Boehner: H.R. 2 begins the process of entitlement reform

Posted by on Thursday, Mar 26, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Debate on H.R. 2, “Medicare Access and CHIP Reauthorization Act of 2015”

United States House of Representatives
C-SPAN, March 26, 2015

Speaker of the House John Boehner:

We expect to end the so-called doc fix once and for all. Many of you know we’ve patched this problem seventeen times over the last eleven years, and I decided about a year ago that I had had enough of it. In its place we’ll deliver for the American people the first real entitlement reform…

Today it’s about a problem much bigger than any doc fix or any deadline. It’s about beginning the process of solving our spending problem, and it’s about strengthening and saving Medicare which is at the heart of that problem. Normally we’d be here to admit that we’re just going to kick the can down the road one more time. But today, because of what we’re doing here, we’re going to save money 20, 30, 40 years down the road. …

We can’t become complacent. We’ve got more serious entitlement reform that’s needed. It shouldn’t take another two decades to do it, and frankly I don’t think we’ve got that much time. But I’m here today to urge all of our members to begin that process, and the process begins by voting yes on H.R. 2 today.

H.R. 2 passed in the House today by a vote of 392 to 37. It goes to the Senate where it will be voted on tomorrow. But is this really about the “doc fix” – eliminating SGR? Speaker of the House John Boehner clarifies that for us. It’s about entitlement reform and H.R. 2 begins that process.

Entitlement reform…

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H.R. 2 has replaced H.R. 1470

Posted by on Wednesday, Mar 25, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

H.R. 2, “Medicare Access and CHIP Reauthorization Act of 2015” replaces H.R. 1470, “SGR Repeal and Medicare Provider Payment Modernization Act of 2015”

By Don McCanne, M.D.

Yesterday, March 24, H.R. 2 was introduced in the House of Representatives. H.R. 1470, the subject of recent Quote of the Day messages, has been included in H.R. 2 as Title I. H.R. 2 is the legislation that the House will pass tomorrow.

The bill is now 263 pages long. It contains the following Titles:

SGR repeal and replacement with MIPS and APMs

Twenty-one Medicare and other health extenders, including extension of funding for community health centers and the National Health Service Corps

Two year extension of CHIP

Means-tested Medicare premiums and elimination of deductible coverage in Medigap plans

Twenty-five miscellaneous provisions






In addition, beneficial measures added to H.R. 2 should be enacted, but they need to be sorted out from inappropriate or deleterious policies that have been added to this act.

At this time Congress should simply repeal SGR, fund CHIP, fund community health centers and the National Health Service Corps, and refer all other provisions for further study by the appropriate committees.

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Repeal SGR, but don’t privatize Medicare

Posted by on Wednesday, Mar 25, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Repeal SGR, but don’t privatize Medicare

March 25, 2015

By Don McCanne

In the fervor to finally rid us of the flawed SGR model of setting Medicare payment rates, Congress is about to pass legislation (H.R. 1470) that includes ill-advised, misguided and detrimental policies that could cause irreparable harm to our traditional Medicare program. Instead, Congress should revise the current legislation to comply with the following recommendations.


1. Repeal SGR

2. Extend the funding of CHIP for four years

3. Extend funding for community health centers

4. Reject unproven or detrimental policies

a. Reject the Merit-based Incentive Payment System (MIPS) which threatens the traditional Medicare program by creating an administratively burdensome but unproven method of replacing volume with value

b. Reject the Alternative Payment Models (APMs) as the only options for escaping MIPS since APMs also remain unproven methods of replacing volume with value

c. Reject the threat to quality care that can result from burnout of health care professionals overburdened with the administrative excesses of MIPS and APMs

d. Reject the false argument that SGR – a policy that has not been implemented for many years – must somehow be paid for by other reductions in public spending

e. Reject the political chicanery of introducing unrelated issues into the legislation such as policy positions on pregnancy termination

f. Reject the expansion of means-tested premiums in Medicare which would threaten solidarity in support of our Medicare program

g. Reject imposing deductibles under Medigap plans which would cause too many patients to delay or forgo beneficial health care services

h. Reject these unproven or detrimental policies that would reduce support of our traditional Medicare program, opening the door for those who would privatize Medicare through premium-support (voucher) proposals.

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Having assessed in the last three posts the impacts of the Affordable Care Act (ACA) over the last five years,  we have seen that the ACA will not bring universal access, contain health care costs for patients and tax payers, or improve the quality of care.

These are some of the main lessons we have already learned from the ACA’s initial five years.

1. Health care “reform” through the ACA was framed and hijacked by corporate stakeholders, themselves in large part responsible for our system problems of health care.

Although deregulated markets in our medical-industrial complex were largely responsible for problems of access, costs and quality of health care for many years, policy makers and framers were unwilling to confront corporate stakeholders of the existing system where the business “ethic” prevails. Thus the interests of insurers, the drug and medical device industries, hospitals and organized medicine took precedence over the needs of patients throughout the political process. By the time the ACA was enacted, some 1,750 organizations and businesses had hired about 4,525 lobbyists, eight for every member of Congress, at a cost of $1.2 billion, to get the kind of legislation they wanted. (1) Drafters of the ACA often had conflicts of interest; Elizabeth Fowler, for example, as the lead author of the Senate Finance Committee’s bill, had served as vice president for public policy for Wellpoint, the country’s second largest insurer. (2)

2. We can’t contain health care costs by letting for-profit health care industries pursue their business “ethic” in a deregulated marketplace.

