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.
Intermountain Healthcare pays $25.5M to settle violations of federal law
By David Wells
Fox 13 News, Salt Lake City, April 3, 2013
Utah’s largest health system self-disclosed violations of federal health care laws and agreed to pay the United States $25.5 million to settle its claims, according to a statement from the United States Department of Justice.
“These issues were primarily technical in nature and involved things such as lack of proper paperwork involving leases of physician offices and service agreements,” said a statement on Intermountain Healthcare’s website.
The DOJ statement said Intermountain Healthcare admitted to violating the Stark Statute by employment agreements under which the physicians received bonuses that improperly took into account the value of some of their patient referrals; and office leases and compensation arrangements between Intermountain and referring physicians that violated other requirements of the Stark Statute. These issues were disclosed to the government by Intermountain Healthcare.
“People should expect that hospitals and doctors care more for their patients than their bottom line profits,” said Gerald Roy, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services region including Utah. “So I applaud Intermountain for recognizing their liability and coming forward to self-disclose these violations. We will vigilantly protect taxpayer-funded health programs against Stark violations through tight coordination with our partners at the Department of Justice.”
This link includes statements from Intermountain Healthcare and from the United States Department of Justice:
The Settlement Agreement:
Most of us have grown weary of the scandalous behavior of our corporate health care system, and so we are no longer surprised by the by headlines notifying us of multimillion dollar penalties assessed against these nefarious entities. In fact we say, “Good riddance.” However, in this instance involving Intermountain Healthcare, it is almost refreshing to see that the story behind the headlines can renew our faith in our health care system.
Intermountain Healthcare is a large, non-profit, highly ethical, integrated health care system in Utah. It has an excellent reputation for providing efficient, high quality care, and for being innovators in improving the delivery of health care. That is why it was surprising to see their name in the headlines reporting yet another scandal.
But a scandal it isn’t. Intermountain Healthcare violated provisions of the Stark statute designed to prevent referral arrangements that could provide perverse incentives for personal profit in health care. The Intermountain violations were technical, involving a flawed formula for physician compensation, and involving improperly documented rental arrangements for use of medical space.
Intermountain discovered these violations on their own. Instead of trying to cover them up, they reported them to the U.S. Attorney for Utah. Considering the total lack of criminal intent, the technical nature of the violations, the lack of harm done, and the self-disclosure of the errors, it can be argued that the $25.5 million penalty was excessive.
What does this have to do with single payer reform? Simply that there is a world of difference between a health care system structured on a business model with a primary mission to make money, and a health care system structured on a service model designed to take care of patients. Intermountain functions as the latter. It is a non-profit, integrated health care system that would be an ideal component of a single payer national health program.
Technical violations will always be with us, but they are understandable errors when the goal is to take care of patients, but not when the goal is to deliberately siphon off health care dollars for personal gain.
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.
Last chance: If ACA fails, single payer is next
The Salt Lake Tribune, March 30, 2012
The Patient Protection and Affordable Care Act should be seen as what it is: One last opportunity for the private health insurance market to prove that it can offer a service that covers the millions of Americans who were previously left out, at a cost that we — as individuals, employers and taxpayers — can afford.
If that is a goal beyond the grasp of the existing system, then it needs to be finally swept aside in favor of something that will meet those needs.
But this is, or should be, the private health insurance industry’s last chance. If Obamacare fails, a return to the cold-hearted free market is not a realistic or humane choice.
An entity with the chops to bargain down the actual cost of care is necessary. At the very least, a robust public option, an idea President Obama bargained away in the creation of the ACA, must be provided. Better still would be a single-payer plan — Medicare for all.
It is already clear that the structure of the private health insurance market that is perpetuated by the Affordable Care Act will continue to fail us – providing us only care that is too expensive and leaves too many out. Not even a competing “robust public option” can alter that. Now is the time to enact a single payer plan – an improved Medicare for all.
Let’s hope that the editorial board of The Salt Lake Tribune – and all other influential observers of the health care scene – will recognize sooner rather than later that the private insurance industry has failed us once again and has to go.
