PNHP

Safety-net hospitals are inappropriately penalized by P4P programs

Safety-net hospitals are inappropriately penalized by P4P programs

The Financial Effect of Value-Based Purchasing and the Hospital Readmissions Reduction Program on Safety-Net Hospitals in 2014

By Matlin Gilman, BA; Jason M. Hockenberry, PhD; E. Kathleen Adams, PhD; Arnold S. Milstein, MD; Ira B. Wilson, MD, MSc; and Edmund R. Becker, PhD
Annals of Internal Medicine, September 7, 2015

Background:

Medicare’s value-based purchasing (VBP) and the Hospital Readmissions Reduction Program (HRRP) could disproportionately affect safety-net hospitals.

Measurements:

Safety-net hospitals were defined as being in the top quartile of the Medicare disproportionate share hospital (DSH) patient percentage and Medicare uncompensated care (UCC) payments per bed. The differences in penalties in both total dollars and dollars per bed between safety-net hospitals and other hospitals were estimated with the use of bivariate and graphical regression methods.

Results:

Safety-net hospitals in the top quartile of each measure were more likely to be penalized under VBP than other hospitals (62.9% vs. 51.0% under the DSH definition and 60.3% vs. 51.5% under the UCC per-bed definition). This was also the case under the HRRP (80.8% vs. 69.0% and 81.9% vs. 68.7%, respectively). Safety-net hospitals also had larger payment penalties ($115 900 vs. $66 600 and $150 100 vs. $54 900, respectively). On a per-bed basis, this translated to $436 versus $332 and $491 versus $314, respectively. Sensitivity analysis setting the cutoff at the top decile rather than the top quartile decile led to similar conclusions with somewhat larger differences between safety-net and other hospitals. The quadratic fit of the data indicated that the larger effect of these penalties is in the middle of the distribution of the DSH and UCC measures.

From the Discussion

Although the payment penalties that safety-net hospitals are receiving under VBP and the HRRP were usually small, supplemental analysis reveals that approximately 1 in every 10 safety-net hospitals in the top quartile of DSH definition are receiving payment rate reductions totaling 1.0% or greater in 2014. Because safety-net hospitals are known to have had historically low margins even before the 2008 economic recession, losing 1.0% or more of Medicare inpatient payments could have a significant effect on these hospitals’ financial conditions for 2 reasons. First, if they were to receive persistent annual reductions in payment rate despite quality improvement efforts, the accumulation of these small penalties on overall financial position would further disadvantage these hospitals. Second, the transition from DSH to the Medicare UCC payments mandated under the ACA will mean less revenue as the proportion of uninsured patients decreases and mandated reduction in the total pool of funds increases. As such, it is not clear that these reductions will be fully offset from revenue by newly insured patients covered by the ACA’s insurance expansion, given earlier evidence from insurance expansions in Massachusetts. When safety-net hospitals close, patients in these communities are negatively affected, and close monitoring of the financial condition of these institutions is warranted as the stakes in VBP and the HRRP increase.

http://annals.org/article.aspx?articleid=2434617

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Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals

By Steffie Woolhandler, MD, MPH and David U. Himmelstein, MD
Annals of Internal Medicine, September 7, 2015

In this issue, Gilman and colleagues document a side effect of Medicare’s pay-for-performance (P4P) initiatives: They divert money from underresourced safety-net hospitals that are mainstays of care in many minority communities to hospitals serving more affluent patients.

Medicare’s P4P program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options. However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.

Are P4P’s benefits worth the risk? The evidence is surprisingly slim. A few small, randomized, controlled trials in outpatient settings have shown improvement on surrogate measures, but most have found no improvement, and none have demonstrated reductions in death or disability rates.

Safety-net providers spend less on administration and may lack the administrative resources to keep up in the gaming arms race — the health care equivalent of teaching to the test. Expensive computer systems and consultants facilitate aggressive upcoding and meticulous documentation of comorbid conditions that can exaggerate patients’ severity of illness and inflate risk-adjusted quality scores. Costly administrative efforts can also ferret out exceptions and ensure that boxes are checked (for example, “Yes, we counseled against smoking”), increasing process-of-care scores, regardless of whether they improve care.

Tethering physicians’ rewards to box checking and redundant documentation risks both substituting insurers’ priorities for patients’ goals and demoralizing physicians. Pay for performance can crowd out intrinsic motivation that keeps us doing good work even when no one is looking.

Paying for quality has strong intuitive appeal. However, as with other medical interventions, intuition may mislead, and adopting everywhere policies that have been proven nowhere puts millions at risk for unintended side effects.

http://annals.org/article.aspx?articleid=2434618

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Comment:

By Don McCanne, MD

Now that the Affordable Care Act has withstood constitutional challenges and five years of implementation, attention has turned to efforts to improve quality while controlling costs – paying for quality rather than volume through various pay-for-performance schemes (P4P) including Medicare’s value-based purchasing (VBP) and the Hospital Readmissions Reduction Program (HRRP). Those closely following the reform process realize that such efforts to date have provided only negligible, if any, improvements in quality and cost containment.

Today’s report shows that these programs also can have adverse consequences. Because of factors such as chronic underfunding, high pressures placed on clinical and administrative staff, and patient populations that are less capable of interacting efficiently with the health care system, safety-net hospitals do not and are not expected to perform well on these measures. As a result, these underfunded institutions suffer further financial penalties which can only compound their difficulties in trying to meet the needs of the vulnerable populations they serve.

The lesson here is that we are diverting our resources and talent to efforts that will fall far short of our goals on quality and affordability, primarily because we passively accept the fact that our dysfunctional system under the Affordable Care Act is here to stay. Instead we should be working on introducing a system that actually will meet our goals, not only for quality and affordability, but also for universality, efficiency, comprehensiveness, accessibility, and, especially, equity – a single payer national health program.

Medicare remains model for universal health care

By William R. Reed, M.D.
Lake Geneva (Wis.) Regional News, Letters, Aug. 27, 2015

I am writing about the difficult situation of health care in the United States. 

As Medicare turned 50 years old on July 30, 2015, it remains a model for providing universal health care for all U.S. citizens. It has low administrative costs, about 4%. 

It provides free choice of providers. And it has high satisfaction rates among those enrolled.

There is enough extra money in the current investor-owned and dividend-driven private health insurance system to provide Medicare for all with no extra cost. Two common misconceptions are worth correcting. 

Medicare is not socialized medicine. The collection and payment of monies is publicly directed, but the provision of health services is by private parties. This is the way it is in most economically advanced countries. 

