By Austin Frakt
The New York Times, October 15, 2018

Calls for a Medicare for All system are growing louder. Many Democrats have embraced it, while President Trump said last week that it would raise health care costs drastically.

Democrats say that giving people the option to partake in Medicare — no matter their age — will actually cut costs.

American administrative costs for health care are the highest in the world, and they argue that one advantage of Medicare for All is that it would save money because Medicare’s administrative costs are below those of private insurers.

Does that argument hold up?

Don’t forget about Medicare’s private plans

Medicare’s administrative costs were $8.1 billion last year, or 1.1 percent of total spending, close to the proportion it has been in recent years.

But some have argued that the actual cost is higher because of services performed for Medicare by other parts of the government that aren’t accounted for: The Social Security Administration collects premiums, the Internal Revenue Service collects taxes for the program, the F.B.I. provides fraud prevention services, and at least seven other federal agencies and departments also do work that benefits Medicare.

The claim that these administrative costs are overlooked is false. As annual reporting of Medicare’s finances plainly states, they are accounted for.

But there is something missing from the $8.1 billion Medicare administrative cost figure, as Kip Sullivan explains in a 2013 paper published in the Journal of Health Politics, Policy and Law. Although it accurately accounts for the federal government’s administrative costs, it does not include those borne by private plans that also offer Medicare benefits.

In addition to the traditional (public) Medicare plan, Medicare is also available from private plans through the Medicare Advantage program. Today, one-third of people using Medicare are in such plans, up from about one-fifth a decade ago. Moreover, all Medicare drug benefits are administered through private plans.

National Health Expenditure data shows both the government’s administrative costs for Medicare and those of Medicare’s private plans. Putting them together for the most recent year available (2016), they reach $47 billion, or 7 percent of total Medicare spending — well above the administrative costs borne directly by the Medicare program.

Medicare’s private drug benefit plans incur administrative costs that are about 11 percent of their spending. All of this additional, private administrative cost is paid for by taxpayers and, through their premiums, people who use Medicare.

Medicare’s direct administrative costs are not only low, but they also have been falling over the years, as a percent of total program spending. Yet the program’s total administrative costs — including those of the private plans — have been rising.

“This reflects a shift toward more enrollment in private plans,” Mr. Sullivan said. “The growth of those plans has raised, not lowered, overall Medicare administrative costs.”

The high costs of private insurer plans

Making an accurate estimate of the administrative costs of Medicare for All would depend, in part, on whether it would be more like an expansion of traditional Medicare (with its 1.1 percent administrative cost rate) or of all of Medicare, including its private plans (with a combined 7 percent administrative cost rate).

Yet both figures are well below private insurers’ administrative costs, which run about 13 percent of spending (this also includes profit), according to America’s Health Insurance Plans, an advocacy organization for the industry.

Some critics have argued that Medicare’s administrative cost rate appears artificially low because Medicare enrollees’ health spending is so high. Average Medicare spending per beneficiary is just over $12,000 per year; for an average worker in a private plan, it’s about $6,000. If you simply divide administrative costs by total spending, you will get a lower number for Medicare for this reason alone.

This is true, but the government’s administrative costs for Medicare are still below those of private plans. The government’s administrative costs are about $132 per person compared with over $700 for private plans. One reason Medicare’s are so much lower is that it reaps economies of scale. It also benefits from not needing to do much marketing, and it doesn’t earn profits.

A final critique of Medicare’s administrative costs is that they’re inefficiently low because the program doesn’t spend enough on anti-fraud efforts.

This is hard to prove or disprove. The government engages in a number of Medicare anti-fraud activities that more than pay for themselves. Perhaps another dollar spent tracking fraud would yield more than a dollar in return.

Still, even if Medicare did every bit as much in this area as the private sector, it would not raise its administrative costs by much.

“While private health plans have active anti-fraud, waste and abuse efforts, their total spending on this is very low,” said Andrew Naugle, a health care consultant with Milliman who studies health plan administrative costs. “For most plans, it’s not even in the top 10 categories of administrative spending.”

Features that may be worth the cost

Although Medicare for All might shed some administrative costs, it could also shed some other features, including some that many people appreciate.

“We should keep in mind that traditional Medicare and private plans are completely different products, and thus their associated administrative cost loads are very different,” Mr. Naugle said.

Traditional Medicare is primarily focused on processing payments to providers, while private plans — including those offered by Medicare Advantage, employers and Affordable Care Act marketplace plans — engage in care management, which could help coordinate care for people with chronic conditions. Private plans also establish networks of physicians, which could help steer enrollees to higher-quality providers.

These activities cost money and are things traditional Medicare doesn’t do, at least not directly. It has, however, put in new programs to give health care providers incentives to better coordinate care.

Another point in favor of private plans is that they’re more responsive to consumer demand. For this reason, private plans have provided some benefits that Medicare hasn’t — or provided them long before Medicare did.

For example, drug coverage was commonplace in private plans well before Medicare put in a universal prescription drug benefit in 2006. Another is that traditional Medicare still doesn’t have an out-of-pocket limit, whereas that’s standard for private plans.

But let’s get back to the main question we posed at the top: Are Democrats right that Medicare’s administrative costs are below those of private insurers? The answer is yes. But that’s in part because private plans do things that Medicare doesn’t. Whether those things are worth higher administrative costs is a value judgment on which reasonable people can disagree.

https://www.nytimes.com…

***

Published Comment:

By Don McCanne, M.D.

The 1.1 percent administrative cost of traditional Medicare increases to 6 percent when only one-third of the Medicare beneficiaries are enrolled in private Medicare Advantage plans. The waste of the private plans is diluted by the efficiency of the traditional program.