Registered Nurses to the Rescue
Andrew D. Coates, MD, FACP
WAMC Northeast Public Radio Mid-day Magazine
29 March 2013
In a small news article this week in the New York Times Nina Bernstein reported that a provision of the New York State budget to allow for-profit hospitals was been dropped after opposition from the Assembly leadership, specifically the intervention of Assemblyman Richard Gottfried, chair of the Assembly’s Health Committee.
While hospitals may be run as for profit businesses in many states, all New York state hospitals are presently either not-for-profit or public institutions. Keeping for-profit hospital care out of New York is good news for people in New York who need hospital care and marks a successful defense of the public interest.
According to the Times Stephen Berger, “an investment banker who has long advised the state on health care,” was behind the push. Republican leaders in the New York State Senate proposed to expand the pilot project to allow ten for-profit hospitals.
The New York State Nurses Association vigorously opposed the measure. The nurses organized a grassroots push of over 2,000 phone calls and hundreds of in-person visits to lawmakers, including a last-minute push of busloads of nurses traveling to Albany.
Jill Furillo, executive director of the New York State Nurses Association, was quoted in the Times saying: “For-profit health care does not work. People in the Assembly listened to us, and so did Gov. Andrew Cuomo.”
Proponents of for-profit hospitals in New York, like Mr. Berger, point to the need for capital investment in the healthcare infrastructure. Berger led a state-appointed committee in 2011 that recommended closing all public hospital beds in the borough of Brooklyn.
Investment in healthcare works for the investors, but it doesn’t work for the patients or the caregivers. Public money must ultimately fund the care of the vulnerable and the indigent. Allowing investment companies to take a cut increases costs and robs caregiving.
For-profit hospitals amount to bad public policy. For-profit hospital have also been shown, in peer-reviewed policy science literature, to provide inferior quality when compared with their non-profit counterparts. For-profit hospitals also lead to greater health spending than non-profit ones.
Convincing research includes studies by Dr. P.J. Devereaux and his team of researchers. When it comes to hospitals Devereaux found that charges at for-profit hospitals were 19 percent greater than at their non-profit counterparts. In a previous paper, Devereaux and colleagues showed that mortality — death rates — were 2 percent greater at for-profit hospitals.
A cardiologist, Devereaux practices, teaches, and performs his research at McMaster University in Ontario, a world-renowned center for evidence-based medicine. Devereaux has also researched the question of for-profit dialysis centers and for-profit nursing homes.
When compared with non-profit institutions, for-profit dialysis and for-profit nursing homes, like for-profit hospitals, are more expensive and more deadly than nonprofit ones.
Moving a hospital into the private sector shifts its fundamental purpose. A for-profit institution primarily exists to remunerate investors and shareholders. The public service model — or at the very least non-profit, community-based institutions — still organizes care with a primary responsibility to patients and their caregivers.
During our lifetimes health care has been transformed from its charitable roots into a profit-seeking industry.
For-profits operate over 84 percent of home health care agencies and 85 percent of dialysis clinics. 96 percent of the nation’s outpatient surgery centers are for-profit, a sector that has grown by more than a third in the last decade. Hospice care has evolved into a $14 billion business, run mostly for-profit. For-profit hospice!
Over three-fourths of nursing homes are for-profit nursing homes — and the largest owner of for-profit nursing homes are private equity firms run by investment bankers.
The exception has been hospitals, where nonprofits and publicly-operated facilities had 88 percent of revenues in 2010.
I love our nurse colleagues. Judy Sheridan-Gonzalez, RN at Montefiore Medical Center and elected NYSNA leader, said: “We’ve won this battle, but our fight for New York patients is just beginning. Our opponents can re-introduce these changes as non-budget bills at any time this legislative session. That’s why we’re not letting down our guard.”
For-profit hospitals are bad public policy. But with the trend toward privatization — you might call it the profitization — of health care — the nurses public advocacy will remain as indispensable to the patient’s interests as their bedside care.