Secondly, Wisconsin Gov. Walker’s recent public proposal to solve the health care crisis by providing “vouchers” for individuals to buy private health insurance is a failed idea. 

Nowhere has this idea worked. It is untested and unproved and dangerous. It would be like having individuals use vouchers to buy private police, fire, health department, or court system services. Politicians are obligated to answer: why would Enhanced Medicare for All, as in House Bill HR 676, not work for the U.S.?

Dr. William Reed resides in Lake Geneva.

http://www.lakegenevanews.net/

A health system in dire need of reform

By Robert S. Kiefner, M.D.
Concord (N.H.) Monitor, Aug. 23, 2015

Through some mutation of American exceptionalism, we have come to believe that by spending more per capita on health care than any other country on Earth, we must surely enjoy the best health on the planet. Not so, not by a long shot.

The Affordable Care Act notwithstanding, the number of uninsured and underinsured in this country is still too high, accounting for thousands of preventable deaths each year. Also, more than 60 percent of personal bankruptcies are tied to uncovered medical expenses.

The cost curve has not been broken. In the health care barnyard, there are way too many piglets and not enough teats. The health insurance companies, plump from the ACA, are increasing premiums, co-pays and deductibles. The insurance industry has been calling the shots for years.

In an effort to offset future challenges to their oligarchies, they are pairing off in a frenzy of corporate promiscuity. Aetna is buying Humana, and Anthem is shelling out your premium dollars for Cigna. One can only hope that the Justice Department will pay close attention.

History has shown us that mergers, including insurance companies and hospital systems, have an annoying tendency toward increasing costs while decreasing access and patient choice. Physicians and their patients, pawns on the chessboard, may be forced to terminate longstanding relationships as mergers arbitrarily create new networks and dismantle others.

The for-profit insurance model is just plain wrong. Physicians and patients are too often befuddled and belittled by insurance companies in their pursuit of coverage for reasonable medical care. Even the smartest and most savvy among us have been beaten into submission by circuitous phone trees whose purpose is clear – abandon the effort to challenge the insurer or submit to exasperating appeals processes while your account goes to collections and your credit drops like a stone.

Big Pharma clearly has its sights on profit, not patients. It is one thing to spend billions of dollars for research on novel, lifesaving drugs. It is quite another to acquire rights to manufacture all forms of established generic drugs (such as colchicine for gout and doxycycline for infections), and to increase the cost tenfold overnight. New cancer drugs and new drugs for hepatitis C would seem to offer a breath of hope for cancer patients and those facing the uncertain prognosis of hepatitis C, until that breath is taken away by price tags in excess of $100,000 per year. Drug companies engage in this sort of behavior, well, because they can. Your money or your life indeed.

Pharmaceutical giants spend untold billions on direct-to-consumer advertising, imploring us to hound our doctors to prescribe some overpriced, marginally effective drug. Meanwhile, in the ultimate corporate welfare program, the government still cannot negotiate with drugs companies for reduced drug costs within Medicare Part D.

The health care free-for-all has led many physicians to misplace their copies of the Hippocratic Oath, which they so earnestly recited upon graduation from medical school. The changing economic landscape, combined with loss of autonomy, has too often led physicians to advocate on behalf of their corporate overlords instead of their patients.

How about a wag of the finger at our tort system?

Practicing physicians are haunted by the specter of a career-ending malpractice suit, ordering billions of dollars worth of unnecessary tests each year. In the world of “defensive medicine,” tests tend to beget more tests, adding to expense and the real potential for harm. Moreover, our tort system is an inefficient way of compensating patients who are harmed by the health care system.

Other players feeding at the health care trough include the vendors of electronic medical records. While a basic EMR can be of immense value to a clinician as a repository for information, the maintenance of an EMR requires substantial ongoing investments of time, money and personnel. EMRs have their origins as billing tools, and are too often crammed with details that do not pertain to care of the patient. Despite their high costs, different EMRs often cannot “talk” to each other, such that transmission of data is still at the mercy of a fickle fax machine and harried staff. To ensure that profits keep rolling in, the spending cycle for EMRs is just a few years, keeping providers and patients paying through the nose in the world of planned obsolescence of hardware and software.

Health care delivery has become, by intent, so complex that it has spawned a whole new cohort of health care policy experts and high level administrators, who project themselves as the only ones who can interpret the chaos, which they have conveniently created. This group includes architects of the ACA and an army of congressional lobbyists.

A friend of mine who works for the government within the Beltway reminds me that our nation is not held hostage by big government so much as big business, which runs big government for its benefit. Nowhere is this observation more salient than in the world of for-profit health care.

For real reform to occur, much advance work needs to be done.

First, we need to decide whether health care is a right or a privilege. If we choose the latter, forget about reform and continue with a profit-driven death spiral until we spend ourselves into oblivion. Should we embrace the notion that health care is a right for all Americans, the road to reform must first pass through campaign finance reform, repeal of Citizens United and dramatic reduction in congressional lobbyists. Our elected representatives need to work for us, not their biggest contributors.

We can build a not-for-profit system of health care that is publicly financed but privately delivered. Medicare should be improved, and applied to all (as in H.R. 676 currently before Congress). Overhead among the insurers is 20 to 30 percent, while Medicare overhead runs just 2 percent. No big-time advertising, shareholder profits, exorbitant CEO salaries. Just innovative, cost-effective, evidence-based, personal care.

We need to realign the health provider workforce to emphasize robust primary care, wherein primary care providers and their designated teams take care of their patients to the full limits of their training and expertise.

No mode of health delivery is perfect, but other countries are taking care of their citizens with better outcomes, improved patient satisfaction and lower costs with single-payer systems. Where there is a nonpartisan political will, there will be a way.

Robert S. Kiefner is a family physician and lives in Concord.

http://www.concordmonitor.com/home/18233047-95/my-turn-a-health-system-in-dire-need-of-reform

‘Value-based’ payment a threat to Hawaii health care

By Stephen B. Kemble, M.D. 
Honolulu Star-Advertiser, Sept. 6, 2015 

The architects of the federal Affordable Care Act (ACA) blamed high U.S. health costs on excessive and unnecessary care. 

We are told, “fee-for-service drives volume” and new payment models will pay for “value, not volume.” 

This rationale is flat-out false in Hawaii. 

Thanks to our Prepaid Health Care Act, we had the most cost-effective health care system in the country, with broad risk pooling, comprehensive benefits, no deductibles and low co-pays, and relying largely on small independent physician practices paid with fee-for-service. 

Prior to the ACA, we had the best benefits, the lowest per-capita Medicare spending, and among the lowest health insurance premiums in the country. 

