PNHP

Readers react: The future of Medicare

Readers react: The future of Medicare

The New York Times, Letters, Feb. 24, 2013

PNHP note: The following two letters were published as part of a “Sunday Dialogue” in response to a Feb. 19 letter by Thomas M. Cassidy titled “Fix Medicare to save it” in The New York Times. The complete set of letters is available here.

Lessons from Canada’s program

By Steffie Woolhandler, M.D., and David U. Himmelstein, M.D.
 
Canada’s Medicare program — phased in at the same time as the American version — shows how we can make Medicare simpler and thriftier, while simultaneously upgrading its coverage. Canada’s program covers all Canadians (not just the elderly) under a single public program in each province, and bans co-payments and deductibles.

Patients can choose any doctor and hospital. Cutting out private insurers and the complexity and fragmentation they impose has simplified paperwork for patients, doctors and hospitals. Administrative costs are roughly half United States levels, saving more than $1,000 per capita.

Over all, Medicare spending on the elderly has grown three times faster in the United States than in Canada since 1980, while life expectancy (for the elderly, as for all age groups) has grown faster in Canada. If American Medicare costs had risen at Canadian rates, we’d have saved more than $2 trillion by now, and Medicare’s trust fund would show a healthy surplus.

The writers, internists and professors at the CUNY School of Public Health at Hunter College, co-founded Physicians for a National Health Program.

Needed: a nonprofit, integrated delivery system and single payer

By Arnold S. Relman, M.D.

Mr. Cassidy’s proposed fix is sensible but is far short of what is needed.

Medicare is headed for bankruptcy because it depends largely on open-ended fee-for-service payment of almost any services providers choose to deliver, at prices mainly determined by the providers. Compounding the problem, most providers act like independent businesses seeking to increase their income, regardless of whether they are for-profit or investor-owned.

An effective Medicare fix would require a new payment system that prospectively pays providers for comprehensive care at a rate set by a single public payer. It would also need a not-for-profit medical care system based on multispecialty doctor groups that pay physicians by salary, thus minimizing incentives to deliver duplicative or unnecessary care.

The new system would have to be mandatory for all citizens, including legislators, and it would have to be financed by a progressive, earmarked health care tax.

Obviously, such reform would be slow and difficult, but so would any other change that threatened vested interests. All reform will depend on an aroused public opinion.

The writer is professor emeritus of medicine and social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine.

Free-market fantasy on health care

By Caroline Poplin, M.D.
The New York Times, Letters, Feb. 21, 2013

Re “The Health Benefits That Cut Your Pay” (Sunday Review, Feb. 17):

With the best intentions, David Goldhill has described a free-market fantasy of health care. Market prices are based on power. In the United States today, hospitals and large doctor groups wield enormous market power, and they exercise it ruthlessly; consumers have none. Hospitals charge whatever the market will bear; uninsured patients pay the highest prices.

Large insurers bargain for “discounts” from prices set high enough so that hospitals still profit, and pass some of the “savings” on to large employers, who also have market power, but not to small businesses or individuals.

Whatever their faults, single-payer systems using government leverage, like the Canadians’ — or Medicare — deliver decent quality care to more people at lower cost. Mr. Goldhill makes the best the enemy of the good.

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

http://www.nytimes.com/2013/02/22/opinion/how-can-we-make-health-care-work.html?emc=eta1

Reducing Administrative Costs

By Samuel Metz, M.D.
New England Journal of Medicine, Correspondence, Feb. 14, 2013

In their Perspective article, Cutler et al. (Nov. 15 issue)[1] describe methods for reducing administrative costs in our health care system. The authors acknowledge that single-payer systems eliminate many administrative expenses, but they omit those estimated savings and dismiss the adoption of a national single-payer system as “unlikely.”

Estimates of administrative costs that could be recovered by a national single-payer system have been reported as $204 billion,[2] $230 billion,[3] $350 billion,[4] and ranging from $400 billion to $500 billion.[5] These numbers can be compared with the authors’ estimates of $23 billion in recoverable costs without a single-payer system.

American single-payer health care is not impossible — it is a reality. More than 120 million Americans currently receive care through single-payer plans, both private (multiemployer plans and self-funded plans) and public (e.g., Veterans Affairs, TRICARE, and Indian Health Service). That’s 39% of our population. All these single-payer plans provide better care to their populations for less money than private health insurance.

We physicians should not underestimate the cost-effectiveness of a single-payer system. We should not dismiss our ability to convince the authors and our national leaders that single payer is not “unlikely”; it is inevitable. We are already 39% of the way there.

References
1. Cutler D, Wikler E, Basch P. Reducing administrative costs and improving the health care system. N Engl J Med 2012;367:1875-1878
2. Institute for Health and Socio-Economic Policy. Single payer/Medicare for all: an economic stimulus plan for the nation. 2009 (http://nurses.3cdn.net/c6fb9a313be501086e_1vm6y1duy.pdf).
3. Kahn JG, Kronick R, Kreger M, Gans DN. The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals. Health Aff (Millwood) 2005;24:1629-1639
4. Rodberg L, McCanne D. Upgrading to national health insurance (Medicare 2.0): the case for eliminating private health insurance. Chicago: Physicians for a National Health Program, July 13, 2007 (https://pnhp.org/news/2007/july/_health_insurance_fo.php).
5. Kuttner R. Market-based failure — a second opinion on U.S. health care costs. N Engl J Med 2008;358:549-551

Samuel Metz, M.D., resides in Portland, Ore. He can be reached at s@samuelmetz.com.

