Markets impact community rating

Posted by on Wednesday, Jun 5, 2013

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.

Geography affects premiums on California health insurance exchange

By Jim Sanders
The Sacramento Bee, June 5, 2013

For the same health coverage from the same insurer, a 40-year-old Sacramentan will pay $78 more per month than a Los Angeles County resident through the state’s new insurance exchange.

In rural Mono County, the disparity will be even larger: $150 per month, nearly 60 percent higher than for identical benefits and co-pays offered in Los Angeles County.

The premiums provide relatively basic coverage from Anthem Blue Cross, but similar regional differences exist in plans proposed by other insurers. The numbers reflect new rate-setting standards: How sick you are no longer matters, but where you live does.

A 25-year-old can buy the least expensive level of coverage – bronze – at prices ranging from $147 to $274 per month, depending on location.

For the first time, Californians soon will be able to compare regional pricing because federal law requires insurers selling policies on state exchanges to offer identical benefits with rates based only on age, location and household size.

A key factor in premium price differences, within a region or in comparison to other California communities, is the provider network created by each insurer, officials said.

The willingness of doctors or hospitals to join a network can be affected by rates that insurers agree to pay them. Those are negotiated privately and tend to vary based on the number of health care providers within a region and the intensity of competition for patients.

Tom Epstein, vice president of public affairs for Blue Shield of California, said costs for medical care generally are higher in Northern California than in Southern California.

“There are a number of large hospital systems that dominate the Northern California market, whereas there are many smaller hospitals and hospital systems in Southern California that compete,” Epstein said.

http://www.sacbee.com/2013/06/04/5471469/geography-affects-premiums-on.html

Although, with guaranteed issue, health plans will no longer be able to adjust premiums based on the health status of the applicant, they will still be able to adjust them through community rating.

Insurers can charge higher premiums in communities that have a less healthy population enrolled in their plans. But market forces also play a major role. In communities in which physicians and hospitals have greater market clout, they can demand higher payment rates when contracting to become part of the insurers’ networks. The differences can be very significant.

This is yet one more example of why it is irrational to try to fund our health care system through a specific premium assigned to each individual or family and administered by an expensive administrative intermediary – a private insurer.

As many other studies have shown, the private insurers have not been very effective in controlling health care spending anyway. Why would we want to keep them in charge?

We should replace these wasteful, ineffective intermediaries with a publicly-administered single payer program. Payments would be based on legitimate costs with fair margins, using global budgeting and various forms of administered pricing or capitation. Our public stewards would sit down with the health care professionals and administrators and see what they really need, and pay that – no more, no less.

For those who don’t believe that would work, simply look at the other OECD nations. They all have government oversight through some form of social insurance and are able to provide health care to everyone at an average of half the price that we are paying for a system that leaves tens of millions out.

Who says this isn’t feasible? It’s the status quo under Obamacare that isn’t feasible.

NHIS: Problems paying medical bills

Posted by on Tuesday, Jun 4, 2013

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.

Problems Paying Medical Bills: Early Release of Estimates From the National Health Interview Survey, January 2011–June 2012

By Robin A. Cohen, Ph.D.; Whitney K. Kirzinger, M.P.H.; and Renee M. Gindi, Ph.D.
National Center for Health Statistics, CDC, June 2013

The percentage of persons under age 65 who were in families having problems paying medical bills decreased from 21.7% (57.8 million) in the first 6 months of 2011 to 20.3% (54.2 million) in the first 6 months of 2012.

In the first 6 months of 2012, among persons under age 65, 36.3% of those who were uninsured, 14.0% of those who had private coverage, and 25.6% of those who had public coverage were in families having problems paying medical bills in the past 12 months. (Coverage status applies only to the day of the interview.)

The “private health insurance coverage” category includes persons who had any comprehensive private insurance plan (including health maintenance and preferred provider organizations).

The “public health plan coverage” category includes Medicaid, Children’s Health Insurance Program (CHIP), state-sponsored or other government-sponsored health plans, Medicare, and military plans.

