Summary: Two recent articles characterize systemic trends and illustrate one patient’s struggles with corporate goals, values, and tactics permeating health insurance.

Value-Based Payment Is the New For-Profit Health Care Industry, Truthout, September 8, 2022, by Kip Sullivan, Kay Tillow, and Ana Malinow

Like the insurance industry, the VBP industry hovers over doctors and patients and seeks to influence (and in some cases, dictate) doctor-patient decision-making, and in the process diverts resources away from medical care. Unlike the insurance industry, the VBP industry is almost invisible to the public. It consists of a heterogeneous mix of corporations that own, contract with, manage, consult with, or sell services to providers (doctors and hospitals). Some, such as “accountable care organizations,” mimic insurance companies. Others are consultants, such as Privia, venture capitalists like General Catalyst, or firms selling management services, such as agilon health. Large pieces of this new industry are being bought out by companies like Walgreens and Amazon. …

The phrase “value-based payment” emerged in the 2000s as the label for all methods of payment that shift insurance risk from insurance companies and public programs like Medicare onto health care providers. Risk is shifted by paying providers a set fee per patient per year (usually called “capitation”) rather than a fee for each service providers render (known as “fee-for-service”), or by tying provider payment to the profits and losses of organizations they contract with. VBP advocates claim, without evidence, that fee-for-service (FFS) induces doctors to order services patients don’t need and that shifting risk to providers will induce them to improve both components of value — cost and quality. …

The speakers at the [National Primary Care] “summit,” who included virtually every prominent advocate of VBP from the public and private sectors, studiously avoided discussion of VBP’s underwhelming effect on the cost and quality of health care, and rarely mentioned its worst side effects. A few speakers expressed frustration at how long VBP was taking to prove it can work, but even these speakers refused to discuss the research. Rather than acknowledge failure and use their time together to analyze the reasons for failure, the 150 speakers concentrated instead on repeating VBP folklore (fee-for-service is the problem and VBP schemes are the answer) and reporting cherry-picked anecdotes.

Tackling cancer while battling the insurance system, The Washington Post, September 9, 2022, by Annabelle Gurwitch

Even plans that are supposed to save patients money can end up costing them dearly

“You’ll receive a bill, but don’t pay it,” my caller [from SavOnSP Specialty Pharmacy] said. “Working with us ensures that you have a zero co-pay.”

[A[ few weeks later my monthly shipment of medication arrived along with an invoice from Express Scripts for $4,445. It noted that I might not owe this amount; nevertheless, it had a detachable payment slip, and a return envelope was provided. Remembering the caller’s assurances, I tossed the bill into my ever-expanding, supersize file I’ve labeled “insurance gobbledygook.” But when I visited an ATM the next day, my balance was significantly lower than I expected. $4,445 had been deducted by Express Scripts….

I’d been entangled in an increasingly exploitative scheme. In what’s become a standard industry practice, pharmacy benefit managers (PBMs) contract with secretive third-party adjusters commonly called co-pay accumulators and maximizer programs to process “specialty medication” prescriptions, including biomarker-targeted therapies for lung cancer and other chronic and deadly diseases. Once a plan engages a co-pay accumulator or maximizer, these entities reclassify these medications (some of the priciest on the market) as “nonessential.” This allows plans to exploit a loophole in the Affordable Care Act: Coverage can be denied for therapies that a plan labels “nonessential,” and a plan can reset the member’s pharmaceutical benefit deductible and out-of-pocket maximum to any amount of their choosing.

Comment:

By Jim Kahn, M.D., M.P.H.

Sadly, US healthcare is increasingly distorted by a rising corporate presence, most of all for insurance but also for care. Corporations create a mythology of benefit for patients and apply aggressive business models and tactics to extract maximum profits, to the detriment of the rest of us.

The first article describes the feverish expansion of value-based payment, an array of funding mechanisms focused on capitation (named as such and de facto), with only one clear and consistent benefit: profits for corporate intermediaries. We’ve written often in HJM about the most egregious examples – Medicare Advantage, DCEs, and ACO reach (just search your emails or the HJM website). Traditional standards of evidence in medicine are routinely ignored. Instead, if a strategy is profitable we hear mindless and mind-numbing assurances that it’s beneficial. Yet often there is evidence of harm. And often there is no evidence at all, due in part to withholding of proper evaluation data by corporate interests resisting scrutiny.