N Engl J Med 2013; 368:683February 14, 2013DOI: 10.1056/NEJMc1215485

http://www.nejm.org/doi/full/10.1056/NEJMc1215485?query=TOC

Corruption and scandal in the NHS: What happens when you introduce private incentives to public services

By Josh Freeman, M.D.
Medicine and Social Justice blog, Feb. 23, 2013

The United Kingdom has a National Health Service which covers everyone (although it allows those with private insurance to access care elsewhere). While not perfect – nothing is – and historically underfunded, it is one very reasonable model for how we could ensure access to health care for everyone. It goes back to the post-WW II period, when the British Labor Party made the decision to expand the existing National Health Insurance program to create the NHS through the political process, while in the US the emphasis among unions was to use collective bargaining to get health insurance as a member benefit.

But the NHS, while profoundly supported by the vast majority of British people, has been a target of attacks by Conservative governments since the Thatcher years. One of the big changes was the creation of several regional “trusts”, quasi-public entities that were invested with NHS funds and made responsible for the provision of care in their regions. This was consistent with the Tory assertion (held even more strongly in the US) that the private sector, or as close as they could get politically to the private sector, would be more efficient and effective than a public “bureaucracy”. Success at meeting “targets” (often high production with inadequate resources) could lead a trust to “foundation” status, where they would have even more control.

Many in Britain had their doubts, certainly among those to the left of the Conservatives. There was concern that the trusts might not be responsive to the health care needs of the people and might be more concerned with enhancing their own salaries, perks, and power. Conservatives (small ‘c’) tend to believe that government bureaucracies are more inefficient; those on the left see more evidence that privatization is much more likely to serve the self-interest of those in control than the interests of those who are supposed to be served.

I recently read the 1996 mystery novel “Quite Ugly One Morning” by the Scottish writer Christopher Brookmyre. One of the major plot lines involves corruption in the Edinburgh-based regional NHS trust. I don’t want to spoil the plot, and I do recommend the book, but the portrayal of self-serving, stealing, and lack of attention to the actual care of the patients of the NHS was scary. Of course, it was a novel; there were not actual patients being harmed by corruption in the actual regional NHS trusts in the actual United Kingdom. After all, I thought, the British don’t do such things. We do, but that is because so much of our system is private and for-profit. Surely the British value the NHS too much for such things to really happen.

Wrong. It appears, however, that this in fact has been happening. In “English hospital report cites ‘appalling’ suffering”, NY Times February 6, 2013, Sarah Lyall describes conditions cited in a government report on Stafford Hospital, operated by the Mid-Staffordshire Trust: “Shockingly bad care and inhumane treatment at a hospital in the Midlands led to hundreds of unnecessary deaths and stripped countless patients of their dignity and self-respect, according to a scathing report published on Wednesday…. The report, which examined conditions at Stafford Hospital in Staffordshire over a 50-month period between 2005 and 2009, cites example after example of horrific treatment: patients left unbathed and lying in their own urine and excrement; patients left so thirsty that they drank water from vases; patients denied medication, pain relief and food by callous and overworked staff members; patients who contracted infections due to filthy conditions; and patients sent home to die after being given the wrong diagnoses.”

HUNDREDS of people. Maybe as many as 1200 people died unnecessarily. And, in the followup of this scandal, there are investigations into at least 14 other trusts, reported across the British press such as this article in the Telegraph, “Head of NHS ignored warning that patients were in danger, alleges whistleblower”. One of these trusts is United Lincolnshire, whose former chief executive has turned whistleblower, accusing the head of the entire NHS, Sir David Nicholson, of ignoring warnings that substandard care was being provided there. The whistleblower, Gary Walker, was fired from his job and paid off to the tune of about a half-million pounds, to keep quiet.

This would be a great example of “life imitating art” if it weren’t for all the people who died or suffered serious morbidity as a result of “…its efforts to balance its books and save $16 million in 2006 and 2007 in order to achieve so-called foundation-trust status, which made it semi-independent of control by the central government, the hospital laid off too many people and focused relentlessly on external objectives rather than patient care,” (NY Times).  As further documented in the report, this was essentially “speed up”, a condition familiar to assembly-line workers.

“Speaking in the House of Commons,” the NY Times article goes on, “Prime Minister David Cameron apologized for the way the system had allowed ‘horrific abuse to go unchecked and unchallenged’ for so long. So deeply rooted was the trouble, he said, that ‘we cannot say with confidence that failings of care are limited to one hospital.’” Apparently not, given the accusations at Lincolnshire. However, despite these accusations, and perhaps more damningly, the fact that he was the Chief Executive of the Mid-Staffordshire trust during much of the time that the scandalous activities were occurring there, Nicholson is staying put, and so far the government is backing him. (more coverage in the Mail (Feb 13 and 17).

Well, he is staying put so far, but people in Britain far and wide are calling for his resignation, as well they might. Demonstrations in support of the NHS as a system designed to serve the people, not its administrators, have broken out across Britain; an example is this wonderful “Youtube” video of a “flash mob choir” (!) at King’s Cross railroad station in London singing in support of National Health (h/t Alex Scott-Samuel).

It would be possible to pin these atrocities on the National Health Service, as an example of the failing of socialized medicine, but that would be wrong. It would even be wrong to point out that the problem is chronic under-funding of the NHS. The problem, in fact, is a public good being run for private benefit, for the temptation of even great “autonomy” (read: potential for exploitation) by becoming a “foundation” led to deaths far in excess of the scale fictionally portrayed by Brookmyre in the mid-90s. The NHS does not suffer because it is tasked with providing health care to all of the British people; it suffers when a lack of adequate regulation and supervision allow such abuses to go unchecked.

