PNHP

Psychiatrists Waste Millions of Hours Obtaining Prior Auths

Psychiatrists Waste Millions of Hours Obtaining Prior Auths

Health Insurers Require Time Consuming Prior Auths for Emergent Psych Admissions

By J. Wesley Boyd, M.D., Ph.D.
Psychology Today, Almost Addicted blog, May 14, 2013

My colleagues and I recently tabulated how long psychiatric patients who were deemed in need of inpatient admission — overwhelmingly because of suicidal thoughts or plans — stayed in the emergency department prior to being hospitalized, as well as the amount of time that the emergency department psychiatrists spent obtaining authorization from the patient’s insurer.

We found both lengthy waits for severely ill psychiatric patients in need of immediate hospitalization as well as time consuming prior authorizations required by insurance companies and published our findings in Annals of Emergency Medicine.

In our study psychiatric personnel spent, on average, 38 minutes on the telephone getting authorization. In 10% of cases it took more than one hour to obtain insurance authorization; in one case authorization took five hours of psychiatrist time. On top of the time required to obtain authorization, psychiatric patients who need admissions wait a long time for inpatient beds to open up. The total time that patients remained in the ER in our study averaged 8.5 hours.

Our data don’t include a handful of patients who boarded in the ED over the weekend while waiting for an inpatient bed to become available for them and also excluded uninsured patients and those with Medicare, which doesn’t require prior authorization.

A much larger study published just before ours found even longer wait times — more than 11 hours while awaiting placement into an inpatient facility.

Out of 53 requests, we had only one prior authorization request denied, so basically the process of calling the insurance company, relaying patient information, and obtaining her authorization to pay for admission, is a needless, time consuming process given that the end result — namely, the insurance company saying they will in fact pay for the admission — is a foregone conclusion provided I jump through the proper hoops.

Imagine if women in labor required this kind of authorization or if children with ruptured appendices did? There would be a public outcry and the practice would end immediately.

Given that there are approximately 2.5 million inpatient psychiatric admissions annually in the US, if two-thirds of them require some form of prior authorization (which is likely an underestimate), then roughly a million hours of time annually is wasted by psychiatric clinicians obtaining these authorizations. Add to that the many day hospital admission and psychiatric medication requests that also require prior authorization from insurance companies, and the total number of psychiatric clinician hours spent on the phone asking for authorization of service is staggering.  

Just today, for example, I spent 25 minutes on the phone obtaining authorization for a psychiatric medication I prescribed for a 50-ish-year-old professional male. Knowing the call would take a chunk of time, I thought about not making the call and just having him pay out of pocket for the medication instead of taking my time to make the call, but I just couldn’t bring myself to concede defeat to his insurance company so, ultimately, I made the call.

This is a travesty. It is demoralizing to psychiatric clinicians. For me to have to calculate whether my time is worth it for an insurer to pay for medications it is supposed to pay for is pathetic.

It also testifies to the fact that psychiatric patients are singled out for this kind of scrutiny because they are vulnerable and often unwilling to publicly advocate for themselves, the way that pregnant or pediatric patients and their allies might. I’d wager that insurance companies hope to profit off this vulnerability, given that overworked clinicians might opt to, if they are on the fence about how to proceed, do something other than admitting their patients given the hassle of seeking authorization. My co-authors and I call this “rationing this by hassle factor.”

The humanity of societies is judged by how well they take care of their most vulnerable, and we undoubtedly need to do better.  Health insurance needs to provide real coverage and assurance to those in need, not set up roadblocks to needed care that deter clinicians from seeking care when it is life-saving.

If we had a health care system that was not profit driven — an improved Medicare for all would be ideal — then I’d wager such impediments to urgent care would not be present and patients could receive the care they need without unnecessary hurdles for healthcare clinicians to jump through, set up only to generate greater profit for insurers.
 
References:
Amy Funkenstein, MD, Monica Malowney, BA, J. Wesley Boyd, MD, PhD.  Insurance Prior Authorization Approval Does Not Substantially Lengthen the Emergency Department Length of Stay for Patients With Psychiatric Conditions.  Annals of Emergency Medicine, Volume 61, Issue 5, May 2013:  596–597

J. Wesley Boyd is on faculty at Harvard Medical School and is an Attending Psychiatrist at Cambridge Health Alliance and Children’s Hospital Boston.

http://www.psychologytoday.com/blog/almost-addicted/201305/psychiatrists-waste-millions-hours-obtaining-prior-auths

Can we talk about the ACA train wreck?

