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Hundreds rally in Oregon for single-payer health care

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Hundreds rally in Oregon for single-payer health care

By Bennett Hall
Corvallis Gazette-Times, Feb. 4, 2013

SALEM, Ore. — Hundreds of people from all over Oregon rallied in Salem on the first day of the legislative session to call attention to what they claim is a broken health care system and call on lawmakers to enact reforms.

An estimated 1,000 protesters, many brandishing signs and wearing red “Health Care Is a Human Right” T-shirts, packed the Capitol steps to hear a dozen speakers tell horror stories of out-of-control medical costs and urge support for a single-payer health care bill.

Ten buses — including two from the mid-valley — delivered people from as far away as La Grande and Bandon, Ashland and Prineville for the lunchtime rally, organized by Health Care for All Oregon.

Rep. Michael Dembrow, D-Portland, got a hearty cheer as he took the stage to talk about his plans to reintroduce the Affordable Health Care for All Oregon Act, which foundered in the 2011 session.

This time, he said, the notion of a comprehensive taxpayer-supported health care system for all Oregonians has broader support, with 19 co-sponsors already on board, compared to 11 last time.

But he also predicted that a statewide ballot measure would ultimately be required to enact a single-payer system in Oregon. Using emotionally charged language, he exhorted the audience to work toward passing an initiative in the 2016 election.

“Brothers and sisters,” Dembrow said, “the real work here is not going to be done inside this building. It’s going to be done outside this building, in all parts of Oregon, by all of you.”

Two of his co-sponsors, Reps. Jennifer Williamson of Portland and Dave Gomberg of Lincoln City, also spoke in support of the bill.

Monday’s rally had a festive air, with musicians performing protest songs, a 10-foot-tall puppet dubbed Big Nurse, and activists wearing open-backed hospital gowns that exposed padded foam derrierres to illustrate what private insurance just won’t cover.

The crowd, roughly six times the size of a similar gathering two years ago to support Dembrow’s previous single-payer bill, chanted and sang, cheered and shouted for a parade of speakers lamenting the ills of private heath insurance.

Wes Brain of Ashland recounted his daughter’s nine-year struggle with leukemia — and with a succession of insurance companies that didn’t want to pay for her care.

He recently marked the fourth anniversary of her death — and began his own battle against cancer. Unlike his daughter, Brain has no insurance.

“The bills are coming in,” he said, “and I just don’t have the money to pay them.”

The Rev. Joel Miller, pastor of the Unitarian Universalist Fellowship of Corvallis, spoke of his personal conversion from a free market capitalist whose parents ran a small business to a single payer advocate who sees how runaway health care costs are crippling the economy. Now that he’s an employer himself, he said, his eyes have been opened to the shortcomings of a system that ties health care access to employment.

“The system of coverage I’m working with is expensive, inefficient and flat-out immoral,” he said. “My employees live in terror of losing their health coverage. We all live in terror.”

Between speakers, event organizer Jess Hoffman of Health Care for All Oregon urged attendees to meet personally with their local legislators and lobby for single-payer health care.

“We really want to make sure we capture the energy of this moment today,” she said, “so we can use it for the rest of the movement.”

http://www.gazettetimes.com/news/local/hundreds-rally-for-single-payer-health-care/article_da39fec6-6f1e-11e2-bf35-001a4bcf887a.html?comment_form=true

CMS shows that the healthy go in and the sick come out of Medicare Advantage plans

Impact of Continued Biased Disenrollment from the Medicare Advantage Program to Fee-for-Service

By Gerald F. Riley
Centers for Medicare & Medicaid Services, Medicare & Medicaid Research Review , 2012: Volume 2, Number 4

Background: Medicare managed care enrollees who disenroll to fee-for-service (FFS) historically have worse health and higher costs than continuing enrollees and beneficiaries remaining in FFS.
 
Objective: To examine disenrollment patterns by analyzing Medicare payments following disenrollment from Medicare Advantage (MA) to FFS in 2007. Recent growth in the MA program, introduction of limits on timing of enrollment/disenrollment, and initiation of prescription drug benefits may have substantially changed the dynamics of disenrollment.

Conclusions: Despite substantial changes in policies and market characteristics of the Medicare managed care program, disenrollment to FFS continues to occur disproportionately among high-cost beneficiaries, raising concerns about care experiences among sicker enrollees and increased costs to Medicare.

Discussion

Despite substantial changes in policies and market characteristics of the Medicare managed care program, disenrollment to FFS continues to occur disproportionately among high-cost beneficiaries. Disenrollees had higher risk scores and incurred higher risk-adjusted payments than beneficiaries in FFS. Their high risk scores are in contrast to the risk scores of the general MA population, most of which is enrolled in plans with average risk scores similar to or less than local FFS experience (United States Government Accountability Office, 2010). Recent studies have also shown that MA plans continue to experience favorable selection through enrollment of low-cost beneficiaries (MedPAC, 2012; Riley, 2012). These research findings suggest a pattern of selective disenrollment whereby disenrollees are sicker and more expensive than the beneficiaries who remain enrolled in MA plans. This selective disenrollment potentially increases Medicare costs through the return of high-cost beneficiaries to the FFS sector, leaving behind a healthier and lower-cost population in the capitated MA sector.

The Affordable Care Act mandated changes to MA payment methods that will result in significant decreases in payment rates and bring them closer in line with plan costs. This may intensify pressure on plans to encourage selective disenrollment.

