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.
CMS Issues Proposed Rule to Increase Patients’ Health Insurance Choices for 2018
Centers for Medicare & Medicaid Services (CMS), Press release, February 15, 2017
The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule for 2018, which proposes new reforms that are critical to stabilizing the individual and small group health insurance markets to help protect patients. This proposed rule would make changes to special enrollment periods, the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements; and announces upcoming changes to the qualified health plan certification timeline.
“Americans participating in the individual health insurance markets deserve as many health insurance options as possible,” said Dr. Patrick Conway, Acting Administrator of the Centers for Medicare & Medicaid Services. “This proposal will take steps to stabilize the Marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options. They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”
The rule proposes a variety of policy and operational changes to stabilize the Marketplace, including:
Special Enrollment Period Pre-Enrollment Verification: The rule proposes to expand pre-enrollment verification of eligibility to individuals who newly enroll through special enrollment periods in Marketplaces using the HealthCare.gov platform. This proposed change would help make sure that special enrollment periods are available to all who are eligible for them, but will require individuals to submit supporting documentation, a common practice in the employer health insurance market. This will help place downward pressure on premiums, curb abuses, and encourage year-round enrollment.
Guaranteed Availability: The rule proposes to address potential abuses by allowing an issuer to collect premiums for prior unpaid coverage, before enrolling a patient in the next year’s plan with the same issuer. This will incentivize patients to avoid coverage lapses.
Determining the Level of Coverage: The rule proposes to make adjustments to the de minimis range used for determining the level of coverage by providing greater flexibility to issuers to provide patients with more coverage options.
Network Adequacy: The proposed rule takes an important step in reaffirming the traditional role of states to serve their populations. In the review of qualified health plans, CMS proposes to defer to the states’ reviews in states with the authority and means to assess issuer network adequacy. States are best positioned to ensure their residents have access to high quality care networks. Also plans will now be required to include only one0fifth of essential community providers (ECPs) within their networks, removing from the patient the option of receiving care from the other four-fifths of ECPs.
Qualified Health Plan (QHP) Certification Calendar: In the rule, CMS announces its intention to release a revised proposed timeline for the QHP certification and rate review process for plan year 2018. The revised timeline would provide issuers with additional time to implement proposed changes that are finalized prior to the 2018 coverage year. These changes will give issuers flexibility to incorporate benefit changes and maximize the number of coverage options available to patients.
Open Enrollment Period: The rule also proposes to shorten the upcoming annual open enrollment period for the individual market. For the 2018 coverage year, we propose an open enrollment period of November 1, 2017, to December 15, 2017. This proposed change will align the Marketplaces with the Employer-Sponsored Insurance Market and Medicare, and help lower prices for Americans by reducing adverse selection.
CMS Proposed Rule:
CMS today released a new proposed rule allegedly designed to “protect patients” by stabilizing the plans offered in the ACA insurance exchanges. A cursory reading of the press release would tend to confirm this intent, but a careful reading of the release and especially the executive summary of the proposed rule will reveal that the rule is designed to improve the market for the insurers with a detrimental impact on potential enrollees of the insurance plans.
Revising the CMS rhetoric to match more accurately the actual impact on patients:
* Special Enrollment Period Pre-Enrollment Verification: Qualifying categories for special enrollment will be reduced, and documentation requirements increased. This will reduce the number of individuals with greater needs that the insurers would be required to accept outside of open enrollment – reducing adverse selection, but it will prevent many individuals who missed open enrollment because of the administrative burden from becoming insured.
* Guaranteed Availability: Insurers may apply premiums paid as a credit against unpaid premiums for the prior year, and then deny coverage because of non-payment for the current year. This will protect insurers from individuals who have difficulty paying the premiums, but at a cost of leaving individuals uninsured in spite of a good faith effort to pay current premiums.
* Determining the Level of Coverage: The insurers will be allowed greater flexibility in the variation of the actuarial values for the metal tiers. This greater flexibility will likely translate into less generous benefits for the beneficiary.
* Network Adequacy: The responsibility for regulatory oversight of network adequacy would be further shifted to the states. Although that would reduce the regulatory burden for the insurers, it would also threaten the adequacy of provider networks in states that have relaxed standards of how many physicians and hospitals would have to be included in the networks. Patients may find access to be impaired.
* Qualified Health Plan (QHP) Certification Calendar: Insurers would be allowed more time to incorporate benefit changes and maximize the number of coverage options available to patients. Allowing insurers more time to manipulate the benefits would allow them to reduce services more likely needed by the beneficiaries while increasing coverage for those services less likely to be used.
* Open Enrollment Period: The open enrollment period will be terminated six weeks earlier. This will protect insurers from many individuals with greater health care needs who often enroll later in the open period. This reduces adverse selection for the insurers but at a cost of leaving uninsured more individuals who have greater needs.
