San Bernardino to slash retiree health care in bankruptcy plan

By Tim Reid
Reuters, May 7, 2015

The southern California city of San Bernardino has proposed virtually eliminating retiree health insurance costs under a bankruptcy exit plan it must produce by May 31, according to an attorney involved in negotiations with city officials.

Steven Katzman, who represents a committee of retirees in talks with the bankrupt city, says a tentative deal has been struck under which retirees would sacrifice the city subsidies they currently receive for health care coverage in exchange for a guarantee that San Bernardino continues to fund and not cut current pension benefits.

The deal would follow an approach taken in the recent bankruptcies of Detroit, Michigan and Stockton, California, where retiree health care was slashed or eliminated, while pensions emerged relatively unscathed.

Retirees, including former police, firefighters and other city workers, can choose to stay with the city health plan, while paying all costs, or they can quit the city health plan and look for coverage in a health exchange, or if eligible, apply for Medicare, the government-funded healthcare program for the elderly.

http://www.reuters.com/article/2015/05/07/usa-bankruptcy-bernardino-idUSL1N0XY3SL20150507

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Comment:

By Don McCanne, MD

In designing the Affordable Care Act, one of the highest priorities was to protect employer-sponsored health plans since they were source of health care coverage for the majority of us. Certainly amongst the most reliable coverage are the plans provided for our police officers and firefighters. No.

As these and other public employees in San Bernardino and other bankrupt cities discovered, their coverage is vulnerable. These workers were forced into a deal wherein they had to give up the ironclad guarantee of retiree health benefits in exchange for protecting their pensions.

At least Medicare would be there for them once they became eligible, though they might face significant financial hardships in the interim. In fact, if we had an improved Medicare that covered everyone, it would always be there, not just for them but for all of us, and we would not have to rely on our employment as a source of health care coverage.

So the best – employer-sponsored health plans – do not provide the stability in health care coverage that we need, and these plans do not even cover over forty percent of us. Besides, the federal government is not subject to bankruptcy. With a single payer national health program, the government would always be there for us.

Alberta’s health care system needs new prescription, NDP leader Rachel Notley tells Calgary crowd

By Dave Dormer
Calgary Sun, April 29, 2015

Restoring a $1 billion cut to funding and eliminating personal levies is the prescription to fixing an ailing health care system, NDP leader Rachel Notley said Wednesday.

“That is a private clinic behind me and that is what Jim Prentice has in mind for you and your family,” she said while campaigning in southwest Calgary.

“That is what a billion-dollar health care cutback leads to and I have a fundamental problem with private clinic health care.

“Private clinic health care is about building a two-tier system where the wealthy, the people who Jim Prentice and his friends represent, can pay to jump to the head of the line instead of treating people on the basis of need.”

Notley said private clinics draw resources away from the public health care system, ultimately undermining it.

“Instead of more of these clinics, I’m proposing we reverse the billion-dollar cutback to health care Mr. Prentice is asking you to vote for in this election and I’m also proposing that we get rid of the regressive health levy,” she said.

“And I’m proposing that we improve our public system with better diagnostics, better long-term care, better mental health care and just plain better health care overall, including better cancer care here in Calgary.

“On this issue, there’s a stark contrast between the vision I’m putting forward and what Mr. Prentice has to offer.”

http://www.calgarysun.com/2015/04/29/albertas-health-care-system-needs-new-prescription-ndp-leader-rachel-notley-tells-calgary-crowd

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Alberta election 2015 results: NDP wave sweeps across province in historic win

CBC News, May 6, 2015

It’s a massive shock that turns Canadian politics on its head: the NDP has won a majority government in Alberta.  

“I think we might have made a little bit of history tonight,” (NDP) leader Rachel Notley told her supporters Tuesday night. “Friends, I believe, that change has finally come to Alberta. New people, new ideas and a fresh start for our great province.”

The long-governing PC Party dropped to third place. The outgoing premier Jim Prentice told his supporters late Tuesday that he had resigned as party leader and had resigned his seat.

The NDP won just over 41 per cent of the popular vote, the Wildrose got 24 per cent and the PCs were at about 28 per cent.

Prime Minister Stephen Harper congratulated Notley on her win.

