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.
Gingrich’s Correct Prediction About Medicare’s Future
By Austin Frakt
The New York Times, July 7, 2014
On Oct. 24, 1995, Newt Gingrich made an assertion about what would happen to Medicare if its beneficiaries could choose between it and private plans. Medicare is “going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.” Though he later walked this statement back, many observers viewed it as an attack on the program.
In fact, over the nearly two decades since, Mr. Gingrich’s claim has undergone something of a test — and it has largely passed it.
In that time, Medicare beneficiaries have enjoyed various levels of access to private alternatives to traditional Medicare through the Medicare Advantage program and its predecessors.
Today, 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan, more than at any time in history.
The surge in Medicare Advantage enrollment seems surprising. With payments to plans cut by the Obama administration, history suggests enrollment should go down, not up. What, then, could explain the growing popularity of private Medicare plans?
One answer is that baby boomers, who are just entering Medicare-eligibility age, are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s, than their predecessors were.
Another answer is that prior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps. This coverage has become less common as employer-sponsored retirement benefits have eroded generally. Since Medicare Advantage plans generally offer extra benefits, financed by the generous government subsidies they receive relative to traditional Medicare, perhaps new retirees are turning to them in greater numbers for more complete coverage.
As Medicare Advantage grows, traditional Medicare necessarily shrinks and its influence on the American health care system weakens. If the trend continues, policies, including those in the Affordable Care Act, designed to use traditional Medicare as a tool to reshape health care delivery for all Americans may become less potent. Is there a tipping point at which traditional Medicare ceases to matter?
If so, we’re probably not there yet, but we may be moving toward it. Unless things change, the data suggest Mr. Gingrich may have been right in a way: Given a choice between traditional Medicare or more benefits from more highly subsidized private plans, Medicare beneficiaries may well be willing to let the former wither on the vine.
Although the higher payments to the Medicare Advantage plans are being reduced, the Obama administration, with encouragement from Congress (responding to AHIP’s intense lobbying campaign), has offset some of the reductions with innovative measures to increase payments to the private insurers.
That is perpetuating the blatant unfairness wherein taxpayers are paying more for those enrolled in the private plans than they are for those enrolled in the traditional Medicare program.
If it is right that we pay the private insurers more, then in all fairness we should be paying more for those in the traditional program so that everyone receives comparable benefits.
Fairness should be of the highest priority when our elected politicians are spending our tax dollars. Once we get that right, it will be no contest when it comes to comparing the traditional Medicare program with the private Medicare Advantage plans that divert a large portion of funds to profound administrative excesses, wasteful marketing, excessive executive compensation packages, and profits for superfluous passive investors, as they take away our choice of health care providers.
If we voters insist on fairness, it will be the private Medicare Advantage plans that will wither on the vine.
Further comment by Don McCanne
Maintaining the integrity of the traditional Medicare program is important because it serves as an example of the capabilities of the government in managing a public insurance program. If the reputation of Medicare is trashed it would provide powerful rhetoric for the opponents of single payer.
The Medicare plus Choice program was established to provide private health plan competition to the traditional Medicare program, supposedly bringing us higher quality at lower cost. The experiment proved to be a failure since it was clear that the private insurers were unable to deliver on that promise. The privatizers did not give up. The program was revitalized as Medicare Advantage, but with a new twist. To supposedly prove that the plans could provide higher quality at lower cost, Congress cheated. They gave the plans an extra 14 percent over the costs of traditional Medicare, thinking that we wouldn’t notice.
The plans became popular mainly because they could entice Medicare beneficiaries with extra benefits, though those benefits were only a small part of their extra payments. That was enough to lure more enrollees. Recognizing that the plans were being paid too much, and struggling to find ways to pay for the Affordable Care Act, Congress included in the Act a gradual reduction in these Medicare Advantage overpayments.
It did not take long for the insurance industry to organize protests against Obama’s “cuts to Medicare.” The Obama administration, under pressure from members of Congress, responded with three years of accounting gimmicks that would offset some of the reductions.
Not only is our tax money being unfairly diverted to the private insurers, while neglecting those in the traditional program, a portion of the Part D premiums paid by traditional Medicare beneficiaries is also being diverted to the provision of more benefits for the Medicare Advantage patients – benefits that those in the traditional program do not receive.
It is important that we publicize this injustice so that the blatant cheating will end. Once that happens, the Medicare Advantage plans will have proven to be a failed model of health care financing. Hopefully then people will listen when we show them that a publicly administered and financed program – a single payer system – provides much greater value in health care.
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.
Comparison of DOD, Medicaid, and Medicare Part D Retail Reimbursement Prices
United States Government Accountability Office (GAO), June 2014
GAO found that Medicaid paid the lowest average net prices across a sample of 78 high-utilization and high-expenditure brand-name and generic drugs when compared to prices paid by the Department of Defense (DOD) and Medicare Part D. Specifically, Medicaid’s average net price for the entire sample was $0.62 per unit, while Medicare Part D paid an estimated 32 percent more ($0.82 per unit) and DOD paid 60 percent more ($0.99 per unit). Similarly, Medicaid paid the lowest net price for the subset of brand-name drugs in the sample, while DOD paid 34 percent more and Medicare Part D paid an estimated 69 percent more. Medicaid also paid the lowest net price for the subset of generic drugs, while Medicare Part D paid 4 percent more and DOD paid 50 percent more.
GAO found that multiple factors affected the net prices paid by each program. Specifically, a key factor for the entire sample and the brand-name subset was the amount of any post-purchase price adjustments, which are the refunds, rebates, or price concessions received by each program from drug manufacturers after drugs have been dispensed to program beneficiaries. These price adjustments ranged from about 15 percent of the gross price for Medicare Part D to about 31 percent for DOD, and nearly 53 percent for Medicaid across the entire sample. The gross prices each program negotiated with pharmacies and the magnitude of beneficiary-paid amounts also contributed to differences in net prices paid by the three programs, but to a lesser degree.