It is not only CMS that is catering to the insurers. Right now Congressional staff members are negotiating with representatives of the insurance industry to help write the replace and repair provisions promised by the politicians. It appears that the legislative proposals will be designed to protect and enhance the market for insurers, though at a cost of reducing the adequacy of coverage for the patients.
Why are we taking such good care of the insurers? We don’t even need them. We need a program that takes good care of patients – all patients. That would be an improved Medicare that includes everyone.
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.
Moving Forward With Accountable Care Organizations
By Carrie H. Colla, PhD; Elliott S. Fisher, MD, MPH
JAMA Internal Medicine, February 13, 2017
During the past 4 years, we have made great strides in advancing our understanding of the changes that hospitals and physician groups implement in response to changes in payment and how providers perform under alternative payment models. Accountable care organization contracts, one type of alternative payment model, hold groups of health care professionals responsible for the cost and quality of care delivered to patients. Accountable care organization programs attract a diverse array of providers with differing legal and governance structures, varied contracts, and mixed capabilities that span service dimensions. These capabilities may include care management personnel and programs, adoption of advanced analytics (eg, to estimate the risk of hospitalization), or support for shared decision making. On average, ACO patients are spending modestly less on health care services and are associated with improved patient satisfaction and other patient-reported measures, with gains often concentrated in high-need, high-cost populations. Previous exposure to risk-bearing contracts, greater numbers of dually eligible or disabled patients, and higher initial financial benchmarks have been associated with greater savings. At the same time, these results mask variation in performance, with some ACOs saving while others spend over their benchmark following ACO formation. In addition, these modest savings have come at a net cost to the Medicare program (both program costs and shared savings rewards) and, although some quality measures have improved, many have not.
The research presented in this issue of JAMA Internal Medicine provides insights from 3 different ACO payment models: the Medicare Shared Savings Program (MSSP), Colorado’s Accountable Care Collaborative, and Oregon’s Coordinated Care Organizations. All 3 programs show some degree of success, although the results continue to be modest in magnitude.
These findings are relevant to 3 major considerations facing policymakers: (1) concerns about the harms of consolidation, (2) the amount of risk bearing needed to produce changes in behavior, and (3) how to manage potential conflicts between alternative payment models.
Consolidation between clinical providers, such as purchase of physician groups by hospital systems, and striking the proper balance between facilitating clinical integration and limiting market power is a major concern. Many believe that continued survival of independent practices is critical, yet economic incentives favor consolidation due to higher reimbursement for the same service in a hospital-based office compared with a physician office. Hospital-physician group consolidation can also raise prices in less-competitive commercial markets through increased bargaining power vis-à-vis insurers.
Accountable care organizations are defined by their accountability for the cost and quality of care, but the degree of accountability for spending varies dramatically across contracts. The amount of financial risk bearing necessary to achieve behavior change is an important area of inquiry, in part because so little is known. The incentives in most existing alternative payment models, including ACOs, are commonly considered insufficient to result in behavior change.
A third issue concerns potential conflicts between Medicare alternative payment models and the poorly understood interplay of incentives across these reforms. Currently, hospitals retain savings within inpatient-initiated bundles for patients attributed to an MSSP ACO. Although incentivizing value within a bundle, bundled payment models do not eliminate the incentive to provide more bundles. As the Centers for Medicare & Medicaid Services expands alternative payment models, it is possible that bundled payment programs will undermine overall savings.
In summary, we still have much to learn. Accountable care organizations have been established across diverse market settings, using a multitude of organizational structures and approaches to governance and operations, and this heterogeneity is reflected in the heterogeneity of their performance. The 2 articles published in this issue add to a growing body of evidence on overall performance, several dimensions of quality, and spending. Nevertheless, we know little about the effects of ACOs on patients’ health and quality of life. Perhaps most important for ACO leaders and the long-term success of these programs, we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts. Although the Centers for Medicare & Medicaid Services has conducted rigorous evaluations of the Pioneer program, generalizable findings tailored to organizational contexts are few. A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform.
This lesson on accountable care, from the Dartmouth Institute, shows us that we still have much to learn. The respected authors state that a long-term commitment to alternative payment model evaluation is necessary. In the meantime, “we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts.”
We actually do have quite a bit of information, and it is unimpressive. What we cannot do is to allow a protracted course of many years or decades of studying accountable care to distract us from the urgent need to make changes that will ensure that everyone has affordable access to health care while dramatically reducing the profound administrative waste in our system.
The Affordable Care Act made some improvements, but not nearly enough as witnessed by the tens of millions uninsured and underinsured, by the failure to make health care affordable for too many of us, and by the perpetuation of the costly administrative excesses.
The next phase of reform being undertaken by our current Congress seems to be pending enactment of policies that would make markets work better for insurers but at a cost of leaving patients exposed to excessive out-of-pocket spending. They do not seem to be even pretending that accountability in shifting from volume to value is anything more than rhetoric (and the studies to date suggest this is true).
