PNHP

Dr. Oliver Fein on healthcare costs and how to contain them

Dr. Oliver Fein on healthcare costs and how to contain them

NJAFP Podcast #4, Healthcare costs and how to contain them, Dr. Oliver Fein 6/22/2006

This podcast is NJAFP Podcast #4, an excerpt of a recording of a panel discussion on healthcare costs and healthcare reform, sponsored by the New Jersey Academy of Family Physicians. This program was recorded June 22, 2006. The program is introduced by Ray Saputelli, executive vice president of the New Jersey Academy of Family Physicians.

Download the podcast file here (16.4mb mono MP3 file, 00:20:00 length). This podcast includes the presentation by Dr. Oliver Fein

Chant from an Ohio March

Courtesy of Dr. Johnathon Ross

I don’t know but I’ve been told
The fight for health care’s very old
Jesus on the Temple Mount
Drove the money changers out
He turned their tables with a kick
And then he turned and healed the sick
And so the churches join the fight
For health care as a human right

I don’t know but I’ve been told
The fight for health care’s very old
The unions stand up every day
For decent jobs with decent pay
And so the unions join the fight
For health care as a human right

I don’t know but I’ve been told
The fight for health care’s very old
The doctors and the nurses too
See the suffering just like you
And so caregivers join the fight
For health care as a human right

I don’t know but I’ve been told
The fight for health care’s very old
Even healthy people say
We might be patients too one day
And so the people join the fight
For health care as a human right

Dr. David Himmelstein on CNBC

Dr. David Himmelstein debating Michael F. Cannon from the Cato Institute on CNBC’s “On the Money”
Wednesday, September 27, 2006

Major impact of small shifts from adverse selection

Illustrating the Potential Impacts of Adverse Selection on Health Insurance Costs in Consumer Choice Models

Kaiser Family Foundation
Health Care Costs

Whenever consumers have a choice among different insurance arrangements, there is a tendency for people to choose a level of insurance based on their expected need for what is being covered (in this case health care). At any given price, people with a relatively high perceived need for the covered item are more likely to want coverage (and given coverage, more likely to want generous coverage) than people with a lower perceived need for the covered item. This is often referred to as “adverse selection.” Since high deductible plans generally are less generous than typical insurance policies — particularly for people with employer-sponsored coverage — some have raised concerns that CDHPs could disrupt the pooling of health risk in insurance markets.

To demonstrate that a relatively small share of enrollees can have a meaningful impact on average claims costs, we present an exercise using a database of medical claims complied by the Society of Actuaries.

What we can see from this exercise is that adverse selection can occur and have a meaningful impact on claims cost even where there are no extreme changes in enrollment. The enrollment shifts portrayed here would be far too small to substantially change the demographic make up of either pool in terms of age, gender, income, or other observable factors — even the 60%/40% scenario only increases the overall census of the adverse selection pool by 2%. Generalizations about enrollment would not reveal the real differences in underlying claim costs. If bias enrollment patterns such as these persist and insurers base premiums on claims experience, or if insurers can anticipate enrollment bias and base their premiums on expected claims, then these small enrollment differences would translate into fairly significant premium differences.

http://www.kff.org/insurance/snapshot/chcm111006oth2.cfm

Comment:

By Don McCanne, MD

This study demonstrates the simple fact that shifting a very few high-cost patients from one insurance pool to another (adverse selection) can have a very dramatic impact on the premiums that must be charged to cover health care costs for the pools.

This phenomenon is of much more concern now because of the greater use of cost sharing, especially though higher deductibles. People with needs will avoid those plans since they would be exposed to unaffordable out-of-pocket expenses. More comprehensive plans will attract the higher cost individuals, and the shift of only a few would make the premiums unaffordable. People with needs are being priced out of both coverage and health care.

Many policies have been suggested to eliminate adverse selection through risk adjustment. They don’t work. Separate high risk insurance pools have been established in several states to insure these people. They don’t work.
Medical underwriting is used in many states to be certain that pools can continue to exclude higher cost individuals, thereby ensuring that pooling will never work.

With a single, universal risk pool, adverse selection disappears. Why do we continue to avoid the inevitable?

PPOs' pattern of underpayment

Health clinics take steps to recover underpayments

by Robin J. Moody
Portland Business Journal
November 3, 2006

Fewer than 20 percent of medical practices nationwide — probably even fewer in Oregon due to the preponderance of small medical groups — conduct comprehensive reviews of payments.

By failing to audit bills, clinics are leaving money on the table.

Clinics that do conduct audits — including a handful that recently completed a pilot project to gather data on the underpayment problem — have identified clear patterns in billing errors.

