PNHP

Aetna Builds Empire: One Denial at A Time

Aetna Builds Empire: One Denial at A Time

By Donna Smith
MichaelMoore.com, August 22, 2012

It’s a business.  It’s big business, and it’s all about the money.  When plans for Aetna to purchase Coventry Health for $5.7 billion surfaced this week, all I could think about is where people like me –  Aetna’s insured – figure in the business models.  I’m not a patient in their calculations; I’m a medical loss.  And it just happens to be a deadly serious business.

So, in all the gobbledygook of business economics, the articles announcing the big Aetna buys Coventry deal, and foreshadowing of  the impact on Aetna’s bottom line, no one writes about the forbidden topic – what about the patients?  What will Aetna do to make sure that other costs – like medical loss ratios – are kept in check while still abiding by federal regulations under the Patient Protection and Affordable Care Act (PPACA)? 

How will the company keep its profits soaring and lower a leverage rate that this article says will rise in the wake of the Coventry Health deal?

From the article:  “Aetna Inc. (AET)’s $5.7 billion purchase of Coventry Health Care Inc. (CVH) will take the insurer from about the bottom to the top of leverage among its peers as it seeks to cut $400 million of costs…

“…Chief Executive Officer Mark Bertolini has pledged to trim leverage, the purchase’s profitability depends on cuts to management and technology spending that may be difficult to achieve, according to CreditSights Inc. The three major credit- ratings firms lowered their outlooks for the Hartford, Connecticut-based insurer after it announced the deal Aug. 20 and said it would take on $2.5 billion of debt to finance it.”

Already, Aetna and other major insurers have been creative in finding ways to classify wellness programs – like the Aetna Connections program – as part of the medical loss expense.  Disease management programs as well as some nurse hotlines provided by insurers were quickly reclassified as medical expenses following the ACA’s imposition of medical loss ratio requirements.  Those reclassifications often mean the actual healthcare claims – for medications, services and treatment provided by physicians and other healthcare providers – may be denied more frequently.  If the money can be kept “in house” by staffing an insurance company run disease management program or nurses hotline, fewer checks need to be sent outside the company.  Profits are protected, and profits are enhanced.

Aetna’s willingness to leverage and to “risk” so much in order to close the Coventry deal tells us much about the profits they expect to gain from it:  “In all, Coventry will add more than 5 million customers to the 26.7 million already on medical and prescription drug plans with Aetna, according to the companies’ quarterly reports.”  And the company is especially interested in gaining the Medicaid and Medicare (government paid programs) business.  Again, that’s cold, hard cash from outside the company.

So, in the short term, how does Aetna shore up the bottom line for investors?  How about denying some claims for medications?  Over the past three months, all three of the new medications my doctors ordered to help me with serious medical issues were initially denied.  One denial was overturned last week on appeal, but two still remain outstanding.  That’s a saving to Aetna of about $400 each month. And how does Aetna plan to cover the $2.5 billion in new debt they’ll take out to close the new business deal?  As one dear friend of mine said to me recently, “One denial at a time.”  It all adds up.

Hmmm, let’s do that math.  Aetna could deny just $400 for just a quarter of its 26.7 million current “customers,”  sign them up for $400 worth of disease management program support, and end up  paying off that debt in no time at all as they’d retain far more of their premium dollars in house rather than paying those dollars out.  $400 in profit times 6.5 million patients denied adds up to pay off that $2.5 billion debt.  

In the books it would look like they were fully compliant with the medical loss ratios required in the ACA.  But in the lives of patients, the pain and suffering could tell a much different story.  I know it does in mine.  That $400 denial causes me not just gut pain but consequences in my life that are far reaching beyond what needs to be listed here.

If you think your for-profit insurance company is very different from mine, think again.  But it’s sure deceptive, isn’t it, when just a few people have to be really hurt to allow for such massive profits.  It’s a business, folks.  And until we finally decide a Medicare for all for life system would better serve us all, the deceptions will grow ever more complex and deadly.

http://www.michaelmoore.com/words/mike-friends-blog/aetna-builds-empire-one-denial-time

The politics of health care

By Sara Stalman, M.D.
Bangor Daily News, Aug. 22, 2012

To write about health care and politics is to write about the sacred and the profane.

Our word “health” has the same etymological root as our words “whole” and “holy.” It reflects ancient awareness that we are designed and guided by forces — sacred forces — that, although beyond human comprehension, we know to be greater than ourselves and to be good. “Health” has “the Sacred” at its very root.

“Politics,” on the other hand, refers to activities related to governance. Our present political realities foster the greatest disparity of wealth between rich and poor that our country has ever known. One in five Mainers do not seek medical care because they cannot afford it. Many have health insurance but, with high monthly payments and high deductibles, they see doctors only in emergencies.

At the same time Maine is hemorrhaging health care dollars to out-of-state insurance profiteers. In 2002, between 38 cents and 50 cents of every dollar spent on health insurance left Maine, never to return. It’s only gotten worse.

