By Elliott S. Fisher, Stephen M. Shortell, A. James O’Malley, Taressa K. Fraze, Andrew Wood, Marisha Palm, Carrie H. Colla, Meredith B. Rosenthal, Hector P. Rodriguez, Valerie A. Lewis, Steven Woloshin, Nilay Shah, and Ellen Meara
Health Affairs, August 2020

Abstract

Health systems continue to grow in size. Financial integration—the ownership of hospitals or physician practices—often has anticompetitive effects that contribute to the higher prices for health care seen in the US. To determine whether the potential harms of financial integration are counterbalanced by improvements in quality, we surveyed nationally representative samples of hospitals (n = 739) and physician practices (n = 2,189), stratified according to whether they were independent or were owned by complex systems, simple systems, or medical groups. The surveys included nine scales measuring the level of adoption of diverse, quality-focused care delivery and payment reforms. Scores varied widely across hospitals and practices, but little of this variation was explained by ownership status. Quality scores favored financially integrated systems for four of nine hospital measures and one of nine practice measures, but in no case favored complex systems. Greater financial integration was generally not associated with better quality.

From the Discussion

We found little relationship between financial integration of hospitals and physician practices and better quality, as measured by higher levels of adoption of care delivery and payment reforms. Independent hospitals had lower scores for four of nine measures (marginally so for two of these), but there were no differences between hospitals in simple and complex systems. Independent physician practices were less likely to participate in payment reforms but more likely to screen patients for clinical conditions or social needs. In no case did physician practices in complex systems have higher scores. Bigger system size was not associated with better scores.

Our findings are consistent with findings from other research. The evidence from earlier studies that financial integration between hospitals and physician groups improves process measures of quality is at best mixed, with only one study finding evidence of improvement on several measures of process quality. We examined a broader range of measures and found no pattern to suggest that financial integration for physician practices was associated with better quality. Our results are also consistent with recent research from the patient’s perspective finding that larger medical practices and hospital-owned groups do not provide more coordinated care. There is also some evidence that small physician practices deliver better care on other domains of quality, and physician-led ACOs have been more successful than hospital-integrated ACOs.

From the Implications for Policy and Practice

These findings also raise the question of why financially integrated delivery systems do not do better in adopting such reforms. One possibility is that sufficient conditions do not yet exist to motivate change. The move away from fee-for-service to value-based payment might not yet be at the tipping point for financially integrated systems to “activate” their potentially greater resources and capabilities to implement recommended reforms.

Another possibility could be differences in the capacity for innovation in the different organizational forms studied. The assumption that the larger, more financially integrated delivery systems have a greater capacity to innovate by adopting such reforms might not be true. Larger organizations can experience diseconomies of scale and increased costs of coordination that can be avoided by smaller, more nimble organizations.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

Much has been written about consolidation in the health care industry, including integration of hospitals and physician practices, primarily because the anticompetitive effects have significantly contributed to higher health care prices. So what value are we receiving for this higher level of health care spending?

Assuming a given volume of health care, then the higher cost should be bringing us higher quality in care. This study concludes, “Greater financial integration was generally not associated with better quality.”

Perhaps it’s innovation? But the authors also observe, “The assumption that the larger, more financially integrated delivery systems have a greater capacity to innovate by adopting such reforms might not be true. Larger organizations can experience diseconomies of scale and increased costs of coordination.”

Another factor behind consolidation and integration, besides anticompetitive pricing, may be the effort to better position themselves for alternative payment models such as accountable care organizations (ACOs) and the Medicare Shared Savings Program. Well, here too, the results so far have been very unimpressive with little cost savings and negligible improvements in quality.

What have we been doing wrong? There are no doubt many factors, but foremost amongst them is that we have been leaving the neoliberals in charge of our politics which has given the medical-industrial complex near carte blanche in their control of our health care delivery system.

So what can we do? The single payer model of Medicare for All is specifically designed to provide the appropriate volume of care, that is of high quality, and that is financed through a system that is affordable for each of us. Further, through regional planning and separate budgeting of capital improvements, it provides appropriate capacity in the system thereby avoiding market consolidation done merely for the purpose of increasing profits. Capacity decisions are made based on patient needs, not entrepreneurial goals.