Factors Affecting Individual Premium Rates in 2014 for California
By Robert Cosway and Barbara Abbott
Report prepared for Covered California, Milliman, March 28, 2013
Covered California retained Milliman to evaluate the changes in individual health insurance premium rates that might be expected due to the implementation of the Patient Protection and Affordable Care Act (ACA) in 2014.
Summary of Potential Rate Changes for People Currently Insured (includes premium tax credits and cost sharing subsidies)
-83.8% Less than 250% FPL
-46.6% 250% to 400% FPL
+30.1% Greater than 400% FPL
Cost at time of care (cost sharing)
-61.8% Less than 250% FPL
-27.3% 250% to 400% FPL
+ 1.2% Greater than 400% FPL
Total cost of care: Premiums plus cost sharing
-76.2% Less than 250% FPL
-39.9% 250% to 400% FPL
+20.1% Greater than 400% FPL
In general, we expect the average currently insured to experience premium increases because they will be part of a new risk pool with a higher average health status. The federal premium tax credits and cost sharing subsidies will more than offset these increases for many low income individuals.
Cost of the Future Newly Insured under the Affordable Care Act (ACA)
Society of Actuaries, March 2013
Note that the ACA’s affect on premium is not modeled in this research; rather, long-term relative claims cost is modeled.
This analysis will primarily focus on the individual, non-group market.
Finding 3: The non-group cost per member per month will increase 32 percent under ACA, compared to pre-ACA projections.
The post-ACA figures include the impact of a) high risk pool members, b) employers dropping group coverage, and c) increased morbidity from selection by those currently uninsured who now purchase coverage.
These two actuarial reports project the potential financial impact of the Affordable Care Act (ACA) on individuals obtaining coverage in the non-group market. The reports are quite complex. Let’s see if we can separate what these reports really say from what the politicians are saying about them.
The excerpts above do not refer to employer-sponsored coverage nor do they refer to Medicaid. They refer only to the differences in plans offered in the individual market before ACA and those to be offered after the ACA exchanges are established next January.
The Society of Actuaries reports that cost of claims, not premiums, will increase 32 percent, but, again, only in the individual market. This increase is due to the change in the mix of individuals covered by these plans. The plans will include more costly individuals who have been insured by the state high-risk pools; they will include individuals dropped by employers from their group coverage, and they will include the previously uninsured who have increased morbidity (i.e., poorer health status).
So those politicians who are using this report to claim that “health care costs are going up 30 percent under Obamacare” either do not understand the report, or they are being dishonest. It is only the insurance pools in the individual market that add in unhealthy individuals that are projected to have 30 percent increases in the cost per enrollee, when compared to the cost per enrollee of current plans in the individual market that have been successful in keeping out individuals with greater health care needs.
The Milliman analysis looks at the pre-ACA and post-ACA change in the premiums, not the change in the cost of claims, but they also include the changes in what the individual actually pays when the premium tax credits and cost sharing subsidies are included. Those individuals with incomes below 400 percent of the federal poverty level will pay significantly less than they would in the current individual market.
For individuals who do not receive subsidies or tax credits, the premiums will increase about 30 percent – again because of the change in the mix of the insurance pools which will include enrollees with greater needs. But the total premiums plus cost sharing are expected to increase about 20 percent since there will be almost no change in cost sharing for these higher-income individuals.
So are the costs for the individual market insurance pools going up 20 percent or about 30 percent? Considering the differences in higher-income individuals in one study and the entire individual market in the other study, the separate impact on premiums, cost sharing, and claims, and the variations in actuarial assumptions, these numbers are quite close. Let’s say 25 percent.
But the number doesn’t matter. Whatever it is, it merely represents the fact that insurers offering individual plans must now sell them to anyone who wishes to enroll, no matter how expensive their medical problems may be. By segregating individuals into different insurance pools, the premiums will have to be set based on how healthy or sick that pool is, especially since risk adjustment is only capable of correcting for just a minor portion of the inequities. Administrative complexity and inequities are inevitable under ACA.