GOP Candidates' Top Campaign Issue Will Be Obamacare 'Train Wreck'

By Wendell Potter
The Huffington Post, May 6, 2013

Will the implementation of some of the most important provisions of ObamaCare this fall and next year result in the “train wreck” Senate Finance Chairman Max Baucus (D-Mont.) predicted a few days ago?

No. But you can be certain that there will be no shortage of political candidates and high-powered political spin doctors who will be working relentlessly between now and the 2014 midterms to convince us that it will be.

If the Democrats and consumer advocates who support ObamaCare are not at work developing their own strategies to counter the coming barrage of misleading spin, the GOP will have an excellent chance of controlling Capitol Hill after the next elections.

http://www.huffingtonpost.com/wendell-potter/gop-candidates-top-campai_b_3222876.html

Comment:

By Don McCanne, M.D.

Of those who are serious about health care reform, some want to abandon the Affordable Care Act (ACA) and immediately enact single payer, and others want to abandon the single payer cause and move full steam ahead with implementation of the ACA. But should we really abandon either approach?

It is clear that ACA alone will be grossly deficient. Thirty million people will remain uninsured, inadequate low actuarial value plans will become the new standard, and wasteful spending will continue because of the highly flawed, administratively complex model of ACA. So single payer should not be abandoned since it is an imperative if we want to have affordable health care for everyone.

Why shouldn’t we abandon ACA? Because, quite simply, it is all that we have right now, and it will provide some limited relief for millions of people. If we were to abandon ACA now, mobilizing a social movement and then enacting and implementing single payer would still take many years – too long for those who would receive some benefit from ACA now.

So we should do both. Let the ACA enthusiasts continue with the implementation, while single payer forces step up the social movement for health care justice though advocacy for an improved Medicare for everyone.

So where is the train wreck? There isn’t any. But Wendell Potter is right. The opponents of reform will latch onto every ACA implementation glitch, real or imagined, and onto the criticisms which will inevitably follow. They will attempt to frame the implementation as a debacle, and run with that in their effort to use election politics to advance their anti-government agenda.

This complicates the message for the single payer camp. We need to educate people as to why ACA will fall intolerably short of reform goals, but we do not want that to become part of the Repeal ACA message. The opponents initially supported Repeal and Replace, but they have largely abandoned Replace, concentrating on Repeal. So how do we counter the Repeal message?

We need to emphasize the positive message of single payer – truly affordable health care for everyone. We can add that we don’t need to repeal ACA since it can help some during the transition to single payer. But our action message should be Replace – letting the public know that we really do have a much better program that will work for everyone, whereas the opponents do not.

So perhaps a unifying message for the supporters of health care justice should be:

Forget Repeal, REPLACE!

Economist to speak in Charlotte about single payer health plan

By Karen Garloch
The Charlotte Observer, May 13, 2013

Dr. Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst, will be in Charlotte May 23 to make the case for single payer, universal health care in the United States.

He won’t argue for that approach because health care is a human right – even though that’s what he believes.

Instead, he’ll make the case that it’s the only plan that makes economic sense.

To those who think we can’t afford it, Friedman responds: “What we can’t afford is the current system. The only thing we can afford in the long run is a universal, single payer system. That’s the only thing that will bring down the cost.”

Friedman’s talk is sponsored by Health Care Justice, a local chapter of Physicians for a National Health Program.

His analysis centers on the nation’s health insurance system, where competition among private payers leads to administrative redundancy that increases costs without improving anyone’s health.

In the early 1970s, when there was little competition and most people got private insurance from one organization (Blue Cross), U.S. health care spending amounted to about 7.5 percent of the gross national product, he said. Today, with dozens of competing insurers, health care costs have risen to nearly 18 percent of GDP.

Eighty percent of that difference “can be explained by rising administrative costs,” Friedman said.

The average U.S. doctor spends 22 hours a week interacting with insurance representatives, and the largest occupation in health care is billing clerks, he said.

Many economists believe competition is good. Offer the best product at the best price, and you’ll sell more. But health care is different, Friedman said.

“Health insurers don’t try to sell more product. They try to sell less … When you get sick, and they pay for an X-ray or chemotherapy, that’s a cost to them … I’m not saying they’re evil, but the incentive is in the direction of making life difficult for people who get sick.”

A single payer system would get rid of duplicate billing operations and the incentive to cherry pick patients.

Even though the Affordable Care Act, the law championed by the Obama administration, will expand insurance coverage, it won’t cover everyone, and it won’t contain costs, Friedman said.

In five or 10 years, he predicted, health costs will be even higher. Private employers and state and local governments will again feel squeezed and demand a solution.