Problems paying medical bills in past 12 months—Based on the following question: “In the past 12 months did [you/ anyone in the family] have problems paying or were unable to pay any medical bills? Include bills for doctors, dentists, hospitals, therapists, medication, equipment, nursing home or home care.”

http://www.cdc.gov/nchs/data/nhis/earlyrelease/problems_paying_medical_b…

As we already knew, about one-fifth of people under 65 are in families that have problems paying medical bills. In the United States we are used to that. But why should people in public plans have greater problems than those with comprehensive private insurance?

Most people under 65 with comprehensive private plans have incomes and can bear some limited out-of-pocket expenses for health care, though 14 percent still have problems paying medical bills.

Most people under 65 who have public health plan coverage qualify for those plans partly on the basis of having inadequate incomes. Their eligibility can vary throughout the year and many of them have intervals with no coverage at all and yet still face medical bills. Even when they have public coverage, they often face out-of-pocket expenses for services and products that may not be included such as medications, dental care, physical therapy, equipment, home care, or care obtained outside of networks (such as Medicaid managed care). These expenses are a problem for one-fourth of those with public coverage.

This demonstrates that it is not enough that we have public plans that serve as safety-nets. These are unstable, fragmented, and incomplete methods of financing health care. Even the private plans are as well, to some extent.

Imagine how this contrasts with a system that would cover everyone, throughout life, and with no deductibles nor coinsurance. You simply get the care you need when you need it. Why do we keep just imaging this? We can have such a system if enough of us demand it.

Obamacare: a fundamentally broken system

Posted by on Monday, Jun 3, 2013

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.

Our Continuing Healthcare Crisis, Part 3: The Obamacare Scorecard

By Richard Eskow
Campaign for America’s Future, May 30, 2013

(This is Part 3 of a series on our ongoing – and worsening – national healthcare crisis.)

Conclusion

We’ll be updating this “scorecard” as its provisions take effect, but one thing’s already clear: While the law does some good things, it will only marginally improve upon a fundamentally broken system.

http://blog.ourfuture.org/20130530/introducing-the-obamacare-scorecard

In this article, Richard Eskow of Campaign for America’s Future scores the effectiveness of several features of the Affordable Care Act (Obamacare) as it is being implemented. His take is that Obamacare provides only marginal improvements to a “fundamentally broken system.”

The importance of this observation is that it comes from a prominent and respected organization that provides strategy for the progressive movement. They provided crucial support to Health Care for America Now! (HCAN), a coalition of over 1000 organizations dedicated to achieving quality, affordable health care for all.

HCAN was part of the massive shift of progressives away from single payer to the “politically feasible” Clinton/Obama/Edwards version of the conservative reform model of the Heritage Foundation. They were distracted by the concept that if we could just get a public option, we would be well on our way towards achieving a truly universal, affordable system. Little did it matter that the public option would not have been much different from a traditional Blue Cross/Blue Shield plan. It would have been only a marginal improvement, if that, on a “fundamentally broken system.”

We can’t back up history, but we can assess where we are now, where we are headed, and, most importantly, where we need to go instead. Now that more individuals in the progressive community are acknowledging that Obamacare can have no more than a marginal impact on a  “fundamentally broken system,” we need to dump it and enact a single payer national health program – an improved Medicare for all.

Immigrants subsidize our Medicare program

Posted by on Thursday, May 30, 2013

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.

