PNHP

AHIP seeks reversal of "any willing provider" clauses

AHIP seeks reversal of "any willing provider" clauses

Insurers seek limited insurance exchange plan networks

By Jennifer Lubell
American Medical News, August 19, 2013

Health plans are focused on being ready “and doing what we need to do” as states set up their respective marketplaces, said Karen Ignagni, president and CEO of America’s Health Insurance Plans.

But some policy concerns remain. Many states, for example, “still have restrictions on our ability to actually provide high-performing networks for individuals to be able to access high-performing doctors and hospitals to make sure again we’re stretching those dollars. That will have to be looked at,” she said.

Ignagni was referring to the “any willing provider” clause, a mandate in some states that requires health plans to allow health care professionals to participate in a health plan’s network if the professional agrees to a plan’s contract terms, limits and conditions.

She also encouraged giving nurses a broader role, joining them with other professionals as part of health care teams, “so that we can try to customize health care and make it very patient-centered, and again stretch those dollars.”

http://www.amednews.com/article/20130819/government/130819959/7

Comment:

By Don McCanne, M.D.

Insurer opposition to “any willing provider” clauses is yet one more example of why we should question leaving coverage decisions in the hands of the private insurance industry.

Any willing provider clauses allow care provided by any qualified physician to be covered even if that physician is not contracted by the insurer but is still willing to accept payment based on contracted rates. The advantage of such clauses is that patients may choose to continue to see their own physician as long as the physician agrees to the insurer’s rates.

Why would insurers want to prohibit patients from having that right? It has to do with their current strategy of switching to narrow network plans – plans that have fewer choices of health care professionals. They say that they can extract even greater discounts from physicians who believe that they will have more patients referred to them by the insurer. Although it is questionable as to just how much further the insurers can ratchet down rates, these limited network plans have the advantage for the insurer of further impairing accessibility, thereby resulting in savings from forgone care, no matter how important that care might be.

Besides reducing the number of physicians in their networks, they also want to increase the number of nurse practitioners, presumably because they can negotiate even lower rates with them than they can with primary care physicians. That assumes that the current movement by nurse practitioners to gain equal pay for equal work will fizzle when the insurers offer the bait.

When they say this isn’t about the money, but it’s about quality… No, wait, they do say that this is about “stretching those dollars.” But how should those dollars be stretched? Should we take away choices of physicians and substitute nurses unwillingly, or should we consider eliminating this egregiously wasteful industry with its unwelcome intrusions? The latter would not only produce immensely more savings, it would also be much more beneficial for patients.

Tackling our uncontrolled health care expenditures

By Jack Bernard
The Star-Ledger (Newark, NJ), Aug. 20, 2013

As stated in various newspaper articles, there is a national concern with hospital billings. Specifically, charges vary tremendously from facility to facility for the same services and procedures, as shown by the Centers for Medicare & Medicaid Services data that was released in May 2013.

For those employed in the hospital and insurance fields, none of this comes as any surprise whatsoever. The “billing versus actual reimbursement” scenario is a long-standing nonsensical game played by providers and third-party reimbursers.

But, the articles miss the larger point. The true underlying problem with Medicare/Medicaid is escalating, uncontrolled national health care expenditures. This excessive increase is caused in large part by our insurance system (as well as providers of care, to a lesser extent), and not by wildly varying charges by service providers — charges that are simply disregarded by third-party payers.

After spending 25 years in the health care field, most of it related to making hospitals more efficient, I have become skeptical of most Washington reform efforts. I am especially wary of the supposed “reforms” proposed by my party, the Republican Party.

The GOP and Rep. Paul Ryan (R-Wis.), the fiscal policy leader of the party, want to talk about only the federal budget and shifting health costs to seniors, as opposed to true systemic cost containment for the nation. Maybe this reflects the fact that Ryan has never spent any significant time in the private sector and is solely a creature of Washington.

Experts in health care economics may differ on many things, depending on how conservative or liberal they may be. But, one thing they all agree on is that raising the age for Medicare will do virtually nothing to reduce the overall cost of health care in this nation. Cost shifting is not cost reduction.

Under the Affordable Care Act, everyone must have insurance, so theoretically the seniors cut out of Medicare under the Ryan plan would just get private insurance.

Medicare has a 3 percent administrative overhead while the private sector is now at 28 percent and trying to eventually come down to 20 percent. Raising the age to join Medicare simply shifts the insurer from the government to less efficient private providers. The national cost of care remains the same; only the insurer has changed for a small group of seniors.

In fact, the cost per capita for Medicare itself will actually rise because the remaining pool of Medicare enrollees will be older and, therefore, sicker than they are now. Plus, the Republican proposal dumps the extra cost into the lap of seniors 65-67, many of whom may well be unemployed/unemployable, according to national statistics.

The real solution to the American health care dilemma is obvious to Canadians, Australians and Europeans, but apparently not to us. Forget what bombastic politicians say about the United States having the best care in the world. Other developed countries have better health care outcomes, according the World Health Organization, and much lower costs. For example, Canada has superior mortality and morbidity statistics compared with ours. Per-capita cost for health care is $4,445 in Canada versus $8,233 in our nation.

How did they do this? Through a single-payer system, otherwise known as Medicare for All. Details can be found at the Physicians for a National Health Program website.

Under single payer, every provider would be paid the same for like procedures, adjusted for intensity. More efficient hospitals would survive. Less efficient ones would go under. That is consistent with the free-market principles that my party advocates … and better for our country’s future.

Jack Bernard was a senior executive with several national health care firms before retiring and worked with various hospital systems around the nation regarding cost containment.

http://blog.nj.com/njv_guest_blog/2013/08/tackling_our_uncontrolled_heal.html

Canadians should beware of Americans bearing ‘activity-based funding’

By Jonathon Ross, M.D.
Canadian Healthcare Network, Aug. 1, 2013

Many American physicians, myself included, support single-payer national health insurance, with global budgets for hospital care. A single, publicly accountable payer, coupled with global hospital budgets, are tools needed to assure cost control in health care systems.

But I was recently reminded by one of my Canadian colleagues that some American “reforms” are getting a hearing north of the border. One of these is that hospitals should be paid by case-based activity fees rather than global budgets.

In the U.S., we bundle clinically similar care into diagnosis related groups (DRGs), and the money follows the patient. We pay hospitals according to the fee assigned to each DRG. I would advise extreme caution and careful assessment of the implications for cost, quality, access, equity and efficiency before adopting this hospital funding model.

In Canada, I’m told you call this “activity-based funding” or ABF. Depending where you live, this method of funding may be called patient-focused funding, payment by results, volume-based funding, service-base funding, case-mix funding, or prospective payment system. But no matter what you call it, ABF has serious side effects.

