PNHP

Medicare turns 50 this month

Medicare turns 50 this month

By Ray Bellamy, M.D.
Tallahassee Democrat, July 18, 2015

In 1963 or so, a group of us UF second year medical students tramped upstairs to listen to some of a spirited discussion among Gainesville-area physicians along with UF faculty regarding providing nearly universal health coverage to seniors. I remember little of the discussion other than some inflammatory rhetoric about “government overreach and what it would do to or for Granny.”

Most folks now are not aware that in those days, the AMA had only recently come off its traditional opposition to group medical practice. (Yes, they felt all physicians should be working solo.) So now, on July 30, we will herald arguably one of this country’s most successful social programs ever — the establishment of Medicare. We should also acknowledge the role Medicare played in speeding the integration of hospitals.

There is much one can complain about Medicare — that it will begin running a deficit in 17 years, that some providers are not reimbursed adequately to cover expenses, that the first day of inpatient care costs a thousand dollars out of pocket. However, with a strong approval among seniors — 92-percent satisfaction, a low overhead of about 2.5-percent, and the benefit of safety net coverage for a part of the population which is stressed to pay bills (elderly women average a third of their income for medical expenses), the goal of sharing risk broadly over a large population has been been met. Note that the sickest 20 percent of this group accounts for 80 percent of the cost.

Presidential candidate Vermont Senator Bernie Sanders is advocating for an improved Medicare for All, properly funded, as he has for decades. Since the simplicity of everyone having the same comprehensive plan and a Smart Card to swipe at the physician’s office or pharmacy would save several hundred billion dollars a year in reduced overhead, it is easy to understand how most developed nations use some version of a single payer system. Because prevention is often less expensive than treatment, but the payoff may take years to realize, enrollees in private insurance who tend to stay with one plan for only a short time are unlikely to see this cost reduction passed to them.

But we muddle on, and costs in health care keep rising, inflammatory opposition rhetoric about “death panels” and “socialized medicine” gets bandied about, and our overall healthcare non-system struggles from day to day.

So here we are with Medicare at 50, struggling with proposals for vouchers, the higher costs of Advantage plans, the need to more adequately fund the trust fund. The latest assault comes from a “bribe” to help passage of the TPP Fast Track international deal. It would take $700 million from Medicare and use those funds to support job retraining and assistance for workers who lose their jobs due to offshoring, etc.

And with our political paralysis, along with suspicion of all things government does, even when government has demonstrated it can do many tasks better than the private sector, stay tuned.

Ray Bellamy, MD, is a long time Tallahassee physician.

http://www.tallahassee.com/story/opinion/2015/07/18/medicare-turns-month/30322447/

The importance of predictable unpredictability in long-term financing of Medicare

Predictable Unpredictability: The Problem with Basing Medicare Policy on Long-Term Financial Forecasting

By Sherry A. Glied, and Abigail Zaylor
The Commonwealth Fund, July 13, 2015

Conclusion: Uncertainty Is Inherent in Medicare Policymaking

Predicting health care costs 20 or 30 — let alone 50 or 75 — years into the future is an inexact science, at best. The costs of providing care depend on future innovations in technology, the value of such innovations to beneficiaries and to taxpayers, and the supply of and demand for health care services. As the Part D experience and the recent cost slowdown suggest, projections of the rate of future technological change are hard to make even in the short run.

The aging of the baby boomers and rising health care costs will plausibly increase the share of GDP devoted to Medicare, but nothing is certain. As we have shown, changes made in the program over the past decade meant that despite substantial expansions of benefits, the financial outlook for the program remained quite stable. The experience of the past 15 years suggests that there is room for considerable optimism about the ability of our nation to afford the Medicare program into the future.

Long-term forecasting uncertainty should make policymakers and beneficiaries cautious about dramatic changes to the program in the near term. The range of error around forecasts of Medicare costs rises as the forecast window lengthens. This suggests that policymakers should focus on the immediate policy window, taking steps to reduce the current burden of Medicare costs by containing spending today. Medicare expenditure policy changes, such as changes in payment rates or methods, can and have taken effect very quickly. Similarly, revenue changes to pay these expenditures occur in real time. Future policymakers are likely to have as much opportunity and much more information than current policymakers to make optimal decisions about Medicare’s future costs.

The challenges of forecasting Medicare costs provide an additional rationale for paying retiree costs through social insurance rather than a defined-contribution system. Individuals simply cannot anticipate what health care is likely to cost after they retire, and they cannot know how much to save against the prospect of these costs. If talented professional actuaries have difficulty making forecasts, then individuals will surely struggle to project what services they will need in the future. As a society, we can decide through the political process to alter policy or payment practices—and we have done so in the past—but such alterations are well beyond the power of any beneficiary.

http://www.commonwealthfund.org/publications/issue-briefs/2015/jul/predictable-unpredictability-medicare-financing

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Comment:

By Don McCanne, MD

For decades we have been hearing from politicians that Medicare is going broke, especially when looking at long-term predictions. Yet as the years roll by, the predictions are continually revised downward in the short term, demonstrating that the doom and gloom of past predictions were not warranted. Yet since long-term forecasting is uncertain, should we be considering major policy changes in Medicare financing? Specifically, should we consider converting Medicare from a social insurance program to a defined-contribution program as politicians are now suggesting?

Well, no. What we want is is for people to be able to access health care without impairing their personal financial security. The defined-contribution, premium support (voucher) model being proposed is designed to slow federal contributions to the Medicare program by shifting more costs to the beneficiaries. That may help politicians balance the federal budget, but it would increase the risk of financial insecurity for the beneficiaries – the opposite of our goal. Also it would add to the administrative waste that already characterizes our system since it would shift us from the administratively-efficient traditional Medicare program to a system of a market of private plans with all of their wasteful administrative excesses and inequities.

The uncertainty of long-term predictions does not mean that we should ignore the future. In fact, this uncertainty should provide us with greater motivation to establish a more stable infrastructure for health care financing. The obvious would be to establish our own public monopsony – a single payer national health program, an improved Medicare that covers everyone. Although unpredictability is predictable, at least a single payer infrastructure  would ensure all of us access and affordability as future needs and resources are confronted.

