Steven Brill’s new book outlines the shortcomings, as well as the accomplishments, of President Barack Obama’s Affordable Care Act

By A.W. Gaffney, M.D.
In These Times, March 25, 2015

Promising new treatments and technologies abounded, but the rising cost of healthcare was squeezing the finances of families throughout the nation. A research group — the Committee on the Costs of Medical Care — was assembled to study, and perhaps change, healthcare financing and delivery in the United States.

The year was 1927, but the Committee’s final report, released five years later, remains quite timely. “There needs to be some plan,” the report stated, “whereby the unequal and sometimes crushing burden of medical expenses can be distributed.” The report presciently acknowledged the dangers of what was a new phenomenon, the commercialization of healthcare: “The danger which physicians and dentists fear, namely that lay groups organized for profit will control medical practice, is a real one.”

These two very much intertwined problems — high healthcare costs and medical profiteering — have only become more pronounced. They are also the concerns of Steven Brill’s bestselling new book, “America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System.”

Brill — a journalist, lawyer and founder of numerous media ventures — burst onto the healthcare reform scene in 2013 with an explosive exposé in Time that painstakingly demonstrated the wreckage inflicted by massive itemized medical bills on some very unfortunate uninsured and underinsured people. His new book traces the emergence, travails, accomplishments and shortcomings of Barack Obama’s Affordable Care Act (ACA). His reporting on the “backroom deals” that helped sculpt the ACA provide a valuable illustration of just how much influence the “medical-industrial complex” has accrued.

For the pharmaceutical industry, the stakes were high, particularly as some Democrats were talking about allowing Medicare to negotiate with drug companies over prices (which is what the rest of the world does already). Brill describes how a deal was ultimately hashed out in meetings between industry lobbyists, Max Baucus’ Finance Committee staff and the administration. “[My] five principal CEOs,” he quotes from a note written by head pharma lobbyist Billy Tauzin to a White House staffer, “have accepted the terms we discussed with the Committee yesterday.” Those terms, not surprisingly, did nothing to substantially contain astronomically high U.S. drug prices.

Brill stumbles, however, in his prescriptions for the future. As Brill describes, a historic consolidation of the healthcare industry into large, integrated, regional systems is underway, and some evidence has already demonstrated that such consolidation carries the peril of monopolistic pricing. His solution is to accommodate this trend toward “branded, integrated and regulated oligopolies” and also to heavily regulate it, while at the same time encouraging these systems to cut out the middleman and become insurers themselves (which some have done already). Through greater administrative simplicity, redefined provider incentives and a cap on profits, Brill envisions huge potential savings.

Unfortunately, insurer overhead (which his plan would not eliminate) is only one part of the massive administrative waste of the U.S. healthcare system. In reality, the only system that could achieve profound administrative savings would be one in which hospitals receive a “global budget” from a single governmental payer to cover all operating expenses for all patients.

Because healthcare organizations would be both the payer (insurer) and the provider in Brill’s plan, he argues that they would no longer have a profit incentive to overtreat — i.e., offer patients unnecessary tests and referrals. However, the notion that we can dramatically reduce healthcare expenditures by suppressing this “fee-for-service” incentive is itself an oversimplified, if happily bipartisan, dogma. No doubt there is overtreatment in the U.S. system, but there are also areas where Americans use comparatively less healthcare. In a recent survey of 15 developed nations, the U.S. had the highest rate of MRI scans — but it also had the second lowest number of annual doctor visits per capita, and the fourth lowest number of per capita hospital discharges.

In an era when the insured are facing rising out-of-pocket health expenses — up to $13,200 a year after premiums for family plans bought on the ACA exchange — I worry far more about all of the families who sacrifice needed care because of the crushing financial burden of high deductibles and copayments. Brill’s own reporting reveals the problem of out-of-pocket exposure to healthcare costs, but it is unclear if his proposal would do anything about it, much less eliminate it.

