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The Intermountain scandal that isn't

Intermountain Healthcare pays $25.5M to settle violations of federal law

By David Wells
Fox 13 News, Salt Lake City, April 3, 2013

Utah’s largest health system self-disclosed violations of federal health care laws and agreed to pay the United States $25.5 million to settle its claims, according to a statement from the United States Department of Justice.

“These issues were primarily technical in nature and involved things such as lack of proper paperwork involving leases of physician offices and service agreements,” said a statement on Intermountain Healthcare’s website.

The DOJ statement said Intermountain Healthcare admitted to violating the Stark Statute by employment agreements under which the physicians received bonuses that improperly took into account the value of some of their patient referrals; and office leases and compensation arrangements between Intermountain and referring physicians that violated other requirements of the Stark Statute. These issues were disclosed to the government by Intermountain Healthcare.

“People should expect that hospitals and doctors care more for their patients than their bottom line profits,” said Gerald Roy, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services region including Utah. “So I applaud Intermountain for recognizing their liability and coming forward to self-disclose these violations. We will vigilantly protect taxpayer-funded health programs against Stark violations through tight coordination with our partners at the Department of Justice.”

This link includes statements from Intermountain Healthcare and from the United States Department of Justice:
http://fox13now.com/2013/04/03/intermountain-health-care-pays-25-5-m-to-settle-self-disclosed-financial-violations/

The Settlement Agreement:
http://www.modernhealthcare.com/assets/pdf/CH8778043.PDF

Comment:

By Don McCanne, M.D.

Most of us have grown weary of the scandalous behavior of our corporate health care system, and so we are no longer surprised by the by headlines notifying us of multimillion dollar penalties assessed against these nefarious entities. In fact we say, “Good riddance.” However, in this instance involving Intermountain Healthcare, it is almost refreshing to see that the story behind the headlines can renew our faith in our health care system.

Intermountain Healthcare is a large, non-profit, highly ethical, integrated health care system in Utah. It has an excellent reputation for providing efficient, high quality care, and for being innovators in improving the delivery of health care. That is why it was surprising to see their name in the headlines reporting yet another scandal.

But a scandal it isn’t. Intermountain Healthcare violated provisions of the Stark statute designed to prevent referral arrangements that could provide perverse incentives for personal profit in health care. The Intermountain violations were technical, involving a flawed formula for physician compensation, and involving improperly documented rental arrangements for use of medical space.

Intermountain discovered these violations on their own. Instead of trying to cover them up, they reported them to the U.S. Attorney for Utah. Considering the total lack of criminal intent, the technical nature of the violations, the lack of harm done, and the self-disclosure of the errors, it can be argued that the $25.5 million penalty was excessive.

What does this have to do with single payer reform? Simply that there is a world of difference between a health care system structured on a business model with a primary mission to make money, and a health care system structured on a service model designed to take care of patients. Intermountain functions as the latter. It is a non-profit, integrated health care system that would be an ideal component of a single payer national health program.

Technical violations will always be with us, but they are understandable errors when the goal is to take care of patients, but not when the goal is to deliberately siphon off health care dollars for personal gain.

Insurers Trump in Washington

By Jon Kamp
The Wall Street Journal, April 3, 2013

Washington wants to get tough on spending — but in the latest round of payment rates for private Medicare plans, insurers emerged victorious.

Shares of health insurance companies soared Tuesday after federal officials scrapped proposed payment cuts to carriers that run Medicare plans amid pressure from senior citizens and lawmakers.

Insurers including Humana Inc., UnitedHealth Group Inc. and Cigna Corp. get paid by the federal government to run Medicare plans for more than 14 million Americans. Known as Medicare Advantage plans, the policies have been a growth spot for insurers as baby boomers turn 65 and appeal to seniors with perks like free gym memberships. Nearly one in three people on Medicare is on such a plan.

In February, the federal agency that runs Medicare proposed steep rate cuts to insurers for running these plans, on top of another layer of cuts called for in the federal health overhaul. One key payment metric was set to fall 2.2% under the initial proposal.

That set off the insurance industry’s most intense lobbying campaign in years, according to those involved, and it brought together an unusual coalition of Republican and Democratic lawmakers to push for stopping the cuts.

Lobbyists organized a grassroots effort that recruited 50,000 seniors to contact members of Congress through phone calls, emails or other methods. They warned that cuts would hurt benefits to seniors while driving plans from some parts of the country.

The effort found a receptive audience, with more than 160 lawmakers signing letters supporting industry-friendly changes. The rate changes were slated to take effect in 2014, just as all House lawmakers and several key senators stand for re-election. One key ally: Sen. Max Baucus (D., Mont.), the chairman of the committee that oversees Medicare, who could face a difficult campaign next year.

With this strong backing, insurers won the biggest item on their wish list: an unusual change in how the Centers for Medicare and Medicaid Services factors in rates it pays doctors, which has a big effect on how much the government pays companies running Medicare Advantage plans. Historically, the agency, known as CMS, has calculated the payment rates under the assumption that a cut in Medicare payments to doctors — estimated at roughly 25% next year — would take effect even though Congress typically delays it.

This time, Health and Human Services Secretary Kathleen Sebelius intervened to let the agency assume the doctor-payment cuts wouldn’t take place, according to CMS’s late Monday announcement. That allowed federal officials to significantly lessen the proposed cuts for insurers. Instead of a 2.2% cut to the key payment metric, Medicare on Monday announced a 3.3% increase.

The delay in the cuts underscores how difficult it is for lawmakers to pare federal spending on health care, which is a main driver of the deficit.

“It’s the old Potomac two-step on Medicare,” said John Gorman, executive chairman of Gorman Health Group, a Washington health consultancy. Lawmakers “slice and dice Medicare in their budgets, and then walk it back when they have to go home and face their constituents,” he said.

Among big insurers, the changes are most meaningful for Humana, which is more tethered to Medicare plans than its large peers. Humana shares rose 5.5% to $79.11 Tuesday, adding to an 8.6% rise Monday, when most of the jump came right at the end of trading, just ahead of the announcement from CMS on the increase in payments.

After Humana, UnitedHealth has the most Medicare Advantage exposure among big insurers, Jefferies analyst David Windley said, followed by Cigna and then Aetna Inc. UnitedHealth shares surged 4.7% Tuesday, while shares of Cigna and Aetna rose 2.9% and 3.7%, respectively. All of the insurers’ stocks added to gains Monday.

While rate estimates varied, analysts broadly said the savings were significant.

Mr. Windley estimated rates next year will now be down by just 1.75% to 2.75%, rather than the 7% to 8% implied by the mid-February proposal. Insurers still face cuts in Medicare Advantage payments under the 2010 Affordable Care Act, which the agency didn’t reverse.

Humana Chief Executive Bruce Broussard cited some “technical adjustments” within the complicated rate announcement that “may still present meaningful challenges in certain geographies.”

CMS’s office of the actuary indicated it disagreed with Ms. Sebelius’s decision to calculate the payment rate under the assumption lawmakers will stave off the doctor-payment cuts. “The assumption conflicts with the office’s professional judgment that, as in all past years, the determination should be based on current law, not an assumed alternative,” the rate announcement said.

Richard S. Foster, the recently retired chief actuary at CMS, said Ms. Sebelius’s intervention was highly unusual and “disturbing.”

“The solution to a problem caused by legislation that’s not working should be new legislation,” Mr. Foster said.

CMS declined further comment on why Ms. Sebelius intervened beyond Monday’s explanation that CMS shifted gears to better reflect likely congressional action on doctor payments.

Brody Mullins and Janet Adamy contributed to this article.

Will the ACA achieve universal, equitable coverage?

By Johnathon S. Ross, M.D.
Toledo Medicine, Winter 2013

In 2004, well ahead of the passage of the Affordable Care Act (ACA), the Institute of Medicine (IOM), in their report “Insuring America’s Health,” outlined a set of principles for health insurance reform: universal, continuous insurance coverage that is affordable and sustainable for individuals, families, and society, and should enhance well-being through care that is effective, efficient, safe, timely, patient-centered, and equitable.

Will the ACA meet the IOM’s principles?