In some cases, VA beneficiaries can obtain drugs on a fee-for-service basis through non-VA facilities. These make up a very small proportion of VA drug expenditures (less than 1 percent in fiscal year 2010). Therefore we did not include VA in this report comparing prices paid to retail pharmacies.
The statutory framework allowing each program to obtain post-purchase price adjustments contributes to the wide range of percentages observed. Medicaid’s federally mandated rebates apply to virtually all drugs, while DOD’s refunds only apply to certain drugs (i.e., primarily brand-name drugs). Furthermore, we found that even when DOD received a refund for a given drug, DOD’s per-unit refund amount was less than Medicaid’s per-unit rebate for most of the drugs in our sample even though we applied only the federally mandated (i.e., URA-based) rebates for the calculation of Medicaid net prices. If we had been able to accurately apply the Medicaid state supplemental rebates, the per-unit Medicaid rebate amounts would be even larger (i.e., a greater percentage of the gross unit price) than we report. Finally, we found that Medicare Part D obtained the lowest per-unit price adjustments among the three programs. In contrast to the statutory authority allowing DOD and Medicaid to collect specific refunds and rebates, Medicare Part D plan sponsors rely on independent negotiations to obtain price concessions from drug manufacturers. As we have previously reported, plan sponsors have noted limitations on their ability to negotiate price concessions for some drugs due to formulary requirements set by CMS, lack of competitors for some drugs, or low utilization for some drugs that limit incentives for manufacturers to provide price concessions.
Comparison of DOD and VA Direct Purchase Prices
United States Government Accountability Office (GAO), Apr 19, 2013
When GAO compared prices paid by the Department of Defense (DOD) and the Department of Veterans Affairs (VA) for a sample of 83 drugs purchased in the first calendar quarter of 2012, DOD’s average unit price for the entire sample was 31.8 percent ($0.11 per unit) higher than VA’s average price, and DOD’s average unit price for the subset of 40 generic drugs was 66.6 percent ($0.04 per unit) higher than VA’s average price. However, VA’s average unit price for the subset of 43 brand-name drugs was 136.9 percent ($1.01 per unit) higher than DOD’s average price. These results were consistent with each agency obtaining better prices on the type of drugs that made up the majority of its utilization: generic drugs accounted for 83 percent of VA’s utilization of the sample drugs and brand-name drugs accounted for 54 percent of DOD’s utilization of the sample drugs. DOD officials told GAO that in certain circumstances they are able to obtain competitive prices for brand-name drugs – even below the prices for generic equivalents – and therefore will often preferentially purchase brand-name drugs.
These two GAO reports explain prices that the federal government pays for drugs and the mechanisms for pricing of those drugs within the Department of Veterans Affairs, Medicaid, Department of Defense, and Medicare Part D programs. The mechanisms are complex, and you have to read the full reports to fully understand them.
The bottom line is that government agencies are far more effective in negotiating optimal pricing than are the private insurers that administer the Medicare Part D program. As an example, the Medicare Part D insurers paid 69 percent more for brand-name drugs than did Medicaid.
The private Part D plan sponsors tout their effectiveness in using market principles to obtain best prices – supposedly the reason for their existence – yet they complain that they have not been as effective as the government because of “formulary requirements set by CMS, lack of competitors for some drugs, or low utilization for some drugs that limit incentives for manufacturers to provide price concessions.”
Formulary requirements? The government agencies include in their formularies the drugs that patients need. The private insurers attempt to exclude from their formularies drugs that do not provide optimal profit opportunities. Complaining about “formulary requirements set by CMS” does not explain their inability to to obtain best prices for the government since the government has its own de facto formulary requirements for the VA, DOD and Medicaid programs.
Lack of competitors for some drugs? The government agencies also negotiate within the same pharmaceutical environment wherein there is a lack of competitors for some drugs.
Low utilization for some drugs that limit incentives for manufacturers to provide price concessions? The government agencies also include low utilization drugs in their formularies.
Medicare Part D was designed based on the fraudulent contention that private marketplace dynamics are more effective then government negotiation in obtaining maximum value – a position that wastes government/taxpayer funds by paying excessive prices in the private sector compared to the price concessions that the government can obtain. We would not be tolerating this fraud if we had a properly designed single payer national health program.
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.
Error on Anthem ID cards results in claim denials
California Medical Association
CMA Alert, June 30,2014
In late March, the California Medical Association (CMA) began receiving complaints from physicians in San Diego, Orange and Bay Area counties about denials from Anthem Blue Cross. Practices reported that patients presented to their offices with Anthem ID cards that indicated they had a Covered California/mirror PPO product and subsequent eligibility verification also indicated the patient had a PPO product.
However, Anthem later denied the claims stating the services were not covered under the patients’ benefit plans because they received services from out-of-network providers.
CMA escalated the issue to Anthem and learned that while the Anthem ID card and eligibility verification indicated these patients had purchased PPO products, it was a mistake. These patients had actually purchased EPO products, with no out-of-network benefits.
While Anthem is offering a PPO product for their Covered California/mirror patients in most counties, they are only offering an EPO product in San Francisco, Los Angeles, Orange and San Diego counties. The Anthem EPO product does not provide any benefits if patients receive services from out-of-network physicians/facilities.
At CMA’s urging, Anthem corrected the affected patient ID cards and reissued new cards to EPO patients in May. Anthem also confirmed they have updated the information that displays when physicians verify eligibility to accurately reflect the correct product type.
CMA requested that Anthem automatically reprocess affected claims at the PPO rates, the product the ID card and eligibility information reflected, but Anthem was unwilling to do so. Instead they are requiring patients to appeal each individual claim to Anthem.