More importantly, the administrative excesses permeate our entire health care delivery system because of the highly fragmented, dysfunctional financing system which also places a great administrative burden on the providers of health care. When people ask where we are going to get the funds tp pay for Medicare for All, they should be reminded that hundreds of billions of dollars are actually recoverable by merely changing to an efficient Medicare for All public financing. That would still leave hundreds of billions for essential administrative services.

Regarding whether or not the private Medicare Advantage plans are providing value for their administrative excesses, the answer is clearly no. Their intrusive care management has been directed more at upcoding to increase profits rather than providing much in the way of truly beneficial services.

It would be much more efficient to roll the extra benefits of Medicare Advantage, retiree plans, and Medigap into the traditional program, creating an improved Medicare for All. The administrative savings along with negotiated pricing is the key to providing affordable health care services to absolutely everyone.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Tricia Neuman, Karen Pollitz, and Jennifer Tolbert
KFF, October 2018

As policymakers debate next steps for expanding health insurance coverage and lowering health costs, some have introduced legislation that would broaden the role of public programs, such as Medicare and Medicaid. During the 115th Congress, eight such proposals were introduced, ranging from bills that would create a new national health insurance program for all U.S. residents, replacing virtually all other sources of public and private insurance (Medicare-for-All), to more incremental approaches that would create a new public plan option, as a supplement to private sources of coverage and public programs.

These eight legislative proposals differ in ways that have important implications for consumers, health care providers and payers, including employers, states, the federal government, and taxpayers. Key policy differences relate to eligibility, the size and scope of the public plan, covered benefits and cost sharing, premiums, subsidies for premium and cost sharing, cost containment strategies, and the likely interactions with current public programs and private sources of coverage. They also vary in their level of detail; some bills, according to their sponsors, are intended to serve as blueprints for reform, and are expected to include greater specificity over time. Given the timing of the legislative calendar, these bills are unlikely to advance in the current Congressional session; however, they illustrate the range of options that will likely serve as prototypes for legislation that may be introduced in the next session of Congress.

Greatly simplified, these public plan proposals fall into four general categories:

* Two proposals would create Medicare-For-All, a single national health insurance program for all U.S. residents (Senator Sanders, S.1804; Rep. Ellison, H.R. 676);

* Three proposals would create a new public plan option, based on Medicare, that would be offered to individuals and some or all employers through the ACA marketplace (The Choice Act by Rep. Schakowsky, H.R. 635, and Sen. Whitehouse, S. 194); The Medicare-X Choice Act by Sen. Bennett, S. 1970, and Rep. Higgins, H.R.4094; and the Choose Medicare Act by Sen. Merkley, S. 2708 and Rep. Richmond, H.R. 6117)

* Two proposals would create a Medicare buy-in option for older individuals not yet eligible for the current Medicare program (Sen. Stabenow, S. 1742; Rep. Higgins, H.R. 3748); and

* One proposal would create a Medicaid buy-in option that states can elect to offer to individuals through the ACA marketplace. (Sen Schatz, S. 2001 and Rep. Luján, H.R. 4129).

This policy brief summarizes key features of these proposals, highlights similarities and differences, and discusses key questions, trade-offs and potential implications.

Issue Brief (16 pages):
http://files.kff.org…

Side-by-Side Comparison of Medicare-for-All and Public Plan Proposals (12 pages):
http://files.kff.org…

Interactive for comparing proposals:
https://www.kff.org…

***

Comment:

By Don McCanne, M.D.

The enthusiasm for Medicare for All continues to increase so much so that it has now become part of our national parlance. Until recently, the meaning of the term has been quite specific, referring to a single payer national health program based on an improved version of our traditional Medicare program that would include everyone and which would be publicly-financed and publicly-administered.

Now advocates of various models of incremental reform want to get in on the action, and they are doing so usually by using the Medicare label. So we not only have two Medicare for All bills, but we also have the labels of Medicare public option (Choice, Medicare-X Choice, Choose Medicare), Medicare Buy-in (Medicare at 55, Medicare Buy-in and Health Care Stabilization), and even a Medicaid buy-in option. Needless to say, this has caused confusion which particularly has been a problem with distinguishing true single payer from merely adding a public option to our current inefficient, fragmented financing system.

This report, authored by the policy experts at KFF, is timely and welcome since it describes the eight leading legislative proposals and discusses some of the key issues that distinguish them. The authors do set apart Medicare for All as a single, federal, government-administered program that would provide coverage to all U.S. residents, replacing virtually all other sources of private health coverage (employment-sponsored plans and insurance offered inside and outside ACA marketplaces) and most public programs, including Medicare, Medicaid and CHIP. All of these other programs – public option, Medicare buy-in, and state Medicaid buy-in – keep intact our administratively inefficient, expensive, fragmented, dysfunctional health care financing system while merely adding administratively complex options.

The difference is night and day. There should be no confusion between an improved Medicare for All that would fix our health care financing problems, and the other proposals that merely add to the complexity and waste while failing to adequately address the inequities and deficiencies inherent in our current system.

This is why the Issue Brief and Side-by-Side comparison produced by KFF are so pertinent. They can be used to educate others on the stark differences between the two approaches to reform – single payer versus adding an option – not to mention that they can be used to sharpen your communication skills as you attempt to educate others on these crucial differences.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Robert Wood Johnson Foundation, October 4, 2018

The threat to consumers posed by bills from out-of-network (OON) health care providers is an issue that has been gaining prominence lately, with coverage from the media and growing policymaker interest.

With the growing use of managed care plan designs and narrow networks, OON coverage is becoming increasingly rare. This tendency is more pronounced in the fully insured market. In the individual market in particular, there has been a steep decline in the percent of plans that offer OON coverage, from 58 percent in 2015 to 29 percent in 2018. The decline in the small group market has been far less sharp, and probably tracks more closely to what is happening in larger employer plans. Part of the difference in the two segments reflects patterns in carrier participation in the individual market. National commercial carriers, which are more likely to offer broader network plans, exited the individual market in droves in 2016 and 2017, leaving a market that is dominated by Blues and Medicaid-managed care organizations (MMCO). MMCO plans almost always offer closed-network plans, and even many Blues plans have shifted to narrow network offerings in the individual market.