Disenrollees from PPOs and PFFS plans incurred lower payments post-disenrollment than disenrollees from HMOs and similar types of plans, and their average payments were closer to predicted levels. Possible explanations include a less chronically ill disenrollee population from PPO and PFFS plans, or less unmet demand for services when they transitioned to FFS. Less selective disenrollment from PPO and PFFS plans may be attributable to the more extensive network of providers available under these types of plans. Beneficiaries with chronic illnesses have a greater choice of physicians to manage their conditions and have more opportunities to switch providers if they become dissatisfied with their care. This expanded choice of providers may reduce the incentives for chronically ill enrollees to leave these types of plans.

http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/MMRR/Downloads/MMRR2012_002_04_A08.pdf

Comment:

By Don McCanne, M.D.

Earlier studies of the Medicare + Choice plans and more recent studies of the successor Medicare Advantage plans have shown that, when it comes to managed care, the healthy go in and the sick come out. Taxpayers are paying more for the healthier, less-costly patients who are enrolled in the Medicare Advantage plans, and then pay more for the sicker patients who return to the traditional Medicare program (adverse selection). This CMS study adds to that evidence.

One interesting finding in this study is that those enrolled in PPO or FFS Medicare Advantage plans did not show as great post-enrollment cost increases. It is likely that the patients did not experience as much of a limitation in services in PPO plans, such as those offered by Blue Cross and Blue Shield, since their networks tend to include a much larger percentage of the physician population.

There are two important take-home points here. One is that we should stop wasting taxpayer funds on both the excesses of the Medicare Advantage plans, and the costly adverse selection burden that they place on the traditional Medicare program.

The other point is that we should reject the policies of the private insurance sector that is taking away our health care choices by establishing networks of health care providers. Our traditional Medicare program includes a choice of any provider, except for the rare physician who totally opts out of the Medicare program.

For greater economy and expanded choice, we should change to a program of an improved Medicare for everyone.

Redefining affordable

The future of health insurance premiums under the ACA

By Pippa Abston, M.D.
Pippa Abston’s blog, Feb. 2, 2013

In a move that goes beyond redefining the word “is,” the IRS has released its final rule on what will be considered “affordable” premiums for families. Although you will not be on the hook for a tax penalty if the premiums for your entire family exceed 8 percent of your income, an increasingly common problem, you will not be eligible to purchase a subsidized plan on the coming Exchanges as long as your individual premium for your employer plan is 9.5 percent or less of your household income.

Do you see where this is going? Let’s say your employer really doesn’t want to pay the wrist-slap penalty for failing to provide you with an “affordable” insurance option. So she finds a policy that costs exactly 9.5 percent of your total household income, which includes your spouse’s two part-time jobs. You have two children, and your spouse’s jobs don’t include benefits because they are part-time. Could a policy covering all four of you cost 38 percent of your income?

I used to have an option for individual or family coverage through my employer, but now there are premiums based on number of persons in my family. Even those of us with decent incomes are going to be hard-pressed to come up with that money, and remember — this is only the premium. It does not include the “cost-sharing” of co-pays, deductibles, and non-covered services.

For low-paying jobs, where it would be hard to find a policy that meets the criteria of essential health benefits for 9.5 percent of salary, look to insurers and the feds to get really creative finding loopholes. Less of your body might be essential than you now imagine. There are already waivers for so-called “mini-med” insurances until 2014. Do you really believe the waivers will disappear on schedule? I’m not holding my breath. Some sort of redefinition is probably already in the works.

If a state refuses to participate in the Medicaid expansion, your children might still be covered if you are under the poverty line. Children in families up to 300 percent of poverty are generally eligible for the SCHIP programs (ALLKids in Alabama). But what about you and your spouse? Oh, well, the IRS says. You don’t have to buy insurance — we won’t penalize you. You can “keep the coverage you have,” even if it is no coverage.

Can you hear me now? As long as private insurers are part of our health care system, our health is at risk. The insurers need to keep our care costs high, so they can rake in their allowed percentages, so there will be little effort to make serious improvements to health care that would keep us healthy at less cost — steps like eliminating subsidies for producers of toxic and obesity-promoting foods, getting corporate food out of the school lunch program, repairing the broken FDA, reducing our exposure to environmental poisons, or financing our public health system effectively.

Let’s get serious about health care reform — we need Medicare for All, now more than ever. Look at the estimates for taxpayer funding under this system, a pre-paid plan with no co-pays or deductibles. It’s affordable for ALL of us, no creative redefining needed. Medicare for All — everybody in, nobody out. Look for a chapter of PNHP (Physicians for a National Health Program), Healthcare-Now, or other single payer groups in your area, and find out what you can do to make it happen! If you are in North Alabama, we’ll be expecting you.

Pippa Abston M.D., Ph.D., F.A.A.P., is a general pediatrician who sees patients and teaches medical students and residents in Huntsville, Ala.

http://pippaabston.wordpress.com/2013/02/02/redefining-affordable-the-future-of-health-insurance-premiums-under-the-aca/

Americans deserve the kind of health care Sen. Kirk received

By Pamella Gronemeyer, M.D.
St. Louis Post-Dispatch, Letters, Feb. 2, 2013

We are all happy about and inspired by Sen. Mark Kirk’s recovery from the unexpected and catastrophic cerebrovascular accident that he suffered last year. His return to the Senate after a grueling year of intense and exhausting rehabilitation proves that we can fight back against medical problems if we have both the will and the access to quality care.