Believing it to be the root of the problem, the Centers for Medicare and Medicaid Services (CMS) is pushing to replace fee-for-service with “value-based payment.” Doctors and hospitals are to be paid “up-front,” with bundled payment for an episode of care or prepaid care for an insured population. 

Unlike with fee-for- service, the incentive under “up front” payment is to minimize “volume” of services. 

To counter the perverse incentive to minimize necessary care, the ACA demands that physicians computerize and provide detailed documentation to measure and reward “quality.” 

“Value-based payment” also creates a perverse incentive to avoid poorer, sicker, more complex patients whose care would likely cost more and might bring down quality metrics. 

The ACA provides for risk adjustment, transferring money from plans with healthier to those with sicker populations, but this, too, requires detailed data from doctors on diagnosis and severity of illness. 

Risk adjustment formulas are complex and easily gamed, and we are already seeing extensive “up-coding” of diagnoses by doctors, hospitals and health plans to maximize payment. 

Hawaii has a shortage of doctors generally, especially for primary care. Our physician workforce is older, and we are losing around 100 physicians a year to retirement and out-of-state moves. Loss of physicians is accelerated by demands for computerization to provide detailed data to CMS and health plans for “quality” metrics and risk adjustment. 

On Oct. 1, the U.S. will switch to a much more complex diagnostic coding system, ICD-10. Unique among countries using this system, CMS wants physicians to use the full detail in the codes, backed by documentation in their notes, in order to be paid. This will require doctors to spend almost as much time documentation in their notes, in order to be paid. This will require doctors to spend almost as much time documenting as seeing patients. 

Doctors must choose between cutting their patient load and income, or staying at work hours longer to complete the required documentation. Hawaii physicians close to retirement will likely retire, worsening our physician shortages. 

“Value-based payment” ignores the fact that the most cost-effective health care systems pay doctors with simpler versions of fee-for-service, including other countries and Hawaii’s experience with our Prepaid Health Care Act. It ignores the huge difficulties in developing valid, meaningful quality measures due to the complexity of health care, and the administrative burdens and costs these reforms impose on doctors, hospitals and health plans. 

Americans see doctors less and have fewer hospital days per capita than any other industrialized country, and Hawaii has low utilization within the U.S. The ACA is adding more administrative burdens, trying to further squeeze already low utilization. The major driver of excessive cost in U.S. health care is exorbitant administrative cost, not unnecessary care, and we are making this worse. 

Preparations for “value-based payment” in Hawaii so far are associated with escalating administrative burdens, accelerating loss of doctors, increasing refusal to accept Medicaid and Medicare, avoidance of sicker, more complex patients, increasing ER and hospital use, and rapidly rising health insurance premiums. Where is the “value”? 

Let’s abandon “value based” payment that isn’t, and refocus on reducing administrative burdens and salvaging our physician workforce. 

Stephen B. Kemble, M.D., is past president of the Hawaii Medical Association, a Hawaii Health Authority member and an assistant clinical professor medicine at the John A. Burns School of Medicine. 

http://www.staradvertiser.com/editorialspremium/20150906_value-based_payment_a_threat_to_hawaii_health_care.html?id=324917261

Medicare’s pay-for-performance incentives unfairly penalizing safety-net hospitals: Annals of Internal Medicine editorial

Using unproven, ‘value-based’ penalties and bonuses, and ignoring socioeconomic disparities between patient populations, Medicare is diverting money from hospitals serving largely minority and low-income Americans to hospitals serving the more affluent

FOR IMMEDIATE RELEASE
Sept. 7, 2015

Contact:
Mark Almberg, PNHP communications director, 312-782-6006, mark@pnhp.org

Medicare’s pay-for-performance incentives, which financially reward or punish hospitals depending on whether they hit specific numerical targets in matters such as curbing inpatient readmissions, are having the unintended side effect of taking dollars away from the nation’s historically cash-strapped safety-net hospitals and boosting the revenue of wealthier hospitals that serve an economically better-off patient base.

That’s one of the conclusions of an evidence-based editorial in today’s [Tuesday, Sept. 8] Annals of Internal Medicine.

The article, titled “Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals,” is written by two leading health-system researchers, Drs. Steffie Woolhandler and David U. Himmelstein, professors at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.

“Medicare’s P4P [pay-for-performance] program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options,” Woolhandler and Himmelstein write. “However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.”

The Woolhandler-Himmelstein commentary appears alongside a study led by Matlin Gilman at Rollins School of Public Health at Emory University in Atlanta of more than 3,000 acute care hospitals in 2014. That study examines the financial impact of Medicare’s Value-based Purchasing program and Hospital Readmissions Reduction Program, two P4P initiatives inspired by the Affordable Care Act, and finds that, in fact, safety-net hospitals are suffering disproportionate penalties from the programs.

Woolhandler and Himmelstein say that the Gilman study’s findings were “not unexpected,” given the findings of related research. They also note, in view of the researchers’ methods, the study very likely understates the extent of the disparity in penalties.

The evidence for the efficacy of P4P measures in medicine is “surprisingly slim,” they write, and such programs can actually backfire by demoralizing physicians and crowding out the intrinsic motivation they have to do good work, for example.

The authors note that P4P schemes are easily “gamed” by hospital administrators who engage in such practices as encouraging physicians to upcode (that is, exaggerate) diagnoses to make the hospital’s medical outcomes look better, or to place early returning Medicare patients in extended “observation stays” (which Medicare doesn’t count as readmissions) rather than readmitting them as inpatients.

Even when it comes to gaming, the authors write, non-safety-net hospitals have a technological and economic advantage over safety-net hospitals – again, to the latter’s detriment.

Woolhandler and Himmelstein warn that Medicare’s P4P measures – particularly when combined with another provision of the ACA that mandates cuts to special federal payments (Disproportionate Share Hospital funds) to safety-net hospitals – will exacerbate existing inequalities and pose a threat to many large urban hospitals that have been mainstays of care for millions of people in low-income and minority communities.

“Paying for quality has strong intuitive appeal,” the authors write. “However, as with other medical interventions, intuition may mislead, and adopting everywhere policies that have been proven nowhere puts millions at risk for unintended consequences.”

In addition to their academic posts, Himmelstein and Woolhandler are primary care doctors in New York City. They are also co-founders of Physicians for a National Health Program (PNHP), an organization of 19,000 doctors who advocate for a single-payer national health insurance program. PNHP played no role in funding or otherwise supporting their article.

In a comment today, Woolhandler, who has worked as a primary care physician in safety-net hospitals for decades, said, “We need a single-payer system that treats all patients, and all hospitals, equitably.”