First things first. Let’s do what really works – enact a single payer national health program, an improved Medicare for all. It is a far better infrastructure to tease out data that might be used to actually improve quality while containing costs. But let’s not stall any longer on enacting the fundamental reform that we really need to make health care affordable for all of us.
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.
Republicans, Aiming to Kill Health Law, Also Work to Shore It Up
By Robert Pear
The New York Times, February 12, 2017
After denouncing the Affordable Care Act as an abomination for seven years, Republicans in Congress, working with the Trump administration, are urgently seeking ways to shore up health insurance marketplaces created by the law.
While President Trump said as a candidate that “Obamacare is certain to collapse of its own weight,” Republicans fear such an outcome because, now that the fate of the health law is in their hands, they could be blamed by consumers and Democrats.
The administration is poised to issue a proposed regulation to try to stabilize insurance markets, and House Republicans are drafting legislation with a similar purpose. The regulation and the bills are intended to hold down insurance premiums and to lure insurers back into the public marketplaces from which they have withdrawn in the past couple of years.
There could not be better evidence that the Republicans never did have an effective plan to replace the Affordable Care Act than the fact that they are now advancing legislation to protect the private insurers in the ACA exchanges – reinforcing them rather than shutting them down.
So their strategy has changed from repeal and replace, and then to repeal and repair, and now simply to repair – repair that will protect the private insurers.
Many of the legislators are facing angry citizens at their town hall meetings who do not want to lose the health care benefits that they may have gained through ACA. That partially explains why they failed to deliver on their promise to “repeal Obamacare on day one.”
Many voters were supportive of repeal and replace, but the politicians and the voters had different objectives. The Republican politicians wanted to repeal the expansions of ACA and thereby reduce government spending on health care. Voters wanted changes (replacement) that would ensure that they could always receive health care that was affordable.
Considering this, it is understandable why the Republicans have not moved immediately forward with their replacement proposals. Reducing Medicaid funding through block grants would cause millions to lose their coverage. Switching Medicare to a voucher program would create greater financial burdens for Medicare beneficiaries. Changing market rules to promote bare-bones private plans is the Republican version of providing “access,” but that would make actual health care truly unaffordable for a majority of Americans with significant medical needs because the very high out-of-pocket expenses would be beyond the capabilities of most American family budgets.
The simmering anger is because ACA was inadequate for too many Americans, and it appears that the Republican “replace” proposals will leave millions worse off. The “replace” that people want is affordable health care, but not merely a continuation of the inadequate policies of the Affordable Care Act. What they really want, though some do not realize it, is an equitably funded, universal health insurance program – an improved Medicare for all. That would give all of us affordable access to health care, and not just access to nearly worthless private health plans.
How the GOP wants to fix health care
By Rep. Tom Price (Confirmed as HHS Secretary at 2:00 a.m. today)
Politico, July 30, 2009
I can attest that nothing has had a greater negative effect on the delivery of health care than the federal government’s intrusion into medicine through Medicare.
Man your stations.
3-in-10 struggling to maintain current financial situation
Monmouth University Polling Institute, February 7, 2017
Paying for health care has emerged as the top concern of American families, according to the latest national Monmouth University Poll. Two years ago this concern was clustered with job security and other household bills as causing the most anxiety for American households.
Currently, 1-in-4 Americans (25%) report that the cost of health care is the biggest concern facing their family right now. Two years ago, 15% reported this as their family’s primary concern. Anxiety about meeting health care costs now outpaces job and unemployment worries (14%) as well as concerns about paying everyday household bills (12%). Health care is the top concern of American families regardless of income level or partisan identity. A variety of other concerns register in the single digits, such as school costs (4%) and taxes (4%).
“The top three concerns were clustered together just two years ago. Now, health care has jumped to the top of the list as Americans grapple with balancing their household budgets,” said Patrick Murray, director of the independent Monmouth University Polling Institute in West Long Branch, New Jersey. “It’s also worth noting that issues that have been dominating the news, such as immigration and national security, rank very low on the list of items that keep Americans up at night.”
19. Turning to issues closer to home, what is the biggest concern facing your family right now? [LIST WAS NOT READ]
25% – Health care costs
14% – Job security, unemployment
12% – Everyday bills, groceries, etc.
4% – College tuition, school costs
4% – Taxes
3% – Housing, mortgage, rent
3% – Social Security, seniors
3% – Family illness, health
3% – The economy
3% – Safety, crime
3% – Immigration
3% – Civil rights
2% – Retirement saving
2% – Terrorism, national security
1% – Quality of government
1% – Education policy
1% – Trump as president
1% – Climate change, environment
2% – Other
10% – Don’t know/No answer
Without being given a list of choices, when asked “what is the biggest concern facing your family right now,” the most common response was “health care costs” (25%). That places this concern well in front of job security (14%) and household bills (12%) with which it was tied two years ago. Although the improvement in the economy has reduced other concerns, health care has become the top concern of American families.