Marilyn Tavenner moves from CMS to AHIP to “protect Medicare Advantage”

Head of Obama’s Health Care Rollout to Lobby for Insurers

By Robert Pear
The New York Times, July 15, 2015

Marilyn B. Tavenner, the former Obama administration official in charge of the rollout of HealthCare.gov, was chosen on Wednesday to be the top lobbyist for the nation’s health insurance industry.

Ms. Tavenner, who stepped down from her federal job in February, will become president and chief executive of America’s Health Insurance Plans, the trade group whose members include Aetna, Anthem, Humana, Kaiser Permanente and many Blue Cross and Blue Shield companies.

On Aug. 24, she will succeed Karen M. Ignagni, a former health policy specialist at the A.F.L.-C.I.O., who has led the industry’s lobbying arm for 22 years.

Most recently, Ms. Tavenner was the administrator of the Centers for Medicare and Medicaid Services, the federal agency that insures one in three Americans and has an annual budget of more than $800 billion. As administrator, she was in charge of HealthCare.gov.

Her selection as chief lobbyist for the industry highlights how federal health programs have become a priority for insurers, which increasingly depend on revenues from Medicare and Medicaid and the new public insurance marketplaces.

Asked about her priorities, Ms. Tavenner said she wanted to protect Medicare Advantage, the program under which private insurers manage care for more than 30 percent of the 55 million beneficiaries of Medicare.

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Obamacare Chief Nominee Pounded On Conflicts Of Interest

By Richard Pollock
The Daily Caller, July 12, 2015

Liberals and conservative have grave ethical concerns about Andy Slavitt, a former health care executive President Barack Obama nominated as his top administrator at the U.S. Centers for Medicare and Medicaid Services.

Of greatest concern to Congress is the apparent conflict of interest Slavitt poses as a top administrator at an agency that will set the rules for his old boss and the nation’s largest insurance company, United Health Group.

Slavitt has been acting CMS administrator since his former boss, Marilyn Tavenner, resigned earlier this year over repeated Obamacare failures.

CMS also is the largest single purchaser of health care in the United States, paying for almost one-third of the country’s health expenditures.

On the other hand, United Health Group is the largest health insurance company in revenues. It reported $122 million in operating revenues in 2013, about one-third which came from government coffers.

Then there are the profits United Health enjoys from CMS. The company sold insurance on many Obamacare’s state exchanges last year. United Health Group’s major profit centers also are based with Medicare and Medicaid. About 40 percent of the company’s operating revenue comes from administering Medicare and Medicaid.

http://dailycaller.com/2015/07/12/obamacare-chief-nominee-pounded-on-conflicts-of-interest/

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Comment:

By Don McCanne, MD

Although the Affordable Care Act included provisions to reduce the overpayment of private Medicare Advantage plans, each year HHS/CMS has used innovative measures to offset these reductions to ensure the viability of these plans. Now former CMS administrator Marilyn Tavenner has been selected to be president and CEO of the insurance lobbying organization, AHIP, the most influential outside organization during the health reform process. When asked about her priorities would be as head of AHIP, Ms. Tavenner said she “wanted to protect Medicare Advantage.”

Selected to replace her at CMS is Andy Slavitt, a former executive of United Health Group, the largest insurer in the nation, a dominant player in the market of private Medicare Advantage plans, not to mention being the provider of AARP Medigap plans and a major provider of administrative services for Medicare and Medicaid.

Karen Ignagni, AHIP’s previous president and CEO, essentially had carte blanche in the White House as ACA was being crafted. She also was very influential in obtaining the concessions that protected the excess payments to the Medicare Advantage plans, measures which greatly benefit United Health Group and others. It seems more than a coincidence that United Health Group dropped out of AHIP shortly after the resignation of Karen Ignagni.

So what is happening? Without insider information, it is very difficult to determine the degree of control held by each of the players, but there is no question that HHS/CMS, AHIP, and UnitedHealth and the other insurers are all participating in advancing the privatization of Medicare by enhancing the private Medicare Advantage plans with our taxpayer dollars. It is particularly disconcerting that this agenda is supported by Congress and the Obama administration.

Imagine what those excess funds could do for our traditional Medicare program, especially in reducing out-of-pocket expenses for premiums, deductibles, coinsurance and catastrophic losses. That would be far better than wasting them on the administrative excesses of the private insurers and on the dishonest activities they engage in to increase their profits by measures such as upcoding or gaming risk adjustment.

Why is there no public outcry? It is simply because the Medicare Advantage plans are able to use about one-third of the extra funds to reduce deductibles and coinsurance, making them appear to be superior products, plus there is no need to purchase supplemental Medigap plans. Most of the beneficiaries who are satisfied with their private plans would not be inclined to support increased taxpayer funding of the traditional Medicare program since it doesn’t concern them anymore. And efforts to reduce Medicare Advantage funding to the same levels as traditional Medicare are met with loud protests orchestrated by AHIP. Those in the traditional Medicare program usually have supplemental retiree or Medigap plans with which they are satisfied, and thus they are not advocates for change either.

It is really difficult to explain to people that what is a good deal for them is a bad deal for all of us together since it perpetuates high costs and extraordinary administrative waste. If their programs seem to be working for them, they don’t want change.

We need to improve the traditional Medicare program so that it is more comprehensive and provides greater value, and then use it to cover everyone. Our task is made much more difficult by the powerful forces that support corporate control of our health care system. After all, they are the ones with the money. And Tavenner and Slavitt will be there as their agents, working inside and outside of the government. And most people won’t care.

New data on the deficiencies of health savings accounts

The Consumer Finance of Health Savings Accounts

By Jake Spiegel
HelloWallet, July 2015

Health Savings Accounts are a rapidly growing savings vehicle that accompanies High-Deductible Health Plans and allows the account holder to pay for qualified medical expenses tax free. Today, little is understood about how HSA account holders use their accounts. For our study, we used data collected from more than 400,000 accounts by UMB Bank, one of the largest HSA recordkeepers in the country.