Preferred Provider Organizations are the worst offenders, administrators said, especially those that lease their networks to out-of-state health plans.

Under PPOs, a network of medical providers charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

A notable finding was the volume of underpayments with sums under $10, which are hard to spot without billing-audit software.

When Portland-based Women’s Clinic PC Administrator Marilyn Happold-Latham used such software, she was surprised to find consistent, albeit small, discrepancies in sums less than $10.

“There were underpayments of a few dollars, over and over again, for the same types of procedures or office visits,” said Happold-Latham.

Happold-Latham’s experience with underpayments prompted her to organize other administrators to perform manual audits. Three companies that completed the audits found numerous small discrepancies.

“Our personnel find the large mistakes, but without payment audit software you won’t find the $2 underpayments that come up time and time again and really add up,” said MaryKaye Brady, administrator for Metropolitan Pediatrics, which learned that the practice was underpaid by $77,000 in one year.

Because 65 percent of Oregon’s doctors practice in groups with fewer than 10 doctors, the cost of a billing-audit system many seem out of reach for many groups. As income levels decline for primary care doctors and stagnate for specialists, however, physician advocates say that auditing bills is an increasingly important business practice.

http://www.bizjournals.com/portland/stories/2006/11/06/story7.html?page=2&b=1162789200^1371308

Comment:

By Don McCanne, M.D.

The physicians signed these PPO contracts in good faith, assuming that they would be paid at the contracted rates. Apparently the PPOs feel that they are not constrained by good faith contractual terms. This policy of chiseling down the rates is particularly egregious when considering that overhead expenses are relatively fixed and that these reductions come directly out of the physicians’ paychecks. A two dollar reduction is a twenty-five percent reduction when the net income would have been eight dollars for the service provided.

If a government-run single payer program reduced compensation by two dollars, it would have done so, by design, only after negotiating and reaching an agreement with the providers. Apparently private insurers use market arguments to operate on a different ethical plane. If you are caught violating the terms of a contract, then the marketplace will take care of that. Or will it?

As long as we leave the private insurers in charge, we can expect the amoral or immoral ethics of whatever the market will bear. A public system would be held to a much higher ethical standard. Let’s go public!

Court upholds insurer's fine print

Health fraud suit is tossed

By Andrew McIntosh
The Sacramento Bee
November 8, 2006

A Nevada County Superior Court judge has dismissed a lawsuit filed by a Penn Valley husband and wife who claimed they were duped when they bought health insurance from a Texas firm and were plunged into a financial crisis after falling ill.

Judge Albert P. Dover rejected the claims of David and Darlene Henderson, saying they received exactly the benefits they signed up for when they bought a policy from Mega Life and Health Insurance Co. of North Richland Hills.

Dover suggested consumers must read the fine print before they buy any insurance policies, adding he saw no evidence that the insurer or its sales agents engaged in any fraud or made misrepresentations.

The California Foundation of Taxpayer and Consumer Rights… said Mega Life’s policies are so technical and riddled with jargon that the Hendersons were unlikely to have understood its limits if they had read it.

In 2001, Darlene Henderson became ill with breast cancer. David was later felled by an aortic aneurysm the size of a baseball and needed emergency surgery.

Those medical misfortunes left the Hendersons with more than $210,000 in medical and hospital bills.

Mega Life covered $33,428 of the Hendersons’ bills. The couple were left stunned and quivering when they learned they still owed more than $180,000.

Michael Heenan, a Sacramento spokesman for Mega Life and Health, said… “We work hard to make sure our customers have quality insurance and excellent service at prices they can afford.”

http://www.sacbee.com/296/story/73084.html

Comment:

By Don McCanne, MD

“Caveat emptor” is an axiom in commerce that the buyer alone bears the responsibility for purchasing decisions. As long as we leave the private insurance industry in charge, it is an axiom that applies to health care financing.

Wouldn’t it be much better to have automatic enrollment in a publicly funded and publicly administered health program devoid of technical jargon in fine print? Or is it more important to protect the forces of greed and deception that are unique to our American private insurance marketplace?

Time To Socialize Medicine

How Democrats can make themselves useful.

By Timothy Noah
Slate.com
Posted Wednesday, Nov. 8, 2006, at 4:33 PM ET

May I put in a word for socialized medicine?

The Democrats have won back the House of Representatives and may also have acquired a gossamer-thin majority in the Senate. They won by not being the party that bungled and lied its head off about the Iraq war. The common wisdom is that even if both houses of Congress become Democratic, the Democrats won’t be able to do anything more than bedevil the Bush administration with investigations rooting out incompetence and corruption (surely there’s more than enough to occupy the next two years), block Bush’s more ghastly judicial appointments, and drop any legislative initiatives Bush might attempt into a very dusty file.