All of the corporate stakeholders in health care have seen a bonanza of profits through new subsidized markets with no significant price controls. Health insurer stocks have soared, as illustrated by UnitedHealth Group, the nation’s largest insurer, which saw its share price rise from $30.40 in March 2010, to $113.85 this month, a 375 percent increase. The other five of the six top insurers more than doubled or tripled their stock value. (3) The ACA has rewarded hospitals with several million more paying customers through the individual mandate and Medicaid expansion as they merge and consolidate with larger market shares. All this has led to higher prices. As one example, charges for medical procedures rose four times faster than the rate of inflation in 2012. (4)

3. We can’t reform the delivery system without reforming the financing system.

Drafters of the ACA never questioned the multi-payer financing system which is a big part of our problems. Ignoring the experience of most other advanced countries, they kept not-for-profit, single-payer public financing off the table. Private insurers have successfully avoided costlier, sicker patients for many years. While the ACA sets some limits on this behavior, the industry has found new ways to continue to game the new system for their business interests, as we shall see in our next post. Today, the “partnership” is still close between government and the private insurance industry. They both need each other—the Obama administration, which counts on private insurers to participate in expanding their markets, and insurers, who welcome nearly $2 trillion in subsidies expected over the next ten years. (5)

4. It is futile to embark on unproven and untested incremental tweaks to our present system while ignoring health policy and experience around the world.

As we have seen in recent posts, the ACA embarked on various new initiatives that were either untested or had failed in earlier years, including increased cost-sharing with patients, changes in payment policies, accountable care organizations, and further privatization. All of those initiatives ignored the role of the deregulated marketplace in perpetuating our access, cost and quality system problems.

5. In order to have the most efficient insurance coverage, we need the largest possible risk pool to spread the risk and avoid adverse selection.

It is well known that the larger and more diverse the risk pool is, the more efficient and affordable insurance can be. About 20 percent of the population accounts for 80 percent of all health care spending. But the ACA has opted to leave some 1,300 private insurers in place, with continued increased fragmentation of risk pools. Risk pools under the ACA are made smaller by many young people not signing up through the exchanges, one-third of middle-aged men opting to stay uninsured (6), and many exemptions to the individual mandate given by the Department of Health and Human Services (HHS).

6. The ACA has been much more disruptive to our system than a simplified single payer alternative would have been.

The key question that was never asked or answered by the framers and promoters of the ACA was who is the system for— corporate interests or patients? Instead of minimizing disruption by corporate stakeholders, the ACA brings us increased disruption for patients: a more confusing and unstable system, more discontinuity of insurance coverage, disruption of many doctor-patient relationships, less choice of hospitals and physicians through narrowed (and changing) networks, and more uncertainty. As one example of how ineffective accountable care organizations (ACOs)  have been, a recent study found that two-thirds of office visits to specialists were provided outside of assigned ACOs, especially for higher-cost patients with more office visits and chronic conditions. (7)

7. We can’t trust many states to assure an adequate safety net for the uninsured and underinsured.

Red states and those that have opted out of Medicaid expansion give us no confidence that they will assure that the uninsured and underinsured will receive sufficient essential health care. Many states are cutting already low Medicaid reimbursement, with the result that more physicians will not accept new Medicaid patients. (8) The ACA gives states wide latitude to determine what “adequate access to covered services” is. Churning in coverage will continue—a 2014 study found that 40 percent of adults likely to enroll in Medicaid or subsidized marketplace coverage will have a change of eligibility within 12 months. (9) And at the national level, the GOP is targeting big cuts in Medicaid and food stamps. (10)

Can this trajectory be changed going forward? Based on the lessons above, the answer has to be “No,” though many supporters are not yet prepared to acknowledge this. It is unfortunate that we will have to see ongoing profiteering and administrative waste at patients’ and taxpayers’ expense before we can get health care right in this country. Our next blog will address one of the main culprits perpetuating our dysfunctional health care system—the private insurance industry itself.

1. Center for Public Integrity, as cited by Moyers, B, Winship, M. The unbearable lightness of reform. Truthout, March 27, 2010.
2. Connor, K. Chief health aide to Baucus is former Wellpoint executive. Eyes on the Ties blog, September 1, 2009.
3. Potter, W. Health insurers’ stock soars as they dump small business customers. The Progressive Populist, March 1, 2015.
4. O’Leary, W. On the road to corporate health care. The Progressive Populist, March 1, 2015.
5. Pear, R. Health law turns Obama and insurers into Allies. New York Times, November 17, 2014.
6. Flavelle, C. Obamacare’s dropouts are middle-age men. Bloomberg News, March 17, 2014.
7. McWilliams, JM, Chernew, ME, Dalton, JB et al. Outpatient care patterns and organizational accountability in Medicare. JAMA Internal Medicine, April 21, 2014.
8. Pear, R. For many new Medicaid enrollees, care is hard to find, report says. New York Times, September 14, 2014.
9. Summers, BD, Graves, JA, Swartz, K et al. Medicaid and marketplace eligibility changes will occur often in all states; policy options can ease impact. Health Affairs 33 (4): 700-707, April 2014.
10. Peterson, K. GOP targets Medicaid, food stamps. Wall Street Journal, March 13, 2015: A 5.

Adapted in part from my new book, How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans.