The lesson is that it would be much simpler and much more equitable to have a single insurance pool that covers everyone, and fund it through progressive tax policies. Fix Medicare, improve the tax structure, and use it for everyone.
HMO Quality Ratings Summary – 2013
Office of the Patient Advocate
State of California
“Health Care Quality is getting the right care at the right time.”
First rating is for “HMO provides recommended care,”
and the second rating is for “Getting care easily”:
*** * Aetna Health of California, Inc.
*** * Anthem Blue Cross – HMO
*** ** Blue Shield of California – HMO
*** * CIGNA HMO
*** * Health Net of California, Inc.
**** ** Kaiser Permanente – Northern California
**** * Kaiser Permanente – Southern California
*** * Sharp Health Plan
*** * UnitedHealthcare of California
*** ** Western Health Advantage
California’s Office of the Patient Advocate defines health care quality as getting “the right care at the right time.” So how well are the HMOs doing?
To assess whether or not the right care is being provided, the HMOs report their compliance with standard Health Plan Employer Data and Information Set (HEDIS) measurements. The HMOs make certain that their health care professionals are aware of the 37 HEDIS measurements that will be made, and that they know that it is important to be certain that compliance is documented.
All ten of the California HMOs were able to document that they were either “good” or “excellent” at providing the right care for these 37 measured clinical recommendations. No measurement was made of the hundreds of thousands of other clinical decision processes that take place. It remains debatable as to whether 37 HEDIS measurements are adequate to determine if the HMO is always good or excellent at providing the right care, but there are those of us who have our doubts (pardon the cautious, restrained language).
So regardless of whether or not it was the right care, was it provided at the right time? Patients were surveyed about “experiences in getting appointments with doctors and other providers when needed and getting tests, treatments and other care without delay.” No HMO was rated excellent; no HMO was rated good. Three were rated fair, and seven were rated poor. At least from the patients’ perspective, care was not being provided at the right time.
Under a single payer system, patients have free choice of their health care professionals and institutions. HMOs take away that choice, subjecting patients to severe financial penalties should they obtain care outside of the HMO. The results of this survey suggest that, once HMOs have captive patients, they limit access by limiting system capacity and by establishing queues that are beyond the tolerance of their patients.
The delegated model of HMOs has no place in a single payer system since they function more as intrusive private insurers rather than as truly integrated health care delivery systems.
HMOs that are fully integrated health care delivery systems, such as Kaiser Permanente, do have a place in a single payer system. Right now, Kaiser is heavily dependent on workers enrolling in Kaiser’s plans through their employment, often choosing Kaiser as their least-worst option.
Once we have a single payer system with patients choosing their health care based on perceived quality, to compete successfully with the rest of the health care delivery system, Kaiser will have to show that they can deliver the right care at the right time. After all, that’s what single payer is all about.
Democracy and the Policy Preferences of Wealthy Americans
By Benjamin I. Page, Larry M. Bartels and Jason Seawright
American Political Science Association, Perspective on Politics, March 2013
It is important to know what wealthy Americans seek from politics and how (if at all) their policy preferences differ from those of other citizens. There can be little doubt that the wealthy exert more political influence than the less affluent do. If they tend to get their way in some areas of public policy, and if they have policy preferences that differ significantly from those of most Americans, the results could be troubling for democratic policy making. Recent evidence indicates that “affluent” Americans in the top fifth of the income distribution are socially more liberal but economically more conservative than others. But until now there has been little systematic evidence about the truly wealthy, such as the top 1 percent. We report the results of a pilot study of the political views and activities of the top 1 percent or so of US wealth-holders. We find that they are extremely active politically and that they are much more conservative than the American public as a whole with respect to important policies concerning taxation, economic regulation, and especially social welfare programs. Variation within this wealthy group suggests that the top one-tenth of 1 percent of wealth-holders (people with $40 million or more in net worth) may tend to hold still more conservative views that are even more distinct from those of the general public. We suggest that these distinctive policy preferences may help account for why certain public policies in the United States appear to deviate from what the majority of US citizens wants the government to do. If this is so, it raises serious issues for democratic theory.