From the Findings

On average, older and higher-income employees contribute over 200 percent more than younger and lower-income employees. We observed that the median account holder in the highest income quartile contributed about three times as much to their HSA as the median account holder in the lowest income quartile.

Among account holders who made a contribution to their HSA, the median contribution was almost $700, while the mean contribution was more than twice as large at $1,550. The skewed mean is largely driven by contributions from wealthier and older account holders. The mean contribution from an account holder in the top income quartile was three times the mean contribution from an account holder in the lowest income quartile.

This is a disconcerting trend, as it indicates that the tax advantages offered by HSAs are disproportionately used by older and wealthier employees.

No matter the underlying reasons for the differences in contribution behavior, tax benefits arising from HSA use are flowing disproportionately to higher-income households.

No matter the cause, one thing is clear; lower deferrals to HSAs leaves less-well-off employees with lower HSA balances, and therefore less prepared to deal with future medical expenses.

Low-income employees are at risk of having insufficient funds to cover large medical expenses. In this case, low-income employees may be forced to pay for medical expenditures out of pocket, thereby forfeiting the tax advantages associated with HSAs. Or worse, they may pay for medical expenditures with revolving credit or money withdrawn from their 401(k)s… or payday loans.

About 5 percent of account holders contributed the maximum amount allowed by the IRS to their HSAs, which was $3,250 for single coverage and $6,500 for family coverage in 2013. Many employees may be deferring insufficient amounts to their HSAs to cover medical expenses. This behavior is suboptimal from a tax-efficiency standpoint, reduces buying power for health care, and is potentially dangerous if the account holder faces large medical bills.

The sample that contributes the maximum skews wealthier and older than the portion of the sample that does not. Almost 67 percent of the households that contribute the maximum earn more than $100,000.

Only 4 percent of account holders eligible to invest their HSA balances actually chose to invest.

The small proportion of account holders who contribute the IRS maximum could be a reflection of several factors, both mathematical and behavioral. Any addition of an account for an employee to contribute to and maintain adds a level of complexity to that individual’s personal finances. HSAs compete for employees’ limited pretax dollars with defined – contribution retirement plans and, to a lesser extent, FSAs and transit benefits. Many employees simply do not have the extra money or will not commensurately cut back on discretionary spending to fully fund their HSA.

On the behavioral side, saving for health care lacks saliency. It is difficult enough to project health-care expenditures, and especially so if one has not previously incurred a large medical bill. HSAs are still a relatively new instrument, and the task of projecting one’s out- of-pocket health-care expenditures is an unfamiliar one for many employees. Without guidance for how much money an employee ought to set aside, it can be difficult to effect change and encourage individuals to save more.

http://www.hellowallet.com/research/health-savings

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Comment:

By Don McCanne, MD

With the rapid increase in the prevalence of high-deductible health plans (HDHPs), many patients are finding that their out-of-pocket expenses when they need to access health are excessively burdensome, resulting in financial hardship, and often resulting in forgoing beneficial health care. Supporters of HDHPs say that health savings accounts (HSAs) are the answer – simply use your own HSA to pay for the care you need before the deductible kicks in. How well is that working?

This study confirms what we have said all along – HSAs work just fine for the healthy and wealthy, but the accounts are not adequately funded and may not even exist for individuals with lower incomes and greater health care needs.

The other feature of HSAs is that, for those who remain healthy, the account can be used as a supplementary, tax-advantaged retirement account. Apparently this concept is not driving the increase in enrollment in HSAs since 96 percent of those with accounts large enough to qualify for investing are not bothering to use the investment vehicles designed for HSAs. Besides, retirement savings should not be based on a game of chance – being lucky enough to have not faced significant illnesses.

We already have more than enough studies to show that consumer-directed health care – HDHPs with or without HSAs – impair access and affordability precisely for those with the greatest health care needs. That’s the opposite of what we need. It’s time for a single payer national health program – an improved Medicare, with first dollar coverage, that covers everyone.

WHO validates Cuba as first nation to eliminate maternal-fetal HIV transmission

WHO validates elimination of mother-to-child transmission of HIV and syphilis in Cuba

World Health Organization, June 30, 2015

Cuba today became the first country in the world to receive validation from WHO that it has eliminated mother-to-child transmission of HIV and syphilis.

“Eliminating transmission of a virus is one of the greatest public health achievements possible,” said Dr Margaret Chan, WHO Director-General. “This is a major victory in our long fight against HIV and sexually transmitted infections, and an important step towards having an AIDS-free generation” she added.

Cuba’s achievement

WHO/PAHO (World Health Organization/Pan American Health Organization) has been working with partners in Cuba and other countries in the Americas since 2010 to implement a regional initiative to eliminate mother-to-child transmission of HIV and syphilis.

As part of the initiative, the country has worked to ensure early access to prenatal care, HIV and syphilis testing for both pregnant women and their partners, treatment for women who test positive and their babies, caesarean deliveries and substitution of breastfeeding. These services are provided as part of an equitable, accessible and universal health system in which maternal and child health programs are integrated with programs for HIV and sexually transmitted infections.

“Cuba’s success demonstrates that universal access and universal health coverage are feasible and indeed are the key to success, even against challenges as daunting as HIV,” said PAHO Director, Dr Carissa F. Etienne.

(As treatment for prevention of mother-to-child-transmission is not 100% effective, elimination of transmission is defined as a reduction of transmission to such a low level that it no longer constitutes a public health problem. In 2013, only two babies were born with HIV in Cuba, and only 3 babies were born with congenital syphilis.)

http://www.who.int/mediacentre/news/releases/2015/mtct-hiv-cuba/en/

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HIV Among Pregnant Women, Infants, and Children

Centers for Disease Control and Prevention, June 23, 2015

At the end of 2009, an estimated 10,834 persons who were diagnosed with HIV when they were younger than 13 years were living in the 46 states with long-term, confidential name-based HIV reporting. Of the total, 9,522 (88%) of these persons acquired HIV perinatally.