Anthem Blue Cross made a mistake in that they provided ID cards and eligibility verification for their EPO (exclusive provider) patients that indicated they were PPO (preferred provider) patients. PPO patients can obtain some care out-of-network but with reduced benefits. EPO patients are not eligible for any benefits out-of-network.
The California Medical Association has requested that Anthem Blue Cross reprocess those claims based on the PPO status that they had verified. Anthem has refused to do so, insisting that each claim be appealed individually. For an industry noted for administrative excesses and placing an administrative burden on health care providers, they are carrying it to an extreme wherein they are requiring much more administrative excesses to rectify their own error – punishing patients and providers for their own mistake.
How can this industry be so crass? Yet this industry, which should be placing patient service above all else, places its own business interests first. Such an insensitive response would never take place if our health care financing system were to be managed by our own public administrators. EPOs wouldn’t even exist. It’s time to replace the private insurers with a publicly-administered single payer system.
UnitedHealth Premium® Designation Program
The UnitedHealth Premium® physician designation program uses evidence-based, medical society, and national industry standards to recognize physicians for providing quality and cost efficient care.
The following designation results are displayed publicly in UnitedHealthcare’s physician directories (e.g., myuhc.com) to support informed decision-making by members when making health care choices and by physicians when making referrals.
Designation information is as follows:
- Quality & Cost Efficiency
- Cost Efficiency & Not Enough Data to Assess Quality
- Quality & Not Enough Data to Assess Cost Efficiency
- Quality & Did Not Meet Cost Efficiency
- Not Enough Data to Assess Quality & Did Not Meet Cost Efficiency
- Not Enough Data to Assess
- Not Evaluated
- Did Not Meet Quality & Cost Efficiency
Innovative Benefit Plan Designs
In addition, employers may offer health benefit programs (e.g., reduced cost-sharing or tiered benefit programs) that provide benefit incentives for members to use UnitedHealth Premium Tier 1 physicians.
Members in health plans that offer tiered benefits may pay lower co-pays and co-insurance amounts for services provided by UnitedHealth Premium Tier 1 physicians.
UnitedHealth Premium Tier 1 physicians have received one of the following Premium designations:
- Quality & Cost Efficiency
- Cost Efficiency & Not Enough Data to Assess Quality
UnitedHealth Premium® Physician Designation Program
The UnitedHealth Premium physician designation program uses clinical information from health care claims and other sources to assist physicians in their continuous practice improvement and to help consumers make more informed and personally appropriate choices for their medical care.
Evaluation for quality compares a physician’s observed practice to the UnitedHealthcare national rate among other physicians who are responsible for the same interventions. Cost efficiency is assessed by comparing the case-mix adjusted cost of care attributed to the physician to a benchmark and applying a statistical test to determine if the difference is statistically significant.
Quality is the fundamental measurement, demonstrating our commitment to evidence-based practice. The quality designation is separate from the cost efficiency designation. Although the quality and cost efficiency evaluations are performed separately, the results are used together to determine the physician’s designation.
Physicians who meet both the quality and cost efficiency designation criteria will receive the quality and cost efficiency designation. Physicians who meet the quality designation criteria will receive the quality designation regardless of their cost efficiency evaluation. Physicians who meet the cost efficiency designation criteria will receive the cost efficiency designation if they do not have enough data to assess quality.
A physician’s quality individual outcome is determined by comparing the number of times his/her patients received recommended care with a benchmark number based on the UnitedHealthcare national rate of the same recommended care for each quality measure.
Cost Efficiency Assessment
Episode cost measurement compares a physician’s observed costs for episodes of care to a peer group’s costs for similar episodes of care, with adjustments for the patient’s severity of illness and the physician’s case mix.
For both episode cost and population cost measurement, the physician’s costs within each set are evaluated against their peer group’s costs by ordering the costs from lowest to highest cost. The costs are converted into percentiles to allow comparison across different types of cases or patients.
Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians (measured in the same specialty for the same types of episodes in the same geographic area) in order to meet the episode cost measurement criteria.
UnitedHealthcare informs members that designations are intended only as a guide when choosing a physician and should not be the sole factor in selecting a physician. As with all programs that evaluate performance based on analysis of a sample, there is a risk of error.
The perennial promise of private health insurers is that their insurance products would bring us higher quality care at lower cost, even though there is a paucity of evidence to support such claims. UnitedHealth now claims to be serious about delivering on that promise with their new Premium Physician Designation Program. They say that “quality is the fundamental measurement.” But let’s sort through their program description to see what the truth really is.
You can consult the websites at the links above for the detailed descriptions of how determinations of quality and cost efficiency are made. Although they state that quality is the fundamental measurement, they combine that with cost efficiency measurements and then use this information to classify each physician in one of the eight categories listed above. There are really only two designations that physicians can receive: quality and cost efficiency. If the physician receives either one or both of these designations, then these honors are displayed publicly in UnitedHealth’s physician directories.
Those designations might be nice, but what the patient really wants to know is if their physician is a Tier 1 physician. In plans that offer tiered benefits – very commonplace today – plan beneficiaries pay lower co-pays and co-insurance when they use Premium Tier 1 physicians. So what determines whether on not a physician is in Tier 1?
Of the eight categories listed, only the first two will qualify the physician as Tier 1. Either the physician must receive the designations of “Quality & Cost Efficiency” or “Cost Efficiency & Not Enough Data to Assess Quality.” Although quality is the “fundamental measurement” and is determined before cost efficiency, it is important to note that the third category – “Quality & Not Enough Data to Assess Cost Efficiency” – will not qualify a physician for Tier 1. The only way to become a Tier 1 physician is to be cost efficient; quality does not count.