“I look forward to working with future Premier Notley on issues of importance for Albertans and all Canadians, including creating jobs, economic growth and long-term prosperity across the province and country,” Harper said in a statement issued Wednesday. He also offered thanks to Prentice, a former minister in his cabinet, and wished him well in his future endeavours.

2015 results – Number of seats won (Number of seats at prior dissolution in parentheses)

10 (70) – Progressive Conservatives
1 (5) – Liberal Party
53 (4) – New Democratic Party
21 (5) – Wildrose Alliance Party
1 (0) – Alberta Party
1 – Undecided

http://www.cbc.ca/news/elections/alberta-votes/alberta-election-2015-results-ndp-wave-sweeps-across-province-in-historic-win-1.3062605

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Comment:

By Don McCanne, MD

The landslide victory for the New Democratic Party (NDP) in Alberta appears to represent not only a shift to supporting progressive values and away from Prime Minister Stephen Harper’s conservative politics, but it also appears to be an endorsement of NDP’s strong support of Alberta’s single payer health program, with a rejection of recent trends in privatization of their system.

Lest the victors not become too smug and complacent, it should be pointed out that the progressives (New Democratic Party) received 41 percent of the popular vote, whereas the conservatives (Progressive Conservatives and Wildrose Alliance Party) received a combined 52 percent of the vote. (This may represent an oversimplification since some would label Harper’s PC party as “neoliberal.”)

Nevertheless it is reassuring to see a vote in one of Canada’s most conservative provinces that seems to support their single payer public health system, while rejecting privatized two-tier health care.

What lessons might there be here for the United States?

Activists Target Hedge Fund Managers Cashing In on Predatory Drug Pricing Schemes from Gilead Sciences

Vocal New York, May 5, 2015

On the eve of Gilead Science’s annual shareholder meeting, activists criticized the pharmaceutical giant’s decision to price its Hepatitis C Virus (HCV) cure out of reach for millions of sick people by targeting three major hedge fund investors in the company. The groups released a new report charging Julian Robertson of Tiger Management, Steve Cohen of Point72 Asset Management, and other hedge fund managers of profiting from extortionate drug prices on the backs of 3.5 million Americans and 175 million people worldwide who are living with the virus.

Gilead charges as much as $1,125 per pill and $94,500 for a course of its lifesaving treatments, forcing health care systems to limit access, robbing patients of a decent quality of life, and forcing many into serious health problems and complications.

Hedge fund managers are laughing all the way to the bank. A pack of hedge fund managers bet big on Gilead price-gouging schemes in 2014, increasing the number of shares they held by a factor of 12. The bet turned out well for the hedge fund managers – Gilead’s stock rose 84%. But things haven’t worked so well for HCV patients who still can’t get access to Gilead’s overpriced drugs.

“The hedge fund industry directly supports Gilead’s decision to put astronomical profits over people’s lives,” said Fred Wright of the grassroots political group VOCAL New York. “Hedge fund managers, including those we’re protesting today, have unapologetically attacked any effort to control drug costs for the good of the public. They’re parasites feeding off of people’s desperation.”

“While Gilead reports, once again, exorbitant profits from their HCV cures, the majority of the people with chronic HCV infection cannot afford them and are not being cured,” said Luis Santiago of ACT UP New York.  “Millions of people will see their HCV disease progress, with horrendous yet avoidable health results. Gilead’s profiteering is letting people get sicker, knowing there is a cure. Gilead must substantially lower these outrageous prices so the rationing is lifted and we can cure everyone with HCV.”

http://www.vocal-ny.org/blog/press-release-activists-target-hedge-fund-managers-cashing-in-on-predatory-drug-pricing-schemes-from-gilead-sciences/

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Hedgepapers No. 13 – Hepatitis C and Hedge Fund Profiteers

Hedge Clippers, May 4, 2015

A pack of hedge fund managers bet big on Gilead price-gouging schemes in 2014:

Julian Robertson of Tiger Management: “I love Gilead right now. I think it’s fabulous…They’re going to get inundated with cash from the profits on the Hepatitis C drug”

Steve Cohen, Chairman and CEO of Point72 Asset Management, whose firm’s schemes to game drug trials resulted in extensive insider trading investigations and almost landed him in prison

Cliff Asness of AQR Capital Management, who has published extensive rants against Obamacare, and who sits on the board of the Manhattan Institute, which opposes Medicare drug price negotiations

Robert Mercer of Renaissance Technologies, a major backer of key players in the fight against Obamacare, including the Heartland Institute and presidential candidate Ted Cruz

Joel Greenblatt of Gotham Asset Management and Glenn Dubin of Highbridge Capital, also significantly increased their stakes in Gilead Sciences over the course of 2014

These six hedge fund managers increased their shares of Gilead by twelve times during this period. The stock price rose 84% over this period, and the value of their collective holdings in Gilead went from $45 million to $844 million.