The public has expressed much more support for tax-financed national health insurance (61 percent in favor) than our wealthy respondents did (just 32 percent). This represents a major gap on a central issue of social welfare policy. Similarly, a solid majority of the public (59 percent), but only a minority of the wealthy (41 percent), said they would be “willing to pay more taxes in order to provide health coverage for everyone.”
Our evidence indicates that the wealthy are much more concerned than other Americans about budget deficits. The wealthy are much more favorable toward cutting social welfare programs, especially Social Security and health care. They are considerably less supportive of several jobs and income programs, including an above-poverty-level minimum wage, a “decent” standard of living for the unemployed, increasing the Earned Income Tax Credit, and having the federal government “see to” —or actually provide—jobs for those who cannot find them in the private sector.
Judging by our evidence, wealthy Americans are much less willing than others to provide broad educational opportunities, by “spend[ing] whatever is necessary to ensure that all children have really good public schools they can go to” or “mak[ing] sure that everyone who wants to go to college can do so.” They are less willing to pay more taxes in order to provide health coverage for everyone, and they are much less supportive of tax-financed national health insurance. The wealthy tend to favor lower estate tax rates and to be less eager to increase income taxes on high-income people. They express concern about economic inequality and favor somewhat more egalitarian wages than they perceive as presently existing, but—to a much greater extent than the general public—the wealthy oppose government action to redistribute income or wealth.
On many important issues the preferences of the wealthy appear to differ markedly from those of the general public. Thus, if policy makers do weigh citizens’ policy preferences differentially based on their income or wealth, the result will not only significantly violate democratic ideals of political equality, but will also affect the substantive contours of American public policy.
The wealthy have a very strong political voice. They use it to advance their own interests while opposing social programs, including tax-financed national health insurance. This is class warfare, but look at who is waging it.
By Alice Brody and Andy Coates
ALBANY, N.Y. — About 60 people rallied in front of Albany Medical Center under the banner, “Protect our health, not their wealth,” on March 20.
Speakers and protesters called for “No ‘Grand Bargain’ – Hands off Medicare, Social Security and Medicaid,” “Scrap the Cap on Social Security,” “Oppose Privatization of our Public Hospitals and Nursing Homes,” and “Single Payer, Improved Medicare for All.”
A broad coalition representing nurses, physicians, medical students, labor unions, senior citizens, faith groups, grassroots organizations, and Occupy Albany – the driving force behind the event – held the rally, including by providing speakers.
Ajay Major, a first-year student at Albany Medical College, was among those who spoke. His remarks were as follows:
The Albany Medical College chapter of Physicians for a National Health Program stands in firm affirmation of a single-payer health system.
Medical student Ajay Major prepares to speak at the Albany rally on March 20. (Photo: Alice Brody.)
As medical students, and the future generation of physicians, we view the existing system of health care — fragmented, discontinuous, costly, and unjust — as unacceptable. Our system of sick care, which prioritizes acute, ultra-specialized care over preventive and primary care, and which values the insured over the uninsured, jeopardizes our ability as future physicians to provide equitable, accessible, and high-quality longitudinal care for our patients.
According to the U.S. Census Bureau, there are 48.6 million uninsured Americans. An additional 25 million are underinsured. That is over 20 percent of Americans whose financial status makes them intrinsically incompatible with our market-driven health care system.
These patients suffer from episodic, transient care and debilitating financial hardship and debt. They cannot access the preventive care to manage their chronic conditions. They cannot afford the medication needed to maintain a high quality of life. They cannot receive the basic health services to keep them productive and functioning members of American society.
This is not justice. In recognition of the socioeconomic determinants of health, we as medical students and as Physicians for a National Health Program recognize that our profit-driven health system disproportionally harms those who need the system most.