Immigrants Contributed An Estimated $115.2 Billion More To The Medicare Trust Fund Than They Took Out In 2002–09

By Leah Zallman, Steffie Woolhandler, David Himmelstein, David Bor and Danny McCormick
Health Affairs, June 2013

Abstract

Many immigrants in the United States are working-age taxpayers; few are elderly beneficiaries of Medicare. This demographic profile suggests that immigrants may be disproportionately subsidizing the Medicare Trust Fund, which supports payments to hospitals and institutions under Medicare Part A. For immigrants and others, we tabulated Trust Fund contributions and withdrawals (that is, Trust Fund expenditures on their behalf) using multiple years of data from the Current Population Survey and the Medical Expenditure Panel Survey. In 2009 immigrants made 14.7 percent of Trust Fund contributions but accounted for only 7.9 percent of its expenditures—a net surplus of $13.8 billion. In contrast, US-born people generated a $30.9 billion deficit. Immigrants generated surpluses of $11.1–$17.2 billion per year between 2002 and 2009, resulting in a cumulative surplus of $115.2 billion. Most of the surplus from immigrants was contributed by noncitizens and was a result of the high proportion of working-age taxpayers in this group. Policies that restrict immigration may deplete Medicare’s financial resources.

Conclusion

Having ourselves witnessed immigrants dying needlessly because of lack of health care, we (and many of our colleagues) are motivated by the belief that all patients have a human right to health care. But economic concerns—including the worry that immigrants are driving up US health care costs—have often dominated the debate over immigration. Our data offer a new perspective on these economic concerns.

Policies that reduce immigration would almost certainly weaken Medicare’s financial health, while an increasing flow of immigrants might bolster its sustainability. Because Social Security’s eligibility criteria and payroll tax–based funding closely track those of Medicare, our findings support the argument that immigration helps sustain Social Security.

Providing a path to citizenship for currently undocumented immigrants would affect Medicare’s finances in multiple ways. It would likely increase payroll tax collections by reducing immigrants’ “off the books” employment and removing barriers that keep them out of higher-paying jobs. But in the long term it would probably increase the number of immigrants eligible for Medicare, and hence expenditures on their behalf.

However, the age structure of the immigrant population is far more important than either of these factors. Encouraging a steady flow of young immigrants would help offset the aging of the US population and the health care financing challenge that it presents.

http://content.healthaffairs.org/content/early/2013/05/20/hlthaff.2012.1223

Everyone should have health care when needed. Immigrants are taxed to support our Medicare program, yet many of them are prohibited from participating in Medicare, Medicaid, and the state insurance exchanges currently under development. Not fair.

We should have a universal health care financing system – covering all of us – in which we pay in, based on ability, and draw out, based on medical need. As long as immigrants are an integral part of our society, they should be included on the same basis.

Does population health explain geographical variation in Medicare spending?

Posted by on Wednesday, May 29, 2013

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.

Geographic Variation in Fee-for-Service Medicare Beneficiaries’ Medical Costs Is Largely Explained by Disease Burden

By James D. Reschovsky, Jack Hadley and Patrick S. Romano
Medical Care Research and Review, May 28, 2013

Abstract

Control for area differences in population health (casemix adjustment) is necessary to measure geographic variations in medical spending. Studies use various casemix adjustment methods, resulting in very different geographic variation estimates. We study casemix adjustment methodological issues and evaluate alternative approaches using claims from 1.6 million Medicare beneficiaries in 60 representative communities. Two key casemix adjustment methods—controlling for patient conditions obtained from diagnoses on claims and expenditures of those at the end of life—were evaluated. We failed to find evidence of bias in the former approach attributable to area differences in physician diagnostic patterns, as others have found, and found that the assumption underpinning the latter approach—that persons close to death are equally sick across areas—cannot be supported. Diagnosis-based approaches are more appropriate when current rather than prior year diagnoses are used. Population health likely explains more than 75% to 85% of cost variations across fixed sets of areas.

http://mcr.sagepub.com/content/early/2013/04/26/1077558713487771.abstract

And…

Health Differences Explain Most Geographic Variation in Medicare Costs

Center for Studying Health System Change, May 28, 2013

Wide geographic variation in Medicare costs is largely explained by health differences across communities rather than inefficient care delivery, according to a Center for Studying Health System Change (HSC) study published online today in the journal Medical Care Research and Review.

Earlier research has asserted that Medicare could reduce spending by as much as 30 percent without harming health if all providers adopted treatment patterns found in low-cost areas, but the new Medical Care Research and Review study questions how well earlier studies accounted for differences in Medicare beneficiaries’ health status.

