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.
Reflections On The 20th Anniversary Of Taiwan’s Single-Payer National Health Insurance System
By Tsung-Mei Cheng
Health Affairs, March 2015
On its twentieth anniversary, Taiwan’s National Health Insurance (NHI) stands out as a high-performing single-payer national health insurance system that provides universal health coverage to Taiwan’s 23.4 million residents based on egalitarian ethical principles. The system has encountered myriad challenges over the years, including serious financial deficits. Taiwan’s government managed those crises through successive policy adjustments and reforms. Taiwan’s NHI continues to enjoy high public satisfaction and delivers affordable modern health care to all Taiwanese without the waiting times in single-payer systems such as those in England and Canada. It faces challenges, including balancing the system’s budget, improving the quality of health care, and achieving greater cost-effectiveness. However, Taiwan’s ￼￼experience with the NHI shows that a single-payer approach can work and control health care costs effectively. There are lessons for the United States in how to expand coverage rapidly, manage incremental adjustments to the health system, and achieve freedom of choice.
The most important lesson of Taiwan’s experience is that the single-payer approach can offer all citizens timely and affordable access to needed health care on equal terms, regardless of the patient’s social, economic, and health status; sex; age; place of residence; and employment status.
A second lesson is that a single-payer model such as Taiwan’s can control costs effectively. It is administratively simple and inexpensive and is the ideal platform for a powerful health IT system. It also facilitates global budgeting, if that is the only way to keep health spending in line with the growth of GDP.
A third lesson is the importance of investing heavily, up front, in a modern IT infrastructure. A modern IT system such as Taiwan’s allows the government to have information about health utilization and spending in almost real time.
Fourth, Taiwan’s case illustrates that health policy makers should not miss windows of opportunity for major health reform. Enabling factors include rapid economic growth, which makes it easier to redistribute resources; strong popular demand for reform; strong political leadership; a broad social and political consensus on the ethical principles that guide the health system; and the availability of a cadre of competent civil servants motivated and able to implement reform.
Lessons For The United States
Taiwan’s experience demonstrates that with competence and goodwill, the challenge of adding a large influx of newly insured citizens can be met. Health systems appear to be adaptive, and the case of Taiwan illustrates that incremental improvements on reform are possible.
Taiwan’s experience also might induce Americans to think more deeply about the term freedom of choice. In health care, freedom of choice could mean choice among health insurance carriers and health insurance contracts, choice among health care providers, or both. For Taiwan’s citizens, freedom of choice among providers of health care trumped freedom of choice among insurance carriers and contracts. These citizens’ high satisfaction with their health system suggests that they still endorse that choice. By contrast, in the United States freedom of choice among insurance carriers and products ranks above freedom of choice among health care providers, which often is limited to narrow networks of providers.
A growing body of literature has shown that by international standards, enormous human resources are used in the United States to facilitate choice among insurers and insurance products, process claims, and annually negotiate a payment system that results in rampant and bewildering price discrimination. Relative to the less complex health systems elsewhere in the industrialized world, the US system is a poor platform for the effective use of modern health IT.
According to a recent report by the Institute of Medicine, the US system has excessive administrative costs that in 2009 amounted to $190 billion. That is more than it would cost to attain true universal health care in the United States.
It is not this author’s role to prescribe what Americans should or should not do in regard to freedom of choice. But it is appropriate to invite readers to think more deeply about the relative benefits and costs of their choices. It is remarkable that in cross-national surveys, Americans have consistently given their health care delivery system relatively high marks, but their health system relatively poor ones.
Tsung-Mei Cheng is a health policy research analyst at the Woodrow Wilson School of Public and International Affairs, Princeton University, in Princeton, New Jersey.
The people of the United States have continued to watch our health care spending increase far beyond that of all other nations. We have watched the quality of our insurance coverage deteriorate as insurers take away our choices of physicians and hospitals and shift more costs to those with health care needs, often causing the very financial hardships that health insurance should be preventing. And we have continued to tolerate leaving tens of millions uninsured.
For the past generation we also have been observing the natural experiment in single payer healthcare financing taking place in Taiwan – Taiwan serving as the experimental subject and the United States as the control. As Tsung-Mei Cheng explains in this Health Affairs article, it has been a spectacular success for Taiwan. Had we adopted a similar program twenty years ago, today everyone would be covered, no one would face financial hardship because of medical bills, we would have freedom of choice of our physicians and hospitals, we would have eliminated much of our profound administrative waste, and our total national health expenditures would have followed a lower trajectory and thus would be much less than they are today.
What is it about American exceptionalism? In our stubbornness, we are going to continue our feeble search for policy solutions to our intolerable deficiencies and inequities in health care, when we have before us one of the nearest to perfect natural experiments ever completed – in precisely the reform that we need. By the definition, “much better than average,” exceptional we are not. Or by the definition, “deviating from the norm,” we should have no pride in either our health care system or in our obstinate refusal to apply proven health policies that would inject much needed remedies into our sick system.
At our PNHP meetings and in the health policy literature, Tsung-Mei Cheng has provided us with an abundance of observations and data that should illuminate for us a clear path forward for reform. We just have to make good use of her contributions. We can begin by sharing this Health Affairs article with others who care about the future of our health care system.