The British people deserve much better. So, for that matter, do Americans. Let’s listen to the “flash mob choir” again!

http://medicinesocialjustice.blogspot.com/2013/02/corruption-and-scandal-in-nhs-what.html

TIME: Steven Brill's "bitter pill" should wake us up

Bitter Pill: Why Medical Bills Are Killing Us

By Steven Brill
TIME, February 20, 2013
The Way Out Of the Sinkhole
“I was driving through central Florida a year or two ago,” says Medicare’s (Jonathan) Blum. “And it seemed like every billboard I saw advertised some hospital with these big shiny buildings or showed some new wing of a hospital being constructed … So when you tell me that the hospitals say they are losing money on Medicare and shifting costs from Medicare patients to other patients, my reaction is that Central Florida is overflowing with Medicare patients and all those hospitals are expanding and advertising for Medicare patients. So you can’t tell me they’re losing money … Hospitals don’t lose money when they serve Medicare patients.”
If that’s the case, I asked, why not just extend the program to everyone and pay for it all by charging people under 65 the kinds of premiums they would pay to private insurance companies? “That’s not for me to say,” Blum replied.
In the debate over controlling Medicare costs, politicians from both parties continue to suggest that Congress raise the age of eligibility for Medicare from 65 to 67. Doing so, they argue, would save the government tens of billions of dollars a year. So it’s worth noting another detail about the case of Janice S., which we examined earlier. Had she felt those chest pains and gone to the Stamford Hospital emergency room a month later, she would have been on Medicare, because she would have just celebrated her 65th birthday.
If covered by Medicare, Janice S.’s $21,000 bill would have been deeply discounted and, as is standard, Medicare would have picked up 80% of the reduced cost. The bottom line is that Janice S. would probably have ended up paying $500 to $600 for her 20% share of her heart-attack scare. And she would have paid only a fraction of that — maybe $100 — if, like most Medicare beneficiaries, she had paid for supplemental insurance to cover most of that 20%.
In fact, those numbers would seem to argue for lowering the Medicare age, not raising it — and not just from Janice S.’s standpoint but also from the taxpayers’ side of the equation. That’s not a liberal argument for protecting entitlements while the deficit balloons. It’s just a matter of hardheaded arithmetic.
As currently constituted, Obamacare is going to require people like Janice S. to get private insurance coverage and will subsidize those who can’t afford it. But the cost of that private insurance — and therefore those subsidies — will be much higher than if the same people were enrolled in Medicare at an earlier age. That’s because Medicare buys health care services at much lower rates than any insurance company. Thus the best way both to lower the deficit and to help save money for people like Janice S. would seem to be to bring her and other near seniors into the Medicare system before they reach 65.
Meanwhile, adding younger people like Janice S. would lower the overall cost per beneficiary to Medicare and help cut its deficit still more, because younger members are likelier to be healthier.
If that logic applies to 64-year-olds, then it would seem to apply even more readily to healthier 40-year-olds or 18-year-olds. This is the single-payer approach favored by liberals and used by most developed countries.
***
Yet while Medicare may not be a realistic systemwide model for reform, the way Medicare works does demonstrate, by comparison, how the overall health care market doesn’t work.
Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.
Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-…

Steven Brill’s TIME article, “Bitter Pill: Why Medical Bills Are Killing Us,” seems to be awakening those who have, until now, accepted the very high prices of health care as an inevitability for having a technologically advanced health care system here in the United States.
In his 36 page article – which will surely be required reading in many health policy courses – Brill makes it clear that we no longer need to take the “bitter pill” of medical bills that are killing us. Clearly, Medicare already has several tools to control costs and has the potential for further improving value in the nation’s health care purchasing.
At the end of his article, Brill seems to be advancing a non sequitur when he writes, “The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market… We don’t have to scrap our system and aren’t likely to.” This certainly does not follow from what he had to say as the central theme of his article.
He then recommends some tired or inadequate remedies that would have very little impact on the problems that we face in health care. What is ironic is that he has built a tremendous case for the logical solution – an improved Medicare for all – and then he seems to dismiss it. You cannot read his article and escape the conclusion that a single payer national health program is an absolute imperative, that is, if we really do want affordable care for everyone.
Download this article (the full 36 pages is available for free at the link above), and share it with others. But put a Post-it note on it that states: WARNING! For the health of our nation, ignore the section at the end titled “Changing Our Choices” (that’s the tired remedies section), but concentrate on what an improved Medicare system could do for all of us.

Physician says Obamacare not the answer to full coverage

By Nicole Back
The Morehead (Ky.) News, Feb. 22, 2013

Is health care a human right? Dr. Ewell Scott, a retired physician, emphatically says the answer is “yes.”

He delivered that message Tuesday during a town hall meeting at the Center for Health, Education and Research (CHER).

Scott was speaking about HR 676, also known as the Expanded and Improved Medicare for All Act, which has been reintroduced in Congress by Rep. John Conyers, Jr.

“If we had a single payer Medicare for all plan – from life to death – it would reduce the expenses of our healthcare by $400 billion a year,” Scott said. “No disputing that figure and we would cover everybody.”

Scott said the Patient Protection and Affordable Care Act (PPACA), more commonly known as Obamacare, will reduce the number of uninsured persons in America but the law won’t help much with the cost of health insurance. The new law will go into effect fully in 2014.

There currently are 50 million uninsured Americans, according to Scott.

“The PPACA is going to insure a lot more people in this country,” he said. “It’s going to bring the 50 million figure down – and the figures are disputed – to somewhere between 20 and 30 million that still won’t have health care insurance for a variety of reasons.”

He said the PPACA will expand Medicaid to 139 percent of the federal poverty level.

“If I remember correctly, it’s like $11,000 for an individual and $32,000 for a family,” Scott said.

“If your income level is below that, you’re going to be eligible for Medicaid, not Medicare, but Medicaid.”

The problem with Medicaid, Scott said, is that it covers only 75 percent of hospital costs. Many specialists will not accept it and benefits vary state by state.