SGR Fix: APMs threaten physician burnout (RAND)

Posted by on Tuesday, Mar 24, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Effects of Health Care Payment Models on Physician Practice in the United States

By Mark W. Friedberg, Peggy G. Chen, Chapin White, Olivia Jung, Laura Raaen, Samuel Hirshman, Emily Hoch, Clare Stevens, Paul B. Ginsburg, Lawrence P. Casalino, Michael Tutty, Carol Vargo, Lisa Lipinski

RAND Corporation, March 19, 2015

The project reported here, sponsored by the American Medical Association (AMA), aimed to describe the effects that alternative health care payment models (i.e., models other than fee-for-service payment) have on physicians and physician practices in the United States. These payment models included capitation, episode-based and bundled payment, shared savings, pay for performance, and retainer-based practice. Accountable care organizations and medical homes, which are two recently expanding practice and organization models that feature combinations of these alternative payment models, were also included. Project findings are intended to help guide efforts by the AMA and other stakeholders to make improvements to current and future alternative payment programs and help physician practices succeed in these new payment models.

Physician Incentives and Compensation

Practice leaders described transforming certain practice-level financial incentives (especially those concerning cost containment) into internal nonfinancial incentives for individual physicians, choosing instead to appeal to physicians’ sense of professionalism, competitiveness, and desire to improve patient care. Common nonfinancial incentives included performance feedback and selectively retaining or terminating their physicians based on quality or efficiency performance.

Generally speaking, alternative payment models had negligible effects on the aggregate income of individual physicians within our sample.

Physician Work and Professional Satisfaction

Within our sample, alternative payment models had not substantially changed how physicians delivered face-to-face patient care. However, the overall quantity and intensity of physician work had increased because of growing patient volume expectations and ongoing pressure for physicians to practice at the “top of license” (e.g., by delegating less intense patient encounters to allied health professionals), which was described as a potential contributor to burnout because lower-intensity patients could be an important source of respite for busy physicians.

Additional nonclinical work, particularly documentation requirements, created significant discontent. Physicians recognized the value of documentation tasks that were directly related to improvements in patient care, such as identifying patients with diabetes to facilitate better management of all patients with this condition, but they disliked the extra burden generated when documentation requirements were perceived as irrelevant to patient care.

Most physicians in practice leadership positions were optimistic and enthusiastic about alternative payment models, while most physicians not in leadership roles expressed at least some level of apprehension, particularly with regard to the documentation requirements of new payment models. Overall, even these physicians seemed to believe that major changes in payment methods would continue and acknowledged that some changes were useful. Nevertheless, their attitude was frequently one of resignation, rather than enthusiasm, because their day-to-day work life was more difficult and included burdens they did not believe would improve patient care.

Factors Limiting the Effectiveness of New Payment Models as Implemented

Physicians and practice leaders described encountering three general types of operational problems in new payment programs that limited their effectiveness and sapped physicians’ enthusiasm for them.

First, physicians and practice leaders participating in a variety of alternative payment models described encountering errors in data integrity and timeliness, performance measure specification, and patient attribution (the process by which patients are assigned to a specific physician or practice). These payment models shared characteristics that might have made errors more likely: They were administratively more complex than FFS payment; some required payers to develop new measurement systems; and some were deployed for the first time quite quickly, without a “dress rehearsal” in which errors could be corrected before payments were on the line.

Second, physicians had a variety of concerns about the implementation of performance and risk-adjustment measures underlying PFP, shared savings, and capitation programs. Broadly speaking, these concerns stemmed from a sense that the multiplicity of measures within and across programs could distract physician practices from making the changes to patient care that were actually the ultimate goal of many payment programs.

Third, the influence of uncontrollable, game-changing events in shared savings and capitation programs (e.g., the introduction of very high-cost specialty drugs) sapped physician practices’ enthusiasm for these payment models. Finally, some physicians reported that they could not understand exactly what behaviors were being encouraged or discouraged by certain performance-based payment programs—even after seeking clarification from payers.

Increased Stress and Time Pressure

New nonclinical work for physicians was almost universally disliked, especially when there was no clear link to better patient care. For example, frustration was common when physicians believed they were being asked to spend more time on documentation solely to get credit for care they had provided already. Overall, increased stress on physicians might directly harm the quality of patient care and might also serve as a marker that physicians are concerned about the quality of care they are able to provide.

Full report (142 pages):

HR 1470, which Congress is scheduled to approve in only two days (March 26), would replace the flawed Sustainable Growth Rate (SGR) method of determining Medicare payments with a new Merit-based Incentive Payment System (MIPS). MIPS introduces considerable administrative complexity which would be a great burden to physicians, but the legislation allows physicians to opt out of MIPS by joining Alternative Payment Models (APMs) such as Accountable Care Organizations (ACOs) or Patient Centered Medical Homes (PCMHs). This RAND study of APMs reveals that physician members of APMs are at very high risk of BURNOUT.

Some believe that the onerous structure of MIPS was designed specifically to drive physicians into APMs, especially ACOs. But is moving from burnout to burnout really progress?

From the report: “(physicians’) day-to-day work life was more difficult and included burdens they did not believe would improve patient care.” Further: “Overall, increased stress on physicians might directly harm the quality of patient care and might also serve as a marker that physicians are concerned about the quality of care they are able to provide.”

This legislation will require physicians to submit to MIPS requirements or join an APM, in either case incurring a high risk of burnout. But health care should really be about the patient. Well, this does affect patients, but in a bad way. Stressed-out physicians unintentionally provide lower quality care. This is the exact opposite of the intent of this legislation, assuming that higher value is intended to represent higher quality.