It is also important to understand that even if all or almost all physicians are actually cost efficient, they are compared to their peers. “Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians.” It is impossible, no matter how efficient they are, for all physicians to gain Tier 1 status.
Further, the health care market in the United States is by far the most expensive of all nations, not only because of our prices but also due to our inefficiencies, especially our profound administrative waste. Favoring prices at the lower end of a highly inflated health care market falls far short of what we need to do to improve efficiency in our health care purchasing.
Thus UnitedHealth, for Tier 1, is selecting the cheapest physicians in an overpriced and inefficient market, regardless of the quality of their care. “Higher quality at lower cost” is a fraudulent marketing slogan of the private insurance industry. We need to throw these con artists out and replace them with our own efficient, quality-driven single payer national health program. The sooner the better.
Opinion of the Court
Supreme Court of the United States, June 30, 2014
BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL. v. HOBBY LOBBY STORES, INC., ET AL.
CONESTOGA WOOD SPECIALTIES CORPORATION ET AL., PETITIONERS 13–356 v. SYLVIA BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.
Justice Alito delivered the opinion of the Court.
We must decide in these cases whether the Religious Freedom Restoration Act of 1993 (RFRA), 107 Stat. 1488, 42 U. S. C. §2000bb et seq., permits the United States Department of Health and Human Services (HHS) to demand that three closely held corporations provide health-insurance coverage for methods of contraception that violate the sincerely held religious beliefs of the companies’ owners.
In holding that the HHS mandate is unlawful, we reject HHS’s argument that the owners of the companies forfeited all RFRA protection when they decided to organize their businesses as corporations rather than sole proprietorships or general partnerships. The plain terms of RFRA make it perfectly clear that Congress did not discriminate in this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.
Since RFRA applies in these cases, we must decide whether the challenged HHS regulations substantially burden the exercise of religion, and we hold that they do.
Ginsburg, J., dissenting
Importantly, the decisions whether to claim benefits under the plans are made not by Hobby Lobby or Conestoga, but by the covered employees and dependents, in consultation with their health care providers. Should an employee of Hobby Lobby or Conestoga share the religious beliefs of the Greens and Hahns, she is of course under no compulsion to use the contraceptives in question. But “[n]o individual decision by an employee and her physician — be it to use contraception, treat an infection, or have a hip replaced — is in any meaningful sense [her employer’s] decision or action.” Grote v. Sebelius, 708 F. 3d 850, 865 (CA7 2013) (Rovner, J., dissenting). It is doubtful that Congress, when it specified that burdens must be “substantia[l],” had in mind a linkage thus interrupted by independent decisionmakers (the woman and her health counselor) standing between the challenged government action and the religious exercise claimed to be infringed. Any decision to use contraceptives made by a woman covered under Hobby Lobby’s or Conestoga’s plan will not be propelled by the Government, it will be the woman’s autonomous choice, informed by the physician she consults.
Allowing an employer to deny coverage of family planning services for employees, strictly on the basis of the employer’s own religion, is yet one more flaw in our highly dysfunctional system of health care financing – a system that is being perpetuated by the Affordable Care Act. If we had a single payer national health program, the employer would not be involved.
As Justice Ginsburg stated in her dissent, a woman’s use of family planning services should be “the woman’s autonomous choice, informed by the physician she consults.” If religious beliefs enter into that decision, it should be the religious beliefs of the individual and not anyone else.
Evidence-based medicine: A movement in crisis?
By Trisha Greenhalgh, Jeremy Howick, and Neal Maskrey
for the Evidence-Based Medicine Renaissance Group
BMJ, June 13, 2014
It is more than 20 years since the evidence-based medicine working group announced a “new paradigm” for teaching and practicing clinical medicine. Tradition, anecdote, and theoretical reasoning from basic sciences would be replaced by evidence from high quality randomized controlled trials and observational studies, in combination with clinical expertise and the needs and wishes of patients. …
[M]any who support evidence-based medicine in principle have argued that the movement is now facing a serious crisis. … Below we set out the problems and suggest some solutions. …
The first problem is that the evidence based “quality mark” has been misappropriated and distorted by vested interests. In particular, the drug and medical devices industries increasingly set the research agenda. …
The second aspect of evidence-based medicine’s crisis … is the sheer volume of evidence available. … [T]he number of clinical guidelines is now both unmanageable and unfathomable. …
Risk assessment using “evidence-based” scores and algorithms … now occurs on an industrial scale, with scant attention to the opportunity costs or unintended human and financial consequences. …
Well intentioned efforts to automate use of evidence through computerised decision-support systems, structured templates, and point-of-care prompts can crowd out the local, individualised, and patient initiated elements of the clinical consultation. For example, when a clinician is following a template-driven diabetes check-up, serious non-diabetes related symptoms that the patient mentions in passing may not be documented or acted on. … Templates and point-of-care prompts also contribute to the creeping managerialism and politicization of clinical practice. …
[A]s the population ages and the prevalence of chronic degenerative diseases increases, the patient with a single condition that maps unproblematically to a single evidence-based guideline is becoming a rarity. … Multimorbidity … seems to defy efforts to produce or apply objective scores, metrics, interventions, or guidelines. Increasingly, the evidence-based management of one disease … may cause or exacerbate another. …
In this paper, Trisha Greenhalgh and two British colleagues present an intelligent review of the impediments encountered by the evidence-based medicine (EBM) movement. The impediments listed by the authors can be grouped into two categories: the distortion of research by drug and device manufacturers, and the misuse of guidelines.
The authors make the expected criticism of drug and device manufacturers. But inexplicably they fail to indict the culprits behind the misuse of guidelines, namely, managed care and pay-for-performance (P4P) proponents – those who think doctors should be subjected to rewards and punishment based on how well they perform according to guidelines.