Fifty percent of the PPACA’s funding will come from new taxes, he said.

The other fifty percent will come from a reduction in payments to Medicare.

The answer, he said, is HR 676, which would establish expanded and improved Medicare for all. Comprehensive coverage would include outpatient, inpatient, emergency department, medications, durable medical equipment, long term care, mental health, dental care, substance abuse, chiropractic care, basic vision care and hearing. There would be no cost sharing, deductibles or co-pays.

“Insurance is basically voluntary socialism with a surcharge,” Scott said.

He added that lack of insurance leads to bankruptcy and the market is not the solution.

The country with the 40th highest life expectancy is the United States, where people live to be 77.8-years-old. There are 50,000 deaths each year due to lack of access to adequate care.

The PPACA would rely on Medicaid and private health insurance. Relying on private health insurance would mandate the purchase of a bad product, according to Scott.

He encouraged the audience of 85 persons to contact their congressmen about voting for HR 676.

After Scott’s speech, there was a panel discussion involving Dr. Bob Albert, dean of Morehead State University’s College of Business and Public Affairs; Sonny Jones, chief financial officer and vice president of St. Claire Regional Medical Center; Dr. Anthony Weaver of St. Claire’s medical staff; and Dr. Bo Shi, assistant professor of finance at MSU.

In Dr. Weaver’s opening statement, he said, “Insurance companies have too much money to be phased out.”

“We are unwilling to accept the lifestyles of people. Let’s face it, if we’re all under a single plan, we’re all responsible for the stupidity of each other and we just can’t handle that,” Weaver said. “Insurance companies have allowed us to escape from that by changing our rates.”

Questions ranged from how Medicare works to how wellness plans do not save money for health insurance companies.

One audience member asked what chance she has of seeing any valid changes in America’s health care system in her lifetime.

“The people who seem to be in the know say by 2017, when the Affordable Care Act has really kicked in, and all these things have taken place, [health care’s share of the] gross domestic product consumption is going to be about 20 percent,” Scott said. “And I’m told that’s the absolute breaking point for our country.”

Nicole Back is a staff writer at The Morehead News.

http://themoreheadnews.com/local/x564659446/Scott-says-Obamacare-not-the-answer-to-full-coverage

CMS limits innovative designs to multi-payer models

State Innovation Models Initiative: General Information

Centers for Medicare and Medicaid Services
Center for Medicare and Medicaid Innovation, February 2013

The State Innovation Models Initiative is providing up to $300 million to support the development and testing of state-based models for multi-payer payment and health care delivery system transformation with the aim of improving health system performance for residents of participating states. The projects will be broad based and focus on people enrolled in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).

Background

The Innovation Center created the State Innovation Models initiative for states that are prepared for or committed to planning, designing, testing, and supporting evaluation of new payment and service delivery models in the context of larger health system transformation. The Innovation Center is interested in testing innovative payment and service delivery models that have the potential to lower costs for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), while maintaining or improving quality of care for program beneficiaries. The goal is to create multi-payer models with a broad mission to raise community health status and reduce long term health risks for beneficiaries of Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).

For more information, click on “Fact Sheet: State Innovation Models Initiative” at this link: http://innovation.cms.gov/initiatives/State-Innovations/

And…

State Receives $937,691 Grant to Continue Healthcare Transformation Efforts

State of Hawaii, February 21, 2013

The State of Hawaii once again has an opportunity to demonstrate its leadership in healthcare transformation. The Centers for Medicare and Medicaid Services (CMS) today announced that Hawaii was awarded a planning grant worth $937,691 as part of the agency’s State Innovations Model (SIM) initiative.

Beginning April 1, the state will have six months to design and submit a State Healthcare Innovation Plan, built around multipayer payment and healthcare delivery system transformation.

“Transforming our state’s healthcare system continues to be a focus of my New Day plan, and under the leadership of Beth Giesting, the state’s healthcare transformation coordinator, we’ve made great strides over the last year,” said Gov. Neil Abercrombie.

http://governor.hawaii.gov/state-receives-937691-grant-to-continue-healthcare-transformation-efforts/

Comment:

By Don McCanne, M.D.

Section 3021 of the Affordable Care Act establishes the Center for Medicare and Medicaid Innovation. Its purpose is “to test innovative payment and service delivery models to reduce program expenditures under the applicable titles (Medicare and Medicaid) while preserving or enhancing the quality of care furnished to individuals under such titles.”

The law lists “opportunities” for models to be tested, including “allowing states to test and evaluate systems of all-payer payment reform for the medical care of residents of the state.” Of note, nowhere does section 3021 limit the innovative testing to “multi-payer models.” Yet CMS now states that “the goal is to create multi-payer models.”

To show how important this administrative decision is, look at Hawaii. Gov. Neil Abercrombie has been a single payer supporter. He was a cosponsor of H.R. 676, John Conyers’ single payer bill, when he was a member of Congress. Efforts have recently been underway to move Hawaii towards becoming a single payer state. But now with this grant, Hawaii is going to “design and submit a State Healthcare Innovation Plan, built around multipayer payment and healthcare delivery system transformation.”

The CMS fact sheet (link above) list other states receiving funds under this program, including states that were thought to be in a position to lead the way on single payer reform, such as Vermont and California.

According to the fact sheet, Vermont has been awarded a $45 million grant to establish “three models: a shared-savings ACO model that involves integration of payment and services across an entire delivery system; a bundled payment model that involve integration of payment and services across multiple independent providers; and a pay-for-performance model aimed at improving the quality, performance, and efficiency of individual providers.” That doesn’t exactly have a single payer ring to it.

Although the law did not limit the innovations to be developed and tested to multi-payer models, the Obama administration has. Once again, single payer advocates have been denied a seat at the table. What are we going to do about it?