In 2010, an estimated 217 children younger than the age of 13 years were diagnosed with HIV in the 46 states with long-term, confidential name-based HIV infection reporting since at least 2007; 162 (75%) of those children were perinatally infected.

http://www.cdc.gov/hiv/group/gender/pregnantwomen/index.html

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Comment:

By Don McCanne, MD

Cuba is the first nation to be validated by the World Health Organization as having reduced maternal-fetal transmission of HIV to such a low level that it no longer constitutes a public health problem. Their success is attributed in part to “an equitable, accessible and universal health system in which maternal and child health programs are integrated with programs for HIV and sexually transmitted infections.”

Do you suppose that if the United States adopted an equitable, accessible and universal health system that it would help further reduce our rate of maternal-fetal HIV transmission? Can we try?

‘Now, move on to single-payer health care’

By Dave Zweifel
The Capital Times (Madison, Wis.), July 12, 2015

The Affordable Care Act has passed constitutional muster with the recent Supreme Court decision, and that’s a good thing.

While so-called Obamacare does have its faults, it has provided health care coverage for millions of Americans who had previously gone without, and it’s stopped insurance companies from cherry-picking the healthy and leaving the sick and suffering behind. Plus, it has provided incentives for hospitals, doctors and insurance companies to work together to bring down costs.

Nevertheless, it needs to be changed — but not in the way that knee-jerk Republican naysayers and U.S. Rep. Paul Ryan, in particular, want to change it. They’d like to repeal the law — even if they have to wait until 2017 and the inauguration of a new president. Gov. Scott Walker has vowed that, if elected president, repeal of the ACA would be a priority in his first 100 days. They’d all like to go back to a system that for decades left up to 50 million Americans without health coverage and padded the bottom lines of health care conglomerates.

No, what needs to be done in the years going forward is to make improvements in the ACA and eventually turn it into a universal single-payer health care system, which this country has needed for nearly a century.

In other words, Medicare for all.

Despite the good that has come from Obamacare, it still falls short of providing health care coverage for all Americans. Even with the exchanges, subsidies for lower-income folks, and provisions that require most people to purchase health insurance, it’s estimated there will still be millions of people, perhaps 30 million, without health coverage in 2023.

Plus, there’s no question that the Affordable Care Act’s complexity makes it difficult for most Americans to understand exactly how it works, which, in turn, breeds the rumor and innuendo that have marked the health care debate seemingly forever.

An easy-to-understand single-payer system in which everyone participates and payments to private doctors, clinics and hospitals all come from one source can once and for all stop this nation’s stubborn insistence on jury-rigging health care plans to appease one special interest after another.

The truth is that among the world’s developed countries, the United States continues to stand out like a sore thumb. We not only pay about double what other countries pay for health care, but we’re not as healthy as many of them. Frankly, we ought to be embarrassed as a nation.

The Physicians for a National Health Program, a national group that boasts 19,000 doctor members, insists a national single-payer system can be funded by the savings obtained by replacing today’s “inefficient, profit-oriented, multiple insurance payers with a single streamlined, nonprofit, public payer and by modest new taxes based on ability to pay.” 

We already have the model in Medicare, the single-payer system that works for American seniors. Obamacare has sent us in the right direction. We now need to make sure we take that next step and end this needless and destructive health debate. 

Dave Zweifel is editor emeritus of The Capital Times. dzweifel@madison.com and on Twitter @DaveZweifel

http://host.madison.com/news/opinion/column/dave_zweifel/plain-talk-now-move-on-to-single-payer-health-care/article_b03eff31-6a27-5ce4-bf48-c0485e2fb269.html#ixzz3fsfjbxEr

Country must move to Medicare for all

By Rob Stone, M.D.
The Herald-Times (Bloomington, Ind.), July 14, 2015

Do you look forward to calling your health insurance company with a problem?

Happy to call Anthem to have them explain a bill?

Do you think it will be even easier to get satisfaction when Anthem merges with Cigna?

The health insurance industry already consolidated from hundreds of companies in the 1970s to being dominated by just five huge companies by the time the Affordable Care Act passed in 2010.

Now, in the wake of the recent Supreme Court decision upholding the ACA, out of those Big 5, Humana and Aetna along with Anthem/Cigna are merging to create the Big 3.

We should be alarmed. When companies get this big, its not good for us little people. The ACA didnt start this problem. Neither can it fix it.

Medicare, one of our nation’s most popular social programs, turns 50 on July 30. As noted in a July 3 New York Times editorial, in 1965 when Medicare was enacted, advocates of Medicare, which today covers 46 million Americans over the age of 65 and 9 million younger disabled people, expected that it would expand to cover virtually all Americans.

Although polls between 1999 and 2009 showed consistent majorities in favor of expanding Medicare to people between the ages of 55 and 64 to cover more of the uninsured, it never happened.

Medicare already takes care of the most complex and expensive patients in our system, and does it well.

Medicare only spends about 2 percent on administration and overhead. In other words, it’s very frugal versus private insurance, whose overhead and profits amount to 12 to 25 percent.

As the giant health insurers consolidate, they will not be looking for ways to pay for more beneficial services.

They will be introducing more “innovations” that prevent patients from getting the care that they need.

That’s the way that the marketplace for health insurance works.

Medicare doesn’t work that way.

In traditional Medicare, you have free choice of doctors and hospitals. At the same time, payments are based on legitimate costs and fair margins.

Medicare (and Medicaid) are the victims of skyrocketing health costs, not the cause. Despite the ACA’s expansion of coverage, about 27 million people will remain uninsured in 2025 (Congressional Budget Office).

The complexity of this highly fragmented system of paying for health care is unique to the United States and results in high costs and inequities that leave tens of millions underinsured and tens of millions more with no insurance at all.

Based on international comparisons, our healthcare quality is mediocre and our healthcare costs are by far the highest of all nations. Politicians may say “we have the best healthcare in the world,” but that doesn’t make it true.

Five years ago, Congress could have and should have extended Medicare to cover all Americans. Instead, it passed the complex ACA, which keeps the wasteful and bureaucratic insurance industry in charge.