Dr. Claudia Fegan, who is the Chicago-based national coordinator of PNHP and who also works in a safety-net hospital, added: “We take care of patients that no one else is prepared to take care of. As a result, we are victimized by the adverse selection created by a society that has yet to fully accept its obligation to take care of everyone.”

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“Collateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals.” Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D. Annals of Internal Medicine, online ahead of print, Sept. 8, 2015.

A copy of the article (in the form of an author’s proof) is available to media professionals here or upon request from Mark Almberg, mark@pnhp.org.

A copy of the related Gilman article is available upon request from Angela Collom at Annals of Internal Medicine. She may be reached at acollom@acponline.org. “The financial effect of value-based purchasing and the Hospital Readmissions Reduction Program on safety-net hospitals in 2014. A cohort study.” Gilman M, Hockenberry JM, Adams EK, Milstein AS, Wilson IB, Becker ER. Annals of Internal Medicine, online ahead of print, Sept. 8, 2015.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 19,000 doctors who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

Misdirection in physician payment reform

Physician Payment Reform In A Post-SGR World: Challenges Remain

By John O’Shea
Health Affairs Blog, September 3, 2015

On April 16, 2015 President Barack Obama signed the Medicare Access and CHIP Reauthorization Act (MACRA) which, among other things, finally repeals the Sustainable Growth Rate (SGR) mechanism of updating fees to the Physician Fee Schedule (PFS).

The passage of MACRA, however, raises new questions about where the U.S. health care system is headed in the post-SGR world of payment and delivery reform.

Reasons For Caution

These policy changes and announcements follow widespread calls to move from the current volume-based fee-for-service (FFS) payment system to a value-based system that pays for patient outcomes rather than individual services. Value-based health care should be the goal of any health reform initiative. However, even with SGR out of the way, there are major challenges to achieving that goal, including the lack of an agreed-upon, patient-centered definition of value; a shortage of meaningful performance metrics; and a deficiency of accounting systems capable of reflecting the true cost of delivering care.

Policymakers and others involved in payment reform should also remain acutely aware that the multitude of reporting requirements associated with participation in APMs will add substantially to the already heavy administrative burden on physician practices.

Alternative Payment Models

The future course of payment reform currently centers on efforts to make fee-for-service increasingly less attractive than participation in an alternative payment model (APM). However, moving providers out of FFS assumes that they have a viable place to go. At this point, it is not clear that they do.

Value-based purchasing (VBP), the concept behind APMs includes a broad set of performance-based payment strategies that attempt to use financial incentives to influence provider performance.

MACRA provides for a significantly modified FFS payment system, the Merit-Based Incentive Payment System (MIPS), which is essentially a P4P program. In addition, the legislation encourages the development and implementation of APMs and offers incentives for providers to move into these models.

Although there are a number of individual examples of successful initiatives, the overall early results, as well as possible conceptual flaws, make the long term viability of these models uncertain.

Pay For Performance

Although P4P programs are among the oldest APMs, the success of these models is impeded by serious gaps in the current quality measurement system. According to a 2014 RAND report that looked at 49 studies examining the effect of P4P on process and intermediate outcome measures, the overall results of the studies were mixed, and any identified effects were relatively small.

A basic flaw in the design of existing P4P models is the reality that meaningful patient-centered outcome measures remain elusive.

Accountable Care Organizations

Accountable Care Organizations (ACOs) are health care organizations that tie provider reimbursements to quality and cost metrics related to the total care of an assigned population of patients.

Although ACOs are still relatively new, their ability to generate savings to share with participants is so far not encouraging, as shown by the early results among the most experienced providers in the Pioneer ACO program.

Even the most inefficient system has a finite amount of waste; although it may be relatively easy to address “low hanging fruit” early on, achieving sustained savings over time will prove increasingly difficult.

Bundled Payments

In the Bundled Payment model, a single payment is made for services delivered during an episode of care related to a medical condition or procedure.

Although the cost of each bundle may be reduced, without any control over the volume of bundles provided, overall spending may not go down. Bundled payments also need accurate risk adjustment to avoid both the underuse of appropriate care services as well as the tendency to “cherry pick” low-cost patients.

Patient-Centered Medical Homes

Although early limited evaluations and anecdotal experience with the Patient-Centered Medical Home model have suggested the promise of cost savings and higher patient and provider satisfaction, results from a large multipayer medical home pilot was associated with limited improvements in quality and no reduction in hospital usage, emergency department visits, ambulatory care services, or total costs over three years.

Impact On The Practice Of Medicine

By and large, physicians not only want to provide the best quality health care to their patients, they also want to know they are doing so. But physicians currently labor under an increasingly burdensome and often meaningless number of reporting requirements that take time away from patients and fail to help them improve the quality of their care.

According to a commentary in The New England Journal of Medicine in 2014, “the quality-measurement enterprise in U.S. health care is troubled.” Physicians, hospitals, and health plans view measurement as burdensome, expensive, inaccurate, and indifferent to the complexity of care delivery. The measures also fail to give patients the information they need to make good decisions.

The recent CMS report that 40 percent of Medicare providers will face 1.5 percent cuts for failing to submit data to the Physician Quality Reporting System underscores the fact that many providers, especially those who see few Medicare patients, likely view the cuts as a cost of business to avoid the administrative hassle.

Yet, in spite of these cautionary signs, public and private payers are tying larger amounts of provider payments to a growing number of largely meaningless measures, as if doubling down will somehow fix the problem.

Given the plethora of payment and delivery reform initiatives currently underway or in development, there is relatively little discussion about the long-term goal of payment reform or the impact of these initiatives on the practice of medicine. There are at least two areas of particular concern: the administrative burden on physicians, and the push toward greater consolidation.

Nearly half (46 percent) of doctors reported that they felt burnout in 2014, and a main reason cited was increasing administrative burden, including the multitude of reporting requirements. These findings cannot be dismissed, since burnout has been positively linked to increases in medical errors and has been cited as a reason why doctors leave practice.

Another consequence of both the administrative burden and financial risk of participation in APMs is likely to be an increase in the already considerable trend toward practice consolidation. This trend has been shown to increase health care spending without increasing quality or efficiency and runs counter to the goals of APMs. Many small, independent practices will lack the resources needed to comply with the myriad of reporting requirements involved in APM participation; they are also less likely to be able to absorb the potential losses in a model that involves down-side financial risk.

Moving Forward On Physician Payment Reform

The Administration’s aims regarding value-based payments and the expanded use of APMs come with very little detail on how they will be realized; thus, it is difficult to comment other than to say that given the current state of performance measurement and the early results from existing APMs, the timeline seems overly aggressive.