Working people pay for everybody’s health care. That’s the reality. In a single-payer health insurance system those monies would go into a single “pot” directly paying all health care costs: minimal overhead, no insurance company profiteers, direct purchase of medications for the cheapest negotiated price. Our veterans receive health care through a single-payer system. Minus the prescription-drug nonsense, Medicare, too, is a single-payer system.

In 2001, Maine was the first state to be standing within a hair’s breadth of legislatively passing a single-payer health insurance system. By a vote of 76-54, “single-payer” passed with strong bipartisan support in the House. With the Senate set to vote in favor along party lines (18-16) then-Gov. Angus King vowed to veto the bill. The final senate vote of 15-17 precluded the governor’s veto but in no way changed the fact of his position.

The tremendous economic impact a single-payer health insurance system would have for Maine can be seen in the results of a feasibility study funded in 2002. Maine is a small state with an aging population and high incidence of chronic disease. Even so, a single-payer healthcare “pot” composed of just 4 percent of Maine working people’s income and 7 percent of business payroll could pay for everyone’s healthcare (individual choice of doctor, preventive care, medical and surgical care, eye and dental care, prescription drugs, and home care) and save $350 million in the first year alone. Minimal copays assessed on a sliding scale would be required, but the maximum individual expense would be $1,000 per year, with no family paying more than $2,000. (With single-payer health insurance, businesses, of course, would no longer have to pay the health care costs of Workers’ Compensation Insurance.)

With Maine’s population of 1.35 million people, $350 million would mean that, for each of us, $260 currently unavailable now would be spent in the local economy — buying food, clothing, textbooks, whatever. Money would be changing hands, Mainers’ hands, improving our quality of life and increasing our local tax base. Moreover, local school budgets would no longer be burdened with the costs of employee health benefits.

Demonstrating we could afford a single-payer health insurance system (and could pass legislation to create that system) put Maine in the sights of those monied interests still working to undermine health care reform. In 2002, the National Heritage Foundation arrived in the guise of the Maine Heritage Policy Center. Pouring money from around the country into our state, those interests continue to dominate Maine electoral politics — underwriting, for example, the candidacy of now-Gov. LePage.

In writing the Declaration of Independence, our American founding fathers asserted that government should recognize “Life, Liberty and the Pursuit of Happiness” as inalienable (Sacred) rights of humankind. Our Democracy was the first modern government based on that principle. Because powers of wealth and economic violence have threatened its founding principle since our Country began, our American Democracy (honored worldwide by men and women trusting that principle) remains a work in progress. Today, that threat can be seen at its most dangerous in the political battle over health care reform.

True Democracy demands a healthy electorate. It demands an electorate able to experience the Sacred, trust the Sacred, and act on that trust. Those opposing quality health care and a single-payer insurance system are typically accused of acting from profit motive alone.

More profoundly, opposition to health care reform is opposition to true Democracy: Democracy of the People, by the People, and for the People. All the People.

Sara Stalman practiced neuropsychiatry for 18 years. Her clinical research investigating the relationship between early childhood experience and adult chronic depressive disorders is available to both lay persons and health care professionals on her website, bornforjoy.com.

http://bangordailynews.com/2012/08/22/opinion/the-politics-of-health-care/

Global spending experiment in Massachusetts

Controlling Health Care Costs in Massachusetts With a Global Spending Target

By Robert Steinbrook, MD
JAMA, August 22, 2012
In July 2012, after years of consideration, Massachusetts enacted wide-ranging health care reform legislation that aims to control costs and improve quality. A signature feature of the act, signed into law by Deval Patrick, the state’s Democratic governor, on August 6, 2012, is the creation of an annual global spending target for total health care expenditures, which is tied to the growth rate of the state’s economy.
For 2013, the health care cost growth benchmark is set at 3.6%. For 2014 to 2017, the benchmark is set at the growth rate of potential gross state product, and for 2018 to 2022, it is set at the growth rate of gross state product minus 0.5%, with some provisions for adjustment. The state will not dictate how the annual benchmark is met.
The Health Policy Commission is to “establish procedures to assist health care entities to improve efficiency and reduce cost growth.” The commission may encourage, cajole, and, if needed, shame them into doing their part to control costs. Starting in 2016, the commission may require some to file and implement a “performance improvement plan” because they have exceeded the cost growth benchmark and have not adequately explained potential mitigating factors. Such an entity will be identified on the commission’s website until its plan is successfully completed.
There will be no way to know if this plan for Massachusetts is working until it has been in effect for at least several years. Until then, skepticism about the amount of projected savings is appropriate.
With a global spending target, health care in Massachusetts is still likely to be very expensive as compared with the United States and all other member countries of the Organisation for Economic Co-operation and Development. Health care may just not be quite as expensive as it could be without a spending target.
http://jama.jamanetwork.com/article.aspx?articleid=1352960