That’s a lot of interest in curing Hepatitis C victims – or rather, in squeezing them for profit.

#HedgePapers No. 13 – Hepatitis C and Hedge Fund Profiteers

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Pharmaceutical firms contribute to wealth inequity

Quote of the Day, April 27, 2015

Pharmaceutical firms are buying the rights to the products of other firms, often buying the firms themselves, paying very high prices for these rights. …an even more egregious example is the action of Gilead Sciences in buying up the rights to the newer, more effective Hepatitis C drugs, again paying outrageous prices for those rights. They are recovering this capital cost by charging $1,000 or more for each pill sold, when a course of treatment may be 84 pills.

A massive amount of capital is paid out, requiring the purchasing firm to charge much higher prices for those drugs to recover the funds paid to acquire the drug rights. Who receives the capital paid out? The wealthiest tier – the tier that holds by far the largest percentage of shares in public and private corporations.

https://www.pnhp.org/news/2015/april/pharmaceutical-firms-contribute-to-wealth-inequity

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Comment:

By Don McCanne, MD

Last week in a Quote of the Day it was described how pharmaceutical firms such as Gilead were paying outrageous amounts for drug rights and then passing these extra costs onto patients through much, much higher drug prices, while tacking on exorbitant profits.

Today’s report shows where much of these profits are going: to the hedge funds! The pharmaceutical industry has become a tool of Wall Street in extracting funds from patients and passing them on up to the very wealthiest, including the fund managers themselves – compounding our problem with wealth inequity.

This screams out for government intervention. With this and all of the other abuses, how could we not support moving control of health care financing to our own public program – a single payer improved Medicare for all?

(For those who plead that hedge funds serve not only the wealthiest individual investors, but they also serve institutional investors such as university foundations and union retirement funds, then you should ask yourself if it is proper for these institutions to expand their assets with tainted money. An important role of government should be to ensure that their money is clean.)

Affordable Care Act payment model saves more than $384 million in two years, meets criteria for first-ever expansion

HHS.gov, May 4, 2015

Today, an independent evaluation report released by the Department of Health and Human Services showed that an innovative payment model created as a pilot project by the Affordable Care Act generated substantial savings to Medicare in just two years. Additionally, the independent Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) has certified that this patient care model is the first to meet the stringent criteria for expansion to a larger population of Medicare beneficiaries.

The independent evaluation report for CMS found that the Pioneer Accountable Care Organization (ACO) Model generated over $384 million in savings to Medicare over its first two years – an average of approximately $300 per participating beneficiary per year – while continuing to deliver high-quality patient care. The Actuary’s certification that expansion of Pioneer ACOs would reduce net Medicare spending, coupled with Secretary Sylvia Mathews Burwell’s determination that expansion would maintain or improve patient care without limiting coverage or benefits, means that HHS will consider ways to scale the Pioneer ACO Model into other Medicare programs.

“This is a crucial milestone in our efforts to build a health care system that delivers better care, spends our health care dollars more wisely, and results in healthier people,” said HHS Secretary Sylvia M. Burwell. “The Affordable Care Act gave us powerful new tools to test better ways to improve patient care and keep communities healthier. The Pioneer ACO Model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large.”