CMS limits innovative designs to multi-payer models

State Innovation Models Initiative: General Information

Centers for Medicare and Medicaid Services
Center for Medicare and Medicaid Innovation, February 2013
The State Innovation Models Initiative is providing up to $300 million to support the development and testing of state-based models for multi-payer payment and health care delivery system transformation with the aim of improving health system performance for residents of participating states. The projects will be broad based and focus on people enrolled in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
Background
The Innovation Center created the State Innovation Models initiative for states that are prepared for or committed to planning, designing, testing, and supporting evaluation of new payment and service delivery models in the context of larger health system transformation. The Innovation Center is interested in testing innovative payment and service delivery models that have the potential to lower costs for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), while maintaining or improving quality of care for program beneficiaries. The goal is to create multi-payer models with a broad mission to raise community health status and reduce long term health risks for beneficiaries of Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).
For more information, click on “Fact Sheet: State Innovation Models Initiative” at this link: http://innovation.cms.gov/initiatives/State-Innovations/
And…

State Receives $937,691 Grant to Continue Healthcare Transformation Efforts

State of Hawaii, February 21, 2013
The State of Hawaii once again has an opportunity to demonstrate its leadership in healthcare transformation. The Centers for Medicare and Medicaid Services (CMS) today announced that Hawaii was awarded a planning grant worth $937,691 as part of the agency’s State Innovations Model (SIM) initiative.
Beginning April 1, the state will have six months to design and submit a State Healthcare Innovation Plan, built around multipayer payment and healthcare delivery system transformation.
“Transforming our state’s healthcare system continues to be a focus of my New Day plan, and under the leadership of Beth Giesting, the state’s healthcare transformation coordinator, we’ve made great strides over the last year,” said Gov. Neil Abercrombie.
http://governor.hawaii.gov/state-receives-937691-grant-to-continue-healt…

Section 3021 of the Affordable Care Act establishes the Center for Medicare and Medicaid Innovation. Its purpose is “to test innovative payment and service delivery models to reduce program expenditures under the applicable titles (Medicare and Medicaid) while preserving or enhancing the quality of care furnished to individuals under such titles.”
The law lists “opportunities” for models to be tested, including “allowing states to test and evaluate systems of all-payer payment reform for the medical care of residents of the state.” Of note, nowhere does section 3021 limit the innovative testing to “multi-payer models.” Yet CMS now states that “the goal is to create multi-payer models.”
To show how important this administrative decision is, look at Hawaii. Gov. Neil Abercrombie has been a single payer supporter. He was a cosponsor of H.R. 676, John Conyers’ single payer bill, when he was a member of Congress. Efforts have recently been underway to move Hawaii towards becoming a single payer state. But now with this grant, Hawaii is going to “design and submit a State Healthcare Innovation Plan, built around multipayer payment and healthcare delivery system transformation.”
The CMS fact sheet (link above) list other states receiving funds under this program, including states that were thought to be in a position to lead the way on single payer reform, such as Vermont and California.
According to the fact sheet, Vermont has been awarded a $45 million grant to establish “three models: a shared-savings ACO model that involves integration of payment and services across an entire delivery system; a bundled payment model that involve integration of payment and services across multiple independent providers; and a pay-for-performance model aimed at improving the quality, performance, and efficiency of individual providers.” That doesn’t exactly have a single payer ring to it.
Although the law did not limit the innovations to be developed and tested to multi-payer models, the Obama administration has. Once again, single payer advocates have been denied a seat at the table. What are we going to do about it?

Intensity bias in risk adjustment

Observational intensity bias associated with illness adjustment: cross sectional analysis of insurance claims

By John E Wennberg, Douglas O Staiger, Sandra M Sharp, Daniel J Gottlieb, Gwyn Bevan, Klim McPherson, H Gilbert Welch
BMJ, February 21, 2013

Conclusions

We have shown that a method of risk adjustment that used data on diagnoses and controlled for the effects of supply, by using data on the frequency of visits by physicians in the year prior to a patient’s death, was more efficient than the standard method; but that still accounted for less than 25% of geographic variation in age, sex, and race adjusted mortality among fee for service Medicare beneficiaries. Thus, our study points to the importance of developing risk adjustment methods that better explain variation in age, sex, and race mortality rates and suggests that these will be found by using data that are clearly independent of the effects of supply.

http://www.bmj.com/content/346/bmj.f549#aff-1

And…

Dartmouth Study Questions Widely Used Risk-Adjustment Methods

By Jordan Rau
Kaiser Health News, February 21, 2013

In evaluating a hospital and health plan in the increasingly expensive U.S. health care system, federal officials and researchers often first factor in an assessment of how sick their patients are. A new study, however, challenges the validity of several widely used “risk-adjustment” efforts and suggests that Medicare is overpaying some plans and facilities while underpaying others.

Without these risk adjustments to level the comparisons, a hospital with more frail and very ill patients—who are more likely to die — might incorrectly appear to be doing a worse job than a hospital with healthier patients — who are more likely to survive.

Medicare risk-adjusts when determining how much to pay private Medicare Advantage insurance plans. It also used risk adjustments when deciding that 2,217 hospitals should be penalized for having high rates of patient readmissions.  Risk adjustment is also a key component in new models of delivering care, such as the accountable care organizations.

The new study by the Dartmouth Atlas Project, published today in the health journal BMJ, faults the practice of trying to assess how sick patients are by looking at records to see patient diagnoses. The authors argue that the more times patients see doctors or get tests, the more new diagnoses they are given. “The more one looks, the more one finds,” the authors wrote. The Atlas researchers have asserted in three decades of research that areas of the country with gluts of hospital beds, specialists and other providers tend to deliver more care, whether it’s needed or not.