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 law’s complexity invites attack, even as it fails to cure ailment: doctors group
Physicians for a National Health Program (PNHP), March 3, 2015
King v. Burwell shows how Affordable Care Act’s corporate-inspired, convoluted structure makes it an easy target for opponents
Latest legal challenge threatens to add more than 8 million people to the ranks of the tens of millions who are currently uninsured, leading to an additional 8,000 ‘excess deaths’ annually linked to lack of insurance
‘This case is yet another reason to swiftly move beyond the failing ACA to a simpler, publicly financed, improved-Medicare-for-All system that would cover everyone, make care affordable, and control costs,’ says president of single-payer physicians’ group
FOR IMMEDIATE RELEASE
March 3, 2015
Mark Almberg, PNHP communications director, (312) 782-6006, email@example.com
The following statement was released today by leaders of Physicians for a National Health Program, a research and educational organization of 19,000 doctors who support single-payer national health insurance, or “an improved Medicare for all.”
This week’s arguments before the Supreme Court in the case of King v. Burwell demonstrate once again how the Affordable Care Act’s administrative complexity and flaws – largely reflecting its accommodation to the private health insurance industry and other corporate, profit-oriented interests in U.S. health care – make it vulnerable to legal attacks by its opponents.
The ACA clearly lacks the simplicity and legal robustness that a single-payer plan would have. Single payer would be simple: everyone in the U.S. would be covered for all medically necessary care in a single program financed by equitable taxes.
If the court upholds King and his fellow plaintiffs’ challenge to premium subsidies in over 30 states, the health and financial harms to our patients will be considerable. By some estimates, more than 8 million people will quickly lose insurance coverage, increasing the intolerable suffering we already see today.
One consequence of this loss of coverage would be an additional 8,000 “excess deaths” each year – deaths linked to lack of insurance. That figure is over and above the estimated 30,000 annual preventable deaths that are currently occurring under the ACA due to its having left 30 million people uninsured. This is completely unacceptable.
Regardless of how the court rules, the unfortunate reality is that the ACA won’t be able achieve universal coverage. It won’t make care affordable or protect people from medical bankruptcy. Nor will it be able to control costs.
The ACA is fundamentally flawed in these respects because, by design, it perpetuates the central role of the private insurance industry and other corporate and for-profit interests (e.g. Big Pharma) in U.S. health care.
In contrast, a single-payer system – an improved Medicare for All – would achieve truly universal care, affordability, and effective cost control. It would be simple to administer, saving approximately $400 billion annually by slashing the administrative bloat in our private-insurance-based system. That money would be redirected to clinical care. Copays and deductibles would be eliminated.
A growing section of the insured population is already facing very high copays, deductibles and coinsurance, deterring them from seeking needed care. This trend is toxic and unsustainable.
Physicians can’t wait for an effective remedy any longer, nor can our patients. The stakes are too high.
Dr. Robert Zarr, a Washington, D.C.-based pediatrician who will be in front of the Supreme Court building on Wednesday at 10 a.m. Eastern, is president of Physicians for a National Health Program.
Zarr said today: “The King v. Burwell case is yet another reason to swiftly move beyond the failing ACA to a simpler, publicly financed, improved-Medicare-for-All system. Such a system would cover everyone, make care affordable, and control costs. Based on our experience with the Medicare program and the experience of other nations, we know it will work. It’s the only moral and fiscally responsible thing to do.”
The Supreme Court case of King v. Burwell is appropriately receiving extensive coverage in the media since the decision of the Court has the potential to cause perhaps 8 million individuals to lose their health insurance, plus it would adversely impact health insurance markets through spiraling premiums due to adverse selection.
Even though a decision prohibiting subsidies in federally-administered state exchanges would be disastrous, the hype over this case obscures the much more intolerable disaster of perpetuating the inequities and injustices of our current health care financing system. The consequences of continued inaction on single payer reform constitutes proportionately a much greater disaster, regardless of the outcome of King v. Burwell. Over 30 million will still remain uninsured, tens of millions will experience financial hardship in the face of medical need, perhaps even personal bankruptcy, while private insurers will continue to take away our choices of physicians and other health care professionals, take away our choices of hospitals, and take away our choices of pharmaceuticals that our physicians say we should have.
Merriam-Webster includes as two of the definitions of “state”: “a politically organized body of people usually occupying a definite territory; especially one that is sovereign,” and “the operations or concerns of the government of a country.” It would be tragic if the court ruled that this silly argument on the meaning of “state” had enough substance to allow a few ideologically-driven Supreme Court justices to deprive 8 million people of insurance coverage. But it would be a much greater tragedy if we allow this to divert us from accomplishing the imperative: establishing a single payer national health program – an improved Medicare for all.
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.
Open Enrollment 2015 Re-Enrollment Snapshot
Department of Health and Human Services, February 25, 2015
Millions of consumers with coverage in 2014 actively selected a Marketplace plan or were automatically re-enrolled through the HealthCare.gov platform for coverage in 2015.
“These numbers tell a powerful story of a strong open enrollment and of engaged and satisfied consumers,” HHS Secretary Sylvia Burwell said. “More new consumers joined the HealthCare.gov Marketplace for 2015 than were covered through re-enrollment. More consumers actively selected a plan on HealthCare.gov than were automatically re-enrolled. These are signs of a vibrant Marketplace where customers are actively engaged in choosing their health coverage – and of a product that families want, need and appreciate.”
“More than half of the 4.17 million people who re-enrolled in coverage during Open Enrollment came back and actively selected a plan and more than half of those consumers selected a new plan,” said Andy Slavitt, Principal Deputy Administrator of CMS. “Based on my experience looking at enrollment trends with employer-sponsored coverage and Medicare, it is clear that Marketplace consumers are more active, engaged, and eager to shop for the coverage that’s right for them.”