High Deductibles

The share of plans with OON benefits has declined, and so has the comprehensiveness of those OON benefits that are offered. In about 95 percent of individual and small group plans with OON benefits, the deductible must be met before there is any cost-sharing. OON deductibles are generally high, particularly in the individual market, where the median OON deductible is approximately $12,000. In about 30 percent of individual market plans with OON coverage, the deductible is greater than $20,000. The small group market is quite different, with a median deductible of about $6,000 and virtually no deductibles higher than $20,000.

Infinite Maximum Out-of-Pocket

After the deductible is met, cost-sharing usually takes the form of 50 percent co-insurance. This generally continues until the maximum out-of-pocket (MOOP) limit is reached. For ACA plans, the MOOP for in-network coverage is capped at $7,350 for individuals, and at about $14,700 for families. Yet for OON benefits, there is no such limit. In fact, about one-third of individual marketplace plans have no dollar amount for the MOOP, meaning that cost-sharing can continue basically forever once the deductible is reached. For plans that do have dollar limits, they are high. The median for the individual market is close to $19,000. In the small group markets this is much less common, as only 8 percent of plans with OON benefits have no MOOP limit. Median out-of-pocket maximums for plans with dollar limits are about $15,000 in the small group market. 

OON bills are a source of concern to consumers, and a recent study showed that approximately 20 percent of hospital visits among patients with large group coverage resulted in an OON bill. In the case of medical emergencies, the ACA requires that OON care is reimbursed at in-network rates, although depending on state law, providers may still “balance bill” patients. Consumers with plans in the individual and small group markets have a high level of exposure to these charges. Narrow networks increase the likelihood that providers are out of network. Many plans in the small group market and most plans in the individual market do not have any OON coverage at all, and for those that do, the coverage tends to be very minimal, leaving consumers with a lot to lose in the event of an unpleasant surprise.

https://www.rwjf.org…

***

Comment:

By Don McCanne, M.D.

One of the most important reasons for enactment of the Affordable Care Act was the inadequacy of plans offered in the individual insurance market. Though some of the deficiencies were corrected, such as ensuring availability of coverage for individuals with pre-existing medical conditions, it is not the nature of the insurance industry to forgo opportunities to improve the business model of their insurance products. This report on what has happened in the individual insurance market since the implementation of ACA should raise alarms.

With an emphasis on controlling access to care by establishing narrower networks of health care providers, the insurers have reduced coverage provided for care obtained outside of the networks. As recently as 2015, 58 percent of individual plans offered coverage for care obtained outside of networks. This year that has declined to only 29 percent. If there is out-of-network coverage the average deductible is about $12,000 and for about 30 percent of the plans it is over $20,000. Since out-of-network care is often unavoidable, the potential financial exposure can be very great in spite of the effort of some states to regulate such exposure.

The Affordable Care Act did place limits on the maximum out-of-pocket costs to which enrollees in exchange plans would be exposed, but this maximum may not apply to care obtained out-of-network. Some individual plans do have a maximum on out-of-network out-of-pocket costs though the average maximum is about $19,000. The majority of individual plans do not have an out-of-pocket maximum and thus cost sharing can continue forever. Thus this coverage would be inadequate for a majority of individuals who had to obtain a significant portion of their care out-of-network.

It is not in the nature of the private insurers to find ways to remove financial barriers to care for patients. Quite the opposite. To meet their own business goals, they increase barriers. After the implementation of ACA we have seen an increase in the use of narrow networks and higher deductibles. If we find ways to reduce the negative impact of these policies on patients, the insurance industry, as masters of innovation, will find more ways to avoid paying for health care. In a way it is our fault because we have allowed our elected representatives to keep these people in charge.

Suppose we had a well designed, single payer national health program – an improved Medicare that covered everyone. Networks designed to limit access would not exist. High deductibles designed to erect financial barriers to care would not exist. Unlimited out-of-pocket spending would not be a problem since costs for essential health care services would be fully covered. Public programs are designed to serve patients whereas private programs are designed to serve business interests.

Again, insurer innovation since full implementation of ACA has been detrimental, as this report shows, and further detrimental innovation is inevitable as long as we leave the private insurance industry in charge. Instead of continuing with our relatively feeble efforts to try to level the playing field, let’s establish our own level field supervised by our own public stewards.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Donald J. Trump
USA Today, October 10 2018

Excerpts

Throughout the year, we have seen Democrats across the country uniting around a new legislative proposal that would end Medicare as we know it and take away benefits that seniors have paid for their entire lives.

Dishonestly called “Medicare for All,” the Democratic proposal would establish a government-run, single-payer health care system that eliminates all private and employer-based health care plans and would cost an astonishing $32.6 trillion during its first 10 years.

As a candidate, I promised that we would protect coverage for patients with pre-existing conditions and create new health care insurance options that would lower premiums. I have kept that promise, and we are now seeing health insurance premiums coming down.

I also made a solemn promise to our great seniors to protect Medicare. That is why I am fighting so hard against the Democrats’ plan that would eviscerate Medicare. Democrats would gut Medicare with their planned government takeover of American health care.

The Democrats’ plan means that after a life of hard work and sacrifice, seniors would no longer be able to depend on the benefits they were promised. By eliminating Medicare as a program for seniors, and outlawing the ability of Americans to enroll in private and employer-based plans, the Democratic plan would inevitably lead to the massive rationing of health care. Doctors and hospitals would be put out of business. Seniors would lose access to their favorite doctors. There would be long wait lines for appointments and procedures. Previously covered care would effectively be denied.