Despite gridlock in Washington, Friedman is optimistic that single payer, universal health care will one day be law in the United States, as it is in so many other nations.

When asked why, he referred to a quote often attributed to Winston Churchill: “Americans will always do the right thing, after exhausting all the alternatives.”

More Information:
Free talk: “Sustainable Quality Health Care for North Carolina: Single Payer is not an Answer – it is the Answer”
Speaker: Dr. Gerald Friedman, professor of economics, University of Massachusetts at Amherst
When: May 23, 7 p.m.
Where: Midwood International and Cultural Center, 1817 Central Ave.

Read more here: http://www.charlotteobserver.com/2013/05/13/4039209/economist-to-speak-in-charlotte.html#storylink=cpy

Why Hospital Charges Vary So Much

By Caroline Poplin, M.D.
The New York Times, May 13, 2013

Re “Hospital Billing Varies Wildly, U.S. Data Shows” (front page, May 8):

No one should be surprised that hospital charges vary wildly, even within the same city. Prices likely vary within the same hospital, depending on who is paying. This is pure capitalism in a setting where sellers have market power: the seller maximizes profit by charging each buyer as much as he can pay, whatever the service actually costs.

Making these sticker prices public will change nothing; most people will have to go to the hospital in the network, the one that gave their insurer a “discount” that still guarantees the hospital a healthy profit. We all pay in premiums.

Price competition among hospitals is problematic, because it is hard to compare “products”: people prefer a hospital recommended by a trusted doctor. The solution is Medicare for all: hospitals compete fiercely on quality, we save a ton of money, and the hospitals with the best quality and the lowest costs profit.

Dr. Caroline Poplin is a primary-care physician and a lawyer. She resides in Bethesda, Md.

http://www.nytimes.com/2013/05/14/opinion/why-hospital-charges-vary-so-much.html?_r=0

Open letter to Gov. Haslam: Don’t abandon the vulnerable

By Diana Reed, M.D.

The following letter was sent to Gov. Bill Haslam of Tennessee on May 10.

Dear Governor Haslam:

I am a concerned citizen, a retired disabled doctor, a Tennessee resident and a woman who has devoted her life to health care as a neurologist in Columbia and at Vanderbilt before a work related injury left me disabled and uninsured.

What a slap in the face! Eventually I was able to get on Medicare and my husband who had a heart attack in 2005 was also uninsurable until the Preexisting Condition Insurance Plan became available. When that program ends, if you do not participate in the Medicaid expansion or the health exchanges, he may end up uninsured again, and if he has an illness or injury, we may end up in bankruptcy for a second time due to medical bills.

My husband’s best friend just died in January because he stayed home during his heart attack, rather than burden his family with medical bills he couldn’t afford because although he worked full time, he had no health insurance. The last three weeks of his life spent in Intensive Care Unit, cost his children what little inheritance they would have received from his estate.
 
Since my career in medicine was cut short, I wrote a book, “The Other End of the Stethoscope The Physicians’ Perspective on the Health Care Crisis.” The book explains why we are losing so many physicians in practice today, and how the health care crisis affects physician’s morale and bottom line. It explains where the money really goes as we spend twice as much as other countries and leave 46 million out, and why we rank 37th in over all health quality.

With the recent release of information on hospital charges, it is interesting to note that hospitals, like doctors almost never get paid what they charge, and due to antitrust laws, are not able to compare or discuss charges with their colleagues in similar practice situations or regions.

It really doesn’t matter what any of them charge, and of the uninsured, very few will pay anything toward their hospital bills. CMS and private insurers dictate what they will pay, and the only choice hospitals and doctors have is whether to be a provider.

As a physician, I had hundreds of thousands in unpaid accounts receivable that were never collected, yet, unlike hospitals I was not allowed to deduct that from my taxable income. I did provide health insurance to my three employees, but after they had some health issues, my rates tripled, along with the medical malpractice insurance.

With no control over my income or overhead, private practice in Tennessee became unsustainable and I, like most doctors today, was forced out of small business and into employment. The three jobs of my office manager, receptionist and nurse I supported were lost, along with my independence and love of medicine.
 
If someone collapsed on your doorstep, would you let them die there because they have no health insurance? Because as governor, that is exactly what you are doing. The poor and disabled, the most vulnerable of the people you represent, are being let down by the policies you espouse.

Contrary to what you might believe, it is tough out there, and hard working people are suffering while you seem to be most concerned with protecting the richest Tennesseans and their pocketbooks.