The recent election guarantees that the ACA be implemented. This will be a complex and expensive effort.

States must create insurance exchanges or let the federal government do it for them and expand Medicaid to138 percent of poverty or face a significant loss of federal support. Systems must be created to educate employers and the uninsured about their opportunity and obligation to obtain health insurance or pay a tax.

Physicians get increased Medicaid and Medicare payments for primary care services, but new bundled payment methods and Accountable Care Organizations (ACOs) with their uncertainties and complexities enter the payment mix.

Hospitals face bundled payments, ACOs, and cutbacks in uncompensated care subsidies, but also increased payments through the expansion of private insurance and Medicaid to the uninsured. Added cuts could come from any federal budget deal.

Insurers must cover everyone without pre-existing condition exclusions or lifetime limits on care and cover all preventive services without co-pay. Premium hikes will be reviewed and 80-85 percent of premiums must be spent on care instead of administrative costs and profits. The insurers gain 10-20 million new customers through the exchanges and managed care Medicaid.

Patients will have no co-payments for preventive services, but will see new “wellness plans” that allow employers to increase the employee portion of premiums. The Medicare drug “donut hole” gets filled, but lower tax deductions for medical expenses and taxes on “Cadillac health plans” will come into play.

Sadly, the ACA covers only half of the uninsured and is unlikely to control costs. In Massachusetts, after six years, their ACA-like plan has not controlled costs and administrative complexity has increased. Those newly insured still find health care bills overwhelming and medical bankruptcy in Massachusetts has not decreased.

Can American healthcare meet the IOM principles through the ACA? If you had a house with a crumbling foundation, would you add a third floor? The ACA builds on the crumbling foundation of competing private insurers and decades of market competition in health care which failed to control costs, improve access or the quality of care.

Nonprofit health insurers were once effective in spreading costs across entire communities. Now, the complexity of the insurance market and the profit motive make insurers a bad bargain.

Private insurers make money by denying claims. Physicians and hospitals waste enormous amounts of time and money on excess paperwork and bureaucracy. More competition has only created an army of bureaucrats whose “generals” – the CEOs – get astronomical salaries.

Money-changers and paper-pushers thrive by chasing the money to pay for care – not by delivering it. In our complex, multi-payer system, chasing money is expensive work. The new Accountable Care Organizations look more like byzantine health care bureaucracies than paths to cost containment.

Individual market forces (medical savings accounts) will never effectively lower costs. The most expensive services are the least negotiable. Can a patient with a ruptured appendix on morphine haggle over fees? Look! Open heart surgery is on sale. Let’s have two!

Health care is not a bar of soap. It is a human need and should be a human right in the richest country in the world.

Physicians fearing change stampede into larger groups and employment in “integrated systems” with their own burgeoning bureaucracies. This consolidation of physicians, health systems and insurers will leave most communities with only a handful of provider organizations. In many, there will be only one. In this context, the rhetoric of market efficiency is nonsense.

We have a tested model. Medicare would work for all of us because it has worked for seniors for almost 50 years. In 1995, Taiwan replaced their private insurance system with one based on Medicare. They went from 60 percent to 100 percent coverage with hardly any growth in costs, and the patients and physicians are happy.

This is no surprise since studies show that the administrative simplicity of Medicare for all could save $400 billion yearly, cover all the uninsured, eliminate significant co-pays and deductibles, allow complete choice of doctor and hospital and improve coverage for all. Physicians could practice privately and independently with guaranteed payment for every patient.

Can the ACA meet the principles of the IOM? The IOM report discussed prototypes for reform, noting if they would satisfy their principles. They note that an individual and employer mandate with premium subsidies (i.e. the ACA) would fail to provide universality, continuity, affordability, and access to equitable care. They also note Medicare for all could satisfy all of the principles.

Perhaps the ACA was the best that could be achieved given the resistance of powerful vested interests to even a “public option.” Those who say “repeal and replace” the ACA will still face the same recommendations from our best health policy scientists when it comes time to choose a “replacement.”

Polls consistently show that Medicare for all is supported by the majority of Americans and a plurality of American physicians. Yet, some in Congress suggest privatizing and replacing Medicare with vouchers for private insurance. If we want Medicare to meet the IOM principles, this is exactly the wrong solution.

In our quest for health reform, we are not done yet. The ACA allows states to experiment with other types of reforms, including Medicare-for-all systems in 2017. Vermont, California, and Hawaii are considering Medicare-for-all reforms that will provide continuous lifetime coverage, save lives, and save money. When they prove it works then other states might follow. They could place our nation on the path toward a health care system that finally meets the principles of the IOM and can finally truly boast of being the best in the world.

http://www.toledoacademyofmedicine.org/%5CContent%5CPDFs%5CToledo-Medicine-Q4-2012.pdf

PNHP note: This article originally appeared under the title “Is the Affordable Healthcare Act the answer to America’s healthcare problems?” Toledo Medicine is the journal of the Academy of Medicine of Toledo and Lucas County (Ohio).

Insurers see way to dodge federal healthcare law next year

A little-known loophole in President Obama's landmark legislation enables health insurers to extend existing policies for nearly all of 2014.

By Chad Terhune
Los Angeles Times, April 2, 2013

A new fight is brewing over health insurance companies letting millions of Americans renew their current coverage for another year — and thereby avoid changes under the federal healthcare law.

That may offer a short-term benefit for certain consumers and shield some of those individual policyholders from potentially steep rate increases. But critics say this maneuver could undermine government efforts to remake the insurance market next year and keep premiums affordable overall.

At issue is a little-known loophole in President Obama’s landmark legislation that enables health insurers to extend existing policies for nearly all of 2014. This runs contrary to the widespread belief that all health insurance must immediately comply with new federal rules starting Jan. 1, when most provisions of the law take effect.

“Insurers are onto this, and the big question is how many will try to game the system,” said Timothy Stoltzfus Jost, a law professor and health policy expert at Washington and Lee University.

Some of the nation’s biggest health insurers are looking to take advantage of this delay, and Arkansas officials are encouraging companies to do this by resetting customers’ renewal dates for the end of December. There’s also concern that some insurers and agents could rush to sell more individual policies before year-end so they could be extended in 2014.

Some policy experts are expressing concern about this practice for fear that insurers will focus on renewing younger and healthier policyholders and hold them out of the broader insurance pool next year. Their absence could leave a sicker and older population in new government insurance exchanges, driving up medical costs and premiums there.

“This could undermine the Affordable Care Act, and it opens the door for exacerbating potential rate shock in the exchanges,” said Christine Monahan, a senior analyst at Georgetown University’s Health Policy Institute. “The health insurers can cherry-pick some healthy people and it raises prices for everyone else.”

This issue could affect some of the 15 million people nationwide who purchase their own coverage and millions more of the uninsured who are expected to join government exchanges next year. It would not pertain to the 150 million Americans who get health benefits through their employers.

Many health insurers are still mulling over their options on how to handle these individual renewals.

“Some carriers will require everyone to switch plans Jan. 1, and other carriers will allow customers to stay on their existing plan as long as possible,” said Bob Hurley, senior vice president of carrier relations at online site eHealthInsurance. “We are trying to nail this down with the carriers. I think it would be better for consumers to have that choice to carry their policy forward.”

The nation’s largest health insurer, UnitedHealth Group Inc. of Minnetonka, Minn., said, “We are currently looking at the best way to serve our customers’ best interests while continuing to comply with the Affordable Care Act going into 2014.”

WellPoint Inc., the Indianapolis insurance giant that runs Blue Cross plans in California and 13 other states, said its renewal practices will vary by state. In California, the company said its Anthem Blue Cross unit may allow individual policyholders to renew through March 31.

Kaiser Permanente, a major nonprofit health plan based in Oakland, said it doesn’t plan to renew policies beyond Jan. 1 in California and most of the other states where it sells coverage.

Richard Kern and his wife, a retired couple in Los Angeles, say they would welcome the flexibility to keep their individual policy from Aetna Inc. for another year amid so much uncertainty over next year’s rates.

“We don’t even know what the prices and alternatives are under Obamacare,” Kern said. “We are waiting for the other shoe to drop.”