At times, Brill implicitly accepts the premise that a public, fully universal, single-payer program might be the best cure for what he calls the “toxicity of our profiteer-dominated healthcare system.” But he is resigned that such a system is simply “never going to happen.” I wonder if fundamental change could be achieved more easily if those with powerful voices, like Brill, were a bit less confident in drawing the boundaries of political possibility, and more willing to join in efforts to expand them.

A.W. Gaffney is a physician and a writer on issues of healthcare policy, politics and history.

http://inthesetimes.com/article/17765/obamacare-and-its-discontents

Trojan horse for Medicare privatization

By Ida Hellander, M.D.

The bipartisan “Doc Fix” legislation (H.R. 1470, now H.R. 2) and proposed amendments will undermine traditional Medicare and advance the goal of privatization, according to Dr. Don McCanne in a series of posts to his popular health policy blog, the Quote of the Day. If enacted as it presently reads, it will:

1. Limit choice of physician in traditional Medicare. Physicians in traditional Medicare would be subject to onerous new documentation requirements for payment and financial incentives to avoid complex patients under the proposed “Merit-based Incentive Payment System.”  The additional paperwork burden will push physicians to stop seeing patients with traditional Medicare, retire, avoid older and sicker patients, or go to work for large organizations using “alternative payment models” (which are exempt from the requirement and more likely to have contracts with private Medicare plans).

2. Reduce access to care in traditional Medicare. Imposes a deductible that cannot be covered by Medigap insurance (starting in 2020) to encourage patients to join a private plan. The current Part B deductible is $147 annually, although that figure has been rising in recent years; 95 percent of traditional Medicare beneficiaries have supplemental insurance that covers the deductible and other cost sharing in Medicare. The only way to avoid the deductible in the future will be to join a private Medicare Advantage plan.

3. Raise Medicare’s costs by driving more patients into private Medicare Advantage plans. Private plans have already cost Medicare an excess of more than $282 billion since 1985. Mandatory deductibles and reduced access to physicians in traditional Medicare will drive more patients into private Medicare Advantage plans, which are more costly than the cost of caring for patients in the traditional fee-for-service program. Although Obamacare was supposed to reduce the amount the private plans are overpaid (the “Medicare cuts” in Obamacare), these have been mostly offset by “adjustments” and “quality awards” by the Department of Health and Human Services.

4. Undermine Medicare’s popular support by requiring higher income seniors to pay higher premiums (means testing). Under means-tested premiums, higher-income individuals will be required to pay larger premiums, undermining the support of this influential group for Medicare program. Although the income subject to extra premiums is high, it can always be reduced in the future.

5. Ending the SGR should cost $20 billion, not $210 billion. These drastic measures aren’t even necessary. According to Bruce Vladeck, a former top administrator at Medicare, “Since the Sustainable Growth Rate (SGR) was implemented in 1998, total Medicare physician expenditures have exceeded the allowed amounts by only $20 billion (on a total of almost $1 trillion). To recoup that all in one year would require a 21 percent reduction in fees for one year. And those reduced fees would then become the base for payment levels in all subsequent years. In a rational world, Congress would write off the $20 billion as a relatively small policy error and establish a more realistic prospective formula. But under Congressional budget rules, the cost of doing so is not $20 billion, but $20 billion per year, compounded by inflation, times 10 years.”

6. The GOP sees this bill as a step towards their longer-term goal of turning Medicare into a voucher program for private plans, shifting more costs onto patients. Rep. Mick Mulvaney, R-S.C., a staunch conservative, told the Washington Post he is supporting the bill because it will lead to much greater savings beyond the traditional 10-year time frame for estimating costs. Newt Gingrich stated the GOP’s goal succinctly in 1996: “Now, we don’t get rid of it [Medicare] in round one because we don’t think that that’s politically smart, and we don’t think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.”

