve seen is that there is growing interest, not only in California but across the country.”

With direct primary care, patients pay a subscription fee — either annually or monthly — that enables them to have immediate access to their doctors, scheduling same-day visits and bypassing the long wait times.

But rather than paying $1,800 to $5,000 a year for that privilege, as they would for concierge medicine, patients pay $395-$595 per year, depending on their age, in the E365 model.

“The real story is that alternatives to concierge medicine are emerging that are going to cause concierge medicine to recede,” Scherger said.

Scherger began developing the program in 2009, when a new outpatient clinic, the Eisenhower George and Julia Argyros Health Center, was about to open. He was faced with a recruitment challenge “because too many of the good primary care doctors were going into high-cost concierge medicine” in the Coachella Valley. So he developed a hybrid model, one that accepts most insurance and Medicare and covers the cost of non-visit communications through a fee.

Since launching, the program has gained steam and now has 14 doctors treating 6,500 patients at four locations in the Coachella Valley.

Personalized Care, Longer Visits

Direct primary care has several characteristics that are attractive to doctors, such as having fewer patients and being able to spend more time with them, Lee said.

“In many ways, the promise of it is that there is an opportunity to control flow and pace,” he said.

A typical primary care doctor may have 90-120 patient visits per week and can only spend 10-15 minutes with each patient. In contrast, an E365 doctor will have around 50 visits per week and can spend 20 minutes with a patient, Scherger said.

The average panel size for a primary care doctor is 2,000 to 3,000 patients. Concierge practices usually limit their physicians to 200 or 300 patients. Direct primary care models fall somewhere in between. In the case of the E365 program, physicians each take care of 850 to 950 patients, Scherger said.

Scherger says direct primary care models began emerging about 10 years ago because primary care physicians were getting burned out under the traditional private practice model. One early model was GreenField Health, launched in 2001. Another model, Qliance, reportedly has 35,000 patients, with about half of whom are enrolled in Medicaid.

According to a 2014 survey by the American Academy of Family Physicians, about 2% of members were currently working in direct primary care settings and 7.2% reported they were currently determining if they would transform their practices to that model.

“The direct primary care model is slowly gaining momentum,” said Robert Wergin, the group’s president. He said the model is increasing in popularity because it moves away from the acute, episodic, fragmented care that is common with volume-based medical services, and it allows doctors more time to focus on quality of care rather than paperwork and billing.

Could Direct Primary Care Exacerbate a Physician Shortage?

One of the looming issues surrounding direct primary care is whether it will exacerbate the shortage of primary care doctors in California, particularly in the Coachella Valley where the shortage is severe.

The Coachella Valley has a cluster of nine cities, including Palm Springs in eastern Riverside County, a region containing both incredible wealth and far-reaching poverty.

“The question I have is around scale,” Lee said. “If everyone is doing this, are we going to meet the needs of the population?”

He is concerned because more patients are now covered by Medi-Cal as a result of the Affordable Care Act, and it’s unclear whether the direct primary care model will serve those patients.

Beth Capell, a policy advocate with Health Access California, said the direct primary care model eases physician workloads but doesn’t solve the issue of access to primary care for all populations in the Coachella Valley. The Coachella Valley and Merced are two of the most underserved regions in California, she said.

Nearly 40% of Coachella adults live in households below the federal poverty line, according to the Health Assessment and Research for Communities’ 2013 Executive Report. The report also estimates that about one-third of adults in the region, roughly 74,600 people, lack health insurance.

“The disparity in health resources only compounds the underlying reality that people who are low income need more access to care,” Capell said.

People who are affluent are generally healthier, while people with lower incomes are disproportionately likely to be in poorer health, often with multiple chronic conditions that are more difficult to manage, Capell said.

The UC-Riverside School of Medicine has launched several programs to expand the physician workforce in the region.

“We have a profound shortage, and our shortage is understated because of the number of concierge practices that exist in the Coachella Valley,” said John Heydt, the medical school’s senior associate dean of clinical affairs.

Market Forces May Be Driving Change

Heydt believes market forces are driving the rise of concierge and hybrid models. He predicts these models will gain even more popularity if insurers continue to expect doctors to see high volumes of patients for lower reimbursement rates.