Although the pursuit of better value in health care is a laudable aim and should continue, setting goals and establishing timelines is not enough. Linking more and more physician income to meaningless quality measures or mandating participation in undeveloped APMs will do little more than add to the already considerable non-clinical burden that physicians face and may force many physicians to abandon private practice in favor of employment, thereby accelerating the current trend toward consolidation. Worse yet, physicians may choose to leave practice altogether.

John O’Shea, MD, is a practicing surgeon and Senior Fellow in the Center for Health Policy Studies at the Heritage Foundation in Washington, DC. He served as a senior health policy advisor to the U.S. House Committee on Energy and Commerce, where he helped draft the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) that replaced the Sustainable Growth Rate (SGR) formula for reimbursing physician services in the Medicare program.

http://healthaffairs.org/blog/2015/09/03/physician-payment-reform-in-a-post-sgr-world-challenges-remain/

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Comment:

By Don McCanne, MD

It is indeed a rare event when we can agree with a health policy fellow from the Heritage Foundation. John O’Shea has spelled out the deficiencies and potential harms of the current directions in physician payment reform.

The goal is to drive quality and control costs. Although Dr. O’Shea does not tell us how he would do that, it is likely that he would disagree with our approach. We would adopt a single payer national health program which, by design, increases quality while improving value in our health care spending.

Laissez faire health care pricing

Health Care Spending: Historical Trends and New Directions

By Alice Chen and Dana Goldman
NBER Working Paper 21501, National Bureau of Economic Research, August 2015

Over the last five decades, broad changes in the US health care system have dramatically influenced growth in health care expenditures. These structural changes have also influenced the trajectory of the health economics research.

From the Conclusion

Chandra & Skinner (2012) categorize technological progress in health care based on its impact on cost and health: (1) high-efficiency, low-cost innovations; (2) costly innovations with high efficiency for particular subgroups; and (3) costly innovations with uncertain efficiency. The first two lead to large improvements in life expectancy, but they are not to be blamed for the rise in health spending relative to other nations. It is the third category that has been uniquely abundant in the US.

There is question of whether efforts to control technology will induce a harmful reduction in innovation, with personalized medicine – currently showing great promise but also great expense – being a notable example. We clearly need a better understanding of what precisely constitutes innovation, how it diffuses, and whether it can be harnessed to slow spending growth in a way that is socially desirable. Given the successes of the past half century, this seems well within the realm of possibility.

http://www.nber.org/papers/w21501

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The Value And Limits Of Economic Evaluation In Policy Analysis

By Victoria Phillips
Health Affairs Blog, September 1, 2015

Health care resources, no matter how represented, are ultimately finite. Trade-offs occur as spending in one area means that those same resources are unavailable to fund another program. In spite of this, U.S. policymakers remain reluctant to engage in conversations that even hint at “rationing.” This reluctance is evidenced by the fact that the Patient-Centered Outcomes Research Initiative (PCORI) is legislatively forbidden to include cost-effectiveness ratios in its comparative effectiveness evaluations.

Diametrically opposed to the U.S. system, most other countries embrace cost-effectiveness, whereby competing programs are evaluated in terms of costs and the health gains they produce.

The U.S. reluctance to embrace cost-effectiveness analyses as a policy tool is misguided, particularly as concerns about the level and distribution of health care spending remain front and center. Foremost, it means missed opportunities to lead much-needed discussions about the inherent trade-offs in health care investments.

Following the model of the clinical literature, policy researchers, analysts, and foundations should become familiar with economic evaluation tools and integrate them into their work and reports as a matter of course.

Cost-effectiveness analyses generally identify what must be paid to generate a health gain. If the focus of an intervention is extending life, results are reported as the cost per life-year gained. Little appreciated is the notion that these analyses describe the cost and health benefit produced. Only in limited circumstances, for example when an intervention is cost-saving, do they prescribe that a particular investment be made.

Extending life is one type of health gain, while improving quality is another. Quality changes can be paramount in populations affected by chronic conditions. The quality-adjusted life-year (QALY) is an outcome measure developed by economists in the 1970s, which adjusts survival gains by quality of life provided over the life-years.

At present the U.S. economic evaluation literature uses both QALYs as a standard outcome measure and an informal cost-effectiveness ratio of $100,000 per QALY gained.

PCORI, however, continues to focus on outcomes alone, including QALYs.

Curing Hepatitis C, Social Values, And Rationing

While cost-effectiveness analysis offers a solid starting point for discussions about health care trade-offs and spending prioritization, there are clear limits to its contributions in decision-making. New, potent, and expensive drugs are a case in point as they increasingly pose challenges for health systems and payers.

The new drug Harvoni offers a cure for Hepatitis C. This condition was previously treated with Interferon costing $15,000 per course, while the new regimen costs approximately $84,000. The budgetary implications of providing it are game-changing, with California alone estimating a total for Medicaid of $18 billion out of a $64 billion budget.

Such breakthroughs end the pretense that the U.S. does not need to confront rationing. Further, as the chance is minimal that Harvoni will be cost effective by any standard, determining whether to fund it falls outside the cost-effectiveness domain. It will involve some stark choices, ultimately reflecting social values, which the public seems woefully unprepared to make.

Policy analysts can lay the groundwork now for these more complex discussions by incorporating cost-effectiveness and the language of trade-offs into their work. This includes embedding these concepts into research, briefs, commentaries, and policy discussions, along with helping edge PCORI in a similar direction.

http://healthaffairs.org/blog/2015/09/01/the-value-and-limits-of-economic-evaluation-in-policy-analysis/

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Comment:

By Don McCanne, MD

Although there are many factors contributing to the increases in health care spending, the advances in technology such as new drugs, innovative surgical procedures, advances in imaging, and now, the potential of pharmacogenetics in personalized medicine, are playing an increasing role in driving up health care costs.

The entrepreneurial drive in health care seems to be expanding as a manifestation of the more general trend of mega-wealth seeking behavior. The outrageous overpricing of the drugs for hepatitis C is but one example of this behavior. But just think of the potential for pharmacogenetics and personalized health care – seven digit pricing would not be beyond the aspirations of the next generation entrepreneurs in the medical-industrial complex.

It is now commonplace for prices to be based not on costs but rather on value attained. Since a quality adjusted life year (QALY) is currently considered to have a value of $100,000, it does not take much imagination for these entrepreneurs to assign a price of $1,000,000 to personalized medicine interventions that add ten QALYs to an individual’s life. Though these numbers look preposterous now, the new prices we are already seeing indicate that we are headed in that direction.