Recognizing that health care reform in Massachusetts enacted when Mitt Romney was governor has failed to control health care spending, Massachusetts has now enacted legislation supposedly designed to limit spending. One of the most important features is the introduction of global budgeting, an important economic tool long advocated by Physicians for a National Health Program. No, wait. It isn’t a global budget, but rather a global spending target, and that is the point of today’s message.
Massachusetts continues to finance care through a fragmented, dysfunctional system that can never be reined in. There is no state universal budget for health care, so there can be no global budgeting. Even hospitals cannot be globally budgeted because they have to interact with so many different payers. All this legislation does regarding global spending is to identify the various entities that exceed the targeted rate increases and them put them on a naughty boys’ list.
Be prepared. A few years from now, when we continue to teach that global budgeting is one of the more effective tools that we should be using to contain costs, we’ll have to respond to the claim that Massachusetts already tried that and it didn’t work. No they didn’t. Erecting targets on the sidelines has nothing in common with crafting  a budget using real dollars.

Romney supports Medicare Advantage overpayments

Patients Would Pay More if Romney Restores Medicare Savings, Analysts Say

By Jackie Calmes
The New York Times, August 21, 2012

Mr. Romney has been especially critical of the cuts for insurance companies that provide Medicare Advantage, a popular private-policy alternative to Medicare. “This is the president’s plan: $716 billion cut, four million people losing Medicare Advantage and 15 percent of hospitals and nursing homes not accepting Medicare patients,” he said in a recent campaign appearance.

But Medicare Advantage, which was created 15 years ago in the hope that private-market competition for beneficiaries would result in lower prices, has consistently cost more than standard Medicare — costs that Medicare beneficiaries must help subsidize through their premiums.

The reductions for Medicare Advantage providers are “a matter of basic fairness because they’ve been overpaid for years,” said (Marilyn Moon, vice president and director of the health program at the American Institutes for Research). As for beneficiaries, she added, “they’re guaranteed basic Medicare benefits. They may lose some extra benefits they may have been getting, but in effect you’re saying some of the windfall benefits may go away.”

“The bottom line,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, which Mr. Ryan leads, “is that Romney is proposing to take more money from seniors in higher premiums and co-pays and hand it over to private insurance companies and other providers in the Medicare system.”

http://www.nytimes.com/2012/08/22/us/politics/costs-seen-in-romneys-medicare-savings-plan.html?pagewanted=all

Comment: 

By Don McCanne, MD

Why would Mitt Romney support overpayments to the Medicare Advantage program? The reason is that they want a vibrant market of private health plans in order to be able to put into place their plans for a premium support (voucher) program for Medicare, even though those plans cost more than does the traditional Medicare program.

The precursor to Medicare Advantage (Medicare + Choice) already demonstrated that private insurers cannot meet Medicare’s lower costs for comparable Medicare populations. They pulled out of patient markets with average or worse levels of health, keeping the healthier regions enrolled in their plans. In the Medicare Advantage program, they have gone even further. They are receiving unwarranted risk adjustment payments by submitting data indicating that their patients are sicker than they actually are.

(There has been some misleading publicity about Medicare Advantage bids this year being only 98 percent of traditional Medicare costs, but the complicated formulas still result in payments well in excess of Medicare costs.)

Once the premium support system is up and running, the intent is to cap the amount that the government contributes to the premiums for the private plans, shifting an ever-increasing portion of the costs to the Medicare patients – sort of a delayed gratification for anti-government ideologues.

(Although today’s message is about the nefarious plot to foist off on us the privatization of Medicare, some may wonder what the NYT headline means. The scheduled reduction in payments to Medicare come from two sources – reduction of overpayments to the Medicare Advantage plans, and reductions in payments to some health care providers, but not from a reduction of benefits in the traditional program. The savings are shared with Medicare beneficiaries in the form of lower premiums and lower coinsurance payments. When Romney restores the Medicare cuts, costs go up for both the taxpayers who finance the government and for Medicare beneficiaries through higher premiums and coinsurance payments.)

For patients or for profits?

By Helen Redmond
Socialist Worker, Aug. 22, 2012

Helen Redmond reports on a series of scandals hitting for-profit health care giant HCA–and looks at how the quality of care patients receive has suffered, with sometimes deadly results.

In the last 20 years, as the health care crisis has accelerated and the number of uninsured has soared to over 50 million, publicly funded, not-for-profit hospitals have been transformed into ruthless, investor-owned, profit-generating businesses. Corporations have bought up not only hospitals, but dialysis clinics, outpatient surgical centers, home care agencies and physician practices with the singular goal of making money.

Hospitals are the nexus of profit-making for medical equipment and supply companies, the pharmaceutical industry, medical device makers, doctors who charge exorbitant fees and, increasingly, private investors. The health care sector has grown exponentially and now comprises one-sixth of the national economy.

No single company has been more successful in the hijacking of health care resources to Wall Street than the Hospital Corporation of America (HCA), which is currently facing a series of scandals. The industry giant’s insatiable greed for profits has resulted in numerous, ongoing federal and state investigations and hefty fines.

Over the years, nurses and doctors at HCA facilities have consistently blown the whistle on unethical medical practices that have maimed and killed patients.