“There are tremendous physician shortages on the horizon,” he said. “When anything is in short supply, the demand is high. And if you look at the day-to-day life of some physicians, they are run by their practices.”

Christopher Flores, who runs an independent direct primary care practice in Palm Desert, says E365 has filled a niche, and he expects the model to grow in coming years because doctors are feeling burnt out.

“The way the system is going, it’s becoming much more of an impersonal assembly line,” he said.

Whether direct primary care will succeed or evolve into something entirely different is up for debate.

“There is still a little uncertainty as to what the regulatory environment dictates,” Lee said. “I think those nuances have yet to be figured out.”

He stressed, though, that creating new models of care is critical given the pressures that primary care physicians are facing, such as high patient volumes and declining reimbursements. He sees new models that are not tied to in-person visits but that incorporate email, telemedicine, or telephone calls as the way forward.

“It’s pretty clear we don’t have enough supply to meet demand,” he said. “We can grow a workforce — but there’s a long tail on that — or we can practice better.”…

Today’s article is presented in its entirety since it is important to view the topic from a broad perspective as opposed to simply considering isolated policy topics contained in the article.

Weariness and burnout are common amongst overworked family physicians. It is no wonder that some physicians are exploring other models of medical practice. Concierge practices are based more on a business model – extracting additional fees from patients in order to lighten the workload. Direct primary care practices differ in that they increase access through electronic communication and at fees that are much more modest than with concierge practices – more of a patient service model and less of a business model. But they both have a serious defect – by sharply reducing the patient load, they decrease the productivity of family physicians at a time when we already have a profound shortage of family physicians in underserved regions.

A model which is designed to increase productivity is the primary care medical home. Such a model can certainly include improved electronic access for patients, but that would be only one feature of the wide variety of integrated services characteristic of well designed medical homes. The medical home would be ideal for balancing the overworked physician with the health care needs of the underserved residents in the community. The other health professionals in the primary care team not only could make work schedules more reasonable for everyone, but they could and should be used to adjust capacity so that the community health care needs at large are well served.

As it is, the label, “direct primary care,” is at risk of becoming just another label for concierge practices, just as “medical home” is at risk of becoming a label for managed care IPOs. To counter these trends we must always place first the health care needs of the patient and the community at large. If we do that, family physicians and other health care professionals working together as a team would have a great future ahead.

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What do insured patients see as financial burdens of health care?

Posted by on Friday, Aug 21, 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.

Financial Burden of Health Care Costs Among Insured: Kaiser Health Tracking Poll: August 2015

By Bianca DiJulio, Jamie Firth, and Mollyann Brodie
Kaiser Family Foundation, August 20, 2013

Among insured:  Thinking about your own health care costs, which of the following do you find to be the greatest financial burden?

17%  The deductible you pay before insurance kicks in
14%  Your health insurance premiums
11%  Your prescription drugs
7%   Your doctor visits
3%   Some other health care cost
44%  Paying for health care and health insurance is not a financial burden

(Note: “All equally” and “Don’t know/Refused” responses not shown)…

It is nice to know that health insurance and paying for health care do not create a financial burden for 44% of those who are insured. The system is working well for the almost half of the insured who have decent incomes who remain in good health. But what about the other half?

Being insured is no assurance that you will not face significant financial burdens. The most common are high deductibles, high insurance premiums, high costs of prescription drugs, and, to some extent, physician fees. But shouldn’t the health care financing system be designed to remove financial burdens whenever people need health care? Our system is not working well for patients who have modest incomes and current significant health care needs.

Under a single payer system, there is no need for deductibles to save money by discouraging the use of beneficial health care services, because spending is controlled though other less intrusive, more patient-friendly economic measures. Physician fees are negotiated and paid by the single payer administrator, and prescription drug spending is controlled through negotiation and bulk purchasing. Insurance premiums are eliminated and replaced with equitable, progressive taxes that place a burden on no one. Instead of deliberately building financial barriers into the system, shouldn’t we eliminate them?