The United States is unique in having a laissez faire attitude toward pricing in health care. All other nations use some sort of public control of pricing. Although our government does play a limited role through public programs such as Medicare and Medicaid, in general we tend to rely on market forces when markets are mostly about getting the highest prices the consumers will bear.

We can no longer sit back and watch more and more of us being priced out of health care. Although as a nation we are ready to accept comparing the effectiveness of various approaches in health care, we now have to make the decision that evaluations must also include cost-effectiveness analyses. Federal law currently prohibits cost evaluations under the Patient-Centered Outcomes Research Initiative (PCORI). That prohibition must be lifted.

Under a single payer national health program, abusive pricing would not be tolerated. Opponents say that government efforts to moderate pricing would stifle innovation and research. Nonsense. There is no way that the medical-industrial entrepreneurs would walk away from trying to get as large of a share as they can of the $3 trillion that we are spending on health care.

Ohio redefines “family” to deprive Medicaid beneficiaries

Court rules Ohio spouses are eligible for Medicaid

By Jim Provance
The Blade, September 2, 2015

In a decision that could have far-reaching effects, a federal appeals court ruled Tuesday that Ohio must count an applicant’s spouse as a member of his family when determining eligibility for financial assistance to pay Medicare bills.

A three-judge panel of the Cincinnati-based U.S. 6th Circuit Court of Appeals told the state it can’t exclude a beneficiary’s spouse when it comes to income calculations simply because the federal law doesn’t define the word “family.”

At issue is a program under Medicaid, the federal-state insurance program for the poor, that helps low-income Ohioans pay their premiums, co-payments, and deductibles under Medicare, the federal health insurance for senior citizens.

The larger the family, the more a beneficiary may earn and be eligible for that financial help.

“Ask 100 Americans whether a 74-year-old man’s ‘family’ includes his wife who lives with him, and every one of those Americans will likely say yes,” 6th Circuit Judge Raymond M. Kethledge wrote. “But the Ohio Department of Medicaid answered no, with the result that it denied Joe Turner’s application for benefits under the Medicaid Act.”

“It should have been clear to Ohio that the word ‘family,’ as used in the provisions here, does not mean whatever the state’s officials want it to mean, but instead includes at least a beneficiary’s resident spouse,” Judge Kethledge wrote.

https://www.toledoblade.com/Medical/2015/09/02/Court-rules-Ohio-spouses-are-eligible-for-Medicaid.html

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Comment:

By Don McCanne, MD

What kind of bureaucrat would make a decision that Medicaid benefits can be denied to an applicant by arbitrarily declaring that the applicant’s spouse is not part of the family and thus the family is too small to qualify? Perhaps Ohio’s family-values Governor John Kasich could explain, if he weren’t so busy running for President.

The real lesson here is that we really need to question the wisdom behind the multitude of health reform proposals that would provide federal grants to states and allow them to craft their own health care financing policies. It’s bad enough that states can refuse to participate in the Medicaid expansion, depriving millions of the health care that they should have. Just imagine the liberties they could take if allowed to make decisions such as redefining a family as having only one spouse when there are actually two.

Although a single payer system would be administered on a state or regional basis, the basic requirements would be established at the federal level. An example is the Canada Health Act which simply requires public administration, comprehensiveness, universality, portability and accessibility. Although their single payer systems are administered on the provincial level, there are no provinces that exclude a spouse from the definition of a family.

In the United States, it would not work to have federal legislation defining a national health program that is as simply stated as in the Canada Health Act. We have a track record of shameless gaming of the system to the detriment of patient care. That’s why we need greater specifications of the requirements – such as those in HR 676, the Expanded and Improved Medicare for All Act, by Rep. John Conyers with 51 cosponsors. We really can’t turn the decisions over the bureaucrats in supposed family-values states who actually don’t believe in family values.

Turkey’s phenomenal success with socialized medicine

The Value of Socialized Medicine: The Impact of Universal Primary Healthcare Provision on Birth and Mortality Rates in Turkey

By Resul Cesur, Pınar Mine Güneş, Erdal Tekin, and Aydogan Ulker
NBER Working Paper 21510, National Bureau of Economic Research, August 2015

Abstract

This paper examines the impact of universal, free, and easily accessible primary healthcare on population health as measured by age-specific birth and mortality rates, focusing on a nationwide socialized medicine program implemented in Turkey. The Family Medicine Program (FMP), launched in 2005, assigns each Turkish citizen to a specific state-employed family physician, who offers a wide range of primary healthcare services that are free-of-charge. Furthermore, these services are provided at family health centers, which operate on a walk-in basis and are located within the neighborhoods in close proximity to the patients. To identify the causal impact of the FMP, we exploit the variation in its introduction across provinces and over time. Our estimates indicate that the FMP caused large declines in mortality rates across all age groups with more pronounced impacts among infants and the elderly, and a moderate reduction in the birth rates, primarily among teenagers. Furthermore, the results are suggestive that the program has also contributed towards equalization in the mortality disparities across provinces. Our findings highlight the importance of a nationwide supply-side intervention on improving public health.

From the Introduction

An  increasing number of countries are devising reforms aimed at improving public health and reducing disparities in the delivery of and access to basic healthcare services. Many countries have taken a primarily demand-side approach to extending health coverage, through mechanisms such as health insurance, user-fees on the basis of ability-to-pay, and conditional cash transfers. There are also countries that have opted for mainly supply-side schemes by extending government financed public provision of healthcare services or creating incentive mechanisms that financially motivate providers to expand their coverage.

The emerging consensus from the strand of the literature that focuses on the demand-side healthcare financing reforms is that extending health insurance coverage improves both access and utilization, at least among the targeted groups. However, the evidence on the degree to which these interventions limit out of pocket expenditures for services and improve health outcomes is mixed and inconclusive.4 The relatively few studies that have focused on supply-side reforms, on the other hand, find that increased availability of free or heavily subsidized healthcare improves both access and health outcomes.

In this paper, we study the impact of a supply-side healthcare intervention implemented in Turkey on measures of mortality and birth rates. The Family Medicine Program – called FMP hereafter – introduced in 2005, has extended basic healthcare services to the entire Turkish population under a free-of-charge and single-payer system that is fully financed and administered by the central government. The key operational feature of the FMP is the assignment of each Turkish citizen to a specific family physician, who offers a wide range of basic healthcare services at easily accessible walk- in clinics called the Family Health Centers.

The Turkish reform has essentially established a socialized medicine program for basic healthcare services since the services are provided free-of-charge by state-employed family physicians. This is in sharp contrast with most other interventions, especially those concerning demand-side incentives, which primarily focus on the impact of reducing out-of-pocket healthcare expenses. Additionally, there is a growing conviction among the leading global health organizations, policymakers and practitioners about the importance of achieving universal health coverage, i.e., ensuring basic and affordable healthcare services to whole citizens irrespective of their ability to pay.