HSC Senior Fellow James D. Reschovsky, Ph.D., along with Jack Hadley, Ph.D., of George Mason University; and Patrick Romano, M.D., M.P.H., of the University of California, Davis, Center for Healthcare Policy and Research, examined multiple ways of adjusting for patient health, finding that a fuller accounting of health status explained at least 75 percent to 85 percent of Medicare geographic cost differences between high- and low-cost areas.

http://www.hschange.com/CONTENT/1353/

And…

Dartmouth Institute for Health Policy and Clinical Practice Responds to Reschovsky at al

By Jonathan Skinner, PhD
The Dartmouth Institute for Health Policy and Clinical Practice, May 29, 2013

There are three fundamental concerns with the Reschovsky et al (2013) geographic variations paper published online May 28, 2013 in Medical Care Research and Review.

The first and most important is that they include current HCCs – diagnostic billing codes – as “explanatory” factors for spending. … the authors’ use of the HCC billing codes would “explain” the more aggressive cardiologist’s behavior as worse health status, rather than attributing it to the more aggressive physician behavior.

But they do find that “non-discretionary” measures of disease, like hip fractures, are higher in high-cost regions.  Wouldn’t that lend credence to their claim that poor health explains higher spending?   I believe the answer is still no – because we cannot reproduce even those basic findings using population based Medicare claims data.

The final concern with this study is a more technical one, so bear with me.  Typically, HCC risk adjustment is predetermined by the HCC formula designed by CMS.  If someone has diagnosed COPD, Medicare would implicitly allow (say) 23% more expenditures as a consequence.  As far as I can tell from the methods section, this is not what they do. Instead, they throw the HCC diagnostic codes into the regression, and let the regression do its best to explain the regional variation.

Now of course, my views on this paper may be viewed as tainted, given my Dartmouth affiliation.  So it’s informative to consider the interim report by the IOM-convened panel of experts on regional variations – a panel that did not include any Dartmouth faculty.  The panel commissioned many studies of regional variation in Medicare, Medicaid, and in private insurance markets.  They read every paper in the literature, and conducted their own analysis of the data.   After sorting through all this evidence, they concluded, as we have:

Observation 4
Although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.

http://tdi.dartmouth.edu/press/updates/dartmouth-institute-for-health-po…

And…

Medicare Spending Variations Mostly Due To Health Differences, Study Concludes

By Jordan Rau
Kaiser Health News, May 28, 2013

The idea that uneven Medicare health care spending around the country is due to wasteful practices and overtreatment—a concept that influenced the federal health law — takes another hit in a study published Tuesday. The paper concludes that health differences around the country explain between 75 percent and 85 percent of the cost variations.

“People really are sicker in some parts of the country,” said Dr. Patrick Romano, one of the authors.

That’s a sour assessment for those hoping to wring large savings out of the health care system by making it more efficient. Some, such as President Barack Obama’s former budget director, Peter Orszag, assert that geographic variations in spending could mean that nearly a third of Medicare spending may be unnecessary.

The new paper is one of the sharpest attacks yet on the work of the Dartmouth Institute for Health Policy & Clinical Practice, whose three decades of research has popularized the theory that the unexplained regional differences in spending are due to the aggressiveness of some physicians to do more, in large part because it enriches them.

“The trouble with Dartmouth is they were trying to spin a simple story from a world which is far more complex and far more nuanced,” said James Reschovsky, the lead author on the paper. “They are to be credited for highlighting that there’s a lot of inefficiency in the delivery of health care in the United States. They defaulted by hanging their hat on geographic determinants of efficiency, and I think that premise is fundamentally being torn down, not only by my research, but also by the IOM work and a bunch of other studies.”

Dartmouth strongly disputed the study, which they said they could not replicate. Jonathan Skinner, a Dartmouth economist, called the study “fatally flawed” in an email. He noted that the Institute of Medicine’s preliminary report stated that “although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.”