In practice, the Democratic Party’s so-called Medicare for All would really be Medicare for None. Under the Democrats’ plan, today’s Medicare would be forced to die.

The Democrats’ plan also would mean the end of choice for seniors over their own health care decisions. Instead, Democrats would give total power and control over seniors’ health care decisions to the bureaucrats in Washington, D.C.

The first thing the Democratic plan will do to end choice for seniors is eliminate Medicare Advantage plans for about 20 million seniors as well as eliminate other private health plans that seniors currently use to supplement their Medicare coverage.

Next, the Democrats would eliminate every American’s private and employer-based health plan. It is right there in their proposed legislation: Democrats outlaw private health plans that offer the same benefits as the government plan.

Republicans believe that a Medicare program that was created for seniors and paid for by seniors their entire lives should always be protected and preserved. I am committed to resolutely defending Medicare and Social Security from the radical socialist plans of the Democrats.

Donald J. Trump is the president of the United States.

https://www.usatoday.com…

***

Comment:

By Don McCanne, M.D.

The good news about this op-ed by President Donald Trump is that the Medicare for All concept has gained so much public support that the president feels that he must attack it in his own inimitable style, that is by being untruthful about it in an effort to reduce the political traction that it has been gaining. Although his misstatements and falsehoods are so obvious that we should not have to refute them, nevertheless it is very difficult to remain silent over his outrageous claims. Can’t help but be compelled to respond to at least a few of them.

— “a new legislative proposal that would end Medicare as we know it and take away benefits that seniors have paid for their entire lives”

Improving Medicare and expanding it to cover everyone does not end Medicare and it does not take away benefits from seniors. It expands benefits for seniors, and everyone else.

— “Dishonestly called ‘Medicare for All'”

It might be dishonest to merely add a public option to our fragmented, dysfunctional health care financing system and call that “Medicare for All,” but that is not what the president is talking about. When the proposal would expand Medicare to cover everyone, just what is dishonest about calling that Medicare for All?

— “I promised that we would protect coverage for patients with pre-existing conditions”

The Trump administration is supporting the lawsuit by Republican state attorneys general that asks for repeal of the entire Affordable Care Act which would repeal the requirement that insurers cover pre-existing conditions. How is that keeping his promise?

— “I promised that we would…create new health care insurance options that would lower premiums”

The new products, such as association health plans, have lower premiums only because they do not provide adequate coverage. People who believed they were insured will be very disappointed when they find they will have to file for medical bankruptcy anyway, in spite of their insurance.

— “we are now seeing health insurance premiums coming down”

Trump’s effort to sabotage the Affordable Care Act by cancelling subsidies caused insurers to sharply increase their premiums. When the subsidies were reestablished, some of the insurers were able to reduce their premiums. There was no Trump magic that brought the premiums back down.

— “I also made a solemn promise to our great seniors to protect Medicare”

The Republicans have repeatedly expressed their desire to implement premium support which is a scheme to privatize Medicare. Giving priority to private investors over patients is not protecting Medicare.

— “That is why I am fighting so hard against the Democrats’ plan that would eviscerate Medicare”

Expanding Medicare benefits can hardly be called an evisceration.

— “Democrats would gut Medicare with their planned government takeover of American health care”

Under Medicare for All, health care delivery remains as it is now – mostly in the private sector – and health care decisions are made by patients in consultation with their health care professionals. That is not a government takeover of health care.

— “The Democrats’ plan means that after a life of hard work and sacrifice, seniors would no longer be able to depend on the benefits they were promised”

Seniors absolutely would be able to depend on the benefits they were promised, and even more.

— “the Democratic plan would inevitably lead to the massive rationing of health care”

With the amount we are spending on health care, we have more than enough funds to ensure adequate capacity in the system.

— “Seniors would lose access to their favorite doctors”

Private insurers limit patient access to provider networks, whereas patients would have free choice of their health care professionals under Medicare for All.

— “There would be long wait lines for appointments and procedures”

Several nations have shown that resource planning and queue management can prevent excessive queues in the system.

— “Previously covered care would effectively be denied”

Who is going to deny care? Donald Trump?

— “the Democratic Party’s so-called Medicare for All would really be Medicare for None”

What an outrageous statement.

— “The Democrats’ plan also would mean the end of choice for seniors over their own health care decisions”

What a lie! (There, I said it.)

— “Democrats would give total power and control over seniors’ health care decisions to the bureaucrats in Washington, D.C.”

As mentioned before, health care decisions are the patients’ own, made in consultation with their health care professionals.

— “eliminate Medicare Advantage plans for about 20 million seniors as well as eliminate other private health plans that seniors currently use to supplement their Medicare coverage”

Medicare Advantage and Medigap plans waste funds through their administrative excesses. It would be of greater value to roll any extra benefits of those plans into an improved version of the more efficient traditional Medicare program.

— “the Democrats would eliminate every American’s private and employer-based health plan”

Finally! Thank goodness.

— “I am committed to resolutely defending Medicare and Social Security from the radical socialist plans of the Democrats”

What? Defending the social insurance programs of Medicare and Social Security from the people who created and support them? Besides, now that the Republicans have cut taxes for the rich they say that we need to cut our entitlement spending – Social Security and Medicare.

Lies and distortions. And when they are repeated at Trump’s perpetual rallies, his forever loyal followers passionately cheer him on with total disregard for absence of a factual basis for his pronouncements. As a child, I remember newsreels of what seemed to me to be similar rallies held in a land far, far away. That did not turn out well. I have often wondered what caused the crowds to show such support. I still do.

