This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
The Better Care, Lower Cost Act
Senator Ron Wyden
January 15, 2014
Medicare is not doing enough to take care of chronically ill patients, and the limitations of the fee-for-service system inhibit a needed focus on these patients and their needs. This is critically important because most Medicare enrollees suffer from multiple chronic conditions and account for almost all of its costs.
The Wyden-Isakson-Paulsen-Welch Better Care, Lower Cost Act removes the barriers that prevent Medicare providers from building on existing successful delivery models, and provides a framework for encouraging innovative chronic care delivery across the country. Specifically, the bill:
Provides Critical Support for Providers
To support providers and plans wanting to actively engage and care for this population, this proposal: does not include any form of the attribution rule, encourages specialized team-based care with rewards for improving patient’s outcomes, uses telemedicine and knowledge networks to increase access in rural areas, and includes vital case management services proven to increase medical compliance.
Focuses on the Unique Needs of Medicare Enrollees
To help transition Medicare from a program that simply treats sickness to one that promotes wellness, this proposal identifies the patients most in need and provides them with better care before becoming the most acutely and persistently ill. To improve standards of care for Medicare enrollees, the bill provides for changes to medical school curricula in order to better respond to the evolving needs of the chronically ill.
Ends Geographic Disparities in Integrated Care
This proposal creates incentives for higher quality, lower cost Medicare coverage nationwide that is open to Medicare beneficiaries regardless of income or place of residence. With a “Better Care Plan” (BCP) designation, a state-licensed and certified provider may practice at the top of his/her license, removing barriers to care that currently exist in parts of the country with provider shortages.
Pays for a Medicare Program Taxpayers Want and Beneficiaries Need
In response to the need to move away from fee-for-service, this proposal makes BCP providers and plans fully responsible for the cost, care and outcomes of their enrolled patients, and directs CMS to determine spending based on the experience of similar patients that are not enrolled in a BCP.
Wyden Plan May Be Vision For Future Medicare Reforms
By Mary Agnes Carey
Kaiser Health News, January 21, 2014
Sen. Ron Wyden, the Oregon Democrat widely expected to be the next Senate Finance Committee chairman, last week led a bipartisan group of lawmakers, health care experts and seniors’ advocates backing a plan to better coordinate care given to Medicare beneficiaries.
The proposal is part of the ongoing health policy conversation over shifting Medicare away from paying per service provided to paying for the quality of that care.
Health insurers and providers who want to specialize in chronic care would receive a set amount of money to care for patients and would be responsible for the cost, care and outcomes of their enrolled patients.
It’s unclear what happens next. Elements of the bill may be included in legislation to repeal and replace Medicare’s “sustainable growth rate,” the formula used to pay Medicare physicians. Maybe the legislation will be attached to another bill or pass on its own. Even if it goes nowhere, it may well be the pathway to Congress finding consensus on Medicare changes in the future.
Reader response: Don McCanne
Before you come to any conclusions, read the actual bill. Google “S.1932 – Better Care, Lower Cost Act”
From the Act: “The qualified BCP (Better Care Program) shall be accountable for the quality, cost, and overall care of enrolled BCP eligible individuals and agree to be at financial risk for that enrolled population.”
Much of the rest of the legislation involves efforts to define the nature of the Better Care Program provider teams, the patient populations, their risks, and how to establish capitation rates that will reduce spending while increasing quality. Such efforts would be administratively intensive and not very effective.
Primary care already plays a very important role in providing chronic care. Our efforts would be better directed to reinforcing the primary care infrastructure. Fragmenting Medicare’s risk and shifting it to the providers might be therapeutic for the federal budget, but it places the providers in conflict with their patients over who will come out ahead – the exact opposite of what we want in our health care system.
S.1932, the Better Care, Lower Cost Act, is important since the concept is being considered as an offset to the cancellation of the accrued deficits related to the sustainable growth rate (SGR), which is a flawed formula for adjusting Medicare payments. Congress has given itself a three month window to enact an SGR fix. This is apt to slip through as attention is directed to celebrating SGR relief while ignoring the actual SGR fix.
The bill can be accessed at congress.gov. It is somewhat complex, which is not a surprise since it empirically segregates chronic care patients and then sets up an administratively complex “Medicare Better Care Program” that “promotes accountability and better care management for chronically ill patient populations and coordinates items and services under parts A, B, and D, while encouraging investment in infrastructure and redesigned care processes that result in high quality and efficient service delivery for the most vulnerable and costly populations.”
Although vague, the program seems to set up a variation of an accountable care organization, with bundling of services, while transferring financial risk to the providers so that they, in essence, also serve as the insurers. The wasteful administrative complexity and the perversity of the incentives alone should cause us to question this concept. As if caring for a patient with multiple chronic disorders wasn’t enough, we need yet additional government rules and bureaucratic oversight of an artificial chronic care construct that seems to be designed primarily to shift risk from the government to the providers?