Sen. Kirk stated on his return that he will be “much more focused on Medicaid and what (his) fellow citizens face.” He learned how expensive health care is even though he is covered by the plan offered to Congress and acknowledges that he spent a large amount of his own resources in the process.

One has to ask what would have been the outcome if Sen. Kirk were employed by a more conventional employer rather than the American people. Would he have kept his job while being rehabilitated? Small businesses can’t afford sick leave or family leave. How much of his medical expenses would have been covered by current employer-sponsored health plans? Even though pre-existing conditions cannot prevent him from getting insurance, they can and do raise premiums. We are all seeing our health insurance plans having a larger deductible and greater co-pays.

We need to have quality health care for all Americans (just like the kind that Sen. Kirk received). If we look around the world, we spend more money per capita for health care in this country with poorer outcomes in life expectancy and infant mortality, to name a few. Many people receive their best quality care when they enter the Medicare system.

Sen. Kirk, we are asking you to support a Medicare for all/single-payer health care system that  will allow all Americans a chance to survive and thrive after a catastrophic medical event. Single-payer is really the only system that will allow us to control costs and make the United States join the other nations in the world where health care is considered a human right.

Dr. Pamella Gronemeyer resides in Glen Carbon, Ill.

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor/americans-deserve-the-kind-of-health-care-sen-kirk-received/article_daea936a-783f-536b-ab0b-b40abf848ea8.html#.UQzv7jZyoTk.email

Holding our breath until 2017

By Vermont Health Care for All

The Shumlin administration presented a report on financing single payer to the legislature on January 24, 2013.  It once again demonstrates that we can have comprehensive health care coverage for every Vermonter and also achieve substantial savings when federal law allows us to implement a single payer system in 2017.

This is the latest in a long line of official reports that has come to the same conclusion.

Click here to see the key takeaway points from this report. (Click here to see Vermonters’ letters to the editor about this plan; please consider writing to your local papers.)

This report is just the start.  It shows us different sources of revenue for single payer, but it does not recommend a particular mix of taxes. (The legislature will not vote on a specific plan until 2015.) 

For decades, health insurance companies have told us they can fix our broken health care system. They had their chance—and they blew it! Vermont Health Care for All hopes to work with other individuals and groups to convene discussions in the months to come about the fairest way to finance a single payer system.  Stay tuned!

Packed room hears testimony on Washington state health bill

OLYMPIA, Wash. – Single-payer supporters packed a hearing room at the State Capitol on Feb. 1 to give and listen to public testimony in support of the Washington Health Security Trust (H.R. 1085). Advocates say the bill would provide affordable, high-quality health care for all of Washington state’s residents.

The crowd was so large that it spilled over into three additional overflow rooms. Of those people who signed in for the hearing, which was conducted by the House Health Care and Wellness Committee, about 135 said they were there to affirm their support for the legislation. Some 25 persons delivered testimony on the bill, including six members of the Western Washington chapter of Physicians for a National Health Program, a single-payer advocacy group.

The hearing, which lasted more than an hour, was notable for the diversity of people offering testimony, who came from many places around the state. Health Care for All Washington, the chief organizer of the bill’s supporters, recorded videos of much of the testimony, which are available for viewing here.

Unfortunately, despite the impressive and moving testimony, the committee’s chair, state Rep. Eileen Cody, did not ask for a vote to pass the bill out of her committee. Even so, single-payer supporters said the hearing was very exciting and invigorating, and a meeting was held afterwards to consolidate supporters for future advocacy.

Shumlin proposal aims to cushion cost increases of health insurance exchange

By Andrew Stein
Vtdigger.org, Jan. 25, 2013

Gov. Peter Shumlin recommended two fiscal measures to the Legislature on Thursday that would mitigate rising health care costs, but would not prevent hikes for lower-income Vermonters.

While Shumlin said during his budget address, “Vermonters currently in Catamount and VHAP (would) not suffer federally imposed cost increases,” the math tells a different story.

In 2014, the state’s new health benefit exchange goes into effect. At that time, roughly 110,000 Vermonters, who aren’t enrolled in Medicaid, will be required to buy health insurance via the online marketplace.

That includes Vermonters currently enrolled in the state-subsidized health insurance programs Catamount and VHAP, which will end as a result of new federal regulations. Those individuals must buy health insurance on the exchange after 2013. And they are facing sharp cost hikes.

Shumlin’s proposal is to allocate $10.3 million in cost-sharing assistance and premium subsidies to cushion the blow of those increases. Although Shumlin’s assistance package would mitigate bumps in the road, it would not eliminate them altogether.

Premiums would be higher for many Vermonters whose income is 133 percent to 300 percent of the federal poverty line, and annual out-of-pocket maximums would jump considerably, making the cost of care highest for those who need it most. Meanwhile, premiums for some lower-income Vermonters would be lower.

State assistance for lower-income Vermonters

The $10.3 million in subsidies for lower-income Vermonters in FY 2014 will turn into more than $20 million in FY 2015, the Shumlin administration promises.

Since a fiscal year begins halfway through a calendar year, and the exchange opens at the start of the calendar year, the FY 2013 amount reflects half a year’s spending.

The proposed funds are broken into two parts: $6.5 million to help pay premiums for Vermonters earning up to 300 percent of the federal poverty line and $3.8 million to reduce out-of-pocket maximum costs for income earners up to 350 percent of the poverty line. Catamount only covers Vermonters up to 300 percent of the federal poverty line.