Although the Affordable Care Act did bring improvements, concerns have not been allayed. As the Republicans fumble around with their rhetoric of “replace,” “repair,” and “access,” it becomes ever more clear that they do not have a program that will reduce the health cost burden on most American families. In fact, many of the policies they support will increase the financial burden on individuals and families.
House Speaker Paul Ryan says that they will have a proposal in place by the end of next month. We know that the policies under consideration will not provide individuals with relief from the high costs of health care.
Since health costs are the number one concern of Americans, it is imperative that we intensify our message that the current financing system, even with the Republican tweaks, will leave the public vulnerable to high health care costs. But we have an answer! A well designed single payer national health program – an improved Medicare for all – will ensure that everyone has access to all essential health care services without being burdened by unaffordable premiums or out-of-pocket costs.
For those who would benefit from an elevator speech: We can pay for it by reducing the profound administrative waste of our fragmented, multi-payer system (the waste of private insurers and the burden they place on the system); we can each afford it by funding the system through equitable tax policies (contributing based on ability to pay), and we can eliminate the perversities of high deductibles and narrow provider networks, eliminating surprise bills while giving us free choices of our health care professionals and hospitals.
Let’s get the word out ASAP. Congress is getting ready to move!
I’ve put my family on a health insurance experiment. It’s been a challenge
By Ashish Jha
STAT, February 6, 2017
Enrollment in high-deductible health insurance plans has exploded over the past five years. I’m learning the hard way how these plans do — and do not — work.
About one-third of American workers covered by health insurance are now in high-deductible health plans, in which the policy holder pays a substantial portion of the cost of health care services out of pocket before insurance coverage kicks in. Many economists and health policy experts believe that these plans are a promising way to reduce health care spending.
So when a high-deductible plan became available through my employer, Harvard University, a couple years ago, I decided to enroll my family in it. If this is going to be a big national experiment, I thought that I, as a physician and a health policy scholar, ought to know what it’s like to live with this kind of health insurance. Debra, my wife, was not convinced.
My family is now in its second year under a high-deductible plan. That means we are responsible for paying the first $6,000 of our health expenses for the year, for everything from a doctor visit for a flu shot to surgery.
It has been an educational enterprise.
Our experiment is showing me again and again that it’s extremely hard to be a health care consumer in Massachusetts — just as I’m sure it is in other states. Want to know how much a particular type of health care costs, like a visit to a specialist or getting a minor surgery? Good luck figuring it out. My insurance company’s online tool was hard to use and, even as a physician, I could almost never guess what sets of services a visit to the doctor might generate.
The second lesson was that being a health care consumer is stressful, at least the way the system is currently set up. Here’s an example. Our son had surgery last year. We got a call saying it was time for his one-year follow-up. Deb stressed for nearly two months over whether or not to make the appointment. Of course she wants our son to get the care he needs, but did he truly need this follow-up? That’s both the promise and the peril of high-deductible plans — they are supposed to make you think twice about consuming health care.
She eventually went with our son for his one-year follow-up — they spent two minutes with the surgeon — and paid $465 for the visit. I’m not sure my son, or my spouse, felt any better afterward. There were many examples like this sprinkled throughout the year, but the most profound one was the one I experienced for myself.
I have supraventricular tachycardia, a common heart rhythm problem. When it hits, my heart races at about 180 beats per minute. It comes on a couple of times a year, lasts a few minutes, and usually isn’t a big deal. But one morning I woke up with my heart racing. After 30 minutes, I wondered if I should go to the emergency department, knowing that I’d probably get stuck with a multi-thousand-dollar bill. So I kept waiting. After an hour, during which my heart kept beating furiously, my chest started to hurt. I knew what that meant — I was at risk of having a heart attack.
Deb asked me what I would tell a patient in this situation. That was easy: I’d tell him or her to call 911. But I kept waiting. Finally, about 15 minutes later, the abnormal rhythm finally broke and I felt my heart calm down. I was lucky — I had rolled the dice and things had worked out.
If we continue with high-deductible health plans the way they exist today, more and more people will experience what my family did — the stress of having to make medical decisions with little information and few choices. At best, we’ll have a health care system that might save a little money — but at the risk of harming the health of our citizens.
Ashish Jha, MD, is an internist at the VA Boston Healthcare System, and a professor of health policy at the Harvard T.H. Chan School of Public Health.
There are two potential adverse consequences of requiring high deductibles in health insurance plans. Developing a serious medical problem can expose the individual to financial hardship. Even more serious is that the potential for financial exposure can cause an individual to make a terribly consequential decision in electing to forgo medical care because of the deductible.
Some say that we merely need to provide the patients with adequate information and then patients can make their own informed decisions. That is a fundamental principle in consumer-driven health care. But the rhetoric does not match the real world.