We do need an improved Medicare that would serve all of us well as a single payer program, but this certainly isn’t it.
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.
Remember the MaineRx
By Robert Kemp
Applied Health Economics and Health Policy, February 2014
In 2000, Maine became the first state in the US to enact a law to establish maximum retail prices for prescription drugs for all qualified state residents—MaineRx. The purpose was to lower prescription drug prices for all eligible residents of the state. The state was to have the ability to negotiate manufacturer rebates and pharmacy discounts. Major drug manufacturers, represented by the Pharmaceutical Research and Manufacturers of America, challenged MaineRx in the courts, going to the Supreme Court where it was upheld in 2003. Fifteen other states enacted, proposed, or filed price-control bills in their state legislatures. The result would have been downward pressure on prices outside of the public programs, and the first instance of state-sponsored monopsony power in the US. MaineRx is viewed as one of the proximate causes of the pharmaceutical industry’s successful lobbying effort to implement Medicare Part D in 2004. Medicare Part D is administered through private Pharmacy Benefit Managers (PBMs); it made administration via state government PBMs illegal. The lower prices that could have resulted from MaineRx-type laws did not occur and the magnitude of these reductions is commented upon.
Politics play an important role in health policy. In this case, pharmaceutical companies, represented by the PhRMA, were able to influence Congress to introduce a national solution to the threat of state-run PBMs and the negotiation of positive lists. The companies were instrumental in formulating Medicare Part D and lobbying for its passage. It is speculated that Medicare Part D came about to put a stop to state rebate programs such as MaineRx in fear of reduced profits for the pharmaceutical companies. Thus, Medicare Part D terminated the existence of state-run PBMs. The historical importance of MaineRx is that it was an attempt of the state trying to contain healthcare cost and expand prescription coverage. Had MaineRx been implemented, it might have been a milestone on the path to reduced healthcare cost.
Robert Kemp, Ph.D. is Associate Professor, Clinical and Administrative Sciences, School of Pharmacy, The University of Louisiana at Monroe
Government works for the benefit of the people, sometimes. The government of Maine almost brought under control our outrageous drug pricing in the United States. The Supreme Court even upheld Maine’s legislation that would do so. But then, with the conservatives in charge, Medicare Part D was enacted which prohibited Maine or any other state, or even the federal government itself, from using its monopsony power to demand fair pricing of drugs by the pharmaceutical firms. This time the government worked to the benefit of the plutocrats rather than the people. We have to change that.
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.
Oncologists call for single payer in leading cancer journal
Physicians for a National Health Program, January 17, 2014
A feature article published today in the Journal of Oncology Practice contains an evidence-based appeal by two oncologists, including a past president of the American Society of Clinical Oncology (ASCO), for their colleagues to endorse a single-payer health system.
They say they do not believe that the Affordable Care Act, or “Obamacare,” will be able to solve the health care crisis that cancer patients face.
Why Oncologists Should Support Single-Payer National Health Insurance
By Ray E. Drasga, MD and Lawrence H. Einhorn, MD
Journal of Oncology Practice, January 2014
Cancer leaves a patient in his or her most vulnerable state not only physically but financially. Oncologists are in a unique position to champion the cause of improving access to care for patients with cancer and easing the financial burden they and their families face.
With ACA now the law of the land, and its retention of the private insurance industry at the center of the health system, the trend toward high-deductible health plans, underinsurance, and cost shifting to patients will almost certainly worsen. 59 Years of private-sector solutions have failed. There needs to be a major paradigm shift in our approach to funding health care in the United States.
Because ACA will fail to remedy the problems of the uninsured, the underinsured, rising costs, and growing corporate control over caregiving, we cannot in good conscience stand by and remain silent. Life is short, especially for some patients with cancer; they need help now. We call on the American Society of Clinical Oncology (ASCO) to advocate for a single-payer national health insurance program. Our medical system must be oriented toward caregiving, not toward maximizing investors’ profits.
All of our patients deserve dignity. It is our moral and ethical obligation as physicians to advocate for universal access to health care. Oncologists, working in conjunction with ASCO, are well positioned to educate legislators about single-payer national health insurance. The time to start is now.
Patients’ Costs Skyrocket; Specialists’ Incomes Soar
By Elisabeth Rosenthal
The New York Times, January 18, 2014
Many specialists have become particularly adept at the business of medicine by becoming more entrepreneurial, protecting their turf through aggressive lobbying by their medical societies, and most of all, increasing revenues by offering new procedures — or doing more of lucrative ones.
That math explains why the incomes of dermatologists, gastroenterologists and oncologists rose 50 percent or more between 1995 and 2012, even when adjusted for inflation, while those for primary care physicians rose only 10 percent and lag far behind, since insurers pay far less for traditional doctoring tasks like listening for a heart murmur or prescribing the right antibiotic.