One of the dangers is that ABF can be used to “game the system.” When you pay hospitals according to diagnosis, the incentive is to increase or otherwise modify your diagnosis so your hospital will make more money. And that’s exactly what happened when the United States implemented ABF for U.S. Medicare patients.

Here in the States, we have a small army of nurses reviewing every case in hospital to remind us to use special words just the right way so we can get more money for each case, regardless of whether we have done anything different in managing our patients.

For example, it is not enough to say that patient has lost weight and looks ill. Instead physicians must use the term “malnourished.” It’s even better if you order a blood test to prove the obvious, even if that test does not change the diet ordered for the patient, or your case management.

The incentive is to list all of the diagnoses you can possibly list for every patient, as some of these will increase the payment even if it does not change your management one bit. These are “complicating conditions” and can increase payment even if they change none of your orders or tests.

All day, every day, nurses are caring for charts rather than for patients at every U.S. hospital. This is what activity-based funding will buy you.

Of course, there will also be pressure to discharge patients sicker and quicker in order to create more cases. You can expect that you will need added extended care rehabilitation beds. There will be demand for added bricks and mortar to build rehab facilities for patients who could more efficiently spend another few days in a hospital bed getting rehabilitation before going straight home. This transfer makes no sense at all unless you already happen to have excess empty rehab beds in a community. It also diverts the patient to a facility where the patient’s physician team does not regularly visit. If physician care is still needed during the rehab stay, the access to those physicians will be impaired, disrupting continuity of care.

Your length of hospital stay will decrease, but the added costly days will just happen in a different costly building, with another costly set of therapists, working under another costly set of administrators.

If the hospitals game the codes upward, then you need another army of regulators to catch them and code them back down. This version of the popular video arcade game, “Whack-a-Mole,” continues in U.S. hospitals to this day. There is now a large hospital bureaucracy whose job it is to up-code the severity of illness of Medicare patients and another large Medicare bureaucracy trying to figure out how to stop the hospitals from gaming the system.

The game of up-coding has been getting significant attention in the U.S. press, where the extreme disparities in hospital costs and insurance payments are making headlines. Surely, Canadians wouldn’t want this administrative nightmare in their own health care system.

If you want to use financial incentives to change behavior in health care, you need to be clear about what you want. How about rewarding staying within budget without patients feeling a loss of access to needed care or reduced quality? How about rewarding providers for reducing the number of premature deaths related to treatable illness? Canadians should ask themselves what they want before implementing activity-based funding.

Winston Churchill is rumored to have said, “You can always count on the Americans to do the right thing … after they have exhausted all the other possibilities.” I would beware of American consultants bearing gifts such as case-based payments for hospitals as a cost-saving idea. Count your blessings, Canadians, and get to work improving the effective system that you have!

Dr. Johnathon Ross is past-president of Physicians for a National Health Program, a U.S. physician organization that supports Medicare for all. He teaches and practices primary care internal medicine at a 500-bed teaching hospital in Toledo, Ohio.

http://www.canadianhealthcarenetwork.ca/healthcaremanagers/discussions/opinion/beware-of-americans-bearing-activity-based-funding-19897

Where’s the outrage over our failed health care system?

By Philip Caper, M.D.
Bangor (Maine) Daily News, Aug. 15, 2013

For the next few months we’ll be bombarded by messages from the Obama administration urging people, especially young, healthy people, to sign up for insurance provided under the Affordable Care Act. Without them, premiums for that insurance will soon climb to unaffordable levels.

We’ll also hear plenty of noise from the ACA’s opponents. It will be hard to get any other health policy messages across during the upcoming PR blitz.

But there are some other important and noteworthy things going on in the policy world. Perhaps the most important is the growing interest in the origins of the high costs of medical care in the U.S., now about double that of other wealthy countries.

That interest has been fueled by the ACA. By requiring many Americans to buy private health insurance, the federal government is now obliged to see to it that insurance remains affordable. Whether they are actually able to do so remains to be seen.

Because of that, both government and the lay media have now joined academicians in paying a lot more attention to the costs of medical care in the U.S. and how they compare to those in other countries. That attention was jump-started last March by a Time Magazine article titled “Bitter Pill” by journalist Stephen Brill, who looked at hospital charges and their causes. He concluded that while many of those paying the bills suffered badly from the high costs, those selling health care products and services were prospering, helping to create an island of affluence for themselves and a sea of poverty for everybody else.

That was followed by Medicare’s public release of the prices it was being charged in various regions throughout the country, revealing huge variations without any persuasive explanation as to why these variations should exist.

More recently, the New York Times has published an ongoing series by Elizabeth Rosenthal examining the costs of medical care for various procedures throughout the U.S., and comparing them with those in other countries. So far she has examined three common types of care: colonoscopy, pregnancy and hip replacement. In each case, she found prices in the U.S. were both variable and extremely high by international standards, some up to 10 times the prices for comparable care in other countries. When asked why, one expert commented, “They’re charging these prices because they can.”

In other words, as economist George Akerlof predicted in his Nobel Prize-winning paper “Selling Lemons,” in a market where the sellers have a great deal of information (and therefore power) and the buyers have little or none, the buyers (most of us) are being ripped off big time.

In most countries that have enacted programs of universal health care, two things have taken place. First, health care prices were restrained so as to keep their national programs affordable. Profiteering from illness is not allowed.

Second, the importance of medical care in maintaining a healthy population was put in perspective. Medical care can be very effective in fixing what’s already broken, but not very effective in preventing the breakage in the first place.

What are now called the “social determinants of health” turn out to be much more important than medical care in maintaining a population’s health. They include lifestyle factors such as a healthy diet; exercise; restraint in the use of substances such as alcohol, tobacco and other drugs; and the presence of robust social policies that help minimize excessive disparities of wealth and income within the national population.

Although the ACA does move the ball toward the goal of universal health care, we are still a long way from scoring. It attempts to curb some of the worst abuses of the health insurance industry, but it doesn’t eliminate the incentives to try them anyway. It will leave many people out, and although it makes some efforts to control overall costs and promote healthy living, many experts believe those efforts are inadequate.

As Akerlof predicted, the medical-industrial complex is becoming increasingly corrupt. It is now one of our largest and most profitable industries. Much (but not all) of what it is doing is legal, but it has lost its moorings and is forgetting about its health care mission in the pursuit of profits and growth.

The MBAs have taken over. We are all paying the price.

I don’t blame only the corporate health care providers, pharmaceutical and device manufacturers and insurance industry. After all, they are just doing what they are supposed to do for their “stakeholders” — profit and grow.