HCA’s tagline on its website says, “Bettering the Human Condition.” But HCA is better known for “bettering” the salaries and profits of shareholders and company executives. So far this year, HCA’s revenues have increased 11.9 percent to $8.112 billion. In 2010, Richard Bracken, the CEO of HCA took home a compensation package that totaled a whopping $38.2 million.

HCA is the largest for-profit hospital chain in the United States and owns 163 hospitals and 110 surgical centers in 21 states.

The hospital chain, formerly known as Columbia/HCA, has a long, corrupt and criminal record. In the 1990s, it was investigated for Medicare billing fraud and accused of ordering unnecessary tests to boost revenue, having unethical relationships with doctors, and of the practice of “patient dumping.”

In 1997, federal agents executed search warrants and seized documents related to billing practices at hospitals and clinics owned by Columbia/HCA. The company was fined $1.7 billion for Medicare fraud. At the time, Rep. Pete Stark (D-Calif.) commented, “Hopefully they’ll all be in jail soon for the crimes they have committed across the country.” No one went to jail.

Instead of being barred from participating in the Medicare program, the hospital chain was forced to sign a strict Corporate Integrity Agreement and their billing practices were monitored by an independent reviewer. That oversight ended in 2008.

History has a way of repeating itself. Soon after the oversight stopped, it was back to business as usual.

According to a recent New York Times investigation of HCA, “HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.”

The MBAs at HCA have worked overtime to get the company back to making superprofits by using methods developed by the founders of the company–Dr. Thomas Frist Jr., the former Republican senator from Tennessee, and Rick Scott, the current Republican governor of Florida.

Scott’s business plan for health care delivery is based on how the fast-food industry delivers burgers and fries. He said, “The day has come when somebody has to do in the hospital business what McDonalds’s has done in the fast-food business and what Wal-Mart has done in the retailing business.”

An updated version of Scott’s argument that health care should be run like an assembly line business is an article by Dr. Atul Gawande in the New Yorker. He argues that the restaurant chain The Cheesecake Factory is the new model for fixing the dysfunctional American health care system. He wrote: “We’ve let health care systems provide us with the equivalent of greasy-spoon fare at four-star prices, and the results have been ruinous. The Cheesecake Factory model represents our best prospect for change.”

Gawande’s argument is absurd; as if the human art and science of medicine and treating complex diseases like cancer and diabetes should adopt the methods that a restaurant chain uses to bake and serve 50 kinds of cheesecake. Treating health care like a factory commodity, while denying that care to millions, is the reason that the U.S. lags behind 19 advanced countries in preventable deaths.

We spend more than $8,000 per person for health care annually, and yet the quality of health care is worse in the U.S. than in nations that spend far less and provide coverage to everyone. It is the rapacious and destabilizing pursuit of profit in the privatized health care market that is the root cause of the fragmented and high cost of health care.

HCA increases profit margins in a contradictory combination of ways that are dangerous to patients’ health. Recent scandals show that HCA medical providers have performed unnecessary medical procedures. In other instances, care is denied to the uninsured and rationed to the insured. Patients are discharged quickly and staff is cut to unsafe levels, particularly nurses.

A recent internal investigation by HCA–instigated after a nurse complained–found that HCA cardiologists have performed hundreds of unnecessary cardiac procedures, putting patients’ lives at risk.

As the Times explained, “Cardiology is a lucrative business for HCA, and the profits from testing and performing heart surgeries played a critical role in the company’s bottom line in recent years.” Medicare reimbursement rates are $10,000 for a cardiac stent and $3,000 for a diagnostic cardiac catheterization–a lucrative figure for the company.

To jettison the uninsured, and avoid providing care that won’t be reimbursed, HCA’s emergency rooms refuse to treat patients who have “non-urgent” health conditions. The patients are told to go somewhere else for care–unless they pay an insurance co-pay or $150 in cash if they’re uninsured, an impossibility for thousands of people.

Enormous pressure is put on medical staff to deny care and to dump uninsured patients to non-HCA hospitals. One uninsured patient went to an HCA emergency room in Nashville complaining of trouble breathing. The patient was discharged without care and was admitted to another hospital hours later with pneumonia. The New York Times reported that a Medicare investigation cited HCA for having “failed to ensure that an appropriate medical screening examination was conducted.”

An article in 1996 in The Nation magazine interviewed nurses that worked for Columbia/HCA. They had a litany of complaints that included insufficient staff to assist patients in walking after surgery, delays of up to 45 minutes in delivering medication and other treatments and the elimination of overnight environmental cleaning services.

Sixteen years later history is repeating itself. HCA hospitals have one of the highest rates of bed
sores, a preventable condition if there are enough nurses to turn patients over and check the skin. An HCA hospital in Florida was cited twice by regulators for having inadequate staffing levels to monitor bedsores. And, according to the New York Times, at least one patient has died due to untreated bedsores.