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NCQA’s ‘medical home’ baffles RAND

Posted by on Friday, Aug 21, 2015

Evaluation of CMS FQHC APCP Demonstration: Second Annual Report

By Katherine L. Kahn et al.
RAND Corporation, July 2015

In December 2009, President Barack Obama directed … the Centers for Medicare and Medicaid Services (CMS) … to implement a three-year demonstration intended to support the transformation of federally qualified health centers (FQHCs) into advanced primary care practices (APCPs) in support of Medicare beneficiaries. … For the demonstration, CMS recognizes as advanced primary care (APC) the type of care that is offered by FQHCs that have achieved Level 3 recognition as a patient-centered medical home (PCMH) from the National Committee for Quality Assurance (NCQA).

RAND is conducting an independent evaluation of the FQHC APCP demonstration for CMS. The evaluation includes studying the processes and challenges involved in transforming FQHCs into APCPs and assessing the effects of the APCP model on access, quality, and cost of care provided to Medicare and Medicaid beneficiaries currently served by FQHCs. [p. xi]

As of the end of the demonstration’s ninth quarter, we know that costs for demonstration [PCMH] sites are higher than for comparison sites. [p. xvii]

In July the RAND Corporation released a report on the second year of CMS’s three-year “medical home” experiment with federally qualified health centers (FQHCs). The report concluded the clinics in the “medical home” arm of the experiment were spending more money than clinics in the control arm, and that this was unlikely to change by the end of Year 3.

Sad to say, we’re never going to know what it was the experimental clinics did that raised their costs. It may well be those clinics used their “care management fees” to hire more social workers who in turn persuaded more people living near the clinics to make appointments, and that in turn led to greater utilization of medical goods and services. Or perhaps the fees were used to hire more patient educators, and the patient education induced existing patients to visit their clinic more often, and that in turn caused more hospitalizations.

We’re never going to know. RAND may produce some anecdotal evidence that the hypotheses I suggested above are true, or any of numerous other hypotheses could be accurate. But RAND will not produce empirical evidence. The primary reason is the maddeningly vague definition of “medical home.” The “features” that “medical homes” are said to possess are so poorly defined they cannot be reduced to measurable components.

It didn’t have to be this way. When President Obama ordered CMS to study the “medical home,” CMS could have used its discretion to test a version of the “home” that was much more clearly defined than the amorphous version adopted by the Agency for Healthcare Research and Quality, the National Committee for Quality Assurance (NCQA), and other self-appointed arbiters of what the phrase means. Instead, CMS punted – they said a “medical home” would be whatever the NCQA says clinics must do to qualify as a “level 3 patient-centered medical home” (PCMH). But NCQA’s requirements for PCMH certification are as vague as the features NCQA and other PCMH advocates claim PCMH’s possess, and in most cases the requirements bear no relation to the alleged features.

The RAND Corporation either could not or would not insist that CMS or NCQA define the PCMH more precisely before signing a contract with CMS to “evaluate” the FQHC PCMH demonstration.

Thus did the impossible challenge of evaluating the amorphous, elusive PCMH bounce down from Obama to CMS to RAND.

To grasp the impossibility of the challenge RAND signed up for, run your eye over the two tables below. Table 1 lists the seven “features” of the PCMH according to NCQA. Table 2 lists NCQA’s ten “must-pass” requirements for PCMH certification. Put yourself in RAND’s shoes and ask yourself two questions: First, how would you operationalize (reduce to measurable components) the “features” listed in Table 1; second, can you discern any relationship between the ten “must-pass elements” and the seven “features”?