Oncologists benefit from the ability to mark up (and profit from) each dose of chemotherapy they administer in private offices, a practice increased dramatically in the late 1990s. The median compensation for oncologists nearly doubled from 1995 to 2004, to $350,000, according to the M.G.M.A. One study last year attributed 65 percent of the revenue in a typical oncology practice to such payments.
New Truths That Only One Can See
By George Johnson
The New York Times, January 20, 2014
It has been jarring to learn in recent years that a reproducible result may actually be the rarest of birds. Replication, the ability of another lab to reproduce a finding, is the gold standard of science, reassurance that you have discovered something true. But that is getting harder all the time.
Fears that this is resulting in some questionable findings began to emerge in 2005, when Dr. John P. A. Ioannidis, a kind of meta-scientist who researches research, wrote a paper pointedly titled “Why Most Published Research Findings Are False.”
His work was just the beginning. Concern about the problem has reached the point that the journal Nature has assembled an archive, filled with reports and analyses, called Challenges in Irreproducible Research.
Among them is a paper in which C. Glenn Begley, who is chief scientific officer at TetraLogic Pharmaceuticals, described an experience he had while at Amgen, another drug company. He and his colleagues could not replicate 47 of 53 landmark papers about cancer. Some of the results could not be reproduced even with the help of the original scientists working in their own labs.
Given what is at stake, it seems like a moral failing that the titles of the papers were not revealed. That was forbidden, we’re told, by confidentiality agreements imposed by the labs.
Drug development: Raise standards for preclinical cancer research
By C. Glenn Begley and Lee M. Ellis
Nature, March 28, 2012
What reasons underlie the publication of erroneous, selective or irreproducible data? The academic system and peer-review process tolerates and perhaps even inadvertently encourages such conduct. To obtain funding, a job, promotion or tenure, researchers need a strong publication record, often including a first-authored high-impact publication. Journal editors, reviewers and grant-review committees often look for a scientific finding that is simple, clear and complete — a ‘perfect’ story. It is therefore tempting for investigators to submit selected data sets for publication, or even to massage data to fit the underlying hypothesis.
Improving preclinical cancer research to the point at which it is reproducible and translatable to clinical-trial success will be an extraordinarily difficult challenge. However, it is important to remember that patients are at the centre of all these efforts. If we in the field forget this, it is easy to lose our sense of focus, transparency and urgency.
Oncology Market Access
By Jill Sackman, D.V.M., Ph.D. & Michael Kuchenreuther, Ph.D
Confronted with unsustainable costs and inconsistent quality of patient outcomes, the U.S. healthcare segment has been embroiled in a national debate over healthcare reform. While nearly every division of the industry has come under fire because of high healthcare costs, one therapeutic area that has continued to win premium reimbursement is oncology. Historically, cancer drugs have enjoyed premium pricing and widespread off-label usage because of their designation for patients with generally incurable diseases. Furthermore, new drugs have been rapidly adopted despite weak clinical evidence and overall questionable value. Thus, it is not surprising that spending on these drugs in the U.S. has risen at twice the rate of total drug spending in recent years.
Cancer has become outrageously expensive to manage. A major factor in the increased spending is the use of high-priced cancer drugs. The newest drugs are priced at about $10,000 per month – a level at which coinsurance payments by patients may not be affordable, if the drug is even covered by the patient’s plan.
What is particularly disconcerting is that the science behind these new drugs is particularly weak. We are paying a lot for drugs that often are not particularly effective and that frequently make people sick. Many of these drugs are introduced into the market after showing scant improvement but were approved because the nominal benefit reached the level of statistical significance. Factors determining the prices of these drugs include costs of research and marketing, like other drugs, but the firms also include “what is a life worth” adjustments – capitalizing on the grief of cancer patients and their families.
Of course there are therapeutic interventions in cancer that are very effective, sometimes curative. With today’s emphasis on outcomes, should the oncologists be paid very high fees for the successful outcomes while being paid little for futile therapy? Of course not. Their incomes should depend on their provision of professional services regardless of the prognosis of their patients.
The article in the Journal of Oncology Practice by Ray Drasga and Lawrence Einhorn explains the rationale of a single payer system – a rationale that should appeal to all oncologists who have faced the dilemma of being able to offer only very expensive drugs that provide unwarranted hope in a futile clinical situation, especially when the drugs may impose a major financial hardship on the patient.
Imagine a situation in which money is removed from that scenario, made possible by a single payer system. The patient does not have to consider out-of-pocket costs when discussing options with her physician. The physician receives the same income regardless of what clinical course the patient selects. Clinical decisions are made by the patient using the best information available, provided to her by her physician. Cost decisions are made by the public administrator, including negotiated pricing for cancer drugs, in an environment totally removed from the clinical scene.
Cancer can be a very cruel disease over which physicians frequently agonize, acutely aware of the physical and emotional pain of the patient. We really need a system in which all of our attention can be devoted to obtaining the very best care for the patient, totally removed from the “business” aspect of medicine. A well designed single payer system would do that.