Supporters say that getting rid of SGR is not only worth the legislative compromise, but that the new MIPS provides the additional benefit of improving quality, not to mention some CHIP funding being thrown in as well. As we have seen, quality will likely be worse instead because of the inevitable burnout. But now the supporters are responding with the usual: “perfect being the enemy of the good,” “art of legislative compromise,” “bipartisan support,” “making sausage,” and “must move on to other priorities.”

It’s tempting to tell them what to do with their sausage, but, above all, we should speak out loudly on behalf of our patients. This legislation will make health care worse. With only two days left and the steamroller in full momentum, can we do anything to prevent this injustice about to be inflicted on patients and their health care professionals?

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Public Meeting of the Medicare Payment Advisory Commission (MedPAC)

January 15, 2015
From the transcript

[COMMISSION CHAIR GLENN] HACKBARTH: [W]e’re now finished with our work for the March report and moving on to work for June, and first up is a continuation of past discussions we’ve had on creating a level playing field or synchronizing payment across traditional Medicare, Medicare Advantage, and ACOs. Jeff.

DR. [JEFF] STENSLAND [STAFF]: Good afternoon….So let’s begin with a review of last year’s discussion. Under the current Medicare program, there are three payment models: traditional fee-for-service, Medicare Advantage, and ACOs. [pp. 110-111]

DR. NERENZ: If we could go to Slide 5, middle column [which purports to show ACO costs], please. Back in October and November when we had the focused ACO discussion, I asked a question about the infrastructure operating costs. You’ve got contracting, you’ve got IT infrastructure, you’ve got care coordinators. And the issue was that those are not reimbursed by CMS, so those are not included in this column, right, because they’re not program costs?

DR. STENSLAND: They are not directly included in that column, but what is in that column is the shared savings that the program pays to them. … So it’s not directly there, but it might be indirectly there through the shared savings.

DR. NERENZ: Okay. Well, my question was: Is it directly there? And it’s not. [pp. 135-136]

This excerpt from the transcript of MedPAC’s January 2015 meeting indicates MedPAC continues to guess that ACO overhead is in the range of 1 to 2 percent of expenditures and that MedPAC continues to ignore those costs in calculating total spending on ACOs participating in Medicare’s ACO programs. Later portions of the transcript indicate ACOs are saving so little money, and are therefore getting such small “shared savings” payments back from Medicare, that ACOs are losing money. But MedPAC continues to ignore that fact as well.

Since MedPAC endorsed “accountable care organizations” at its November 2006 meeting, it has never expressed any interest in comprehending what it costs to start and run an ACO. MedPAC didn’t receive even a guesstimate of ACO overhead until its November 2013 meeting. At that meeting the commission began discussing the “synchronization” of payment to Medicare’s three programs: the traditional fee-for-service (FFS) program, the Medicare Advantage (MA) program, and Medicare’s ACO programs – the Pioneer ACO program and the Medicare Shared Savings Program (MSSP). At that meeting, one of its staff, Katelyn Smalley, told the commission Pioneer ACOs were saving Medicare half a percent but their overhead was “about 1 to 2 percent” (see p. 164). Neither Smalley nor anyone else pointed out the obvious: If ACOs incur overhead costs of 1 to 2 percent, but they’re only saving Medicare half a percent, they’re losing money and, depending on how they make up the losses, they are raising costs for the entire health care system.

Nearly a year passed before one of the commission’s 17 members asked the obvious question: Aren’t ACOs going to die off, or raise system-wide costs, if their overhead is higher than the money they are saving Medicare? The commissioner, David Nerenz, raised the issue at MedPAC’s September 11, 2014, meeting after MedPAC staffer Jeffrey Stensland asserted that ACOs have “low overhead.” Nerenz questioned Stensland on that claim. “Do we know anything about that?” he asked.

The answer Nerenz got from Stensland indicated MedPAC was still guessing ACO overhead was 1 to 2 percent. “[P]eople we talk to and the data we have seen, it looks like maybe 1 to 2 percent of your spend, that that’s what they’re spending on their ACO to operate it,” said Stensland. (p. 133).

A few minutes later Nerenz asked Stensland if he knew whether any ACOs had “made money net of overhead costs?” (p. 144). Stensland replied the average ACO is losing money. This was obviously correct. If ACOs are cutting Medicare costs by only a half-percent and are receiving back from Medicare only a portion of that half-percent (a quarter-percent is a good guess), and if ACOs have overhead equaling 1 to 2 percent of their expenditures, then ACOs are losing money.

At that September 2014 meeting, only one other commissioner, Mary Naylor, supported Dr. Nerenz’s position on ACO administrative data.

It should be no surprise, then, that when the commission resumed its discussion about leveling the playing field among Medicare’s FFS, ACO and MA programs at its January 2015 meeting, ACO overhead was not on the agenda. It would have been ignored again if Nerenz hadn’t raised the issue once more. As was the case in September 2014, only one other commissioner backed Nerenz up.

Nerenz raised the overhead issue after Stensland presented a table purporting to show that ACO costs are equal to FFS costs measured in terms of claims paid out by CMS. According to Stensland’s table, ACO costs are exactly equal to – 100 percent of – those of the FFS program. Nerenz asked Stensland whether he included ACO overhead costs in his calculations. Stensland should have said no. Instead he offered this non sequitur: He said he included the “shared savings” payments that a minority of ACOs are getting from CMS, ergo, overhead “might be indirectly” in his ACO-cost total. Stensland’s cryptic reply forced Nerenz to clarify: Stensland had not included ACO overhead costs in his estimate of ACO spending, period.