Research has shown that lower nurse-to-patient staffing ratios lead to improved health outcomes, increased hospital safety and decreased mortality. But what is good for patients is not always good for profits, and the Wall Street investors that own HCA hospitals have calculated that into the cost of doing business, putting patient’s lives at risk.

http://socialistworker.org/2012/08/22/for-patients-or-for-profits

Dr. Ann Settgast on travel medicine and health care policy

Minnesota Health Care News, August 2012

Dr. Ann Settgast, an assistant professor of internal medicine at the University of Minnesota, is a primary care physician at HealthPartners Center for International Health and practices travel medicine at HealthPartners Travel and Tropical Medicine Center.

You earned a diploma in tropical medicine and health (DTM&H). How did you become interested in that field and in international health in general? I’m fascinated by other countries and cultures, and love to travel. Most Western medical education doesn’t provide extensive coverage of diseases encountered in developing countries (malaria, leprosy, malnutrition, etc.). I obtained my DTM&H to be better prepared to work in parts of the world, and with populations, where these conditions are common.

Many of your patients are foreign-born. Is working with them different than with U.S.-born patients? It’s a privilege to work with people from entirely different backgrounds than my own. I’m fascinated by my patients’ histories and perspectives, and learn a great deal from them. For many, coming to the U.S. from, say, a refugee camp, preventive medicine and chronic disease management are foreign concepts. I enjoy the opportunity to improve health by building relationships that allow me to promote these concepts, working with patients to combine their non-Western approaches to health with our own in order to obtain the best outcomes.

Some travel requires advance medical planning, such as immunizations. How can a traveler find out what is needed?The best way is to visit a travel clinic. Many patients think the only thing we do at travel clinic is give shots, but there is much more. Significant time is spent reviewing malaria risk and prevention. Malaria is an illness that can be fatal quickly in patients who are not immune to it. Choice of prophylactic medication is individualized based on side-effect profile, patient medical history, and other factors. We discuss prevention and management of traveler’s diarrhea, which is very common, and review travel risks.

Some preexisting conditions require special planning for travel abroad. Please give us some examples. Changes in diet, activity, and time zone can all affect diabetes control and may require readjustment during travel. Risk of altitude illness can be affected by various cardiopulmonary conditions. Patients who are immunosuppressed, whether due to a disease like AIDS or to medication, require special management.

Have you found an effective way to handle jet lag? Starting a trip well rested helps. People are typically affected when crossing more than three time zones, and traveling west is easier than going east. For example, someone traveling west across six time zones can expect to feel well within two or three days. But the same distance going east can require double that time to feel synchronized with local time. In addition to circadian rhythm disturbance, sleep loss itself common during travel contributes to jet lag. I advise patients to use daylight, outdoor activity, and intense activities during the day of arrival when going east to help them stay awake at their destination until local bedtime. Some providers recommend melatonin or zolpidem to help with sleep the first few nights.

Recently, you had a short-term teaching appointment in Tanzania. Please tell us about that. I taught on the internal medicine service at Selian Hospital outside Arusha, Tanzania, which serves northern Tanzania’s rural Masaai. My students were training to be assistant medical officers, mid-level providers who lessen Tanzania’s profound physician shortage. They were among the most eager and motivated learners I have ever met; teaching and learning from them was fun and inspiring. They requested multiple topics for lectures, and would attend any time of day for as long as I would teach!

What can the United States learn about health care delivery from other countries? The U.S. has much to learn from other wealthy democracies, all of which have truly universal health care systems, most at less than half the cost of ours. There is a constant search in American medicine for the “holy grail” of cost control. We often try to do this via mechanisms to reduce care based on the misperception that our system is so expensive because we provide too much care. However, if one looks at discrepancies in spending between us and these countries, it’s not because the U.S. provides too much unnecessary care (although this problem certainly exists). Rather, our huge spending is on the administrative side due to our fragmented, multipayer, for-profit system.

Please tell us about Physicians for a National Health Program and this group’s reaction to the June 28 Supreme Court ruling on the Affordable Care Act (ACA). Physicians for a National Health Program (PNHP) is a national non-profit research and education organization dedicated to implementing a single-payer health care system in the U.S. Our Minnesota chapter, with nearly 1,000 provider and medical student members, works toward a single-payer solution at the state level. While the ACA will help some patients, it will not solve our crisis. More than 200,000 Minnesotans will remain uninsured while many more will be under-insured without proper access to health care. Single-payer still provides the only means to cover everyone at reduced cost. More information is at www.pnhpminnesota.org.

What are obstacles to implementing single-payer health insurance? The main obstacle is the private health insurance industry. Another obstacle is lack of education about what “single payer” really means. Some erroneously confuse it with socialized medicine or think it would lead to reduced care. However, the savings come not from reducing care but from streamlining the administrative side of the system. The Lewin fiscal analysis of a Minnesota single-payer system, published in March 2012, revealed that Minnesota could reduce health care spending by 9 percent and cover ALL Minnesotans with comprehensive coverage if single payer was enacted here.