It’s not too late to take the next step – Medicare for all.

Dr. Rob Stone of Bloomington is director of Hoosiers for a Commonsense Health Plan.

http://www.heraldtimesonline.com/news/opinion/guest-column-country-must-move-to-medicare-for-all/article_240698f1-8e2c-5bb5-b617-4cc6be086642.html?_dc61143974587.3213

More Medicare Advantage audits reveal overcharges

Researchers say government secrecy thwarts efforts to fix payment scheme

By Fred Schulte
The Center for Public Integrity, July 10, 2015

Government audits just released as the result of a lawsuit detail widespread billing errors in private Medicare Advantage health plans going back years, including overpayments of thousands of dollars a year for some patients.

Since 2004, privately run Medicare Advantage plans, an increasingly popular alternative to traditional Medicare, have been paid using a risk score calculated for each patient who joins. Medicare expects to pay higher rates for sicker people and less for those in good health.

But the internal audits, never before made public, provide striking new evidence of billing mistakes – mostly overcharges –in the Medicare Advantage program. Four of the audits were recently obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit.

The audits involve four health plans: an Aetna Health Inc. plan in New Jersey, Independence Blue Cross in the Philadelphia area; Lovelace Health Plan in Albuquerque, NM, and a Care Plus plan in South Florida. Care Plus is a division of Humana, Inc.

Last month, the Center for Public Integrity reported on a fifth such audit at PacifiCare in Washington State, an arm of giant UnitedHealth Group, the nation’s largest Medicare Advantage plan.

In all five audits, two sets of auditors inspected medical records for a sample of 201 patients at each plan for 2007. If the medical chart didn’t document that a patient had the illnesses the plan reported, Medicare asked for a refund. Auditors also gave plans credit for underpayments they discovered.

Among the findings:

  • Medicare paid the wrong amount for 654 of the 1,005 patients in the sample, an error rate of nearly two thirds. The payments were too high for 579 patients and too low for 75 of them. The total payment error topped $3.3 million in the sample.
  • Auditors concluded that risk scores were too high for more than 800 of the 1,005 patients, which in many cases, but not all, led to hefty overpayments. Medicare’s annual payment for more than 200 patients was at least $5,000 higher than merited, according to the audits.
  • Auditors could not confirm one-third of the 3,950 medical conditions the health plans reported, mostly because records lacked “sufficient documentation of a diagnosis.” The names of the medical conditions were redacted by federal officials.

The federal Centers for Medicare and Medicaid Services, or CMS, which conducted the audits, had no comment.

None of the health plans would discuss the audit findings. Aetna, in a statement, said the company had “raised a number of questions and concerns” regarding the results and was “awaiting a response from CMS.”

Clare Krusing, a spokeswoman for America’s Health Insurance Plans, the insurance industry’s primary trade group, said the audits “overstated” the payment errors. Health plans have since improved their record keeping and offer better care for people with chronic health conditions than traditional Medicare, Krusing said.

“The evidence is overwhelmingly clear that these programs (Medicare Advantage) deliver the right care for beneficiaries,” she said.

The records are coming to light at a time of rapid expansion – and consolidation—in the Medicare Advantage market. Enrollment has neared 17 million, about one of every three people eligible for Medicare. Last week, Aetna announced plans to buy competitor Humana for $37 billion.

But the industry also is drawing scrutiny over the accuracy of risk-based payments—and a penchant for secrecy.

The Center for Public Integrity first reported last year that billions of tax dollars are wasted every year due to plans that appear to exaggerate how sick their patients are, a practice known as “upcoding.”

The government audits, known as Risk Adjustment Data Validation, or RADV, are the government’s primary tool for catching these sorts of billing mistakes and holding the industry accountable.

Yet the process has proven unwieldly at best, partly due to a complex and lengthy appeals process and partly to indecision over how much the health plans should refund to the government. It’s not clear how the five audits were settled because CMS officials have refused to release these records. The five RADV audits were launched in 2008, but findings weren’t issued until August 2012, when CMS officials sent each plan a form letter detailing the amount of the overpayment and the plan’s extensive appeal rights. CMS has refused to make public the status of the audits—or even how many total RADV audits have been conducted. CMS cites an exemption to the Freedom of Information Act that shields “trade secrets.”

This stance has largely concealed Medicare Advantage billing records. It wasn’t until April 15, 2011 that CMS announced it would release minimal billing data annually. Doing so would “inform the public on how their tax dollars are being spent,” the agency said at the time, citing President Obama’s January 2009 Memo on Transparency and Open Government.

But much to the chagrin of some researchers, CMS has never expanded on what is released, even though it has made public a huge cache of billing data and audits centering on thousands of doctors, hospitals and other medical suppliers.   

“It’s astonishing. They are dumping huge amounts of data in other areas. Medicare Advantage is now 30 percent of the Medicare program,” said Brian Biles, a professor at George Washington University who successfully sued CMS to win release of the limited billing data now available. (Biles assisted the Center for Public Integrity with its 2014 analysis of that data).

Timothy Layton, a Harvard Medical School researcher who recently co-authored a paper on health plan “upcoding,” said scholars “are definitely hindered” by the lack of data. For instance, researchers can’t examine individual risk scores and the various medical conditions that raise and lower them, he said.

“Without the ability to answer these questions, we can keep pointing out how big the overpayment to MA (Medicare Advantage) is, but we can never really provide the optimal solution to the problem,” Layton said.

David Himmelstein, a physician and professor in the CUNY School of Public Health at Hunter College who supports a single payer medical system, agreed.

“Medicare publishes detailed data on almost every doctor and hospital that gets paid a penny, but it leaves the public—and researchers—almost completely in the dark about the giant Medicare Advantage plans that will collect more than $150 billion from Medicare this year,” he said.

Still, Medicare Advantage insurers are facing calls for closer scrutiny of their operations. In May, Senate Judiciary Committee Chairman Charles Grassley wrote to Attorney General Loretta Lynch and CMS administrator Andrew Slavitt asking how many risk score fraud investigations had been conducted over the past five years and their results. He’s still waiting for an answer.