You seem to believe that the poor will make wasted trips to their doctors and drive up costs if they don’t have skin in the game by paying co-pays and deductibles they can’t afford, by definition of being poor. Isn’t their life skin enough?

The real cost savings will come when the poor can get to primary care, preventative health screening, medications for high blood pressure and diabetes, mental health care and health education rather than showing up in the ER with end stage catastrophic and chronic conditions that leave them disabled or dead, and costing us all much more in the long run.

Economically, the PPACA and the Medicaid expansion are a win-win for Tennessee, and I urge you to reconsider your political posturing and work to the benefit of all Tennesseans. You and your Republican colleagues are not hurting President Obama, whose agenda and health care plan was overwhelmingly approved as evidenced in the last election. You are not helping to make America strong, you are really hurting the Republican party and it will show in the next elections. People are sick of obstructionism.

Mainstream Americans are not a selfish, money-worshipping group that have no compassion for the poor or disabled. They know that we are all one people on one earth; that the Bible tells us we must help our brothers, especially the least of us, if we are to live by God’s word and we will all benefit. You need to come out of your ivory tower, and see how the majority of people in Tennessee are struggling, starving, and dying.
 
I would like to meet with you face to face, if possible, to discuss the health care crisis further, and as a Tennessee Volunteer, I would be happy to work with you toward a goal of compassionate care for all Tennesseans. Thank you for your consideration.

Dr. Diana Reed resides in Spring Hill, Tenn.

Keep people out of Medicaid to avoid fraud?

Healthcare puts Jerry Brown, Capitol Democrats on different sides

By Anthony York and Chris Megerian
Los Angeles Times, May 10, 2013

With California’s deficit wiped out and its economy starting to hum, this was to be a year when Gov. Jerry Brown was free of the budget logjams that have paralyzed the Capitol.

But instead, the governor has a fight on his hands — with his fellow Democrats. He is on a collision course with them over how to reshape the state’s sprawling, complicated healthcare system to conform with President Obama’s national overhaul.

The sticking points in extending public healthcare to more Californians include how many to add to state insurance rolls, how much to pay doctors and hospitals, and how much money to give counties for their care of the indigent.

The Democrats who control the Legislature — with a veto-proof supermajority — want to make it easier to obtain public insurance than Brown does and send more money to the doctors, hospitals and counties than the governor wants to part with.

The major bill that would expand public insurance under Medi-Cal is from Assembly Speaker John A. Pérez (D-Los Angeles). The measure would make it easier for Californians to enroll in the program by allowing people to sign up online and eliminating requirements that recipients file semiannual financial reports to prove they are still eligible.

Administration officials have said the governor opposes those changes out of concern that the easier enrollment process could lead to fraud.

http://www.latimes.com/health/la-me-brown-healthcare-20130511,0,6700749.story

Comment:

By Don McCanne, M.D.

Isn’t the idea of the Affordable Care Act to get as many people covered as is possible, considering the administrative complexities of this highly flawed model of reform? So what does California Governor Jerry Brown recommend? Do not make enrollment easier since it might lead to fraud!

Enrollment fraud could not possibly occur under a single payer system since it automatically enrolls everyone. We need a change in attitude. A single payer system would start us thinking in the right way about how to cover everyone and still pay for it.

Caregiving As Humankind's Shared Project

By Andrew D. Coates, M.D., F.A.C.P.  
WAMC Northeast Public Radio, May 13, 2013

In two recent essays Dr. Arthur Kleinman, the eminent Harvard anthropologist and psychiatrist, writes in the world’s leading medical journals about caregiving as a moral experience.

One essay appeared last November in The Lancet. A few weeks ago The New England Journal of Medicine published another article by Dr. Kleinman with a similar theme but a slightly different emphasis.

“Consider how central caregiving is to what it means to be human,” Dr. Kleinman writes. “Caregiving is an indelible part of relations between partners, the raising of children, and response to the infirmities of aged parents and grandparents. It is, of course, the very definition of how families and friendship networks cope with sickness or disability among their own.”

He goes on to say there’s “an ancient lineage to caregiving across historical periods and societies,” and in today’s world “[n]ursing, medicine, and the allied health disciplines justify their status as healing professions by underlining their professional commitment to caregiving.”

Dr. Kleinman’s words in these essays have delivered for me, a physician, the kind of a jolt you get if you pull off your clothes on a hot June day and jump into a Catskill mountain pond. A systemic shock, then the deep breaths that bring a liberating awareness of the world around us.

Kleinman has drawn a bright line around the sphere of caregiving. He reminds us that our relationships with those we care for give our lives meaning. He then extends this truth to the caregiving professions.

