Excerpted from the Citizens’ Health Care Working Groups’s final recommendations, Dr. Andrew Pollack of Maimonides Hospital notes that even though the CHCWG own report cites the overwhelming public public for national health insurance (see excepts in bold), the group ignored the public’s recommendations.
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By Gary Claxton, Jon Gabel, Isadora Gil, Jeremy Pickreign, Heidi Whitmore, Benjamin Finder, Bianca DiJulio, Samantha Hawkins
Health Affairs
September 26, 2006
Abstract
Based on a survey of 2,122 randomly selected public and private employers, this paper reports on the state of employer-sponsored health insurance in spring 2006, including recent changes. Premiums increased 7.7 percent from spring 2005 to spring 2006 and have risen 68 percent since 2001. About 4 percent of workers are enrolled in high-deductible health plans with savings options. The percentage of workers covered by their own employer did not statistically change from 2005 to 2006.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w476
By Don McCanne, MD
Some reports of this study suggest that this is good news because employer-sponsored premium increases are now down to only twice the rate of inflation, as if a “down” isn’t an “up.”
Remember the magic of compounded interest? Modest amounts of funds, with time, grow to very large amounts not only because of the interest, but also because of the interest on the interest. With insurance premiums, not only are the rate increases high, but the rates are applied to prior high rate increases, compounding year after year. That has resulted in a rate increase of 68 percent since 2001.
Although this report is about increased costs of insurance premiums, the real issue is the increase in actual health care costs. Our current pseudo-market mechanisms of slowing spending increases have been ineffective. It is not as if we don’t know what can be done. Establishing a public monopsony would enable us to obtain value in health care purchasing though single payer mechanisms. What is astounding is that we continue to tolerate these outrageous cost increases with a complacency that the market will take care of it for us.
Same question as before: Are we a nation of dimwits?
Citizens’ Health Care Working Group
Bipartisan legislation created the Citizens’ Health Care Working Group to go to the American people, to explore their values and aspirations for the American health care system, and to bring their ideas and energy for health reform back to Washington.
Appointed by the Comptroller General of the United States, the Citizens’ Health Care Working Group is a nonpartisan body made up of 14 citizens plus the Secretary of Health and Human Services – all from very different backgrounds, experiences within the health care system, and communities across the nation.
Guarantee Financial Protection Against Very High Health Care Costs
By establishing protection against very high medical costs for all, the Working Group’s Recommendation 2 responds to two major messages from the American people. First, people believe that no one should be financially ruined by health care costs. Further, there was overwhelming public support for a new dynamic in American health care where everyone is protected, not just select portions of the population. This Recommendation can be implemented in the short term and provide a basic level of financial protection to those who do not already possess this coverage. Building this system will provide some level of immediate protection for everyone, and also has the potential to stabilize existing employer-based health insurance markets and expand the private individual and small group health insurance markets to more Americans.
After listening to and analyzing the needs and ideas of the American people and discussing the topic with experts, the Working Group developed two possible frameworks that would meet the requirements of universal protection and guard against very high health care costs: The Market-Based and the Social Insurance models.
The Market-Based Model
The basics of the market-based model are as follows:
* All Americans would have to obtain coverage against high out-of-pocket costs.
* Individuals would be offered a choice of standardized high-cost insurance products, whose details would be easy to understand and easy to compare.
* The products would offer protection at different levels of out-of-pocket costs to individuals.
* Individuals would be free to purchase the policy that best suits their needs. Since individuals with the lowest incomes also face impoverishment with all but the most expensive plans, premium subsidies would be provided based on ability to pay, and would diminish with increasing income levels.
* Employers would retain a role in paying for or providing health plans.
The Market-Based Model: An Example
For illustrative purposes only, consider three policies covering the same set of services: (1) Policy A with a deductible of $4,000 in out-of-pocket expenses prior to full coverage of covered services, (2) Policy B with a deductible of $12,000, and (3) Policy C with a deductible of $30,000. These deductible levels are similar to policies currently offered in the individual insurance market. Based strictly on coverage offered, Policy A would have the highest premium, Policy C the lowest premium.
The Social Insurance Model
A second approach is based on a social insurance model:
* All Americans would be required to participate in a federal government program protecting against very high out-of-pocket costs.
* The program, like Medicare, would be administered by the federal government through private-sector contractors.
* The program would be funded through a combination of premiums and earmarked federal revenues. Premiums would be structured to be fair and affordable, based on a sliding scale or surcharges related to income.
* Federal subsidies, based on ability to pay, would be provided to pay premiums.
The Social Insurance Model: An Example
In an illustration of this coverage approach, protection would be provided against out-of-pocket costs for covered services that exceed some percentage of income-such as 20 percent of taxable income above the federal poverty level-or that exceed a fixed dollar amount of individual liability-such as $30,000-whichever is lower.
Final Recommendations (access page):
http://www.citizenshealthcare.gov/recommendations/finalrecs.php
Executive Summary:
http://www.citizenshealthcare.gov/finalrecs/ppd_execsumm.pdf
Recommendations report:
http://www.citizenshealthcare.gov/finalrecs/ppd_recommendations.pdf
By Don McCanne, MD
I followed this process closely, and personally participated in it. One common theme I heard repeatedly was that comprehensive health care must be affordable for all Americans. At no time did I ever hear support for the concept that we only need to “guard against VERY HIGH health care costs” (emphasis mine). Even the few who supported high-deductible health plans also supported covering initial costs with health savings accounts. And never did I hear a suggestion that the deductible be in the range of $30,000. Although there was very strong support for single payer social insurance, none of the advocates suggested a deductible of 20 percent of income over the federal poverty level.