“Sen. Grassley continues to expect responses to his letters and will continue to press for responses. This is an important issue involving a large amount of taxpayer money,” said Grassley spokeswoman Jill Gerber.

In a separate letter, Sen. Clare McCaskill, the senior Democrat on the Senate Aging Committee, asked  CMS officials to advise her of government efforts to curb Medicare Advantage billing abuses.

“After meeting with CMS we have continued concerns about the level of oversight taking place with respect to Medicare Advantage plans and will continue working to increase oversight and accountability in this area,” said McCaskill spokesman Drew Pusateri.

This story was co-published with NPR.

http://www.publicintegrity.org/2015/07/10/17634/more-medicare-advantage-audits-reveal-overcharges

They spend half and live longer

By Ed Weisbart, M.D.
St. Louis Business Journal, Letters, July 10, 2015

Ascension CEO Tony Tersigni is right when he told the St. Louis Business Journal that our nation’s current policies relegate health care to a side burner. Finances, not health care, are the focus of our national policies.

Tersigni identifies four health care finance models in the United States — Canada for seniors, Europe for employees, Great Britain for veterans and Native Americans, and rural India or Cambodia for the uninsured.

One choice stands out as the most efficient use of resources and a fierce acceptance across America — the Canadian model that forms the basis of our Medicare.

Until 1971, the United States and Canada were spending roughly the same percentage of GDP on health care, and had been following the same cost trends. That year, President Richard Nixon signed the HMO Act into law, while Canada full implemented their national health program. In a sense, North America embarked upon an experiment proactively comparing the private insurance model with a single-payer structure.

Since 1971, the cost curves have definitively separated. Canadian costs have continued to climb, but at a rate substantially slower than ours. Today they spend roughly half what we spend on health care.

But health care is not only about economics. Over the same time frame, Canadian life expectancy has also been growing more quickly than that of the United States. At the beginning of the experiment, Canadians were living one year longer than we were. Today, they live nearly three years longer than we do.

They spend half of what we spend and they live longer. Both distinctions developed after the fork in the road where we turned to managed care they turned to a single-payer national health program.

I submit that it’s time to stop this experiment. We know the solution to our health care crisis, and it does not need to be difficult to implement.

This year, 2015, marks the 50th anniversary of Medicare having been signed into law, right here in Missouri. We should pause, celebrate the program, and honor it by providing it to all Americans. After all, who among us does not deserve this?

Dr. Ed Weisbart is chairman of Physicians for a National Health Program — Missouri chapter.

http://www.bizjournals.com/stlouis/

Distributive injustices in U.S. health care

Distributive Injustice(s) in American Health Care

By Clark C. Havighurst and Barak D. Richman
Duke Law School, January 2007, Research Paper No. 140

Abstract

This article explores the hypothesis that the U.S. health care system operates more like a robber baron than like Robin Hood, burdening ordinary payers of health insurance premiums disproportionately for the benefit of industry interests and higher-income consumer-taxpayers. Thus, lower- and middle-income Americans with health coverage pay not only for their own families’ health care but also to support a vast health care enterprise that primarily benefits others, including many far more affluent than themselves. The system is able to finance itself in part because U.S.-style health insurance greatly amplifies price-gouging opportunities for health care firms with market power, creating a cost burden that falls ultimately on all premium payers equally, like a severely regressive head tax. Moreover, these same consumers also bear excessive costs for their own health care because, not seeing the costs they bear with any clarity (since the tax system makes those costs appear to fall on their employers rather than themselves), they demand unnecessarily costly coverage and resist efforts to economize – all to the benefit of the health care industry and others with reasons to value high-cost medicine. Lower-income insureds also appear, for several reasons, to get less out of their employers’ health plans than their higher-income coworkers, despite paying the same premiums. Finally, insured individuals’ lack of cost-consciousness also affects their attitudes and behavior as citizens and as voters, enabling politicians as well as industry interests to make choices on their behalf that systematically raise costs and foreclose economizing possibilities. The burden of excess health care costs and how it is distributed is rarely recognized as the fundamental issue of social justice it is. The purpose of this article is to make the question who pays and who benefits a principal concern of health policymakers.

From the text

Criticism of health care in the United States usually focuses first and foremost on the millions of Americans who lack health insurance of any kind. But the uninsured are not the only Americans whose welfare should concern policymakers. Because of the way private health services are financed on the one hand and dispensed on the other, the U.S. health care system burdens lower- and middle-income premium payers for the benefit of providers and high-income consumers. In this article, we seek to show the nature — and to suggest the cumulative magnitude — of the many regressive tendencies of the financing, regulatory, and legal regime governing the private side of U.S. health care. Parts II and III chart some of the numerous pathways through which too much money flows or appears to flow from the pockets of the less-than-affluent to the benefit of elite interests. Part IV observes how the legal and regulatory environment of U.S. health care has been structured according to the perceptions and preferences of these same elites, thus raising costs for everyone who seeks health coverage; because the marginal benefits of more and better health care are, of necessity, valued less by people with lower incomes and other unmet needs, significant social-justice issues are raised by the American legal system’s many ways of making families of modest means, if they want health coverage, pay for especially costly versions of it.

Our explicit concern in writing this article is that, for whatever reasons, the health care system’s systematic exploitation of the many for the benefit of the privileged few has been either overlooked, underestimated, or conveniently ignored by analysts and policymakers. We will also suggest, however, that the regressive tendencies we observe are no accident, but result from a combination of ideology and the political economy of health care. Specifically, we see a seemingly well-meant but essentially destructive policy bias — assiduously cultivated by the health care industry and shared by many commentators and policy analysts — in favor of more and better health care for all with only nominal regard for how much it costs or who bears the burden. Because unwillingness to view health care as an economic good accords so well with illusions about health care in the public mind, it has been easy for industry and other interests to manipulate people’s thinking about health care issues, both as consumers and as voters.