I also blame all the rest of us for letting it happen. What we are witnessing is a massive failure of public policy that is not permitted in any other wealthy country. It is being enabled by the timidity of experts in academia and the media, who are paid to be truth-tellers but who until very recently ignored the elephant in the room — rampant corporatism that is subverting the interests of most of the American public and the mission of our health care system. I blame the passivity of a public that consistently permits our politicians to fail to do their jobs to protect our interests.

Where’s the outrage?

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.

http://bangordailynews.com/2013/08/15/health/wheres-the-outrage-over-our-failed-health-care-system/

The “Cadillac” health plan is a myth

A doctor explains that limiting the scope of employer-based health care has long been a dream of the establishment

By Adam Gaffney
Salon, August 16, 2013

What would a gold-plated Cadillac health care plan look like to you? By the sound of it, you might think it’d cover such superfluities as annual trips to Swiss medical spas, cosmetic surgery on demand and weekly thermal seaweed wraps.

Alas, that appears to be far from the case. As the New York Times reported last week, municipal unions across the country are facing pressure to accept worse health care plans, before the so-called “Cadillac tax” on expensive health care plans kicks in in 2018.  Not surprisingly, workers are displeased with the prospect of being downgraded to inferior plans with more out-of-pocket spending.

Before concluding that such luxurious plans are the sole preserve of supposedly greedy city workers, keep in mind that by the estimate of one health economist, as many as 75 percent of employer health plans could fall under the “Cadillac” umbrella over the next decade. Reasonably good insurance – you know, the kind that covers all of your medical needs, without making you pay an arm and leg out-of-pocket every time you need to use it – has stealthily become the new Cadillac. However much the reputation of General Motors may have fallen in recent years, this seems like a bit of a stretch.

A reasonable observer might be enticed to ask: What on earth is going on here? From whence came this health care Cadillac?

To begin, the nationwide trend towards lower-value health insurance – now enshrined in law in the form of the Cadillac tax – is not, contrary to appearances, some newfangled, desperate cost-saving measure. On the contrary, limiting the scope of employer-based health insurance has been a dream of health policy wonks for decades.

The academic taproots of the idea stretch at least back to the year 1968, with the publication of the economist Mark Pauly’s highly influential paper “The Economics of Moral Hazard” in the American Economic Review. “The effect of an insurance which indemnifies against all medical care expenses,” Pauly wrote, “is to reduce the price charged to the individual at the point of service from the market price to zero.”  As a result, “no individual will be motivated to restrain his own use … since the incremental benefit to him for excess use is great, while the additional cost of his use is largely spread over other insurance holders.” Although others had made note of this phenomenon previously, Pauly’s contribution was to calculate the loss to society as a result of this “excess use,” which he found to be quite substantial.

Thus was the idea of health care “moral hazard” born, otherwise known as the doctrine of: “it’s included, so we might as well take it!” We could also more colloquially label it the “salad bar” hypothesis.

From “moral hazard,” in turn, came the idea that that the fundamental, “original sin” of the American health care system was not our failure to enact universal health care, but was instead our creation of a system of tax-favored, overly generous employer-based insurance. Several years after the Pauly paper, along this line of thinking, the prominent economist Martin Feldstein – future chief economist of the Reagan administration – would argue in another important paper that “American families are in general overinsured against health expenses,” and that the right medicine was more deductibles and coinsurance.

It was not until the early 1980s, in the face of persistently rising health care costs, that this academic concern for “moral hazard” began to hit the pocketbooks of Americans: Between 1982 and 1984, for instance, the percentage of insurance plans requiring some deductible for hospitalization more than doubled, from 30 percent to 63 percent. During the 1990s, on the other hand, the central importance of “cost sharing” was sidelined as corporatized “managed care” took central stage, and insurance companies sought to decrease costs (and thereby increase profits) by limiting care on the supply side.

But with the widespread revolt against managed care in the late 1990s (and with health care costs continuing to rise in spite of it), “moral hazard” again became a prime target for “reform.” The solution was in line with the recommendations of Pauly and Feldstein – higher deductible insurance. President George W. Bush’s 2003 Medicare prescription drug law gave us the “Health Savings Account” (HSA) – a tax-free account that could be used for out-of-pocket medical expenses, but which had to be attached to a high-deductible insurance plan. “Consumer-driven” health care plans – not much more than high-deductible plans with the capacity to be coupled with an HSA – quickly became all the rage.

Yet even for those outside these new plans, cost-sharing soared over the decade. Copayments for expensive drugs skyrocketed, sometimes to the tune of hundreds or thousands of dollars, while the percent of employer plans with $1,000 deductibles (or more) tripled.

But this was not enough – the alleged culprit for our continuously rising health care costs was still that dreaded “moral hazard.” Once you paid for the salad bar, after all, why not heap on larger and larger portions of colonoscopies, all-nighters in the emergency room or chemotherapy infusions? By 2008, John McCain was essentially centering his entire health care platform on the vilification of those “gold-plated Cadillac plans,” as he called them, which covered, among other things, such absurdities as “transplants.”

And in 2010, despite opposition from House Democrats and organized labor, a somewhat limited but still highly controversial “Cadillac tax” made its way into the Affordable Care Act, creating a 40 percent excise tax for family plans valued at greater than $27,500, or individual plans greater than $10,200.

The Age of the Cadillac, it seemed, was finally coming to a close. Health care “consumers” would now have to play with their own damn money. A golden age of improved quality and reduced costs was about to dawn.

Unfortunately, however, we didn’t live happily ever after.

For over these very s
ame years, the idea that we were a nation “overinsured” began to collide with several lines of hard evidence. First, the very existence of a large societal net loss from “overinsurance” was called into question in the academic health economic literature, most prominently by the economist John Nyman. Nyman argued that while there may be some cost to moral hazard, it was far smaller than what Pauly, Feldstein and others had calculated. We use more health care when we are sick, he demonstrated, not because health care becomes free, but because we gain “income” in the form of insurance transfers, which we rationally use to pay for “otherwise unaffordable procedures.”

Second, there was an accumulating body of data in the academic medical literature suggesting that “underinsurance,” not “overinsurance,” was the more serious problem facing Americans. More and more families were seeing higher and higher percentages of their family income consumed by their health care service burden and by out-of-pocket medical expenses. In fact, we were increasingly going bankrupt as a result of our health care expenses – according to one study, in 2007 62 percent of all bankruptcies had a medical cause, despite the fact that in a majority of those cases, those going bankrupt actually already had health insurance. Not much evidence for “overinsurance” in that department, either.