Robin Lunge, Shumlin’s director of Health Care Reform, said the state is focusing funds on premiums because high premiums are the largest barrier to health insurance enrollment.

The Affordable Care Act caps premiums and out-of-pocket maximums for Vermonters earning up to 400 percent of the federal poverty line at levels that are more than twice what many individuals pay now.

The feds limit premiums on a linear scale. For example, Vermonters earning 150 percent of the federal poverty line would pay 4 percent of their income on premiums. Vermonters earning 200 percent of the poverty line would pay 6.3 percent of their income. And residents earning 300 percent to 400 percent would pay 9.5 percent of their income.

The Shumlin administration proposes the same linear calculation that the feds use, but with a cap 1.5 percent lower — 2.5 percent of an individual’s income at 150 percent of the federal poverty line, 4.8 percent at 200 percent and 8 percent at 300 percent.

Using this linear equation that provides exact ratios of coverage based on incomes — rather than the series of income tiers that is currently used — will benefit some Vermonters more than others.

“People will not be paying exactly what they’re paying today,” Lunge said about premiums. “Some people will be paying more. But, I think, administratively … and for fairness, using the same calculation as the ACA makes more sense than trying to maintain an old system.”

What this means for an individual earning $17,244 — or 150 percent of the estimated 2013 poverty line — is that this person would pay $431 in premiums annually. That is $35 a year more than the $396 that person currently pays for a subsidized plan, but $259 less than the $689 he or she would have paid with the federal cap. These numbers are derived from a combination of calculations by VTDigger, the state and the Vermont Campaign for Health Care Security.

For some populations new premiums will actually decrease under the Shumlin administration’s plan.

Take, for example, a couple earning $46,548 a year, or 300 percent of the federal poverty line. They would face an annual premium of $3,724 — roughly $1,250 less than the $4,992 that couple would have paid under Catamount. And they would pay about $700 less than the $4,422 they would have with the federal cap.

The couple’s out-of-pocket maximum, however, would rise from $2,100 under Catamount to $5,000. This maximum represents the total out-of-pocket costs for care, co-pays and other fees that the couple is liable for in a year.

For healthy Vermonters who are at 133 percent to 300 percent of the federal poverty line, many of these plans would be similarly priced to the current ones. But if these Vermonters fall ill, they would have less coverage. The higher costs kick in when people need care.

Peter Sterling, director of the Vermont Campaign for Health Care Security, is an advocate for a publicly financed health care system and is concerned about rising health care costs for lower-income and middle-income Vermonters.

“The governor should be applauded for making Vermont one of only two states in the country to attempt to lower costs under the exchange, however, he doesn’t go far enough,” Sterling said. “Vermonters will be paying more for their health care in 2014 than they are now, and I don’t think low- and middle-income Vermonters can essentially afford to pay several thousand dollars a year more. That’s health care reform backwards.”

Shumlin told reporters months ago that to hold every Vermonter harmless who is currently enrolled in Catamount and VHAP would require an $18 million injection that he wasn’t sure the state would have. He is now proposing a larger sum than that previous estimate and still it’s not keeping costs level for many of these lower-income Vermonters.

Asked about this shift, Mark Larson, commissioner of the Department of Vermont Health Access, replied, “Our estimates have evolved.” He wasn’t sure, however, exactly how much money would be necessary to hold all of these Vermonters harmless.

Democratic Rep. Mike Fisher, who chairs the House Health Care Committee, said it’s not an apples-to-apples comparison: The new assistance program will operate under a completely different set of rules and models.

“It’s my intent to drive the conversation toward what is affordable, not how does it compare to a system that will no longer be there,” he said. “Everyone wants to compare this to Catamount, but it’s not the right question. The right question is: What is a reasonable amount to expect a lower-income Vermonter to pay for their premiums and out-of-pocket expenses.”

The Medicaid cost shift

The governor’s second budget proposal for restraining the growth of health care costs is to raise the state’s Medicaid reimbursement rate by 3 percent on Oct. 1, 2013. That’s an increase of about $24.4 million.

Commercial providers currently cover the tab for state Medicaid reimbursements to health care providers. These Medicaid reimbursements are below the cost of care and drive up commercial health insurance premiums.

The thinking behind this decision is that if the state pays a larger share for Medicaid patients, then commercial insurance carriers will charge their clients less.

“This step alone will lower private insurance premiums by almost $25 million every single year,” Shumlin said in his address.

The Green Mountain Care Board is charged with regulating health care finance in Vermont. Anya Rader Wallack,
who chairs the board, said it’s her board’s responsibility to make sure these state payments produce the desired result.

“We have to oversee this as a board and make sure the new revenue isn’t simply an increase in overall payments but a reduction in what one payer pays versus another,” she said.

Vermont’s medical community has frequently criticized the state for passing the buck to commercial payers by not ponying up enough cash for Medicaid.

“We have not exactly, as a payer, recognized health care cost increases,” Wallack said. “As we move forward, it’s important for Vermonters to know the state is an honest dealer and pays its fair share.”

Some legislators and members of the medical community are concerned that a 1 percent tax hike on paid insurance claims will offset this aid. The tax increase would be phased in over a two-year period — FY 2015 and FY 2016 — at a rate of a 0.5 percent per year.