But etiquette, if nothing more, requires that the Democrats also put forth some ideas about how they intend to govern, and the evidence suggests they don’t have any. It’s telling that, in a Washington Post story headlined “Democrats Promise Broad New Agenda,” the particulars of what that new agenda happens to be don’t appear until the 10th paragraph. I won’t bore you with what they are but will instead direct you to an entertaining rundown by Slate’s Michael Kinsley. Judging from Kinsley’s source document, an issues pamphlet put out by presumptive Speaker Nancy Pelosi, health care figures into the Democratic agenda only insofar as it affects stem-cell research, broadband access, the elderly, small business, and (most especially) the military. The question of how to repair America’s health care is addressed with strikingly little audacity (and even less specificity) in The Audacity of Hope, the new tome by Democratic heartthrob Sen. Barack Obama of Illinois.

None of this is any accident. The last big attempt to reform the health-care system is widely believed to have lost the House for the Democrats back in 1994, and many would say it’s perverse to bring up the subject mere hours after the Democrats finally got it back. The conviction that the United States government is capable of achieving anything has surely been hit hard by the Iraq war. I doubt that government takeover of the health-care system would poll well. Politically, the issue would seem a very impractical one to place at the center of the Democratic agenda.

But there are many categories of practicality in this world, and the political type is highly susceptible to changed circumstance. There are also the practical questions of how to make sick people well and how to pay for it. These are matters that health insurers, hospitals, and doctors have been fighting over for decades, and the battle has left the health-care system in a state that a wealthy and civilized society can no longer tolerate.

Have you been inside a hospital lately?

The signs of breakdown are everywhere, from the emergency room overflowing with uninsured people to the film labs unable to locate MRIs that cost thousands of dollars to produce (usually because a doctor misfiled them) to the medical chart whose privacy is guarded so fervently that the patient may need a law degree to get his hands on it, only to discover that results of his last three blood tests never made it out of the fax machine. (Before she died of liver cancer, my wife found that the only place she could read her medical chart unmolested was the hospital ladies’ room.) The National Academy of Sciences estimates that 3 percent to 4 percent of all people admitted to hospitals end up suffering some sort of injury due to medical error and that the number who die as a result may approach 100,000 annually, which exceeds the number of people who die annually in car crashes. The problem isn’t incompetent doctors or medical technicians; it’s the seat-of-the-pants way medical care must be delivered under the current jerry-built system. By comparison, your local Department of Motor Vehicles is a model of efficiency and cheery service.

None of this comes cheap. Assuming you aren’t one of the 43 million Americans lacking any health insurance, the policies your employer provides you—it’s rarely the same one for more than three or four years—are becoming rapidly more expensive, often in maddeningly tricky ways involving intricate rules about minutiae like which lab your doctor happens to use. (The most elaborate ones are labeled “consumer choice” plans and are based on the fiction that you can know in advance whether you’re ever going to get sick.) This past August, Steven Greenhouse and David Leonhardt observed in the New York Times that America was experiencing its “first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.” Corporate greed was apparently one cause, since wages and salaries represented the smallest share of the gross domestic product since 1947, while corporate profits represented the highest share since the 1960s. But the more significant factor, I’ll bet, was the rising cost of health-care benefits, which have more or less abolished raises. These days the only incentive most workers have to boost productivity is fear of a pay cut.

Market-based solutions to the crisis are, it should be obvious by now, a distraction. Paul Krugman and Robin Wells summarized the problem in a March 2006 New York Review essay:

[I]magine an insurer who offered policies to anyone, with the annual premium set to cover the average person’s health care expenses, plus the administrative costs of running the insurance company. Who would sign up? The answer, unfortunately, is that the insurer’s customers wouldn’t be a representative sample of the population. Healthy people, with little reason to expect high medical bills, would probably shun policies priced to reflect the average person’s health costs. On the other hand, unhealthy people would find the policies very attractive.

You can see where this is going. The insurance company would quickly find that because its clientele was tilted toward those with high medical costs, its actual costs per customer were much higher than those of the average member of the population. So it would have to raise premiums to cover those higher costs. However, this would disproportionately drive off its healthier customers, leaving it with an even less healthy customer base, requiring a further rise in premiums, and so on.

Insurance companies deal with these problems, to some extent, by carefully screening applicants to identify those with a high risk of needing expensive treatment, and either rejecting such applicants or charging them higher premiums. But such screening is itself expensive. Furthermore, it tends to screen out exactly those who most need insurance.