If an insurer offers this option, it would then be up to consumers to decide whether they want to renew an existing policy into 2014. The length of any renewal may depend on what month their annual plan year begins.

Many lower-income people will qualify for federal premium subsidies, which will be available only when purchasing new coverage available in state- or federal-run insurance exchanges. It would make financial sense to take advantage of that government aid. Individuals earning less than $46,000 or families below $94,000 annually would be eligible for subsidies.

However, many people who are middle income or above could face significantly higher premiums next year with no subsidies. Those premium increases are tied to federal requirements that insurers accept all applicants regardless of their medical condition and the inclusion of more comprehensive benefits.

Renewing an older policy could mean forgoing some of those richer benefits and new limits on out-of-pocket medical expenses.

Last week, California officials estimated that premiums may rise 30% on average for about 1.3 million existing policyholders primarily because of those changes in the federal law. Insurers have warned that some customers could see their premiums double depending on their age and other factors.

Citing that threat of higher rates, Arkansas officials issued a bulletin to insurers last month describing how they could extend individual policies until Dec. 30, 2013, and then renew them for another year.

These health plans “would not be required to comply with the [Affordable Care Act] market reforms until 12/31/2014,” according to the Arkansas bulletin.

“For those folks who don’t qualify for subsidies, this is a consumer-friendly thing because the premium rates for 2014 will be substantially higher,” said Dan Honey, deputy commissioner of compliance for the Arkansas Insurance Department. “You will be exposed to rate shock.”

Other states may oppose that approach, further underscoring the uneven implementation of the federal healthcare law across the country. Oregon Insurance Commissioner Louis Savage said these renewals could be problematic and his office issued a rule barring any extension beyond March 31, 2014.

“We want to get as many people as possible into the exchange,” Savage said. “I think having renewals go deep into 2014 is counterproductive to the goals of the federal healthcare law.”

In California, state lawmakers are working on legislation that could address this renewal issue and other details about how individual policies comply with the federal overhaul.

These questions over renewals are separate from “grandfathered” health policies that existed before the federal law passed in March 2010. Those plans don’t have to meet all the requirements of the healthcare law as long as insurers or employers don’t make significant changes to them.

http://www.latimes.com/business/la-fi-health-renewal-loophole-20130402,0,7315979.story

Government insiders misappropriate funds to Medicare Advantage insurers

U.S. to boost rather than cut payments to health insurers

By Sandhya Somashekhar
The Washington Post, April 1, 2013

The Obama administration reversed itself Monday, scrapping plans to cut by 2.2 percent the rates paid to health insurers that take part in the Medicare Advantage program.

The insurance industry and more than 100 members of Congress had objected to the cut in the per capita growth rate, which was proposed in February. The insurers mounted a vigorous campaign, using television ads and phone banks, to persuade lawmakers to oppose the reduction.

On Monday, the Centers for Medicare and Medicaid Services (CMS) announced that it was changing its method of calculating reimbursement rates. Instead of cutting payments for Medicare Advantage plans, it will increase them by 3.3 percent.

“The policies announced today further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice,” Jonathan Blum, the CMS’s acting principal deputy administrator, said in a statement.

http://www.washingtonpost.com/national/health-science/us-to-boost-rather-than-cut-payments-to-health-insurers/2013/04/01/7423c3a0-9b16-11e2-9a79-eb5280c81c63_story.html

And…

CMS Ensures Greater Value for People in Medicare Drug and Health Plans

Centers for Medicare and Medicaid Services (CMS), April 1, 2013

After careful consideration of public comments, key changes and updates finalized in the Rate Announcement and final Call Letter include:

The final estimate of the combined effect of the Medicare Advantage growth percentage and the fee-for-service growth percentage is 3.3 percent. These growth rates assume a zero percent change for the 2014 physician fee schedule (PFS) by taking into account the likely Congressional override of the schedule physician payment reduction.

http://www.cms.gov/apps/media/press/release.asp?Counter=4568&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&sr

And…

Subject: Advance Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2014 Call Letter

CMS, February 15, 2013

Section A. MA Growth Percentage

The current estimate of the change in the national per capita MA growth percentage for aged and disabled enrollees combined in CY 2014 is -2.3 percent.

We appreciate that plans are facing several legislatively mandated changes affecting payment for 2014, and this may present challenges for plans. We solicit comment on suggestions to address these challenges within the parameters of current law.

http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2014.pdf

And…

Subject: Announcement of Calendar Year (CY) 2014 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter

CMS, April 1, 2013

Attachment I shows the final estimates of the increases in the National Per Capita MA Growth Percentage for 2014 and the National Medicare Fee-for-Service (FFS) Growth Percentage for 2014. These growth rates will be used to calculate the 2014 capitation rates. As discussed in Attachment I, the final estimate of the increase in the National Per Capita MA Growth Percentage for combined aged and disabled beneficiaries is 2.96 percent, and the final estimate of the increase in the FFS Growth Percentage is 3.53 percent. Attachment II provides a set of tables that summarizes many of the key Medicare assumptions used in the calculation of the National Per Capita MA Growth Percentage.

The basis for the Growth Percentage for 2014 has been changed to incorporate an assumption that Congress will act to prevent the scheduled 25-percent reduction in Medicare physician payment rates from occurring. The Office of the Actuary has been directed by the Secretary to use this assumption, on the grounds that it is a more reasonable expectation than the reduction required under the statutory “sustainable growth rate” (SGR) formula. Although the Office of the Actuary agrees that Congress is very likely to override the physician fee reduction, the assumption conflicts with the Office’s professional judgment that, as in all past years, the determination should be based on current law, not an assumed alternative.

http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2014.pdf

And…

AHIP Statement on Final 2014 Medicare Advantage Payment Rates

America’s Health Insurance Plans (AHIP), April 1, 2013

America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni released the following statement in response to the final Medicare Advantage payment rates released by the Centers for Medicare & Medicaid Services (CMS) today:

“By being responsive to the more than 160 members of Congress from both parties who raised concerns about the impact of the proposed payment rate on seniors, CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges. We are currently reviewing the final rate announcement and will continue to work with policymakers in both parties to strengthen this critically important part of Medicare that provides high-quality, affordable coverage to more than 14 million seniors and people with disabilities.”

http://ahip.org/News/Press-Room/2013/AHIP-Statement-on-Final-2014-Medicare-Advantage-Payment-Rates.aspx

And…

Medicare Advantage Plan Star Ratings and Bonus Payments in 2012

Kaiser Family Foundation, November 2011

In 2012, Medicare Advantage plans will begin to receive bonus payments based on quality ratings. These payments were initially established in the 2010 health reform law that provides for bonus payments to plans that receive 4 or more stars and to unrated plans beginning in 2012. In addition to the bonus payments established by the health reform law, CMS will also be launching a 3-year demonstration to begin in 2012 that increases the size of bonuses for these plans, and also provides bonuses to plans rated as average (receiving 3 or 3.5 stars), using the same 1 to 5 star scale.

http://www.kff.org/medicare/upload/8257.pdf

And…

Payment Accuracy (Official U.S. government website)

The Department of Health and Human Services (HHS) reports an annual Medicare Advantage (Part C) program payment error rate, which presents the combined impact on payments from two kinds of error: errors in the payment system and errors in risk scores used to adjust benefit payment amounts to Medicare Advantage plans.

$96.4 billion Total Medicare Advantage payments
$13.6 billion Improper payments
14.1% Improper payment rate

http://www.paymentaccuracy.gov/programs/medicare-part-c#learnmore

Comment:

By Don McCanne, M.D.

The private Medicare Advantage plans, offered as options to the traditional government-run Medicare program, were to have their egregious overpayments reduced by provisions of the Affordable Care Act. This year they were to have a 2.2 percent reduction in their rates, but instead received a 3.3 percent increase. That is a rate 5.5 percent higher than scheduled, which increases the payments to the Medicare Advantage plans by over $5 billion! What happened?

It is easier to understand why when you realize that the program was established as an effort to privatize Medicare. The previous effort – private Medicare + Choice plans – didn’
t work since the insurers were unable to provide profitable plans at a cost comparable to the traditional Medicare program.