The authors conclude, “Much more needs to be learned about how to accelerate improvement. This may be through the expanded adoption of alternative payment models that reward high-value care; the better alignment of payment models across payers to increase the magnitude of incentives; greater transparency of both cost and outcomes data; greater leadership and managerial skills in implementing changes in care redesign and continuous quality improvement; or, most likely, all of the above.” More neoliberal medical-industrial management. Sadly, they just don’t get it.

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Foundation of a ‘New Normal’ In U.S. Health Care

By John Geyman, M.D.

Note to the Reader: In his famous pamphlet, Common Sense, written for the people of the Thirteen Colonies in 1775-1776, Thomas Paine made a strong case – based on simple facts, plain arguments, and common sense – to gain independence from England.

In this pamphlet, I also offer simple facts, plain arguments, and common sense about today’s triple crises impacting U.S. health care – the coronavirus pandemic, the resultant economic downturn on the scale of the 1930s, and the uprising against systemic racism and police brutality that is sweeping across our country. Together, these crises have exposed the failure of our present health care system to meet the needs of ordinary Americans.

As the costs of health care in our corporatized, unaccountable non-system continue to spiral upward and become less affordable for much of our population, and as the rolls of the unemployed without health insurance grow unabated, much of the population can no longer gain access to our health care “system” based as it is on the ability to pay, not medical need. The stakes have been further raised by the risk of becoming exposed to the coronavirus while seeking care in ERs, hospitals and clinics. It has become the leading cause of death in the U.S. while patients are postponing or foregoing care for other major medical problems.

We have a long history in this country of failed incremental attempts to reform health care for the benefit of patients and their families. The Affordable Care Act of 2010 (ACA) made some progress, but is no solution to the tens of millions of Americans without health care. It did not contain health care costs, and has ended up as just one more failed incremental attempt. This was predictable, since armies of well-funded lobbyists succeeded in protecting the profits of stakeholders in the medical-industrial complex.

Health care is once again a leading issue in this turbulent election season. Three major reform alternatives are being debated: (1) building on the ACA; (2) one or another variant of a public option; and (3) single-payer Medicare for All.

This pamphlet is intended to inform the debate, drawing on traditional American values, and our experience over the years. It is targeted to legislators in Congress, opinion leaders, grassroots activists, and everyone seeking to better understand the issues.

This pamphlet has six parts:

I. How the ‘old normal’ of U.S. health care is breaking up

II. The inadequate response to the pandemic by the Trump administration

III. Why the ‘old normal’ should be replaced

IV. The case for and against three major reform alternatives

V. What the ‘new normal’ will look like after replacing our dysfunctional, largely private health insurance industry with a not-for-profit single-payer financing system with the mission to extend universal coverage for health care to our entire population

VI. Useful resources

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Common Sense: Medicare For All

Foundation of a ‘New Normal’ In U.S. Health Care

Paperback: https://www.lulu.com…

Ebook: https://www.lulu.com…

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Comment:

By Don McCanne, M.D.

We are facing the worst health care crisis in a century. The impact is so severe that we are also facing the worst economic crisis in a century. John Geyman’s pamphlet could not be more timely.

We can do something about it. We have three choices to begin to immediately address this crisis – (1) building on the ACA; (2) one or another variant of a public option; and (3) single payer Medicare for All – and only one will work.

Our presidential election is right around the corner. One major party candidate has selected two of the approaches – build on ACA and add a public option – but rejects the one reform that will work – single payer Medicare for All. His choices only tweak our complex, expensive but grossly inadequate health care financing system that has left tens of millions exposed to financial hardship while failing to provide adequate access to the health care that they desperately need.

The other major party candidate is currently in office and has been bumbling around in a display of the greatest incompetence that this nation has ever seen in its leader. He has promised “phenomenal” health reform, though nearing the end of his current term in office, he has never revealed what that reform is, no doubt because he does not have an effective proposal. (Lest this comment be criticized for being political rather than being limited to a discussion of policy, it has to be acknowledged that the prevailing process has been so highly political that it has created almost impenetrable barriers to reform – barriers that we must overcome.)

We desperately need a major reset, and it is the third option that would establish policies that will effectively begin to address the combined health and economic crises that we face: the single payer model of Medicare for All. True, we will need to be doing much more, but we cannot begin until we have the health care financing infrastructure that will organize us and start to move us in the direction in which we need to be headed.