Skinner also noted that Dartmouth researchers have never endorsed the idea of adjusting Medicare spending by region.

A 2008 “white paper” from Dartmouth directed at policy makers and titled “an agenda for change” implied the possibility of substantial savings if Medicare rooted out inefficiency and unnecessary treatments.

Dartmouth researchers have long maintained that experts shouldn’t trust Medicare diagnosis records, which the new study used for its analysis. They believe that doctors in some areas of the country are more aggressive in diagnosing people with serious ailments than doctors elsewhere.

Still, while faulting Dartmouth’s methods, the new paper left between 15 percent and 25 percent of geographic differences unexplained. And Romano said he agrees there are substantial differences in how medicine is practiced. “I really do believe there is huge practice variation, but I don’t think we see that variation at the level of these large geographic units,” he said. “We see those variations at the level of individual physician practices.”

http://www.kaiserhealthnews.org/Stories/2013/May/28/medicare-state-geogr…

It has been well documented that there is considerable variation in Medicare spending both between and within geographical areas. What has been disputed is whether or not these differences are due to population health. This latest study indicates that population health explains about four-fifths of the differences in spending. If that is true, the differences in spending are largely warranted.

If the differences in spending are due to geography and physician behavior and not to how sick the patient is, then the onus of explaining how the excess spending could be precisely identified and recovered should be borne by those supporting this view.

Jonathan Skinner of the Dartmouth Institute has been a leading advocate of using accountable care organizations to ferret out this waste. It is difficult to conceptualize how providing care and making the providers “accountable” for it leads to recovery of this alleged waste, especially since accountability measures are so primitive and misdirected that they could never identify most of the excesses.

What is tragic is that this debate has distracted us from seriously considering changes that are well documented to be capable of recovering waste while providing greater value in our health care spending – changes that we could easily achieve by enacting and implementing a single payer national health program.

If there are crooks out there who are wasting our health care dollars, we can investigate them as outliers and then take appropriate measures as warranted. It would be much easier to do under a single payer system.

Millions of the poorest will remain uninsured

Posted by on Tuesday, May 28, 2013

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.

States’ Policies on Health Care Exclude Some of the Poorest

By Robert Pear
The New York Times, May 24, 2013

The refusal by about half the states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance under President Obama’s health care law even as many others with higher incomes receive federal subsidies to buy insurance.

More than half of all people without health insurance live in states that are not planning to expand Medicaid.

People in those states who have incomes from the poverty level up to four times that amount ($11,490 to $45,960 a year for an individual) can get federal tax credits to subsidize the purchase of private health insurance. But many people below the poverty line will be unable to get tax credits, Medicaid or other help with health insurance.

http://www.nytimes.com/2013/05/25/us/states-policies-on-health-care-excl…

The poorest of the poor, those living below the federal poverty level, are ineligible for subsidies for the exchange plans, and they will not be able to enroll in Medicaid in those states that have refused to expand eligibility beyond those who are already qualified.

For those living in poverty, the Affordable Care Act (ACA) could have provided plans through the state exchanges with subsidies for 100 percent of the premiums and 100 percent of the out-of-pocket costs. Instead, it was decided to cover those in poverty with Medicaid, while limiting the income-indexed exchange subsidies to those living above 100 percent of the federal poverty level.

That was before the Supreme Court ruled that state participation in the Medicaid expansion could not be made mandatory. Since so many states opted out, millions of the very poor will not be eligible for Medicaid nor for the exchange plan subsidies. They will simply remain uninsured.

Because of the obstructionists in Congress, no legislative remedy is possible at this time. Too many members of Congress want to prove that ACA won’t work. Of course, they do not advance any program that will.

Even if all glitches were eliminated, the fundamental structure of ACA is irreparably flawed. It will leave 31 million uninsured, establish under-insurance as the new standard, and fail to control costs. So let’s replace it with a system that covers not only the poorest of the poor, but covers all of us – an improved Medicare for all.