The shock and awareness come refreshingly thanks to Kleinman’s gentle assertion that market forces and money interests — profit-seeking — serve only to poison and undermine the very relationships that are most defining of our humanity and our profession.

Kleinman writes: “Everyone who has been in love or built a family knows that there are things, essential things, that money can’t buy.

“Patients with serious illness and their network of caregivers know this too, because those things that really matter to us are threatened and must be defended.”

He then says many clinicians “reflecting on what is at stake in health care not only for patients but for themselves, know the same thing: the market has an important role in health-care financing and health systems reform, but it should not reach into those quintessentials of caregiving that speak to what is most deeply human in medicine and in living.”

To briefly digress, I so admire Dr. Kleinman’s courage. It is not easy to explain the experience of becoming a physician, let alone the ongoing work we do to be the best we can be for our patients and our fellow caregivers. Kleinman locates our profession within a continuity of sharing, self-sacrifice and humanity — a profession with profound rewards on the most basic and human level, rewards not measurable with money.

He introduces, courageously, a deeply personal element. He offers reflections on the personal role of caregiving for his wife, who developed early Alzheimer’s disease.

Dr. Kleinman alludes to the corrosive, corrupting external pressures of what he calls “the market model” and “the clarion call of efficiency” weighing upon doctors and nurses and family members. Yet, from the standpoint of personal responsibility, he doesn’t let any of us off the hook. He challenges all of us to insist that health policies and programs place caregiving at their core.

If we don’t demand this, Kleinman writes, “all of us are demeaned and the profession of medicine and the processes of health care are transmuted into something that is hollowed of its humanity and moral value.”

Dr. Kleinman’s honesty brings a liberating awareness. He invites us to face our contemporary crisis in health care with sober senses. Every effort to turn caregiving into a marketplace transaction does indeed demean us – not just we doctors and our patients, but all of us.

As distressing as the idea is that money interests threaten to steal humanity from our professional efforts at caregiving, Kleinman encouragingly notes that among many clinicians the passion for caregiving is still very much alive. This is true in my experience too. The urgent task, however, is to elevate that passion – through medical education and other means – to a new level in the face of challenging, market-oriented headwinds.

In my view, the first step toward protecting the sphere of caregiving from the corrupting influence of money would be to enact a national health program, publicly financed, truly universal, and stripped of the corporate profiteering that afflicts us today. It’s an achievable goal, as other nations have shown us. And it will bring us closer to what Dr. Kleinman calls “enact[ing] care as humankind’s shared project.”

Dr. Andrew Coates practices internal medicine in upstate New York. He is president of Physicians for a National Health Program.

You can listen to Dr. Coates’ radio broadcast here: http://www.wamc.org/post/andrew-coates-caregiving-humankinds-shared-project

Private insurers' Medicare Advantage plans cost Medicare an extra $34.1 billion in 2012

Instead of being more efficient, private insurers have cost Medicare almost $300 billion more over the life of the program

FOR IMMEDIATE RELEASE, May 10, 2013

Contact: Mark Almberg, (312) 782-6006, mark@pnhp.org

A study published online today finds that the private insurance companies that participate in Medicare under the Medicare Advantage program and its predecessors have cost the publicly funded program for the elderly and disabled an extra $282.6 billion since 1985, most of it over the past eight years. In 2012 alone, private insurers were overpaid $34.1 billion.

That’s wasted money that should have been spent on improving patient care, shoring up Medicare’s trust fund or reducing the federal deficit, the researchers say.

The findings appear in an article published in the International Journal of Health Services by Drs. Ida Hellander, Steffie Woolhandler and David Himmelstein titled “Medicare overpayments to private plans, 1985-2012: Shifting seniors to private plans has already cost Medicare US$282.6 billion.”

Hellander is policy director at Physicians for a National Health Program (PNHP), a nonprofit research and advocacy group. Woolhandler and Himmelstein are professors at the City University of New York School of Public Health, visiting professors at Harvard Medical School and co-founders of PNHP.

Medicare has contracted with private insurance plans – previously referred to as Medicare HMOs and now called Medicare Advantage plans – since 1985. Such plans, most of them for-profit, currently cover about 27 percent of Medicare enrollees and have been growing at a fast clip. UnitedHealth and Humana are among the largest players in this market, and together operate about one-third of such plans.

Medicare pays these privately run plans a set “premium” per enrollee for hospital and physician services (averaging $10,123 in 2012) based on a prediction of how costly the enrollee’s care will be.