We need a movement of the people – a movement that will bring us a Congress that will do the right thing by, in turn, forcing the president who will be in office in 2021 to do the right thing for all of us. John Geyman’s latest in his series of Common Sense pamphlets can be very helpful as a valuable tool for sending us in the right direction. His common sense description of where we are, the three directions that we could take, and the one that will actually achieve success – single payer in all its simplicity – can be used as a basis for moving the process.

This edition of Common Sense has already been sent to every member of Congress. It is now the job for us, the people, to be sure that every member of Congress, along with their staff members, familiarize themselves with this straightforward action – single payer Medicare for All – and then enact it and require the president to implement it, even if a veto override is required.

Congress and the president aren’t fixing this thing now. We, the people, have to make them do it. To the streets!

And, yes, for the loudest voice of all, we need to make sure that everyone votes!

PNHP does not endorse any political candidates nor any political party, and any suggestion here otherwise represents the independent views of the author of the comment.

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By The Geisel School of Medicine at Dartmouth
Medical Xpress, August 5, 2020

The coronavirus pandemic has highlighted the numerous weaknesses in the U.S. healthcare system. Millions have lost their health insurance and millions more can barely afford it. Racial, ethnic, economic, and geographic disparities in health are widening as death rates from COVID-19 rise. And the financial solvency of hospitals and physician practices is at risk. At some point soon, health care reform will be high on the political agenda.

In the lead article for the current issue of NEJM Catalyst Innovations in Care Delivery, Elliott Fisher, MD, MPH, professor of medicine and health policy at Dartmouth, and one of the policy leaders who developed the concept of Accountable Care Organizations, lays out a path to reform that would provide universal coverage, real-time data and performance measures, and more robust payment models that would enable the market to improve care for all through informed choice of population health organizations (PHOs), providers, and treatments.

“There is a real risk that policy makers will get stuck in a fruitless debate between ‘single payer’ and ‘multi-payer’ approaches to achieving universal coverage,” said Dr. Fisher. “If we get another crack at major reform after the upcoming elections, we should address the underlying reasons that healthcare in the United States is so expensive and unequal.”

Responding to a pre-publication copy of the paper, Representative Peter Welch (D. VT), said: “Dr. Fisher helped develop the ACO model that has garnered strong bipartisan support. He has now clarified why costs nevertheless continue to rise and how we could do better. Dr. Fisher’s recommendations about how to empower the market to improve care and lower costs for all deserve serious attention. I look forward to working with my colleagues across the aisle—as we did with ACOs—to explore these ideas.”

The concept at the heart of the proposal—Population Health Organizations—is intended to address the limitations of the current ACO model, under which primary care focused provider organizations are responsible for the quality and total cost of care for their assigned patients and receive a share of any savings they achieve if they continue to meet quality standards. More than 30 million Americans now receive care under this payment model. “We should celebrate the broad bipartisan support and high levels of adoption seen for ACOs and other value-based payment models,” Dr. Fisher said. “And we must admit that while these models appear to achieve some savings, their overall impact has been less than what we hoped for.”

In his Catalyst paper, Dr. Fisher explains why the U.S. continues to see the inexorable increases in costs that have made healthcare unaffordable for so many. “Fragmented delivery, payment, and insurance systems have long been recognized to pose serious challenges to care coordination,” he writes. “Fragmentation also weakens incentives, discourages innovation, and makes it easy for providers and insurers to avoid efforts to control costs.” ACOs, for example, can be rewarded for lowering costs for the patients in their ACO contract while at the same time increasing costs to others. “Our current system can be seen as a balloon: push on one part and the expansion simply continues somewhere else.”

The solution is to shift from thinking of ACOs as a contract to seeing them as organizations paid under capitation to manage the health of all of their enrolled primary care patients—as Population Health Organizations. Fisher recommends that all Americans get to choose their PHO on statewide insurance exchanges where uniform benefits, limited cost-sharing, and transparency on quality would enable market forces to drive meaningful improvement in both cost and quality.