The problem is that the authors have conflated EBM with managed care, or “creeping managerialism” as they put it. (In the U.K., “managerialism” appears to be synonymous with “managed care.”) That is regrettable but understandable. EBM has been appropriated by the managed care movement to justify shifting authority from doctors and patients to bureaucrats.
Since the formation of the EBM movement in the U.K. and North America in the early 1990s, managed care advocates have enthusiastically insisted that doctors abide by the principles of EBM, all the while refusing to impose upon themselves a similar set of standards. (Is it not odd that there is no analogous movement for evidence-based health policy?)
The EBM movement has been controversial from the beginning. At first blush, that seems odd. EBM’s architects defined EBM in seemingly nondebatable, mother-and-apple-pie terms. “Evidence-based medicine is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients,” wrote David Sackett, one of the founders of the movement in a 1996 paper for BMJ.
In that paper Sackett et al. made it clear they were not motivated by a desire to enforce “cook book medicine” on behalf of insurance companies and cost cutters. “Some fear that evidence based medicine will be hijacked by purchasers and managers to cut the costs of health care,” they wrote. “This would … be a misuse of evidence-based medicine. … Doctors practising evidence-based medicine … may raise rather than lower the cost of their [patients’] care.”
But the critics turned out to be correct: EBM was quickly “hijacked” by the managed care movement. By the early 2000s, P4P had become an influential managed care fad, and P4P proponents routinely cited EBM principles to justify P4P.
The solution is not to conflate EBM with P4P. The solution is to make a clear distinction between problems caused by the violation of the rules of science and those caused by managed care.
For example, if a group promotes a guideline based upon biased research (a problem caused by the violation of the rules of science), the bias should be publicized and the guideline should be recalled or amended. But if the problem is that a scientifically sound guideline (one based on EBM principles) has been hooked to a P4P scheme, and that scheme causes doctors to ignore patients’ priorities, the appropriate response is to criticize the P4P fad, not the guideline or EBM.
A recent BMJ paper co-authored by Greenhalgh illustrates the need for this distinction. The investigators observed nurse-led encounters with British patients to examine the effect of the U.K.’s P4P program on the nurse-patient encounter. The paper provided several examples of how the nurses’ need to check boxes on a computer screen interfered with their ability to respond to their patient’s concerns. Here is an example:
A frail-looking 86-year-old man struggled into the clinic, barely able to walk. He was very deaf. He hung his walking stick over his chair and grimaced as he sat down, looking as if he was in pain. The nurse said loudly “We’ve called you in to look at you from the heart point of view. I know you have a lot of other things going on but we’ve called you in to look at your heart.” She then asked “How often do you use the angina tablet under your tongue?’ The patient replied in a way which made his most pressing concern clear: “Not much … for the simple reason that I can only crawl like a tortoise.”
Nurse: “and the simvastatin?”
Patient: “no … I stopped that. I think it’s giving me diarrhoea. These hearing aids are not very good you know. I’ve had it adjusted several times but I’m really disappointed. I had hoped for better than this.”
The nurse’s statement, “I know you have a lot of other things going on but we’ve called you in to look at your heart” performs two contrasting functions. On the one hand, she acknowledges the difficulty inherent in separating out his ‘heart’ problem from his other illnesses and wider experiences, making it legitimate for the patient to frame his heart problems in a broader context. However, in the next part of her utterance “but we’ve called you in to look at your heart”, she exhibits what discourse analysts call a ‘scale jump’. She shifts quickly from an individual, unique ‘here and now’ framing (“I know you have …”) to a more general institutional framing (“we’ve called you in …”). This shift indexes what is most relevant and implies certain limits around what may happen in this consultation.
The patient responds by juxtaposing his prime concerns with the ‘core’ concerns of this clinic. First, he rarely uses his angina tablet – but only because his mobility problems outweigh his angina. Then his concern about simvastatin moves swiftly into a complaint about his hearing aids. Neither mobility nor deafness are pursued by the nurse (or recorded on the electronic record); they are ‘unremarkable’ problems in this (heart) clinic.
The problem here is not a scientific one – the issue is not whether evidence indicates patients with coronary artery disease should take statins. The problem is that the patient’s concerns were neither heeded nor documented because the nurse’s priorities were set by her computer, not her patient. The patient’s authority to set his own agenda was undermined by the U.K.’s massive P4P scheme.
One of the more cloying labels invented by the managed care movement in the last 15 years is the phrase “patient-centered care.” The great irony of this saccharine phrase is that it is promoted by groups that have undermined patient autonomy by promoting report cards and P4P.
The most preeminent among these groups is the Institute of Medicine (see Crossing the Quality Chasm, 2001). For a quarter century the IOM has also been promoting the use of electronic medical records (EMRs) and for the last 15 years the IOM has promoted P4P.
That combination – EMRs plus P4P – deserves a name. I propose “computer-centered care.” The story about the old man with heart disease I quoted above illustrates how computer-centered care (supported by the IOM) sabotages patient autonomy (aka “patient-centered care,” something the IOM also promotes).
The story illustrates why Greenhalgh et al. should have distinguished EBM from computer-centered care. EBM is not the problem. The problem is computer-centered care.
Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has 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.
Department of Health and Human Services, June 19, 2014
This proposed rule would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015.