Of the approximately 2.21 million 2014 consumers who actively returned to select a plan for 2015, about 1.20 million or 54 percent chose a new plan for their 2015 coverage.
These numbers will fluctuate over the course of the year based on consumers changing or canceling plans or having a change in status such as new job or marriage.
So HHS Secretary Sylvia Burwell is celebrating the “powerful story” of “engaged and satisfied consumers” in the “vibrant Marketplace” of federally facilitated ACA exchange plans. Really? Does this unheard of rate of switching plans during an open enrollment period really represent the enthusiasm of of health plan shoppers in finding even better plans than they have, or does it represent dissatisfaction with the plans they have been stuck with during the past year?
What it most likely represents is relatively healthy people – the majority – who are shopping for the lower premiums available for the benchmark silver plans. Because of the clumsy administrative nature of pricing exchange plan premiums, there is a high turnover in the plans classified as benchmark plans. So these are healthier individuals who are more concerned about a better deal on the insurance premiums than they are about the specifics of their plans, since they hope that they won’t need to use them much.
This process of annually switching benchmark plans ensures instability of coverage which is especially problematic when considering that the narrow networks that are essentially universal in the exchange plans will often result in disruption of care whenever there is a change in the plan selected.
Thus the ACA Marketplace perpetuates instability of premiums, instability of plans selected, instability of provider networks, instability of out-of-pocket cost sharing, and instability of the innumerable devious insurer practices such as outrageous coinsurance for expensive drugs – a practice designed to chase chronically ill individuals away, dumping them on the insurer’s competitors.
This is how markets are supposed to work? The deceptive rhetoric of “a vibrant Marketplace where customers are actively engaged” is shameful. It is particularly disgusting when it is our own government that is perpetrating the dishonest and disproved dynamic that markets work well in health care. Nobel laureate Kenneth Arrow disproved that decades ago.
We need the government to take charge by enacting and then implementing a single payer national health program. But it appears that first we will have to replace our legislators and government administrators with more responsible stewards who are dedicated to the health of the people rather than to the medical-industrial complex. Are we up to that task?
Medicaid Acceptance by Healthcare Providers Drops to 1-out-of-3
By Kev Coleman
HealthPocket, February 26, 2015
When HealthPocket first investigated Medicaid acceptance in 2013, it found that only 43% of the healthcare providers examined were formally listed as accepting Medicaid. Since the original 2013 study, Medicaid enrollment has continued to rise as the Affordable Care Act has led many states to increase the income eligibility range for the program. Medicaid, along with the Child Health Insurance Program (CHIP), currently covers approximately 1-in-5 people in the United States. This year, the temporary increase in Medicaid payments to primary care physicians discontinues with only 15 states indicating that they intend to maintain the payment increase (fully or partially). The reduction in Medicaid reimbursement to primary care physicians has brought with it a concern that Medicaid acceptance, already low among healthcare providers, will drop further.
HealthPocket found that in 2015 only 34% of the healthcare providers examined were listed as accepting Medicaid insurance. This represents a 21% decrease from the listings of Medicaid acceptance found in the 2013 data for the same categories of healthcare providers.
Since both the 2013 analysis and 2015 analysis relied upon the same government data source and provider record parameters, the marked decline in Medicaid acceptance is significant. In particular, the data calls into question whether the temporary increase in Medicaid payments to primary care physicians effected any lasting improvements to Medicaid acceptance.
Why Do Some Healthcare Providers Avoid Medicaid?
A common explanation given for Medicaid lower acceptance is the program’s reimbursement rate to healthcare providers. Medicaid typically pays 61% of what Medicare pays for the same outpatient physician services. To make matters worse, the Medicare payment benchmark is already lower than payments for the same services from private insurers. It is estimated that Medicare typically pays 80% of what commercial health insurers pay. Consequently, in comparison to commercial health insurance from private insurance companies, Medicaid payments represent a reduction on a reduction.
One of state governments’ responses to the problem is the use of managed care organizations to serve some portion of a state’s Medicaid population. However, as a 2014 Health & Human Services study noted, state standards regarding the ratio of primary care physicians to Medicaid managed care enrollees can vary widely (1-to-100 to 1-to-2,500) as do their methods for determining compliance with these standards. Consequently, Medicaid enrollees can face the prospect of long distances and/or long waits to access care under the program.
From the Conclusion
HealthPocket’s comparison of Medicaid acceptance listings from 2013 to 2015 illuminates an alarming trend for those dependent on Medicaid for their healthcare: a reduction in Medicaid acceptance occurring during a period of Medicaid enrollee expansion. How federal and state governments will reverse this trend remains to be seen. The temporary increase in Medicaid payments to primary care physicians from 2013 to 2014 does not appear to have produced a lasting increase in Medicaid acceptance and the expiration of this increase may contribute to further healthcare provider attrition from the Medicaid program.
By Richard Gottfried, Chair, Committee on Health, New York State Assembly, and sponsor of A05062 (S03525), “The New York Health Act”
If the Medicaid recipient’s doctor were paid the same as my doctor, this wouldn’t be a problem. And if we were all in the same health plan, the wealthy and well-connected would see to it that their doctors were paid fairly, and the rest of us (and our doctors) would share the benefit. If we’re all in the same boat, we’ll all do better.
by John Geyman, M.D.
Author of How Obamacare is Unsustainable.