Health care CEOs have highest pay

Posted by on Friday, May 24, 2013

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.

Health care tops other industries for highest median CEO pay

The Washington Post, May 23, 2013

Here’s a look at median CEO pay by industry last year, as calculated by executive pay research firm Equilar. For the fourth time in five years, health care CEOs got the most pay and utilities CEOs got the least.

—Health care: $11.1 million

—Industrial goods: $11 million

—Services: $10.9 million

—Financial: $9.8 million

—All companies: $9.7 million

—Consumer goods: $9.5 million

—Basic materials: $9.3 million

—Technology: $9.2 million

—Utilities: $7.5 million

http://www.washingtonpost.com/business/health-care-tops-other-industries…

So health care CEOs have the highest median pay of all industries in the United States. But notice that their pay is not much higher than the median CEO pay in all industries. That brings up a couple of questions.

What do CEOs do?

Does their “contribution” to society warrant that level of pay?

Considering what CEOs do, do we really even want them in our health care system since it is an “industry” apart from all the rest?

Important: Milliman Medical Index now $22,030

Posted by on Thursday, May 23, 2013

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.

2013 Milliman Medical Index (MMI)

Milliman, May 2013

The MMI represents the projected total cost of medical care for a hypothetical American family of four (two adults and two children) covered under an employer-sponsored PPO health benefit program.

Key findings

*  As measured by the 2013 MMI, the total annual cost of healthcare for a typical family of four covered by an employer-sponsored preferred provider plan (PPO) is $22,030.

*  The 6.3% increase over 2012 is the fourth consecutive year of decreasing trends, but the total dollar increase of $1,302 is the fourth year in a row of increases over $1,300.

*  Of the $22,030 healthcare cost for a family of four, the employer pays about $12,886 in employer subsidy while the employee pays the remaining $9,144, which is a combination of $5,544 in payroll deductions and $3,600 in employee out-of-pocket costs. For employees, this represents a cost increase of 6.5% over last year’s total employee cost of $8,584.

*  We expect that the emerging reforms required by the Patient Protection and Affordable Care Act (ACA) will have little impact on the cost of care for our family of four in 2013 because this family tends to be insured through a large group health plan. Some of the most far-reaching reforms will not become effective until 2014, and they are focused primarily on the individual and small employer markets. Additionally, while those reforms will likely have immediate impacts on premium rates in those markets, it is unclear whether they will have any near-term effects on growth in the cost of healthcare services for a given person.

http://publications.milliman.com/periodicals/mmi/pdfs/mmi-2013.pdf

According to the Milliman Medical Index (MMI), the average projected cost for health care today for the typical family of four with an employer-sponsored preferred provider plan (PPO) is $22,030. That includes an employee contribution to the premium of $5,544, out-of-pocket expenses of $3,600, both totaling $9,144, plus an employer contribution of $12,886 which is actually paid by the employee through forgone wage increases.

Median annual household income is now $51,404 (February 2013). Although that does not represent the same demographic group as working families with four members, it does give you a general perspective of the burden of today’s health care costs on families and households.

An important point made in the MMI report: “the Patient Protection and Affordable Care Act (ACA) will have little impact on the cost of care for our family of four in 2013 because this family tends to be insured through a large group health plan,” and ACA is “focused primarily on the individual and small employer markets.” Since employment remains the primary source of health care coverage, the majority of families can anticipate little relief from these health care cost burdens.

A fundamental flaw in employer-sponsored coverage is that the entire burden of health care costs is placed on the employee (when considering forgone wages), yet it is clearly not affordable for low- or middle-income families. Progressive financing of health care is an imperative.

ACA provides at least modest income-indexed public subsidies which extend into the middle-income ranges, though they are still inadequate. Premiums for employer-sponsored plans are tax deductible, which is a form of public subsidy (tax expenditure), but since the premiums represent forgone wages, this tax subsidy benefits higher-income individuals much more than those with lower incomes. Thus the financing of health care through employer-sponsored coverage is terribly regressive (lower-income families pay a much larger percentage of their income for health care than do higher-income families).