PNHP-MN has introduced legislation for single-payer insurance. What can you tell us about this? PNHP-MN has worked closely with Sen. John Marty, chief author of Minnesota’s single-payer legislation. The bill made progress during the first few years after introduction, passing through several legislative committees. However, since the 2010 election and subsequent changes in House and Senate leadership, the bill has stalled. Single-payer is not a partisan issue. It is the most fiscally conservative approach to health care reform.

http://issuu.com/mppub/docs/mhcnaug12

Health plan competition improves quality, right? Right??? – ctd.

By Aaron Carroll, M.D.
The Incidental Economist, August 21, 2012

Yesterday, Austin highlighted a paper that said competition might not increase quality. Here’s another paper that goes even further. “Quality and Equity of Care in the Veterans Affairs Health-Care System and in Medicare Advantage Health Plans“:

Background: After an organizational transformation in the mid-1990s, the quality of care in the Veterans Affairs health-care system(VA) compared favorably with the quality of care in some private sector settings. Whether this performance advantage has persisted, and also its relation to geographic and socioeconomic variations in care, is unknown.

Objective: We compared the quality and equity of care for older adults in the VA with that delivered in Medicare Advantage (MA) health plans using the same performance measures.

Research Design: Cross-sectional comparison.

Subjects: A total of 293,554 observations from enrollees in 142 VA medical centers (VAMCs) and 5,768,573 observations from enrollees in 305 MA plans.

Measurements: Adherence to quality measures assessing diabetes, cardiovascular, and cancer screening care from 2000 to 2007.

Using the same HEDIS type measures Austin described yesterday, this study compared the quality of the VA health care system to that of private Medicare Advantage. Remember, the VA isn’t just a single-payer system, a la Canada or Medicare, it’s a completely government run health care system a la the UK. Can you guess where this is headed?

Results: The VA outperformed MA plans on 10 of 11 quality measures in the initial study year, and on all 12 measures in the final year. In 2006 and 2007, adjusted differences between the VA and MA ranged from 4.3 percentage points (95% CI, 3.2-5.4) for cholesterol testing in coronary heart disease to 30.8 percentage points (95% CI, 28.1-33.5) for colorectal cancer screening. For 9 of 12 measures, socioeconomic disparities (defined as the difference in performance rates between persons in the highest and lowest quartiles of area-level income and education) were lower in the VA than in MA. Across all measures, the mean interquartile range of performance was 6.7 percentage points for VAMCs and 14.5 percentage points for MA plans.

For people over the age of 65, the VA outperformed private insurance (Medicare Advantage) on nearly all the measures of quality. The care it delivered was also more consistent across geography and socioeconomic status.

I know a lot of you believe that private market and competition are the cures for what ails us. Unfortunately, there’s just not a lot of evidence that’s true.

http://theincidentaleconomist.com/wordpress/health-plan-competition-improves-quality-right-right-ctd/

Romney supports Medicare Advantage overpayments

Patients Would Pay More if Romney Restores Medicare Savings, Analysts Say

By Jackie Calmes
The New York Times, August 21, 2012
Mr. Romney has been especially critical of the cuts for insurance companies that provide Medicare Advantage, a popular private-policy alternative to Medicare. “This is the president’s plan: $716 billion cut, four million people losing Medicare Advantage and 15 percent of hospitals and nursing homes not accepting Medicare patients,” he said in a recent campaign appearance.
But Medicare Advantage, which was created 15 years ago in the hope that private-market competition for beneficiaries would result in lower prices, has consistently cost more than standard Medicare — costs that Medicare beneficiaries must help subsidize through their premiums.
The reductions for Medicare Advantage providers are “a matter of basic fairness because they’ve been overpaid for years,” said (Marilyn Moon, vice president and director of the health program at the American Institutes for Research). As for beneficiaries, she added, “they’re guaranteed basic Medicare benefits. They may lose some extra benefits they may have been getting, but in effect you’re saying some of the windfall benefits may go away.”
“The bottom line,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, which Mr. Ryan leads, “is that Romney is proposing to take more money from seniors in higher premiums and co-pays and hand it over to private insurance companies and other providers in the Medicare system.”
http://www.nytimes.com/2012/08/22/us/politics/costs-seen-in-romneys-medicare-savings-plan.html?pagewanted=all