In the ensuing dialog with Nerenz, Stensland repeated his estimate that ACO overhead is in the range of 1 to 2 percent. (He said it was 1.5 percent, which was apparently splitting the difference between the estimate of “1 to 2 percent of spend” that he offered at the September 2014 meeting and that Katelyn Smalley had offered at the November 2013 meeting.) In other words, MedPAC knew no more about ACO overhead in January 2015 than it knew in November 2013.

Commissioner Scott Armstrong, the CEO of Group Health Cooperative, was the only other commissioner to express support for Nerenz’s effort to induce his fellow commissioners to instruct MedPAC staff to stop ignoring ACO overhead. But even Armstrong could not bring himself to make that demand explicitly. What he said was, “I think we need to be responsible for the total cost question.” (p. 178)

Later in the discussion at the same January 2015 meeting, Stensland was asked if he had any information on whether ACOs were saving Medicare money. Stensland replied:

I don’t remember the MSSP numbers off the top of my head. For the Pioneer it was something like 1.7 percent lower, or something, in aggregate the first year. You know, you’re kind of in that 1 percent range in terms of the aggregate. [pp. 181-182]

Note that 1 percent or 1.7 percent, whichever it was Stensland intended, is much higher than the 0.5 percent figure reported to the commission at its November 2013 meeting. (At the September 2014 meeting, a MedPAC staff member reported that Pioneer ACOs are cutting Medicare costs by 0.5 percent while MSSP ACOs are saving 0.3 percent (pp. 121-122)). But even if Pioneer ACOs are cutting Medicare costs by 1.7 percent, they are still losing money and the system as a whole is just breaking even (assuming the cost to CMS of running the ACO programs is trivial).

I commend MedPAC for insisting that payments to ACOs and MA reflect their true efficiency. But MedPAC will never know the true efficiency of ACOs if they persist in ignoring ACO overhead costs.

Kip Sullivan, J.D., is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.

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MIPS – Learn to live with it

Posted by on Monday, Mar 23, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Working Framework of SGR Package

House Committees on Energy & Commerce and Ways & Means, March 20, 2015

Repeal and Replace Medicare Physician Payment System. The legislation repeals the flawed SGR formula and replaces it with HR 1470, SGR Repeal and Medicare Provider Payment Modernization Act (replaces SGR with MIPS, the Merit-based Incentive Payment System)

Children’s Health Insurance Program (CHIP). This provision preserves and extends CHIP, fully funding the program through September 30, 2017.

Medicare, Medicaid, and Other Health Extenders. The legislation extends all of the extenders included in the Protecting Access to Medicare Act of 2014 (PAMA, the most recent SGR patch) in addition to funding for Community Health Centers through 2017.

Other Medicare Reforms.1) Medicare DMEPOS Competitive Bidding Improvement Act (HR 284). (2) The Protecting Integrity in Medicare Act (HR 1021).


(1) Income-related Premium Adjustment. Starting in 2018, this policy would increase the percentage that beneficiaries pay toward their Part B and D premiums in two income brackets (roughly 2 percent of beneficiaries): for individuals with income between $133.5-160K ($267-$320K for a couple), the percent of premium paid increases from 50 percent to 65 percent. For those with income between $160-214K ($320- $428K for a couple), the percent increases from 65 percent to 75 percent.

(2) Medigap Reform. The proposal limits first dollar coverage on certain Medigap plans by prohibiting plans from covering the Part B deductible. Change applies only for future retirees starting in 2020.

(3) Increase Levy Authority on Payments to Medicare Providers with Delinquent Tax Debt.

(4) Hospital Update. Under current law, hospitals will receive a 3.2 percentage point adjustment in addition to their base payment rate in FY18. This policy would phase-in this update incrementally.

(5) Additional Medicaid DSH Savings.

(6) 1 Percent Market Basket Update for Post-Acute Providers…


What Measures Should Be Used to Evaluate Health Care?

By Melinda Beck

The Wall Street Journal, March 22, 2015

There’s little agreement among patients, providers and insurers…


Primum Non Nocere: Congress’s Inadequate Medicare Physician Payment Fix

By Jeff Goldsmith

Health Affairs Blog, January 24, 2014

With this legislation, Congress is preparing yet again to enshrine in statute another payment strategy that is both unproven and highly controversial.

The proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place. The cure is actually worse, and potentially more expensive, than the disease we have now.

If we’re not sure new advanced payment schemes actually work, if we haven’t actually gotten them right, then we have no business compelling or incenting 680 thousand practicing physicians to use them. We’re not going to get clinical practice where we want it to go with an elaborate, individualized operant conditioning schedule with four domains and sixty eight “core measures”, and billions more spent on the IT systems and clerical support to document them. We need to reward teamwork, not box-checking.

It isn’t just physicians that should be guided by Hippocrates’ maxim, “First Do No Harm,” but our policymakers as well.…

We’re there. The SGR extension expires March 31, and Congress is leaving for a two week recess this Friday, March 27. Not only is there strong bipartisan Congressional support for HR 1470, the SGR repeal and replacement act, but there is also overwhelming support from the AMA and other physician societies and from other influential interest groups such as Families USA. The bill will pass this week.