And looking at the problem from another angle, it became increasingly appreciated that the rise in deductibles, copays and coinsurance was having significant effects on our very health. As I described in a recent article, there are clear downsides to becoming “Copay Country.” There is evidence, for instance, that cost sharing may increase the risk of death for the most vulnerable, perhaps because it reduces expenditure on both “inappropriate” and “appropriate” care. In one recent experiment that randomized patients to copays or to full coverage for prescriptions after they suffered heart attacks, those with full coverage took their medications more regularly – and had less strokes and other cardiovascular complications as result. And all told, there was still no overall increase in cost, either way.

Yet, in the face of this growing body of solid evidence, we simply continue to hear more and more about how patients (apologies, “consumers”) need to have more “skin in the game” – as if having their physical hearts, lungs or – in some instances – their skin on the line wasn’t enough already.

So don’t be surprised if you find, in the coming years, that your semi-reasonable-quality heath insurance – perhaps won through hard-fought negotiation, or maybe earned in exchange for lower pay or other benefits – somehow transforms itself into a taxed “Cadillac” plan. From the perspective of much of the health policy establishment, you’ve had it too good, for too long, already. And however nice it might sound, they say we simply can’t afford truly universal health care, with comprehensive benefits for all and with little or no cost sharing (even if other industrialized countries magically manage to do so, at a lower price, and with better results).

Instead, it’s time we tightened our belts, stopped our whining and traded in our Cadillacs, or – depending on which metaphor you find less loathsome – that we finally got off of the salad bar.

Adam Gaffney is a physician and writer in Massachusetts.

http://www.salon.com/2013/08/16/the_cadillac_health_plan_is_a_myth/

Texans don't like Obamacare, but what are the alternatives?

By Jack Bernard and Barbara Carr
Abilene (Texas) Reporter-News, Aug. 18, 2013

Supreme Court finds “Medicare For All!” constitutional.

No, this is not what is on the horizon. But Obamacare is on the minds of Texans, who ask: What about 10 or 20 years from now?

Let’s take a look at the health expenditure trends in Texas over the past decade.

A recent Commonwealth study showed that family premiums are at record highs in Texas — $14,526 in 2010. What is even more disturbing is that premiums were just $9,575 in 2003. That constitutes a rise of 52 percent in a few short years. But Texas is not alone.

Nationally, family premiums were $13,847 in 2010, a 50 percent increase from 2003. Projections are that, using the same rate of increase, it will rise to $23,793 by 2020. The study’s writers hope that the Affordable Care Act (ACA, Obamacare) will lay the foundation for slowing this rate of growth. But will it?

Why are these costs increasing? It’s certainly not because more people have health insurance, as the opposite is true. More people are losing insurance every year.

The problem is we have a fee-for-service system, where the more you use the more you pay, regardless of the outcome. Health care, in many ways, is still a cottage industry, where every hospital designs its own disease care framework. Health care needs to work smarter, not harder, and take a look at best practices “not invented here.”

In the words of Dr. Cosgrove, CEO of the Cleveland Clinic: “We do not have a system of health care delivery in the U.S. It’s a series of mom-and-pop shops all over the country, and it has not been systematized.”

Congratulations to Obama for doing what no other president has been able to do: get near universal coverage into law (that is if Medicaid is eventually expanded by heavily politicized “red” states such as Texas).

According to Harvard studies, about 50,000 Americans die each year due to lack of insurance. Many others suffer. Is this the America that we want to pass on to our children? No. Even if half the uninsured become covered, per the latest CBO projection, it is a very good thing.

Our position is that there is a lot to like in the ACA (Obamacare) when it comes to expanding access, though its benefits will be limited if states such as Texas choose against their own interests and refuse to expand Medicaid, letting the federal funds go to the blue states in the northeast and far west. And the recent decision by Texas and five other states to refuse to enforce the ACA’s regulations is strange, at best.

On the other hand, we see very little in the ACA that will constrain long-term cost increases.

For arguments’ sake, let’s assume we have a continuing rise in health care expenses. What alternatives are left?

The Ryan approach embraced by the Republican Party only deals with public expenditures, Medicare and Medicaid. It wants to make Medicare a voucher program, pushing costs onto the elderly, and Medicaid a block grant, forcing states to cut programs/recipients or raise taxes.

Neither of these budgetary gimmicks addresses the cause of health care inflation, private insurance and practice patterns being key. Therefore, neither will slow the private sector premium increases, rather than simply limiting government expenditures.

At that point, Medicare For All, with reimbursement based on need and accepted medical practice norms, will be the only answer that the nation can reasonably consider.

Under Medicare as it is currently run in Canada, there is universal budgeting and no opt out by physicians and hospitals. Costs of pharmaceuticals are controlled and much less than here. The per capita health care expenditure in Canada is only $4,363 whereas it is $7,960 in the U.S. under our current system.

Long term, Medicare For All will be enacted here if not for humanitarian reasons, then simply for cost containment.

Jack Bernard is a retired senior level executive who has worked for several major for-profit health care firms, including NME (now Tenet) in Dallas. He also worked with Hendrick Medical Center on cost. Barbara Carr is an adjunct professor at Eastfield College in Dallas and has 20 years of experience in Texas health care firms and hospitals.

http://www.reporternews.com/news/2013/aug/18/jack-bernardbarbara-carr-texans-dont-like-but/

The fallacy of balancing cooperation and competition

Coordination versus Competition in Health Care Reform

By Katherine Baicker, Ph.D., and Helen Levy, Ph.D.
The New England Journal of Medicine, August 14, 2013

Many current proposals to increase the value of care delivered in the U.S. health care system focus on improved coordination — and with good reason. Badly coordinated care, duplicated efforts, bungled handoffs, and failures to follow up result in too much care for some patients, too little care for others, and the wrong care for many. A host of current reform efforts aim to reduce these inefficiencies in both public and private markets. These efforts range from penalizing hospitals with higher-than-expected readmission rates, to rewarding primary care providers when patients receive higher-value care, to providing incentives for the adoption of electronic health records. Accountable care organizations (ACOs) and bundled payments are designed to create monetary incentives for coordinated care. The hope is that coordination will improve value by ensuring that the right care is provided in the right place at the right time.

These laudable efforts, however, may unintentionally be at odds with another strategy for improving value: promoting competition in health care markets. In general, less competition means higher prices; one well-publicized symptom of the lack of competition in U.S. health care is providers’ ability to charge different prices for the same service. Competition may drive higher quality, particularly when prices are constrained. The benefits of competition in private markets may even spill over to higher quality in Medicare, for which the Centers for Medicare and Medicaid Services (CMS) sets prices. A number of policy interventions, such as quality-reporting and price-transparency initiatives, are based on the idea that better information can promote competition and lead to greater value, and these initiatives have the potential to be very effective when patients have a choice of providers.