In paragraph (j)(1), we propose that if an enrollee remains eligible for enrollment in a QHP through the Exchange upon annual redetermination, and the product under which the QHP in which he or she was enrolled remains available for renewal, consistent with 45 CFR §147.106, such enrollee will have his or her enrollment in a QHP under the product renewed unless he or she terminates coverage, including termination of coverage in connection with voluntarily selecting a different QHP, in accordance with §155.430. In this situation, we propose that the QHP in which the enrollee will be renewed will be selected according to the following order of priority: first, in the same plan as the enrollee’s current QHP, unless the current QHP is not available; second, if the enrollee’s current QHP is not available, the enrollee’s coverage will be renewed in a plan at the same metal level as the enrollee’s current QHP; third, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan at the same metal level as the enrollee’s current QHP, the enrollee’s coverage will be renewed in a plan that is one metal level higher or lower than the enrollee’s current QHP; and fourth, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan that is at the same metal level as, or one metal level higher or lower than the enrollee’s current QHP, the enrollee’s coverage will be renewed in any other plan offered under the product in which the enrollee’s current QHP is offered in which the enrollee is eligible to enroll.
Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases in 2015 Unless They Switch Plans
By Elizabeth Carpenter
Avalere, June 26, 2014
Under the Affordable Care Act, federal premium assistance is tied to the second lowest cost silver plan (“benchmark plan”) in a given region. Subsidized exchange enrollees who select a more expensive plan must pay the difference—dollar for dollar—between the benchmark plan premium and their selection. In six of nine states analyzed by Avalere, the 2014 benchmark silver plan will lose benchmark status in 2015. Further, in seven of the nine states, the lowest cost silver plan will also change in 2015.
“Most enrollees in 2014 chose a plan based on the monthly premium. However, the lowest cost plans in 2014 may no longer be low cost in 2015,” said Elizabeth Carpenter, director at Avalere Health. “Before consumers renew their 2014 plan, they should consider the tradeoff between continuity of care and lower monthly premiums.”
“Two-thirds of people enrolling in silver plans are choosing one of the two lowest cost silver options,” said Caroline Pearson, vice president at Avalere. “The competitive landscape for plans is changing in 2015. However, the premium subsidies are tied to the benchmark plan and a percentage of income. Consumers have to pay the difference if they enroll in a plan more expensive than the benchmark. Those receiving federal premium subsidies may need to switch plans in 2015 to avoid paying more than the limits established by the ACA, and the impact will be more profound for lower-income consumers.”
Acknowledging the complexity of the administration of the exchanges under the Affordable Care Act, HHS has decided to simplify the process by making renewal of plan enrollment automatic unless the enrollee decides on a different option. It is estimated that about 95 percent of enrollees will qualify for automatic renewal, and undoubtedly many will passively accept this hassle-free option. That may not be a wise choice.
The Avalere report indicates that the benchmark silver tier plan – the plan with the second lowest premium in the silver tier – will change in many of the exchanges since premium bids are changing for most plans. Since the enrollee is responsible for the full balance of the premium above the benchmark plan, net premiums for the enrollees could increase significantly unless the person opted to change to next year’s benchmark plan or a plan close to it.
As Avalere director Elizabeth Carpenter states, “(consumers) should consider the tradeoff between continuity of care and lower monthly premiums.” This means that those current enrollees who do not passively accept higher premiums will be forced to choose between higher premiums or a change in their narrow provider networks, the latter likely resulting in disruption of continuity of care.
Further, according to the HHS rule, the individual could be transferred to a different metal tier, thereby losing eligibility for the subsidies for cost sharing, though that would likely occur only in exchanges that have few choices.
Even something as simple as “automatic renewal” becomes complex when you try to rely on market dynamics to satisfy private insurers. Imagine if at renewal time you didn’t have to make a decision on what premiums you could afford, or on what provider networks you would choose when none of them quite fit, or where you might fall based on subsidy eligibility redetermination.
Imagine instead if the concept of renewal did not even exist – you were simply automatically enrolled for life. We really do need to replace this boondoggle with a single payer national health program – quality health care for everyone at a price we can afford.
Shifting toward Defined Contributions — Predicting the Effects
By Kevin A. Schulman, M.D., Barak D. Richman, J.D., Ph.D., and Regina E. Herzlinger, D.B.A.
The New England Journal of Medicine, June 26, 2014
When Representative Paul Ryan (R-WI) attracted national attention by joining Senator Ron Wyden (D-OR) in proposing a sweeping privatization of Medicare, he was variously vilified and praised for suggesting that Medicare should be converted from a defined-benefit program to a defined-contribution program. Although there has been little congressional action to advance the Wyden–Ryan plan, defined-contribution programs are becoming increasingly prevalent in employer-sponsored health insurance and may ultimately bring about substantial changes in U.S. health care.
A defined-benefit program provides specific benefits to enrollees when those benefits are needed. For example, a defined-benefit pension program provides payments of specified amounts to retirees. Defined-benefit health insurance, such as Medicare and most private plans, pays for specific health care services when eligible beneficiaries demand such services. In contrast, a defined-contribution program — like most typical 401(k) retirement plans — provides certain financial support to beneficiaries before any benefits are consumed, and beneficiaries then spend those funds to meet their eventual expenses. In defined-contribution pension plans, only the financial contribution is defined, and the extracted benefits are determined by the payment and investment preferences of the beneficiary.
Economists have posited that defined-contribution health insurance plans offer two key benefits. First, enrollees in such plans receive more choice than they would in the one-size-fits-all plans typically offered by employers. They can thus consider the quality of plans and express their preferences for various features of benefits packages, such as open or limited provider networks and low or high deductibles. Second, defined-contribution plans can give employers greater certainty about costs, insulating them from unpredictable health care inflation. Such plans might also curb or reverse the trend toward employees’ passively shouldering the growing costs of employer-based defined-benefits plans. (Between 2003 and 2013, employer spending increased by 77%, while employees’ costs increased by 89%.1) In a competitive labor market, with the transparency of a defined-contribution plan, employers would have to compensate employees through higher wages for any shifting of additional health care costs, although increased compensation might only need to match employees’ perceptions of the value of the lost benefits.