We assert that health care is a right, not a commodity that is restricted to those who can pay for it, and we cannot continue to support a system that restricts our clinical autonomy, costs hundreds of millions dollars in excess administrative overhead, and lets the needy fall — nay, pushes the needy — through the cracks.
We, medical students at Albany Medical College, stand here and rally today as patient advocates, striving to adopt a system of universal coverage to ensure that all Americans have access to high-quality and continuous care. We thank you for your support and echo your rallying cry: we need single payer now!
Sponsors of the event included the New York State Nurses Association, Public Employees Federation, Physicians for a National Health Program – Student Chapter, Single Payer New York, Capital District Area Labor Federation, Albany Central Federation of Labor, The Labor Religion Coalition, Capital District Alliance for Universal Healthcare, Statewide Senior Action, Citizen Action, MoveOn, and Occupy Albany. Also present were labor union members from the American Federation of Government Employees, the Service Employees International Union, and the National Association of Letter Carriers.
Fremont’s Washington Hospital: Joint replacement patients, doctors excluded from new facility
By Ashly McGlone
MercuryNews.com, March 25, 2013
When Robert Cantley needed both knees replaced in August, he was expecting to recover from the surgery at Washington Hospital’s fancy, new $42.7 million Center for Joint Replacement.
According to hospital marketing brochures, the center offered “A Higher Level of Care” in a 20,000-square-foot space featuring 25 private patient rooms, a “breathtaking physical therapy space” and a beautifully landscaped therapy garden.
Instead, Cantley did his physical therapy sessions in a dimly lit hallway on the sixth floor of the main hospital in what he described as “a miserable set of circumstances.”
Cantley’s physician, Dr. John Jaureguito, who has been on the medical staff at Washington for 18 years, said the arrangement means his patients get “second-class” treatment. “Therapy is literally in the hallway,” he said. “I’ve never come across anything like this before.”
What Cantley and many other patients at the public hospital didn’t know was that access to the new center, the only facility of its kind in the Bay Area, is restricted to just two orthopedic surgeons at the hospital — the only ones on the Washington staff who met 24 criteria set by the hospital.
Those two doctors — long the hospital’s primary joint replacement specialists — played a critical role in the creation of the lucrative new center, and one of them acknowledges he helped create the criteria that have excluded many of his fellow surgeons. Some of those surgeons and their patients are crying foul, saying the result is a “two-tier” system of care that favors wealthier patients and chosen doctors.
“It is a community hospital, serving the public,” Cantley, 78, told the publicly elected Washington Township Health Care District board at a meeting last month. “The public in no way, shape or form should be excluded from the new wing.”
The only two surgeons who qualified, Dr. John Dearborn and Dr. Alexander Sah, received a five-year contract from the hospital to staff the center through May 2017 while maintaining their status as independent contractors, not employees, according to the contract.
The average single joint-replacement surgery performed at Washington Hospital in 2011 cost nearly $160,000, more than twice the California average, state data show.
According to one of Dearborn’s secretaries, neither he nor Sah accepts Medi-Cal or Alameda Alliance, which serve low-income residents, but typically carry lower reimbursement rates for doctors and hospitals than does Medicare.
There are ten orthopedists on the staff of Washington Hospital in Fremont, California who perform joint-replacement surgery, but only two are allowed to use the hospital’s state-of-the-art Center for Joint Replacement. The Center charges more than twice the average for California, while the two approved surgeons apparently have a policy of discouraging low-income residents, including Medi-Cal patients.
Perhaps the most appalling consequence is that the patients of the other eight orthopedists receive their post-op physical therapy in the hallway of the main hospital rather than in the new “breathtaking physical therapy space.”
As a community hospital, serving the public, and with pressure from the state Department of Public Health and the Washington Township Health Care District, it is likely that this arrangement will be modified.
So what does this have to do with health care reform? We can ask ourselves if a single payer system that separately budgets capital improvements would have ever allocated funds for a state-of-the-art center serving only two prima donna surgeons and their affluent patients exclusively. Of course not. Attention surely would have been directed to a decision on whether or not it was even appropriate to establish a separate joint replacement pavilion. Likely the funds would have been better spent on improving or replacing existing surgical and physical therapy facilities.