7. Other features:

Continues funding for safety-net programs
* Two-year extension for CHIP
* Two-year ($7.2 billion) extension for Community Health Centers

Restricts abortion, adds funds for war
* Makes Hyde Amendment permanent law. Since the ACA is a permanent statute, any amendment to any part of the ACA becomes part of U.S. Code.
* $94 billion in additional military spending in an “off-budget account.”

Dr. Ida Hellander is director of health policy and programs at Physicians for a National Health Program.

By Kay Tillow
Daily Kos, March 23, 2015

House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.) have worked out a deal, a permanent “doc fix” that would repeal automatic cuts in Medicare payments to physicians. Their bipartisan solution, if enacted, will plunge a stake into the heart of traditional Medicare, according to health policy expert Don McCanne, M.D., of Physicians for a National Health Program.

Social Security Act amendments passed more than a decade ago once again threaten to slash Medicare payments to physicians, this time by 21.2 percent, as of April 1, 2015.  These provisions require automatic cuts based on a formula called the “sustainable growth rate.”  

Each time these cuts threaten to kick in, Democrats and Republicans alike look for a solution to stop the harmful cuts. Now Boehner and Pelosi have agreed on a permanent solution, a plan that stops those cuts, but at the unacceptable price of inflicting devastating damage on Medicare.

The Boehner/Pelosi-backed bill, H.R. 1470, “SGR Repeal and Medicare Provider Payment Modernization Act of 2015” is cosponsored by progressive James McDermott (D-Wash.), anti-Medicare Republican Paul Ryan (R-Wis.), and seven others from both parties.  The bill would replace the current formula for physician reimbursements with a new Merit-based Incentive Payment System (MIPS).

MIPS is an administrative nightmare, says McCanne.  

Expensive consultants will game the system bringing in additional incentive payments while those who work with disadvantaged patient populations will find it difficult to score higher points, predicts McCanne. Those who serve less wealthy populations will see negative payment adjustments by up to 9 percent.

MIPS robs from the professionals who are trying to make the system work for their patients and gives the spoils to those who likely have consultants to show them how to game the system, says McCanne.

MIPS will apply only to traditional Medicare, promoting an exodus of physicians from traditional Medicare into the private for-profit Medicare Advantage plans.

The deal would also reward remote patient-monitoring and telehealth as clinical practice improvement activities, reports Darius Tahir of Modern Healthcare. That can create big bucks for health information technology but does not portend well for patients who need hands on caring professionals.

According to The Hill’s Scott Wong and Peter Sullivan, the deal will be paid for through a combination of means testing — that is, making wealthier seniors pay more for Medicare — and reforms to the supplemental health insurance plans known as Medigap.  

Medigap policies would have to make the patients pay the first $250, providing the “skin in the game,” that ugly, inhumane concept so popular with insurance companies. The further means testing of Medicare threatens its broad based popular support as a benefit for all.

“The increased beneficiary cost-sharing included in the SGR reform proposal could work hand-in-hand with the larger House GOP Medicare plan by prodding seniors to choose the lower-cost private Medicare plans envisioned under the budget blueprint. That would advance their long-held goal of turning Medicare into a privatized, means-tested welfare program and getting the government out of the health insurance business,” reports Harris Meyer in Modern Healthcare.

Grover Norquist, founder of Americans for Tax Reform and known for wanting to shrink government small enough to be drowned in a bathtub, likes the Boehner-Pelosi deal.  Norquist says the “doc fix” deal could be a “model of success” for a larger entitlement deal.

The bill, negotiated in secrecy, is being steamrolled and is predicted to come to a vote this week.  Those who cherish Medicare as our nation’s best yet health program should sound the alarm.  A stab in the heart of Medicare is not a compromise but a complete and disastrous sell-out.