Working for the Few
Oxfam, January 20, 2014
In November 2013, the World Economic Forum released its ‘Outlook on the Global Agenda 2014’, in which it ranked widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months. Oxfam shares its analysis, and wants to see the 2014 World Economic Forum make the commitments needed to counter the growing tide of inequality.
Given the scale of rising wealth concentrations, opportunity capture and unequal political representation are a serious and worrying trend. For instance:
• Almost half of the world’s wealth is now owned by just one percent of the population.
• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
• The bottom half of the world’s population owns the same as the richest 85 people in the world.
• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
Those gathered at Davos for the World Economic Forum have the power to turn around the rapid increase in inequality. Oxfam is calling on them to pledge that they will:
• Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;
• Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;
• Make public all the investments in companies and trusts for which they are the ultimate beneficial owners;
• Support progressive taxation on wealth and income;
• Challenge governments to use their tax revenue to provide universal healthcare,
education and social protection for citizens;
• Demand a living wage in all the companies they own or control;
• Challenge other economic elites to join them in these pledges.
Oxfam Briefing Paper – Summary: http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-politi…
World Economic Forum – Outlook on the Global Agenda 2014:http://www3.weforum.org/docs/WEF_GAC_GlobalAgendaOutlook_2014.pdf
Oxfam: 85 richest people as wealthy as poorest half of the world
By Graeme Wearden
The Guardian, January 20, 2014
As World Economic Forum starts in Davos, development charity claims growing inequality has been driven by ‘power grab’
Winnie Byanyima, the Oxfam executive director who will attend the Davos meetings, said: “It is staggering that in the 21st Century, half of the world’s population – that’s three and a half billion people – own no more than a tiny elite whose numbers could all fit comfortably on a double-decker bus.”
Working for the Few – Oxfam report
Although Martin Luther King Jr is no longer here in body, he did leave with us his moral guidance, reinforcing our ability to recognize social injustice when we see it. It is left to us to seek an end to these injustices.
Of industrialized nations, the United States is the world leader in expanding the injustices of inequality – a first for us that matches our first place in health care spending in a nation that is in last place amongst wealthier nations in meting the goal of universality.
From the perspective of those of us who are morally outraged over health care injustice, we need to “challenge governments to use their tax revenue to provide universal health care.” We cannot possibly do this without adopting policies that would “counter the growing tide of inequality.”
If Martin Luther King could speak to us today, he would certainly challenge us to demand the opportunity for everyone to have an adequate education which would help them understand better the injustices inflicted upon us by, yes, the wealthy who control our plutocracy, and to understand what our remedies should be. He would challenge us to demand not only the right but also the opportunity for everyone to vote for the government we need, especially a government that would create a health care system that serves the health care needs of the people first rather than the business goals of the insurers and the rest of the medical-industrial complex. As he famously said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”
Listen. You can hear him now. Let’s march.
Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications
By Juliette Cubanski, Tricia Neuman, Gretchen Jacobson, and Karen E. Smith
Kaiser Family Foundation, January 2014
As policymakers consider ways to slow the growth in Medicare spending as part of broader efforts to reduce the federal debt or offset the cost of other spending priorities, some have proposed to increase beneficiary contributions through higher Medicare premiums.
Modifications to Medicare’s current income-related premiums have been proposed recently by several policymakers and groups, including the Obama Administration as part of the President’s Fiscal Year (FY) 2013 and FY 2014 budgets, the Bipartisan Policy Center (BPC), the Center for American Progress (CAP), and the Moment of Truth Project (headed by Erskine Bowles and Alan Simpson, co-chairs of the National Commission on Fiscal Responsibility and Reform).
Some recent proposals to address concerns about federal spending have included recommendations to reduce the growth in Medicare spending by increasing beneficiaries’ contributions towards their health care costs. These include proposals to increase the share of beneficiaries who would pay Medicare’s Part B and Part D income-related premiums and increase the portion of program costs they would pay.
Part of the appeal of requiring higher-income beneficiaries to pay a greater share of Medicare costs is that these higher costs would only be imposed on those beneficiaries who arguably have greater financial means to bear the additional expenses. In the context of current federal budget discussions, some consider an approach that includes this type of progressive financing to be preferable to one that imposes higher premiums or cost sharing across the board, without regard to beneficiaries’ incomes. There is some concern, however, that the income thresholds used to trigger the imposition of higher premiums for higher-income Medicare beneficiaries ($85,000/individual, $170,000/couple) are substantially lower than the thresholds often used to define higher-income individuals in other policy discussions. For example, the ACA imposed higher Medicare Part A payroll taxes on individuals with income of $200,000 and couples with income of $250,000.