In theory, when insurance companies tinker with co-payments and deductibles, they put the brakes on health-care costs by pressuring consumers to avoid frivolous visits to the doctor. In practice, frivolous visits to the doctor are comparatively rare and confined to a few hypochondriacs and hysterics. Going to the doctor is, after all, a fairly unpleasant experience. When people are pressured to avoid seeing the doctor, what happens is that their health suffers. This isn’t rocket science.

Krugman and Wells (whose essay ought to be read, I’m not kidding, by every American) displayed a chart telling the familiar tale that the United States spends about twice what Canada, France, and the United Kingdom do on health care (all three have socialized medicine) yet ranks lower than these countries on life expectancy and higher on infant mortality. There’s no question that the United States practices the most advanced medicine in the world, but that doesn’t translate into a healthier population. The problem isn’t the science; it’s the boring stuff, like the size and variety of the cohort that’s insured, and the availability of computerized medical records, and the price tag for a visit to the doctor. Writ large, it’s the inability of the health care system to benefit economically from improving the long-term health of its customers. This is a job private industry can’t do.

It’s a given that the government will be forced to take over health care. Just about every doctor I’ve ever questioned on the subject has said so, even though one consequence may be that doctors will lose income by becoming salaried employees rather than fee-for-service entrepreneurs (a system widely agreed to have increased the number of unnecessary and sometimes dangerous medical procedures). Will the cost be prohibitive? Obviously if more people have access to medical care, that will push costs up. At the same time, though, eliminating the ever-more-elaborate financial game-playing between insurers, doctors, and patients would save an enormous amount of money, and so would eliminating costly medical care required when a patient has failed to receive preventive care, which is comparatively inexpensive. Medicare, Medicaid, and the Veterans Administration all have their faults, but they all manage to deliver health care more cheaply than private insurance, and the VA, which actually employs doctors and owns hospitals, is widely understood by experts to provide better care than private hospitals do. Krugman and Wells note that when Taiwan switched to a single-payer system in 1995, overall health-care costs went down:

[T]he percentage of the population with health insurance soared from 57 percent to 97 percent, yet health care costs actually grew more slowly than one would have predicted from trends before the change in system.

The practicalities of politics may shun putting socialized medicine at the center of the Democratic agenda. But the practicalities of life demand it and will soon reverse the political calculus. People are dying, and corporations are going broke. Let’s get started.

Timothy Noah is a senior writer at Slate.

Article URL: http://www.slate.com/id/2153275/

Elections and health care reform

Voters and Health Care in the 2006 Election

By Robert J. Blendon, Sc.D., and Drew E. Altman, Ph.D.
The New England Journal of Medicine
November 2, 2006

Whichever party wins in the November congressional election, the margin of victory is likely to be small, and for this reason, the outcome of the election will have only a limited effect on the current direction of national health policy. The new leaders of the Congress will have to deal with the problems of scarce new federal revenues, a deep partisan division over the direction of health policy, and resistance by many conservative members to new plans for health care spending. In addition, as the presidential election of 2008 approaches, opposition by members of each party to the other’s health care proposals will intensify. In this environment, important new health reform initiatives are unlikely, and the congressional focus will be on incremental policy changes.

http://content.nejm.org/cgi/content/full/355/18/1928

And…

Health Reform: Time For A Wake-Up Call

By Drew E. Altman and Robert J. Blendon
Health Affairs Blog
October 30th, 2006

For health reform to again gain a foothold at the top of the national political and policy agenda, it needs to become a central issue in the 2008 election campaign, so that candidates who are elected to office and the new president feel that they were elected, at least in part, to address the nation’s big health care problems when they start work in 2009. This is by no means guaranteed, but there is a scenario under which it could happen.
First, if we are fortunate enough to see external problems like Iraq stabilize or subside and no new big ones arise, health would have the opening it needs to compete for center stage as an election issue. Second, as Americans pay more and more each year out of their own pockets for health care, they will become increasingly concerned about health as a voting issue and policy priority.

But what health needs most to rise up in American politics is for national political candidates, whether from the political left, right, or center, to begin talking about the issue again as they did in the early nineties. Most important of all are the presidential candidates, who receive so much national media attention. If even one major candidate begins to seriously address health reform, the others will be forced to follow suit. The presidential candidates’ level of attention to health will be decisive to where health ranks on the national agenda going into the 2008 election and
2009 Congress. If they do play a leadership role on health, the media will follow, and the agenda-setting power of a debate driven from the top will meet the public’s concerns rising up from the bottom like two weather fronts colliding.

http://healthaffairs.org/blog/2006/10/30/health-reform-time-for-a-wake-up-call/

Comment:

By Don McCanne, MD

So this election wasn’t about health care reform, but the next one can be. Get to work!