Table 1: Seven “features” of the PCMH according to NCQA

(1)    Personal physician: Each patient has an ongoing relationship with a personal physician
(2)    Physician directed medical practice: The personal physician leads a team of individuals … who collectively take responsibility for ongoing patient care
(3)    Whole person orientation
(4)    Care is coordinated and integrated
(5)    Quality and safety are hallmarks of the medical home
(6)    Enhanced access to care is available through … innovative options for communication
(7)    Payment appropriately recognizes the added value provided to patients who have a patient-centered medical home


Table 2: NCQA’s ten “must-pass elements” for certification as a Level 2 or 3 PCMH

(1)    Written standards for patient access and patient communication
(2)    Use of data to show standards for patient access and communication are met
(3)    Use of paper or electronic charting tools to organize clinical information
(4)    Use of data to identify important diagnoses and conditions in practice
(5)    Adoption and implementation of evidence-based guidelines for three chronic or important conditions
(6)    Active support of patient self-management
(7)    Systematic tracking of tests and follow-up on test results
(8)    Systematic tracking of critical referrals
(9)    Measurement of clinical and/or service performance
(10)  Performance reporting by physician or across the practice

Table 1 is riddled with mushy, sometimes tautological phrases such as “ongoing relationship,” “physician-directed,” “whole person” and “hallmarks” (I have italicized amorphous phrases). How is RAND supposed to distinguish, for example:

* a doctor-patient relationship that is “ongoing” from one that is not going,
* a “personal physician” from an impersonal physician,
* a “team of individuals” from a plain-vanilla staff, or
* “whole person orientation” from, say, “half-person orientation”?

How does RAND determine when “quality and safety” have become “hallmarks”? If we stumbled upon a “hallmark” in a clinic, how would we know?

When you’re done struggling with the questions generated by the happy talk in Table 1, then ask yourself whether the ten requirements in Table 2 answer any of the questions generated by Table 1. The answer is no, they just add to the clutter.

There are two reasons for this. The first is that the ten requirements are almost as vaguely described as the seven “features” (I have italicized mushy phrases in Table 2). What sense, for example, is RAND supposed to make of requirement 6, the one about “active support of patient self-management”? How is RAND supposed to know:

* what a “self-managed” patient is as opposed to whatever the opposite of “self-managed” is,
* what constitutes “support,” and once that has been defined, what constitutes “active support” as opposed to (help me out here) inactive support?

What do “important diagnoses” (requirement 4) and “critical referrals” (requirement 8) mean? Why would some diagnoses be unimportant and some referrals uncritical?

The second reason for the disconnect between Tables 1 and 2 is that there is no obvious relationship between the seven “features” and most of the ten requirements. Which of the ten requirements would you say “transforms” a mere staff into a “team,” “transforms” an ordinary doctor-patient relationship into an “ongoing relationship,” or is remotely related to “appropriate payment”? Answer: None.

What I see in the ten requirements is an obsession with measuring and reporting. Nine of the ten requirements mandate measurement and/or reporting. (Only the “active support of patient self-management” requirement does not clearly require measurement, but it might. The phrase is just too vague to say for sure).[1] It is reasonable to conclude that the most accurate “definition” of a “medical home,” according to NCQA, is a clinic that agrees to measure and report on a few vaguely defined policies and activities. This would be like defining a “cargo-centered” trucking company as one that signs a document with the National Committee on Trucking Quality to obey the speed limits, to stop by the side of the road now and then to be weighed, and to limit the number of hours its drivers can go without sleep. These promises tell us nothing about what a “cargo-centered” trucking company does.

My characterization of NCQA’s “definition” is supported by RAND’s finding that PCMH staff felt overwhelmed by NCQA’s documentation requirements. As RAND put it at page 37:

The problem of documentation in general for the NCQA application process was mentioned as an overarching concern for a majority of the FQHC respondents. Not only was there a concern about documenting the specifics of the … NCQA PCMH standards, the respondents also described the demanding nature of documenting every task that a clinician or provider engages in during a patient encounter.

To return to the problem I raised at the outset: If NCQA’s “definition” of a PCMH is essentially a clinic that agrees to document vaguely defined standards and policies that have no obvious relationship with the “features” NCQA says PCMHs possess, how is a CMS contractor like RAND supposed to determine why PCMH clinics raised Medicare’s costs? They can’t. RAND can ask the same questions NCQA asks during its audits – do PCMHs have a document on file explaining their “standards for patient communication,” for example. But since this standard will vary by clinic (thanks to the vague definition of this NCQA requirement), and because it might not even be implemented effectively or at all, RAND has no usable data on this variable.  Ditto for the other requirements. With no useful data on the “standards for patient communication” and the other requirements, RAND cannot test these variables to assess their impact on the dependent variable – Medicare expenditures.