Recognizing that, Congress established the Medicare Advantage program, authorizing payments averaging 14 percent over the costs of traditional Medicare. This would allow the private plans to offer a more attractive option with greater benefits and lower our-of-pocket costs. Once enough people were enrolled in the private plans then they could start to make the traditional Medicare program even less attractive through greater cost sharing, through means testing that chases away the more affluent beneficiaries, and through reducing payment rates causing a further decline in the number of willing providers.

Originally, the private Medicare + Choice plans were successful in enrolling healthier, lower cost patients. With time, many of those patients required more care, and the insurers started dropping out of markets in which they experienced losses. So the next phase – Medicare Advantage.

With Medicare Advantage, risk adjustment was used to transfer funds from insurers that cornered healthier patients to insurers that enrolled more patients with greater needs. Soon it was evident that the insurers became masters at enrolling patients who were not very ill but who could be coded as having expensive problems. Although efforts have been made to further refine the risk adjustments, our government’s payment accuracy website reveals that the insurers are still able to game the system, such that 14 percent of payments remain improper – over $13 billion.

Another one of the methods used to improve payments – but not reduce payments since the proposal was to be revenue neutral – was to retain some of the funds for the Medicare Advantage plans and then use them to reward plans with higher quality ratings, 4 or 5 star. Well, when they were ready to start reducing the overpayments, as required by the Affordable Care Act, the insurers protested that they couldn’t afford the reductions. So the administration revised the quality awards to include 3 star plans, thus assuring that 80 percent of Medicare Advantage plans would have their required reductions largely offset with the quality awards. But this was not revenue neutral. No problem. The administration declared these expanded awards to be a “demonstration,” and thus drew funds from their demonstration project kitty (our tax funds). That diversion of funds will continue through 2014.

So now we’re down to this year, and, of course, the insurance industry said that they would not be able to tolerate the scheduled reductions of 2.2 percent. They called out the forces. They even had more than 160 Representatives and Senators of both parties lobbying the administration to reverse these cuts. Yesterday, it became evident that they were successful – increasing payments 5.5 percent over the scheduled 2.2 percent cut – a $5 billion bonanza. How did they do it?

The sustainable growth rate (SGR) was a formula designed to slow the growth of spending on physician care down to sustainable levels. In response, physicians adjusted the frequency and intensity of their services to make up for what they perceived to be a reduction in their reimbursement rates. The formula would require a reduction in rates that would especially impact primary care physicians. Congress has deferred the reductions for fear of losing too many physicians from the program, but that has resulted in a 25 percent deficit for which Congress needs to enact a “doc fix.” Here’s where the shell game comes in.

In violation of the standards of the Office of the Actuary, CMS decided that Congress inevitably would enact a doc fix, which then they could say represents an increase in the cost of providing care to all Medicare beneficiaries. Thus the phantom increase has been applied to the new Medicare Advantage rates. Little does it matter that there was no increase since Congress has continued to authorize the suspension of the SGR reductions. It is specious for CMS to claim that payments went up this year because of the not-yet-enacted doc fix when they have been up the whole time. Also it seems not to matter that the doc fix which they used in their calculations has not been fixed, and the money will have to come from somewhere… but certainly not from the $5 billion bonus they just gave the Medicare Advantage plans – money that never existed but will have to be drawn from Medicare payroll taxes, from general funds for Part B, and from increases in Part B Medicare premiums that will be paid by Medicare beneficiaries in the traditional plan who are not receiving any of the extra benefits that enrollees in the Medicare Advantage plans are receiving. Unfair.

But it’s worse than this. Not only is the administration bending over backwards to take good care of the private Medicare Advantage insurers, they are now engaged behind the scenes to further impair the traditional Medicare program – a strategy to further push privatization.

The Ryan/Wyden and Frist/Breaux/Thomas premium support voucherization of Medicare has proven to be too hot for the privatizers, considering the backlash that they have experienced. So premium support is off the table during the Obama administration’s negotiations with Congress over the next manufactured fiscal crisis. So what has replaced the vouchers?

It has been leaked, presumably deliberately, that Obama is proposing to combine the Part A (hospital) and Part B (physician) deductibles into one deductible for Parts A & B combined. The intent is twofold – to reduce the amount that the federal government is paying for Medicare, and to increase the sensitivity of Medicare beneficiaries to prices paid for Medicare benefits – making them empowered health care shoppers. This increase in out-of-pocket spending will especially impact the majority who do not require hospitalization and thus have lower total costs. This strategy will make those who have fewer health care needs wonder why they are paying so much more than they thought they would once they were on Medicare.

Bu that’s not all. About 90 percent of Medicare beneficiaries are protected from excessive cost sharing through Medigap plans or through employer-sponsored retirement health benefit programs. The consumer-directed camp has long wanted to bash the Medigap plans so patients would be exposed more directly to the costs. Obama’s team is proposing just that. They want to prohibit the Medigap plans from providing protection for the deductible – removing it, or at least reducing it, as a Medigap benefit. Another option that they are considering is to assess a 15 percent tax on Medigap premiums which would have a similar net financial impact as prohibiting coverage of the deductible.

So what is a person to do? You can accept the traditional Medicare program, but you will face higher deductibles, perhaps a Medigap tax, an even higher Part B Medicare premium, and perhaps means-tested premiums and benefits which will gradually shift down to middle-income individuals. This will not be pleasing to the majority who have only modest health care needs. The other option? You can enroll in a Medicare Advantage plan with greatly reduced cost sharing plus expanded benefits, and perhaps not even a plan premium, all thanks to Congress and the administration who are using our tax funds to provide very generous subsidies to the private Medicare Advantage plans.

A crummy traditional Medicare program with high out-of-pocket costs, or a slick private plan with most costs prepaid, by the government no less? It is presumed that the majority will rush over to the private plans, especially when they see what extra bennies they get.

What then? Congress can then continue to ratchet down government spending on the traditional program, causing an exodus of willing providers – stripping the program down to worse-than-Medicaid. After the private plans have become the standard and Medicare is in the tank, then what? Premium s
upport vouchers! The government gradually pares down the support for the premium you select, so you are now really an empowered shopper – empowered to buy whatever meager benefits you can afford with your measly premium subsidy.

Excuse the length of today’s message, but I hope you understand why. It’s not that I’m a soothsayer… but maybe I am.

Farewell to the NHS, 1948-2013

A dear and trusted friend finally murdered by Tory ideologues

This week’s ‘reforms’ of a treasured institution – by people who came to power promising not to mess with it – is yet another sickening assault on the poor by the rich

By Owen Jones
The Independent (U.K.), March 31, 2013

Nothing is more gut-wrenching than watching a close friend dying in front of you. And I mean beyond close: a friend who brought you into the world, helped raise you, and was there whenever you were most desperately in need. So, spare a moment for our National Health Service. Time of death: midnight, 1st April 2013. Cause of death: murder.

That this will strike many as hyperbole is because the assault on the NHS is one of the most scandalously under-reported issues in modern British history. Newsnight actually devoted a piece to scrutinising the privatisation of an institution once described by Tory Chancellor Nigel Lawson as “the nearest thing the English have to a religion”.

Only two years too late, then. Frequently, the attack is presented on the Government’s own terms: as the simple devolution of power to doctors and patients. Cuts of up to £20bn by 2015 are spun as “savings”. And who can disagree with “savings”?

A charitable explanation would be the sheer complexity of the Tory assault. The Health and Social Care Act is more than three times longer than the legislation that established the NHS in the first place. When I asked journalists adamantly opposed to the Tory plans why they had failed to adequately cover this travesty, they sheepishly responded it was too complicated: it went over their heads.

Cynical though it may be, that so many of those running our glorious “free” media are covered by private health insurance should not be ignored either.

From today, strategic health authorities and primary care trusts are formally abolished. Some £60bn of the NHS budget is now in the hands of clinical commissioning groups, supposedly run by GPs. This is a sham, though one which turns local doctors into human shields for the privatisers. In reality, the vast majority of GPs will keep on doing what they do already – looking after patients – while commissioning will be managed by private companies.

It’s worse than that. Under the Government’s Section 75 regulations – even after they were revised after huge political pressure – all NHS services must be put out to competitive tender unless the commissioning groups are satisfied a “single provider” can deliver that service. But as the British Medical Journal has asked, how can they “be sure there is only one possible provider except by undertaking an expensive tender?”