From the Conclusions

There should be little disagreement, philosophical or otherwise, with the two main premises of this article: (1) that the burden of paying for public goods such as health care for the uninsured, medical education, and pharmaceutical research should not fall disproportionately on those with less ability to pay and (2) that persons with lower incomes should not be compelled to pay, as part of the price of having any health insurance at all, either for coverage designed by and for elite interests or for health care that is consumed disproportionately by the well-to-do. This article has observed many ways in which, under these premises, the U.S. health care system unfairly exploits ordinary payers of health insurance premiums.

The day of reckoning in U.S. health policy could be hastened if populist politicians (liberal or conservative, as the case may be) would tell consumer-voters the truth about the extortion-like protection scheme being practiced on them by the health care system — which essentially forces them to choose between paying what the system demands and putting their families’ health in danger. This unpleasant truth has heretofore been kept from consumer-voters for complex reasons.

In our view, however, a responsible reform movement might gain political traction if middle-class consumers were given some sense of how much they are paying to support a health care industry essentially unaccountable for its cost-increasing actions.

Although this article has made our general policy preferences reasonably clear, it takes no firm position on the particular health policy that should replace the one we criticize for giving ordinary premium payers a horrendously bad deal while also serving inadequately those without any insurance protection. Indeed, we would not object if our observation of the major burdens imposed on consumers by private health insurance were cited as a reason to adopt a monolithic national health program, scrapping private health insurance altogether (except insofar as it might supplement the national system’s coverage). We hope, however, that populists and progressives invoking our concerns in such a cause will not simply claim that that market-oriented policies have proved unworkable and that big government is therefore needed to do the job. We have, after all, stressed that it is not private insurance as such but “U.S.-style” health insurance and government policy itself that generate the problems that concern us. Moreover, we have some confidence that, with altered subsidies and incentives for consumers, some deregulation of insurers and providers, substantial redesign of insurance products, and some tweaking at a few other points, the market would soon evolve so as generally to give consumers, in actuarial terms, both no more and no less than they choose, with limited public subsidies, to pay for.

The potential benefits of a policy based on principles of managed competition seem to us to be great and uncontroversial enough that responsible policymakers of different ideological persuasions should be able to find common ground on which to build bipartisan reform. Although highly threatening to special interests, such a policy would not be radical in itself but would instead, we think, be entirely in keeping with American values.

We hope that our observation of the serious unfairness of the burdens that the current system imposes on the majority of consumer-voters will help both to inflame and to enlighten a political debate leading to a more responsible national health policy — whatever that policy may turn out to be. The crucial thing is to find a fairer way to distribute the costs of health care.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=959643

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Comment:

By Don McCanne, MD

This paper was published in 2007, before the formal process leading to the Affordable Care Act was underway. Today, Austin Frakt, in his blog, “The Incidental Economist,” published excerpts from it, quite appropriately, because the reform process has not effectively addressed this important topic: Distributive injustices in U.S. health care.

If you read the full 77-page article, you will see that Clark Havighurst and Barak Richman provide convincing evidence in support of their thesis: “Lower- and middle-income Americans with health coverage pay not only for their own families’ health care but also to support a vast health care enterprise that primarily benefits others, including many far more affluent than themselves.” Others have suggested that the burden of direct and indirect health care cost increases borne by low- and moderate-income workers is a major reason for the flat incomes of the workers in recent decades, as income and wealth inequality continue to compound.

Much of their discussion of distributive injustices concerns employer-sponsored plans. Very little in ACA addressed this problem. In fact, the excise tax (Cadillac tax) on employer-sponsored health plans will only increase the injustices for workers and their families. The expansion of Medicaid and the introduction of subsidies for exchange plans move in the right direction, but the subsidies are inadequate for those with moderate incomes, and they won’t even apply to workers with employer-sponsored plans.

Not particularly helpful in this article is the element of victim-blaming such as the allegation that workers demand unnecessarily costly coverage and that they resist efforts to economize. Although the authors claim to take no firm position on health policy changes, they do support greater consumer involvement through cost sensitivity, managed competition, and reducing health benefits to only those needed, at the same time that they caution against overregulation of health plans – concepts that generally are favored by conservatives.

However, they do state, “Indeed, we would not object if our observation of the major burdens imposed on consumers by private health insurance were cited as a reason to adopt a monolithic national health program, scrapping private health insurance altogether.” Considering their other ideological stances, it is not clear how sincere they are that they would not object, but it is clear that they do recognize that these injustices are a legitimate reason to adopt a single payer national health program.

By informing the public of the distributive injustices that exist in U.S. health care, we share the hope of the authors that their observations of the “serious unfairness… will help both to inflame and to enlighten a political debate leading to a more responsible national health policy.”

Medicare and Medicaid: Successes and Drawbacks

The New York Times, Letters, July 11, 2015

PNHP note: The three letters below were among six published in the Sunday (July 12) print edition of The New York Times in response to its editorial noting the 50th anniversary of Medicare and Medicaid.

By Marcia Angell, M.D.

In “Medicare and Medicaid at 50” (editorial, July 3), you referred to polls between 1999 and 2009 that showed “consistent majorities in favor of expanding Medicare to people between the ages of 55 to 64 to cover more of the uninsured.” The next day, “Insurers Seek Steep Increases in Plans’ Rates,” a front-page news article, reported on likely double-digit rate increases — something the Affordable Care Act can discourage but not prevent.

Isn’t it time to accede to the wishes of the “consistent majorities” and begin dropping the qualifying age for Medicare one decade at a time? It would probably be less costly for consumers, since any increase in payroll taxes would be more than offset by lower premiums and out-of-pocket costs, it would provide truly universal care to those in the covered age groups and it would certainly be less inflationary.

Dr. Marcia Angell resides in Cambridge, Mass. She is a senior lecturer in social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine.

By Ann Troy, M.D.

Congress created Medicare 50 years ago to provide seniors with health care, giving them protection against financial ruin and peace of mind. Five years ago Congress could have and should have extended Medicare to cover all Americans, creating a single-payer system with the much freer choice of doctors and hospitals that seniors enjoy. Instead, it passed the hopelessly complex Affordable Care Act, which has kept the wasteful and bureaucratic insurance industry in health care and left millions uninsured and millions more with woefully inadequate coverage. It has also cost far more than simply extending Medicare.