Kay Tillow is a leader of Kentuckians for Single Payer Health Care and the All Unions Committee for Single Payer Health Care–HR 676. She resides in Louisville.

http://www.dailykos.com/story/2015/03/23/1372791/-Grover-Norquist-sees-bi-partisan-doc-fix-deal-as-model-of-success-in-privatizing-Medicare#

By Harris Meyer
Modern Healthcare, March 18, 2015

The proposed bipartisan House deal to repeal and replace Medicare’s hated sustainable growth-rate physician-payment system offers Republicans a chance to make two significant benefit changes they’ve long sought. Now it remains to be seen if they can accept and lock in that victory. 

It also raises the question of what Democrats, if they help enact the SGR bill, would have left to offer when Republicans come back the next time—probably quite soon—with more and bigger demands to revamp and reduce Medicare spending.

The deal crafted by House Speaker John Boehner and House Minority Leader Nancy Pelosi would pay for a $70 billion portion of the SGR overhaul partly by increasing Part B premiums for higher-income beneficiaries and requiring those with Medigap supplemental coverage to spend at least $250 out of pocket before coverage kicks in, according to Modern Healthcare’s Paul Demko, who first reported the details last week. 

Even though President Barack Obama previously proposed similar Medigap changes in his 2016 budget, senior advocacy group AARP expressed “very serious concerns” about those changes and the increased means-testing of premiums. Some Senate Democrats also voiced reservations. 

The Center for American Progress (PDF) has cautioned that revising Medicare supplemental coverage rules to impose higher costs on seniors would hurt lower-income beneficiaries. It urged that any such changes be applied using means-testing, sparing beneficiaries at lower income levels. Beyond that, AARP and other groups that support Medicare fear that too much means-testing could erode political support for the program among middle- and upper-middle-class Americans.

But Boehner and the conservative Americans for Tax Reform see the measures as an important first step toward dramatically restructuring Medicare. Meanwhile,House Republicans separately unveiled their 2016 budget proposal that would transform Medicare into a defined-contribution voucher program (which they call premium support), convert Medicaid into a capped state block-grant program, and repeal the Affordable Care Act.

The increased beneficiary cost-sharing included in the SGR reform proposal could work hand-in-hand with the larger House GOP Medicare plan by prodding seniors to choose the lower-cost private Medicare plans envisioned under the budget blueprint. That would advance their long-held goal of turning Medicare into a privatized, means-tested welfare program and getting the government out of the health insurance business.

Some conservatives clearly were thrilled at the prospect of advancing their Medicare overhaul goals through the SGR bill, and urged other conservatives to accept the added 10-year costs to the federal budget and pass it. “I could care less about the 10 years,” Ryan Ellis, tax policy director of Americans for Tax Reform (which is headed by conservative stalwart Grover Norquist), told the National Journal. “You would never measure entitlement reform in a 10-year window.”

Follow Harris Meyer on Twitter: @MHHmeyer

http://www.modernhealthcare.com/article/20150318/BLOG/303189965

Harris Meyer oversees news and feature coverage for the magazine. Meyer has covered healthcare and law since 1983, most recently as a freelance writer for Health Affairs, Kaiser Health News, the Oregonian, Medscape and other publications. He previously served as law editor at the Daily Business Review in Miami; a staff writer at the New Times alternative weekly in Fort Lauderdale, Fla.; senior writer at Hospitals & Health Networks; national correspondent at American Medical News; and health unit researcher at WMAQ-TV News in Chicago. Meyer has a bachelor’s degree in communications from Northwestern University. In 2000 he was a winner of the Gerald Loeb Award for Distinguished Business and Financial Journalism. He joined Modern Healthcare in 2013.

Commentary: Obama administration bragging about anti-fraud efforts, but Center report showed bigger dollars are being lost elsewhere

By Wendell Potter
Center for Public Integrity, March 23, 2015

The Obama administration went to great lengths last week to inform us that it recovered $3.3 billion in fraudulent payments to Medicare health care providers in fiscal year 2014. Officials even went so far as to give an advance copy of their report to The Wall Street Journal, which, like the Center for Public Integrity, has been investigating Medicare fraud and abuse.