The second article brings home how this ethic affects the individual, with a startling example of a women with cancer caught in a thoroughly confusing web of drug insurance entities. These layered intermediaries are proliferating out of control (pharmacy benefit managers, adjusters, accumulators, maximizers). Each complexity and inadequacy of drug insurance represents another business opportunity, a 3^rd and 4^th layer “remedy”. It’s a daunting challenge for anyone to understand the myriad drug insurance entities and the sequence of events described in the article. Perhaps the slimiest aspect is reclassifying a drug for cancer treatment as “nonessential” in order to burden the patient with costs far in excess of the deductible.

When will we transform our health insurance to elevate people over profits? And society over shareholders?

Single payer.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Summary: A survey of California physicians finds that Medicare fee-for-service payments, not keeping pace with inflation, don’t cover their costs to provide care. Big caveat: biased sampling — 88% of respondents don’t participate in FFS Medicare. Under single payer, payment rates would be negotiated with physicians, and fair for them.

Medicare / Physician Payment and Access to Care Survey, California Medical Association, August 29, 2022

Deeply alarmed about the growing financial instability of the Medicare physician payment system, the California Medical Association (CMA) recently surveyed physicians about the financial health of their practices and how Medicare payment rates are impacting access to care in their communities.

Since 2001, inflation has increased by 40%, yet physician Medicare payments have only increased by 7%. Today’s Medicare payments on average lag 40% behind the cost of providing care, while hospital and nursing home payments are indexed to inflation (and as a result have increased by 60% since 2001).

According to the CMA survey results, 76% of physicians report that Medicare fee-for-service payments do not cover their costs to provide care, with 61% reporting average revenue losses between 11-50%. And, 13% of physicians even report average revenue losses over 50%.

Forty-one percent of physicians report they are considering closing their practices to new Medicare patients. And, 87% report that low Medicare reimbursement rates coupled with the high costs to practice in California are negatively affecting the ability to recruit and retain physicians in their communities.

Comment:

By Don McCanne, M.D.

It is important to realize that of the 843 physician practices surveyed, 88% reported that they did not participate in the Medicare fee-for-service program, presumably traditional Medicare. No mention was made of private Medicare Advantage participation. Might one suspect that there was an element of bias?

Regardless, the Medicare program does have some very major deficiencies that would require more than a nominal overhaul, especially now that it has been severely damaged through the CMS push for privatization.  In contrast, a well-designed single payer system is a vastly superior system of financing health care for all, and it should have the support of the medical profession. This survey would suggest that “Medicare for All” might be a poor choice for a label, especially if we want the support of organized medicine. But everyone needs to understand the policies behind single payer and how they would work so well for each and every one of us as individuals, including the physicians. Then we would have to join together to make sure that is the system that the government implements.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Summary: Medicare Advantage has overwhelming problems, progressive health policy organizations agree. Can it be fixed with a comprehensive set of far-reaching reforms? Physicians for a National Health Program says no – it must be replaced.

Letter to CMS about Medicare Advantage, August 25, 2022, from Susan Rogers, President, PNHP

Administrator Chiquita Brooks-LaSure
Centers for Medicare & Medicaid Services

… Medicare Advantage plans have achieved profitability largely by gaming their risk pools, up-coding, and blunt restrictions on care including issuing millions of inappropriate denials for care that met Medicare coverage rules,¹⁴ and minimally if at all by improving care. ^15,16 Typical administrative costs for Medicare Advantage plans, including profits, have been in the 15-20% range^1,17, compared to around 2% for Traditional Medicare prior to the Affordable Care Act.²

It would be far more cost-effective for CMS to improve traditional Medicare by capping out-of-pocket costs and adding improved benefits within the Medicare fee-for-service system than to try to indirectly offer these improvements through private plans that require much higher overhead and introduce profiteers and perverse incentives into Medicare, enabling corporate fraud and abuse, raising cost to the Medicare Trust Fund, and worsening disparities in care.

These problems are not correctible within the competitive insurance business model, and the Medicare Advantage program should be terminated.

Sincerely,

Susan Rogers, M.D.
President, Physicians for a National Health Program

Comment:

By Susan Rogers, M.D. and Stephen Kemble, M.D.