Indeed, were they to refrain from doing so, they would risk a costly legal battle. As over a thousand doctors and nurses warned last month, the regulations will “force virtually every part of the English NHS to be opened up to the private sector”. A free-for-all in the English NHS beckons.

As Dr Lucy Reynolds, a research fellow at the London School of Hygiene and Tropical Medicine, puts it, “the public sector will shrink away, and the private sector will grow”. All NHS hospitals will be forced to become foundation hospitals, laying the ground for them to be pushed into the private sector. That process is happening to my own local hospital, the Whittington Hospital, which is selling £17m worth of assets and faces 230 fewer beds and 570 job losses.

Let’s be clear what it at stake: services, people’s health and even lives. As Professor Terence Stephenson of the Academy of Medical Royal Colleges put it last week, doctors’ warnings had been ignored, and “unnecessary competition [would] destabilise complex, interconnected local health economies, in particular hospitals, potentially having adverse effects on patient services”.

And a warning from a leading member of a profession not known for overstating a case: patients could be “in danger from complications” from a fragmented NHS. Resources will no longer be distributed on the basis of need: the rules of the market now rule supreme. “It’s chaos, really,” says Brian James, until recently chief executive of the Rotherham Foundation Trust. Small and medium-sized hospitals will be “bankrupted by the market and more will be pulled into the big teaching hospitals”.

The great sell-off of our NHS is already well under way. Virgin Care now run more than 100 NHS services across the country, from radiology departments to GP clinics. Last year, they were given a £100m contract to run services in Surrey, and a £130m contract to run key NHS services for young people in Devon. Not that you’d know, of course: services run by the profiteering vultures circling ahead operate under the NHS logo, hiding privatisation from public view.

Just where is the opposition? Labour, the mother of the NHS, is hobbled by its own record. Although it injected desperately needed cash into our health services when last in power, New Labour helped to lay the foundations for this Tory offensive. Former Labour Health Secretary Frank Dobson once condemned government plans to contract out commissioning, “with private companies handing work to private hospitals… If that wouldn’t amount to privatisation, I don’t know what would.”

But that was 2006, and it was Tony Blair in office. The disaster of New Labour’s Private Finance Initiative – the equivalent of buying public services on a credit card – has left hospitals saddled with debts of £79bn. Hospital trusts face bankruptcy as a result.

Labour’s own health spokesperson, Andy Burnham, has commendably pledged to repeal the Tories’ NHS Act. But let’s not forget that the last time they were in opposition, Labour pledged to renationalise the railways: on assuming office, it was deemed politically impossible. That must not happen again, and pressure must be brought on the Labour leadership to reject their own past.

The Tories didn’t have the guts to put their proposals before the electorate. Despite its flaws, the NHS had record levels of public satisfaction before the Tories began systematically dismantling it. You need only look to the US – where their inefficient market-driven system consumes twice as much of GDP as our NHS – to see the superiority of publicly-run healthcare. New Labour’s own privatisation doubled the cost of administration in our NHS.

It was Nye Bevan who said “The NHS will last as long as there are folk left with the faith to fight for it”. It is with huge regret that I must say that – however much faith we have – we did not fight to save it. The NHS has been killed, murdered, assassinated by a Tory government. The question now is – do we have enough faith to bring it back to life?

http://www.independent.co.uk/voices/farewell-to-the-nhs-19482013-a-dear-and-trusted-friend-finally-murdered-by-tory-ideologues-8555503.html

The Salt Lake Tribune – If ACA fails, single payer is next

Last chance: If ACA fails, single payer is next

Editorial Board
The Salt Lake Tribune, March 30, 2012

The Patient Protection and Affordable Care Act should be seen as what it is: One last opportunity for the private health insurance market to prove that it can offer a service that covers the millions of Americans who were previously left out, at a cost that we — as individuals, employers and taxpayers — can afford.

If that is a goal beyond the grasp of the existing system, then it needs to be finally swept aside in favor of something that will meet those needs.

But this is, or should be, the private health insurance industry’s last chance. If Obamacare fails, a return to the cold-hearted free market is not a realistic or humane choice.

An entity with the chops to bargain down the actual cost of care is necessary. At the very least, a robust public option, an idea President Obama bargained away in the creation of the ACA, must be provided. Better still would be a single-payer plan — Medicare for all.

http://www.sltrib.com/sltrib/opinion/56079343-82/care-health-insurance-cost.html.csp

Comment:

By Don McCanne, M.D.

It is already clear that the structure of the private health insurance market that is perpetuated by the Affordable Care Act will continue to fail us – providing us only care that is too expensive and leaves too many out. Not even a competing “robust public option” can alter that. Now is the time to enact a single payer plan – an improved Medicare for all.

Let’s hope that the editorial board of The Salt Lake Tribune – and all other influential observers of the health care scene – will recognize sooner rather than later that the private insurance industry has failed us once again and has to go.

Registered Nurses to the Rescue

By Andrew Coates, M.D.
WAMC Northeast Public Radio, March 29, 2013

In a small news article this week in the New York Times, Nina Bernstein reported that a provision of the New York State budget to allow for-profit hospitals was been dropped after opposition from the Assembly leadership, specifically the intervention of Assemblyman Richard Gottfried, chair of the Assembly’s Health Committee.

While hospitals may be run as for-profit businesses in many states, all New York state hospitals are presently either not-for-profit or public institutions. Keeping for-profit hospital care out of New York is good news for people in New York who need hospital care and marks a successful defense of the public interest.

According to the Times’ Stephen Berger, “an investment banker who has long advised the state on health care” was behind the push.

Republican leaders in the New York State Senate proposed to expand the pilot project to allow 10 for-profit hospitals.

The New York State Nurses Association vigorously opposed the measure to allow for-profit hospitals in New York. The nurses organized a grassroots push of over 2,000 phone calls and hundreds of in-person visits to lawmakers, including a last-minute push of busloads of nurses traveling to Albany. Jill Furillo, executive director of the New York State Nurses Association, was quoted in the Times saying: “For-profit health care does not work. People in the Assembly listened to us, and so did Gov. Andrew Cuomo.”

Proponents of for-profit hospitals in New York, like Mr. Berger, point to the need for capital investment in the health care infrastructure.

Berger led a state-appointed committee in 2011 that recommended closing all public hospital beds in the borough. Investment in health care works for the investors, but it doesn’t work for the patients or the caregivers. Public money must ultimately fund the care of the vulnerable and the indigent. Allowing investment companies to take a cut increases costs and robs caregiving.

For-profit hospitals amount to bad public policy. For-profit hospitals have also been shown, in peer-reviewed policy science literature, to provide inferior quality when compared with their nonprofit counterparts. For-profit hospitals also lead to greater health spending than nonprofit ones.

Among the convincing research are studies by Dr. P.J. Devereaux and his team. When it comes to hospitals, Devereaux found that charges at for-profit hospitals were 19 percent greater than at their nonprofit counterparts. In a previous paper, Devereaux and colleagues showed that mortality — death rates — were 2 percent greater at for-profit hospitals.

A cardiologist, Devereaux practices and teaches and performs his research at McMaster University in Ontario, a world-renowned center for evidence-based medicine. Devereaux has also researched the question of for-profit dialysis centers and for-profit nursing homes.

When compared with nonprofit institutions, for-profit dialysis and for-profit nursing homes, like for-profit hospitals, are more expensive and more deadly than nonprofit ones.

Moving a hospital into the private sector shifts its fundamental purpose. A for-profit institution primarily exists to remunerate investors and shareholders. The public service model — or at the very least nonprofit, community-based institutions — still organizes care with a primary responsibility to patients and their caregivers.

During our lifetimes health care has been transformed from its charitable roots into a profit-seeking industry.

For-profits operate over 84 percent of home health care agencies and 85 percent of dialysis clinics. Ninety-six percent of the nation’s outpatient surgery centers are for-profit, a sector that has grown by more than a third since 2004. Hospice care has evolved into a $14 billion business, run mostly for-profit. For-profit hospice!