One largely overlooked attraction of defined-benefit plans is related to the political economy of firms. Because the tax exemption for employer-provided health insurance often hides what employers pay for employees’ health insurance, many employees demand costly plans without realizing that the employer’s contribution ultimately reduces their own take-home pay. A defined-contribution plan, in contrast, makes insurance premiums more transparent, thereby inducing employees to demand more affordable health plans because they are aware of the full amount they pay. For example, when human resources consultancy Aon Hewitt helped companies implement insurance plans under a defined-contribution system in 2013, 42% of employees purchased less expensive plans, 32% purchased coverage similar to what they had previously had, and only 26% bought more expensive coverage.
The intellectual appeal of the Wyden–Ryan plan rested on this logic. Its supporters argued that because the risk of higher-than-expected health care inflation would be shifted onto Medicare enrollees, who would be empowered to exercise consumer choice, the market dynamics would change. On one hand, there would be greater cost consciousness behind consumer demand; on the other hand, supply would reflect greater competition for consumers’ premium dollars.
If Medicare reforms do not adequately address the excessive costs of health care, converting the program to a defined-contribution plan could leave many seniors uninsured or exposed to unaffordable health care bills, thereby undermining one of the fundamentals of the Medicare program — protection against financial risk — while leaving providers with major revenue shortfalls.
Although Medicare seems unlikely to be transformed into a defined-contribution program in the immediate future, the private insurance market is shifting toward defined contributions. Many large companies — including IBM, Duke Energy, and Time Warner — are now pursuing defined-contribution strategies for their retirees; others, including Walgreens, are doing so for current workers. Some companies have designed private insurance exchanges through which workers and retirees can purchase insurance plans, and others may encourage retirees to purchase insurance through private exchanges or the public exchanges established under the Affordable Care Act. A recent survey suggests that 58% of employers have confidence in private exchanges as a viable alternative to the plans they currently offer employees and that “employers are intrigued by the potential of private exchanges to control cost increases, reduce administrative burdens and provide greater value.”
Some observers have expressed legitimate concerns that employers could limit their payments for health benefits by increasing wages by amounts less than those of employees’ medical costs. In theory, a competitive labor market would ensure that total employee compensation remained at competitive levels, thereby preventing employers from using defined-contribution mechanisms in this way. But competitive labor markets require compensation to reflect productivity. In rigid sectors of the economy, defined-contribution strategies could burden employees disproportionately with the weight of medical inflation.
Yet the appeal of defined-contribution plans — whether as part of Medicare reform or in the form of changing benefits for retirees and workers — remains potent. Defined-contribution strategies reveal to employees and health insurance customers any cost increases that exceed the growth of wages, and individuals purchasing insurance on exchanges have shown a growing preference for lower-priced plans that increase cost sharing for health expenditures. In 2013, for example, Aon Hewitt found that the proportion of employees who selected high-deductible plans (most of which included a contribution to a health savings account) increased from 12% to 39%, while enrollment in preferred provider organizations decreased from 70% to 47%.
Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.
Whether or not providers and consumers are ready, defined-contribution benefit plans are growing in popularity. They will unquestionably have both short- and long-term consequences for providers. They will bring greater transparency to health care costs and health care inflation, and they will probably give insurance purchasers greater motivation to attend to insurance prices, stimulating the provision of lower-cost insurance.
Because insurance premiums are ultimately the primary source of revenue for providers, cost consciousness among consumers will impose new fiscal constraints on providers. For some highly leveraged providers — especially those who expanded costly infrastructures that relied on lucrative fee-for-service revenue models — even small changes in the private health insurance market could have substantial financial effects. In this world, providers’ future success will depend on their ability to sustain themselves on a flattening allowance.
Over the long term, greater consumer sensitivity to insurance premiums will affect all providers. It is a truism that the growth of health care costs — or, phrased differently, the growth of provider resources — will be bounded by the growth of health care revenue. A dramatic shift in the revenue available to providers will impose strong cost pressure. And such pressure, in turn, can be seen as a new opportunity for developing more cost-efficient delivery mechanisms.
This article from the prestigious New England Journal of Medicine should alarm anyone who cares about ensuring that everyone has access to health care. We are now seeing a rapid conversion of health care financing from defined benefit (paying for appropriate health care) to defined contribution (paying a specific dollar amount while placing upon the beneficiary the responsibility of using those funds to find affordable care, if possible). This places the burden of health care inflation most heavily on those who have the greatest health care needs when these individuals and families are already over-burdened with our deficient system of health care financing.
Look at the explanation that these authors give as to why defined contribution is a superior method of financing health care:
Perhaps there is a limit to what the employee/patient/beneficiary/consumer may support in this transition to defined contribution financing of health care. According to these authors, “Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.”
Ah ha! We need to switch to defined contribution financing because it will make health care inflation “visible and painful to consumers.” Clearly there had to be more advantages than just those listed above. There ain’t no gain if there ain’t no pain.
Regina Herzlinger is an icon in the consumer-directed policy community. They are winning the battle, and the people are losing. If you like the policies listed above, you don’t need to do anything. Regina and her friends will take care of it for you.
For the rest of you, get over the lousy satire and go out and fight the battle for health care justice for all.
Medical Cost Trend: Behind the Numbers 2015
PwC Health Research Institute, June 2014
PwC’s Health Research Institute (HRI) projects 2015’s medical cost trend to be 6.8% — a modest increase over our 2014 projection of 6.5%. This projection is based on HRI’s analysis of medical costs in the large employer insurance market, which covers about 150 million Americans. By comparison, Medicare serves 52 million beneficiaries and a little over 8 million Americans enrolled in the public exchanges this year.
The net growth rate in 2015, after accounting for benefit design changes such as higher deductibles and narrow provider networks, is expected to be 4.8%. Benefit design changes typically hold down spending growth by shifting costs to consumers, who often choose less expensive healthcare options.