I am not surprised by this recommendation. At the start of the process I stated the following in a Quote of the Day:
“It is crucial that we closely observe this process that will result in a vote in Congress on systemic health care changes theoretically designed to bring quality care to every American. The current Comptroller General, David Walker, will appoint 14 of the 15 members and the Chairperson of the Working Group. Since David Walker will be able to control the ideological complexion of the Working Group, we should try to understand his views. Based on his health care forum presentation this month, it appears that he supports incremental reforms in the marketplace that place a greater emphasis on increasing price sensitivity for patients while decreasing the financial insulation provided by insurance.”
(https://pnhp.org/news/2004/january/medicare_bill_calls_.php)
I think that it is safe to say that nothing in the process warranted the “very high costs” recommendation, but it is also safe to say that the Comptroller General achieved his goal of producing a report that places “a greater emphasis on increasing price sensitivity for patients while decreasing the financial insulation provided by insurance.”
This process had great potential. We could have seen the best of the American political process at work – a process expressing the will of the American people. Instead it turned out to be another partisan hack job.
Taming a medical monster
By William H. Albers
Peoria Journal Star
September 24, 2006
In 2004, the Illinois Legislature enacted the Health Care Justice Act (HCJA). A 29-member task force was appointed to gather information about the uninsured and to issue a report by this December. The committee hired a consultant to recommend solutions. Public hearings have been held. Six proposed solutions have been submitted. The committee, which meets Tuesday, is now attempting to reach consensus on a plan to recommend to the Legislature.
Any solution must satisfy at least three major criteria. First, there must be universal, affordable coverage. Second, cost containment should be built in. Third, coverage should be comprehensive and fair.
Possible solutions for the uninsured take several approaches. Several attempt to increase the number of individuals covered by private insurance, including an employer mandate, individual mandate, tax incentives, health savings accounts (HSAs), purchasing cooperatives and vouchers. All of these would increase health care costs.
Other plans would seek to expand enrollment in Medicare or Medicaid by lowering eligibility requirements. Finally, some propose a single-payer system, similar to Canada’s, in which a government agency receives funds from individuals and employers, and reimburses providers for care.
Six proposals have been submitted to the task force. The consultant, rating each on a point system based on essential ideals, ranked single-payer the highest. It is the only solution which meets each of the criteria. Because of low administrative costs and simple reimbursement policies, a government-managed system can cover all citizens for no more than is now being spent on health care.
This alternative is highly controversial because it would eliminate private insurance. Not only would it be opposed by insurance companies, but others oppose it philosophically. “I do not favor national health insurance because it is not the American way,” one elected official recently said.
Unregulated private insurance has not and will not solve the current problems of excess cost and 46 million uninsured. Health care is unlike any other commodity in our economy. Demand is inelastic and society tells us that everyone is entitled to the same care, regardless of the ability to pay. However, private insurance, because it needs to generate profit, tries to exclude those at high risk, thus limiting the pool and reducing payouts.
The old and the poor are covered by public plans, but many middle-class working families are unable to afford private insurance (premiums for a family of four exceed $10,000 annually), and many others with chronic conditions are denied coverage and fall into the ranks of the uninsured.
To reach consensus, the task force may recommend a compromise. A hybrid proposal has been drafted which includes an employer mandate (employers above a certain size must offer health insurance) and an individual mandate (all individuals must have health insurance; those who cannot afford it may receive subsidies). Any proposal using either mandate will reduce the numbers of uninsured only if there is also an insurance mandate (insurance companies must expand the risk pool by offering insurance at the same rates to all).
The ideal solution to our health-financing problem is a federal single-payer system. Realistically, that is not going to happen for a while. A state-by-state approach is not optimal. There could be 50 different systems.
The Legislature must seriously consider the final recommendations of the task force and pass legislation. Any action which reduces the number of uninsured in Illinois (currently about 1.8 million people) will improve the health and well being of our citizens. This problem has been ignored by our leaders for far too long, and Illinois now has a chance to lead the way.
William H. Albers is a pediatric cardiologist and professor emeritus of pediatrics at the University of Illinois College of Medicine at Peoria.
http://www.pjstar.com/stories/092406/OP__BB0EJLGN.059.shtml
By Don McCanne, MD
Once again, the single payer model ranked the highest based on the ideals of a universal system. Yet the voices still clamor for a compromise merely to protect the private insurance industry that has failed miserably in achieving the ideals we are seeking.
Compromise!? Why do we insist that the insurance industry must be allowed to continue to compromise the health and financial security of the people of our nation?
Are we a nation of dimwits!?
Luring Customers From Medicare
By Milt Freudenheim
The New York Times
September 22, 2006
For years, private insurers have offered alternatives to the federal Medicare program that are meant to give patients lower-cost options than the government coverage provides.
But suddenly a type of private insurance plan is gaining ground that looks very similar to the basic coverage long available to anyone with a federally issued Medicare card.
And the government is paying the private insurance industry a subsidy of 11 percent per patient, on average, to provide it.
The fee-for-service plans, the focus of the current controversy, are in many ways similar to the government’s own Medicare. Under the industry version, patients have the right to choose their own doctors and hospitals – as they have long been able to do with their federally issued Medicare cards.
And as with the federal program, enrollees in the private fee-for-service plans typically pay a monthly $88.50 premium to the government.
Under the industry plans, moreover, the hospitals and doctors receive the same rates as when they are paid through the basic federal Medicare program.
Experts say that because the administrative costs of providing the private policies are minimal, they represent easy income for the insurance companies, with profit margins of 4 percent or so.
But many see the private fee-for-service Medicare plans as mainly a feeder program in which insurance companies hope to gradually convert members into even more complex, more profitable private Medicare offerings that the government also subsidizes.
The more lucrative plans, like Medicare health maintenance organizations or doctor-network managed care programs, which have been available longer, can yield profits in the 10 percent range, analysts say.