Toyota's health cost cure: A clinic at the plant site

With tab of $11,000 per U.S. worker, automaker will invest $9M in San Antonia facility

By Christine Tierney
The Detroit News
Wednesday, November 08, 2006

Detroit’s automakers are not the only ones grappling with soaring health-care costs. They are becoming an issue for Toyota Motor Corp., as well, as the Japanese giant expands its U.S. manufacturing operations and work force.

“Our health care costs have doubled over the past five years,” to more than $11,000 a year per U.S. plant worker, said Ford Brewer, assistant general manager for health and wellness at Toyota’s North American manufacturing headquarters.

In designing its newest plant, in San Antonio, Toyota is trying to tackle the problem by building a clinic at the factory to provide a wider array of treatments and services than a typical factory medical office.

The workers at the San Antonio pickup plant can have their eyes checked and their teeth repaired at the $9 million clinic, which also offers pediatric services, laboratory tests and physical therapy.

“This is a major step beyond what we’ve done before,” Brewer said.

The move, however, is consistent with Toyota’s bedrock principle of kaizen, or continuous improvement.

“Typically we reduce costs by improving quality,” Brewer said. “That’s the same thing we’re doing here.”

By offering better primary care and preventive medicine, Toyota expects to rein in its health-care expenses.

Companies that have adopted this approach tend to spend more for primary care and drugs, but that increase is more than offset by a drop in costly hospitalization and specialty care expenses, Toyota said.

The San Antonio clinic is the first of its kind at Toyota, said plant manager Hidehiko “T.J.” Tajima.

“It’s for employees, their families and for suppliers. If it’s successful, we’ll spread the concept to other plants.”

Toyota will employ 2,000 workers at the truck plant by spring, while suppliers on the site will employ 2,100.

Toyota will gauge the success of the clinic by monitoring employees’ health-care indicators, such as smoking-cessation rates and blood-pressure levels, and by tracking expenses.

“From a cost control standpoint, it certainly makes sense,” said Ronald Harbour, president of Troy-based Harbour Consulting Inc., which specializes in manufacturing.

U.S. automakers are deeply frustrated by the rapid increases in health-care costs. In addition, “they feel they have very little control over the cost and over how effectively the money is spent. This is one answer,” Harbour said.

An on-site clinic also is likely to reduce the absenteeism rate.

While a clinic a few minutes from the assembly line may seem convenient to many workers, others may worry about their privacy, some auto industry experts say.

Ford Motor Co. operated a clinic at the Rouge plant in the 1950s that offered basic health-care and dental services. “There used to be a bed ward where employees were kept overnight,” said William Heckman, executive physician at Ford Motor Co.

“The trend has been to move away from doing personal care, to focusing on occupational injuries, as employees got better health-care coverage,” he said.

Ford believes most employees prefer to go to their own doctor.

Honda Motor Co. also encourages employees to choose their doctors, although it has two wellness centers at plants in Ohio offering physical therapy, massages, and exercise and nutrition classes to encourage workers to stay healthy and fit.

Toyota would not require San Antonio workers to go to the on-site clinic, but it encourages them to do so by charging higher co-pays and deductibles for workers who choose to go elsewhere.

“Is that like Big Brother providing my health-care? We had to deal with similar concerns with our pharmacies a couple of years ago,” Brewer said.

When Toyota installed pharmacies at U.S. plants to lower its drug costs, some employees expressed concerns about their privacy.

But now more than 80 percent of the drugs purchased by employees are bought from the plant pharmacies or the mail-order service, Brewer said.

A spokesman for the United Auto Workers union declined to comment specifically on Toyota’s program.

“The primary concern of our members is that the interest of the patient always comes first in any health care delivery system,” said UAW spokesman Roger Kerson. The UAW believes that a comprehensive national health insurance program, as Japan and other industrialized countries have, is the answer to the U.S. health care crisis.

While Toyota is intent on holding down health-care costs, company officials say the system also will benefit employees.

“We want to provide high-quality care,” said John Runge, manager of human resources for the Texas plant.

The clinic’s physicians will not be remunerated on the basis of how many patients they see — a payment method that encourages doctors to see as many patients as possible.

Whereas studies show doctors spend around seven minutes on average with patients in the United States, the San Antonio clinic will allot 20 minutes for a visit with a doctor.

“If a doctor spends 20 minutes with a patient, he’s likely to know more. There’s a major focus on prevention,” Brewer said.

The clinic, which will be operated by CHD Meridian Health Care, will initially employ two full-time doctors and one part-time, but expects to increase that to as many as seven doctors when the plant is fully staffed.