Pioneer ACOs are part of the innovative framework established by the Affordable Care Act to move our health care system toward one that rewards doctors based on the quality, not quantity, of care they give patients. HHS earlier this year announced the ambitious goal of tying 30 percent of Medicare payments to quality and value through alternative payment models by 2016 and 50 percent of payments by 2018.

http://www.hhs.gov/news/press/2015pres/05/20150504a.html

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Association of Pioneer Accountable Care Organizations vs Traditional Medicare Fee for Service With Spending, Utilization, and Patient Experience

By David J. Nyweide, PhD; Woolton Lee, PhD; Timothy T. Cuerdon, PhD; Hoangmai H. Pham, MD, MPH; Megan Cox, MHA; Rahul Rajkumar, MD, JD; Patrick H. Conway, MD, MSc
JAMA, May 4, 2015

During Pioneer ACOs’ first 2 performance years, total spending for 1 481 970 aligned beneficiaries increased approximately $385 million ($280 million in year 1; $105 million in year 2) less than spending of similar FFS beneficiaries. A large portion of the smaller increase in spending was from decreases in inpatient utilization among ACO-aligned beneficiaries, although greater decreases in primary care evaluation and management office visits, and smaller increases in the use of tests, procedures, and imaging services, also were related to the observed differential changes in spending. There was no difference in all-cause readmissions within 30 days of discharge, but follow-up visits after hospital discharge increased more for ACO-aligned beneficiaries. Beneficiary reports of care experiences were similar to both the general FFS and Medicare Advantage populations in the first performance year and may have been better in terms of timely care and clinician communication.

Although such success may be replicable in regions with varying market characteristics, not all ACOs did well fiscally—one-third of Pioneer ACOs did not generate lower expenditure growth relative to their comparison populations in their first 2 years, and 2 generated significantly higher expenditure growth their second year. Multiple factors may contribute to these findings. It may take more time for some ACOs to redesign care delivery and learn how to effectively manage the care of a population of FFS Medicare beneficiaries to realize smaller increases in spending. CMS may also need to reexamine specific design elements to facilitate better performance, such as expenditure benchmarking methodologies that are more predictable to the ACO or enhanced benefits and other tools to engage beneficiaries. Reducing Medicare spending through the Pioneer ACO model, then, likely depends on an array of market, organizational, programmatic, and physician-related factors that should be better understood in future implementation and research.

For individual Pioneer ACOs, the results of this difference-in-differences analysis differ from the results that determine whether they share in savings with CMS. The latter results were derived from reconciling the ACO’s projected and actual spending levels as part of their financial incentive to participate in the model, whereas the primary goal of this analysis was to assess the performance of Pioneer ACOs on a set of key spending and utilization outcomes compared with such outcomes in the absence of the intervention. This study does not address other important concerns such as the degree to which the Pioneer ACO model can sustain small increases in spending and high quality performance over longer periods or whether Pioneer ACOs can achieve a meaningful return on investment for the resources they devote to improving care. These results are also limited to Pioneer ACOs and do not include other types of Medicare ACOs.

http://jama.jamanetwork.com/article.aspx?articleid=2290608

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Accountable Care Organizations and Evidence-Based Payment Reform

By Mark McClellan, MD, PhD
JAMA, May 4, 2015

The study by Nyweide et al in this issue of JAMA is the most comprehensive to date on the association of Medicare’s Pioneer ACO program with spending and beneficiary experience with care. Because beneficiaries cannot be randomized to a Pioneer ACO, the authors compared annual changes among beneficiaries assigned to the ACOs with changes among beneficiaries in the same region who were not in an ACO or a Medicare Advantage plan.

In the first year, the spending difference was largely attributable to fewer physician encounters and hospital admissions; in the second year, reductions in “preventable” hospitalizations for complications that may be affected by ambulatory care were more important.

These early results may be viewed as modest. The smaller increase in spending amounted to 4% in year 1 and less than 1.5% in year 2 (though the 2 estimates do not appear statistically different). The estimates do not account for the shared-savings payments to the ACOs, which totaled $77 million in 2012. Nor do they account for the investments of time and money made by the health care organizations.

http://jama.jamanetwork.com/article.aspx?articleID=2290607

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Pioneer ACO Evaluation Findings from Performance Years One and Two

L&M Policy Research, March 19, 2015

From “Results at a Glance”

• Pioneer ACOs saved a total of $384 million over the first two performance years; most of these savings accrued in the first performance year ($279.7 million in the first performance year [2012]; $104.5 million in the second performance year [2013]).
• Total spending relative to local markets varied for the 32 individual Pioneer ACOs:
  •   Ten Pioneers had statistically significant savings in both performance years.
  •   Ten Pioneers had statistically significant savings in only one of the two performance years; two of these Pioneers had significant losses the other year.
  •   Twelve Pioneers had no statistically distinguishable savings or losses.