RAND offers no solution. Its analysts merely state they will compare outcomes of PCMH with non-PCMH clinics using claims data and answers from patient surveys about their “experiences with care.”[2] Claims data will tell RAND whether expenditures were higher for PCMH clinics, and patient surveys will answer general questions about patient perceptions, e.g., “satisfaction” with the timeliness of care and whether doctors were clear in their instructions or good listeners. But claims data and patient survey responses contain no information about what it is PCMHs do that makes them different from non-PCMHs.

This quandary is, of course, not peculiar to CMS’s FQHC “medical home” demo. It is afflicts every test of the “medical home” that uses NCQA’s flabby definition.

The inability of RAND, CMS or anyone else to determine what it is PCMH clinics do raises another obvious problem: If we cannot determine what PCMHs do, how do we know what PCMHs do with the “care management fees” CMS pays them? I’ll address that question shortly on this blog.


1. If evidence supported NCQA’s assumption that measuring and reporting improves quality, we could at least say the requirements have some link with the “quality and safety” feature in Table 1. But the evidence on that issue is mixed.

2. Here is a quote from the RAND study: “Key Policy Question 2 focuses on differences between demonstration and comparison sites. … To answer this policy question, the evaluation focuses on metrics spanning 12 research questions … including: (1) continuity, (2) timeliness, (3) access to care, (4) adherence to evidence-based guidelines, (5) beneficiary ratings of providers, (6) effective beneficiary participation in decision making, (7) self-management, (8) patient experiences with care, (9) coordination of care, (10) disparities, (11) utilization, and (12) expenditures. Some of these metrics are evaluated using claims data, others by beneficiary report.” (p. xvi)

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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Over 2 million exchange enrollees forgo cost-sharing reductions

Posted by on Thursday, Aug 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.

More than 2 Million Exchange Enrollees Forgo Cost-Sharing Assistance

By Elizabeth Carpenter
Avalere, August 19, 2015

A new Avalere analysis finds that more than 2 million exchange enrollees eligible for cost-sharing reductions (CSRs) are not receiving the subsidies because they have selected a non-qualifying plan. In addition to the more publicized tax credits that lower consumers’ monthly premiums, exchange enrollees with incomes between 100 and 250 percent ($11,770 – $29,425) of the federal poverty level are eligible for CSRs. Exchange consumers must enroll in a plan on the silver metal level to access CSRs.

Specifically, the analysis finds that of the 8.1 million individuals enrolled in exchanges in 2015 who earn incomes that make them eligible for CSRs to reduce out-of-pocket costs, only 5.9 million are actually receiving them. This leaves 2.2 million consumers who may be paying more out-of-pocket than intended under the Affordable Care Act (ACA) because they have selected a plan that does not qualify.

“Consumers are picking plans on exchanges based on premiums, rather than out-of-pocket costs,” said Dan Mendelson, CEO at Avalere.

The difference between the number of exchange enrollees eligible for CSRs and those enrolled may be a result of consumers’ focus on premiums. For example, some CSR-eligible consumers are likely enrolling in lower-premium bronze plans, rather than the required silver plans. Meanwhile, other consumers may not be aware that CSRs are available and the benefits they offer.

The Congressional Budget Office (CBO) estimates that consumers will continue to forgo CSRs in the future. Indeed, the CBO projects 3 million individuals  who are eligible for CSRs will forgo subsidies by signing up for a bronze plan in the years after 2015.…

One of the more prominent problems with our dysfunctional system of financing health care is that the first decision faced by health care “consumers” is how much they are willing to pay towards the insurance premium, whether paying in full or sharing the cost with an employer or public program. People who are relatively healthy and do not expect to need much health care and whose incomes are limited will tend to select a plan with a lower premium regardless of the plan benefits.

A prime example is found in this report from Avalere. More than 2 million people who would be eligible for cost-sharing reductions if they selected qualifying silver level plans instead select bronze plans with their lower premiums, disqualifying them for the cost-sharing reductions. If they either have or should develop significant medical conditions, they are much worse off financially by having selected a bronze plan.