Physicians for a National Health Program (PNHP) is a single issue advocacy organization supporting a single payer national health program – an improved Medicare for All. PNHP does not support any political candidates nor political parties. If there is a misperception of a political overtone in this article, it reflects strictly the ineptitude of the author in his effort to comply with 501(c)(3) status.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By John O’Shea
Health Affairs Blog, October 3, 2018

Although still a subject of debate, the fee-for-service health care payment system that reimburses providers for individual services is widely indicted for promoting care that is inefficient, uncoordinated, and too often fails to meet the needs of patients. Whether or not fee-for-service is the main culprit, the escalating cost and inconsistent quality of US health care highlights the need for a better system. In discussions about what that system should look like, the terms “patient-centered” and “value-based” have become buzz words for payment and delivery reform in health care.

Unfortunately, many well-intentioned efforts to move to a more effective system are adding to the already substantial administrative and regulatory burden on physicians, hospitals, and other providers. In turn, these cumbersome new initiatives stifle innovation and obstruct meaningful payment and delivery reform. The current administration has appropriately recognized that this over-regulation is impeding the transition to a truly patient-centered and value-based health care system. Recently announced initiatives such as “Meaningful Measures” and “Patients over Paperwork” are promising because they aim to reduce the amount of time physicians spend on record-keeping and administrative tasks, allowing them to re-focus on patient care. However, the administration’s recent refusal to consider new payment and delivery models recommended by the Physician-Focused Payment Model Technical Advisory Committee (PTAC) throws into question whether the Department of Health and Human Services (HHS) is serious about removing barriers to innovation.

The Impact Of MACRA

In 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) became law. In addition to repealing the flawed Sustainable Growth Rate (SGR) payment system and providing a period of payment stability, MACRA seeks to stimulate the transition to a value-based health care system through payment incentives embodied in the Quality Payment Program (QPP). The QPP provides for two payment approaches for physicians and other providers in Medicare: the Merit-based Incentive Payment System (MIPS) and alternative payment models (APMs). While the goals underlying MACRA are sound, the original framework evolved into an overly complex statute, leading to an equally complex set of rules governing implementation, all of which undermine MACRA’s original intent.

The Burden Of MIPS

MIPS links payment to an individual provider’s performance on measures in four categories: quality, advancing care information, clinical practice improvement activities, and resource use. Once MACRA is fully implemented, an individual provider’s performance will be compared to the average performance of all MIPS-eligible providers in the previous year, and the provider will receive a positive, negative, or neutral update to their fee schedule payments two years later.

The Medicare Payment Advisory Commission (MedPAC) has stated that the current iteration of MIPS “is unlikely to clearly identify high-value or low-value clinicians and hence may be of limited utility for beneficiaries (in selecting high-value clinicians), for clinicians themselves (in understanding their performance and what to do to improve), or for the Medicare program (in adjusting payments based on value).” MedPAC recently recommended scrapping MIPS entirely and replacing it with a voluntary program.

The program needs no less than a major overhaul. It is increasingly clear that equitably measuring the performance of individual providers from different specialties, practice settings, and geographic regions on a national scale is not only unrealistic, it is inconsistent with many of the basic tenets of payment and delivery reform, such as team-based care, coordination of services, and the aggregation of payments to incentivize these principles.

APMs, The PTAC, And Barriers To Innovation

The underlying goal of the QPP is to incentivize providers to transition out of fee-for-service and into APMs. However, current Advanced APM options are limited to Centers for Medicare and Medicaid Services (CMS)-approved initiatives. These initiatives have excessively stringent requirements, which have contributed to disappointing early results and exits of a number of early adopters.

MACRA established the PTAC as a forum for practicing physicians to develop innovative ideas about Medicare payment and delivery reform. However, even though the current committee members comprise a veritable “dream team” of dedicated payment and delivery reform experts, the complex regulations governing the application process and CMS’s rules about testing and implementing recommended models prevent the committee from realizing its original intent.

Given the excessive regulatory requirements and resultant sluggish start of the CMS-sanctioned initiatives, combined with the restrictions placed on the PTAC process, MACRA (as currently structured) is unlikely to realize its potential as a catalyst for transitioning to patient-centered, value-based health care.

Recently HHS released its response to comments and recommendations from the PTAC regarding 12 models submitted to the HHS secretary between October 2017 and May 2018. Citing HHS criteria for evaluating proposed models, the secretary declined to consider any of the models for implementation or further testing, listing several considerations that the agency used to support this decision.

Looking Ahead

Transitioning to a patient-centered and value-based health care payment and delivery system is a good idea. However, initiatives that divert physician time away from clinical care are not patient-centered, and investing precious resources on administrative and reporting requirements without any improvement in the quality of care is anything but value-based. The administration has promised to address the excessive regulations that have so far hindered meaningful payment and delivery reform. Now, the administration and Congress need to follow through on that promise. Otherwise, the terms “patient-centered” and “value-based” will remain largely hollow buzz words.

***

Published Comment:

By Don McCanne, M.D.

Fixation on the concept of value-based health care has led the policy community to craft reform models that inherently increase the administrative inefficiencies in our health care financing system – an approach which bears some of the blame for the oppressive regulatory oversight. MACRA, MIPS, APMs, and, by extension, ACOs thus far have done very little to control costs (especially when including provider compliance costs). In spite of the relatively advanced state of health policy science, it is no wonder that none of the proposals submitted through the Physician-Focused Payment Model Technical Advisory Committee (PTAC) were considered worthy of experimentation since they were developed within the constraints of legislation and regulation defining ACOs and the other alternative payment models.

Rather than blaming excessive regulation, we should ask whether it is the right kind of regulation. Over half a century ago, Kenneth Arrow showed us that deregulating the private health care market was not the answer. Since then, many other industrialized nations, in fact all of them, have shown us that the rate of health care cost increases can be slowed to a sustainable level while providing essentially everyone with comprehensive health care coverage. In all of these nations regulatory oversight has been an essential element, but the right kind of regulation.