Other key elements of the “Single System Solution” include:

• A single, unified health information system, ensuring that clinicians have all of their patients’ health records when needed and where comprehensive quality and outcome measures empower consumer choice of treatments, providers, and PHOs;
• Universal coverage under which everyone would have access to the same basic benefit packages and choice of PHOs on statewide exchanges, which is the single best way to reduce disparities and eliminate the sense of exclusion experienced by those now relegated to the “safety net.”
• Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.

https://medicalxpress.com…

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Reforming Health Care: The Single System Solution

By Elliott S. Fisher, M.D., M.P.H.
NEJM Catalyst, September-October 2020 (Released August 5, 2020)

Full article (behind paywall):
https://catalyst.nejm.org…

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Comment:

By Don McCanne, M.D.

The policy community and politicians have gone out of their way to protect the private insurance industry from enactment and implementation of a national health program, especially the single payer model of Medicare for All.

The Affordable Care Act was designed specifically to maintain a role for private insurers both by protecting the private employer-sponsored plans and by establishing an exchange of competing private plans in the individual market.

Although the managed care revolution and its HMOs suffered from a backlash, it was decided that the concept of competing integrated health systems could be perpetuated by creating accountable care organizations (ACOs). Under this model health care professionals would be provided incentives to be accountable for both the quality and costs of the care provided.

Although the ACO experiment continues, it has largely failed to accomplish its goals of higher quality at lower costs. Elliott Fisher and his Dartmouth colleagues were primary architects of the ACO model. Now even he concedes, “their overall impact has been less than what we hoped for.”

There were some very significant design defects in the ACOs that caused a few of us to predict their failure. Fisher now proposes changes to correct the perceived defects (though he misses the fundamentals). His primary proposal is a switch to Population Health Organizations (PHOs). The concept is that the PHO is a “single system solution” (perhaps a rhetorical takeoff on the popularity of single payer reform?). All PHOs would provide the same benefit package, paid under capitation, while having a uniform national fee schedule, and share a unified health information system. The PHOs would be offered through exchanges that would operate as “active purchasers” (required to meet certain standards to qualify for listing) where they would compete based on quality and performance, but not prices.

It is ironic that the Dartmouth release touts PHOs as follows, “Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.” Those are characteristics of single payer Medicare for All more so than they would be of a market of competing PHOs with all of their administrative complexity.

But is a market of competing PHOs really a single system solution? Each PHO would have a separate network of hospitals, physicians and other health care professionals. With the entire health care system fragmented into competing silos, health care choice would certainly be limited, perhaps severely so if enough entrepreneurial-oriented PHO managers are competing in a small space.

Where this proposal really breaks down is that Fisher says that we should not waste an opportunity for reform by “arguing about single payer, multi-payer, or repeal and replace.” He states, “the single system approach — if implemented in a multi-payer model that preserves a role for private insurers — should satisfy the core interests of all key stakeholders: better, less expensive care for consumers; better support, information, and working environments for clinicians; and a continued important role not only for hospitals, but for insurers, too. Conflict is also likely to arise between advocates of single- or multi-payer approaches. I believe this is a false choice. It is certainly possible that a streamlined and well-regulated private insurance system could be as effective as government agencies that have been captured by provider interests — as is plausibly the case under Medicare” (referring to private Medicare Advantage?).

So the policy community is still fixated on the market concept of competition as a means of controlling costs. Competing private insurers have been responsible for much of the excesses, fragmentation and especially the profound administrative waste of our current health care financing system. It is not competition but rather cooperation that best serves the interests of patients. Instead of a fragmented system of competing PHOs, if we had only one single “population health organization,” composed of the entire health care delivery system, then patients and their health care professionals would have complete free choice in obtaining the best care possible. Of course, Medicare for All makes the entire health care delivery system a de facto single health organization for the entire population – the only “PHO” that you would need, though we wouldn’t call it that.

In a recent Quote of the Day we noted that Stuart Butler, an architect of the Affordable Care Act, wants us to “improve” ACA by moving private Medicare Advantage plans into the exchanges. Elliott Fisher, an architect of ACOs, now wants us to “improve” ACOs by converting them to PHOs. Both are recommending changes because of the failures of their own models. Please. No more failures. Let’s move smartly into the model that will work well for all of us: single payer improved Medicare for All.

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By Reed Abelson
The New York Times, August 5, 2020

Some of the largest companies, including Anthem, Humana and UnitedHealth Group, are reporting second-quarter earnings that are double what they were a year ago.

Anthem’s net income soared to $2.3 billion for the second quarter, from $1.1 billion in 2019, while UnitedHealth reported net earnings of $6.7 billion, compared to $3.4 billion for the same three months last year.