While insurers do run a risk of losing money on a patient if he or she has unexpectedly large health costs, the companies can consult county-by-county Medicare cost data and decide where to offer coverage and which high-cost areas to avoid.
Under Medicare’s complicated rules, though, the amount actually paid to a company for a patient can vary. Around the nation, depending on local medical costs and the health profile of Medicare-eligible residents, the monthly federal subsidy to the insurance company can range from $400 to $2,500, said Dr. Scott Latimer, a Humana executive based in Tampa, Fla.
Marilyn Moon, a longtime Medicare researcher who served as a public trustee of the program… said she was “unconvinced by the logic that says, ‘If we are overpaying the health plans now, they will save us money later.'”
It is a “back-door way of trying to privatize Medicare,” said Dr. Jack Lewin, the chief executive of the California Medical Association.
By Don McCanne, MD
Why would Congress do this? They are paying more money to private insurers for the same fees as traditional Medicare and for the same providers (all willing physicians). They also allow them to market exclusively in more lucrative markets. In addition, patients currently in treatment programs will be less likely to change coverage, whereas less expensive, healthy patients may be attracted by potential incentives such as a single package which adds a Part D drug benefit.
Clearly Congress did not intend that the private plans would continue to receive higher rates and continue to indirectly avoid adverse risk. Their intent was to establish painless private Medicare insurance options even though it requires a subsidy. The next step is ominous. Congress will slash the funding of the “unsustainable” traditional program requiring a reduction in provider funding with a massive exit of providers from the program.
Once the traditional program can no longer float (except as an under-funded welfare program), the private insurers will be granted more leeway to keep their products affordable, but not with more government money. What does that mean? The insurance industry has defined affordability to mean higher deductibles and coinsurance, greater premiums, and innovative benefit programs that reduce services covered.
The intent of Congress is not really to encourage more of the abusive practices of the private insurance industry. They passively accept that as being the markets at work (though they will want to see options for comprehensive products in the private market that take care of themselves and their wealthy supporters). Their intent is simply to destroy political support for the traditional program so they can shrink it “down to the size where we can drown it in the bathtub.”
Evil, evil, evil!
By MILT FREUDENHEIM
New York Times, business section
For years, private insurers have offered alternatives to the federal Medicare program that are meant to give patients lower-cost options than the government coverage provides. More than 7 million people now subscribe to such plans, out of a total Medicare population of 42.5 million.
But suddenly a type of private insurance plan is gaining ground that looks very similar to the basic coverage long available to anyone with a federally issued Medicare card.
And the government is paying the private insurance industry a subsidy of 11 percent per patient, on average, to provide it.
Since the government substantially increased the subsidies two years ago for these most basic private industry plans — known as private fee-for-service — enrollment in the plans has grown tenfold to 820,000. About 18,000 people signed up in August alone, Medicare said yesterday in its latest update. And some analysts expect enrollments to double or even triple by 2009.
The $7 billion that Medicare will pay private industry this year to provide this fee-for-service coverage is at least $770 million higher than the government would spend covering those patients itself, based on the 11 percent calculation.
Critics see the trend as further evidence that the government is paying private industry to take Medicare off its hands.
It is a “back-door way of trying to privatize Medicare,Ć¢ā¬Ā said Dr. Jack Lewin, the chief executive of the California Medical Association, a physicians’ group. But the Bush administration’s Medicare chief, Dr. Mark B. McClellan, insisted yesterday that the trend “is definitely not a Ć¢ā¬Ėpush to privatization,’ ” but simply a way to give people with Medicare more choices. “The original Medicare program is and remains an option for those who prefer it,” said Dr. McClellan, who plans to step down next month.
Private insurers can offer more choices and cost breaks to patients, he said, while providing overall better health care that will end up saving the government money.
The 11 percent calculation comes from the Medicare Payment Advisory Commission, an independent federal research body that advises Congress. And some insurance executives say the figure is an exaggeration. But there is little dispute that federal subsidies are encouraging the insurance industry to recruit members for the plans.
And while the current industry coverage can be a good deal for some patients, critics worry that Medicare patients reliant on private insurers could be left stranded if the federal money is eventually cut.
“We are very concerned that Congress is going to pull back on the funding,” Dr. Lewin said, “and we will be left with a private system that offers fewer benefits and is going to be influenced by Wall Street.”
Critics say the growing transfer of the nation’s $342 billion Medicare program to private industry has already been playing out through other means, like the new Medicare Part D drug program and various Medicare-linked managed care plans and H.M.O’s offered by private insurers.
Providing Medicare coverage in all its guises has become a $60 billion-a-year business and one of the few profitable growth areas for insurers. Medicare enrollees look especially attractive to insurers, as the industry’s other main clientele — corporate America — struggles to meet the growing cost of providing health benefits to working people.
The fee-for-service plans, the focus of the current controversy, are in many ways similar to the government’s own Medicare. Under the industry version, patients have the right to choose their own doctors and hospitals — as they have long been able to do with their federally issued Medicare cards.
And as with the federal program, enrollees in the private fee-for-service plans typically pay a monthly $88.50 premium to the government.
Under the industry plans, moreover, the hospitals and doctors receive the same rates as when they are paid through the basic federal Medicare program.
Experts say that because the administrative costs of providing the private policies are minimal, they represent easy income for the insurance companies, with profit margins of 4 percent or so.
But many see the private fee-for-service Medicare plans as mainly a feeder program in which insurance companies hope to gradually convert members into even more complex, more profitable private Medicare offerings that the government also subsidizes.
The more lucrative plans, like Medicare health maintenance organizations or doctor-network managed care programs, which have been available longer, can yield profits in the 10 percent range, analysts say.
The more basic private fee-for-service plans, around for less than a decade, were authorized through an amendment to the 1997 balanced budget act as a way to ensure that elderly people could obtain adequate health insurance. Now the plans are envisioned as primarily for rural Americans who typically have few medical choices.