In the United States it is looking like a well designed, single payer model – an improved version of Medicare – would be most suited to our politics and culture. The latest polls show that close to one-half of Republicans have now joined a majority of Democrats and Independents in supporting Medicare for all. Though MACRA is another misstep on the way there, we should get past that and move forward with high value, patient-centered care that is affordable for everyone and protected with just the right dose of regulatory oversight through a publicly-financed and publicly-administered system. In such a system patient-centric care, value, and regulation are quite compatible.

https://www.healthaffairs.org…

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The Secretary of Health and Human Services

June 13, 2018

I am very pleased to respond to the comments and recommendations of the Physician-Focused Payment Model Technical Advisory Committee (PTAC) transmitted between October 2017 and May 2018. Shifting our health care system to one that pays for value rather than volume is one of my top four priorities as Secretary of Health and Human Services (HHS). PTAC can help us make that shift by reviewing promising new ideas, providing expert analysis, commentary, and recommendations, and working collaboratively to realize the promise of new physician-focused payment models (PFPMs).

Considerations for Proposed Model Submissions

Prior to PTAC beginning its work, HHS and CMS set forth 10 criteria for PTAC to use in evaluating proposed PFPMs (as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)). Consistent with these criteria and factors, I also ask that stakeholders take into account the following considerations as they develop new proposed payment models. This information, as well as the 10 established criteria for PFPMs and CMS’ model selection factors, have informed my review of responses to the comments and recommendations transmitted by PTAC on 12 proposed PFPMs.

1. HHS seeks models that demonstrate potential for significant impact on the Medicare population in ways where we can conduct a robust evaluation. PTAC has recommended several proposed models for limited-scale testing. In its Proposal Submission Instructions, PTAC indicates that the limited-scale testing “category may be used when the PTAC determines a proposal meets all or most of the Secretary’s criteria but lacks sufficient data to (1) estimate potential costs, savings or other impacts of the payment model and/or (2) specify key parameters in the payment model (such as risk adjustment or stratification), and the PTAC believes the only effective way to obtain those data would be through implementation of the payment model in a limited number of settings.” To the extent the limited-scale recommendation for a proposed model test precludes robust evaluation, we would be unlikely to implement such a recommendation.

2. Use of proprietary tools or tools that are not already developed in a proposed APM is an obstacle to HHS’ testing of the model. In prior Secretarial responses, HHS has communicated concerns about proposed models that require the use of specific proprietary products. HHS cannot endorse, promote or rely on a unique product.

3. Providing care in accord with current standards of practice or accelerating adoption of emerging standards of care do not require an APM. Although APMs often reward the provision of higher quality care, care that is provided would always meet current standards of care, regardless of the way in which a practitioner is paid. CMS would not implement a model that pays physicians solely for implementing standard practice and following established guidelines for care.

In summary, I look forward to reviewing proposals that present ideas that go beyond the scope of our current model portfolio, bringing in fresh and bold ideas for PFPMs from the field.

Sincerely,

Alex M. Azar II

The appendix includes 12 PFPM proposals and the reasons why each one was rejected:
https://aspe.hhs.gov…

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Comment:

By Don McCanne, M.D.

Please note my comment above that was published on the Health Affairs Blog website.

The letter by HHS Secretary Alex Azar is important because it demonstrates the fallacy that  we can somehow create a new health car financing system that pays for value rather than volume. The process set up by MACRA establishes the Physician-Focused Payment Model Technical Advisory Committee (PTAC) which evaluates new designs for alternative payment models (APMs), as if a new model that converts volume to value could be created. Yet all proposals submitted to HHS were rejected. Pretending that someone, somewhere, sometime will think up a new way to do that is an escape to fantasyland. MACRA, MIPS, and APMs are a failure and need to be dumped.

The goal of reducing volume is to control spending. Models designed specifically to do that either reduce beneficial health care services – an undesirable outcome – or they fail to have a significant impact on costs, as the disappointing results with ACOs demonstrate. On the other hand, the economic tools used in a model that already exists – a well designed single payer system (reduction of administrative excesses, global budgeting, negotiated rates, bulk purchasing, etc.) – do slow spending (value) without eliminating beneficial services (volume). So you can have greater value while maintaining an appropriate volume of services.

We could use the current process and submit to PTAC the PNHP single payer Medicare for all model, but HHS Secretary Azar and CMS Administrator Verma have already said they would reject Medicare for all.

This just demonstrates once again that we must intensify our efforts in educating the public so that we reach a threshold where the people lead and the politicians have no choice but to follow.

As FDR said, “The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country,” and, in another context, “now make me do it.”

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By Shannon Firth
MedPage Today, October 5, 2018

“Risk” and “predictability” were key themes in the discussion between accountable care organization (ACO) participants and Adam Boehler, the recently appointed director of the Center for Medicare and Medicaid Innovation (CMMI).

“There are a lot of folks that should take risk and there are a lot of folks that shouldn’t take risk,” Boehler said Thursday at the National Association of ACOs (NAACOS) conference here. “And I’m a big believer in being what you are.”

One group that probably shouldn’t take risk: single physician groups. “That’s silly,” he said. But for those providers and hospitals who are ready, it’s his responsibility and that of the Centers for Medicare & Medicaid Services (CMS) to create “practical and simple” policies to help participants succeed, Boehler said.

And for those who aren’t? “It’s also our job to say to folks, ‘If you’re not cutting it, get out of the way,’ because there are others that will come that will cut it … People will come in and take that risk and do something with it,” he said.

Boehler’s comments are in line with CMS’s more aggressive vision for ACOs to move towards risk.

Training Wheels Off

In August, CMS released a proposed rule for the Medicare Shared Savings ACO program which shortened the glide path for ACOs to stay in upside only models (those without any risk) for 2 years, down from an initial 6 years.