Well-integrated provider networks may promote coordinated care that improves the allocation of health care resources, but they are likely to undermine competitive pressures to keep prices down while maintaining high quality. Coordinated systems may thus deliver the right care to the right patient at the right time, but at the wrong price. Competitive markets may do a better job of keeping prices low, but with the well-documented drawbacks of fragmentation.

The current suite of policies for addressing the ills of the health care system does not embody a unified approach to the roles of coordination and competition. In part, this lack of coherence reflects the fact that our insurance “system” is really several different systems, including moderately competitive private insurance markets for the nonelderly, nondisabled population and a single government payer, Medicare, for the elderly and disabled that largely pays providers set prices on a fee-for-service basis. These two payers currently pursue different approaches to reform. The most recent round of Medicare reform initiatives focuses on coordination, with ACOs as the prime example. In fact, the FTC has signaled that it will weigh the benefits of integration in improving quality against the potential harms of reduced competition. For the privately insured sector, the current focus is on enhancing competition through price transparency and “skin in the game” for consumers.

So what should policymakers do? We offer three broad prescriptions that may help strike the right balance between coordination and competition. First, we can look for the win–win opportunities to enhance both competition and coordination. As noted, health IT may be an example of such an opportunity if it is implemented well. There may also be win–draw opportunities in which either coordination or competition may be enhanced without harming the other. For example, the contracting processes that CMS uses for Medicare Advantage plans, Medicare Part D, and durable medical equipment have some competitive aspects but do not fully leverage the forces of competition to promote quality without sacrificing coordination. These processes could be improved.

Second, the courts and regulatory agencies that are tasked with enforcing antitrust law could focus explicitly on this trade-off when they examine health care and health insurance markets. After decades of relatively unsuccessful attempts to prevent hospital mergers, the FTC has recently had a string of successes in that arena. Similar vigilance is needed in other areas, particularly in the new realm of ACOs. As we gain insight into the reasons for the price dispersion in health care markets that transparency initiatives are bringing to light, we should explore whether this dispersion results not just from variation in quality and efficiency but potentially from anticompetitive behavior.

Third, policymakers could systematically look across silos to consider the effects that an initiative in one sector will have on consumers in another — and on providers overall. To do so, they must have a clear understanding of the trade-offs at hand and the interaction of multiple policies and regulations aimed at improving quality and value. Coordination may foster delivery of the right quantity of care to each patient, while competition may help keep the prices for that care as low as possible. It is not obvious a priori what point on the competition–coordination spectrum provides the highest value in terms of quality of care and health benefit per dollar of spending. But total spending depends on both quantity and price. We need to evaluate the net effect of the suite of new public and private insurance-market policies on both price and quantity as we consider which policies might restore federal health care spending to a fiscally sustainable path.

http://www.nejm.org/doi/full/10.1056/NEJMp1306268

Competitive bidding is no Medicare fix

By John Teevan
Milwaukee Journal Sentinel, August 12, 2013

Recently, the Centers for Medicare and Medicaid Services (CMS) substituted its current pricing methodology with an unfair new process for setting prices known as “competitive bidding.” The idea behind this policy is to lower costs and reduce fraud in the system, and these are commendable goals. But what resulted was bad public policy that not only fails to fix the problems it was meant to solve but also creates a host of new problems.

When round 1 of this program was put into place, it was limited to just a few test markets. But in July, it expanded to about 100 more, including one in southeastern Wisconsin. The effects will be devastating for health care providers, health care systems and the patients we serve. If round 1 was any predictor of the future under round 2, numerous providers will go out of business.

Even more troubling, this “competitive bidding” program will lead to less freedom of choice and access for our patients, and, I believe, a possible decrease in the quality of care for them. Many Medicare beneficiaries — seniors over 65 and disabled Americans — have come to rely on their local health care provider to be there for them when they are at their most vulnerable. Local providers are there for their patients during power outages, equipment malfunctions and other potentially life-threatening moments. When many of these local providers are put out of business by “competitive bidding,” it will be the patients who suffer the most.

As smaller, local providers disappear, patients will potentially be forced to rely on providers many miles away. This may mean a delay in Medicare approval of regular services, as well as longer wait times in the case of emergency or equipment failure that could leave the patient stranded, waiting for critical equipment like a wheelchair or oxygen tank.

Not only will this unfair pricing scheme be harmful to health care providers, he
alth care systems and patients, it also will be more expensive for taxpayers. Reducing access to in-home medical care will result in more emergency room visits, delayed discharges and unnecessary hospital stays. Keeping patients in their homes means significant savings to the Medicare trust fund; “competitive bidding” does just the opposite.

http://www.jsonline.com/news/opinion/competitive-bidding-is-no-medicare-fix-b9974040z1-219335911.html

Comment:

By Don McCanne, M.D.

Many policies today are aimed at providing cooperation/integration/coordination as a means of improving quality while obtaining greater value in health care. Although some of the models are inappropriately directed more to business aspects and less to patient care quality, nevertheless, everyone working together seems like a good idea. Free market ideologues may also agree that these efforts are laudable, but they remain emphatic that, above all, marketplace competition must be relied upon to drive higher quality and lower prices.

This is not an idle, intellectual exercise. Pro-market enthusiasts are driving much of our health care system today with the result that health care is outrageously priced, is of mediocre quality, and has impaired access for tens of millions due to financial barriers that the market model has erected. Let’s look a little bit closer at the call of ideologues Katherine Baicker and Helen Levy to “fully leverage the forces of competition” by injecting more competition into coordinated systems.

They mention Medicare Advantage, Medicare Part D, and the purchase of durable medical equipment as CMS programs that have introduced supposedly beneficial competition, although not enough in their opinion. We already know that Medicare Advantage costs more than the traditional Medicare program, while taking away patients’ choices of their health care providers. The Medicare Part D drug program was designed to promote competition between drug plans, yet we are paying much more than we would be with government purchasing programs such as we have with Medicaid and the VA system.

Now CMS is expanding its competitive bidding program for durable medical equipment. The suppliers who win the bids will likely do well when measured by business standards. But many of the losing firms will be forced out of business simply because CMS will take away the largest sector of their clientele – the Medicare beneficiaries. Many patients will lose the services of their own medical suppliers and have to rely on other suppliers who may not be readily accessible because of distances that must be traveled, or who may provide inferior services simply because they cut back too much in order to win the bid based strictly on lower prices.