For many higher-income beneficiaries, the proposed increase in Medicare premiums might not be a financial hardship. However, if the income thresholds are frozen over a longer period of time relative to current law, then a growing share of elderly and disabled people who would not be considered high income by today’s standards would face higher premiums, and as the income-related premium amounts increase over time, they would consume a larger share of income. In addition, there is some possibility that such changes could lead some higher-income beneficiaries to drop out of Medicare Part B and instead self-insure, which could result in higher premiums for all others who remain on Medicare if the dropout group is large and relatively healthy.
Amid ongoing concerns about the nation’s debt and the future financial stability of Medicare, policymakers are likely to continue their discussion of alternative Medicare savings proposals. In light of the financial vulnerability of many people on Medicare and the difficulty they may have paying for rising health care costs on limited budgets, the proposal to require higher-income beneficiaries to pay more in Medicare premiums, rather than raise premiums for all beneficiaries, would protect those with relatively modest incomes. Yet, given the relatively low incomes of most people on Medicare, a significant amount of savings from this proposal is only possible by going relatively far down the income scale to reach a sizeable share of beneficiaries—at which point the affordability of these additional costs could be called into question.
We already require higher-income individuals to pay larger premiums for Medicare Part B (physician services) and Part D (drugs), and now there are serious proposals to increase those amounts in order to reduce federal spending on Medicare. Is this wise?
In order to have more than a negligible impact on the federal budget both the numbers of individuals paying higher premiums and the increase in the premiums would have to be significant.
This report shows that lowering the income threshold at which higher premiums would be assessed would include individuals who would find paying the premium to be a hardship, simply because there are not enough seniors with very high incomes.
So suppose instead we increase even more the premiums that higher-income individuals would pay. Since there are so few of them, the premium increases would have to have to be significant to have any real impact on the federal budget. What would happen then? It is likely that many of those who are financially secure and relatively healthy would drop out of the Medicare B and D programs and simply self-insure. The premiums that these healthier individuals would have paid will instead be paid by higher premiums for those staying in the program and by a greater contribution from general tax revenues.
Some have suggested that deductibles also be increased for higher-income individuals. This would surely anger our wealthy citizens – those who have the greatest political influence – and undermine support for Medicare. That would risk us eventually ending up with an underfunded, austere Medicare program, while the wealthy could continue to buy all the care that they would want.
No. We need to have the full support of the wealthy for a high quality system that would serve them well, while serving all of us well. We need to eliminate premiums, deductibles and other cost sharing so that the system provides us all with equal access based on medical need rather than ability to pay. The wealthy could still have access to luxurious suites and other amenities that they might prefer and be willing to pay for.
We still need progressive financing, but we can do that easily by using equitable taxes to fund Medicare – Improved Medicare for All, that is.
Bare-Bones Health Plans Survive Through Quirk in Law
By Theo Francis
The Wall Street Journal, January 16, 2014
The health-care overhaul was supposed to eliminate insurance plans that offer skimpy coverage at cut rates. But a quirk in the law stands to help some companies keep them going for years to come.
AlliedBarton Security Services, a closely held firm that employs more than 63,000 people nationwide, has offered a modestly updated version of its so-called mini-med plan to employees this year and it intends to do so in 2015 as well, even though the cheap coverage fails to meet requirements of the Affordable Care Act.
What makes the no-frills plan attractive is that it will save money for AlliedBarton and for its security-guard employees who don’t incur substantial medical bills, many of whom want a low-cost option, according to the company.
What makes it possible under the health law: As long as companies offer at least one plan that complies with the law’s requirements, they are free to keep offering ones that don’t.
That has enabled companies to find ways to comply with the law while minimizing increases in their health-care costs. The result has been an increase in lean insurance offerings such as “fixed-indemnity” plans.
Such plans, which might cost an employee just $80 a month in premiums, generally pay a set amount for specific medical services—$70 for a doctor’s visit, for example, or $20 for a prescription—without regard to the underlying cost. They limit the amount of payments or care available in a year, and can exclude entire areas of coverage, such as mental-health care. When catastrophic injury or illness strikes, they often pay little.
AlliedBarton intends to offer its employees two low-cost insurance options—one that meets the law’s requirements for both scope of coverage and affordability, and a cheaper plan that falls short. Offering the compliant plan heads off the law’s penalties. And offering the cheaper plan—which the company thinks most of its security guards will pick—keeps costs down.
Employees who pick the cheaper plan could have to pay the individual penalty—though that could still cost them less than signing up for the more expensive plan.
Fixed-indemnity coverage “violates the spirit of the law,” said Jay Angoff, a Washington lawyer who previously headed the federal insurance-oversight office and served as Missouri’s insurance commissioner. “There’s a strong argument that it is inherently misleading, and it provides so little coverage that it shouldn’t be sold at all.” Such plans, he adds, “were never intended to survive past 2014.”
AlliedBarton’s Mr. Buckman countered that workers are good at weighing medical and financial trade-offs. “To a lot of people for a lot of good reasons, fixed-indemnity plans may be a better choice, and we think it’s appropriate for people to be able to make choices,” he said.