CMS asked for public comments on how to improve Medicare Advantage. As described last week in HJM, one approach is to list the program’s serious problems, and recommend a broad set of reforms that together are so fundamental and pervasive as to constitute replacing MA.

Yet this may leave CMS with the idea that MA is salvageable, that implementing selected reforms from the list can result in an adequately functioning program. That’s wrong – MA is structurally flawed. Also, excellent reforms even if well-articulated will be weakened or undermined in practice.

Thus, PNHP in its letter to CMS calls for the end of Medicare Advantage. No reforms, no tweaks, instead a new program.

The PNHP letter documents widespread profiteering and abuse by MA plans (read it!), and concludes that these problems cannot be fixed. MA must be replaced.

What’s more likely to work: ambitious reforms, or a clean slate?

But let’s go further. It’s a mistake to isolate the privatization of Medicare (MA and ACO REACH for traditional Medicare) from the exact same issues that affect private health insurance and Medicaid. Removing voracious for-profit entities from Medicare does not advance us to single payer unless we remove them from all health insurance. And saving Medicare does not prevent worsening destruction of other components of our so-called healthcare system. Private equity, venture capitalists and others involved in Medicare are also involved in hospitals, job-based insurance, pharmacy benefit management, and so on. The problem with Medicare is just one metastatic lesion in an entire industry riddled with this cancer. Removing one lesion does not cure the cancer.

That’s why we need single payer.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Summary: Recently three leading progressive organizations (Just Care USA, Social Security Works, and Center for Health and Democracy) wrote to two federal health agency leads, offering an incisive litany of major flaws with Medicare Advantage. They proposed a 10-point reform plan, which would remove insurer profiteering, assure access, and improve quality of care. The plan would make Medicare a lot like its inevitable successor, single payer.

Letter to HHS & CMS on Reforming Medicare Advantage, August 31, 2022, by Diane Archer, Alex Lawson, and Wendell Potter

Dear Secretary Becerra and Administrator Brooks-LaSure:

… We agree with the HHS Office of the Inspector General, Government Accountability Office and MedPac that Medicare Advantage is in need of major reform to ensure the health and well-being of enrollees, promote health equity, and minimize legal violations, Including overpayments. As GAO reported: “The Medicare program, which includes MA, is on GAO’s High Risk List, because of its size, complexity, and susceptibility to mismanagement and improper payments. …

People from racial and ethnic minority groups, people with disabilities and serious health conditions, people of disadvantaged socioeconomic status, people with limited English proficiency, and people from rural communities disproportionately choose Medicare Advantage because of its low upfront cost. They are, however, at greater risk in Medicare Advantage than in traditional Medicare for two key reasons:

• Copays and deductibles impose a financial barrier to care, forcing the most vulnerable MA enrollees to go without needed care;
• Referral and prior authorization requirements, narrow networks, and widespread and persistent inappropriate delays and denials of care and coverage endanger care access for everyone, particularly vulnerable MA enrollees.

Fundamental problems with the current Medicare Advantage model drive health inequities and poor health outcomes for people with complex conditions. The biggest problem is the risk-adjusted capitated payment model. Medicare Advantage plans that: 1. Attract a disproportionate number of enrollees in relatively good health and/or 2. Delay and deny care inappropriately and/or 3. Do not include high quality specialists and specialty hospitals in their networks, can be sure to profit handsomely. …

We propose a suite of ten changes to improve health equity, reduce Medicare Advantage threats, enable appropriate CMS oversight, and minimize health insurer violations in Medicare Advantage.

1. Change the way the government pays Medicare Advantage plans.

The government should pay MA plans so that they do not have a financial disincentive to cover care for people with costly and complex conditions. Prospective payments, unrelated to actual medical claims, create a powerful financial incentive for MA plans to impede access to high-value care for enrollees with complex conditions in order to maximize profits.

2. Base payments to MA plans on the cost of services MA plans cover plus a reasonable fee for administration and a global cap.

3. Require Medicare Advantage plans that pay providers on a fee-for-service basis to use traditional Medicare’s fee schedule.

4. Require MA plans to include all centers of excellence in their networks and disclose out-of-pocket costs for people with complex conditions.