The government is in a unique position to administer pricing on a take-it-or-leave-it basis. The process is based on an analysis of actual costs plus fair margins. Health care providers would be foolish to reject fair prices. If pricing proved to be too low, threatening sustainability of the providers, it would be the responsibility of government to adjust prices to make sure that services and products were there when patients needed them. For those who say that this process results in $1000 toilet seats, all you need to do is compare costs in the traditional Medicare program with the higher costs through private insurance plans, including Medicare Advantage, or compare VA drug pricing with pricing through Part D plans or even higher pricing through the open competitive market.

Baicker and Levy offer three policy prescriptions that have a goal of being sure that competition remains the driving force, yet they seem to muddle through delivery system reform in order to protect competition. To no surprise, they remain totally silent on a far more effective solution – dump price competition and establish a universal program of government administered fair pricing. It works in all other wealthy nations; it should certainly work here.

Are nurse practitioners a solution for the cognitive/procedural pay gap?

Medicare Payment for Cognitive vs Procedural Care

By Christine A. Sinsky, MD and David C. Dugdale, MD
JAMA Internal Medicine, August 12, 2013

Conclusions and Relevance

Our analysis indicates that Medicare reimburses physicians 3 to 5 times more for common procedural care than for cognitive care and illustrates the financial pressures that may contribute to the US health care system’s emphasis on procedural care. We demonstrate that 2 common specialty procedures can generate more revenue in 1 to 2 hours of total time than a primary care physician receives for an entire day’s work.

The medical literature has highlighted the decline in the number of physicians entering cognitive specialties, with accompanying warnings about the impending collapse of primary care. The number of physicians in training who choose the primary care field of internal medicine dropped by 50% from 1998 to 2003, and primary care physicians (PCPs) in practice are leaving at a faster rate than other specialties. Increased workloads, administrative hassles, demanding time commitments, and low compensation relative to other specialties are major contributing factors.

Fewer physicians are choosing primary care fields while the needs of an aging population with multiple chronic diseases are projected to require an increase in the supply of primary care by at least one-third. This mismatch between supply and demand for PCPs has serious implications for the future of US health care. Health care costs in the United States are among the highest in the world and continue to rise. The quality of health care that Americans receive has been questioned. Worldwide and within the United States, health care costs are lower and quality is higher in regions with more PCPs. In addition, the quality of care is higher and costs are lower for patients whose first contact with the medical system is with a PCP.

The US health care reimbursement system rewards procedural services while providing financial disincentives for physicians to spend time on cognitive care, the main professional activity of PCPs and other nonprocedural specialists. In a comparison of international health payment systems, Wilson concluded that “the current system in the United States offers little incentive for PCPs to provide the kind of care coordination that is known to improve health quality.”

Several proposed or implemented changes, including an increase in the relative value of evaluation and management (E&M) codes, pay-for-performance programs, and primary care adjustment, may modestly address this issue, but each of these policy changes is projected to increase PCP compensation by only 1% to 10%. Herein we identify the magnitude of the payment gap for physician time spent on common procedures vs cognitive tasks.

http://archinte.jamanetwork.com/article.aspx?articleID=1726999

Wonkbook: Doctors for higher health-care costs!

By Ezra Klein and Evan Soltas
The Washington Post, August 15, 2013

Everyone knows American health care costs too much.

Identifying the problem is easy. Doing anything about it is hard. But there’s one thing states can do that isn’t particularly hard: Allow more nurse practitioners — who charge much less than doctors — to treat patients directly, without a physician’s oversight.

Doctor’s groups oppose this strenuously. They say patient safety is at risk. What’s really at risk is their incomes.

This is a protection racket. Any state legislature that extends it is choosing higher health-care prices — and health-care costs — for no good reason.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/15/wonkbook-doctors-for-higher-health-care-costs/

Perspectives of Physicians and Nurse Practitioners on Primary Care Practice

By Karen Donelan, Sc.D., Catherine M. DesRoches, Dr.P.H., Robert S. Dittus, M.D., M.P.H., and Peter Buerhaus, R.N., Ph.D.
The New England Journal of Medicine, May 16, 2013

Proposals that focus on the potential for nurse practitioners to help meet current and expected future gaps in the supply of primary care providers have met with wide interest and considerable controversy. At the core of the controversy is whether nurse practitioners have the education and experience to provide high-quality services and lead clinical practices without supervision by a physician.

Respondents in the two groups were far apart in their views on equal pay for providing the same services. Physicians’ opposition to equal pay is consistent with their perception, expressed in these data, that for any given service, they provide a higher quality of care than do nurse practitioners. Nurse practitioners’ support for equal pay is consistent with their majority view that physicians do not provide a higher quality of care for any given service. These survey data cannot provide evidence of the relative value of the training and expertise of these professionals. Nevertheless, the data suggest that physicians do not think that increasing the supply of nurse practitioners would have a positive effect on either the cost or the effectiveness of care, whereas more than 80% of nurse practitioners believe that increasing their numbers would improve the cost savings and quality of health care. From a societal perspective, we might consider whether expanding the supply of nurse practitioners and paying them equally for the same services that physicians provide would negate current savings from the disproportionately lower payments nurse practitioners now receive. More information is needed on the economic implications of the division of work between physicians and nurse practitioners before policymakers can definitively answer the question of whether employing a greater number of nurse practitioners and expanding their role would result in overall cost savings.

Our data provide evidence to inform ongoing public debates among physicians and nurse practitioners about their roles, responsibilities, and scope of practice. Both physicians and nurse practitioners will be needed to address the many challenges of developing a workforce that is adequate to meet the need for primary care services. It is our hope that the stark contrasts in attitudes that this survey reveals will not further inflame the rhetoric that has been offered by some leaders of the two professions but rather will contribute to thoughtful solutions for health care workforce planning and policy.

http://www.nejm.org/doi/full/10.1056/NEJMsa1212938#t=articleTop

Comment:

By Don McCanne, M.D.

With concerns about our very high health care costs, we have to ask if procedure-oriented specialists are overpaid, or if the cognitive services of primary care physicians are underpaid? Further, are nurse practitioners underpaid when they are providing many of the same services as primary care physicians?

It seems that the consensus in the popular literature is that specialists are overpaid for procedures, whereas, listening to cynics like Klein and Soltas, primary care physicians are also overpaid when you consider that they can be replaced by nurse practitioners “who charge much less than doctors.” They contend that limiting the independence of nurse practitioners is a “protection racket.”

Yet nurse practitioners want their pay to be comparable to that of primary care physicians, “equal pay for equal work.” They do not want pay for cognitive services to be decreased; they want their own pay for these services to be increased.