NAACOS president and CEO Clif Gaus, ScD, swiftly panned the idea of a shorter transition period, saying at the time that CMS was “pulling the rug” out from under the program.

In May, a NAACOS survey found that 71% of ACO participants would likely leave the Medicare Shared Savings Program (MSSP) rather than take on two-sided risk.

https://www.medpagetoday.com…

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NAACOS: Proposed rule changes to ACO program are ‘deal breakers’

By Tina Reed
Fierce Healthcare, October 5, 2018

Proposed changes to the federal accountable care organization (ACO) model—namely, a cut in the shared savings rate from 50% to 25%—would cut the knees out from under the program, board members of the National Association of ACOs said on Thursday.

Speaking with reporters at their annual conference in Washington, D.C., ACO leaders said they supported many of the proposed changes that the Centers for Medicare & Medicaid Services have brought forward regarding ACOs.

But proposed rules that would speed their path to risk and reduce the reward they would reap in return for any savings they realize are “deal breakers” for new entrants to the program, said Clif Gaus, NAACOS president and CEO.

“I don’t know any ACO that would roll the dice for 25%,” Gaus said. “You’ve got the carrot and the stick. And you just cut the carrot in half.” 

https://www.fiercehealthcare.com…

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Verma, Azar take aim at ‘Medicare for All’ proposals

By Paige Minemyer
Fierce Healthcare, October 5, 2018

Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma took another swipe at calls for a “Medicare for All” healthcare system this week, saying expanding those benefits to every American would “dilute” the program.

“Putting more people in the program is not going to solve the problem, and actually threatens the focus and security of the program for seniors,” Verma said.

When FierceHealthcare requested more details on how expanded enrollment would hurt seniors, CMS declined to provide specific data.

Department of Health and Human Services Secretary Alex Azar has also drawn a clear line in the sand on Medicare for All. In a speech last week, hosted by the Nashville Healthcare Council, Azar said that expanding the program to all Americans would eliminate their ability to make health choices for themselves.

“It’s simple math: Higher payments from commercial insurers help doctors take on seniors whose Medicare plans pay less,” Azar said. “It’s far from an ideal set-up, but a single government system would completely unravel it, without a theory for how seniors’ access would be protected.”

https://www.fiercehealthcare.com…

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Comment:

By Don McCanne, M.D.

At last week’s meeting of the National Association of ACOs (NAACOS) there was considerable interest in CMS’s proposed rule in which accountable care organizations (ACOs) would be forced into downside risk after only two years instead of the previous six allowed, and the share of any savings for the ACO would be reduced from 50 percent to 25 percent, with Medicare keeping 75 percent.

Of course no ACO wants downside risk but that is their stick that drives accountability for costs of health care. If forced into downside risk, the ACOs want time to adjust their operations to meet the required benchmarks, but that time would be cut short by the rule such that most ACOs would anticipate losses. The carrot for sharing in savings also is being reduced in half. An industry survey suggests that close to three-fourths of ACOs would leave the program rather than take on two-sided risk, and you can imagine that there will be a paucity of new entrants into the program, if any at all.

Although the rule is still only proposed, it is well on its way to being adopted since it has the strong support of CMS administrator Seema Verma and HHS Secretary Alex Azar. They are so determined that CMS’s Adam Boehler, director of the Center for Medicare and Medicaid Innovation (CMMI), says, “If you’re not cutting it, get out of the way.”

Oops, where did everyone go?

ACOs have fallen far short of expectations, and now they want to tighten the vise on providers. How could anyone with the least knowledge of health policy ever conceive that this model could succeed? If you consider the provider costs of participating in the program, it has already failed.

As regular readers know there is a proven model that would work for all of us, patients and providers alike – a well designed, single payer, improved Medicare for all. Yet last week both Verma and Azar again have attacked Medicare for all. Can we change their minds, or do we need to replace them?

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By Sarah Kliff
Vox, October 4, 2018

Leon Lederman won a Nobel Prize in 1988 for his pioneering physics research.

But in 2015, the physicist, who passed away Wednesday, sold his Nobel Prize medal for $765,000 to pay his mounting medical bills. The University of Chicago professor began to suffer from memory loss in 2011, and died in an Idaho nursing home.

In a lot of ways Lederman’s story represents the best and worst of America. Lederman was born in the 1920s to a father who worked in a laundry facility. He went on to discover the Higgs boson subatomic particle, the so-called “God particle.”

But even an accomplished physicist and university professor isn’t immune from America’s sky-high health care prices.

https://www.vox.com…

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Leon Lederman, 96, Explorer (and Explainer) of the Subatomic World, Dies

By George Johnson
The New York Times, October 3, 2018

Leon Lederman, whose ingenious experiments with particle accelerators deepened science’s understanding of the subatomic world, died early Wednesday in Rexburg, Idaho. He was 96.

Early in his career Dr. Lederman and two colleagues demonstrated that there are at least two kinds of particles called neutrinos (there are now known to be three), a discovery that was honored in 1988 with a Nobel Prize in Physics. He went on to lead a team at the Fermi laboratory, in Batavia, Ill., that found the bottom quark, another fundamental constituent of matter.

He and his wife, Ellen, moved to their place in Idaho, in Driggs, just before his 90th birthday. Found to have dementia, he was advised by his doctors to live in peaceful surroundings. In 2015 the couple agreed to let an online auction company sell his Nobel Prize medal. The proceeds, $765,002 before taxes, were set aside for future medical expenses.

“There’s always a place at the edge of our knowledge, where what’s beyond is unimaginable, and that edge, of course, moves,” Dr. Lederman told The Times in 1998.

In the beginning were the laws of physics. But where did the laws come from? At that point, he said, “You’re stuck.”

“I usually say, ‘Go across the street to the theology school, and ask those guys, because I don’t know.’”