The authors find that private insurers have four strategies that make them more costly than the traditional Medicare program.

1.    Private plans cherry-pick healthier beneficiaries who cost less to care for, guaranteeing large profits. Although private plans must accept all seniors who choose to enroll, they cherry-pick by selectively recruiting the healthiest seniors through advertising, office location, etc. They also induce sicker ones to disenroll by making expensive care inconvenient.
2.    They recruit otherwise healthy seniors with very mild (and inexpensive) cases of sometimes serious conditions – automatically triggering higher premiums for these beneficiaries from the risk-adjustment scheme implemented in 2004, but escaping payments for expensive care. For instance, many seniors have very mild cases of arthritis, heart failure and bronchitis that require little or no treatment.
3.    They enroll patients who get most of their care free at the Veteran’s Administration.
4.    They heavily lobby Congress to raise their reimbursement. The insurance industry successfully induced Congress and the Bush administration to add bonus payments to Medicare Advantage premiums beginning in 2003.

Since the study was completed, the industry has again successfully lobbied the administration to raise payments to Medicare Advantage plans, reversing a planned cut of 2.2 percent in reimbursement rates and instead obtaining a 3.3 percent increase. Stock prices of private insurers soared over the announcement.

“We’ve long known that Medicare has been paying private insurers more than if their enrollees had stayed in traditional fee-for-service Medicare, but no one had added up the total extra cost to the taxpayer since contracting with private insurers began 27 years ago,” said Dr. Ida Hellander, lead author of the study. “Nor has anyone systematically examined the many ways that private insurers have gamed the system to maximize their bottom line at taxpayers’ expense.”

“In 2012 alone, private insurers are being overpaid $34.1 billion, or $2,526 per Medicare Advantage enrollee,” Hellander said.

Co-author Dr. Steffie Woolhandler said: “It’s clear that having Medicare Advantage programs compete with Medicare doesn’t save us money. In fact the opposite is the case. The private plans only add waste, and the aggregate waste is staggering – enough to be a significant drag on the economy.

“It’s time we look to proven, cost-effective ways of providing high-quality care to Medicare’s beneficiaries and to the entire population,” Woolhandler said. “That means taking a fresh look at the single-payer model of reform.”

###

“Medicare overpayments to private plans, 1985-2012: Shifting seniors to private plans has already cost Medicare US$282.6 billion.” Ida Hellander, M.D., Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D. International Journal of Health Services, May 10, 2013 (online first), Vol. 43, No. 2. DOI: 10.2190/HS.43.2.g

Physicians for a National Health Program (https://pnhp.org) is a nonprofit educational and research organization of more than 18,000 doctors who advocate for single-payer national health insurance.

Medicare private plans overpaid $282 billion

Medicare Overpayments to Private Plans, 1985-2012: Shifting Seniors to Private Plans has Already Cost Medicare $282.6 Billion

By Ida Hellander, David U. Himmelstein, Steffie Woolhandler
International Journal of Health Services, Volume 43, Number 2 / 2013, Posted online May 10, 2013

Abstract:

Previous research has documented Medicare overpayments to the private Medicare Advantage (MA) plans that compete with traditional fee-for-service Medicare. This research has assessed individual categories of overpayment for, at most, a few years. However, no study has calculated the total overpayments to private plans since the program’s inception. Prior to 2004, selective enrollment of healthier seniors was the major source of excess payments. We estimate this has added US$41 billion to Medicare’s costs since 1985. Medicare adopted a risk-adjustment scheme in 2004, but this has not curbed private plans’ ability to game the payment system. This has added US$122.5 billion to Medicare’s costs since 2004. Congress mandated increased payment to private plans in the 2003 Medicare Modernization Act, which was mitigated, to a degree, by the subsequent Affordable Care Act. In total, we find that Medicare has overpaid private insurers by US$282.6 billion since 1985. Risk adjustment does not work in for-profit MA plans, which have a financial incentive, the data, and the ingenuity to game whatever system Medicare devises.

How Does Medicare Overpay Private Plans?

1. The selective enrollment of healthier beneficiaries before 2004, or what we will call “old cherry-picking.” Under the payment formula in effect until 2004, Medicare paid private plans a premium that was risk-adjusted only for a few demographic factors, such as age, gender, disability, whether an enrollee resided in a nursing home, and Medicaid eligibility (a proxy for poverty). Hence a healthy 70-year-old man would bring the same premium as his sicker, 70-year-old neighbor. Private plans used marketing, benefit design, enrollment office location, and other techniques to recruit the healthy and discourage sicker seniors from enrolling.