You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.

Action and Reaction

By Matthew Holt
Spot On Blog | San Francisco
Nov 6, 2006

Back in the day when there was some vague interest from Democrats in fixing our health care system, a kindly millionaire gave a pile of money to a lobbying pressure group that had quite some influence behind the ill-fated Clinton Health Plan. Not too much has been heard since from Families USA and its leader Ron Pollack. Sadly, those of us of a certain age felt that its day in the sun had come and gone.

But what was interesting about Families USA was that, unlike other Capitol Hill groups with “friendly” names, it actually lobbied for things that might make pretty good sense to families, especially poor ones. Namely national health insurance coverage that couldn’t be taken away if the breadwinner got sick. Those of us in the now majority who live in households that are no longer inhabited by traditional families, might wonder why health care needs to be specially designed just for them, given that it’s not just people in traditional families who get sick (and in fact many of the most sick are not in traditional families). But families are important because families tend to be richer and more likely to vote than other households, and what’s good for them is generally what’s good for America.

However, you might think that 13 years after its heyday that Families USA may not be very important any more. But it is. How do I know this? Well the health care industry and a few of its zealot fellow traveler ideologues have set up a knock-off “astroturf” movement to counter its work. I’d missed the formal launch but, no worries, into my inbox popped a very nice looking email from someone called Sandra Berk who claims to be the head of Health Care America. And Health Care America’s web site address is, get this, fightingforfamilies.org. No confusion there. Nope. Not a speck.

You know this has got to be special – presumably fighting forfamiliesmotherhoodandapplepie.org was taken. But then I read down in the email and it was full of all the nutty health care theories that proliferates from certain right wing think tanks. I know these people well enough and have had long interviews with two of their leaders Grace Marie Turner and David Grazter over on my site, THCB. Their basic premise is that no one should be forced by mandate or taxation to buy health insurance. They know and cheerfully admit that this will continue the current scenario in which millions of Americans will remain uninsured, and consequently in which many of them have extreme problems with medical costs – often leading to bankruptcy.

Turner, Gratzer et al basically think that this is the price we pay for getting slightly better survival rates for cancer than Canadians, and we should thank our lucky stars that we’re not like them – as in forced to pay into a social insurance pool that puts some limits on care for the virtually dead, but makes sure that no one goes to the poorhouse purely because they’re sick. Whether or not you agree with them, that’s what they think and I suppose it’s a point of view.

But I don’t see how it’s a point of view that “families” are particularly keen on. Which raise a basic question. Which families are supporting fightingforfamilies.org? Well it becomes pretty obvious when you look at their web site:

Health Care America is supported by a broad spectrum of consumer choice advocates, including employers, individuals, hospitals, pharmaceutical manufacturers, pharmacy benefit managers, health care professionals and others.
So the families we’re discussing are the McGuires, the Frists, the Crawfords, et al. Families that look just like the other 50 odd million in America, apart from their bank accounts.

But you won’t find out from the site who’s running the show. There is no page for “management” or “sponsors”. The Washington Post reported that the head was “Sarah Berk, a former lobbyist for the American Hospital Association and earlier an aide in the leadership office of Sen. Rick Santorum (R-Pa.).” She wants to “produce research papers and be a free-market ‘counter-voice’ to Families USA, a group that she said promotes a ‘liberal health-care agenda.'”

Well you didn’t know that 13 years after its glory days promoting the Clinton plan – which today is even repudiated by the person who lead it – Families USA needed to be combatted. So how will HCA help finish it off?

Health Care America is a tireless advocate for American families and is a vocal critic of policies that restrict consumer choice in the health care system. We participate actively in the media, produce groundbreaking research and provide Americans with the information they need to help improve our nation’s health care system.
And even if they don’t tell you on their web site who their management or funders are, a quick search shows the site’s address is registered to geofffreeman@cox.net who sounds suspiciously like this Geoff Freeman:

Geoff Freeman, executive director of the Discover America Partnership, is an expert in managing complex issue campaigns and developing innovative outreach strategies to increase support among unlikely allies.
And who is he really? A Republican PR operative returned from a tour in Iraq at the Coalition Provisional Authority with ties to the big drug companies.

As a Vice President with APCO Worldwide, a global public affairs firm, Mr. Freeman managed a wide array of issue campaigns, including the Partnership for Prescription Assistance (PPA). The PPA, supported by America’s pharmaceutical companies, is the largest effort ever created to connect uninsured Americans with free prescription medicines. The campaign succeed in helping more than two million Americans in its first year of operation, driving over 5,000 news stories and repositioning the pharmaceutical industry.