Our results indicate that the FMP led to considerable health benefits. In particular, we find that the FMP caused a large and statistically significant decline in overall mortality rate with more pronounced and long-lasting effects among infants and the elderly. We also find that the FMP reduced the birth rates, especially among teenagers.

From the Conclusions

Over the past decade, the Turkish healthcare system has undergone a major transformation marked by significant investments in infrastructure, education of healthcare personnel, modernization of patient tracking and payment systems, and most importantly, the launching of the Family Medicine Program (FMP). With the introduction of the FMP in 2005, Turkey has essentially established a socialized healthcare system for primary healthcare services, under which every Turkish citizen is ensured a comprehensive package of healthcare service that is free-of-charge irrespective of the citizen’s ability to pay. This paper provides the first comprehensive analysis of the impact of the FMP on the outcomes of age-specific birth and mortality rates using province level data between 2001 and 2013. 

Our results indicate that the FMP has caused reductions in both mortality and birth rates. The benefits associated with the FMP appear to be the strongest among the most vulnerable populations, i.e., the infants and the elderly for the mortality rate, and the teenagers for the birth rate. Furthermore, the results indicate that the program resulted in a more rapid reduction in mortality in provinces with a higher baseline mortality rate. This implies that the FMP might have also contributed towards an equalization of the mortality disparities across provinces.

A handful of recent studies highlight the importance of supply-side reforms in improving public health and reducing disparities in health outcomes in countries like Brazil and Thailand. The current study builds upon this growing strand of literature by documenting evidence on the effectiveness of a nationwide supply-side intervention from Turkey, which emphasizes direct service provision and effective government oversight. The findings in this paper provide further compelling evidence in favor of the view that extending healthcare services to all citizens is critical to achieving universal coverage and improving public health.

The signature feature of the Turkish FMP is the assignment of every citizen to a new category of “family physicians,” who are the central and first point of contact for patients. Every Turkish citizen is required to register with a particular family physician, who is in charge of providing a wide range of healthcare services at neighborhood clinics that operate on a walk-in basis.

http://www.nber.org/papers/w21510

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OECD Reviews of Health Care Quality: Turkey 2014

OECD, November 25, 2014

From the Executive Summary

Over the past decade, Turkey has implemented remarkable health-care reforms, achieving universal coverage in 2003, and dramatically expanding access to care for the population. Accompanied by significant investment in the hospital sector and the establishment of a family physician system, the Health Transformation Programme (HTP) has delivered a high level of activity in the health system. The reforms benefited from ambitious leadership and a clear set of priorities (focused on expanding health insurance and improving access and, in the clinical domain, on maternal and child health). An evaluation culture built in from the beginning and a willingness to open up the reform process to external scrutiny were also fundamental elements. Centralisation and rationalisation of the health system’s governance was critical in achieving recent health-care successes.

http://www.oecd.org/publications/oecd-reviews-of-health-care-quality-turkey-2013-9789264202054-en.htm

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Comment:

By Don McCanne, MD

Turkey’s phenomenal success in health care reform is largely due to the establishment of the supply-side Family Medicine Program – a socialized health care system for primary health care services. Maybe we in the United States should be thinking beyond a single payer social insurance program. A single payer socialized medicine program built on a primary care infrastructure offers many advantages that may never be realized if we stop short with mere insurance reform. Just a thought.

We need Medicare for everyone

By Sandra Wright
Carroll County (Md.) Times, Letters, Aug. 31, 2015

Recently, two government programs extremely important to seniors, Social Security and Medicare, both celebrated birthdays. This letter is about Medicare.

Before Medicare, most seniors in this country had no health insurance. Private insurance companies determined they couldn’t make money insuring the elderly. When seniors became ill, often they and their caring became impoverished trying to provide the necessary care.

Medicare stopped that!

Medicare also stimulated the development of needed regulations, medicines and technologies.

The Commonwealth Fund that has compared health care in the rich countries since 1998 wrote, “Medicare is more protective than all the different insurance plans those under 65 have in the U.S. Nonetheless, our older population still compares unfavorably to our richer neighbors.”

We lead in older citizens having two or more chronic diseases (hypertension, heart disease, diabetes, cancer, etc.).

The other wealthy countries have health care programs, either single-payer national programs or government-subsidized and regulated health insurance, for all their citizens all their lives at lower costs than ours. Many U.S. citizens have not always had health insurance and have forgone care at different times in life because of cost.

A dear friend, in business for herself, went 20 years without coverage because she couldn’t afford it. Turning 65 was a joyous celebration. Finally, she was covered under Medicare.

Physicians For A National Health Program (PNHP) has written, “We need one risk pool for everyone so that the $1.66 billion we are spending could provide a rich benefits package for everyone, if allocated properly.”

We need improved Medicare for all to be covered at all stages of our lives, and we can afford it!

One granny celebrating Medicare’s recent 50h birthday held a poster, “Everybody In! Nobody Out!” demonstrating her compassion for the 120 Americans who die daily due to lack of care. That is 45,000 of our citizens who die needlessly every year for lack of care!

Many years ago Dr. Martin Luther King Jr. said, “Of all forms of inequality, injustice in health care is the most shocking and inhumane.”

Sandra Wright is a member of the Carroll County chapter of Healthcare is a Human Right. She resides in Westminster.

http://www.carrollcountytimes.com/opinion/letters/ph-cc-wrigth-letters-090115-20150831-story.html

Largest exchange insurers have 75% higher premium increases than other insurers

Larger Issuers, Larger Premium Increases: Health insurance issuer competition post-ACA

By Eugene Wang and Grace Gee
Technology Science (Harvard University), August 11, 2015

Abstract

The Patient Protection and Affordable Care Act (ACA) has substantially reformed the health insurance industry in the United States by establishing health insurance marketplaces, also called health exchanges, to facilitate the purchase of health insurance. The ACA has increased transparency in insurance pricing and in issuer pricing behavior. Using 2014 and 2015 Unified Rate Review (URR) data, this study examines changes in health insurance premiums made by individual health insurance issuers in 34 federally facilitated and state-partnership health insurance exchanges.