Why would Mitt Romney support overpayments to the Medicare Advantage program? The reason is that they want a vibrant market of private health plans in order to be able to put into place their plans for a premium support (voucher) program for Medicare, even though those plans cost more than does the traditional Medicare program.
The precursor to Medicare Advantage (Medicare + Choice) already demonstrated that private insurers cannot meet Medicare’s lower costs for comparable Medicare populations. They pulled out of patient markets with average or worse levels of health, keeping the healthier regions enrolled in their plans. In the Medicare Advantage program, they have gone even further. They are receiving unwarranted risk adjustment payments by submitting data indicating that their patients are sicker than they actually are.
(There has been some misleading publicity about Medicare Advantage bids this year being only 98 percent of traditional Medicare costs, but the complicated formulas still result in payments well in excess of Medicare costs.)
Once the premium support system is up and running, the intent is to cap the amount that the government contributes to the premiums for the private plans, shifting an ever-increasing portion of the costs to the Medicare patients – sort of a delayed gratification for anti-government ideologues.
(Although today’s message is about the nefarious plot to foist off on us the privatization of Medicare, some may wonder what the NYT headline means. The scheduled reduction in payments to Medicare come from two sources – reduction of overpayments to the Medicare Advantage plans, and reductions in payments to some health care providers, but not from a reduction of benefits in the traditional program. The savings are shared with Medicare beneficiaries in the form of lower premiums and lower coinsurance payments. When Romney restores the Medicare cuts, costs go up for both the taxpayers who finance the government and for Medicare beneficiaries through higher premiums and coinsurance payments.)

How are health insurance investors betting on the election?

Investors in Health Care Seem to Bet on Incumbent

By Andrew Ross Sorkin
The New York Times, August 20, 2012

Who is going to win the presidential election?

You might want to ask Mark T. Bertolini. He just bet $5.7 billion on President Obama.

Mr. Bertolini is the chief executive of Aetna, which on Monday agreed to acquire Coventry Health Care, a huge provider of Medicare and Medicaid programs. His $5.7 billion bet makes a lot of sense if you believe that the Affordable Care Act — otherwise known as Obamacare — will not be repealed.

Mitt Romney has pledged to repeal the act “on my first day if elected,” so any gamble that Obamacare stays intact could be fairly described as a wager that President Obama will remain in office.

At a minimum, the stock market, which is an indicator of future earnings, seems to be in disagreement, at least somewhat, with the steady drumbeat of C.E.O.’s and investors who have said that President Obama’s administration, in the words of Daniel Loeb, the outspoken activist hedge fund investor, “is openly hostile to most businesses and unable to articulate or implement policies to spark growth and reduce unemployment.”

Mr. Loeb is a frustrated Obama voter who now backs Mr. Romney.

But take a look at some of his most recent investments in the health care field. In the last quarter, he reported in Securities and Exchange Commission filings, he picked up shares of Aetna, Cigna, Humana, UnitedHealth and WellPoint, among others. All of those companies stand to benefit while Obamacare remains in force; a repeal of the bill could send those shares reeling.

Aetna is not the only company to make a bet on the White House. WellPoint agreed to acquire Amerigroup for $5 billion in July, just a little over a week after the Supreme Court’s decision to uphold the Affordable Care Act. Before that, Cigna paid $3.8 billion for HealthSpring in another bet on the expansion of Medicaid and Medicare.

Companies like Aetna, WellPoint and Cigna have all gravitated to rivals with a foothold in government-sponsored programs because the prevailing view is that margins for private customers are going to steadily erode. According to Aetna on Monday, the acquisition of Coventry will “substantially increase Aetna’s Medicaid footprint, creating more opportunity to participate in the expansion of Medicaid and to pursue high acuity positions as they move into managed care.” Aetna’s revenue from the government will jump to 30 percent from 23 percent.

David Einhorn of Greenlight Capital recently made the contrarian case that companies like Cigna would actually do better if the law were to be repealed, ostensibly because of the margin compression that is likely as a result of the new law.

“While the stocks are already cheap, there is the additional unpriced upside in the possibility that the election changes the political landscape, resulting in a possible modification or repeal of Obamacare,” he wrote in a letter to investors last month.

Still Mr. Einhorn, through smarts or luck, made a big investment in Coventry in the last quarter. With the sale to Aetna, irrespective of his investment thesis, Mr. Einhorn’s firm just made about $72 million.

http://dealbook.nytimes.com/2012/08/20/investors-in-health-care-seem-to-bet-on-incumbent/

Comment: 

By Don McCanne, MD

Although this article suggests that presidential election politics may influence the future of the private health insurance industry, the message is really nonpartisan. No matter who is elected president, there will be a lot on money to be made by investing in private insurers. Regardless of the election outcome, this message is terrible news for the patients in our health care system.

How are health insurance investors betting on the election?