Achieving the goal of health care justice for all will be made that much more difficult if our health care professionals and administrators fall below the ethical plane that we envision for the healing arts.
That’s what you get when you kick the can down the road
Northeast Public Radio commentary (WAMC and affiliates)
March 22, 2013
Andrew D. Coates, MD, FACP
“Kicking the can down the road” is an idiom that means to defer something crucial in hopes that the problem will become someone else’s responsibility. The other day it occurred to me that “kicking the can down the road” has become a trademark of contemporary governments worldwide — from the European debt crisis, to the so-called sequester, to the decision to defer changing the tax on New York’s wealthy until a non-election year.
In many ways President Obama’s “health care overhaul,” the Affordable Care Act, is another example of kicking the can down the road. Here at the third anniversary of the reform, the bulk of the law will not begin to take effect until next year — and its full process will continue through 2019, all the way to the Presidential election after the next Presidential election.
Perhaps then it is small wonder that the Kaiser Family Foundation Health Tracking Poll found this week that a solid majority of Americans, fifty-seven percent, have no idea what the impact of the Affordable Care Act will be. Three years after “health care overhaul” was signed into law we’re still Waiting for Godot.
The Kaiser Foundation pollsters had the good sense to ask about things that were part of the debate four years ago but not part of the law. They found that a majority of people mistakenly believe that the reform will implement a so-called “public option” insurance plan. Four of ten people think that there are government “death panels” empowered to decide whether Medicare beneficiaries live or die, although this too has no basis in reality.
The real facts, however, are not encouraging. Inadequate access to care, uninsurance, underinsurance, medical bankruptcy and state-by-state rationing of care for the poor remain the order of the day. The real experience for those in need of medical care has not improved. Indeed in many communities it has worsened.
Still, the Affordable Care Act promises private insurance for the uninsured — starting next year. The plans offered through the state exchanges will be benchmarked to cover a minimum of 60 percent of the anticipated health care costs.
That means that a family plan purchased on the on the New York exchange will cost about $21,000 in a year in premium payments, plus an anticipated $12,500 in out of pocket expenses. Of course you can pay more if you want better coverage. In other words, starting this fall the uninsured will be able to sign up for unaffordable — yet insufficient — health coverage.
Families earning less that $92,000 will be given tax subsidies for insurance premiums, — but each family eligible will face a significant, personalized, calculus problem about whether or not to purchase insurance.
The Kaiser Family Foundation’s polling found that most people have no idea about this. I think this reveals popular wisdom. Some things we might rather not know! Cynicism and distrust amounts to a healthy impulse in this case.
When it comes to health policy, the mainstream media consistently fails to lead with the facts. He-said, she-said reporting, with no grounding in facts, dominates. Casual attention to NPR and the daily papers invited the conclusions that both death panels and socialism were debated on Capitol Hill.
The real problem is that the Affordable Care Act kicked the can down the road, rather than taking responsibility for the health care crisis that the United States has right now. Small wonder that people don’t know how the law will change the status quo — when the ACA never aimed to to change the status quo in the first place. Unaffordable underinsurance will remain the best we can do.
That’s what you get when you kick that can down the road — until the day when the cans in the road block the way forward. Soon now we will all need to face the fact that nothing short of a public, national single-payer health program will be able to control costs, guarantee access to all, improve the quality of care — and raise us all up.
Interim Report of the Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Health Care: Preliminary Committee Observations (2013)
Institute of Medicine
The National Academies
A geographic value index would adjust payment to all providers within a defined area based on aggregate measures of spending and quality. The committee sought to determine empirically whether providers within a defined area behave similarly (e.g., exhibit similar patterns of service use across sub-regions, clinical conditions and quality measures). Consistent with a body of literature, analyses commissioned by the committee observed variation in health care spending at every geographic level (Hospital Referral Regions, Hospital Service Areas, Metropolitan Statistical Areas) studied, and additional research found variation among hospitals within Hospital Referral Regions, among physicians in the same group practice, and even within individual providers when treating different conditions. Further, Hospital Referral Regions do not consistently rank high or low across quality measures, nor is there a consistent relationship between utilization and various quality measures. These preliminary observations suggest that a geographic value index would reward low-value providers in high-value regions and punish high-value providers in low-value regions.