“Although you’re increasing Medicaid payments and reducing the cost shift, you are adding an assessment on claims that private insurers pay,” said Leigh Tofferi, a lobbyist for Blue Cross Blue Shield. “While we welcome a reduction in the cost shift, we note that it comes with an assessment on claims. We haven’t worked through the numbers of if that’s a straight balance or not.”

Bea Grause, CEO of the Vermont Association of Hospitals and Health Systems, said that while this Medicaid proposal represents an improvement, the state still has a long way to go.

“It’s up to policymakers to pay the cost of care for Vermonters on public programs,” she said. “If the state is unable to do so, Vermonters with private insurance will continue to shoulder the burden for these costs.

“This Medicaid budget reflects the state’s desire to be a better payer, but doesn’t make significant progress on underpayments,” she added. “We all have a lot of work left to do.”

http://vtdigger.org/2013/01/25/shumlin-proposal-aims-to-cushion-cost-increases-of-health-insurance-exchange/

Single-payer financing plan released

By Andrew Stein
Vtdigger.org (Montpelier, Vt.), Jan. 24, 2013

The Shumlin administration released two financing plans Thursday evening: one for funding a publicly financed health care system and another to pay for portions of the state’s new health benefit exchange.

The much-anticipated single-payer financing plan provides more of a map of the state’s health care finance landscape than it does a course of action through it. The document itself alludes to the need for a plan with substantive revenue-generating measures.

“A future financing plan will likely feature a substantial and regular individual and employer contribution, similar to current law, albeit one paid through a public system,” the plan says.

The plan — which was drawn up by the University of Massachusetts for a price tag of $300,000 — estimates that the total savings of reforming the system would be about $35 million in 2017. The total $5.91 billion cost of the system would place a burden of $1.61 billion on taxpayers, after federal funding, and a $332 million chunk would be placed on employers who continued to enroll their employees on their insurance plans after the system takes effect.

While the plan points to a slate of tax bases for raising such revenues, the architects of the plan acknowledge the lack of information they had to work with — and, therefore, the potential inadequacy of their findings.

“Many details regarding the structure of a single payer system in Vermont have not been determined,” they write. “These details may significantly affect the assumptions underlying our models and therefore the results of our models.”

When Gov. Peter Shumlin and the Legislature approved Act 48 in 2011, they set the state on a track towards a publicly financed health care system. Part of that legislation called for a financing plan to be submitted to the Legislature by Jan. 15, 2013, that “shall recommend the amounts and necessary mechanisms to finance Green Mountain Care and any systems improvements needed to achieve a public-private universal health care system.”

On Thursday, Director of Health Care Reform Robin Lunge said the plan met the statutory goal.

“It has amounts, and it has necessary mechanisms included; it just doesn’t have one,” she said. Furthermore, she added, the plan seeds the Statehouse for constructive debate over how to pursue and implement such a health care system.

Jeffrey Wennberg, who runs the anti-single payer group Vermonters for Health Care Freedom, panned the report for its lack of substance.

“The report … contains surprisingly little information within its 91 pages,” he said in a public statement. “There is no multi-year budget or projection, and the Act 48-required recommendation for a funding source is completely absent.”

This weekend, VTDigger will provide a deeper dig on the single payer financing plan.

http://vtdigger.org/2013/01/24/single-payer-financing-plan-released/

Is the Doctor Pay Model a Solution?

The New York Times, Feb. 1, 2013

PNHP note: the four letters below were among those published in the Feb. 1 edition of the Times in response to an article earlier in the week by Bill Keller on pay-for-performance schemes. For more on the hazards of such schemes, see “Will pay for performance backfire? Insights from behavioral economics,” by Steffie Woolhandler, M.D., M.P.H., Dan Ariely, Ph.D., David U. Himmelstein, M.D., at the Health Affairs blog, Oct. 11, 2012.

To the Editor:

Thanks to Bill Keller for responding to fads with facts (“Carrots for Doctors,” column, Jan. 28).

Of course, as he suggests, physicians need to be held to professional norms. But until we join the rest of the industrialized world, where health care is publicly financed and a public good, we are unlikely to see the substantive cost controls that misdirected schemes like “pay for performance” supposedly address.

At best, these schemes are tinkering with the system; at worst, they end up costing more and delaying the real reforms that are necessary.

ELLEN OXFELD
Middlebury, Vt., Jan. 29, 2013

To the Editor:

Great: pay for performance.

The problem with the current approach is that it forces the performer to document his performance by clicking boxes and repeating hollow attestations. This mostly just takes away from the real work of trying to take care of patients, which has become subverted in the pursuit of “documenting” the desired performance.

The underlying assumption is that without this documentation, doctors will perpetrate fraud.

To this end, I am forced to attend fraud awareness sessions, which teach me what boxes to check and what attestations I must make to be in compliance. We get it: it all costs too much.

But a medical bureaucrat’s idea of what should happen in a medical encounter for it to be billed at its current exorbitant level has created a nightmarish scenario that will result in much worse, more costly care.

DANIEL BRAUNER
Chicago, Jan. 29, 2013

The writer, a geriatrician and ethicist, is an associate professor of medicine in the Pritzker School of Medicine, University of Chicago.

To the Editor:

Bill Keller’s column explores ways of dealing with our overpriced, underperforming health care system but ignores the elephant in the room: the insurance industry.