Now that Obamacare (the Affordable Care Act or ACA) is just turning five years since its enactment in 2010, it is time to assess its progress and shortfalls. This is the first of three posts that will deal with its experience toward its major goals—expanding access to care, cutting costs and making care more affordable, and improving the quality of care. A fourth post will follow that deals with the takeaway lessons from this five-year experience.
The initial goal of the ACA was to extend health insurance to 32 million more people by 2019, about one-half of that number through expansion of Medicaid. Online insurance exchanges were to be set up by states or the federal government to allow people to comparison shop for new coverage. Most uninsured with incomes above 138 percent of federal poverty level (FPL) would be required to purchase insurance or face penalties. In order to help them to afford new coverage, those with incomes between 138 and 400 percent of the FPL ($32,913 to $95,400 for a family of four) would receive federal subsidies. New requirements were to be established for insurers, including prohibiting them from denying coverage based on pre-existing conditions, requiring them to cover 10 categories of defined benefits, requiring them to cover at least 60 percent of health care costs (actuarial value of the bronze plan, leaving patients responsible for the remaining 40 percent of costs), requiring insurers to accept every individual and employer that applies for coverage, and others.
Now, five years after the ACA’s enactment, these are some of its major accomplishments so far:
Although these sign-ups reflect significant progress, the ACA will fall far short of its goals, as shown by these examples:
Based on the above, together with trends going forward, it is clear that the ACA has failed to remedy the nation’s access to care problem. In the next post, we will see how well it is doing in containing costs and making health care more affordable.
Adapted in part from my new book, Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015.
Market Guide for Healthcare Payers’ Core Administrative Processing Systems
By Constance Sjoquist
Gartner, January 28, 2015
Payer CIOs need to enhance, append or replace their existing core administrative systems to more effectively compete in an increasingly complex healthcare environment. Vendors are developing newer or re-engineering existing solutions to meet this demand.
Historically, the vendor options for core claims administrative systems have been somewhat limited. A handful of legacy solutions have dominated the payer space for years. Often highly customized to a payer’s unique business environment or utilized only for a specific line of business (LOB), core administration systems have been expensive and difficult to replace, upgrade, enhance or consolidate without incurring significant risk or downtime.
In the last several years, an enormous amount of change has occurred in the healthcare market and is impacting payers’ requirements of their core administrative solutions. New demands include the need to comply with an increased number of regulatory requirements, manage a growing number of contractual arrangements and support new distribution channels. Payers are finding it necessary to make the shift from a historical group to a largely individual membership base and are seeking new and differentiated capabilities that will help ensure they can remain relevant and competitive.
In response, vendors in the healthcare core administrative space have begun to significantly shift their product strategy or market focus to address new payer challenges. While this has brought about innovation and choice, it has also led to a disparate market, causing confusion over what exactly the essential elements of a core administrative system are. Vendors that once dominated the market have recently merged or have been acquired, causing uncertainty around their future product road maps. Some vendors have completely dropped their product offerings for a particular LOB or have shifted their technology strategy to offer only nonlicensed software solutions.
Gartner receives a steady volume of inquiries and requests for information on core administrative vendors, as these run the business applications that necessitate an enormous amount of a payer’s IT resources and budget. Healthcare payers are looking to modernize their application portfolios, comply with government regulations and lower their cost of doing business. Payers are also seeking functionality that will allow them to support new health models, such as accountable care organizations (ACOs), pay for performance (PFP) and value-based networks (VBNs). Inquiries focus on who can provide new technology approaches to the development, deployment and management of existing core administrative applications, as well as which vendors offer solutions to support future payer needs.
Core administrative vendors are challenged to adapt and develop their solutions to address these disruptive changes in the healthcare industry, as well as to adapt to rapid advancements in technology.
Industry disruptions include:
- * The shift from a wholesale (group) to a retail (consumer) decision maker requiring greater support for user-specific preferences
- * Demand for transparency tools to support member enrollment, care and payment decisions
- * Providers becoming risk-bearing entities requiring real-time information on payment and reconciliation in their provider applications that parallels payers’ application status
- * Establishment of payer/provider contractual arrangements requiring increased coordination of information and workflows and greater accountability of services and payments
- * Ongoing regulation and compliance changes requiring timely updates, audits and reports
- * The expanding number of distribution channels requiring increased support for enrollment and related services
The healthcare market is expected to continue along a path of rapid change and innovation. There is great uncertainty as to where the market is headed and what technologies will be necessary to adapt and succeed. Core administrative vendors are aggressively vying for position and are competing to manage current expectations and address future client demands.
This report from Gartner is instructive in that it demonstrates the profound increase in administrative complexity in health care, much of which is directly attributable to a dependency on markets as opposed what we would have under a publicly administered single payer system. Administrative functions in health care are essential, but it is the private sector that has created a bureaucratic quagmire. Gartner is just trying to help the private sector make sense of it.
This does not let the government off the hook. By supporting the current fragmented, dysfunctional model of health care financing, the government is placing a greater burden on the private sector. We are all paying the price in higher costs and in bearing the the burden of systemic inefficiencies. By design, a single payer system would reduce this administrative complexity.
Taxpayers Following ACA Rules, Refunds Take a Hit
H&R Block, February 24, 2015
So far in the 2015 tax season, H&R Block (NYSE: HRB), the world’s largest consumer tax services provider, is seeing a majority (52 percent) who enrolled in insurance via the state or federal Marketplaces paying back a portion of the Advance Premium Tax Credit (APTC). The average amount paid back is $530, decreasing the tax refund on average by 17 percent, according to analysis almost six weeks into the 2015 tax season.