The last two Quote of the Day messages have discussed some serious defects in this legislation, especially the problems with the Merit-based Incentive Payment System (MIPS). But that part of the bill is a given. What is new today is the one page summary of the intended amendments that will be added before enactment of the bill (see “Working Framework of SGR Package,” above).

Two items in these proposed amendments are of particular concern: 1) Means-testing of Medicare Part B and Part D premiums, and 2) Prohibiting Medigap plans from covering the Part D deductible.

Under means-tested premiums, higher-income individuals will be required to pay larger premiums, undermining the support of this influential group for the traditional Medicare program. Since they will be paying higher premiums, many likely would prefer to select their own coverage from a market of private Medicare plans – a goal of those supporting privatization of Medicare through the premium-support model of reform. Thus this provision would be a significant incremental step towards privatization.

Prohibiting Medigap plans from covering Medicare Part B deductibles expands the implementation of consumer-directed approaches to financing health care. It advances the conservative agenda of requiring more personal responsibility on the part of patients, often expressed by the repulsive “skin in the game” rhetoric. Much has been written about the potential adverse consequences of deductibles, but the more ominous portent of this measure is that it establishes the principle that all health care must conform with the consumer-directed model. As we have seen, the use of ever higher deductibles is rapidly expanding in employer-sponsored plans, and this opens the door for the same rapid increase in cost sharing to occur with Medicare.

But back to the basic bill – using the MIPS to replace the SGR. In the last two Quote of the Day messages it was pointed out what an administrative nightmare MIPS would bring us. What should be particularly alarming is that these new required administrative procedures have not been shown to either significantly decrease the volume of medical services, or improve quality – supposedly the two goals of payment reform.

As Jeff Goldsmith states about last year’s version of the same policies, “The proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place. The cure is actually worse, and potentially more expensive, than the disease we have now.”

Tune in to C-Span this week for the latest chapter in their epic fiction series: Democracy in America.

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URGENT: Explaining MIPS; Action required

Posted by on Saturday, Mar 21, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Summary of “SGR Repeal and Medicare Provider Payment Modernization Act”

House Committees on Energy & Commerce and Ways & Means, March 19, 2015

Yesterday’s Quote of the Day:…

Yesterday’s Quote of the Day message sounded the alarm on legislation that would replace the flawed Sustainable Growth Rate formula (SGR) for updating Medicare payments with a new Merit-based Incentive Payment System (MIPS) – legislation with strong bipartisan support that will be taken up in Congress this week and is expected to pass.

Yesterday I sent out a link to the actual legislation (minus crucial amendments, likely detrimental, that have not yet been advanced). Since few have the time to plow through the legislative language and make sense of it, I am now providing a link to the eight page summary (above).

Why this concern?

The SGR formula is considered to be flawed primarily because economic factors considered in the formula would result in inappropriate payment reductions in many of the yearly adjustments. Thus there is consensus that the formula should be repealed. However, it did provide an administratively simple process for trying to keep Medicare rates from increasing well beyond the growth in the economy. That is, there was no administrative burden placed on the providers; they merely had to accept adjustments in their payments.

The concern is over its replacement: MIPS. On reading the summary of the “SGR Repeal and Medicare Provider Payment Modernization Act,” you will see that MIPS places a tremendous administrative burden on health care professionals in a health care system that is already overwhelmingly overburdened with administrative excesses. The only way to escape this additional burden is to participate in Alternative Payment Models (APMs) which, in themselves, create further significant administrative burdens (ACOs, PCMHs, etc.). MIPS is an administrative nightmare.

Some might consider the administrative excesses of MIPS to be worth it if it were to result in fair adjustments to Medicare payment rates. But you need to read the “MIPS Payment Adjustment” section of the summary.

Under the MIPS payment system, eligible professionals with higher scores will receive positive payment adjustments (and may be eligible for an additional incentive payment). We have observed repeatedly how such systems are gamed in order to receive these extra payments. The problem is that those who do not game the system, and especially those with practice situations and patient populations that make it very difficult to score higher points, will almost automatically receive performance scores below the threshold since their performances will be compared with the gamers. This will result in negative payment adjustments – reducing payments by up to nine percent. If you think SGR is unfair, MIPS robs from these hard-working professionals who are just trying to make the system work for their patients, and gives the spoils to those who likely have consultants to show them how to game the system. (Consultants? See Sec. 6 that authorizes “qualified entities” to suck more money out of our health care system by selling analyses and claims data to assist providers in their quality improvement activities., i.e., professional gamesters.)

This is serious. And it is being steamrolled through Congress right now! I consider myself an information resource, but I am not an organizer. Those who care about the future of Medicare and who do have organizational skills must immediately inform themselves on what is happening here. Then act. You cannot wait to watch the Congressional vote tally on C-Span, perhaps as early as this week. By then it will be a done deal.

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EMERGENCY! The MIPS stake is plunging into the heart of traditional Medicare

Posted by on Friday, Mar 20, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

H.R. 1470: “SGR Repeal and Medicare Provider Payment Modernization Act of 2015”

114th Congress


To amend title XVIII of the Social Security Act to repeal the Medicare sustainable growth rate and improve Medicare payments for physicians and other professionals, and for other purposes.

TABLE OF CONTENTS.—The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Repealing the sustainable growth rate (SGR) and improving Medicare payment for physicians’ services.

Sec. 3. Priorities and funding for measure development.