Thirty percent off the top of our health care dollar goes to the insurance industry’s profit and overhead. There are also the hidden costs to physicians and hospitals that employ an army of workers whose only job is to deal with the paperwork for each claim. At the back end is the cost of malpractice insurance. Again, with an unknown percentage of profit.

This enormous expenditure adds nothing to the quality of health care, though it does add hours of work and anxiety to the sick, physicians and hospitals with the hope of reimbursement.

This is the low-hanging fruit of cost control without compromise to quality care. We should pick it.

MERLE PERLMUTTER
New Rochelle, N.Y., Jan. 28, 2013

To the Editor:

Neither carrots nor sticks promote professional performance or pride, whether they come in the form of monetary incentives or threats of public humiliation.

We’ve known for decades that extrinsic rewards and punishments are successful only for short-term simplistic goals, yet the idea persists in crucial areas of national need like education and medicine, undermining substantive progress.

ARTHUR H. CAMINS
Hoboken, N.J., Jan. 28, 2013

The writer is director of the Center for Innovation in Engineering and Science Education at Stevens Institute of Technology.

http://www.nytimes.com/2013/02/01/opinion/is-the-doctor-pay-model-a-solution.html?_r=0

AHIP's report on physician out-of-network charges

New Report Examines Physician Out-of-Network Charges

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

A new report from America’s Health Insurance Plans (AHIP) highlighting data collected by Dyckman & Associates shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are 10 times – and in some cases, nearly 100 times – Medicare reimbursement for the same service in the same geographic area. Looking at the 30 largest states, the report found that some physicians who do not take insurance are charging patients startling fees for a wide variety of medical treatments and services.

This report demonstrates the importance of public policy leaders focusing on how much patients who seek out-of-network care are being charged by some physicians. In discussions to date, the focus only has been on how much insurers pay for these services, and the critical issue of what out-of-network physicians charge patients has been ignored.

The findings of the report should cause policymakers to closely investigate this issue, especially considering how these charges compare to in-network fees, as well as fees charged for similar services in other countries. For example, in New York, a physician billed a patient $115,625 for lumbar spinal fusion – 62 times the Medicare fee of $1,867.

While the issue of how much is appropriate for out-of-network physicians to charge has not been part of the affordability discussion to date, this report demonstrates that it needs to be. No mechanism exists to protect patients who seek care out-of-network from receiving bills that are unreasonable and unaffordable.

“As we shine a spotlight on the affordability issue, we encourage policymakers to look at how much is being charged for services, particularly since there is often no relationship between higher charges and higher quality of care,” said AHIP President and CEO Karen Ignagni. “With the nation facing the crushing burden of rising medical costs, all stakeholders should be focusing on constructive ways to bring costs under control.”

https://www.ahip.org/News/Press-Room/2013/New-Report-Examines-Physician-Out-of-Network-Charges.aspx

AHIP infographic on highest out-of-network charges:
http://www.ahipcoverage.com/wp-content/uploads/2013/01/OutOfNetwork_National_V17_FV.jpg

Comment:

By Don McCanne, M.D.

The insurance lobby organization, AHIP, is correct when they point out that patients are not protected from exorbitant fees charged by physicians outside of their own insurance networks. Although this report appropriately condemns outrageous fee gouging, the report itself is deceptive, reflecting on AHIP’s own credibility.

AHIP asked its insurers to provide the three highest billed charges from non-participating providers for each of 24 CPT procedure codes. They then took the very highest charge for 10 procedures and created a graph demonstrating how outrageous these charges were compared to Medicare rates. They distributed the graph with their press release.

Although the bar graph is quite impressive (link above), it represents only ten specific instances of fee gouging. Yet the infographic – labeled “Out-of-Network Charges” – is presented as if it were representative of charges made by out-of-network providers (though it does state that these are the highest reported out-of-network provider charges).

Nowhere in the 26 page report is there any mention of what fees were actually paid. Although the insurer pays no more than its allowed out-of-network charges, if any, does the patient pay the rest? No. Often the patients are able to negotiate payments that are closer to typical commercial insurance rates. Sometimes the patient simply doesn’t pay at all, though the claim may be turned over to a collection agency. Regardless, the AHIP report is deceptive since it represents only a few outrageous billing charges but does not represent actual typical out-of-network payments.

In this press release, AHIP implies that there needs to be a mechanism “to protect patients who seek care out-of-network from receiving bills that are unreasonable and unaffordable.” In essence, they are saying that the government should require out-of-network providers to accept rates similar to those agreed to through contracts with the in-network providers.

Think about that. The only mechanism that insurers have introduced to slow the increase in heath care spending has been provider contracting. Okay. Let’s accept their implicit recommendation. Let’s do what other industrialized nations do and use some form of government administered pricing. Then there would be no reason for the insurers to establish exclusive provider networks.

Since the insurers then would have nothing substantial to offer other than claims processing, we can do away with much of their administrative and marketing waste. In fact, we can do away with them completely by establishing our own universal health insurance administrator – a single payer national health program.

As AHIP CEO Karen Ignagni says, “With the nation facing the crushing burden of rising medical costs, all stakeholders should be focusing on constructive ways to bring costs under control.” She’s right. The first step should be to get rid of the private insurers.

Preexisting conditions, reinsurance, and risk adjustment

States rethink high-risk-pool plans

By Brett Norman
POLITICO, January 29, 2013

When the health exchanges open next year, they will cover some of the sickest and costliest patients, people who cannot easily get insurance precisely because they are so likely to run up bills that no insurer would want to be on the hook for.