Although many hospitals have been overwhelmed by the coronavirus outbreaks raging from state to state, insurers have shelled out billions of dollars less in medical claims in the last three months because expensive, elective surgeries have been postponed in many places. Moreover, people have steered clear of doctors’ offices and emergency rooms in fear of contagion.

The companies’ staggering pandemic profits stand in stark contrast to the scores of small medical practices and rural hospitals that are struggling to stay open. And the earnings are putting a spotlight on the big insurance companies at a time when government officials in many states are facing massive budget shortfalls as businesses collapse, unemployment rises and tax revenues plummet.

But the companies may have even higher profits than is apparent. Some, like UnitedHealth, have large networks of doctors and other health care businesses, in addition to owning giant pharmacy benefit managers. There are no limits on how much these units can make, and many of the units sell their services directly to the insurer.

And in this presidential election year, the companies’ overly buoyant position could also reignite a discussion among Democrats about “Medicare for all,” a proposal that would replace the current private health care system with a government one that guarantees coverage for all U.S. residents.

“We’re looking at the fact that health care can’t be regulated by the marketplace,” said Representative Pramila Jayapal, the Washington State Democrat who is a strong proponent of Medicare for all.

“Who knows what’s going to happen by January?” Ms. Jayapal asked. “It’s entirely possible that everything shifts on health care, within weeks or months after the election.”

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

So how is our health care financing system working? For patients, many are losing their health insurance and others are facing financial hardship in spite of being insured. For small medical practices and rural hospitals? They are struggling and many are having to shut down. And for the large private insurers? Record profits!

If we had a single payer Medicare for All program, patients would have no financial barriers to care, and the health care delivery system would be adequately funded to be able to provide all essential services. And the expensive, private, for-profit insurance giants? Gone!

Reject the presidential candidates’ statements in opposition to Medicare for All. The down-to-earth conditions cry out for intensifying our advocacy for single payer Medicare for All. We must give the victors in the November election no choice but to accept the will of the people. No more health care coverage designed of, by, and for the private insurers. No more!

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By Jennifer Karas Montez, Jason Beckfield, Julene Kemp Cooney, Jacob M. Grumbach, Mark D. Hayward, Huseyin Zeyd Koytak, Steven H. Woolf, Anna Zajacova
The Milbank Quarterly, August 4, 2020

Abstract

Policy Points

• Changes in US state policies since the 1970s, particularly after 2010, have played an important role in the stagnation and recent decline in US life expectancy.
• Some US state policies appear to be key levers for improving life expectancy, such as policies on tobacco, labor, immigration, civil rights, and the environment.
• US life expectancy is estimated to be 2.8 years longer among women and 2.1 years longer among men if all US states enjoyed the health advantages of states with more liberal policies, which would put US life expectancy on par with other high‐income countries.

Context: Life expectancy in the United States has increased little in previous decades, declined in recent years, and become more unequal across US states. Those trends were accompanied by substantial changes in the US policy environment, particularly at the state level. State policies affect nearly every aspect of people’s lives, including economic well‐being, social relationships, education, housing, lifestyles, and access to medical care. This study examines the extent to which the state policy environment may have contributed to the troubling trends in US life expectancy.

Methods: We merged annual data on life expectancy for US states from 1970 to 2014 with annual data on 18 state‐level policy domains such as tobacco, environment, tax, and labor. Using the 45 years of data and controlling for differences in the characteristics of states and their populations, we modeled the association between state policies and life expectancy, and assessed how changes in those policies may have contributed to trends in US life expectancy from 1970 through 2014.

Findings: Results show that changes in life expectancy during 1970‐2014 were associated with changes in state policies on a conservative‐liberal continuum, where more liberal policies expand economic regulations and protect marginalized groups. States that implemented more conservative policies were more likely to experience a reduction in life expectancy. We estimated that the shallow upward trend in US life expectancy from 2010 to 2014 would have been 25% steeper for women and 13% steeper for men had state policies not changed as they did. We also estimated that US life expectancy would be 2.8 years longer among women and 2.1 years longer among men if all states enjoyed the health advantages of states with more liberal policies.