5. Standardize MA coverage rules and cost-sharing design.

6. Ensure appropriate oversight of MA.

The GAO has found that CMS has not validated MA patient encounter data as needed and recommended. In a recent House Ways and Means Subcommittee on Oversight and Investigations hearing, MedPAC reported that “After a decade, MA plans are “not producing complete and accurate enough records needed for MedPAC to conduct oversight activities

7. Do not assume value in MA, since it cannot be measured.

MedPAC has said repeatedly that MA quality cannot be measured.

8. Rethink Medicare Advantage networks.

CMS should stop allowing Medicare Advantage plans, except those that are fully integrated health systems, to design their own provider networks and require them to cover care from all Medicare providers.

9. Rethink key consumer information regarding Medicare Advantage and overhaul MA marketing to minimize deception.

10. Level the playing field with traditional Medicare and ensure health equity in MA.

We urge the government to put an out-of-pocket cap in traditional Medicare so that traditional Medicare is a meaningful choice for everyone with Medicare, including people with low incomes, people in rural communities, people from racial and ethnic minority groups, and people with complex conditions. Without that out-of-pocket cap, the hundreds of thousands of people who face inappropriate delays and denials of care in Medicare Advantage too often are deprived a meaningful choice of traditional Medicare.

Comment:

By Jim Kahn, M.D., M.P.H.

This impressive letter assembles key evidence on the failings of Medicare Advantage – how it costs too much, imposes barriers to care access, and fails to assure quality. The problems are structural and thus require aggressive reforms, such as changing how plans are paid.

The proposed changes would move Medicare Advantage (and Medicare) much close to single payer, by removing excessive profit-taking by insurers, standardizing coverage and provider payments, and collecting clinical data to measure and improve quality. The major difference is that even an improved Medicare for seniors and the long-term disabled would not create the fairness, efficiency, and simplicity of an improved Medicare *for all*. That’s single payer.

For those interested in the numbers on Medicare finances, see HJM pieces on how Medicare Advantage plans plunder government funds here and here, and on the financial barriers faced by sick beneficiaries here.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Jane Fonda Lymphoma Care, Instagram, September 2, 2022, @janefonda

So, my dear friends, I have something personal I want to share. I’ve been diagnosed with non-Hodgkin’s Lymphoma and have started chemo treatments.

This is a very treatable cancer. 80% of people survive, so I feel very lucky.

I’m also lucky because I have health insurance and access to the best doctors and treatments. I realize, and it’s painful, that I am privileged in this. Almost every family in America has had to deal with cancer at one time or another and far too many don’t have access to the quality health care I am receiving and this is not right.

Comment:

By Don McCanne, M.D.

We’ve been saying this just isn’t right, yet inertia persists. Does Jane Fonda’s voice, representing the lay public, make a difference?

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Summary: Decreased pay for hard-working pharmacists, and growing support for unions. Maybe there’s a connection.

U.S. Approval of Labor Unions at Highest Point Since 1965, Gallup, August 30, 2022, by Justin McCarthy

Seventy-one percent of Americans now approve of labor unions. Although statistically similar to last year’s 68%, it is up from 64% before the pandemic and is the highest Gallup has recorded on this measure since 1965. [The nadir was 48% in 2010.]

How Pharmacy Work Stopped Being So Great, New York Times, August 20, 2022, by Noam Scheiber

If any group of workers might have expected their pay to rise last year, it would arguably have been pharmacists. With many drugstores dispensing coronavirus tests and vaccines while filling hundreds of prescriptions each day, working as a pharmacist became a sleep-deprived, lunch-skipping frenzy — one in which ornery customers did not hesitate to vent their frustrations over the inevitable backups and bottlenecks.

“I was stressed all day long about giving immunizations,” said Amanda Poole, who left her job as a pharmacist at a CVS in Tuscaloosa, Ala., in June. “I’d look at patients and say to them, ‘I’d love to fill your prescriptions today, but there’s no way I can.’”

Yet pay for pharmacists, who typically spend six or seven years after high school working toward their professional degree, fell nearly 5 percent last year after adjusting for inflation. Dr. Poole said her pay, about $65 per hour, did not increase in more than four years — first at an independent pharmacy, then at CVS. …

[Pharmacy] consolidation generated large fees for workers at the top of the income ladder — financiers and corporate lawyers — but slowed the growth of retail outlets where pharmacists could find employment. After striking a deal in 2017 to acquire roughly 2,000 Rite Aid stores, Walgreens shut down more than 500 locations. It closed a few hundred more over the next three years.