The federal health law contains several measures designed to spread the risk and tamp down some of the expected turbulence in the market. But a recent change in how the Department of Health and Human Services plans to run a three-year, $20 billion fund — known as reinsurance — to cushion health plans that end up with lots of high-cost customers is forcing states to rethink their own timetable for shifting some of their highest-risk people into the exchanges.

The fear, of course, is that if all the sick people flood the exchanges and younger, healthier ones hold back, premiums could surge. The health law has a bunch of mechanisms to try to avert rate shock — but questions remain about how well they will work.

More than 300,000 people are now covered through special plans for people with pre-existing conditions — about 100,000 in pools created by the health law and more than 200,000 in older, state-run pools.

The federal plan was designed from the start to be temporary and to shut down as soon as the exchanges open.

But many states had planned on moving their high-risk pool populations into the exchanges slowly to mitigate the shock to the individual market. But now, the state high-risk pools may offload as many people as they can onto the exchanges as soon as they open in 2014 or risk losing a piece of that $20 billion pie.

The Affordable Care Act program requires all insurers to pay into the reinsurance fund — and to be paid out of it if they have a big share of really expensive customers in the individual market. State officials had anticipated having a voice in distributing those payments to hard-hit plans in their states, but HHS in December proposed that it would give the money to plans with enrollees that cost more than $60,000 per year. And state high-risk pools wouldn’t be eligible for the cash.

The reinsurance program is front-loaded, with $10 billion in the first year, $6 billion in the second and $4 billion in the third and final year. By year three, the hope is that a broad range of people will be in the state exchanges, balancing out the really high-cost patients.

“I don’t think it’s going to be enough — it will offset some but not all of the effect of the high-risk pools on the individual market,” said Jonathan Gruber, an MIT economist who has studied the issue in several states.

http://www.politico.com/story/2013/01/states-rethink-high-risk-pools-exchanges-86831.html

And…

HHS Risk Adjustment Model Algorithm Instructions

Centers for Medicare and Medicaid Services
The Center for Consumer Information & Insurance Oversight

Section 1343 of the Affordable Care Act provides for a permanent risk adjustment program. To protect against potential effects of adverse selection, the risk adjustment program transfers funds from plans with relatively lower-risk enrollees to plans with relatively higher-risk enrollees. It generally applies to non-grandfathered individual and small group plans inside and outside Exchanges.

The methodology that HHS proposes to use when operating a risk adjustment program on behalf of a State would calculate a plan average risk score for each covered plan based upon the relative risk of the plan’s enrollees, and apply a payment transfer formula in order to determine risk adjustment payments and charges between plans within a risk pool within a market within a State. The proposed risk adjustment methodology addresses three considerations: (1) the newly insured population; (2) plan metal level differences and permissible rating variation; and (3) the need for risk adjustment transfers that net to zero.

The proposed risk adjustment methodology developed by HHS:

• Is developed on commercial claims data for a population similar to the expected population to be risk adjusted;
• Employs the hierarchical condition category (“HCC”) grouping logic used in the Medicare risk adjustment program, with HCCs refined and selected to reflect the expected risk adjustment population;
• Establishes concurrent risk adjustment models, one for each combination of metal level (platinum, gold, silver, bronze, catastrophic) and age group (adult, child, infant);
• Results in payment transfers that net to zero within a risk pool within a market within a State; 
• Adjusts payment transfers for plan metal level, geographic rating area, induced demand, and age rating, so that transfers reflect health risk and not other cost differences; and
• Transfers funds between plans within a risk pool within a market within a State.

This document provides the detailed information needed to calculate risk scores given individual diagnoses. (The report then goes into 14 pages describing the algorithm for the HHS-Hierarchical Condition Categories risk adjustment model.)

http://cciio.cms.gov/resources/files/ra_instructions_proposed_1_2013.pdf

Comment:

By Don McCanne, M.D.

In a single payer financing system, health care is simply paid for out of a publicly-financed, single risk pool that covers everyone, regardless of how much appropriate health care is provided to each individual.

In our current fragmented financing system, risk pools are segregated and thus are each vulnerable to an influx of high-cost patients (adverse selection). The spending on an excess of high-cost patients drives premiums up ever higher until they are no longer affordable, patients drop out, and the insurer must then shut down (death spiral).

To protect against excessive costs being borne by any single risk pool, policies have been established to cover patients who have preexisting disorders, to provide reinsurance for costs exceeding defined limits, and to transfer funds from risk pools that enrolled healthier patients to risk pools that cover more high-cost patients.

When the Affordable Care Act (ACA) was written, it was recognized that many people with preexisting conditions could not purchase insurance because the insurers wanted to keep their premiums competitive, so they refused to accept these patients. For that reason, a temporary three-year program was established to provide subsidies to new risk pools that concentrated patients with preexisting disorders. Only about 100,000 people were enrolled since the premiums were still unaffordable for many who would otherwise qualify, plus there were restrictions such as a requirement to be uninsured for at least 6 months.

Although these pools for those with preexisting disorders didn’t work very well, at least these individuals would be able to participate in the state insurance exchanges once they become operative next January 1, since ACA requires that every qualified person be accepted regardless of prior conditions (guaranteed issue).

A problem is that adding high-cost patients will drive premiums up, perhaps to a level that could precipitate a death spiral. It was thought that this would be a problem only initially, since later on the pools would be filled with younger, healthier patients who could absorb the higher costs of the sicker patients (a very dubious assumption which we will not address here).