What kind of rule is this? As long as employers offer to their employees a plan that complies with the requirements of the Affordable Care Act (ACA), but a plan that the employees cannot afford to purchase, then the employers are relieved of their penalties for providing them with almost worthless “fixed indemnity” plans, even though that means that the employees may have to pay a penalty for failing to be insured with a qualified plan.
ACA was designed to interfere as little as possible with employer-sponsored plans since supposedly that large sector of the health insurance market was working so well. But it wasn’t for far too many. Employers offering mini-med style fixed indemnity plans is only one of the potential deficiencies of employer-sponsored coverage, others being high deductibles, narrow provider networks, and forgone wage increases to pay for the coverage.
Right now, several respected journalists are criticizing single payer advocates for being critical of the health care gains under the Affordable Care Act. They have it all wrong. We are not critical of the gains; we are critical of the failure to correct the major deficiencies in our system that cause so much suffering and financial hardship. Instead of tweaking a mediocre system, we should fix it. We could do that with a single payer national health program – an improved Medicare that covers all of us.
Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?
By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD
JAMA, January 13, 2014
Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.
What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.
One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.
How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.
This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.
Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.
Implementing Health Reform: Four Years Later
By Timothy S. Jost
Health Affairs, January 2014
Despite enormous potential, the Affordable Care Act has been plagued by controversy and confusion from day one.
It is likely that more complaints will be heard once people actually use their ACA coverage. Many exchange carriers are offering limited provider networks. Narrow networks allow insurers to reduce premiums as they exclude the most expensive providers and negotiate steep discounts with those who remain. Consumers will like the low premiums but will be unhappy to learn that their doctors are not available and shocked to discover charges from out-of-network specialists when they go to in-network hospitals.
Consumers may also be surprised by the magnitude of cost sharing under ACA plans. Bronze plans may have $6,000 deductibles, and silver plans can have deductibles of $2,000 or more. Even at these levels, of course, cost-sharing obligations will be lower than many policies found now in today’s nongroup market. But this is not free care, or anything close to it.
Millions of low-income Americans in states that refuse to expand Medicaid will find themselves too poor to receive any help. This is, of course, not the fault of the ACA but rather of its opponents. But the public may not grasp this distinction.
Other problems will also attend the implementation of the 2014 reforms, and all will be widely reported. Employers may continue to reduce employees to thirty hours or otherwise try to avoid offering health insurance to their employees. Insured and self-insured plans will bear part of the cost of expanding coverage and reinsuring high-cost enrollees in the individual market, increasing their costs. Finally, public outrage is sure to hit the headlines again when tax filing time arrives in 2015 as some individuals will be assessed the penalty for remaining uninsured, while others will face a repayment demand for overpaid premium tax credits.
Going forward, one of the most important challenges facing the ACA will be whether its benefits become apparent quickly and dramatically enough to offset the problems that are currently dominating the news coverage of the health reform law. Even more important may be the question of how much it will matter that the greatest beneficiaries of the ACA are likely to be low-income Americans, who are less likely to be politically active than many of the higher-income Americans who will be adversely affected by higher insurance premiums and taxes.
In the end, the most important fact is that the ACA addresses a real and dramatic problem: nearly fifty million uninsured Americans. Its opponents in Congress have failed to put forth any credible proposal to address this problem since the law was enacted. As disruptive as it may in fact be, the ACA does address this problem. If it succeeds, America will be a better place. If it fails, it is unlikely that another solution will be forthcoming any time soon, perhaps not for another generation.
Timothy Jost is one of the most astute, objective analysts and observers of the unfolding of the Affordable Care Act. We should listen to him when he describes the negative impact that ACA will have on moderate- and higher-income Americans. They will be especially unhappy with their loss of choice of physicians and hospitals because of the narrow or ultra-narrow networks, and they will be greatly displeased with out-of-pocket costs that are much greater than they previously experienced.
Although Jost suggests that the determination of the success or failure will be based on how successful the enrollment of the 50 million mostly lower-income uninsured Americans will be, it is more likely that those with incomes above 400 percent of the federal poverty level who will be bearing the full costs of their insurance, directly or through wage concessions, will consider the shift in employer-sponsored plans toward narrow networks and high cost sharing to be a failure of policy.
Although Jost also discusses the positive features of ACA, they do not offset the negative since we did not have to accept such a compromised system.
Although he suggests that another solution is unlikely for a generation, once the politically active people with good jobs and decent incomes realize what happened and what they could have had, the demand for single payer Medicare for all will move the process much earlier. At least for their benefit, and for the benefit of all U.S. residents, we hope so.
Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households
By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, January 9, 2014
The Medicare program offers health and financial protection to more than 50 million seniors and younger people with disabilities. However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package can result in beneficiaries spending a substantial share of their household budgets on health care.
Medicare households devoted nearly 14% of total household spending to health-related expenses in 2012, on average — a substantially larger share than non-Medicare households.