“You would think sicker places would have higher visit rates, but they don’t,” said Dr. John Wennberg, the lead author and the founder of the Atlas.

Here’s how their latest study worked: The researchers examined Medicare records for more than 5 million beneficiaries in 306 different regions of the country. They looked at three different formulas commonly used to assess how sick patients are, each based on the number and nature of diagnoses for patients as well their age, race and sex. Medicare uses one of those methods, known as “hierarchical condition categories” (HCC) to adjust for risk.

The researchers also analyzed the death rates of patient populations in each of the 306 regions. They found that the sickness of the patients explained between 10 and 12 percent of the discrepancy between places with high mortality rates and those with low mortality rates. But there was still a wide spread between regions of the country. For instance, under the HCC method, the death rate in the Salt Lake City region was 59.3 patients per 1,000—much higher than around Miami, where the death rate was 32.6 patients per 1,000. If that difference were accurate, then it would appear that patients in Salt Lake City were getting astoundingly worse care than in Miami—something that the researchers considered implausible.

Next, the researchers looked at the number of physician visits the patients had in the previous year. They then used statistical methods to “correct” the sickness rates, essentially reclassifying those patients with lots of excess physician visits as less sick than they would appear based by their diagnoses alone.

When the researchers used this revised metric to look at regional death rates, they now found it explained between 21 percent and 24 percent of the differences between high-mortality and low-mortality areas—twice as much as the standard risk-adjustment methods explained. Once visits were factored into the equation, Salt Lake City’s death rate dropped to 51.8 patients per 1,000 and Miami’s rate rose to 47.3 percent. That was much closer than before, although there remained an unexplained variation.

In a phone interview, Wennberg said the paper showed that the government and others need to refine the methods of adjusting for risk. “The way we’re doing it now has a lot of problems,” he said.

http://capsules.kaiserhealthnews.org/index.php/2013/02/dartmouth-study-questions-widely-used-risk-adjustment-methods/

Comment:

By Don McCanne, M.D.

Private insurers pride themselves on market innovation. They will always find ways to reduce the amount that they spend on patients. They use devious methods to selectively enroll healthier individuals while receiving payments that are more appropriate for a mixture of both the sick and the healthy. When efforts are made by means of risk adjustment to modify payments to compensate for this injustice, insurers will use data manipulations to make their patients appear to be even sicker than they are in order to receive extra payments for their care.

This study by John Wennberg and his colleagues demonstrates that the differing regional rates of visits by physicians introduces a bias that makes it appear that regions with lower visits by physicians have higher costs and higher mortality rates, and vice versa. They conclude that correcting for such variations in intensity of patient observation (physician visit rates) would improve current risk adjustment methodologies, but that this would still account for “less than 25% of geographic variation in age, sex, and race adjusted mortality among fee for service Medicare beneficiaries.”

We already know that the private Medicare Advantage plans play games with risk adjustment. The Affordable Care Act will require risk adjustment between the private plans offered by the state insurance exchanges, and we can anticipate that they, too, will game the system.

Will this latest study finally bring us a risk adjustment process that the insurers cannot game? Unlikely. As more data are added, such as the intensity of patient observation suggested by this study, the administrative complexity increases, while the insurers find ever more not-yet-patched holes in the risk adjustment infrastructure.

As long as individual patients are linked to individual private plans, there will always be intermediaries – the private insurers – who will manipulate the system to their own benefit. We should remove these superfluous, administratively inefficient middlemen and replace them with our own public administrators. The task of negotiating appropriate payments with health care professionals and institutions would be much simpler if we got the private intermediaries out of the way.

Intensity bias in risk adjustment

Observational intensity bias associated with illness adjustment: cross sectional analysis of insurance claims

By John E Wennberg, Douglas O Staiger, Sandra M Sharp, Daniel J Gottlieb, Gwyn Bevan, Klim McPherson, H Gilbert Welch
BMJ, February 21, 2013
Conclusions
We have shown that a method of risk adjustment that used data on diagnoses and controlled for the effects of supply, by using data on the frequency of visits by physicians in the year prior to a patient’s death, was more efficient than the standard method; but that still accounted for less than 25% of geographic variation in age, sex, and race adjusted mortality among fee for service Medicare beneficiaries. Thus, our study points to the importance of developing risk adjustment methods that better explain variation in age, sex, and race mortality rates and suggests that these will be found by using data that are clearly independent of the effects of supply.
http://www.bmj.com/content/346/bmj.f549#aff-1
And…