The average tax penalty for not having insurance was $172, an indication that most taxpayers are paying more than the flat-fee of $95 per uncovered adult penalty many consumers anticipated.
“The level of payback of the Advance Premium Tax Credit is significant in that it’s costing taxpayers a large percentage of their refund – a refund many of them count on to pay household expenses,” said Mark Ciaramitaro, vice president of H&R Block health care and tax services.
For next tax filing season, it is important to note that the base penalty will increase to the greater of $325 or 2 percent of household income for 2015.
So far, 52 percent of those receiving a tax credit last year to help pay their premiums for the ACA exchange plans are having to pay back an average of $530 – certainly an unpleasant surprise for individuals subsisting on modest budgets.
Fortunately, for most individuals that repayment will be through a reduction in their tax refunds rather than an additional payment to be made from funds on hand. Nevertheless, many people look forward to receiving their tax refunds in order to be able to meet other important expenses.
Under a single payer system, there is no premium to be paid and thus no need for subsidies based on income. It is much simpler and even more equitable to fund the entire system through progressive taxes.
Research says hospital consolidation isn’t a cure-all for health care
By Tim Vogus, Associate Professor of Management at Vanderbilt University
The Conversation, February 23, 2015
In his new book, America’s Bitter Pill, Steven Brill dives deep into the history of the Affordable Care Act (ACA) and how it was passed. He concludes that, although providing more Americans with health insurance is worthy of praise, the ACA does far too little to address the costs of health care.
And he makes his own proposal for bringing costs down: consolidation. As hospital systems expand and eye ways to grow even more, Brill proposes that these systems start to insure patients as well as treating them. If the hospital system is the insurer, he reasons, it has an incentive to keep costs down. And these new integrated systems would treat all their patients’ needs from primary care, to surgery and more. In short – treating the whole patient.
Economists and other researchers have been looking at what consolidation, big integrated systems and dwindling competition mean for health care. And so far, it looks like consolidation isn’t a cure for high costs or a way to improve care. In fact, it might make it harder for hospitals to deliver care well.
Consolidation is already happening
Hospital consolidation is either “horizontal,” like buying a hospital and reducing the number in the market, for instance, or “vertical,” like buying clinics and physician practices.
The truth is that hospitals are already a long way down this road. Both kinds of consolidation are happening and in recent years there has been unprecedented consolidation, with more planned for 2015.
And the ACA creates an incentive for organization to consolidate and offer insurance by encouraging the development of Accountable Care Organizations (ACOs). These are networks of doctors, hospitals and other care providers that coordinate care for patients. The idea is that they save money by increasing efficiency because they care for all of the patients health needs. That means everything from primary care to specialists, hospital services and more. ACOs are especially prominent in Medicare, but the Department of Health and Human Services (HHS) is pushing for more of this quality- and value-based contracting over traditional fee-for-service.
Some critics say that consolidation in general means that hospital systems have a tremendous amount of market power – something that isn’t known for keeping costs down. But Brill argues that any concerns about the market power these systems would hold can be overcome by simple regulations to ensure minimum competition.
So in other words, both Brill and the ACA would push health care delivery toward large integrated entities that would manage the entire spectrum of patient needs from insurance to primary care checkups to cancer treatment to managing chronic disease. But research shows that consolidation has a poor track record of keeping costs down and that very large organizations have trouble delivering care and working efficiently.
Consolidation doesn’t have a track record of keeping costs down
Earlier attempts to control costs through consolidation did not succeed. In the 1990s integrated delivery networks attempted to lower costs, but failed due to financial losses from purchasing physicians practice, difficulties with integration and managing risk. Researchers argue that new attempts to control costs through consolidation are likely to experience similar disappointing results.
Martin Gaynor of Carnegie Mellon and Robert Town of the University of Pennsylvania’s Wharton School summarize recent research indicating that increases in consolidation – and the resulting lack of competition – lead to higher health care costs. And these increases are especially high in consolidated markets with few hospitals.
Beyond higher costs, consolidation can also reduce the quality of care provided. Research from outside the US suggests that increases in consolidation can have a negative impact on survival from heart attack. Concentrated markets also mean less choice for patients when it comes to choosing hospitals or doctors, and research indicates that more choice can lead to better health outcomes for procedures like coronary artery bypass graft surgery.
Bigger systems don’t always make for better care
Brill also ignores another major problem: integrating and operating a very large or consolidated health system is hard.
In research at a large, academic medical center, Brian Hilligoss and I found even simple, everyday care transactions and decisions are fraught with problems. Different units, like general medicine and emergency, have different workplace cultures and different ways of operating, which can make integration difficult. Units might be interdependent, but their administration is separated. And the physical size of these organizations matters too. The hospital we studied occupied over 6 million square feet putting a lot of physical distance between units and between doctors and patients. In our study we found that these factors led to a heavy reliance on technology to coordinate care rather than direct communication.
In another study Hilligoss found that this poor integration between different units in the hospital means that doctors rely on an elaborate process of “selling patients” to other departments in order to transfer them. One department has to make a case for the patient to be transferred to another department, even if that is where they objectively need to be. And inpatient services have the right to refuse transfers.
We found that physicians have to consistently engage in elaborate workarounds to carry out their work. And nurses face similar challenges in complex organizations. Anita Tucker of Brandeis University documents how, like doctors, they frequently encounter operational failures like missing materials and information that require workarounds.