Spending on health insurance premiums, including for Part B, Part C (Medicare Advantage), Part D and supplemental coverage (such as Medigap and retiree health plans), was about two-thirds (65.4%) of Medicare households’ average health care spending in 2012, and 9.1% of Medicare household spending overall. Medical services (such as hospital stays, physician services, lab tests, and X-rays) were the next largest component of Medicare households’ health spending (18.5%), followed by prescription drugs (13.0%) and medical supplies (3.1%).
The financial burden of out-of-pocket health spending is felt disproportionately by some subgroups of Medicare households, including older beneficiaries and those with incomes between 100% and 399% of poverty.
As policymakers consider options to address federal budget concerns, including policies to rein in Medicare spending, these findings highlight the importance of assessing the effects of such proposals on out-of-pocket health care spending among Medicare beneficiaries — a majority of whom already live on tight budgets.
Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News
By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.
Employee Benefit Research Institute, October 2013
Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 60 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 12 percent. Furthermore, the percentage of private-sector establishments offering retiree health benefits has been falling, and where benefits are offered, they are becoming less generous. This is true even in the public sector.
Couples at the 90th percentile in drug expenses would need $220,000 to have a 50 percent chance of having enough money to cover health care expenses in retirement. They would need $295,000 to have a 75 percent chance of covering their expenses and $360,000 to have a 90 percent chance of covering their expenses.
However, it should be noted that many individuals will need more than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare.
Finally, issues surrounding retirement income security are certain to become an even greater challenge in the future, as employers continue to scale back retiree health benefits and as policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.
The bad news is that out-of-pocket expenses for those on Medicare are significant and fall disproportionately on older individuals and those with incomes between 100% and 400% of the federal poverty level. Although some relief is anticipated with the closing of the Part D donut hole, the overall burden is expected to increase, especially with proposed policies that would increase spending on Medicare insurance premiums.
A far more equitable system would be to completely separate payments for the financing of health care from the benefits received. That is, eliminate premiums, deductibles, co-payments and coinsurance and instead use a single public fund for health care to which individuals contribute based on ability to pay (i.e, progressive taxes). Then care is accessed based only on medical need, not on ability to pay.
As long as Medicare remains a separate program exclusively for the elderly and for individuals with long term disabilities, we are going to see efforts made to try to limit federal spending on Medicare, passing more costs onto the beneficiaries. Increases in premium revenues is quite likely, not only for Part B and Part D of Medicare, but also for private Medigap, Medicare Advantage, and retiree health plans. Also, proposed taxes on Medigap premiums are on the agenda.
Both of today’s articles demonstrate that the burden is already too great, especially for the majority who are on tight budgets. Rather than shifting yet more responsibility for health care costs onto the backs of Medicare beneficiaries, we should be reducing it. If we were all in this together, as we would be with an improved Medicare for all, we would be demanding relief from excessive out-of-pocket costs while begrudgingly paying our taxes.
Maryland All-Payer Model to Deliver Better Care and Lower Costs
Centers for Medicare and Medicaid Services, January 10, 2014
On January 10, 2014, the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland jointly announced a new initiative to modernize Maryland’s unique all-payer rate-setting system for hospital services that will improve patient health and reduce costs.
Maryland operates the nation’s only all-payer hospital rate regulation system. This system is made possible, in part, by a 36 year old Medicare waiver (codified in Section 1814(b) of the Social Security Act) that exempts Maryland from the Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) and allows Maryland to set rates for these services. Under the waiver, all third party purchasers pay the same rate. The State of Maryland and CMS believe that the new model test announced today will provide an opportunity for Maryland to reform its delivery system to align with the goals of delivering better health, better care, and lower cost.
Terms of the Model
Maryland’s all-payer rate setting system for hospital services presents an opportunity for Maryland and CMS to test a unique model that has the potential to inform CMS and other states. This opportunity is available through the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.
Under the terms of the Maryland All-Payer Model:
• Maryland will agree to permanently shift away from its current statutory waiver, which is based on Medicare payment per inpatient admission, in exchange for the new Innovation Center model based on Medicare per capita total hospital cost growth.
• This model will require Maryland to generate $330 million in Medicare savings over a five year performance period, measured by comparing Maryland’s Medicare per capita total hospital cost growth to the national Medicare per capita total hospital cost growth.
• This model will require Maryland to limit its annual all-payer per capita total hospital cost growth to 3.58%, the 10-year compound annual growth rate in per capita gross state product.
• Maryland will shift virtually all of its hospital revenue over the five year performance period into global payment models, incentivizing hospitals to work in partnership with other providers to prevent unnecessary hospitalizations and readmissions.
• Maryland will achieve a number of quality targets designed to promote better care, better health and lower costs. Under the model, the quality of care for Maryland residents, including Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries will improve as measured by hospital quality and population health measures.