This outrageous $22,000 burden on typical working families should be enough to provide us with an incentive to fix our health care financing system. A single payer national health program that includes everyone and is financed with progressive taxes is precisely what we need. Keep in mind this $22,000 burden when you discuss health care reform with others. ACA is not going to make that go away.

Insurers dump debt on physicians

Posted by on Wednesday, May 22, 2013

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.

Loophole in health care law could stick doctors with tab

By Jim Sanders
The Sacramento Bee, May 22, 2013

A loophole in California’s upcoming health care overhaul could be exploited by families gaming the system or responding to hardship in a way that doctors say could leave a pile of unpaid bills.

A chain of events would create a two-month period during which a family has medical coverage but no insurer must pay its claims.

Nonpayment of premiums for subsidized policies would trigger the oddity: Federal law provides a three-month grace period before cancellation – but insurers are responsible only for the first month.

The U.S. Department of Health and Human Services, in written comments, conceded that nonpayment of premiums would “increase uncertainty for providers and increase the burden of uncompensated care.” But it rejected a handful of proposals for cracking down on families whose policies lapse.

During the three-month grace period, insurers are required to pay claims for the first month, after which policyholders would be asked to pay their doctor’s bill or their insurance premium. If they pay neither, doctors get stuck with the tab.

http://www.sacbee.com/2013/05/21/5438115/loophole-in-health-care-law-cou…

This looks like another provision of the Affordable Care Act (ACA) designed specifically to protect insurers, at least partially, from untoward losses.

To protect patients who have financial hardships that prevent them from paying their premiums on time, ACA requires that their insurance remain in force for three months before it can be cancelled for non-payment. Physicians contracted with the insurers providing plans through the exchanges will have to continue to provide services for three months after non-payment begins. The insurers, on the other hand, are required to pay the bills for only the first month. After that, the physicians bear the losses.

This is one more example of the role played by the private insurers in both creating ACA and then in implementing it, taking care of their own interests first.

This particular defect is directly related to the fact that Congress, with the support of the Obama administration, selected a highly flawed model of reform – expanding our fragmented, dysfunctional system of private and public plans.

A much greater problem than this transitional coverage issue for non-payment is what then follows. After three months, the patient may remain uninsured, especially if not eligible for Medicaid. The financial hardship that caused the lapse of insurance in many instances will prevent the person from obtaining any other coverage.

Although we can be angry with the insurers for dumping on the physicians, we should hold greater contempt for the politicians and policy makers who brought us this highly flawed financing system. They know that we could have prevented these problems by enacting an improved Medicare that automatically includes everyone, forever, but they didn’t do it.

We still can, you know.

Evolving Role of Emergency Departments

Posted by on Tuesday, May 21, 2013

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.

The Evolving Role of Emergency Departments in the United States

By Kristy Gonzalez Morganti, Sebastian Bauhoff, Janice C. Blanchard, Mahshid Abir, Neema Iyer, Alexandria Smith, Joseph V. Vesely, Edward Okeke, Arthur L. Kellermann
RAND Health, May 20, 2013

To develop a more complete picture of how EDs (emergency departments) contribute to our modern health care system, the Emergency Medicine Action Fund asked RAND to conduct this mixed-methods study.

Key findings include the following:

• Between 2003 and 2009, inpatient admissions to U.S. hospitals grew at a slower rate than the population overall. However, nearly all of the growth in admissions was due to a 17 percent increase in unscheduled inpatient admissions from EDs. This growth in ED admissions more than offset a 10 percent decrease in admissions from doctors’ offices and other outpatient settings. This pattern suggests that office-based physicians are directing to EDs some of the patients they previously admitted to the hospital.

• In addition to serving as an increasingly important portal of hospital admissions, EDs support primary care practices by performing complex diagnostic workups and handling overflow, after-hours, and weekend demand for care. Almost all of the physicians we interviewed—specialist and primary care alike—confirmed that office-based physicians increasingly rely on EDs to evaluate complex patients with potentially serious problems, rather than managing these patient themselves.