Although total US health spending will likely increase as more people gain insurance under the Affordable Care Act (ACA), it may have little effect on employer health spending. The increase in utilization under the ACA will likely drive up total national health expenditures without changing prices for those with employer coverage.
High-deductible plans will continue to tamp down use of services
The popularity of high-deductible health plans continues to rise as employers attempt to manage their benefit costs. According to PwC’s 2014 Touchstone Survey, 44% of employers across all industries are considering high-deductible plans as the only insurance option for their employees during the next three years. In addition, according to the same survey, 33% of employers are considering moving their active employees to a private exchange in the next three years, and this strategy tends to accelerate employee adoption of higher deductible plans.
Now more than ever, consumers are experiencing increased financial responsibility and are evaluating and rethinking how and when to spend.
Consumers become cost-conscious healthcare shoppers
The ongoing growth in high-deductible plans ultimately influences consumer behavior on the number and type of health services purchased. Eighty-five percent of employers in PwC’s 2014 Touchstone Survey have already implemented or are considering an increase in employee cost-sharing through plan design changes over the next three years, and 44% of employers are considering offering high-deductible plans as the only insurance option for their employees over the next three years.
While increased cost sharing and high-deductibles do not affect medical inflation directly, consumer behavior does. Cost remains a top concern for consumers and affects the health choices they make. According to a December 2013 HRI survey, 40% of consumers said that healthcare expenses put a strain on their budget. And a recent study in the journal Health Affairs about families with high-deductible health plans observed deliberate changes in those families’ use of health services. Families enrolled in high-deductible plans used fewer brand name drugs, had fewer doctor visits, and spent less per visit.
Risk-based contracts are beginning to reduce costs
Insurers and employers are increasingly using risk-based payments in their physician and hospital contracts to reduce costs. Risk-based contracts can include quality bonuses and penalties, shared savings programs that encourage physicians to cut costs, and patient-centered medical homes (PCMH), which pay physicians to manage and coordinate care. Most health plan actuaries interviewed by HRI reported that these strategies are starting to reap cost savings.
Employers: What are they doing now?
Employers continue to pursue a range of cost-cutting strategies with a fresh emphasis on shifting more responsibility onto workers. According to PwC’s 2014 Touchstone survey, 26% of employers have a high-deductible health plan as their highest enrolled medical plan in 2014—the highest percentage ever. Controlling costs through high-deductible plans is not the only strategy employers are trying. Offering plans with narrow provider networks, investing in wellness programs, contracting directly with centers of excellence, or even participating in private exchanges, may save employers money. Consumer behavior is also beginning to impact the spending growth rate.
This PwC medical cost trend applies to the large employer health insurance market, covering about 150 million Americans. The increase in costs for 2015 is anticipated to be 6.8%, again well in excess of the rate of inflation. Perhaps most alarming is the estimate of net growth – 4.8% – a reduction accomplished by “benefit design changes such as higher deductibles and narrow provider networks.”
We have discussed repeatedly the perversities of higher deductibles and narrower provider networks – reducing spending by impairing access and making health care less affordable for patients in need – yet that is the direction where the mainstay of health care coverage – employer-sponsored plans – is headed.
We need to remove employers and private insurers from the health care equation. A single payer national health program would eliminate the need for deductibles and would provide unlimited choice of health care professionals and institutions, while actually controlling health care spending. Its time is now.
Marital Disruption and Health Insurance
By H. Elizabeth Peters, Kosali Simon, and Jamie Rubenstein Taber
National Bureau of Economic Research, NBER Working Paper No. 20233, June 2014
Despite the high levels of marital disruption in the United States, and substantial reliance on family-based health insurance, little research is available on the consequences of marital disruption for insurance coverage among men, women, and children. We address this shortfall by examining patterns of coverage surrounding marital disruption. We find large differences in coverage across marital status groups in the cross-section. In longitudinal analyses that focus on within-person change, we find small overall coverage changes but large changes in type of coverage following marital disruption. Both men and women show increases in private coverage in their own names, but offsetting decreases in dependent coverage tend to be larger. Dependent coverage for children also declines after marital dissolution, even though children are still likely to be eligible for that coverage. Children and, to a lesser extent, women show increases in public coverage around the time of divorce or separation. The most vulnerable group appears to be lower-educated women with children because the increases in private, own-name, and public insurance are not large enough to offset the large decrease in dependent coverage.
New provisions in the Affordable Care Act (ACA) will increase availability of health insurance, especially through Medicaid expansions and subsidized exchange-based private coverage, and may mitigate some of the detrimental impacts of marital disruption. However, because employers are expected to remain the main source of coverage for the nonelderly population (Congressional Budget Office 2012) and because of lingering uncertainty regarding state compliance with expansions (Kaiser Family Foundation 2013), marital disruption is likely to remain a cause of instability in insurance coverage.
To no surprise, this study confirms that divorce is disruptive to health insurance coverage, especially for spouses and dependent children. That disruption is worse for more vulnerable lower-educated women with children. Since employer-sponsored coverage is expected to remain the most dominant form of insurance and most susceptible to changes due to divorce, and since many states are avoiding compliance with the intentions of improving coverage through the expansions authorized in the Affordable Care Act, and since many divorced individuals and their dependents will qualify for hardship exemptions allowing them to remain uninsured, marital disruption will remain a significant cause of being uninsured.
We are now inundated with reports about how well the Affordable Care Act is working – the glass half-full argument. What about those who will be left out because their share is in the empty half of the glass? We need a full glass – a single payer national health program – but we didn’t get it. Many divorcees and their children will be victims of our mediocre, half-assed effort (excuse me, half-glass). Well, it was half-assed and it’s time we said it.
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