The insurance industry largely ignored the fee-for-service plans until the insurers’ subsidies were increased by $14 billion over 10 years by the 2003 Medicare overhaul legislation. Insurance lobbyists had argued that expanding private Medicare programs would eventually lower the government’s costs.
But insurers “are not really being asked to do anything for additional subsidies,” said Marilyn Moon, a longtime Medicare researcher who served as a public trustee of the program — a watchdog role — during the Clinton years. She is now at the American Institutes for Research, a nonpartisan research center in Washington.
Insurers, though, say they provide benefits that basic Medicare does not cover.
The leader by far in private Medicare fee-for-service, with more than half the total members, is Humana. UnitedHealth and WellPoint are also big players.
John M. Bertko, a Humana vice president, says benefits included having nurses stay in touch with discharged hospital patients with chronic diseases to make sure they were following doctors’ orders.
Other selling points for the private insurance plans include predictable out-of-pocket co-payments — typically $5 to $20 for doctor visits. That compares with the uncertainties patients face under traditional federal Medicare, in which they are responsible for 20 percent of whatever the doctor charges.
Martin Smith and his wife, Donna, of Bristol, Ind., chose a fee-for-service plan from UnitedHealth’s Secure Horizons Medicare unit earlier this year.
The monthly premiums of $12.50 each for Mr. Smith, 68, and Mrs. Smith, 70, are in addition to their government Medicare premiums of $88.50 each. But the Smiths say the private plan is paying off.
Mrs. Smith recently had heart bypass surgery. And though the bill has not yet arrived, she knows that the hospital deductible for her Secure Horizons plan is $600, compared with the $952 she would be responsible for under traditional Medicare.
And instead of 20 percent of the approved doctors’ fees in traditional Medicare, the Smiths pay only $10 to a primary care doctor and $20 for specialists. Secure Horizons pays the rest out of its subsidies from Medicare — which are $692.29 a month, on average, for each fee-for-service member in that part of the country.
The Smiths chose to sign up for Medicare Part D drug coverage from a separate insurer, Humana.
Like the Smiths, more than half of the private fee-for-service enrollees so far have also chosen drug coverage, and many are choosing a plan that combines both.
One is Cathy Watts, 58, of Decatur, Ill., a former nurse who says she had to retire four years ago because of Parkinson’s disease and partial paralysis. Last January she signed up for a fee-for-service offering from Humana that included Part D drug coverage.
Other than the government’s $88.50 Medicare premium that is deducted from her monthly Social Security check, Ms. Watts pays no premium to Humana.
She says the drug coverage was the main lure for her because her drug bill last year was $6,000.
“I will probably pay $3,600 this year” for drugs, she said. “So that will be better.” And she can still see the doctors of her choice.
While insurers do run a risk of losing money on a patient if he or she has unexpectedly large health costs, the companies can consult county-by-county Medicare cost data and decide where to offer coverage and which high-cost areas to avoid.
In southern Illinois, where Mrs. Watts lives, the average monthly rate the government is paying an insurer to provide Medicare fee-for-service is $692.29 — the same as in Mr. Martin’s town in Indiana.
Under Medicare’s complicated rules, though, the amount actually paid to a company for a patient can vary. Around the nation, depending on local medical costs and the health profile of Medicare-eligible residents, the monthly federal subsidy to the insurance company can range from $400 to $2,500, said Dr. Scott Latimer, a Humana executive based in Tampa, Fla.
Enrollments in the fee-for-service plans are still primarily, though not exclusively, concentrated in rural and small cities. Before the Medicare subsidies were increased in 2003, insurers had little incentive to focus on such places. With few doctors and sometimes only one or two hospitals in such areas, insurers typically have little bargaining power. And the health care providers have often balked at accepting the lower fees and second-guessing often associated with managed care insurance networks. But when enough patients in a local area have been enrolled in the private fee-for-service plans, the companies say local health care providers may have little choice but to join the insurers’ Medicare networks.
Rick Jelinek, the chief executive of UnitedHealth’s Secure Horizons Medicare business, acknowledged that the company’s strategy was “in the longer term, to build networks around our programs.”
With such networks in place, he said, the company could help manage patients’ health — and the insurer’s costs — through techniques like having nurses provide telephone health counseling aimed at helping keep patients with heart disease and diabetes avoid hospitalization.
Dan Mendelson, a former Clinton administration health official who is now the president of Avalere Health, a Washington research and consulting firm that advises insurance companies, said the private fee-for-service trend “should save money for Medicare by improving patient care.”
But Ms. Moon, the Medicare researcher, said she was “unconvinced by the logic that says, ‘If we are overpaying the health plans now, they will save us money later.'”
Rewarding Provider Performance: Aligning Incentives in Medicare
Institute of Medicine
September 2006
The health of senior citizens in the United States is not as good as it should be, given the billions of dollars spent on health care each year. This raises concerns that Medicare is not getting the best value for the services it purchases. Medicare’s current payment system places no emphasis on whether the care delivered is of high or low clinical quality or is appropriate. The system provides few disincentives for overuse of often high cost medical services and does little to encourage coordinated, preventive and primary care that could save money and produce better health outcomes.
This study is the third in the IOM’s Pathways to Quality Health Care series, which offers tools for implementing the vision of improved health care delineated in the Quality Chasm report. The first report in the Pathways series, Performance Measurement: Accelerating Improvement, recommended a strategy for developing and implementing a comprehensive performance measurement system, including a national board to coordinate that effort.
The second report, Medicare’s Quality Improvement Organization Program: Maximizing Potential, recommended an emphasis on technical assistance to providers for quality improvement. The present report builds on those studies and offers an operational plan for introducing into Medicare payment incentives that would encourage and reward high-quality care. While alignment can occur in many areas, this report is limited to examining the link between payment incentives and provider performance.