Investors in Health Care Seem to Bet on Incumbent

By Andrew Ross Sorkin
The New York Times, August 20, 2012
Who is going to win the presidential election?
You might want to ask Mark T. Bertolini. He just bet $5.7 billion on President Obama.
Mr. Bertolini is the chief executive of Aetna, which on Monday agreed to acquire Coventry Health Care, a huge provider of Medicare and Medicaid programs. His $5.7 billion bet makes a lot of sense if you believe that the Affordable Care Act — otherwise known as Obamacare — will not be repealed.
Mitt Romney has pledged to repeal the act “on my first day if elected,” so any gamble that Obamacare stays intact could be fairly described as a wager that President Obama will remain in office.
At a minimum, the stock market, which is an indicator of future earnings, seems to be in disagreement, at least somewhat, with the steady drumbeat of C.E.O.’s and investors who have said that President Obama’s administration, in the words of Daniel Loeb, the outspoken activist hedge fund investor, “is openly hostile to most businesses and unable to articulate or implement policies to spark growth and reduce unemployment.”
Mr. Loeb is a frustrated Obama voter who now backs Mr. Romney.
But take a look at some of his most recent investments in the health care field. In the last quarter, he reported in Securities and Exchange Commission filings, he picked up shares of Aetna, Cigna, Humana, UnitedHealth and WellPoint, among others. All of those companies stand to benefit while Obamacare remains in force; a repeal of the bill could send those shares reeling.
Aetna is not the only company to make a bet on the White House. WellPoint agreed to acquire Amerigroup for $5 billion in July, just a little over a week after the Supreme Court’s decision to uphold the Affordable Care Act. Before that, Cigna paid $3.8 billion for HealthSpring in another bet on the expansion of Medicaid and Medicare.
Companies like Aetna, WellPoint and Cigna have all gravitated to rivals with a foothold in government-sponsored programs because the prevailing view is that margins for private customers are going to steadily erode. According to Aetna on Monday, the acquisition of Coventry will “substantially increase Aetna’s Medicaid footprint, creating more opportunity to participate in the expansion of Medicaid and to pursue high acuity positions as they move into managed care.” Aetna’s revenue from the government will jump to 30 percent from 23 percent.
David Einhorn of Greenlight Capital recently made the contrarian case that companies like Cigna would actually do better if the law were to be repealed, ostensibly because of the margin compression that is likely as a result of the new law.
“While the stocks are already cheap, there is the additional unpriced upside in the possibility that the election changes the political landscape, resulting in a possible modification or repeal of Obamacare,” he wrote in a letter to investors last month.
Still Mr. Einhorn, through smarts or luck, made a big investment in Coventry in the last quarter. With the sale to Aetna, irrespective of his investment thesis, Mr. Einhorn’s firm just made about $72 million.
http://dealbook.nytimes.com/2012/08/20/investors-in-health-care-seem-to-bet-on-incumbent/

Although this article suggests that presidential election politics may influence the future of the private health insurance industry, the message is really nonpartisan. No matter who is elected president, there will be a lot on money to be made by investing in private insurers. Regardless of the election outcome, this message is terrible news for the patients in our health care system.

HCA hasn't changed

A Giant Hospital Chain Is Blazing a Profit Trail

By Julie Creswell and Reed Abelson
The New York Times, August 14, 2012

During the Great Recession, when many hospitals across the country were nearly brought to their knees by growing numbers of uninsured patients, one hospital system not only survived — it thrived.

In fact, profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors.

The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.

The financial performance has been so impressive that HCA has become a model for the industry. Its success inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall.

HCA’s emergence as a powerful leader in the hospital industry is all the more remarkable because only a decade ago the company was badly shaken by a wide-ranging Medicare fraud investigation that it eventually settled for more than $1.7 billion.

Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff, a move that sometimes led to conflicts with doctors and nurses over concerns about patient care.

In late 2008, for instance, HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.

As HCA’s profits and influence grew, strains arose with doctors and nurses over whether the chain’s pursuit of profit may have, at times, come at the expense of patient care.

http://www.nytimes.com/2012/08/15/business/hca-giant-hospital-chain-creates-a-windfall-for-private-equity.html?_r=2&hp&pagewanted=all

Comment:

By Don McCanne, MD

Nobody expected the for-profit HCA hospital chain to change its fundamental practices. It hasn’t. It is an investor-owned corporation designed to make money, which it does very effectively. The PNHP model of single payer reform calls for an end to for-profit, investor-owned corporations in health care. You need only to read this fairly long article to understand why.

HCA hasn’t changed

A Giant Hospital Chain Is Blazing a Profit Trail

By Julie Creswell and Reed Abelson
The New York Times, August 14, 2012

During the Great Recession, when many hospitals across the country were nearly brought to their knees by growing numbers of uninsured patients, one hospital system not only survived — it thrived.

In fact, profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors.

The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.

The financial performance has been so impressive that HCA has become a model for the industry. Its success inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall.

HCA’s emergence as a powerful leader in the hospital industry is all the more remarkable because only a decade ago the company was badly shaken by a wide-ranging Medicare fraud investigation that it eventually settled for more than $1.7 billion.

Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff, a move that sometimes led to conflicts with doctors and nurses over concerns about patient care.

In late 2008, for instance, HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.

As HCA’s profits and influence grew, strains arose with doctors and nurses over whether the chain’s pursuit of profit may have, at times, come at the expense of patient care.

http://www.nytimes.com/2012/08/15/business/hca-giant-hospital-chain-creates-a-windfall-for-private-equity.html?_r=2&hp&pagewanted=all

Comment:

By Don McCanne, MD

Nobody expected the for-profit HCA hospital chain to change its fundamental practices. It hasn’t. It is an investor-owned corporation designed to make money, which it does very effectively. The PNHP model of single payer reform calls for an end to for-profit, investor-owned corporations in health care. You need only to read this fairly long article to understand why.