What about the fundamental issue of filling the void in primary care with independent nurse practitioners? Even if medical schools increased the numbers of graduating physicians who would want want to become primary care physicians, there is a lack of residency programs and clinical training sites t
o train the numbers that we need. So does that mean that there is a plethora of comparable clinical training programs for nurse practitioners that would fill the void? Where are those programs that will produce an adequate number of nurse practitioners through training that will provide them with the same level of competence as primary care physicians? It is specious to assume that there is a paucity of clinical training programs for primary care physicians in a country that supposedly has a great abundance of comparable comprehensive training opportunities that are limited to nurse practitioners, while excluding physicians.

Try this mind game. Define primary care physician. Define nurse practitioner. Except for the duration and intensity of their training programs, are they exactly the same? If not, what are their differences? Should these differences be reflected in either their clinical independence or in their pay?

There is absolutely no dispute that nurse practitioners are an important addition to the clinical team that includes primary care physicians, specialists, and other health care professionals. It should not be difficult to integrate all clinical health services into a well oiled machine, as long as we can set aside turf issues. But we need to chastise the Ezra Klein’s of the nation who would throw a monkey wrench into the machine by characterizing this as a “protection racket.” It’s the patients who need protection through improved integration of our health care system.

Massachusetts shows us that we can have higher premiums with fewer benefits

Annual Report on the Massachusetts Health Care Market

Commonwealth of Massachusetts
Center for Health Information and Analysis, August 2013

In a continuing trend, the health coverage available through Massachusetts employers in 2011 cost more and had lower benefit value. Between 2009 and 2011 premiums rose by 9.7% to pay for benefits that decreased by 5%. Consistent with this trend, employees are paying increasingly more out-of-pocket for their health care. Deductibles have grown in Massachusetts by more than 40% between 2009 and 2011.

This dual trend – increasing premiums and decreasing benefit levels – was consistent across market sectors, but the effect was not the same for all sectors. The effect of increased premiums coupled with benefit declines was most pronounced in the small group market sector, where the benefit value started out lower and decreased faster (-7.5%) than in other market sectors. Although the small group market sector accounted for just 16% of the Massachusetts commercial insurance market, it included the greatest number of businesses. This sector is one of the most vulnerable to cost increases and has been the focus of policy interventions at both the state and federal levels.

http://commonhealth.wbur.org/files/2013/08/0815_ar-ma-health-care-market-2013.pdf

Many Health Insurers to Limit Choices of Doctors, Hospitals

By Anna Wilde Mathews
The Wall Street Journal, August 14, 2013

The new consumer marketplaces created by the federal health law… Many of the plans will include relatively few choices of doctors and hospitals.

Insurers are betting that consumers who buy plans on the exchanges will be willing to trade some choice and flexibility in order to get cheaper premiums. Smaller networks of providers generally translate to lower premiums.

A spokeswoman for the federal Department of Health and Human Services said that in the new marketplaces, “plans will compete side by side, and consumers can compare based on the factors that are important to them to find the plan that best fits their needs and budget.”

http://online.wsj.com/article/SB10001424127887323446404579010800462478682.html

Comment:

By Don McCanne, M.D.

Under Massachusetts health care reform, the largest sector of health insurance – employer-sponsored plans – continues to cost more while benefits decrease in value. Just in the two years from 2009 to 2011, the average increase in premiums along with the decrease in benefits resulted in a decline in value of 14.7 percent!

Nationally, the same process is underway, and it is fully predictable that it will increase under Obamacare – a model of reform very similar to that in Massachusetts. We will all be paying more to get less.

Worse yet, we will have even fewer choices of our physicians and hospitals as insurers shift more to narrow-network plans.

Don’t worry though. HHS assures us that with competitive plans we will be able to “to find the plan that best fits (our) needs and budget.” We will have our choice of a selection of plans with higher premiums, lower benefits, and less choice of our health care providers.

Of course we could have had, and still can have, an improved Medicare for everyone that would replace premiums with equitable taxes, provide comprehensive benefits, and give us free choice of our health care professionals and institutions. Too bad that we believe our politicians when they tell us that single payer isn’t politically feasible. Come to think of it, whose politics is that anyway?

Rochester's growth owes a lot to Medicare

By Mark Liebow, M.D.
Rochester (Minn.) Post-Bulletin, Aug. 2, 2013

Medicare, a program that has transformed health care and Rochester, celebrates its 48th birthday this week.

Before 1965, the federal government provided care for active-duty servicepeople and their dependents, some veterans, some native Americans and merchant sailors. As an employer, it provided health insurance for federal employees and their dependents.

However, it did nothing to help most people in the country pay for health care.

The revolution of the 1940s and 1950s in health insurance coverage meant most employees of larger companies and their dependents had health insurance, but, with some exceptions, coverage stopped at retirement. Most seniors, at an age when they usually needed health care more than ever, no longer had health insurance.

There was a limited private market for health insurance for seniors, but even those who qualified often found the cost unaffordable. Seniors without coverage paid for care out of savings, got help from their children, depended on charity care — or went without care. Going without care was dismayingly common.

Medicare changed all that. It had been a Democratic dream for a generation, and it finally passed in 1965 after the Johnson landslide in 1964 gave Democrats overwhelming control of Congress.

Starting Jan. 1, 1966, Medicare covered hospital care, physician care and tests for seniors. Seniors could go to doctors and hospitals without risking bankruptcy or asking other people for financial help.

This meant medical advances often needed for seniors, such as heart bypass surgery, joint replacement and cataract surgery, became available in hospitals across the country. It made hospitals far less dependent on fundraising to pay for day-to-day operations and so less vulnerable to failure. It helped raise incomes for most health professionals.

Since Medicare started, the United States has become one of the countries with the highest life expectancy for those who reach age 65. The program was the first time the federal government paid directly for care provided by private doctors and hospitals. It worked out very well. Administrative costs for the government, as well as for doctors and hospitals, were lower than for private insurance programs. It proved a large, single-payer insurance program could work in the United States, at least for part of the population.

Medicare changed Rochester, too. Since Medicare began, Mayo Clinic has grown almost tenfold, and Rochester’s population has more than doubled. The Rochester we have today would be unimaginable without Medicare. The flow of money into clinics and hospitals, and then out to their employees, has helped make Olmsted County the wealthiest county in Minnesota outside of the Twin Cities metropolitan area.

Thousands of people make their livings from having Medicare patients come to our area for care. Even the training of young physicians in Rochester has been boosted by Medicare, which has always paid for graduate medical education and now is the primary payer for that.