Another example of selecting plans based on the premiums has been the increase in the prevalence of high-deductible plans, selected because of their lower premiums. Once again, those who develop significant problems are worse off financially with high-deductible plans.

Shopping for cheaper premiums does not exist in a single payer system since the entire system is financed through equitable taxes rather than being financed on an individual basis, and there is no need to shop for plan benefits since everyone receives the same comprehensive benefits.

Instead of having a system wherein individuals are cornered into selecting a plan that is not in their best interests, everyone could participate in a system that is efficient, equitable, comprehensive and affordable for all – a single payer national health program.

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Fundamental flaw of Republican health reform proposals

Posted by on Wednesday, Aug 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.

Scott Walker, Marco Rubio Propose ‘Plans’ to Replace Obamacare

By Jonathan Chait
New York Magazine, August 18, 2015

Today, Scott Walker and Marco Rubio have published plans — really, not so much plans as skeletal descriptions of planlike concepts — to replace Obamacare. Appealing to the general election requires them to promise something to compensate the victims of repeal. How will they fund that something? This is the basic problem that for decades has prevented Republicans from offering a health-care plan. Rubio and Walker show that they still have no answer.

The main reason people lacked insurance before Obamacare is that they did not have enough money to afford it. Some of those uninsured people had unusually high health costs. Some of them had unusually low incomes. Boiled down, Obamacare transferred resources from people who are rich and healthy to people who are poor and sick, so the poor and sick people can afford insurance.

Walker and Rubio are fairly clear about their plans for regulating the insurance market. They want to go back to the pre-Obamacare, deregulated system. They’d eliminate the requirements that insurance plans cover essential benefits, and let them charge higher prices to sicker customers. That’s good for people who have very limited medical needs (as long as they never obtain a serious medical condition, or have a family with somebody with a serious medical condition). It’s bad for people who have, or ever will have, higher medical needs.

Both Walker and Rubio promise to take care of people with preexisting conditions by creating separate “high-risk pools.” That is a special kind of insurance market for people with expensive medical conditions. As you may have guessed, insurance for people with expensive medical needs is, well, expensive. Making that insurance affordable therefore requires lots of subsidies from the government. Where would Walker and Rubio get the money for that? They don’t say.

Both Walker and Rubio propose to cut funding for Medicaid, but this doesn’t create much room to subsidize coverage, since Medicaid is already much cheaper than Medicare or private insurance. Republicans are willing to cut Medicaid because they’re generally willing to cut programs that focus on the very poor, but there’s not much blood to be drawn from this stone.

It is tempting to treat the lack of specifics in the Republican health-care plans as a problem of details to be filled it. But it is not a side problem. It is the entire problem. They will not finance real insurance for the people who have gotten it under Obamacare, nor will they face up to the actual costs they’re willing to impose on people. The party is doctrinally opposed to every available method to make insurance available to people who can’t afford it. They have spent six years promising to come up with an alternative plan, and they haven’t done it, because they can’t.…

Much has been written this week about the proposals of presidential candidates Gov. Scott Walker and Sen. Marco Rubio for replacing the Affordable Care Act (ACA or Obamacare) once it is repealed. Most articles discuss the few specifics of their proposals that they have provided, but Jonathan Chait’s stands out because he describes the underlying fundamental flaw common to all conservative proposals for reform: for everyone to have affordable access to health care, there must be a large transfer from the healthy to the sick and from the wealthy to those with lower incomes, and the conservative proposals fall far short on the size and direction of the transfers that are needed.

Chait exits the topic leaving ACA in place, but there is more to be said. Although ACA actually did expand the necessary transfers, it still falls short of what is needed, plus too many inequities are perpetuated. Patches to ACA would still leave in place the fundamentally flawed infrastructure, and the Republican replacements are even more fundamentally flawed because they would worsen the financial barriers to care, especially by failing to include adequate transfers in their models.

A much more efficient and equitable method of achieving the necessary transfers would be to enact a single payer national health program. If the Republicans really do want a better replacement for Obamacare, maybe they should seriously consider single payer.

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