Over three-fourths of nursing homes are for-profit nursing homes — and the largest owner of for-profit nursing homes are private equity firms run by investment bankers. The exception has been hospitals, where nonprofits and publicly operated facilities had 88 percent of revenues in 2010.

I love our nursing colleagues. Judy Sheridan-Gonzalez, RN at Montefiore Medical Center and elected NYSNA leader, said: “We’ve won this battle, but our fight for New York patients is just beginning. Our opponents can re-introduce these changes as non-budget bills at any time this legislative session. That’s why we’re not letting down our guard.”

For-profit hospitals are bad public policy. But with the trend toward privatization — you might call it the profitization — of health care, the nurses’ public advocacy will remain as indispensable to the patient’s interests as their bedside care.

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

You can listen to Dr. Coates’ radio broadcast here:
http://www.wamc.org/post/andrew-coates-registered-nurses-rescue

Will ACA raise costs 30%?

Factors Affecting Individual Premium Rates in 2014 for California

By Robert Cosway and Barbara Abbott
Report prepared for Covered California, Milliman, March 28, 2013

Covered California retained Milliman to evaluate the changes in individual health insurance premium rates that might be expected due to the implementation of the Patient Protection and Affordable Care Act (ACA) in 2014.

Summary of Potential Rate Changes for People Currently Insured (includes premium tax credits and cost sharing subsidies)

Premiums
-83.8% Less than 250% FPL
-46.6% 250% to 400% FPL
+30.1% Greater than 400% FPL

Cost at time of care (cost sharing)
-61.8% Less than 250% FPL
-27.3% 250% to 400% FPL
+ 1.2% Greater than 400% FPL

Total cost of care: Premiums plus cost sharing
-76.2% Less than 250% FPL
-39.9% 250% to 400% FPL
+20.1% Greater than 400% FPL

In general, we expect the average currently insured to experience premium increases because they will be part of a new risk pool with a higher average health status. The federal premium tax credits and cost sharing subsidies will more than offset these increases for many low income individuals.

http://www.healthexchange.ca.gov/Documents/Factors%20Affecting%20Individual%20Premiums%20FINAL%203-28-2013.pdf

And…

Cost of the Future Newly Insured under the Affordable Care Act (ACA)

Society of Actuaries, March 2013

Note that the ACA’s affect on premium is not modeled in this research; rather, long-term relative claims cost is modeled.

This analysis will primarily focus on the individual, non-group market.

Finding 3: The non-group cost per member per month will increase 32 percent under ACA, compared to pre-ACA projections.

The post-ACA figures include the impact of a) high risk pool members, b) employers dropping group coverage, and c) increased morbidity from selection by those currently uninsured who now purchase coverage.

http://cdn-files.soa.org/web/research-cost-aca-report.pdf

Comment:

By Don McCanne, M.D.

These two actuarial reports project the potential financial impact of the Affordable Care Act (ACA) on individuals obtaining coverage in the non-group market. The reports are quite complex. Let’s see if we can separate what these reports really say from what the politicians are saying about them.

The excerpts above do not refer to employer-sponsored coverage nor do they refer to Medicaid. They refer only to the differences in plans offered in the individual market before ACA and those to be offered after the ACA exchanges are established next January.

The Society of Actuaries reports that cost of claims, not premiums, will increase 32 percent, but, again, only in the individual market. This increase is due to the change in the mix of individuals covered by these plans. The plans will include more costly individuals who have been insured by the state high-risk pools; they will include individuals dropped by employers from their group coverage, and they will include the previously uninsured who have increased morbidity (i.e., poorer health status).

So those politicians who are using this report to claim that “health care costs are going up 30 percent under Obamacare” either do not understand the report, or they are being dishonest. It is only the insurance pools in the individual market that add in unhealthy individuals that are projected to have 30 percent increases in the cost per enrollee, when compared to the cost per enrollee of current plans in the individual market that have been successful in keeping out individuals with greater health care needs.

The Milliman analysis looks at the pre-ACA and post-ACA change in the premiums, not the change in the cost of claims, but they also include the changes in what the individual actually pays when the premium tax credits and cost sharing subsidies are included. Those individuals with incomes below 400 percent of the federal poverty level will pay significantly less than they would in the current individual market.

For individuals who do not receive subsidies or tax credits, the premiums will increase about 30 percent – again because of the change in the mix of the insurance pools which will include enrollees with greater needs. But the total premiums plus cost sharing are expected to increase about 20 percent since there will be almost no change in cost sharing for these higher-income individuals.

So are the costs for the individual market insurance pools going up 20 percent or about 30 percent? Considering the differences in higher-income individuals in one study and the entire individual market in the other study, the separate impact on premiums, cost sharing, and claims, and the variations in actuarial assumptions, these numbers are quite close. Let’s say 25 percent.

But the number doesn’t matter. Whatever it is, it merely represents the fact that insurers offering individual plans must now sell them to anyone who wishes to enroll, no matter how expensive their medical problems may be. By segregating individuals into different insurance pools, the premiums will have to be set based on how healthy or sick that pool is, especially since risk adjustment is only capable of correcting for just a minor portion of the inequities. Administrative complexity and inequities are inevitable under ACA.

The lesson is that it would be much simpler and much more equitable to have a single insurance pool that covers everyone, and fund it through progressive tax policies. Fix Medicare, improve the tax structure, and use it for everyone.

The future of the NHS — irreversible privatisation?

Observations, Health and Social Care Act
BMJ, March 20, 2013

This is the edited transcript of a video interview carried out on 3 March 2013 by Jill Mountford with Dr Lucy Reynolds, research fellow at London School of Hygiene and Tropical Medicine. Dr Reynolds has studied the background of the NHS in detail, and in the interview she shares her view of the consequences of the NHS reforms and possible privatisation of the NHS.

JILL MOUNTFORD: Lucy, can you explain to us what is going on right now? The Health and Social Care Act has been law now for almost a year, and we thought surely that’s all going to go ahead. All of a sudden there is a lot of movement, a lot of anxiety and a lot of agitation around something that’s happening in parliament that’s going to have a big effect on the National Health Service. What is it and why?

LUCY REYNOLDS: The health and social care bill was passed in the form as if it were an aeroplane with no engines. The structure was all there. Its significance was not very plain to many people unfortunately. They looked at it and couldn’t really understand what they were looking at. They couldn’t find the thing in it that was actually going to accomplish the privatisation because really the only marker of it was a little clause explaining that regulations would be issued.

Now those regulations [section 75] are with us, and those regulations provide the jet engines to make that privatisation go ahead. So all of the rest of the plane was put in place last year, and now at the very last minute before this whole thing happens on 1 April 2013 the regulations are coming into place to show that everything has to be put out to competitive markets by CCGs [clinical commissioning groups] and the national commissioning board. That will create rights for private providers to supply which will not only allow them to take quite a lot of the share of the NHS budget for their business right now, it also potentially makes the privatisation irreversible in the future.

JILL MOUNTFORD: For somebody coming to this question fresh who is very concerned, what does this mean? From 1 April what will this mean for them accessing services, and how will it unfold over the next few years?

LUCY REYNOLDS: We’re not going to have a big bang privatisation for the NHS. We’re going to have a very quiet one.

What has happened is that all of the rules that control health financing have been gradually changed since the New Labour times. Overall, we now have the NHS reorganised in such a way that it can be relaunched as a mixed market, so not just the public health sector service, but also a healthcare industry. The rules are structured in such a way that there will be a gradual transition between those two groups. The public sector will shrink away, and the private sector will grow.

But because there will never be an announcement in parliament that the NHS is privatised, and because the private providers will be allowed to use the NHS logo for anything that they are getting NHS funding for, it is very likely that the general public will not be aware that the private sector has in fact come in and taken over whatever bits of the NHS it finds profitable until probably service provision gets fairly bad.

JILL MOUNTFORD: Lucy, you made reference to a mixed market in the National Health Service in the near future. Why is this such a bad thing?