Prior to leading the PPA, Mr. Freeman managed a multi-million dollar campaign to inform millions of Americans on some of the many “untold stories” from America’s liberation of Iraq. The campaign featured dozens of Iraqis touring the United States to express their gratitude for the sacrifices made by American soldiers as well as the release of a groundbreaking film titled “Voices of Iraq.” The film empowered Iraqis to share their personal stories and won rave reviews from critics across the country. The campaign included over 200 speaking engagements in targeted markets and earned more than 325 television and radio appearances and over 250 newspaper placements.
What Iraqis have in common with bedraggled American families and their health care needs escapes me. But they’re not the only ones who’s labels are in question. There’s also Consumers for Health Care Choices, run by Greg Scandlen – a man who cut his teeth working for the Blue Cross plans – and Stormy Johnson – a former President of the American Medical Association. You might think that a health plan executive and a proponent of organized medicine aren’t exactly most likely to be the standard bearers for the down-trodden consumer. And you’d be right.

But that’s all OK. This is America – you can call yourselves what you like and there’s no penalty for misleading the public. But the skeptics might ask cui bono. And while they’re lacking a bunch of PR flacks on the payroll, there are some organizations who are what they claim, The poor saps at Physicians for a National Health Program are actually what they say they are – a bunch of physicians in favor of a national single payer plan.

Sadly, no one told them that you need to be a “family” to run the world.

What's good about a 5 percent cut in physician payments?

Medicare Announces Final Rule Setting Physician Payment Rates and Policies for 2007

Centers for Medicare and Medicaid Services
November 1, 2006

Starting next year, the Medicare program will pay physicians more for the time they spend talking with Medicare beneficiaries about their health care and will pay for a broader range of preventive services. The changes, which will become effective January 1, 2007, are included in the Medicare Physician Fee Schedule (MPFS) final rule released today by the Centers for Medicare & Medicaid Services (CMS).

CMS projects that it will pay approximately $61.5 billion to over 900,000 physicians and other health care professionals in 2007 as a result of the payment rates and policies adopted in this rule. This new spending figure reflects current law requirements to reduce payment by 5 percent to account for the combined growth in volume and intensity of physician services.

The hallmark of this rule is a stronger emphasis on the physician-patient relationship. The final rule increases significantly the work component for the RVUs (relative value units) for the face-to-face visits (evaluation and management or “E&M services”) during which the physician and patient discuss the patient’s health status and the steps that can be taken to maintain or improve the patient’s health. For example, the work component for RVUs associated with an intermediate office visit, the most frequently billed physician’s service, is increasing by 37 percent. The work component for RVUs for an office visit requiring moderately complex decision-making and for a hospital visit also requiring moderately complex decision-making are increasing by 29 percent and 31 percent respectively. Both of these services rank in the top 10 most frequently billed physicians’ services out of more than 7,000 types of services paid under the physician fee schedule.

The increases in the work component for E&M services are the result of a comprehensive review of the values CMS has placed on the physician work involved in providing a service. Medicare law requires that this review be conducted at least every five years. Consistent with longstanding practice, CMS worked with the Relative Value Update Committee (RUC), which operates under the auspices of the American Medical Association, to review work relative value units for over 400 services. The RUC recommended the proposed E&M increases, and many of the specialty societies commented favorably on them in their comments on the proposed MPFS rule.

The Medicare law includes a statutory formula that will require CMS to implement a minus 5.0 percent update in payment rates for physician-related services. This is slightly less than the 5.1 percent reduction in the proposed rule. This formula compares the actual rate of growth in spending to a target rate, which is based on such factors as the growth in number of Medicare fee-for-service beneficiaries and statutory or regulatory changes in benefits. If the actual rate of spending growth exceeds the target rate, the update is decreased; if it is less, the update is increased. Every year beginning with 2002, in response to rising spending, the statutory update formula would have operated to impose payment cuts. The negative update went into effect in 2002, but for 2003 to 2006, Congress intervened and temporarily suspended the requirements of the formula in favor of specific, statutory updates.

Consistent with requirements of the DRA (Deficit Reduction Act of 2005), the final rule caps payment rates for imaging services under the physician fee schedule at the amount paid for the same services when performed in hospital outpatient departments. The final rule includes a list of codes to which the outpatient prospective payment system (OPPS) cap would apply. The rule also finalizes a policy of reducing by 25 percent the payment for the technical component of multiple imaging procedures on contiguous body parts. CMS will apply the multiple imaging reductions first, followed by the OPPS imaging cap, if applicable.

http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=2044

Final rule (1418 pages):
http://www.cms.hhs.gov/center/physician.asp and click on “CMS-1321-FC and CMS-1317-F”

Comment:

By Don McCanne, MD

As is typical for this administration, this release places a very positive spin on the message that announces a 5 percent reduction in the payment for physician services. For those who believe that they read that payment for an intermediate office visit is increasing by 37 percent, read it again. The 37 percent increase applies only to the work component (physician labor) and not to the practice expenses (office overhead). None the less, there is very positive news in the 1418 pages in the final rule (most of which I confess I have not read).