Dartmouth Study Questions Widely Used Risk-Adjustment Methods

By Jordan Rau
Kaiser Health News, February 21, 2013
In evaluating a hospital and health plan in the increasingly expensive U.S. health care system, federal officials and researchers often first factor in an assessment of how sick their patients are. A new study, however, challenges the validity of several widely used “risk-adjustment” efforts and suggests that Medicare is overpaying some plans and facilities while underpaying others.
Without these risk adjustments to level the comparisons, a hospital with more frail and very ill patients—who are more likely to die — might incorrectly appear to be doing a worse job than a hospital with healthier patients — who are more likely to survive.
Medicare risk-adjusts when determining how much to pay private Medicare Advantage insurance plans. It also used risk adjustments when deciding that 2,217 hospitals should be penalized for having high rates of patient readmissions.  Risk adjustment is also a key component in new models of delivering care, such as the accountable care organizations.
The new study by the Dartmouth Atlas Project, published today in the health journal BMJ, faults the practice of trying to assess how sick patients are by looking at records to see patient diagnoses. The authors argue that the more times patients see doctors or get tests, the more new diagnoses they are given. “The more one looks, the more one finds,” the authors wrote. The Atlas researchers have asserted in three decades of research that areas of the country with gluts of hospital beds, specialists and other providers tend to deliver more care, whether it’s needed or not.
“You would think sicker places would have higher visit rates, but they don’t,” said Dr. John Wennberg, the lead author and the founder of the Atlas.
Here’s how their latest study worked: The researchers examined Medicare records for more than 5 million beneficiaries in 306 different regions of the country. They looked at three different formulas commonly used to assess how sick patients are, each based on the number and nature of diagnoses for patients as well their age, race and sex. Medicare uses one of those methods, known as “hierarchical condition categories” (HCC) to adjust for risk.
The researchers also analyzed the death rates of patient populations in each of the 306 regions. They found that the sickness of the patients explained between 10 and 12 percent of the discrepancy between places with high mortality rates and those with low mortality rates. But there was still a wide spread between regions of the country. For instance, under the HCC method, the death rate in the Salt Lake City region was 59.3 patients per 1,000—much higher than around Miami, where the death rate was 32.6 patients per 1,000. If that difference were accurate, then it would appear that patients in Salt Lake City were getting astoundingly worse care than in Miami—something that the researchers considered implausible.
Next, the researchers looked at the number of physician visits the patients had in the previous year. They then used statistical methods to “correct” the sickness rates, essentially reclassifying those patients with lots of excess physician visits as less sick than they would appear based by their diagnoses alone.
When the researchers used this revised metric to look at regional death rates, they now found it explained between 21 percent and 24 percent of the differences between high-mortality and low-mortality areas—twice as much as the standard risk-adjustment methods explained. Once visits were factored into the equation, Salt Lake City’s death rate dropped to 51.8 patients per 1,000 and Miami’s rate rose to 47.3 percent. That was much closer than before, although there remained an unexplained variation.
In a phone interview, Wennberg said the paper showed that the government and others need to refine the methods of adjusting for risk. “The way we’re doing it now has a lot of problems,” he said.
http://capsules.kaiserhealthnews.org/index.php/2013/02/dartmouth-study-q…

Private insurers pride themselves on market innovation. They will always find ways to reduce the amount that they spend on patients. They use devious methods to selectively enroll healthier individuals while receiving payments that are more appropriate for a mixture of both the sick and the healthy. When efforts are made by means of risk adjustment to modify payments to compensate for this injustice, insurers will use data manipulations to make their patients appear to be even sicker than they are in order to receive extra payments for their care.
This study by John Wennberg and his colleagues demonstrates that the differing regional rates of visits by physicians introduces a bias that makes it appear that regions with lower visits by physicians have higher costs and higher mortality rates, and vice versa. They conclude that correcting for such variations in intensity of patient observation (physician visit rates) would improve current risk adjustment methodologies, but that this would still account for “less than 25% of geographic variation in age, sex, and race adjusted mortality among fee for service Medicare beneficiaries.”
We already know that the private Medicare Advantage plans play games with risk adjustment. The Affordable Care Act will require risk adjustment between the private plans offered by the state insurance exchanges, and we can anticipate that they, too, will game the system.
Will this latest study finally bring us a risk adjustment process that the insurers cannot game? Unlikely. As more data are added, such as the intensity of patient observation suggested by this study, the administrative complexity increases, while the insurers find ever more not-yet-patched holes in the risk adjustment infrastructure.
As long as individual patients are linked to individual private plans, there will always be intermediaries – the private insurers – who will manipulate the system to their own benefit. We should remove these superfluous, administratively inefficient middlemen and replace them with our own public administrators. The task of negotiating appropriate payments with health care professionals and institutions would be much simpler if we got the private intermediaries out of the way.

Young immigrants excluded from ACA benefits

Young immigrants shut out of health reform

By Drew Joseph
San Francisco Chronicle, February 19, 2013

California’s young immigrants who have been granted reprieves to stay in the country stand to gain little from the federal health reform law that the state Legislature is working to implement.

The Affordable Care Act excludes illegal immigrants from accessing the law’s benefits, but some immigrant and health advocates are angry that the young people known as Dreamers have been left out, saying the policy contradicts the law’s intent of expanding coverage to more people.

“It really defeats what the goals of the ACA were to begin with,” said Sonal Ambegaokar, health policy attorney at the National Immigration Law Center.

The Deferred Action for Childhood Arrivals program (DACA), which was announced in June, allows people who were brought into the United States when they were young to stay for two years if they pursue education or military service. The young people eligible for the program are known as Dreamers, in reference to the proposed Dream Act – legislation that would give them a path to citizenship.

More than a quarter of the 1.76 million people who are or will be eligible to apply for DACA – about 460,000 immigrants – live in California, according to an August 2012 Migration Policy Institute report.

After the DACA program was announced, the Obama administration clarified the policy, specifying that people to whom DACA applies will not qualify for Medicaid now or as the health law is implemented. And while many Americans will receive subsidies to buy insurance through their state’s exchanges – the insurance marketplaces established by the Affordable Care Act – people granted DACA approval will not be able to purchase coverage through those exchanges even with their own money.

Critics say the rule does not make sense. They argue that people approved for the program are lawfully present in the country, but when it comes to health care, they are treated as undocumented immigrants and will face a harder time finding coverage.

http://www.sfgate.com/default/article/Young-immigrants-shut-out-of-health-reform-4292195.php

And…

Health Care for DACA Grantees

National Immigration Law Center, January 2013

What health insurance options are available to DACA grantees under ACA?

Until recently, like other individuals granted deferred action, DACA grantees would have had access to all the new health insurance options under ACA as “lawfully present” individuals. Due to a rule change by the Obama administration in August 2012, DACA grantees were specifically excluded from the ACA as well as nonemergency Medicaid and CHIP, and have the same access to health insurance as do undocumented individuals despite being granted deferred action by the U.S. Department of Homeland Security. As a result of the rule change, DACA grantees who have valid work permits and valid Social Security numbers (SSNs) and who are otherwise eligible:

* Cannot enroll today in affordable coverage through Medicaid or CHIP unless their state provides coverage to a broader group of lawfully present individuals.