In this instance, a noted physician and professor of health policy, Ashish Jha, made a decision to protect his personal finances even though that decision could have cost him his life! As an optimally informed patient-consumer, he made the wrong decision, even though fortunately he escaped the worst consequences.
Several other nations that cover everyone at a cost much lower than ours are able to provide care with first dollar coverage – no need to use high deductibles in a misguided effort to contain spending. Surely the United States could do the same.
Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years
By Richard Kronick
Health Affairs, February 2017
Over the past decade, the average risk score for Medicare Advantage (MA) enrollees has risen steadily relative to that for fee-for-service Medicare beneficiaries, by approximately 1.5 percent per year. The Centers for Medicare and Medicaid Services (CMS) uses patient demographic and diagnostic information to calculate a risk score for each beneficiary, and these risk scores are used to determine payment to MA plans. The increase in relative MA risk scores is largely the result of successful efforts by MA plans to identify additional diagnoses, also known as coding intensity, and not of changes in enrollees’ true health. In this article I estimate the effects of coding intensity on Medicare spending over the next decade. Under the moderately conservative assumption that coding intensity will decelerate, Medicare expenditures are expected to increase by approximately $200 billion. CMS has implemented a variety of strategies since 2010 that lessened the impact of coding intensity on Medicare spending; it has a variety of policy responses at its disposal to mitigate the impact going forward. The problem could be largely solved if CMS adjusted for coding intensity using the principle that MA beneficiaries are no healthier and no sicker than demographically similar fee-for-service Medicare beneficiaries, returning to the budget-neutrality approach that was introduced in 2004 and later abandoned.
From the Introduction
In the three decades that Medicare has been contracting with health maintenance organizations and other health plans, figuring out how to pay the plans accurately and fairly has posed a persistent challenge. Rapid growth in enrollment in Medicare Advantage (MA) plans has raised the stakes involved in getting the answer right: Over 30 percent of Medicare beneficiaries are enrolled in Medicare Advantage and account for an estimated $200 billion in Medicare payments in 2017, or approximately 1 percent of the gross domestic product.
House Speaker Paul Ryan’s proposal to convert Medicare into a premium support system raises the stakes even further. In such a system, beneficiaries might be required to pay a larger premium for traditional Medicare than for Medicare Advantage. It is critically important that any premium differential between traditional Medicare and Medicare Advantage under premium support reflect differences in efficiency, quality, and covered benefits, and not differences in risk selection or coding practices.
The inclusion of diagnoses in the payment system creates strong incentives for MA plans to report as many diagnoses as they can legitimately support—incentives that are not present in traditional Medicare. As a result, the average risk score for MA enrollees has increased by approximately 1.5 percent per year more than the average risk score of fee-for-service (FFS) Medicare beneficiaries over the past decade, with little indication that the relative morbidity of MA enrollees has actually increased. If this remarkably consistent rate of increase in relative Medicare Advantage risk continues over the next decade, Medicare payment will increase dramatically.
Despite the attention given to coding intensity by CMS and Congress over the past decade, unless there is a further policy response, Medicare will substantially overpay MA plans over the coming decade—likely to the tune of hundreds of billions of dollars.
From the Discussion
Political And Technical Obstacles
The political obstacles to a robust solution are formidable. Aggressive action to mitigate the effects of coding intensity would raise the ire of the Medicare Advantage industry and might well engender a lobbying effort involving the spectacle of buses circling the Capitol, with multitudes of MA enrollees imploring members of Congress to protect their benefits. The Medicare Advantage industry and enrollees would be angered by the prospect that aggressive response to coding intensity would increase premiums or reduce supplemental benefits enabled by the rebates that plans receive for bidding below their benchmarks.
In addition, aggressive action to mitigate the effects of coding intensity might raise concern among some policy makers about the stability and growth of the Medicare Advantage program.
The technical obstacle is determining how to accurately measure coding intensity. As discussed more fully in the Appendix, various reasonable approaches exist to measure the effects of coding intensity.
As originally conceived, the budget-neutrality adjustment was not designed as an adjustment for coding intensity, but it could serve that purpose well moving forward. It rests on a simple principle: namely, that MA enrollees are no healthier and no sicker than demographically similar FFS Medicare beneficiaries. If one accepts that principle, then it follows that aggregate payments to MA plans should be equal to the amount that would have been paid using demographic risk adjustment. As shown in this article, if CMS were to calculate the coding intensity adjustment using this principle, payments to MA plans would be approximately $200 billion less over the next decade than if the coding intensity adjustment remained at the statutory minimum of 5.91 percent.
Although there is evidence that the introduction of diagnostic risk adjustment using diagnoses from ambulatory care encounters in 2004 reduced favorable selection into MA plans, analyses by Joseph Newhouse and colleagues show that favorable risk selection into Medicare Advantage likely remains to some degree. More recent evidence provided by Pete Welch and me, and extended in Exhibit A-2 of the Appendix to this article, also suggests that MA enrollees are no sicker, and may well be healthier, than demographically similar FFS Medicare beneficiaries. Thus, the budget-neutrality method of calculating the coding intensity adjustment will result in payments to Medicare Advantage that are at least fair, if perhaps still slightly too generous.