Although Medicare has been fairly effective in controlling fees, it has not been able to control the increases in frequency and intensity of services. The Sustainable Growth Rate (SGR) makes appropriate adjustments to physician fees based on factors such as demographics, inflation, and newly-authorized benefits. To attempt to control over-utilization, it makes downward adjustments when the frequency and intensity of services increase. This is appropriate when it appears that practice patterns change merely for the purpose of increasing the units for reimbursement. It is especially appropriate when it appears that there is a dramatic increase in high-tech services of no benefit, as has been demonstrated by John Wennberg and Elliott Fisher. The largest single component driving down the SGR-determined rates has been the explosion in the use of expensive imaging services. Another very important factor has been the shift from primary care services to more specialized services, even though primary care services have been proven to provide high-quality care at significantly lower costs.

The good news is that payments are being adjusted upwards to reinforce the primary care infrastructure, and downwards to discourage excessive use of non-beneficial high-tech services. The bad news is that expensive high-tech services that are beneficial may actually end up being under-compensated with these changes. They will certainly take the brunt of the 5 percent reduction. Continual oversight and refinement has to be a perpetual process.

The important point is that, as a social insurance program, Medicare is making every effort to try to achieve the greatest value for our health care dollars as we are ever closer to the spending threshold that we can tolerate. In contrast, the private insurance sector makes every effort to squeeze whatever it can get out of the system short of sacrificing too many patients and their providers. Public administrators who care about the health of patients serve us far better than private administrators who care more about being judged by the success of their business models.

Deterioration of employer-sponsored coverage

Insurance plans target employers

By Andi Atwater
The Wichita Eagle
November 2, 2006

Three of Wichita’s largest insurance carriers are introducing new products this year and next that will help employers offer affordable benefits to just about every employee — even those ineligible for traditional medical coverage or who opted out for financial reasons.

These plans — often called “mini-medical” plans because they typically have limited or capped benefits and high deductibles — can save employers or their employees up to 40 percent from their traditional group coverage.

Industry experts say demand among employers is prompting this new emphasis on trimmed-down health benefits.

Blue Cross Blue Shield of Kansas, which covers about 100,000 people in Sedgwick County, rolled out a new, limited-benefit product Wednesday that gives employers a more affordable way to offer health benefits.

Called EssentialBlue, the plan caps benefits at $30,000, but covers routine and preventive care after a co-payment.

CIGNA HealthCare, which insures 17,500 employees in the Wichita area, will introduce Fundamental Care in Kansas early next year. It’s a limited-benefit plan that can save employers between 25 percent and 40 percent from traditional coverage.

http://www.kansas.com/mld/kansas/business/industries/healthcare/15906000.htm

And…

Many Employers Promote High-Deductible Health Plans During Open Enrollment Period

kaisernetwork.org
November 7, 2006

The Wall Street Journal on Tuesday examined how “employers are trying to get workers to confront ever-rising” out-of-pocket heath care costs as the open enrollment period for health plans “goes into high gear at many companies.”

According to the Journal, the efforts to “get workers to do the math” on health care costs “are coming chiefly from employers that are offering workers new ‘consumer-driven health plans,'” which often have deductibles of at least $1,000 and cost less for employers than plans with lower deductibles.

http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=40920&dr_cat=3

Comment:

By Don McCanne, MD

The insurers in the individual market have survived by introducing products with affordable premiums, but they have been able to do so only by sharply curtailing the financial security offered by these plans (by reducing benefits and increasing cost sharing). These plans have provided a (false) sense of security for those who remain healthy, but they have defeated the purpose of insurance by creating financial hardships for those with significant health care needs.

Until recent years, employer-sponsored plans have provided more comprehensive benefit packages and have exposed employees to only modest out-of-pocket expenses. That is now changing. The dramatic increase in the use of high-deductible plans has resulted in truly unaffordable out-of-pocket spending for the majority of individuals who develop major health problems. Worse, the newer products that are also stripped of benefits offer no financial security for those with needs. As employer-sponsored plans copy the deficient products in the individual insurance market, private insurance plans are headed toward obsolescence.

Can you imagine Blue Cross Blue Shield capping benefits at $30,000? That’s not insurance; that’s a crime!