• As a result of these shifts in practice, emergency physicians are increasingly serving as the major decisionmaker for approximately half of all hospital admissions in the United States. This role has important financial implications, not only because admissions generate the bulk of facility revenue for hospitals, but also because inpatient care accounts for 31 percent of national health care spending.

• Although the core role of EDs is to evaluate and stabilize seriously ill and injured patients, the vast majority of patients who seek care in an ED walk in the front door and leave the same way. Data from the Community Tracking Study indicate that most ambulatory patients do not use EDs for the sake of convenience. Rather, they seek care in EDs because they perceive no viable alternative exists, or because a health care provider sent them there.

• Medicare accounts for more inpatient admissions from EDs than any other payer. To gain insight into whether care coordination makes a difference in the likelihood of hospital admission from an ED, we compared ED admission rates among Medicare beneficiaries enrolled in a Medicare Choice plan versus beneficiaries enrolled in Medicare fee-for-service (FFS). We found no clear effect on inpatient admissions overall, or on a subset of admissions involving conditions that might be considered “judgment calls.”

• Irrespective of the impact of care coordination, EDs may be playing a constructive role in constraining the growth of inpatient admissions. Although the number of non-elective ED admissions has increased substantially over the past decade, inpatient admissions of ED patients with “potentially preventable admissions” (as defined by the Agency for Healthcare Research and Quality) are flat over this time interval.

Our study indicates that: (1) EDs have become an important source of admissions for American hospitals; (2) EDs are being used with increasing frequency to conduct complex diagnostic workups of patients with worrisome symptoms; (3) Despite recent efforts to strengthen primary care, the principal reason patients visit EDs for non-emergent outpatient care is lack of timely options elsewhere; and (4) EDs may be playing a constructive role in preventing some hospital admissions, particularly those involving patients with an ambulatory care sensitive condition. Policymakers, third party payers, and the public should be aware of the various ways EDs meet the health care needs of the communities they serve and support the efforts of ED providers to more effectively integrate ED operations into both inpatient and outpatient care.

http://www.rand.org/pubs/research_reports/RR280.html

This RAND Health report provides an excellent perspective on how emergency departments (EDs) have evolved into institutions providing a greater central role in health care delivery. It is a particularly valuable report because it sets aside many misperceptions about ED functions – misperceptions that can lead to flawed policy recommendations.

It is crucial that we continue to assess and recommend improvements in the health care delivery system. This report reflects the benefit of such an approach since EDs have expanded their roles in very beneficial ways. As they continue to evolve, integration with both inpatient and outpatient care should become more efficient, especially from the perspective of benefiting patients.

The current focus of policy reform seems to be not so much on the improvement of health care delivery, but rather on mechanisms that supposedly would slow the growth in health care spending. Accountable care organizations, bundling of payments, innovative insurance designs such as those that erect financial barriers to care, are the types of policy approaches that will have very little impact on overall costs while inappropriately expanding the administrative excesses of our dysfunctional system.

This report is well worth downloading. As you read it, you can see many opportunities to further expand the progress that we have seen through the evolving improvements in the role of EDs in our health care system. Thinking about how further improvement in integrating their role with both inpatient and various community outpatient services can help us envision further opportunities to achieve the goals of a high-performance system.

An example of the misguided and misdirected emphasis on innovative payment reform is the failure to find any clear effect on inpatient admissions when comparing the public Medicare program with the much more expensive private Medicare Advantage plans. Payment innovation is simply not where it’s at.

We need to get this right. Let’s continue to work on fixing the health care delivery system so that it works best for patients. That is the key to improving value in health care. It will work as long as we adopt a financing system that is designed exclusively to fund a high-performance health care system (single payer), as opposed to one that is designed to keep policy wonks and insurance administrators employed in bringing us ever-expanding payment innovations that we don’t want (Obamacare).

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