The analysis presented in this article cannot solve the political problem of creating support for a robust response to the problems created by differential coding in Medicare Advantage. I hope, however, that this work will create the foundation for a solution to the technical problem by fostering a discussion of how best to measure and adjust for differential coding between Medicare Advantage and fee-for-service Medicare. Solving this problem is an important prerequisite to the establishment of a stable and equitable future for the current Medicare Advantage program, and even more important if Congress were to convert Medicare into a premium support system.
Some long-time readers of these messages may be bored by yet another article confirming that the private Medicare Advantage plans have been successful in being paid significantly more than we are spending for comparable patients in the traditional fee-for-service Medicare program, but it is crucial to understand that this is a major part of the strategy to privatize the Medicare program, and we taxpayers are being cheated as they pull off their scheme.
This year we will see intensified efforts to convert to a premium support program (vouchers) which will enrich private insurers as costs are transferred onto the backs of Medicare beneficiaries, with the goal of privatizing the entire Medicare program. Insurers win, patients lose, and the libertarian ideologues snicker in the background.
There are two methods by which the private insurers are overpaid. They engage in favorable selection – using devious methods to enroll healthier patients – thus spending less than they would if their enrollees were of average health. They also have gamed risk adjustment – qualifying for extra payments by submitting claims indicating that their enrollees are sicker than they actually are.
About one-third of these extra payments are used to enhance benefits, thus enticing seniors to enroll in their plans instead of the traditional Medicare program. You can imagine how attractive lower deductibles could be to individuals who just turned 65 and are used to dealing with private plans. By marketing heavily to them they further improve their favorable selection since those just 65 years old are the healthiest and least expensive members of the Medicare population.
And that other two-thirds of the extra payments? They keep that to help pay for their high administrative costs that characterize the unique waste in the U.S. health care financing system.
But why should Medicare Advantage patients receive more benefits than those remaining in the traditional program? If the same extra payments were used to reduce deductibles and coinsurance in the traditional program then there would be no reason to select the private plans, especially since there are no network restrictions such as those instituted by the private plans. More choice, at no extra cost.
You say you don’t want to increase taxes to pay for better benefits in the traditional Medicare program? Then, for the sake of fairness, at least decrease the overpayments to the private Medicare Advantage plans to the same level that we are paying for the traditional program. Of course, because of their administrative excesses, they could never compete, and they would just go away (just as they were doing under the Medicare + Choice program that was discontinued when the insurers proved that it was impossible for them to provide higher quality at a lower cost).
The study author, Richard Kronick, suggests that we switch to a budget neutrality method of correcting the overpayments. That might reduce the problem of differential coding for risk adjustment, but we could still face the deceptive, opaque methods the insurers use to gain favorable selection.
Regular readers know what the solution is. Throw out the private insurers, improve the traditional Medicare program, and then use it to cover everyone – greater value while ensuring health care access for all.
How Would Republican Plans for Medicaid Block Grants Actually Work?
By Aaron E. Carroll
The New York Times, February 6, 2017
There are only so many ways to cut Medicaid spending.
You can reduce the number of people covered. You can reduce the benefit coverage. You can also pay less for those benefits and get doctors and hospitals to accept less in reimbursement. Or you can ask beneficiaries to pay more.
None of those are attractive options, which is why Medicaid reform is so hard. Medicaid already reimburses providers at lower rates than other insurance programs. How do you reduce the number of beneficiaries when the vast majority of people covered are poor children, poor pregnant women, the disabled, and poor older people? Which of those would you cut?
Reducing benefit coverage has always been difficult because most of the spending has been on the disabled and poor older people, who need a lot of care. Beneficiaries don’t have much disposable income, so asking them to pick up more of the bill is almost impossible.
That doesn’t mean that states haven’t tried. As I’ve discussed in past columns, a number are attempting to increase cost sharing. But this isn’t really a solution because it doesn’t change overall spending much at all.
The fiscal magic behind a block-grants approach is that the federal government can then set how quickly the amount they’re responsible for will increase over time, regardless of how quickly medical spending grows. If a gap develops between how much a state needs to spend, and how much the block grant provides, it’s up to the state to make up the difference.
A recent New England Journal of Medicine article provides some perspective on how this might work by looking at what happened before Medicaid was created in 1965. Care for the poor in the 1950s was done through direct reimbursements to providers. It was calculated on a per-capita basis — the average cash and medical needs of those the programs covered. Those amounts were capped, based on age and demographics. This is quite similar to how many Republican proposals might function.
When these capped amounts weren’t enough to pay for the programs, states had to make cuts. They began to restrict who would be covered, what would be covered and how much care beneficiaries could use. Some states refused to cover children at all. Others didn’t cover doctors’ visits or drugs.