Sec. 4. Encouraging care management for individuals with chronic care needs.

Sec. 5. Empowering beneficiary choices through continued access to information on physicians’ services.

Sec. 6. Expanding availability of Medicare data.

Sec. 7. Reducing administrative burden and other provisions.


(1) IN GENERAL.—Section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended by adding at the end the following new subsection:



“(A) IN GENERAL.—Subject to the succeeding provisions of this subsection, the Secretary shall establish an eligible professional Merit-based Incentive Payment System (in this subsection referred to as the ‘MIPS’) under which the Secretary shall—

“(i) develop a methodology for assessing the total performance of each MIPS eligible professional according to performance standards under paragraph (3) for a performance period (as established under paragraph (4)) for a year;

“(ii) using such methodology, provide for a composite performance score in accordance with paragraph (5) for each such professional for each performance period; and

“(iii) use such composite performance score of the MIPS eligible professional for a performance period for a year to determine and apply a MIPS adjustment factor (and, as applicable, an additional MIPS adjustment factor) under paragraph (6) to the professional for the year.


“(A) PERFORMANCE CATEGORIES.—Under the MIPS, the Secretary shall use the following performance categories (each of which is referred to in this subsection as a performance category) in determining the composite performance score under paragraph (5):

“(i) Quality.

“(ii) Resource use.

“(iii) Clinical practice improvement activities.

“(iv) Meaningful use of certified EHR technology

“(B) MEASURES AND ACTIVITIES SPECIFIED FOR EACH CATEGORY.—For purposes of paragraph (3)(A) and subject to subparagraph (C), measures and activities specified for a performance period (as established under paragraph (4)) for a year are as follows:

“(i) QUALITY.—For the performance category described in subparagraph (A)(i), the quality measures included in the final measures list published under subparagraph (D)(i) for such year and the list of quality measures described in subparagraph (D)(vi) used by qualified clinical data registries under subsection (m)(3)(E).

“(ii) RESOURCE USE.—For the performance category described in subparagraph (A)(ii), the measurement of resource use for such period under subsection (p)(3), using the methodology under subsection (r) as appropriate, and, as feasible and applicable, accounting for the cost of drugs under part D.

“(iii) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES.—For the performance category described in subparagraph (A)(iii), clinical practice improvement activities (as defined in subparagraph (C)(v)(III)) under subcategories specified by the Secretary for such period, which shall include at least the following:

“(I) The subcategory of expanded practice access, such as same day appointments for urgent needs and after hours access to clinician advice.

“(II) The subcategory of population management, such as monitoring health conditions of individuals to provide timely health care interventions or participation in a qualified clinical data registry.

“(III) The subcategory of care coordination, such as timely communication of test results, timely exchange of clinical information to patients and other providers, and use of remote monitoring or telehealth.

“(IV) The subcategory of beneficiary engagement, such as the establishment of care plans for individuals with complex care needs, beneficiary self-management assessment and training, and using shared decision-making mechanisms.

“(V) The subcategory of patient safety and practice assessment, such as through use of clinical or surgical checklists and practice assessments related to maintaining certification.

“(VI) The subcategory of participation in an alternative payment model (as defined in section 1833(z)(3)(C)).

In establishing activities under this clause, the Secretary shall give consideration to the circumstances of small practices (consisting of 15 or fewer professionals) and practices located in rural areas and in health professional shortage areas (as designated under section 332(a)(1)(A) of the Public Health Service Act).

“(iv) MEANINGFUL EHR USE.—For the performance category described in sub-paragraph (A)(iv), the requirements established for such period under subsection (o)(2) for determining whether an eligible professional is a meaningful EHR user.

Sec. 2(e)(6) INTEGRATING MEDICARE ADVANTAGE ALTERNATIVE PAYMENT MODELS.—Not later than July 1, 2016, the Secretary of Health and Human Services shall submit to Congress a study that examines the feasibility of integrating alternative payment models in the Medicare Advantage payment system. The study shall include the feasibility of including a value-based modifier and whether such modifier should be budget neutral.

GPO pdf of H.R. 1470:

It is URGENT that everyone who cares about the future of Medicare understands what is happening here.

H.R. 1470, the “SGR Repeal and Medicare Provider Payment Modernization Act of 2015,” was formally introduced in the House of Representatives only yesterday (3/19/15), with strong bipartisan support. The 158 pages (GPO pdf) introduced so far provide a mechanism for replacing the Medicare Sustainable Growth Rate (SGR) for determining Medicare payments, with a new Merit-based Incentive Payment System (MIPS).

Next week it is anticipated that the House will act on amendments that allegedly will help offset the cost of canceling payment reductions that would have taken place under the SGR system. Today’s message is limited to the new MIPS, but everyone should be alarmed about the amendments that are to be considered next week. Just two of them – greater means testing of Part B premiums, and requiring Medigap enrollees to start paying deductibles – will be very damaging to the egalitarian nature of our Medicare program.

The excerpts from H.R. 1470,  above, reveal how the government intends to fulfill its goal of supposedly converting Medicare from a system that pays based on volume to a system that is based on value. Since the excerpts represent only a small sampling of this bill, it would be wise to download the full bill. You can gain a better understanding of the bill by skimming through the 158 pages, reading only the lines in full capital letters, while reading in full any section that piques your interest. It takes just a few minutes. That’s too much? Remember, this bill is about to become law and we will have to live with it perhaps for decades (the scorned SGR has been with us for 18 years).