• Pioneer ACO features explored to date—including hospital relationships, ability to follow beneficiaries across the care continuum, and ACO leadership—do not appear to explain the differences in Pioneer ACOs’ spending performance in the first two years of the model. Provider engagement activities suggest some relationship with Pioneer ACOs’ performance. These findings may be attributable, in part, to the somewhat limited variation in observed structural characteristics that can be measured consistently from available qualitative data across all Pioneer ACOs.
• Overall spending performance was mainly accompanied by utilization reductions in acute inpatient settings. As a group, Pioneer ACO results showed lower-than-expected utilization in acute inpatient stays and physician services in the first and second performance years compared to local markets. The 10 Pioneers with savings in both performance years had particularly steep reductions in acute inpatient stays.
• Pioneer ACOs collectively had per-beneficiary-per-month savings in 2012 relative to near markets on physician services, inpatient hospital, hospital outpatient, skilled nursing facility, home health, hospice, and durable medical equipment services. However, the magnitude of savings in these settings was lower in 2013.
• Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys of aligned Pioneer beneficiaries found that Pioneer ACOs exhibited few changes in patient experience between the first and second performance year. In addition, most ACOs have similar levels of performance to one another in the domains we examined. There appears to be little relationship between savings and high or low CAHPS scores.
• Pioneer ACOs continue to rely largely on internal sources of learning. Although ACO leadership report gaining insights from consultants, commercial payers, and self-insured employers, they find that as innovators, they have more experience within their organizations that they can draw on than from external sources. Pioneers ACOs had the greatest participation in learning system topics related to cost savings, financial data analysis, and quality results/quality reporting/quality improvement.

From “Conclusions”

Descriptive examination of key ACO features did not reveal measured characteristics that appear to be related to ACOs’ two-year spending results. This finding may be attributable, in part, to the somewhat limited variation in observed structural characteristics that can be measured consistently from available qualitative data across all Pioneer ACOs. For those features where we do observe variation, such as relationship with a hospital or whether ACO providers use a single EHR, it appears that they do not explain Pioneer ACOs’ two-year spending results. One suggestive finding is around provider engagement, where ACOs that place more emphasis on engaging providers through incentives and referral management activities may be better positioned to achieve savings. Ongoing collection and analysis of qualitative data may provide additional insights into key operational features or may reveal that other factors, such as market characteristics, are bigger drivers of spending.

http://innovation.cms.gov/Files/reports/PioneerACOEvalRpt2.pdf

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Comment:

By Don McCanne, MD

Although most reports about the initial experiences with the Pioneer ACO model have been relatively disappointing, nevertheless HHS Secretary Sylvia Burwell in a press release states, “The Pioneer ACO Model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large.”

The release further states, “this patient care model is the first to meet the stringent criteria for expansion to a larger population of Medicare beneficiaries.” HHS intends that, by 2018, 50 percent of Medicare payments will be tied to quality and value through such “alternative payment models.”

This study was done with highly select “Pioneer” organizations that were already geared up to put into place policies intended to accomplish the goal of lower costs without impairing quality. The first year reductions in spending were quite modest and not achieved by many of the ACOs, and the second year savings were only one-third of the first year, questioning whether savings could be sustained. Also a portion of the savings was returned as shared savings rewards, plus the calculated savings did not include the offset of investment of time and money by the health care organizations. A savings for Medicare does not necessarily equate with a savings in health care spending.

The mechanisms of the savings are not clear. With the successful Pioneer ACOs there were fewer hospitalizations and fewer physician visits, but this could represent the fact that the Pioneer organizations were caring for healthier patients. Also it is not clear if the ACOs were truly effective in reducing unnecessary physician visits and hospitalizations, or if they were denying beneficial health care services because of incentives provided for reducing spending.

The JAMA authors write, “Reducing Medicare spending through the Pioneer ACO model, then, likely depends on an array of market, organizational, programmatic, and physician-related factors that should be better understood in future implementation and research.” So we do not know what we are doing, yet HHS is going to shove us into an ill-defined and unproven program which will determine 50 percent of Medicare payments in less than three years from now. And doctors thought SGR was bad!