There’s no magic in how Congress reduces spending under a block grant mechanism. It just says it will do so, and leaves the hard decisions to others.
Why should Medicaid be a separate program for low-income individuals? Or Medicare for the elderly and those with long-term disabilities? Or a multitude of private plans based merely on employment status? Or, as the Affordable Care Act attempted to address, having to turn to the highly dysfunctional individual insurance market by default?
The most popular of these alternatives is Medicare. Why don’t we simply improve Medicare and then provide it for everyone? As a welfare program representing individuals with a weak political voice, Medicaid is vulnerable to budget hawks. If we had one program representing all of us, politicians would be motivated to protect the program rather than hacking it with a blunt cleaver.
Hospital Payer and Racial/Ethnic Mix at Private Academic Medical Centers in Boston and New York City
By Roosa Sofia Tikkanen, Steffie Woolhandler, David U. Himmelstein, Nancy R. Kressin, Amresh Hanchate, Meng-Yun Lin, Danny McCormick, Karen E. Lasser
International Journal of Health Services, February 2, 2017
Academic medical centers (AMCs) are widely perceived as providing the highest-quality medical care. To investigate disparities in access to such care, we studied the racial/ethnic and payer mixes at private AMCs of New York City (NYC) and Boston, two cities where these prestigious institutions play a dominant role in the health care system. We used individual-level inpatient discharge data for acute care hospitals to examine the degree of hospital racial/ethnic and insurance segregation in both cities using the Index of Dissimilarity, together with recent changes in patterns of care in NYC. In multivariable logistic regression analyses, black patients in NYC were two to three times less likely than whites, and uninsured patients approximately five times less likely than privately insured patients, to be discharged from AMCs. In Boston, minorities were overrepresented at AMCs relative to other hospitals. NYC hospitals were more segregated overall according to race/ethnicity and insurance than Boston hospitals, and insurance segregation became more pronounced in NYC after the Affordable Care Act. Although health reform improved access to insurance, access to AMCs remains limited for disadvantaged populations, which may undermine the quality of care available to these groups.
From the Introduction
Academic medical centers (AMCs) play a unique role in the U.S. health care system. These institutions, which typically comprise a medical school and a closely affiliated teaching hospital, train health professionals, conduct research, and provide patient care. AMCs are often among the largest hospitals in their service areas: despite representing only 5% of the nation’s hospitals, combined, they account for one-fifth of the total hospital volume in the United States. AMCs typically serve a medically complex patient population and provide specialized expertise across a range of clinical areas. Many AMCs are ranked among the top hospitals in the country, and patients treated at AMCs are more likely than other patients to receive treatments using the latest technologies and care adhering to current clinical guidelines.
For these reasons, AMCs are often recognizable brands and attract referrals from nearby counties, states, and, increasingly, from other countries as well. At the same time, many AMCs are key safety-net providers in their communities and have historically provided approximately one-third of all charity care and one-quarter of all Medicaid hospitalizations. Yet, recent reports raise concern that uninsured and Medicaid patients face barriers to obtaining care at AMCs.
Racial and ethnic minorities, who are more frequently uninsured or covered by Medicaid than other Americans, often encounter access barriers. Unequal access to high-quality health facilities, including AMCs, is recognized as a contributor to racial and ethnic health disparities.
From the Discussion
Our analyses of adult hospital discharges indicate that minority, uninsured, and Medicaid patients are strikingly underrepresented at NYC’s private AMCs. This pattern has not improved and – regarding insurance status — became even more pronounced after the passage of the ACA. In contrast, care was less segregated according to both race/ethnicity and insurance in Boston. Indeed, minorities were slightly overrepresented, although Medicaid and uninsured patients were underrepresented, at Boston’s AMCs.
What explains the greater racial/ethnic and payer segregation in NYC’s AMCs relatives to Boston’s? First, the extensive network of public hospitals in NYC relieves pressure on that city’s private AMCs to care for disadvantaged patients, allowing AMCs there to focus on serving as referral centers for privately insured patients living in predominantly white, suburban communities. In contrast, only one relatively small public hospital remains in the Boston area. Second, AMCs in Boston may be less resistant to integrating the comparatively small number of minority and uninsured patients in that city. Finally, Boston Medical Center, a private AMC that incorporates a previously public hospital, continues to serve many poor and black patients.
The case for desegregation is morally and medically compelling. Disparities in access to high-performing health facilities contribute to racial/ethnic disparities in both quality of care and health outcomes. Ensuring equal access to health facilities is a stated policy priority of both federal and NYC authorities.
Academic medical centers (AMCs), with their great resources and advanced technologies, are ideal to provide specialized care for certain patients with complex medical needs. A high performance health care system should provide equitable access for those who would most benefit from the services offered by AMCs. This study indicates that race and insurance status may contribute to inequities and disparities in access to these facilities.