Health policy leaders suggest that, to improve value, payment reforms need to create incentives to encourage behavioral change in the locus of care (provider and patient), and thus payment should target decision-making units, whether they be at the level of the individual providers, hospitals, health care systems, or stakeholder collaboratives. Payment reforms contained in the ACA (e.g., value-based purchasing, accountable care organizations, bundled payments) and being tested in the commercial market and Medicaid, do target decision makers rather than geographic areas. Because these reforms are relatively new, there is little evidence to date about their effects on the value of care. Nevertheless, the results of the subcontractors’ work for this study suggest that tying a decision-making unit’s payment to its actions, as these reforms do, is preferable to induce desired changes in care. Further, because post-acute care, particularly home health and skilled nursing, is a major source of unexplained variation in Medicare spending, reforms that address incentives to overuse post-acute care, including fraud in that use, could have a large impact on health care efficiency.
Health care spending tends to fall under a Bell curve. Most of it falls in the middle, but some falls under the low end (low-cost) and some falls under the high end (high-cost). The Dartmouth studies have confirmed the geographical nature of this distribution. Thus much attention has been directed to devising methods of recovering the allegedly excessive spending in the high-cost regions. This report casts doubt that such an effort would be productive.
To begin with, the Bell curve or Gaussian distribution (normal distribution) is to be expected even when resources are being used properly. Further, this variation is found not only between geographic regions, but also between hospitals within the same regions, between physicians within the same group practices, and even by the same physicians managing different conditions. Thus measures designed to reduce spending only in geographical regions at the high end will be too blunt because they would reduce not only high-cost care of lower value, but they also would reduce legitimately high-cost care that is providing full value.
The authors of this Institute of Medicine report suggest that payment reforms instead should target decision makers rather than geographical areas. The decision makers include individual providers, hospitals, health care systems, and stakeholder collaboratives. Health payment reforms of the Affordable Care Act are designed to do just that. These include measures such as accountable care organizations, value-based purchasing, and bundled payments. Of course, adjusting payments based on these and similar reforms are much more complex administratively than merely adjusting payments based on regional spending levels.
It is questionable as to whether or not such payment systems could ever be effective in significantly improving value in the entire health care system since most impacts of the payment models are effective only at the margin, if even there. Further, Gaussian distributions would apply to these new models as well, making it likely that payment adjustments would be inappropriate for some, even if appropriate for others.
Think of the Bell curve again, but for decision makers rather than geographical regions. Many have suggested that 30 percent of health care represents wasteful spending. What if you lop off the upper 30 percent of care under the Bell curve? First you have to believe that you can identify low-value care in advance – a highly unlikely scenario. Then you have to assume that all care in the lower 70 percent provides value whereas that in the upper 30 percent does not – a preposterous assumption.
What about the lower 30 percent of the curve. Does it really represent high-value, low-cost care? Or does it represent care that is not being delivered (and therefore not measured), even if it should be. Shouldn’t we be directing more efforts to be sure that we are meeting patient needs, even if it could increase health care spending?
We are looking for ways to slow down the outrageous increases in spending for what is often mediocre care. These feeble measures that are designed to tweak decision makers are complex and likely will cost as much to administer as any meager savings that they could realize. Some of the ideas may be worth pursuing, such as value-based purchasing, but we should not deceive ourselves that these are the grand solutions for our excessive spending.
All other wealthy nations provide care for everyone at much lower costs, and they have done it without playing these pseudo-wonk policy games. We can’t rely on silly, little tweaks. We need fundamental reform of our health care financing system. We need a single payer national health program.
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