2. Gaming of Medicare’s more complex risk-adjustment scheme, known as Hierarchical Condition Categories (HCCs). Since 2004, private plans have been selectively enrolling beneficiaries with very mild cases
of the medical conditions included in the HCC risk-adjustment formula; such patients have, on average, substantially lower costs than the risk-adjusted premium payment that Medicare pays the private plan on their behalf. We refer to this as “new cherry-picking.”

3. Congressionally-mandated overpayments included in the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (MMA), including duplicate payments for indirect medical education. The provisions that generated this overpayment were tacked onto the MMA after heavy lobbying by the private insurance industry.

4. Bonus payments from the $8.35 billion CMS Medicare Advantage Quality Bonus Payment Demonstration, an expansion of the $3 billion in quality bonuses contained in the ACA. This demonstration will award bonuses to plans covering more than 90 percent of MA beneficiaries and offset more than one-third of the cuts to MA overpayments mandated by the ACA between 2012 and 2014. According to the General Accountability Office (GAO), the demonstration is so poorly designed that it will generate almost no useful findings to improve quality.

5. Duplicate payments for private plan members who receive all or part of their care at Veterans Health Administration (VA) facilities. Medicare pays the private plan a full premium payment, no matter how much of the patient’s care is delivered (and paid for) by the VA. In an extreme case, a senior might receive all care at the VA, making the premium given to the private plan pure profit. In 2009, 8.3 percent of all MA enrollees were enrolled in the VA.

Conclusions

Advocates of market-based Medicare reforms suggest that competition among private plans will induce greater efficiency and result in cost savings. Our findings indicate that the opposite is true. Private plans have drained more than $280 billion from Medicare since 1985, most of it in the last eight years. Increasing private enrollment through voucher-type Medicare reform (as suggested by Republicans) or through quality bonuses and financial incentives to plans to enroll dual-eligible beneficiaries (as enacted by President Barack Obama’s administration) will almost certainly raise Medicare’s costs, not lower them.

Funds wasted on overpayments to private MA plans could instead have been used to improve benefits for seniors, extend the life of the Medicare Trust Fund by more than a decade, or reduce the federal deficit. Private insurers have enriched themselves at the expense of the taxpayers.

It is time to end Medicare’s long and costly experiment with privatization. The U.S. needs to adopt a single-payer national health insurance program with proven, effective methods for controlling costs.

http://baywood.metapress.com/app/home/contribution.asp?referrer=parent&backto=issue,7,11;journal,1,170;linkingpublicationresults,1:300313,1  (you may have to cut and paste this link)

Comment:

By Don McCanne, M.D.

Now we know that the private Medicare plans have been overpaid $282 billion in taxpayer funds. The Obama administration has continued to add to the overpayments by expanding eligibility for extra quality award payments to which the plans were not entitled, and by using a bookkeeping gimmick for suspended SGR adjustments. Congress and the administration, in using our taxpayer funds to reward this unprincipled industry, should pay a political price for their misdeeds.

The health law and its incentives

By Marc H. Lavietes, M.D.
The New York Times, Letters, May 9, 2013

Re “What Health Insurance Doesn’t Do,” by Ross Douthat (column, May 5):

Ross Douthat’s statement that liberals “remain wedded to the dream of a health care bureaucracy that pays” is disingenuous. Obamacare will provide greater access to health care but will neither diminish health care costs nor provide universal care. Progressive physicians favor a single-payer health plan serving as an insurance fund, leaving physicians free to organize their own practices and patients free to choose their physicians.

“Lump” payments for a given condition (angina, asthma) rather than individual payments for each test ordered would push physicians to minimize testing rather than maximize it, and thus limit cost. A powerful single provider could negotiate reasonable drug prices, thus decreasing the exorbitant cost of prescription drugs.

Countries with a single-payer system show major reductions in their administrative costs. Pharmaceutical industry and medical insurance company profits are unconscionable. It is possible to improve health care while limiting both bureaucracy and cost.

Dr. Marc H. Lavietes, a clinical associate professor of medicine at U.M.D.N.J., is secretary of Physicians for a National Health Program, New York City chapter. He resides in Bradley Beach, N.J.

http://www.nytimes.com/2013/05/10/opinion/the-health-law-and-its-incentives.html?_r=0

CMS pushes price transparency

Administration Offers Consumers an Unprecedented Look at Hospital Charges

Centers for Medicare and Medicaid Services, May 8, 2013

New data released today show significant variation across the country and within communities in what hospitals charge for common inpatient services.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Secretary Sebelius said.

These amounts can vary widely.  For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.