There are many contributing factors, some of which are discussed in the article. It is clear that one significant factor is the fragmentation in the financing of health care – both in funding of the health care delivery infrastructure and in the various forms of public and private insurance coverage or lack thereof.
Patients are treated differently based on whether they are uninsured, or if they are on Medicaid with its low reimbursement rates, or on the basis of the richness or sparseness of the benefits offered by their private plans, or on the makeup of the provider networks established by their insurers.
A single payer national health program, including separate allocation of resources for health care delivery infrastructure, would dramatically reduce the role of financing factors that result in these inequities.
Once we have an equitable financing system, other racial factors must still be addressed. As study co-author David Himmelstein states, “Stark racial segregation persists to this day in New York’s hospitals. Our most prestigious institutions find ways to avoid Black and poor patients. And they maintain separate and unequal clinic systems. Privately insured patients get business-class care; those with Medicaid are mostly treated by interns and residents in rundown facilities and face long waits for appointments; while the uninsured are usually turned away from the elite hospitals’ clinics altogether.”
Clearly, once we have an improved Medicare for all in place, our work is not done.
New Health Insurance Survey: Post-ACA, Market Works Better For Consumers Buying Plans On Their Own; Fewer People Postponing Care and Medications Because of Cost
The Commonwealth Fund, February 1, 2017
The health insurance market has been working better for consumers buying coverage on their own, especially those with health problems, since the Affordable Care Act (ACA) took effect. According to a new Commonwealth Fund report, the percentage of people who shopped for insurance on their own who could not find an affordable plan dropped from 60 percent in 2010 to 34 percent in 2016.
“Before the Affordable Care Act, it was often extremely hard for people not covered through an employer to buy coverage,” said Sara Collins, vice president for Health Care Coverage and Access at the Commonwealth Fund and the report’s lead author. “Many were routinely turned down, told a preexisting condition would not be covered, or charged higher rates because of an illness. This survey finds that since the law was passed the individual market has changed dramatically. Now, millions of people are finding and buying affordable plans that provide coverage meeting their needs.”
The survey finds that since the ACA’s passage in 2010, people are more likely to say they can get the health insurance and care they need:
* In 2012, 80 million adults said they went without health care or medication they needed because of the cost, compared to 63 million in 2016.
* In 2010, more than two of five (43%) adults buying plans on their own said they found it difficult or impossible to find a plan that fit their needs, compared to one-quarter (25%) in 2016.
* In 2010, more than half (53%) of adults with health problems said it was difficult or impossible to find a plan that fit their needs; this fell to one-third (31%) in 2016. For people with low incomes, the share reporting such difficulty fell by about half, from 49 percent in 2010 to 26 percent in 2016.
* In 2012, 29 percent said they did not go to a doctor when they were sick because of the cost, compared to 20 percent in 2016. In 2012 over one-quarter of adults (27%) said they did not fill a prescription because of the cost, compared to one-fifth (19%) in 2016.
* In 2016, the share of adults reporting they had skipped a recommended test, treatment, or follow-up visit because of the cost fell to 18 percent, from 27 percent in 2012. And in 2016, 13 percent said they had not gotten needed care from a specialist because of the cost, down from 20 percent in 2012.
* Medical bills remain a challenge. The number of adults saying they had problems paying medical bills in the past 12 months or were paying off medical bills over time declined modestly, from 75 million is 2012 to 70 million in 2016. There are still a substantial number of people paying off medical debt over time; nearly 46 million adults reporting doing so in 2016—unchanged from 2012.
It is really wonderful to see the progress that we have made with the Affordable Care Act in ensuring affordable health care for all. To understand better how far we have come, let’s select from this report the findings of where we stand today:
* Only 63 million adults say they went without health care or medication they needed because of the cost
* Only 25 percent of adults buying plans on their own say they found it difficult or impossible to find a plan that fit their needs
* Only 31 percent of adults with health problems say it was difficult or impossible to find a plan that fits their needs
* Only 26 percent of adults with low incomes and health problems say it was difficult or impossible to find a plan that fits their needs
* Only 20 percent of adults say they did not go to a doctor when they were sick because of the cost
* Only 19 percent of adults say they did not fill a prescription because of the cost
* Only 18 percent of adults reported they had skipped a recommended test, treatment, or follow-up visit because of the cost
* Only 70 million adults said they had problems paying medical bills in the past 12 months or were paying off medical bills over time
* Only 46 million adults are currently paying off medical debt over time (unchanged from 2012)
Is this really good enough? Should we vigorously defend the status quo supported by the Democrats? Or should we support Republican policies that would replace the Affordable Care Act – policies that would shift more costs to patients, inevitably increasing the exposure of adults to these difficulties they now face? These are the options currently under debate in Congress.
There is another option. We can reduce all of those numbers to ZERO simply by enacting and implementing a well designed single payer national health program – an improved Medicare for all. And it wouldn’t cost the nation any more than we are already spending. Congress and the President need to hear from us.
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