Mergers don’t always mean coordinated care
The consolidation encouraged by Brill exacerbates all the challenges identified in this research. For example, in her book Code Green, Dana Beth Weinberg documents how the merger of Beth Israel and Deaconess hospitals in Boston had profound effects on the way care was delivered at the bedside. The merger prioritized cost reductions through higher patient loads for each nurse which undermined Beth Israel’s comprehensive and influential primary nursing model. In practice that meant shifting critical patient care tasks away from highly skilled registered nurses to less skilled aides which compromised care quality.
And early evidence from Accountable Care Organizations suggest that is difficult for different organizations to integrate their cultures. Sara Kreindler of the University of Manitoba and colleagues examined early Accountable Care Organizations and found that in no case did these organizations see themselves as integrating different groups into one whole. In fact, the organizations studied painstakingly avoided the idea of integration.
While Brill’s work offers a compelling personal narrative and a provocative and thorough recounting of the development and passage of the ACA, it has substantially less to offer as guidebook for change. He fails to sufficiently grapple with existing economic research, earlier attempts to achieve similar aims, and the real difficulties posed by consolidation for those doing the hard work at the point of care delivery.
(The article includes links to resources cited plus a response by Steven Brill and a reply by the author.)
Considerable attention has been directed to the phenomenon of provider consolidation. It is celebrated by some as a means of providing greater efficiency and quality by means of integration of services, advancing the model of accountable care organizations. Others have criticized consolidation because of its anti-competitive influence on markets, driving prices ever higher.
This article by Professor Tim Vogus is presented in its entirety since it explains why we need to look elsewhere than provider consolidation if we truly want to improve value delivered by our health care system.
If we had publicly-administered health care financing through a single payer system, then consolidation would not be a tool of gaining greater market leverage and thus higher prices. Rather, consolidation would occur only if it improved the delivery of care. Single payer is a much more effective way of achieving our goals of improving quality while controlling costs.
Evaluation of the Comprehensive Primary Care Initiative: First Annual Report
Mathematica Policy Research, January 2015
In October 2012, the Center for Medicare and Medicaid Innovation of the Centers for Medicare and Medicaid Services (CMS), in a unique collaboration between public and private health care payers, launched the Comprehensive Primary Care (CPC) initiative to improve primary care delivery in seven regions across the United States. …The substantial transformation … is expected to achieve better health care, better health outcomes, and lower costs.
Some managed care proposals lack evidence but can be subjected to testing to see if they work. Other managed care proposals lack evidence and cannot be tested because they are too vaguely described. The “patient-centered medical home” (PCMH) is an example of the latter. The Comprehensive Primary Care Initiative, a test of the PCMH “model” being conducted by the Center for Medicare and Medicaid Innovation (CMMI), illustrates the problem. It tests too many vaguely defined variables at once.
First, a word about labels. The CMMI chose the label “comprehensive primary care” (CPC) rather than “medical home” for an insubstantial reason: It wanted to involve multiple insurers in the experiment, and in their view previous “home” experiments used only single insurers. But “CPC” is clearly just the PCMH concept with a different label. CMMI tells us the CPC Initiative “builds on the ‘medical home’ concept,” and that it is authorized by Section 3021 of the Affordable Care Act, which mentions the “patient-centered medical home” but not “comprehensive primary care.” Not surprisingly, the CPC Initiative is widely seen as a test of the PCMH concept.
Here is how the CMMI defines the CPC experiment:
Over the next four years, the Comprehensive Primary Care Initiative will evaluate whether a core set of comprehensive primary care functions, coupled with payment reform, enhanced data to guide practice improvement, and the meaningful use of health information technology, can achieve better health, better health care, and lower costs through continuous improvement. (p. 1)
Notice first that four variables are being tested at once:
• “a core set of … care functions” (i.e. the usual “features” attributed to “homes”)
• “payment reform,”
• “enhanced data,” and
• “meaningful use of HIT.”
Multiple components within the thing being tested – the intervention, the drug, etc. – is not necessarily an impediment to testing. Scientists often test entities or methods that contain multiple variables; the “Mediterranean diet” and the Diabetes Prevention Program are examples. What makes the CPC “model” untestable is the vagueness of all four of the variables. Any one of these variables alone would be impossible to test. Bundling all four into a single “model” creates a conceptual mess.
To grasp how messy this “model” is, please click here and view the circular diagram. Viewer discretion is advised. At first glance you think you’re looking at a mandala from the cover of a Grateful Dead album. Upon closer examination you realize you’re looking at an attempt by your government to explain the “logic” of the CPC Initiative. This mandala bears the title, “Comprehensive Primary Care Initiative Logic Diagram.” (You can find this title if you click here and scroll down to “additional information.”)
The mandala attempts to explain each of the four elements of the CPC “model,” but further explanation only deepens the viewer’s sense of being drawn down a rabbit hole where you hear words coming out of people’s mouths but they’re not making sense. For example, we discover that the first variable – “comprehensive primary care functions” – consists of five “functions.” These functions have labels we have heard before from “home” advocates such as “patient and caregiver engagement” and “coordination of care across the medical neighborhood.” How do we operationalize (reduce to measurable components) “engagement”? How would we know that patient X is “engaged” while patient Y is “unengaged”? How do we operationalize “coordination” and “medical neighborhood,” much less coordination “across” said medical neighborhood?
CMMI’s mandala is no better at explaining the other three elements of the CPC “model.” To take one example for each of those elements:
• “enhanced accountable payment” somehow consists of “strategic use of practice revenue”;
• “continuous improvement driven by data” somehow consists of “culture of improvement”; and
• “use of HIT” includes “continuous improvement of HIT.”