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Yes, only in America. Nobel laureate Leon Lederman sold his Nobel medal in order to help pay for his pending medical bills.

To learn more about this remarkable gentleman, the full New York Times obituary is well worth reading.

Then take time out for a contemplative interlude. We all know about the injustices of our health care financing system that negatively impact those of modest or meager means, but a Nobel laureate?

We can do better that that, to the benefit of everyone.

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Medical Group Management Association, October 2018

The federal government has focused on decreasing the regulatory burden on medical group practices. MGMA has long been a champion for decreased regulatory burden and increased administrative simplification and standardization in order to achieve a more efficient and effective care delivery process for patients and providers.

This study is the second in a series to assess the burden level of regulatory processes for physician practices participating in Medicare programs.

The move toward value

How do you view the move to paying physicians based on value of care delivered rather than volume of services provided?

57% – Negative
38% – Positive
5% – No opinion

Has the move toward value-based payment (in Medicare/Medicaid) improved the quality of care for your patients?

76% – No
15% – Yes
9% – No opinion

Has the move toward value-base payment (in Medicare/Medicaid) increased the regulatory burden on your practice?

90% – Yes
6% – No
4% – No opinion

Overall, has the move toward paying physicians based on value been successful to date?

79% – No
8% – Yes
13% – No opinion

https://www.mgma.com…

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The Future of Healthcare: A National Survey of Physicians

The Doctors Company

The 2018 Future of Healthcare report, compiled from the observations of more than 3,400 doctors, has uncovered a complex picture of the attitudes of physicians nationwide toward the important issues facing the industry.

43% of Doctors Believe Value-Based Care Will Negatively Impact Physician-Patient Relationship (42% No impact; 15% Positive impact)

61% of Doctors Believe Value-Based Care Will Negatively Impact Their Practice

https://www.thedoctors.com/future

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Half A Decade In, Medicare Accountable Care Organizations Are Generating Net Savings

By William Bleser, David Muhlestein, Robert Saunders, Mark McClellan
Health Affairs Blog, September 21, 2018

Summing Up

The MSSP (Medicare Shared Savings Program) like overall health care reform remains work in progress, with performance trends continuing to show improvement. While some organizations have been participating for half of a decade, most MSSP participants are still just a few years into their care transformation journey. Quality scores are generally high, the program is achieving net savings, and cost reduction is improving. But the modest savings suggest that learning from MSSP experiences to date to modify it for the future – and reinforcing these changes with other accountable care reforms – could do more to bend the curve of future cost growth. The new MSSP proposed rule would shift many more ACOs toward downside risk. But if many organizations that could have achieved savings over time drop out, and if those payments represent a small minority of total payments, even heightened downside risk may be insufficient to drive more substantial change toward a value-based health care. We are still early in the journey, but with more experience and more participants, the opportunities for evidence-based payment reforms and for shared learning to accelerate progress are greater than ever.

https://www.healthaffairs.org…

***

Comment:

By Don McCanne, M.D.

The future of health care financing is all about value-based care (VBC) – paying based on value rather than volume – or so you would believe based on the proclamations of politicians and the policy community and the dissemination of that concept through the academic literature and lay media.

We are already several years into the Medicare Shared Savings Program (MSSP) through VBC experimentation using accountable care organizations (ACOs) and other alternative payment models (APMs). Two important questions to ask now about VBC are 1) How is it doing so far, and 2) What do the physicians on the front line think about it?

There are thousands of articles on VBC, but the status to date could be summed up by the recent Health Affairs Blog by Mark McClellan and his colleagues. They state that quality scores are generally high, but they are relatively meaningless since they have been pared back to measuring small bits of minutiae that are easy to game. They state that the program is achieving modest savings, but that is only in Medicare spending and it is almost negligible. When including the provider costs of complying with the program (hardware and labor) which are not included in the estimates, VBC through ACOs in the MSSP (in the language of the policy community) is resulting in higher total costs – the exact opposite of what VBC is supposed to deliver. As with so many of the academic papers on the topic, McClellan and colleagues state, “We are still early in the journey, but with more experience and more participants…” Come on.

The experiment with VBC has failed, though many are not ready to admit it. But the concept of value-based care now has a life of its own. Of great concern is that members of Congress who support Medicare for All are moving forward with changing HR 676 – The Expanded and Improved Medicare for All Act –  modifying it to include supposedly modern concepts of value-based care. But when you ask them to define specifically what value-based care is, they may reply with the meme that we will no longer pay for volume (which is untrue since even the most basic care requires a certain volume that must be funded). When you ask them to clarify what that means as far as it relates to transformation of the health care delivery system, after stumbling around, they may come up with accountable care organizations. Ask them what that is and the better informed politicians might tell you that it is an organization that is accountable for quality and costs (how astute of them). Zero in on that and ask them to define precisely what that is structurally, beginning with it being an organization to which patients are assigned without their knowledge. Got them, because  they don’t know what an ACO is because a precise definition does not even exist (even though ACOs were also included in the Affordable Care Act). And yet the progressives want to change HR 676 to include VBC and ACOs within the legislation.

They don’t seem to be listening to the people on the front line – the physicians who are providing so-called value-based care, often through ACOs. What do the physicians have to say?

* 79% do not believe that value-based care has been successful to date

* 90% state that value-based care has increased the regulatory burden on them

* 76% do not believe that value-based care has improved the quality of care

* 61% believe that value-based care negatively impacts their practices

The process of rewriting HR 676 has already begun. The politicians involved seem to think that they are improving this two-decades-old legislation by introducing modern concepts of value-based care. The concept may be an empty meme, but the application of the concept is already causing serious harm where it really counts – at the physician-patient interface. When we are aiming for patient care nirvana through a single payer, improved Medicare for all, we don’t want to damage or destroy it by injecting into it a major element of VBC hell. Let the politicians know.

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