Results summary: Our study shows that the largest issuer in each marketplace had a 75% higher premium increase from 2014 to 2015 compared to other same-state issuers. On average, the largest issuers raised rates by 23.9%, while the other issuers only raised rates by 13.7%. Moreover, the largest issuers’ premium increase affects a larger proportion of plans and do not seem justified from the standpoint of incurred claims-to-premium ratio. Projected Index Rate from the rate review process is used as a summary of an issuer’s premiums across different plans and Projected Member Months as a proxy for on-exchange market share. Our findings suggest that even after the Affordable Care Act, the largest on-exchange issuers may be in a better position to practice anti-competitive pricing compared to their same-state counterparts.

From the Results

But can the largest issuers justify their higher premium increases in 2015 by claiming that they had higher incurred claims relative to collected premiums in 2014, compared to other issuers? To test this hypothesis… (technical details available at link)…

Note that this is very similar to the Medical Loss Ratio (MLR) as formulated in 45 CFR §158.221, which is used to calculate the MLR rebates issuers have to give to consumers if the MLR falls below 0.80 (i.e. they spent too little on medical expenses) in the experience period. But the MLR calculation would require the denominator to include only premiums collected in the experience period net of taxes, licensing and regulatory fees, which data is unavailable in the URR (Unified Rate Review public use files).

To test if the largest issuers in each state have higher incurred claims relative to premiums in 2014, the following null hypothesis was tested… (technical details available at link)…

After omitting states where data on the largest issuer was not available (the largest issuers having only joined the exchange in 2015) and omitting issuers without experience data (issuers can choose not to input experience period claims and premiums data if they deem that the data they have collected is not substantially representative), the test statistic is eventually calculated… (technical details available at link)…

… with a mean of 0.02, which means that the largest issuer has a higher claims ratio of only 0.02. Figure 9 shows that the claims-to-premium ratio for the largest issuers is 0.85 while that for the other issuers is 0.83. Since the test statistic is 0.50139 with a one-tailed p value of 0.31092, we conclude at 5% significance level that there is insufficient evidence to reject the null hypothesis in states where this ratio could be calculated. The claims-to-premium ratio of the largest issuer is not statistically significantly higher than other same-state issuers. Even if it were significant, a 2.5% higher claims-to-premium ratio is unlikely to be sufficient to justify the 75% higher premiums increase that the largest issuer incurred.

From the Discussion

Overall, this study is important in light of recent market consolidation efforts in the health insurance industry. This paper provides evidence that even after ACA, the largest on-exchange issuers may be in a better position to practice anti-competitive pricing compared to their same-state counterparts. This evidence should be prudently considered in any antitrust debate.

http://techscience.org/a/2015081104/

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CMS seeks emergency review of request for more insurance information

AMA Morning Rounds, August 31, 2015

Congressional Quarterly (8/29, Subscription Publication) reported that the Centers for Medicare and Medicaid Services “is seeking an emergency review of its request to collect more information from health insurance companies in connection with the medical-loss-ratio data and risk corridor regulations, which both are part of the agency’s effort to fully implement the 2010 health law.” The agency said it found a “number of significant discrepancies in the 2014 benefit year submissions that insurers made.” CMS officials said in a filing with the Federal Register “that they are concerned that the agency ‘will be unable to verify the accuracy of the submission and validate the data needed to operate the MLR or risk corridors programs’ if it doesn’t get additional information.”

http://www.ama-assn.org/ama/pub/news/newsletters-journals.page

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Comment:

By Don McCanne, MD

This is scandalous. The co-authors of this article, Eugene Wang and Grace Gee (with Harvard degrees in Applied Mathematics), have shown that the largest insurance issuer in each federally-facilitated and state-partnered ACA insurance exchange had a 75% higher premium increase this past year than did other insurers in the same states. But what is really shocking is that they have shown that, based on claims-to-premium ratios, these excess premium increases are in no way warranted.

This should not have happened since the Affordable Care Act requires that at least 80% of the premiums be spent on health benefits (the medical-loss ratio). Now we learn that the Centers for Medicare and Medicaid Services found a “number of significant discrepancies in the 2014 benefit year submissions that insurers made” regarding medical-loss-ratio data. CMS is seeking an emergency review of its request to collect more information from the health insurers.

With the current merger activity of the nation’s largest insurers, we should be very concerned about their too-big-to-follow-the-rules attitude. The insurers contend that they need higher premiums because of their claims experience, yet they have failed to provide CMS with adequate, accurate data to show that they are spending at least 80% of the premiums on health care. This study strongly suggests that they are not.

It’s time to throw out the crooks and establish our own single payer national health program – one owned by the people. We aren’t going to cheat ourselves.

Moody’s revises outlook for not-for-profit/public health care sector

Moody’s revises US not-for-profit healthcare outlook to stable from negative as cash flows increase

Moody’s Investors Service, August 26, 2015

Moody’s Investors Service has revised the outlook for the US not-for-profit and public healthcare sector to stable from negative due to improvement across the industry’s fundamental business, financial and economic conditions. The outlook had been negative since 2008.

Following several years of flat growth, operating cash flow growth increased to 12.3% in 2014 from 0.3% in 2013.

Moody’s says factors driving the stronger operating cash flow are increases in the number of insured individuals and a reduction in bad debt, particularly in states which expanded Medicaid eligibility.

The outlook change to stable from negative expresses Moody’s views for the sector will neither erode nor significantly improve materially for the 12 to 18 months. Looking beyond that horizon, pressures linger.

“The not-for-profit and public healthcare sector industry faces long-term challenges stemming from who pays for care, how providers are reimbursed, and changes in patient behavior. These risks may weigh on profitability and growth,” says (Moody’s Vice President — Senior Analyst Daniel Steingart ).

https://www.moodys.com/research/Moodys-revises-US-not-for-profit-healthcare-outlook-to-stable–PR_333323

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Comment:

By Don McCanne, MD

It seems ironic to celebrate profits in the not-for-profit and public health care sector, but at least this Moody’s report does show that the not-for-profit/public sector has moved from negative to stable as cash flows increase. That is reassuring.

Nevertheless this industry still faces long-term challenges, especially based on uncertainties of future funding.

This sector is particularly important since it serves as the primary safety net for those who have impaired access for reasons such as being uninsured. So it is essential that a reliable source of adequate funding is always available.

How can we do that? Simple. Establish a single payer national health program which will fund the entire health care delivery system equitably. Part of that process involves converting the investor-owned, for-profit delivery system to not-for-profit status. Why? The primary mission of non-profits is patient service whereas the primary mission of for-profits is creating wealth by achieving a maximum return on investment. The former works better for patients than does the latter.

Although it is nice that the not-for-profit/public sector has temporarily stabilized, we could be assured of more funds in the future if the administrative waste of our entire system were eliminated. Single payer would ensure stability in our system well into the indefinite future… and beyond.