LUCY REYNOLDS: Well, it sounds like a good idea to have diversity and options and these kinds of things, and that would be fine if it weren’t for the fact that the rules of the market are thoroughly stacked. We know for certain that organising [healthcare] as a public sector service is the cheapest and most effective way of providing healthcare. And that is broadly because the market model does not fit healthcare. The market model includes assumptions that both parties are in possession of all information about the subject of the transaction. In markets where the consumer has to rely upon the supplier for guidance, what you get isn’t a market that clears down to a minimum price and is efficient. What you get is soaraway inflation and abuse within that market.

Of course the US health system is the most salutary warning to us, but there are an awful lot of other countries which have had their health services privatised over the last couple of decades.

If you pay doctors only when they do work, then they over-treat people. If you make sure that medical facilities have no way of making any money other than by selling things, then they become salesmen, not advisers and advocates for the public. And actually in the world we have one of the very best public services, and compared to other developed countries it’s also one of the most cost effective. There were several of these in Europe. Sweden’s has been privatised. Spain’s has been privatised. Ours is being privatised. In fact 1 April 2013 is also the day the Spanish government signs over control of its national health service into the competitive market.

JILL MOUNTFORD: So this is an ideological attack on the National Health Service. It’s an attack on the founding principle of free healthcare at point of need.

LUCY REYNOLDS: There is certainly an ideology promoted around privatisation, but that is a rationalisation to convince people who otherwise wouldn’t come on board. At the bottom of it it’s about making money.

JILL MOUNTFORD: You made reference to CCGs and how they come into play from 1 April. Can you tell us a little bit about the size of the budget that they’re going to be holding, the power, the massive power shift that’s going to take place and what this means?

LUCY REYNOLDS: The health service is being restructured on to an insurance compatible footing, and the CCGs are technically state-owned insurance schemes. So they are going to be taking on around 80% of the NHS budget and they are going to be parcelling it out to providers. They have been told that they are going to have a lot of autonomy in that and that they will be able to represent the interests of their patients in the matter.

That bit doesn’t appear to be able to be delivered when we have these regulations in place because what the regulations say is that commissioners will put out contracts according to competition law, and they will decide according to competition law. If anybody that didn’t get the contract feels that they don’t like the decision and that it could be faulted on failure to comply with competition law, they are permitted to complain to the sector regulator, Monitor, which is required to enforce competition law. So once everything gets put through the market, the CCGs won’t actually have any autonomy in the matter.

And the reason we have been told about GP empowerment and patient empowerment is firstly to lure the doctors into complying with this. They are belatedly starting to understand that this has been a trick.

The second reason GPs have been told that in CCGs they would have the chance to advance the interests of patients is because it’s very important for our politicians that nobody blames them. The public has been induced to believe that the GPs are taking over and will be in control so in five years when the whole thing is complete chaos and you can’t get decent care, it won’t be the politicians’ fault.

JILL MOUNTFORD: What is the experience of the last 15 years, 13 years under the Labour government though? Is there anything that the Labour government did whilst it was in power to give people the confidence to feel they can rely on Labour to sort out the NHS?

LUCY REYNOLDS: All of the stuff about the purchaser-provider split, the creation of commissioning within the NHS, the first bringing in of these competition regulations direct from Brussels in 2006-2007 by the Labour government, all of this has been absolutely fundamental to
setting the thing up. I think the Labour government has been absolutely critical to the success of NHS privatisation and continues to be so.

JILL MOUNTFORD: On 1 April people are talking about the NHS is now going to be in the thick of being a privatised service. What exactly does that mean?

LUCY REYNOLDS: It’s not suddenly going to turn into a privatised service on 1 April. What happens on 1 April is a bunch of legal and operational changes that affect the way that the NHS functions internally. In general this reform is a health financing reform. So we’re finishing the transition away from the original form of funding of the NHS and moving into a market system which is going to be full-on market.

JILL MOUNTFORD: So full-on market means people are going to be competing for contracts, profits are going to be made, and is profit going to be the driving force as opposed to patient care?

LUCY REYNOLDS: Profit is already the driving force as opposed to patient care, even within traditional NHS hospitals. There won’t be a sudden change, but there will be a new set of legal arrangements which will cause certain things to happen more than others.

And the things that are going to happen include a lot of private providers coming into the health service and a lot of public providers going bust, because every time the public provider of a service does not get the contract to carry on providing that service because a private provider has got it instead, that service will be shut down permanently because there won’t be any more money to pay the staff and keep the lights on.

So gradually this system will kill off all our traditional NHS providers apart from maybe some big names. I’m expecting Great Ormond Street to survive. I’m expecting the Royal Marsden to survive. There are a few other really high profile hospitals around the country where the brand name is so valuable that they might carry on.

It is intended that all NHS hospitals be pushed through the foundation trust pipeline, which is an arrangement organised by competition regulator Monitor to privatise all of our hospitals. So all of our hospitals that aren’t yet foundation trusts are being turned into them, and the foundation trusts are being pushed out into the private sector. So there is an intention that within a few years there simply will not be any public sector health provision, either because it’s been driven out of business by a stacked competition or because it’s just been straight privatised by Monitor.

JILL MOUNTFORD: Rich people have forever used private healthcare and have benefited from it. Now we’re going to have that. What’s the big deal?

LUCY REYNOLDS: Well, actually, you see we don’t really have a proper private health insurance scenario in this country at all because the private health insurance only offers certain kinds of transactions. They like to keep it simple and they like to keep it profitable. So if there is any kind of problem where somebody has got two illnesses at once maybe, or they don’t react to drugs well so you have to find other solutions, or if there is any kind of complication, the private hospitals don’t deal with those people any longer, so they just refer everybody back into the NHS.

People in this country seem to believe you can use private health insurance for everything. But the truth is they are not interested in anybody that’s going to cost them money. So they will certainly make sure that if you are already ill, they charge you a lot, and usually they will exclude ongoing conditions. It is very, very partial and very skewed, and frankly no use whatsoever to anybody that actually needs a lot of medical care. It’s a great way for the insurance companies to make money, but it’s a terrible way to deliver medical care.

JILL MOUNTFORD: You talk of private providers coming in to take over services and public providers losing out in the new commissioning set-up post 1 April. Who are these private providers? Are they health experts?

LUCY REYNOLDS: Well, under the rules of competition law it’s not permitted to really restrict your providers. But a lot of them are general outsourcing companies that can just see a useful income stream. They’re not people who have any kind of commitment to public health or the individual welfare of patients.

And you know the government has been very careful to muddy the water and make out that a public healthcare provider is pretty equivalent to a private healthcare provider, but actually their goals are completely different. In the public sector doctors attempt to arrange to have enough money to treat the medical needs of the people that come to them for help. The purpose is treatment, and the money is a means to an end.

Once you move into the private sector, company law forces company staff to prioritise making money for the shareholders above everything else. The whole system is about making money. What we need to do is move back to a public service model in which things are arranged so doctors can help people who are ill. At the moment this reform is taking us in quite the opposite direction.

JILL MOUNTFORD: So once the rules have locked in from 1 April, is there anything that can be done to prevent the private market or the market from governing our health service from there on?

LUCY REYNOLDS: Those rules could be taken away again. The problem comes when the contracts are awarded to the private sector. So at the moment an awful lot of things are being done by traditional NHS providers. But we will now have a regime where everything has to go out to tender and the private contractors are considerably advantaged in winning those tenders.

JILL MOUNTFORD: Why are they advantaged?

LUCY REYNOLDS: They designed the rules, and the tendering process [is] quite highly technical—legally, financially and operationally. Just having medical knowledge is not enough. You need people who are good on legal and financial stuff and are experts in bid preparation. Private companies have a dedicated bid team who do nothing but search for bids to apply for, prepare the bids, and pull in the external consultants to get exactly the right technical expertise in.

There are some other reasons why it’s stacked, Tory MP Sarah Wollaston started asking questions [at the Health Select Committee] about cherry-picking to the economists in charge of Monitor, And they explained that in order to resolve the cherry-picking problem, which is that the private providers only take the bits they can make the most money out of and ignore everything else, a special mechanism has been put in place which uses what is called a local tariff facility, which is in the Health and Social Care Act.