It is well known that people without insurance or with high deductibles wait longer to seek medical care; thus their illnesses or problems become more difficult to treat. And sometimes they die because they have no insurance (an estimated 50,000 every year). Those with Medicare have more protection against the devastating effects of illness and injury, get more help overcoming or living with disabilities, and are protected against financial ruin.

“Equal protection” has been used, with some success, to improve access to education and, now, to allow same-sex couples to marry. It seems that an even stronger case can be made regarding access to health care — which is considered a right in every other developed nation.

Dr. Ann Troy resides in San Rafael, Calif. She is a pediatrician.

By Samuel Metz, M.D.

Medicare provides better care at lower cost than private health insurance can achieve. But it is woefully underfunded and may become insolvent. Many argue for privatization. However, every health care system in the world, especially our private insurance industry, faces increasing costs and a decreasing willingness of patients (and taxpayers) to pay for them.

Remarkably, Medicare costs are rising slower than those of private insurance — despite caring for older, sicker patients. Privately administered Medicare Advantage costs more than traditional Medicare; that’s not because patients receive care they don’t need, but because private insurance companies receive extra federal payments they don’t earn. Clearly Medicare needs less private interference, not more.

Medicare delivers high value. Its critical features — prepayment during high earning periods, reduced cost-sharing at time of need, inclusion of the broadest possible population, comprehensive benefits — should be reinforced. Then these features should extend to the rest of us. Medicare for some is good. Medicare for all is better.

Dr. Samuel Metz resides in Portland, Ore. He is an anesthesiologist and a member of Physicians for a National Health Program.

http://www.nytimes.com/2015/07/12/opinion/sunday/medicare-and-medicaid-successes-and-drawbacks.html

Paying the deductible year after year

New Evidence on the Persistence of Health Spending

By Richard A. Hirth, Teresa B. Gibson, Helen G. Levy, Jeffrey A. Smith, Sebastian Calónico, Anup Das
Medical Care Research and Review, June 2015

Abstract

Surprisingly little is known about long-term spending patterns in the under-65 population. Such information could inform efforts to improve coverage and control costs. Using the MarketScan claims database, we characterize the persistence of health care spending in the privately insured, under-65 population. Over a 6-year period, 69.8% of enrollees never had annual spending in the top 10% of the distribution and the bottom 50% of spenders accounted for less than 10% of spending. Those in the top 10% in 2003 were almost as likely (34.4%) to be in the top 10% five years later as one year later (43.4%). Many comorbid conditions retained much of their predictive power even 5 years later. The persistence at both ends of the spending distribution indicates the potential for adverse selection and cream skimming and supports the use of disease management, particularly for those with the conditions that remained strong predictors of high spending throughout the follow-up period.

http://mcr.sagepub.com/content/72/3/277.abstract?etoc

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High health spending is more persistent than you might think

By Austin B. Frakt, PhD
AcademyHealth Blog, July 9, 2015

You get hit with a major health condition and your health care needs and spending spikes. A lot. Welcome to the 10% club, whose members spend at least $30,000 on health care in a year. Yeah, most of it is covered by insurance, but selecting the plan with the $2,500 deductible you blew through (not to mention the thousands more in copayments) looks like a bad idea in hindsight.

It could be worse. It could happen to you next year, and the year after, and the year after that, and so on. Will it?

This is a question of health spending persistence. And, as surprising as it may sound, we don’t know a lot about it, at least for the working age population.

Richard Hirth and colleagues recently were able to take an analysis of persistence for workers and their dependents a lot further, and using recent data. They looked at six years of health spending data (2003-2008) for a sample of millions of individuals with coverage from over 100 medium and large employers. One of their findings is that at least one in every three high spenders in a given year will be a high spender in any of the next five years. (Here, high spender is defined as in the top 10% of the annual spending distribution.) I don’t know what your prior is, but this is a much higher level of persistence than I expected.

If you’re unlucky enough to get hit with a very costly health condition, consider yourself relatively lucky if it’s not highly persistent. The new work by Hirth and colleagues shows that such persistence is surprisingly common and remarkably long. This is how sickness saps savings, for those with coverage that comes with high enough deductibles and copayments. Today, we call that “insurance.” Is it?

http://blog.academyhealth.org/high-health-spending-is-more-persistent-than-you-might-think/

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Comment:

By Don McCanne, M.D.

We already know that high deductibles and other cost sharing can result in financial hardships for individuals who develop major medical problems. But how many face the additional burden of having to pay the high deductibles in the years following? This study provides an answer.

Of health plan members or their family members who were in the top 10 percent of spending in a given year, 43 percent were still in the top 10 percent the following year, and an astonishing 34 percent were still in the top 10 percent five years later.

These are workers and their family members – largely middle-income Americans – who had employer-sponsored health plans. These are the plans that the Affordable Care Act was designed to protect. Now that employers are are switching to “consumer-directed” high-deductible health plans, these plans are devastating to the personal finances of these families that must meet the high-deductibles and other cost sharing year after year. Forget retirement funds, college funds, vacations, and the like and plan to spend time with bill collectors and bankruptcy referees.

When you think about the financial protection that you should be receiving from your health plan, it is deplorable that one-third of those who have the greatest needs for health care are exposed to years of recurrent, persisting financial burdens simply because of the fundamentally flawed design of our private health plans. Austin Frakt is right to question if this is even “insurance.”

The authors of the study suggest that the solution is found in disease management. What? Disease management only tweaks spending on major medical problems and would have no impact on the high-deductibles that patients would have to pay before their coverage kicks in. Let’s get real.

A single payer system with first dollar coverage would eliminate the burden of high medical bills that these unfortunate individuals face under our current, dysfunctional health care financing system. Yes, they need qualified health professionals to help them manage their diseases, but that’s a function of the health care delivery system. Intrusive, private, third-party money managers need to get out of the way.