“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, M.D., RWJF president and CEO.

http://www.cms.gov/apps/media/press/release.asp?Counter=4596

Medicare Provider Charge Data: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

Comment:

By Don McCanne, M.D.

So now we have access to hospital chargemaster prices – meaningless numbers that nobody pays. And that is going to make us better health care shoppers?

What matters are payments, not prices. Actual payments are negotiated prospectively by private insurers, and even more effectively by Medicare. Cash paying patients usually feebly attempt to conduct negotiations retroactively, if they pay at all.

This CMS effort on hospital price transparency will have almost no impact on controlling total health care spending since chargemaster prices are a fabrication.

There is a far better way to control spending without forcing patients to make unwise health care decisions in their efforts to avoid the financial burdens of health care. Each hospital should be placed on a global budget, just as we do with our police and fire departments. That way, services are rendered simply when needed, without having an associated price tag.

Requiring price shopping as a prerequisite to health care access is anathema to health care justice.

Oregon needs single-payer health care

By Bill Whitaker
Wallowa County Chieftain (Enterprise, Ore.), May 8, 2013

Many Wallowa County families and businesses are facing financial catastrophe because of the increasing cost of health insurance and medical care. They hope that the Affordable Care Act (“Obamacare”) will cure their problems. Unfortunately it will not.

The Oregon legislature has the opportunity to pull Oregon back from the health care brink. HB 2922, The Affordable Health Care for All Oregon Plan Act, would establish a universal single-payer health care system for all of Oregon. Passing this bill would allow every family in Oregon to get the health care they need when they need it. Oregonians would spend no more on health care than they do now, probably less.

Objections to HB 2922 are not financial: at this moment single-payer systems throughout the U.S. and in Oregon provide better care to more people for less money than our private insurance industry. Almost every large business in Oregon uses its own private single-payer system (also known as “self-funded”) to finance health care for its employees. All our armed forces and veterans get their health care through single-payer systems.

Single-payer is not experimental. It provides access when needed. It costs less than private health insurance. And people who receive single-payer care are healthier than they would be with private insurance.

Oddly, the biggest objections to creating a single-payer system in Oregon are not financial. They are based on the erroneous assumption that the Affordable Care Act (“Obamacare”) will solve all our problems.

Here’s why Obamacare takes us closer to the brink of catastrophe.

Obamacare will not improve access to health care. The Congressional Budget Office (CBO) estimates the ACA will leave 60 million Americans under-insured (at risk for bankruptcy if a family member gets the wrong disease at the wrong time) or uninsured (with no access to care whatsoever). We do not yet have a study in Oregon, but we can expect 700,000 Oregonians to be left at risk for medical bankruptcy or death from a treatable disease – if the ACA works perfectly.

Obamacare will increase, not decrease, health care costs. Although government spending goes down, expenses for patients go up; the CBO estimates a $100 billion annual increase. We can expect annual costs in Oregon to increase by over $1 billion – if the ACA works perfectly.

The ACA will not improve public health. We know this because of the experience in Massachusetts. Since implementing its own version of Obamacare in 2006 (now known as “RomneyCare”), nearly 100 percent of Massachusetts residents own a health insurance policy. However, measures of public health have not improved; medical bankruptcies have increased 30 percent; and health care costs in Massachusetts are rising faster than any region in the country. (Massachusetts began with the highest health care costs in the country and still leads all other states).

What does all this mean for Oregon? After we fully implement Obamacare, we can expect health care to remain dangerously inaccessible, our health care costs and medical bankruptcies to increase, and our public health to continue to deteriorate – if the ACA works perfectly.

Obamacare is not the answer. The consequences of Obamacare will make health care reform in Oregon more urgent than ever. Oregon must act decisively now to protect our health care in the future.

Oregon needs and deserves single-payer health care. A public hearing on HB 2922 will be held in Salem on May13. Every resident of Wallowa County and eastern Oregon should ask Rep. Bob Jenson and Sen. Bill Hansell about HB 2922 and what it can do for you and your family’s health care.

For further information about how you can help bring health care to every person in Oregon, contact: Oregon Rural Action Health Care Reform Action Team, bill@oregonrural.org, 541-663-1358. See our website at oregonrural.org. You can help ensure every Oregonian gets the health care they need. Everybody in, nobody out!

Bill Whitaker is co-chair of the Oregon Rural Action Health Care Reform Action Team.

http://wallowa.com/opinion/regional_opinions/commentary-oregon-needs-single-payer-health-care/article_e4a4d1d2-b772-11e2-b173-0019bb2963f4.html