“Accountable payment”? “Strategic use?” “Culture of improvement?” “Improvement of HIT,” continuous or otherwise? How would we recognize these things (sorry, “thing” is the best descriptor I can come up with) if we happened to stumble over one?
CMMI attempted to operationalize the four variables by listing a series of tasks each “practice” must complete. (In the “medical home” rabbit hole, there are no “clinics” anymore. They are all “practices.”) CMMI calls these tasks “milestones.” The “milestones” become more numerous and specific over the course of the four-year demonstration (click here to see all the “milestones”). Here are the nine “milestones” for the first year (2013) as reported by Mathematica in their report on the first-year of the CPC experiment:
• Estimate CPC revenues and develop a plan for their reinvestment in the practice.
• Stratify patients by risk status and provide care management to high-risk patients.
• Ensure 24/7 access to the medical record for the practice’s providers.
• Assess and improve patient experience with care by conducting a patient survey or forming a patient and family advisory council … that meets quarterly.
• Use data to guide care improvement by selecting one quality and one utilization measure on which to focus.
• Improve care coordination in the medical neighborhood by selecting one area for focus.
• Improve patient shared decision-making capacity by selecting one decision aid.
• Participate in the regional learning community.
• Attest to Stage 1 meaningful use. (Table 6.1, p. 82)
Mathematica assures us these tasks not mere busywork. “While the Milestones themselves are not evidence based,” writes Mathematica, “they are rooted in strong conceptual thinking about what activities a practice needs to pursue to achieve comprehensive primary care.” (p. 81) This is classic managed care gibberish. The key phrases are so abstract they could mean anything, and the logic is circular. (The “milestone” requiring use of a decision aid is in fact evidence-based, but it is the only one.)
These milestones are more specific than the mushy labels in the CPC “logic” mandala, but they are still so vague they leave enormous latitude for clinics to react with diverse activities – activities so diverse that the uniformity of behavior necessary to test any milestone is impossible to achieve. Is the “patient and family council” (PFAC) a bona fide council if it consists of one patient and one family member? How would a clinic know when it has “focused” on its “one quality measure” or on “coordination in the medical neighborhood”?
Here, from the Mathematica report, is an example of how the amorphous “milestones” encourage diverse behaviors:
Among the 100 practices that choose to form a PFAC to help assess and improve patient experience with care, all reported having more than one patient on the PFAC. … The most common area of focus – communication – was chosen by 59 percent of practices. (p. 85)
So some PFACs will have more than two patients, some won’t. Some will “focus” on “communication,” whatever that means, and others will “focus” on something else. (Incidentally, do two-patient advisory committees reveal “strong conceptual thinking?”)
The CPC Initiative, like all tests of the “medical home,” attempts to assess the impact of too many vaguely defined variables at once. It is time to terminate experiments testing the fuzzy “home model” and shift the funds to experiments that test more plausible and more testable hypotheses. If the goal of the PCMH movement is simply to strengthen primary care, then let’s funnel more resources into primary care. If the goal is to take better care of chronically ill patients, then let’s conduct research on specific services for specific types of patients and, for those services that are shown to work, let’s invent a billing code for them and pay for them.
Kip Sullivan, J.D., is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.
CMS pitches 1.1% boost to Medicare Advantage payments
By Bob Herman
Modern Healthcare, February 20, 2015
The CMS has proposed increasing health insurers’ Medicare Advantage payment rates by 1.05% for 2016, a move that kicks off a 45-day dogfight in Washington before the rates are cemented.
The base rate was an 0.95% average decrease, but “when combined with expected growth in plan risk scores due to coding,” Advantage plans will actually receive the 1.05% hike in revenue next year, according to a release from the CMS posted late Friday afternoon. Risk scores relate to how Medicare pays for the health status of beneficiaries. CMS pays more for patients who have more health conditions and less for those who are healthier.
Like last year, Advantage plans that earn at least four stars out of five will receive a 5% bonus payment in 2016, the CMS said. Any plans with 3.5 stars or fewer will continue to get no additional payments.
Breaking from proposals in the previous two years, the CMS said it will not propose any adjustments to the use of home visits for patient risk assessments. Many Advantage plans diagnose the severity of patients’ illnesses at home instead of in a physician’s office. But this has raised concerns that many plans are falsely inflating the diagnoses in a bid to warrant higher payments for sicker members, a process called upcoding.
Medicare Advantage’s risk-assessment process has been under fire from policymakers and consumer advocates who argue private insurers are purposefully bilking money from the program, which covers 17.3 million people as of this month. The Medicare Payment Advisory Commission has said the risk scores of Advantage patients have grown more rapidly than those of regular fee-for-service beneficiaries, and the current risk-score payment reductions mandated by the Affordable Care Act may not be enough.
Humana, one of the largest Advantage insurers in the country, disclosed this week that it is facing increased scrutiny from the U.S. Justice Department for its risk-adjustment practices.
Health insurers have already begun their Medicare Advantage lobbying campaign in the hope of extracting higher rates come April. The Coalition for Medicare Choices, part of America’s Health Insurance Plans, has aired several ads featuring seniors advocating for the private plans.
Many members of Congress have also weighed in on the process. A bipartisan group of 53 senators, led by Chuck Schumer (D-N.Y.) and Mike Crapo (R-Idaho), sent their own letter to Tavenner this week urging the agency to “minimize disruptions for beneficiaries enrolled in the MA program by maintaining payment levels and providing a stable policy environment for 2016.”