Recommendation 1: The Secretary of the Department of Health and Human Services (DHHS) should implement pay for performance in Medicare using a phased approach as a stimulus to foster comprehensive and systemwide improvements in the quality of health care.
Recommendation 2: Congress should derive initial funding (over the next 3-5
years) for a pay-for-performance program from existing funds.
* Congress should create provider-specific pools from a reduction in the base Medicare payments for each class of providers (hospitals, skilled nursing facilities, Medicare Advantage plans, dialysis facilities, home health agencies, and physicians.
* Congress should ensure that these pools are large enough to create adequate motivation for improved performance on selected measures. Because of unique challenges of physician payment relating to the SGR, investment dollars may be necessary to create adequate resources to effect change.
* Initial funding should be budget conscious in taking into account the resources needed for both funding the pools and implementing the program.
Recommendation 3: Congress should give the Secretary of DHHS the authority to aggregate the pools for different care settings into one consolidated pool from which all providers would be rewarded when the development on new performance measures allows for shared accountability and more coordinated care across provider settings.
Recommendation 4: In designing a pay-for-performance program, the Secretary of DHHS should initially reward care that is of high clinical quality, patient centered, and efficient.
Recommendation 5: The Secretary of DHHS should design a pay-for-performance program that initially rewards both providers who improve performance significantly and those who achieve high performance.
Recommendation 6: Because public reporting of performance measures should be an integral component of a pay-for-performance program for Medicare, the Secretary of DHHS should offer incentives to providers for the submission of performance data, and ensure that information pertaining to provider performance is transparent and made public in ways that are both meaningful and understandable to consumers.
Recommendation 7: The Secretary of DHHS should develop and implement a strategy for ensuring that virtually all Medicare providers submit performance measures for public reporting and participate in pay for performance as soon as possible. Initially, measure sets may need to be narrow, but they should evolve over time to provide more longitudinal and comprehensive assessments of provider and system performance. For many institutional providers, participation in public reporting and pay for performance can and should begin immediately. For physicians, a voluntary approach should be pursued initially, relying on financial incentives sufficient to ensure broad participation and recognizing that the initial set of measures and the pace of expansion of measure sets will need to be sensitive to the operational challenges faced by providers in small practice settings. Three years after the release of this report, the Secretary of DHHS should determine whether progress toward universal participation is sufficient and whether stronger actions – such as mandating provider participation – are required.
Recommendation 8: CMS should design the Medicare pay-for-performance program to include components that promote, recognize, and reward improved coordination of care across providers and through entire episodes of illness. Thus, CMS should (1) encourage beneficiaries and providers to identify providers who would be considered their principle responsible source of care, and (2) pay for and reward successful care coordination that meets specified standards for providers who take on that role.
Recommendation 9: Because electronic health information technology will increase the probability of a successful pay-for-performance program, the Secretary of DHHS should explore a variety of approaches for assisting providers in implementation of electronic data collection and reporting systems to strengthen the use of consistent performance measures.
Recommendation 10: The Secretary of DHHS should implement a monitoring and evaluation system for the Medicare pay-for-performance program in order to:
* Assess early experiences with implementation so timely corrective action can be taken.
* Evaluate the overall impact of pay for performance on clinical quality, patient-centeredness and efficiency.
* Identify the best practices of high-performing delivery settings that should be shared with others to improve care throughout the nation.
Report brief (4 pages):
http://www.iom.edu/CMS/3809/19805/37232/37236.aspx
Rewarding Provider Performance (full text):
http://darwin.nap.edu/books/0309102162/html/R2.html
By Don McCanne, MD
Until now, conceptualizations of pay for performance have not proffered much more than the introduction of additional administrative intrusions that might motivate minimal tweaking of a few practice parameters, but would have a negligible impact on overall health care outcomes.
This Institute of Medicine report sheds further light on the subject. In elaborating on the pay-for-performance concept, the Institute of Medicine makes it very clear that the administrative burden is significant and will divert time and resources away from patient care. But what will that effort attain for us? Sampling of performance will always provide a very incomplete picture of overall performance, and it will favor those who master gaming of the system. The IOM proposal would attempt to improve provider behavior through public humiliation and financial penalties as funds are shifted to those who play the games better. There are already enough pressures on health care professionals without adding this insult.
Pay for performance eventually may become a valuable tool to improve efficiency, quality, and health care outcomes, if anyone can figure out an effective model for doing that. Unfortunately, the gifted individuals at the Institute of Medicine have not yet provided us with that model. Until they do, we should proceed with reform that we know will dramatically improve resource allocation: single payer national health insurance.
by Cathy Schoen, Karen Davis, Sabrina K. H. How, and Stephen C. Schoenbaum
Health Affairs
September 20, 2006
This paper presents the findings of a new scorecard designed to assess and monitor multiple domains of U.S. health system performance. The scorecard uses national and international data to identify performance benchmarks and calculates simple ratio scores comparing U.S averages to benchmarks. Average ratio scores range from 51 to 71 across domains of health outcomes, quality, access, equity, and efficiency. The overall picture that emerges from the scorecard is one of missed opportunities and room for improvement. The findings underscore the importance of policies that take a coherent, whole-system approach to change and address the interaction of access, quality, and cost.
Access And Affordability
Studies repeatedly find that the single most important determinant of whether patients obtain essential health care is having health insurance. With insurance premiums rising at higher rates than wages and consumer cost sharing up sharply, the affordability of insurance and care is of increasing concern to middle- and low-income families and employers.
The insurance indicator tracks the percentage of adults who are adequately insured all year. Inadequate protection or being underinsured is defined as having expenses that exceed 10 percent of family income (5 percent for those with incomes below 200 percent of the federal poverty level) or being exposed to deductibles that alone constitute 5 percent of income. As of 2003, sixteen million U.S. adults (ages 19-64) were underinsured, and sixty-one million adults (35 percent) were either uninsured or underinsured. In 2004, 40 percent of U.S. adults reported that they went without care because of costs during the year, a rate four times higher than in the United Kingdom, the benchmark country.