* Do not have access today to prenatal care through Medicaid or CHIP unless their state provides coverage for pregnant women regardless of the woman’s immigration status.

* Cannot apply today for private health insurance under Pre-Existing Condition Insurance Plan (PCIP) unless their state has a similar health insurance program that is available regardless of status.

* Will not be able to buy affordable private health insurance, even at full cost, in the new insurance marketplaces created by ACA after 2014.

* Will not be eligible for federal tax credits (or subsidies) to help make private health insurance affordable after 2014, even if they are paying federal taxes.

* Will not be eligible for the Basic Health Plan if their state has this program.

* Likely will not be required to have health insurance after 2014.

What health care options do DACA grantees and undocumented individuals have today?

* Emergency-room care.

* Community health centers and free clinics.

* Public and safety-net hospitals.

* Public health services (immunizations, treatment of communicable diseases such as tuberculosis, HIV, or sexually transmitted diseases).

* Emergency treatment under the emergency Medicaid program, including labor and delivery for pregnancy.

* Hospital and community health centers’ financial assistance programs (also known as “charity care”).

* Private health insurance.

http://www.nilc.org/facts-health.html

Comment:

By Don McCanne, M.D.

Young immigrant children who were brought to this country and remained here without proper documentation have been raised here and are as much a part of our culture as are legal citizens. The Dream Act has been proposed to grant these individuals legal status to match the reality that this is their country.

Because of the failure of Congress to pass the Dream Act, President Obama has established the Deferred Action for Childhood Arrivals program (DACA). This is not a replacement of the Dream Act, but it is aimed at the same demographic, and it does provide temporary, potentially renewable legal status.

It seems that these individuals under DACA should have the same access to health care as other documented immigrants. However, it was decided that they would specifically be excluded from the provisions of the Affordable Care Act. They are not totally excluded from all health care since they have the same access as undocumented immigrants – those services and facilities listed above.

Although some might say that these services are adequate for this population, most of us want not want these limitations placed on our health care (with the exception of being able to purchase insurance outside of the exchanges and without subsidies – a problem for this population).

Immigration policy and health policy are two different topics. They should be dealt with separately. Right now, Congress is engaged in a process to reform immigration, and hopefully our lawmakers will demonstrate wisdom and benevolence in their decisions.

Health care is another matter. Everyone should have whatever health care is necessary. Period. Our laws and regulations and their implementation should have a goal of making certain that people get the care that they need. The Obama administration’s interpretation of their own DACA program falls short.

Under an optimally designed single payer program, whoever you are, if you need care, you get care. That’s the way it should be.

Chart of the day: Medicare’s administrative costs, explained

By Austin Frakt
The Incidental Economist, Feb. 18, 2013

In the Journal of Health Politics, Policy and Law, Kip Sullivan of the Minnesota chapter of Physicians for a National Health Program thinks almost everyone doesn’t understand Medicare’s administrative costs. He has problems of varying degree with the writing of Greg Mankiw, Paul Krugman, John Goodman, Thomas Saving, Dianne Archer, the Kaiser Family Foundation, and Ezra Klein, whom he quotes at length and then responds,

If by “premium collection” Klein meant taxes, he was wrong; a portion of IRS costs are allocated to Medicare’s overhead by OACT [CMS’s Office of the Actuary]. If by “premium collection” Klein meant Part B premiums, he was wrong on two counts: (1) the Social Security Administration, not the IRS, calculates and collects Part B premiums for the vast majority of Medicare enrollees, and the Railroad Retirement Board does so for former railroad workers; and (2) a portion of the SSA’s and the railroad board’s costs are allocated to Medicare’s overhead by OACT. Klein’s statement that the cost of processing claims for the traditional Medicare program does not appear in Medicare’s administrative expenditures is also incorrect. OACT does include the cost of claims processing, which is done by what used to be called “carriers” and “intermediaries” and are now called “Medicare administrative contractors.” […]

The federal agencies for which Treasury collects expenditure data, and which are therefore included in the trustees’ reports on Medicare administrative spending, include the Treasury Department, the IRS, the SSA, CMS, the Department of Health and Human Services, the Medicare Payment Advisory Commission, the Area Agency on Aging, the Department of Justice, the Federal Bureau of Investigation, and the Railroad Retirement Board (see the appendix). In addition, the appendix lists “quality improvement organizations,” which are private-sector organizations with which CMS contracts. The appendix also indicates that payments by CMS to insurance companies that process claims for Medicare’s original fee-for- service program are included in the trustees’ definition, as are the cost of buildings that house CMS staff and the cost of the numerous demonstration projects Congress requires CMS to conduct.

According to Sullivan, the Treasury’s calculation of administrative costs does not include those incurred by Medicare Advantage and private, Part D (drug) plans. Those are, however, included in the administrative costs calculated for the National Health Expenditure Accounts (NHEA). Examining the two flavors of administrative costs is instructive. I’ve graphed the figures Sullivan includes in his Table 1, below.

The trustees’ and NHEA measures were fairly close until the 1980s. Then they diverged as enrollment grew in Medicare Advantage and its predecessor programs. In 2006, Part D drug plans became available and the two types of administrative costs diverged further still. As traditional Medicare’s administrative costs went down, those of private plans grew.

Sullivan writes, “This enormous disparity between two measures that used to be almost identical should long ago have triggered inquiries within Congress and the US health policy community as to whether the higher administrative costs associated with the growing privatization of Medicare are justified.”

http://theincidentaleconomist.com/wordpress/chart-of-the-day-medicares-administrative-costs-explained/