The health insurance industry also happens to be one of the top financial backers of Schumer and Crapo. Since 2009, health insurers have given more than $493,000 to Schumer’s campaigns and more than $234,000 to Crapo’s, according to OpenSecrets.org.
CMS proposes 2016 payment and policy updates for Medicare Health and Drug Plans
CMS Press Release, February 20, 2015
The Centers for Medicare and Medicaid Services (CMS) today released proposed changes for the coming year for the Medicare Advantage (MA) and Part D Prescription Drug Programs that will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.
The proposed changes reflect the commitment to a Medicare program that delivers better care, spends health care dollars more wisely and results in healthier people.
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter
CMS, February 20, 2015
Section H. Medicare Advantage Coding Pattern Adjustment
Below we offer three analyses that strongly suggest that the health status of MA enrollees is no worse, and more likely is better, than the health status of FFS beneficiaries of similar age, gender, Medicaid, and institutional status. These include analyses of self-reported health status and mortality rates, as well as Part D drug information.
Self-Reported Health Status. Analysis of self-reported data on health status and on whether the respondent has ever been diagnosed with one of a variety of conditions from the 2006-2011 Medicare Current Beneficiary Survey (MCBS) suggests that the average risk for MA enrollees is approximately 96% of the average risk for FFS beneficiaries.
Mortality Rates. Mortality rates for MA beneficiaries are significantly lower than mortality rates for FFS enrollees. For example, in 2012, the mortality rate in MA was 81% of the mortality rate in FFS. (It is possible that lower mortality rates result from better quality of care in MA, but it seems more likely, given the size of the difference, that this reflects, at least in part, relative health status.)
Part D Drug Information. MA enrollees are significantly less likely than FFS beneficiaries to be prescribed drugs that are predictive of high expenditures. HHS has used information from Part D data to construct risk scores for MA and FFS enrollees, and has found that MA enrollees are at significantly lower risk than demographically similar FFS beneficiaries.
Of the three sources of information that are independent of the diagnoses reported by MA plans, each suggests that MA enrollees are at similar or lower risk than demographically similar FFS beneficiaries.
CMS Advance Notice (172 pages): http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Down…
Letter from U.S. Senate members to Marilyn Tavenner, CMS Administrator:http://www.usatoday.com/story/news/nation/2015/02/20/medicare-advantage-…
The 2016 base rate for private Medicare Advantage (MA) plan payments was to have decreased by 0.95%, phasing in a correction of the overpayments that have been made to the MA plans. Instead, CMS will increase the payment rates by 1.05%, a full 2.0% increase over the projected base rate. This is the fourth year in a row that CMS has violated the intent of ACA and other legislation to bring MA rates down to the equivalent of payments made in the traditional fee-for-service Medicare program.
CMS’s Advance Notice provides three sources of evidence demonstrating that the MA patients are a healthier subset of patients than those in the traditional Medicare program. Since this results in adverse selection in the traditional Medicare program, the rates paid to MA plans should be even lower than payments made in the traditional program, not higher.
The record is now clear that the MA plans have been using various methods of upcoding the severity of illness of their customers (known to us as patients) thus qualifying for higher risk adjustment payments. One of the latest schemes is to make home visits, not to provide more care but merely to try to find more diagnoses to be used in inflating risk adjustments – diagnoses that do not appear in the billing documents from physicians and hospitals! Although this abuse is widely recognized, CMS said “it will not propose any adjustments to the use of home visits for patient risk assessments.” This is at a time that the Justice Department has increased its scrutiny of these likely criminal acts.
As if we didn’t have enough reason to be disgusted with our government, over 50 Senators have sent a letter to CMS Administrator Marilyn Tavenner requesting preservation of the overpayments made to the MA plans. The rhetoric of the letter is clearly that of America’s Health Insurance Plans (AHIP) – the lobby organization for the health insurance industry. To no surprise the lead signers of the letter, Senators Mike Crapo and Charles Schumer, between them have received from the insurance industry close to three-quarters of a million dollars.
The Coalition for Medicare Choices has already begun its intense campaign to drum up public support for MA overpayments, of course disguised as protecting Medicare. It surely surprises no one that this organization is headquartered not only in the same building as AHIP, but it even shares the same suite.
Perhaps even more ominous is the statement in the CMS press release that states that the proposed changes “will advance Health and Human Services Secretary Sylvia M. Burwell’s vision of building a better, smarter health care system and moving the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.” And the the Senators’ letter that states, “At the time of broad agreement on the need to shift U.S. health care to focus on care coordination, quality, and value-based payments, it would be counterproductive to jeopardize a program that is already driven by and aligned toward those goals.” This political support of MA plans clearly advances the agenda of privatizing Medicare – only one step away from converting to a defined contribution premium support (voucher) program – the dream of the private insurance industry.
So who is paying the higher costs of these private MA plans? We, the taxpayers, and the beneficiaries in the traditional Medicare program who are paying higher Part B premiums to help fund this gift to the private insurers.
If there were even a thread of moral fiber left in D.C., instead of shamelessly supporting overpayments to the private insurance industry, our representatives would be advocating for using those funds to improve benefits for all Medicare beneficiaries. Under that scenario, the private insurers who are keeping three-fourths of the overpayments, would be dismissed. But then Crapo and Schumer would likely decide that three-quarters of a million dollars is too dear of a price to pay for a strand of moral fiber.
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