Only 58 percent of the nonelderly population lives in a state where employer insurance premiums average less than 15 percent of this population’s median household income. One-third of nonelderly adults report having problems with medical bills, collection agencies, or medical debt. High out-of-pocket and premium costs compared to income affect 17 percent of all nonelderly families. Time trends on all three indicators have been moving toward less affordability.
Overall picture
Within the United States, there is often a substantial spread between the top and bottom groups of states, hospitals, or health plans as well as wide gaps between the national average and top rates. As a result, the U.S.
performance relative to benchmarks averages near 50 for efficiency to 70 for healthy lives, quality, access, and equity, for an overall average score of 66 across the main domains of performance. On multiple indicators, the United States would need to improve its performance by 50 percent or more to reach benchmark countries, regions, states, hospitals, health plans, or targets.
Interrelatedness of deficits
The results provide evidence of the potential net gain from strategies focused simultaneously on improving access, quality, and efficiency. Policies are needed that address the interaction of access, quality, and cost and take a coherent, whole-system view rather than a fragmented approach to change. Universal coverage and participation are essential to improving health care quality and cost performance. High and rising rates of the population that is under- and uninsured destabilize the delivery system, fuel inefficient use of resources, and put families and the nation at risk of losing ground on past gains in health and workforce productivity.
Fragmented and unstable coverage not only increases insurance overhead costs, it also undermines the nation’s ability to assess outcomes or costs over time. Medicare is often the only national program with the stability to track outcomes and costs over episodes of care and follow patients over multiple years.
In sum, the scorecard indicates that the United States has broad opportunities to improve. It can do better, given the level of resources it has committed to health care. There is also much risk in failing to act: Cost and coverage vital signs are moving in the wrong direction. To assure a healthy, productive nation, transformation of the health system is of great urgency.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w457
For the release and helpful links from The Commonwealth Fund:
http://www.cmwf.org/publications/publications_show.htm?doc_id=401577
By Don McCanne, MD
For the next two weeks, the article about this important new scorecard can be downloaded for free from the Health Affairs website. You should do so now. Also keep the link to The Commonwealth Fund’s page that provides important scorecard resources.
The first annual scores are now in. They’re not good. We need to address immediately the “single most important determinant” by eliminating the scourge of uninsurance and underinsurance.
A Superintendent’s Surprise
By BARBARA MARTINEZ
Wall Street Journal – September 18, 2006; Page A1
When Kevin Grady took over as an employee-benefits consultant for the Columbus Public Schools District in 2001, he signed a contract promising to act “in the best interest” of the schools. The Ohio district agreed to pay him $35,000 a year to help it choose a health insurer. Officials thought that was all Mr. Grady was getting out of the deal.
It wasn’t. After the district switched its health insurance to UnitedHealth Group Inc. on what it says was Mr. Grady’s recommendation, he started getting payments and other compensation from the big Minnetonka, Minn., insurer. “Thank you and United for the steaks,” Mr. Grady wrote in a Dec. 20, 2001, email to a UnitedHealth employee. “We’ll have those on Christmas eve.”
Aetna gives brokers a “retention bonus” for staying loyal. If a broker keeps 90% of his Aetna clients with the insurer for another year, he gets a bonus equal to 0.75% of the clients’ total premiums. If 100% stay, the bonus rises to 1.25% of total premiums. Though employers typically put their health-insurance contracts up for bid every few years, such bonuses are one factor encouraging brokers to keep their clients on the same plan.
A spokeswoman for Aetna said the insurer requires consultants and brokers to disclose such fees to customers. She said Aetna also makes its broker fees public via its Web site and in annual disclosures to clients. Many other insurers don’t detail their contingent commissions on public Web sites.
Consultants also may have financial ties with pharmacy-benefit managers, or PBMs, which administer prescription-drug benefits for employers. Mercer, the big benefits consultant, has done consulting work for a leading PBM, Medco Health Solutions Inc., even as it was advising employers choosing among PBMs including Medco, of Franklin Lakes, N.J. In a proposal for a 1998 job handled by Mercer Management Consulting, Mercer said it could help Medco “refine its pricing to increase its profitability.” Mercer also said it would help Medco “improve relationship with key benefit consultants to better position [Medco] for winning target accounts.”
In 2000, the top Mercer pharmacy-benefits consultant, Nicholas K. Vasilopoulos, gave a written declaration in a lawsuit by Medco clients who accused the PBM of overcharging them for drugs. In it he defended Medco as “forthright” in its business dealings. Mr. Vasilopoulos said he advised employers seeking advice on PBMs — and advised Medco in assessing its competitiveness against other PBMs.
In an email, Mr. Vasilopoulos said “there were no conflicts of interest” when he was a Mercer consultant. He said Mercer had no reason to favor any particular PBM because it provided advice to all the major ones over the years. This advisory role gave Mercer a “more thorough understanding” of each PBM’s offerings, which benefited Mercer’s employer clients, he said.
Lisa Zeitel, a senior consultant at Mercer’s pharmacy-benefits consulting practice, said much of the work for Medco was done by the management-consulting side of Mercer, which is “totally separate” from her unit. She said her own unit occasionally undertakes small assignments for PBMs, but this “in no way interferes with the work that we do for individual clients.”
Joseph Sawicki Jr., the comptroller of Suffolk County on Long Island, N.Y., discovered the ties between consultants and PBMs after the county sought a routine audit of its PBM, Express Scripts Inc., in 2003. The county hired Mercer for the job. Mr. Sawicki says officials didn’t realize at first that Mercer also serves as Express Scripts’s employee-benefits consultant and had other consulting arrangements with the PBM. Mercer says it did disclose the ties.