• If Maryland fails during the five-year performance period of the model, Maryland hospitals will transition over two years to the national Medicare payment systems.
• Before the start of the fourth year of the model, Maryland will develop a proposal for a new model based on a Medicare total per capita cost of care test to begin no later than after the end of the five year performance period.
This model will test whether an all-payer system for hospital payment that is accountable for the total hospital cost of care on a per capita basis is an effective model for advancing better care, better health and reduced costs. CMS expects that this model will be used to engage all Maryland hospitals, as well as other care providers, in payment reform and innovation.
CMS and Maryland expect that the All-Payer Model will be successful in improving the quality of care and reducing program expenditures for Maryland residents, including Medicare, Medicaid, and CHIP beneficiaries. Moreover, the Maryland system may serve as a model for other states interested in developing all-payer payment systems.
Guiding Principles for Implementation of Population-Based and Patient Centered Payment Systems: A Report from the Advisory Council to the Maryland Health Services Cost Review Commission, January 31, 2014
The State of Maryland is leading a potentially transformative effort to lower health care spending in the State while at the same time improving access to care and quality of care. Stated in terms of the “Three Part Aim,” the goal is a health care system that enhances patient care, improves health outcomes, and lowers total costs.
To achieve this goal, the State of Maryland worked closely with the Centers for Medicare and Medicaid Services (CMS) throughout 2013 to craft an innovation plan that would make Maryland a national leader achieving the Three Part Aim and permit the federal government to continue to participate in the four‐decade long all‐payer system that has proven to be both successful and enduring. The federal government is anticipated to approve Maryland’s new Model Design application and implementation begins in January 2014.
Building on the Commission’s existing authority to regulate and set hospital rates across all payers including Medicare, the State is preparing to tie system‐wide hospital inpatient and outpatient payment to economic growth. Effectively, the State is instituting a plan to shift from payment based on inpatient hospital cost per admission to total hospital cost per capita. The ultimate goal is to tie total health care spending per capita to the per capita growth of the state’s economy. New health care delivery and payment models will be aligned with numerous existing initiatives to help meet the goals.
Advisory Council Recommendations
2. Hospital Global Payment Models are the best strategy for the first phase of implementation.
The HSCRC anticipates that most hospitals will be operating under global payment models by early 2014. These models hold the most promise for meeting the revenue targets in the early years because they move away from incentives in fee‐for‐service payment that foster a greater volume of services and offer strong budget discipline. In addition, global payments provide clear and simple revenue targets with flexibility for hospitals to manage within these macro goals. In the long‐run, these models will need to evolve to ensure that the revenue in the system follows the patients.
(DISCLAIMER: This is a draft document for discussion purposes which has been prepared by consultants to the Advisory Council. The contents of this draft have not been reviewed or approved by Advisory Council members.)
Maryland Health Services Cost Review Commission
All Payer Hospital System Modernization: Advisory Council:http://www.hscrc.state.md.us/hscrc-advisory-council.cfm
Overview of Proposed New All-Payer Model:http://www.hscrc.state.md.us/documents/md-maphs/ac-meet-2013-11-13/hscrc…
The model for a single payer national health program, as proposed by Physicians for a National Health Program, includes placing hospitals on global budgets. Just as police and fire departments are funded by single, publicly-financed global budgets rather than being paid for each fire or crime intervention as they arise, hospitals would likewise be placed on single, publicly-financed global budgets that are adjusted based on some reasonable index of inflation. Not only does that cost less, partly by dramatically reducing administrative waste, it also improves quality by providing the hospital administration with the flexibility to improve the allocation patient care dollars, plus it slows health care inflation to a sustainable level.
Maryland is the only state that currently has an all-payer hospital rate regulation system. Under this system, all payers, including Medicare, Medicaid, CHIP, private insurers, and individuals pay the same rates for the same hospital services. This has reduced administrative complexity, made payment for hospital services more equitable, and has slowed the increases in hospital spending from one of the most expensive states down to average.
Since their all-payer system pays for services provided, incentives remain to increase volume of services. Under the new system just approved by CMS, payment will still be all-payer but will not be based on volume of services, but rather will be based on “the Medicare per capita total hospital cost growth.” In essence, that establishes “global budget” as a form of hospital financing in the United States, though it is limited to Maryland under the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.
We certainly have many questions about the details that have not yet been revealed. It does fall short of hospital global budgets as envisioned by PNHP. For instance, this model still seems to pool funds from multiple public and private sources, whereas the PNHP model would use only public funds from a single pool funded by equitable taxes. That is a crucial difference since multiple sources leads to administrative complexity and inequities in funding.
In general though, it seems that we can celebrate this step towards a more equitable and just financing system. It won’t get us in the back door of single payer, but it will provide us with another talking point on policy – the fact that global budgets are an improvement but that we can make them even better when we mesh them in with a bona fide, comprehensive single payer system – an improved Medicare that covers everyone.
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