In a story that appeared in the Journal before the official release of the report, WSJ reporter Stephanie Armour wrote that the recovery “was part of an effort by the Obama administration to improve enforcement and prevent abusive billing practices.” That effort is run jointly by the Department of Health and Human Services the Justice Department.

HHS secretary Sylvia Burwell was quoted in the story as saying that “we’ve cracked down on tens of thousands of health care providers suspected of Medicare fraud,” an effort she said is helping to extend the life of the Medicare Trust Fund.

That’s good news, of course. Taxpayers benefit when doctors and other health care providers get caught trying to rip off the government.

But when it comes taking on big and well-connected insurance companies that have been ripping off the Medicare program for years, the administration has been far less aggressive in catching, much less punishing, the abusers.

As the Center for Public Integrity reported last week, officials in the Obama administration were advised as long ago as 2009 that a formula the government uses to pay private insurers that participate in the Medicare Advantage program “triggered widespread billing errors and overcharges” that waste billions of tax dollars every year.

There was no press release issued by the administration about that 2009 report; in fact, the administration buried it. The report probably never would have surfaced at all had the Center for Public Integrity not filed a Freedom of Information request seeking records going back several years regarding payments to Medicare Advantage plans.

The Medicare Advantage program is a privately run alternative to standard Medicare. Close to a third of Medicare-eligible Americans are now enrolled in insurance company-operated Medicare Advantage plans. People enrolled in these plans typically pay less out of pocket for their care—which explains their appeal—but also typically have a smaller network of providers to choose from.

As Center reporter Fred Schulte explained in his March 13 story, the federal government pays these private health plans a set monthly fee for each patient based on a formula known as a risk score. Risk scores were put in place by the government to measure the state of Medicare Advantage enrollees’ health. “Sicker patients merit higher rates than those in good health,” Schulte wrote.

Schulte’s investigation into risk score payments last year uncovered evidence that the government has been overpaying private insurers for years. That’s because the risk scores can be manipulated by insurers to make it appear that enrollees are sicker than they actually are. Just last week, the Government Accountability Office estimated that “improper payments” to Medicare Advantage plans totaled more than $12 billion in 2014 alone.

When Schulte came across the unpublished 2009 report, he asked CMS why it was never made public.

The explanation he got was preposterous. According to a CMS spokesperson, the agency wanted to publish the report but was told it was too long, that to be considered for publication on a government-run research site, it would have to be “substantially shortened.” This despite the fact that some of the reports that have been published on that site are even longer than the one on risk score manipulation.

The story gets even more incredible. The CMS spokesperson said that “given competing workload demands we were not able to revise and resubmit the article.”

I don’t doubt that the folks at CMS were especially busy in 2009. That’s the year debate began on what would eventually become Obamacare.

To make Obamacare work, the administration needed to have the support of the insurance industry. Insurers had to agree to change many of their profitable but anti-consumer practices in exchange for billions of dollars in new revenue from the government.

Insurance industry lobbyists are among the most powerful and well connected in Washington. Could the administration have put the kibosh on the 2009 report because it didn’t want to jeopardize its relationship with insurers and put the reform law at risk?

We’ll probably never know. But if the administration is really as serious about reducing Medicare fraud as it said last week it is, let’s hear more from CMS about what it’s doing to end abuses in the Medicare Advantage program.

The Wall Street Journal reported that the owners of a home health care company that defrauded the government were recently sentenced to prison terms of up to 120 months each. How much do you want to bet that executives of Medicare Advantage plans that are overbilling taxpayers out of far more money will ever see the inside of a jail cell?

Wendell Potter is the author of “Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care” and “Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.“

http://www.publicintegrity.org/2015/03/23/16942/fed-war-health-care-spending-abuse-needs-include-medicare-advantage