Mr. Sawicki wasn’t happy with the audit’s results, which initially found that Express Scripts had overbilled the county by more than $1.1 million but later suggested that the overbilling amounted to only $14,000. Mercer charged the county $93,000. Mr. Sawicki withheld half the payment and asked Mercer to return the half it already had received, saying he doesn’t pay for “shoddy” work. A spokeswoman for Mercer, Stephanie Poe, says Mercer made clear its initial estimate was likely to be reduced and it did a good job on the audit although it wasn’t allowed to complete its work. The dispute over the $93,000 is unresolved.
The county didn’t pursue any refunds from Express Scripts in connection with the billing Mercer had audited. It then hired another auditor to review Express Scripts’s billing in subsequent years. That review led to a settlement in which Express Scripts paid the county $865,000. A spokesman for Express Scripts said the company has saved “millions of dollars” for Suffolk County. He declined to comment on the settlement.
Back in Columbus, school-district human-resources chief Craig Bickley wants consultants who aren’t getting money from the same people they are supposed to be evaluating. He was annoyed to discover that under the previous consultant, Kevin Grady, the district switched to UnitedHealth from Anthem (now part of WellPoint) even though UnitedHealth’s administrative fees were $776,000 a year higher. Mr. Grady’s son, Joe, says UnitedHealth offered more coverage for the money.
Mr. Bickley says his first question to consultants nowadays is: “Who are you working in the best interest of, yourself or the client?” The district insisted that the consultant replacing Mr. Grady forgo commissions and bonuses it might otherwise receive from health insurers for bringing in the district’s business. Mercer won the contract and agreed to do so.
–Raymund Flandez contributed to this article.
Early Enrollee Experiences with Health Savings Accounts (HSA) and Eligible Health Plans (HDHP)
Consumer-Directed Health Plans
Government Accountability Office (GAO)
August 2006
GAO estimated that HSA-eligible plan enrollees would incur higher annual costs than PPO plan enrollees for extensive use of health care, but would incur lower annual costs than PPO plan enrollees for low to moderate use of health care.
HSA-eligible plan enrollees generally had higher incomes than comparison groups. Fifty-one percent of tax filers reporting HSA contributions had an adjusted gross income of $75,000 or more, compared with 18 percent for all tax filers under age 65 in 2004.
Most participants said they would recommend HSA-eligible plans to healthy consumers. Some participants said they enrolled in the HSA-eligible plan specifically because they did not anticipate getting sick, and many said they considered themselves and their families as being fairly healthy.
However, participants would not recommend these plans to people who use maintenance medication, have a chronic condition, have children, or may not have the funds to meet the high deductible.
http://www.gao.gov/new.items/d06798.pdf
By Don McCanne, MD
Advocates of health savings accounts (HSA) with their HSA-eligible high-deductible plans (HDHP) refute the challenge that the plans primarily benefit the healthy and wealthy. They claim that they are suitable for everyone, including low-income individuals with greater health care needs.
The claim of opponents of HSAs that they benefit the healthy and wealthy is based specifically on the design of the plans. These plans use regressive tax policies that benefit the wealthy but not the poor. They also provide an additional retirement benefit, but only for those who remain healthy and are able to fund the accounts.
This GAO study confirms that the healthy-wealthy benefit of the plans is recognized by the participants. Not only do they understand the benefit for themselves, but they also understand the disadvantages for those with greater health care needs. The healthy and wealthy do not recommend these plans for the sick and poor. This GAO report should put an end to that debate.
Health policies that take good care of the healthy but not the sick are irrational. It’s time to abandon these policies and to become serious about adopting policies that would ensure that the sick will always have affordable access to the health care that they need. It’s time for national health insurance.
By Laura Ungar
lungar@courier-journal.com
The Courier-Journal
Celeste Vanskike has worked at preschools for 25 years but can’t afford health insurance — meaning she’s had to put off doctor visits and leave a thyroid condition untreated.
“Here I am, I’ve got a good work ethic and I’m barely eking out an existence. Ć¢ā¬Ā¦ And there’s so many of us out here without insurance,” said the 56-year-old Louisville woman, who earns less than $20,000 a year. “More has to be done. It has to be brought to light.”
Yesterday, the Kentucky Medical Association focused its annual meeting on the estimated 46 million uninsured Americans and more than half a million uninsured Kentuckians.
Called “Breaking the Barriers,” the meeting attempted to dissect the problem and present possible solutions, including a Massachusetts program mandating residents have insurance, an American Medical Association plan promoting “incremental” health-care reform, and a national health-care system like the one in Canada.
“For a number of our members, the issue of the uninsured in the state is a bigger problem” than the rising cost of malpractice insurance, said Daniel W. Varga, chief medical officer for Norton Healthcare and outgoing president of the KMA.
Dr. Stephanie J. Woolhandler, an associate professor at Harvard Medical School and co-founder of Physicians for a National Health Program, said America is morally bound to care for the uninsured. According to the Institute of Medicine, a nonprofit organization that advises the government on medical issues, about 18,000 Americans die each year because they lack insurance.
“We don’t just live in an economy,” she said. “We live in a society and we have a responsibility to protect and care for each other.”
Kentucky below average
About 14 percent of Kentuckians, and a similar portion of Indiana residents, lack health insurance. Although these figures are below the national average, speakers said the problem in Kentucky is compounded by poverty and one of the unhealthiest populations in the nation.
There’s also an increasing number of middle-class, underinsured Kentuckians facing some of the same problems as the uninsured in getting the care they need, said Michael E. Samuels, a University of Kentucky professor and rural health expert.