Automation has further reduced demand for workers — many pharmacists now spend far less time processing insurance claims because software does it for them.

Pharmacies also faced external challenges. To hold down the cost of prescription drugs, insurance companies and employers rely on so-called pharmacy benefit managers to negotiate discounts with drugmakers and pharmacies. Consolidation among benefit managers gave them more leverage over pharmacies to drive prices lower. (CVS merged with a large benefits manager in 2007.)

Big drugstore chains often responded by trying to rein in labor costs, according to William Doucette, a professor of pharmacy practice at the University of Iowa. Several pharmacists who worked at Walgreens and CVS said the formulas their companies used to allocate labor resulted in low levels of staffing that were extremely difficult to increase.

Comment:

By Jim Kahn, M.D., M.P.H.

On this Labor Day, we see two conflicting trends. For labor advocates, the good news is that support for labor unions is at a 50-year high. The bad news is that corporations are lowering pay for pharmacists, despite the work burdens of COVID, a robust economy, and generally rising wages.

Corporate machinations that led to pharmacist pay cuts include buyouts and mergers, retail outlet reductions, and the invention of a new corporate intermediary, the pharmacy benefit manager. Corporate executives and shareholders gain; over-burdened front line providers lose.

Maybe these trends aren’t conflicting! Maybe growing support for unions reflects a rising awareness of vulnerability to the cost-cutting profit-maximizing actions of private equity and corporations more generally.

Single payer would incorporate collective bargaining for payment rates to professionals.

Single payer would remove the financial burdens of health care from workers (and everyone). Wages would rise with the end to employer premium payments.

Let’s keep up the struggle for better health care, better wages, and delinking of the two!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Summary: President Biden yesterday gave a critically important speech on the need to fight MAGA Republican efforts to destroy US democracy. Our health care system is similarly in need of improved alignment with democratic principles, achievable by adopting single payer.

Video of President Biden’s Speech on Preserving Democracy

Full Transcript of President Biden’s Speech in Philadelphia

“Donald Trump and the MAGA Republicans represent an extremism that threatens the very foundations of our republic.”

“The Republican Party today is dominated, driven, and intimidated by Donald Trump and the MAGA Republicans, and that is a threat to this country.”

“The soul of America is defined by the sacred proposition that all are created equal in the image of God. That all are entitled to be treated with decency, dignity, and respect. That all deserve justice and a shot at lives of prosperity and consequence. And that democracy…must be defended, for democracy makes all these things possible. Folks, it’s up to us.”

Comment:

By Jim Kahn, M.D., M.P.H.

Last night, President Biden delivered a powerful and much-needed speech about preserving US democracy. Standing in front of Philadelphia’s Independence Hall, arguably the birthplace of modern democracy, he forcefully called out MAGA Republicans for their attempts to replace loyalty to our republic and its rules of fair play with lies, manipulations, and violence in pursuit of absolute power, outside of the historic to-and-fro of our political parties. He publicly emphasized, for the first time, that his hopes of bipartisan cooperation have been dashed by the new Republican party’s “semi-fascism” (a term he used recently, not in the speech). We should be deeply grateful for his (finally) saying in this high-profile way what many historians and observers have long noted: Trump and his followers threaten to destroy our democracy. A functioning democracy is essential as we strive in the US for greater humanity and equity.

However, as I listened, I did wonder how the same words would apply to achieving an admirable, highly democracy-compatible US health care system. Here’s my adaptation:

“Our reliance on private insurers and price-gauging drug companies represents an extremism that threatens the very foundations of our health system.”

“The health sector today is dominated, driven, and intimidated by profiteers, and that is a threat to our medical care and our well-being.”

“The soul of America’s health care is defined by the sacred proposition that all deserve quality health care without financial burden. That all patients are entitled to be treated promptly, respectfully, and with clinical focus, undistracted by burdensome insurance rules or lack of insurance. That all deserve a shot at lives of excellent health and long duration. And that universal health system … must be defended, for covering everyone and removing excess profits make all these things possible. Folks, it’s up to us.”

Universal single payer health insurance, favoring people over profits, is well-aligned with the laudable democracy-preserving exhortations of President Biden. Let’s adopt it to enhance our personal and democratic well-being!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.