The arrangement is that where a provider has been cherry-picking, the CCG [will] be able to say well, since you don’t offer the full service, and the full standard tariff is set up to reflect a provider which does offer the full service, you need to drop your prices. If Monitor approves that, then the CCG and the private provider can make a deal to have a special lower tariff, allowing competition on price which the government said would be impossible. And that means that the private providers can systematically undercut all of the public providers on price.

And every time one of those contracts is lost for the first time into the private sector, it means that that the public sector capacity to deliver that service disappears because there is nobody to pay the ongoing salaries. So this is a very important mechanism, and it goes directly against the assurances that our politicians gave us.

JILL MOUNTFORD: I assume that it will be bigger organisations that are running bigger chunks of healthcare. Is that not likely to be a model or not?

LUCY REYNOLDS: The healthcare won’t be run in the same way as presently. They’ll do it all in the way that makes them the most money so it will look d
ifferent. I mean I’m sure the actual physical infrastructure won’t change very much to start with, and certainly the logo will be the same. But the entire ethos and way of doing things and likely outcomes and transparency—all of that’s going to be different.

JILL MOUNTFORD: What does this mean—we’ve got lots of fragmented care, some privatised, the cherry-picked stuff privatised, the profit-making stuff privatised, the less profitable, the more nitty-gritty, the more needed stuff perhaps, more long-term stuff will be there in the public sector.

LUCY REYNOLDS: But with not enough budget to actually do it any longer. What is plain is that this has been a long-term plan with things set up in a predictable way such that the outcome is likely to be privatisation of the NHS.

Footnotes
Jill Mountford is an activist for the Alliance for Workers’ Liberty. The full interview can be viewed at www.youtube.com/watch?gl=CO&hl=es-419&v=OkTnCtg_Omk.
Provenance and peer review: Not commissioned; not externally peer reviewed

Cite this as: BMJ 2013;346:f1848

CORRECTION: In this Observations article (an edited transcript of a video interview by Jill Mountford with Dr Lucy Reynolds on 3 March 2013), Jill Mountford wishes us to clarify that it was as a member of the steering committee on the “Save Lewisham Hospital” campaign that she conducted the interview (BMJ 2013;346:f1848, doi:10.1136/bmj.f1848).
Cite this as: BMJ 2013;346:f2047

http://www.bmj.com/content/346/bmj.f1848?utm_medium=email&utm_campaign=7362&utm_content=BMJ%20-%20What%27s%20New%20Online&utm_term=The%20future%20of%20the%20NHS%E2%80%94irreversible%20privatisation%3F&utm_source=Adestra_BMJ

Digital archive of Health/PAC Bulletin now available

By the Health/PAC Archives Workgroup
Press release, March 25, 2013

Before there was an Internet, with blogs, listservs and web pages to turn to, there was the Health/PAC (Policy Advisory Center) Bulletin, a hard-hitting and muckraking U.S. journal of health activism and health care system analyses and critiques.

A new website, www.healthpacbulletin.org, contains a complete and searchable digital collection of Health/PAC’s influential articles, which were published from 1968 through 1993. The site is easily accessible and free.

During the bulletin’s quarter-century existence, Health/PAC staffers and authors in New York City (and, for a brief time, in a West Coast office in San Francisco) wrote and spoke to health activists across the country on every issue from free clinics to women’s health struggles to health worker organizing to environmental justice.

Health/PAC both reported on what was going on and reflected back on a wide variety of strategies and tactics to build a more just health care system – a conversation that continues today.

Health/PAC coined the terms “medical empire” and “medical-industrial complex” to capture the ways the profit motive distorted priorities in the American health care system. It critiqued big Pharma and rising health care costs, explored the differing forms of health activism, and made it clear that a seemingly disorganized health care system was in fact quite organized to serve ends other than health care.

Its first book, “The American Health Empire” (1970), published by Random House, brought its analysis to national attention. Other edited collections of the Bulletins followed: “Prognosis Negative” (1976) and “Beyond Crisis” (1994).

Many of today’s leading health activists, reformers and policy scholars got their start at Health/PAC.

The new website adds immeasurably to the resources documenting the history of mid- to late-20th-century American health policy and politics. Activists, scholars, journalists, practitioners, professors, and students will all find these bulletins a source of useful analysis and information. This is not only a way to learn about the late 20th-century history, but to consider why certain issues continue to plague our health system.

The site is a work in progress and its editors welcome feedback and suggestions. It was a real labor to get these collected and available and we hope readers will find the site a useful resource.

For more information, please contact the archives workgroup at contact@healthpacbulletin.org.

Merlin Chowkwanyun, Feygele Jacobs, Ronda Kotelchuck and Susan M. Reverby for the former HEALTH/PAC staff and board.

The Health/PAC Archives Workgroup: Merlin Chowkwanyun, Feygele Jacobs, Susan Reverby, Ronda Kotelchuck, David Rosner, Oliver Fein and Robb Burlage.

HMOs score poorly on access

HMO Quality Ratings Summary - 2013

Office of the Patient Advocate
State of California

“Health Care Quality is getting the right care at the right time.”

*     poor
**    fair
***   good
**** excellent

First rating is for “HMO provides recommended care,”
and the second rating is for “Getting care easily”:

*** *   Aetna Health of California, Inc.
*** *   Anthem Blue Cross – HMO
*** ** Blue Shield of California – HMO
*** *   CIGNA HMO
*** *   Health Net of California, Inc.
**** ** Kaiser Permanente – Northern California
**** *   Kaiser Permanente – Southern California
*** *   Sharp Health Plan
*** *   UnitedHealthcare of California
*** ** Western Health Advantage

http://reportcard.opa.ca.gov/rc2013/hmorating.aspx

Comment:

By Don McCanne, M.D.

California’s Office of the Patient Advocate defines health care quality as getting “the right care at the right time.” So how well are the HMOs doing?

To assess whether or not the right care is being provided, the HMOs report their compliance with standard Health Plan Employer Data and Information Set (HEDIS) measurements. The HMOs make certain that their health care professionals are aware of the 37 HEDIS measurements that will be made, and that they know that it is important to be certain that compliance is documented.

All ten of the California HMOs were able to document that they were either “good” or “excellent” at providing the right care for these 37 measured clinical recommendations. No measurement was made of the hundreds of thousands of other clinical decision processes that take place. It remains debatable as to whether 37 HEDIS measurements are adequate to determine if the HMO is always good or excellent at providing the right care, but there are those of us who have our doubts (pardon the cautious, restrained language).

So regardless of whether or not it was the right care, was it provided at the right time? Patients were surveyed about “experiences in getting appointments with doctors and other providers when needed and getting tests, treatments and other care without delay.” No HMO was rated excellent; no HMO was rated good. Three were rated fair, and seven were rated poor. At least from the patients’ perspective, care was not being provided at the right time.

Under a single payer system, patients have free choice of their health care professionals and institutions. HMOs take away that choice, subjecting patients to severe financial penalties should they obtain care outside of the HMO. The results of this survey suggest that, once HMOs have captive patients, they limit access by limiting system capacity and by establishing queues that are beyond the tolerance of their patients.

The delegated model of HMOs has no place in a single payer system since they function more as intrusive private insurers rather than as truly integrated health care delivery systems.

HMOs that are fully integrated health care delivery systems, such as Kaiser Permanente, do have a place in a single payer system. Right now, Kaiser is heavily dependent on workers enrolling in Kaiser’s plans through their employment, often choosing Kaiser as their least-worst option.

Once we have a single payer system with patients choosing their health care based on perceived quality, to compete successfully with the rest of the health care delivery system, Kaiser will have to show that they can deliver the right care at the right time. After all, that’s what single payer is all about.

pnhpf3a

Comment:

CMS Ensures Greater Value for People in Medicare Drug and Health Plans

Subject: Advance Notice of Methodological Changes for Calendar Year (CY) 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2014 Call Letter

Subject: Announcement of Calendar Year (CY) 2014 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter

AHIP Statement on Final 2014 Medicare Advantage Payment Rates

Medicare Advantage Plan Star Ratings and Bonus Payments in 2012

Comment:

This week’s ‘reforms’ of a treasured institution – by people who came to power promising not to mess with it – is yet another sickening assault on the poor by the rich

Comment:

Cost of the Future Newly Insured under the Affordable Care Act (ACA)

Comment:

Comment:

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