He pointed to statistics from a recent telephone survey of 2,100 households by the University of Kentucky, the University of Louisville and the Kentucky Long-Term Policy Research Center. It showed that 54 percent of uninsured residents and 21 percent of insured residents skipped a medical test because of cost.
“The one thing we don’t want to do is prevent people from getting necessary preventive care and the necessary screenings,” he said.
Samuels said several trends are converging: Employers are shifting more insurance costs to workers, fewer small companies offer health benefits and a growing number of personal bankruptcies are linked to medical costs.
Those most likely to be among the uninsured include low-wage workers, young people entering the labor force and those who retire early. About half of Kentuckians with no health insurance have done without it for more than three years, the survey found.
Vanskike, who has an associate’s degree, lives in an apartment and has no car, said she’s been uninsured since 2003. Although her current employer offers health insurance, she said she can’t afford the premiums.
When she was insured, she took medication for an underactive thyroid. But she said she hasn’t been able to get a clinic appointment to get her prescription renewed and can’t afford a private doctor. Without treatment, she said, the condition causes her to gain weight and saps her energy.
Vanskike said she would support a national health-insurance plan. “I’m all for the government helping people.”
Financial incentives
Woolhandler said there are many financial reasons for adopting national health care. For instance, she said, health-care costs for auto companies were $1,309 per car for Ford but only $97 per car for Toyota in Japan, which has a system of universal health coverage.
She said administrative health-care costs have risen dramatically in the United States and are much lower in countries with national health care. Meanwhile, life expectancy is higher in several of these countries.
She acknowledged problems with national systems, such as some waits for care in Canada. But she said the percentage of people with unmet health-care needs is about the same for Canadians as for insured Americans.
“The problems have been grossly exaggerated in the U.S. media,” Woolhandler said.
Other speakers provided different remedies for the nation’s health-care woes.
Dr. Jack T. Evjy, of the Massachusetts Medical Society’s task force on universal access, said that state is putting into place a program that mandates residents have insurance and helps them by expanding Medicaid eligibility and providing subsidies for low-income residents to buy insurance. The program, modeled on the requirement for car insurance, penalizes those who don’t get insurance by July 2007.
“I think it’s going to succeed,” Evjy said. “A lot of our experience can apply here in Kentucky.”
Dr. Jeremy A. Lazarus, vice speaker of the AMA House of Delegates, outlined that group’s approach, which boils down to giving people money to buy health insurance through tax credits. The plan also involves giving people a choice of coverage plans and rewarding them for staying insured.
Lazarus said the AMA will work to make coverage of the uninsured one of the top priorities in the 2008 national elections.
He said, “There’s really a moral imperative to get something done and get something done soon.”
Reporter Laura Ungar can be reached at (502) 582-7190.
By Sara R. Collins, Jennifer L. Kriss, Karen Davis, Michelle M. Doty, and Alyssa L. Holmgren
The Commonwealth Fund
September 2006
Low participation in the individual market likely reflects the difficulty people have finding affordable and suitable coverage. The survey asked adults whether they had sought coverage in the individual market in the past three years. About 58 million adults ages 19 to 64 reported either that they had coverage purchased through the individual market or had considered buying, or tried to buy, a plan. Of these, nearly 90 percent never bought a plan.
The survey asked respondents about particular challenges they encountered in attempts to purchase a health plan in the individual market. These included ease of finding a plan with suitable or affordable coverage or being turned down for a preexisting condition. One-third (34%) of those in the individual market said they found it very difficult or impossible to find a plan with the coverage they needed. This problem was particularly pronounced among people with health problems: 48 percent of those with health problems (fair or poor health status, any one of four chronic conditions, or a disability) found it very difficult or impossible to find a plan with the coverage they needed.
Even greater numbers of people had difficulty finding an affordable plan.
Nearly three of five (58%) adults who had ever shopped for coverage in the individual market found it very difficult or impossible to find a plan they could afford. This problem was especially evident among those with health problems and low incomes. More than 70 percent of people with health problems or incomes under 200 percent of the federal poverty level found it very difficult or impossible to find an affordable plan.
http://www.cmwf.org/usr_doc/Collins_squeezedrisinghltcarecosts_953.pdf
And…
America’s Health Insurance Plans (AHIP)
September 14, 2006
The Commonwealth report… claims that “most adults who seek to purchase insurance coverage through the individual market never end up buying a plan, finding it either very difficult or impossible to find one that met their needs or is affordable.” However, those defined as “seeking” coverage include any respondent who “ever thought about” buying individual coverage in the past three years.
AHIP’s member survey, however, is based on the experiences of several million consumers who actually did seek coverage in the individual market, and it found that even in states that allow insurers to consider an applicant’s medical history, nearly nine out of ten people who completed the application process for non-group insurance were offered coverage.
“The data could not be clearer: coverage purchased in the individual market is accessible and affordable,” said AHIP President Karen Ignagni.
http://www.ahip.org/content/pressrelease.aspx?docid=17543
By Don McCanne, MD
Last week, The Commonwealth Fund released their widely-quoted report demonstrating that, of those adults who “had sought coverage in the individual market in the past three years… nearly 90 percent never bought a plan” primarily because they had difficulty finding affordable and suitable coverage.
Immediately, the opponents of reform released statements based on AHIP’s press release stating that Commonwealth’s finding was flawed because “nearly nine out of ten people who completed the application process for non-group insurance were offered coverage.”
The facts are clear. Most individuals who are confronted with a health insurance premium that they cannot afford do not bother to submit an application. Karen Ignagni’s statement that “coverage purchased in the individual market is accessible and affordable” applies to only the very small percentage of individuals who actually purchased coverage because they could afford it.
The statements in the AHIP release are not lies, but they are blatantly dishonest because they leave the reader with the belief that almost any of the uninsured can afford to buy comprehensive coverage, when, in fact, most of them cannot. How long are we going to leave these flimflammers in charge?