One ominous clause in the bill is Sec. 2(e)(6) on page 101 of the GPO version. It calls for a study of “the feasibility of integrating alternative payment models in the Medicare Advantage payment system.” That is code language to clarify that these onerous requirements of MIPS apply only to the traditional Medicare program and not to the private Medicare Advantage plans. Why is that important?

The House budget introduced this week once again calls for the end of the traditional Medicare program and replacing it with a market of private plans. Although this has been a Republican goal, many Democrats now agree to this MIPS legislation that moves in that direction, and it has the strong support of the AMA and other physician organizations. While loudly proclaiming that we finally have a “doc fix” for the SGR, they are moving forward with changes that will lead us much closer to Medicare privatization, using the excuse that compromise is the way the legislative process works.

Physicians will be mortified by the new requirements and administrative burdens of MIPS. They will be looking for a way out. For those not able to retire, there may be a mass exodus of physicians from the traditional Medicare program into the Medicare Advantage plans. Included in H.R. 1460 is even a ruling change that simplifies the requirements for a physician totally opting out of Medicare indefinitely.

This process is being steamrolled. The bill will pass this month, unless Congress is deafened by a roaring protest.

Are you just going to sit there?

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Gov. Brown’s attack on public employee health benefit programs

Posted by on Thursday, Mar 19, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Unions, retirees blast Jerry Brown’s state worker medical plan

By Jon Ortiz
The Sacramento Bee, March 18, 2015

Unions lined up Wednesday to oppose Gov. Jerry Brown’s proposal to offer high-deductible medical coverage to state employees, suggesting it could hurt workers’ health instead of improving it.

“We think that high-deductible plans are a very bad thing,” SEIU Local 1000 President Yvonne Walker said during a Senate subcommittee hearing into Brown’s plan.

Meanwhile, state experts said it’s not clear whether a plan with high-monthly premiums and a tax-advantaged health savings account would save money in the long run. The most comprehensive studies take in only three years, not nearly long enough to establish a reliable trend.

Brown wants to add at least one health plan to the state’s menu that would give subscribers lower monthly premiums and a tax-advantaged health-savings account in exchange for higher co-pays for visits to doctor significantly larger deductibles for treatments, hospitalization and drugs.

High-deductible plans and health-savings accounts have become common in the private sector as a way for employers to shift more health care cost to their employees. This year the state will pay about $3 billion for employee medical benefits.

CalPERS, which is dominated by union members and politicians with labor ties, has stayed away from offering the kind of low-premium high-deductible health plan Brown has proposed, said Ann Boynton, who is responsible for the fund’s health plan contracting.

For reference, she noted that the lowest-premium plan CalPERS offers members now, PERS Select, has just 17,000 subscribers, fewest of any of its preferred-provider organization plans.

Member surveys show those subscribers are the most dissatisfied with their coverage, Boynton said, due to the steep co-pays and how hospitals in the preferred networks price services.…


Retirees Could Lose their ‘Guaranteed’ Health-Care Benefits

By Allison Schrager
Bloomberg Business, March 18, 2015

California’s struggling to pay for health care for retired state employees, with an estimated $72 billion in medical costs coming in the next 30 years. Governor Jerry Brown’s solution: Make workers start contributing money to pay for the health care they’ll need after retiring.

Until recently, the courts had regularly said that health-care benefits must be honored. In January, that changed: The Supreme Court unanimously decided that retiree health benefits are not necessarily guaranteed.

Since 1992, private companies have had to list health-care obligations as a liability on their balance sheets. Being forced to disclose health-care costs led many employers to ditch retiree health care. A Kaiser Foundation report speculates that the remaining plans may soon be eliminated, too.

The Supreme Court’s ruling may finally signal the end of private-sector retirement health benefits. What it means for public-sector retirees is still an open question, although some lawyers say the same ruling will apply. If that’s the case, the consequences may be more far-reaching. Employer health coverage among public-sector retirees is still common. From 2006 to 2010, health plans covered two-thirds of Medicare eligible and three-quarters of early retirees.…

Private employers have taken the initiative in slowing the cost increases in their health benefit programs. They have been reducing or terminating their retiree health plans. They have also greatly expanded the use of high-deductible health plans which shift costs of care to their employees. Public employees have been relatively insulated from these reductions, largely due to more favorable plans negotiated by their unions. California’s Governor Jerry Brown is now attempting address the state’s budget issues by reducing the state’s contribution to these plans.

These were not free benefits that the unions negotiated. They were paid for by forgoing wage increases. To reduce these benefits without compensatory wage increases amounts to significant pay cuts for the government employees. That is not right.

Also, high-deductible health plans clearly reduce access to appropriate health care primarily because health care becomes less affordable when the patient is faced with greater out-of-pocket costs. CalPERS has confirmed what was already well known about the high-deductible plans: subscribers to these plans are the most dissatisfied. Today’s payers, whether the government or the private sector, are taking it out on their employees through these undesirable reductions in benefits that create potential financial hardships for their employees.

It would be far better to remove the employer, public or private, from the role of being keeper of the health benefits, and to restore, in full, the wage and salary increases that have been forgone to pay for these programs.

With a publicly-financed and publicly-administered single payer program – an improved Medicare for all – there would be no need for employer-sponsored plans for either active or retired employees. Also, the public program would be designed for the benefit of patients needing care, rather than being used inappropriately as a tool to balance public or private budgets.

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