Since this was thought to be a temporary problem, the authors of ACA added another special three-year program – a reinsurance scheme. For any enrollee whose costs exceed $60,000 per year, the government would pick up the balance. Many believe that the $20 billion to be authorized over the three years of the p
rogram is not enough to cover the anticipated need.

Well, by the time that plan is terminated, there will have been established a permanent plan to address this problem of unequal distribution of risk between these segregated risk pools – a risk adjustment scheme. This is to be done through the HHS-Hierarchical Condition Categories risk adjustment model mentioned above.

It should be pointed out that a fairly recent study of the Hierarchical Condition model used for Medicare Advantage plans has demonstrated that the private insurers have already learned how to game the system, making patients appear much more ill than they really are (NBER Working Paper No. 16977, April 2011).

It’s too bad since, by enacting a single payer system, Congress could have eliminated the need for temporary high-risk pools, the need for temporary reinsurance, and, especially, the need for risk adjustment schemes which the private insurers will always manipulate to their own advantage.

You might want to click on the link to the HHS Risk Adjustment Model Algorithm (above) and skim through the pages just to get a feeling of the complexity of the risk adjustment process. Better yet, click on the following link and in one picture you’ll understand how the process really works:

http://www.kaiserhealthnews.org/cartoons/2013/January/Risk-Factor.aspx

"Shared responsibility payment" buys you nothing

Fact Sheet: Individual Shared Responsibility for Health Insurance Coverage and Minimum Essential Coverage Proposed Rules

Centers for Medicare and Medicaid Services
January 30, 2013

Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals are given shared responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Starting in 2014, the individual shared responsibility provision calls for each individual to have basic health insurance coverage (known as minimum essential coverage), qualify for an exemption, or make a shared responsibility payment when filing a federal income tax return.

Highlights of the Proposed Regulations

A principle in implementing the individual shared responsibility provision is that the shared responsibility payment should not apply to any taxpayer for whom coverage is unaffordable, who has other good cause for going without coverage, or who goes without coverage for only a short time.  The proposed regulations include several rules to implement this principle.

For example:

Hardship Exemption Clarified to Protect Taxpayers, Address Key Concerns

The statute gives HHS authority to exempt individuals determined to “have suffered a hardship with respect to the capability to obtain coverage.”  In developing these proposed regulations, HHS considered several particular circumstances that provide good cause to go without coverage.  To provide clarity for taxpayers facing these circumstances, the HHS proposed regulations enumerate several situations that will always be treated as constituting a hardship and therefore allow for an exemption.  Hardship exemptions include:

* Individuals whom an Exchange projects will have no offer of affordable coverage (even if, due to a change in circumstance during the year, it turns out that the coverage would have been affordable).  This rule will protect individuals who turn down coverage because the Exchange projects it will be unaffordable but whose actual income for the year turns out to be higher so they are not eligible for the affordability exemption;

* Certain individuals who are not required to file an income tax return but who technically fall outside the statutory exemption for those with household income below the filing threshold; and

* Individuals who would be eligible for Medicaid but for a state’s choice not to expand Medicaid eligibility.  This rule will protect individuals in states that, pursuant to the Supreme Court decision, choose not to expand Medicaid eligibility.
 
The HHS regulations also provide that the hardship exemption will be available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage.
 
Specific Rules and Process for Receiving an Exemption

The proposed regulations also codify the statute’s nine categories of individuals who are exempt from the shared responsibility payment. These categories are as follows:

Individuals who cannot afford coverage;
Taxpayers with income below the filing threshold;
Members of Indian tribes;
Hardship;
Individuals who experience short coverage gaps.
Religious conscience;
Members of a health care sharing ministry;
Incarcerated individuals; and
Individuals who are not lawfully present.

http://www.cms.gov/apps/media/fact_sheets.asp (Select the Fact Sheet on “Individual Shared Responsibility…” dated January 30, 2013.)

Comment:

By Don McCanne, M.D.

Today CMS and the IRS released two sets of proposed rules which included the exemptions that will be allowed to avoid having to pay a penalty for not being insured.

Basically, the exempt individuals will be those for whom there are no affordable plans, those whose income falls below the threshold for filing tax returns, or those who would qualify for Medicaid under federal law but their state elected not to expand eligibility. A few other exemptions are listed in the excerpts above.

One concern in the actual rule (though not listed in the CMS Fact Sheet) is that the exemption for individuals who would otherwise have to pay more than 9.5% of their income for their share of the premium of an employer-sponsored plan applies only to the employee’s coverage, but not to coverage of the family members as well. At today’s premiums, this means that an employee could pay much more than 9.5% of income if the family were to be included under the employer-sponsored plan, and that would be just for the premiums. The deductibles and other cost sharing would be in addition.

It is interesting that, instead of calling the penalty for being uninsured a tax or a fine, CMS now calls it a “shared responsibility payment,” a payment to be made when filing a federal income tax return. It is ironic that this shared responsibility payment buys you… nothing!

With all of the administrative waste that characterizes our health care system, this rule adds even more administration complexity by providing opportunities to allow individuals to remain uninsured. And the reward is, if they qualify, they don’t have to make a shared responsibility payment. Hurray!

What happened to the reform advocates who were trying to advance policies that would ensure that everyone was covered? Didn’t they have a say in this process? Oh, that’s right. Sen. Baucus had them arrested.