Medicare has taken on new responsibilities over the years. It now covers people with end-stage renal disease and many people with long-term disabilities, even if younger than 65, since few of these people can get private insurance. It also provides greater coverage for seniors than it did in 1965. Neither preventive services (most of which didn’t exist in 1965) nor most drugs were covered in 1965, but drug coverage was added in the last few years, and preventive service coverage has been added bit by bit over the years.

Like most 48-year-olds, Medicare has more aches and pains than it did in its youth. The aging of the baby boom generation will put increasing pressure on the Medicare Trust Fund, which pays for hospital care for seniors, but a small change in the payroll tax that supports the Trust Fund can keep it going. For a while it looked as if the rising cost of physicians services and tests, 75 percent of which is paid for out of federal general revenues, would put severe strain on the rest of the federal budget, but the rate of cost increase has slowed considerably, and there’s hope the slower rate of increase will continue into the future. We won’t stop worrying about how to pay for Medicare, but this isn’t as big a concern as it was a few years ago.

Medicare has been good for America and particularly good for southeast Minnesota.

Mark Liebow is a Rochester doctor and the chairman of the Senate District 26 DFL.

http://www.postbulletin.com/opinion/mark-liebow-rochester-s-growth-owes-a-lot-to-medicare/article_53723f28-c03d-5050-bb97-5a3b7e81cb86.html?mode=story

Medicare, Medicaid anniversary raises fears, hopes for future

Advocates celebrated Medicare's birthday while calling for universal care

By Christen McCurdy
The Lund Report (Portland, Ore.), Aug. 14, 2013

The end of July marked the 48th anniversary of the signing of the Social Security Act which turned Medicare and Medicaid into law.

Now – with talk of Medicare becoming a voucher program, and threats to Medicaid, Social Security and other entitlements – local activists are fighting to protect the program and potentially to expand it.

“What would sum it up is that we would like to see Medicare for all. We’d not only like to see Medicare protected and improved but expanded for the entire population,” said Dr. Camilo Marquez, co-chair of the health committee of Jobs with Justice, which along with several other groups, helped organize a Medicare birthday party last week at the Hollywood Senior Center in Portland, attended by about 50 people.

The event was organized to celebrate and also raise awareness about threats to Medicare and other programs that affect seniors and low-income people – and to push for single-payer healthcare.

“We’re in support of all healthcare reform but some reforms are better than others,” Marquez said. “Healthcare should be universal.”

“I’m one of those people over 50 looking for a job right now,” said Lisa Stiller, who also serves on Jobs with Justice’s health committee. Stiller has been without health insurance for five and a half years, and is concerned about the limitations of the Affordable Care Act, noting that people who earn too much to qualify for subsidies may end up paying a quarter of their income to cover the cost of monthly premiums.

Marquez said activists feel confident that the single-payer study authorized by the Oregon Legislature earlier this year “will show single payer is the best way to go,” and are optimistic —  despite the expected  hurdles – about getting a single-payer program in place.

Steve Weiss, a board member of United Seniors of Oregon, which also helped organize last week’s event, has been in favor of universal healthcare since the early 1960s, when friends came back from visiting England and told him after they got sick overseas, they could get care without having to pay. He thought, “We’ve got to get this here within 10 years.”

Weiss, who is eligible for both Medicare and Medicaid, said he’s concerned about the fate of both programs.

“I have a number of concerns. The Republicans, some months ago, and their proposal still on the table, is to voucherize Medicare. Voucherizing of the program is one more step toward privatization,” Weiss said, noting the institution of Medicare Advantage plans was a first step in that direction, and a successful one at that.

Weiss is actually more concerned about the Medicaid’s future. While the number of providers who accept Medicare patients has increased in recent years, the converse has occurred with Medicaid with the number of providers willing to see Medicaid patients has gone down – which could create a crisis after the Affordable Care Act’s Medicaid expansion next January when people earning up to 138 percent of the federal poverty level will qualify in Oregon. U.S. Rep. Paul Ryan has proposed funding Medicaid with a block grant program, which could eliminate Medicaid in states with conservative leadership, Weiss said.

“I really don’t know what’s going to happen here. It’s such a pressing problem, we wanted to let folks know about it,” Weiss said. “It’s nice to have celebrations like we did, but eternal vigilance is the price of maintaining these programs.”

Christen McCurdy can be reached at christen@thelundreport.org.

http://www.thelundreport.org/resource/medicare_medicaid_anniversary_raises_fears_hopes_for_future

Cost sharing in Massachusetts is growing fast

By John McDonough
Boston Globe, August 14, 2013

Fine story in today’s Globe by Liz Kowalczyk on the new state health data report showing, once again, the dominant economic power of Partners Healthcare in our health market. One beef — if you read you the story, you would have assumed that the annual report from the State’s Center for Health Information and Analysis (CHIA)  was all about Partners. There is  much more — go see for yourself.  and congrats to CHIA for an excellent report.

Here’s what struck me the most:

From the report:

“In a continuing trend, the health coverage available through Massachusetts employers in 2011 cost more and had lower benefit value. Between 2009 and 2011 premiums rose by 9.7% to pay for benefits that decreased by 5%. Consistent with this trend, employees are paying increasingly more out-of-pocket for their health care. Deductibles have grown in Massachusetts by more than 40% between 2009 and 2011, approaching the national average.”

Massachusetts has always been one of the most resistant states to high levels of patient cost sharing in the form of deductibles, co-pays, and coinsurance. If these new data are on the mark, no more. We’re just average — and a 40% uptick over three years! Ouch!! On average, with premiums up 9.7% and benefits down by 5%, that’s a 14.7% drop in value for consumers between 2009 and 2011, reinforcing the point, it’s not just about the premiums, even if that’s what gets all the attention.

Yes, Partners is big: see this pie chart for the evidence. And their 31% in 2012 share is rising, up from 28% in 2011:

And, let’s not forget, our major insurance carriers are pretty big, too.  Blue Cross, Harvard Pilgrim, and Tufts represent nearly 80% of the state’s commercial health insurance market, and their premiums are the highest among all carriers in the Massachusetts market. Whether it’s insurance, hospitals, or physicians, big means more costly.

In terms of the Commonwealth’s goal to eliminate most fee-for-service payment in favor of global payment – embodied in the State’s 2012 cost containment law, signed just one year ago — we have a high hill to climb. Fully 60% of commercial spending and 64% of private plan enrollment is fee-for-service. Global budgeting represents between 35 and 39% of the market. Is that high or low? That’s a judgment call, but here’s the benchmark to judge success or failure.

Helpful information and analysis from CHIA.