Conclusions: Understanding and reversing the troubling trends and growing inequalities in US life expectancy requires attention to US state policy contexts, their dynamic changes in recent decades, and the forces behind those changes. Changes in US political and policy contexts since the 1970s may undergird the deterioration of Americans’ health and longevity.

From the Discussion

The changing policy contexts of US states since the 1970s may have played a sizable role in shaping US life expectancy. Indeed, this study’s findings are consistent with the proposition that changes in state policy contexts have contributed to the growing gap in life expectancy across states since 1980 and suppressed overall gains in US life expectancy. This is particularly striking during the last five years of our study period (2010‐2014), in which we estimated that the shallow upward trend in US life expectancy would have been 25% steeper for women and 13% steeper for men had state policies not changed as they did.

The causal mechanisms linking state policies to life expectancy are complex. For example, environmental laws can shape exposure to toxic substances that damage respiratory and cardiovascular function, affect gene expression, disrupt endocrine function, and increase the risk of death. Civil rights laws may help protect individuals from the pernicious mental and physical health effects of racism, sexism, and other forms of discrimination. Living in a US state with weak protections for lesbian, gay, and bisexual populations may elevate rates of generalized anxiety disorder, post‐traumatic stress disorder, and dysthymia among these populations. Labor policies such as higher minimum wage and paid family leave can improve economic well‐being, health behaviors, birth outcomes, and access to prenatal care, and can decrease mortality rates. Tobacco control policies, such as higher excise taxes and indoor smoking bans, have reduced the prevalence of smoking. Restrictive abortion policies have been linked with women’s poverty, reduced employment, anxiety, poor physical health, and violence from the man involved in the pregnancy. And finally, access to firearms in the home is associated with greater risks of gun‐related homicide (particularly for female victims, thought to reflect partner victimization) and suicide. Collectively, these studies indicate that the mechanisms are numerous and complex and shape nearly all aspects of people’s lives.

From the Policy Implications

Although the importance of any specific domain in our study should be interpreted cautiously, the overarching conclusion is clear: states that have invested in their populations’ social and economic well‐being by enacting more liberal policies over time tend to be the same states that have made considerable gains in life expectancy.

Conclusions

Americans’ opportunities and constraints for living a healthy life are strongly shaped by structural conditions. Other factors such as individual behaviors and medical care are also important and must be part of a comprehensive strategy to improve population health and reduce inequalities; nevertheless, as McCartney and colleagues argued, “there should be no pretense or illusion that health inequalities can be eliminated, or even meaningfully reduced, without a primary focus on structural factors.” This study focused on US state policy contexts as an increasingly important structural factor. Our findings underscore that progress in understanding—and reversing—the troubling trends and growing disparities in US life expectancy requires attention to state policy contexts, their dynamic changes in recent decades, and the forces behind those changes.

The full article, well worth reading, is open access:
https://onlinelibrary.wiley.com…

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Comment:

By Don McCanne, M.D.

This meticulously researched study demonstrates that “states that have invested in their populations’ social and economic well‐being by enacting more liberal policies over time tend to be the same states that have made considerable gains in life expectancy.”

Policy matters. Those states that get policy right contribute to the health of their populations. Those states that are successful in enacting and implementing beneficial liberal policies that are health-enhancing are those states that get their politics right.

If the policies aren’t right and the politics are a barrier, then change the politics so that you can fix the policies. Simple.

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CMS.gov, August 3, 2020

On August 3, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces and solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, on or after January 1, 2021.

Since 1992, Medicare has paid for the services of physicians and other billing professionals under the PFS.

Payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for physician work, practice expense, and malpractice. These RVUs become payment rates through the application of a conversion factor. Payment rates are calculated to include an overall payment update specified by statute.

CY 2021 PFS Ratesetting and Conversion Factor

We are proposing a series of standard technical proposals involving practice expense, including the implementation of the third year of the market-based supply and equipment pricing update, and standard ratesetting refinements to update premium data involving malpractice expense and geographic practice cost indices (GPCIs).

With the budget neutrality adjustment to account for changes in RVUs, as required by law, the proposed CY 2021 PFS conversion factor is $32.26, a decrease of $3.83 from the CY 2020 PFS conversion factor of $36.09.

https://www.cms.gov…

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Comment:

By Don McCanne, M.D.

Each year, in their efforts to privatize Medicare, CMS has used innovative accounting maneuvers to increase the payment rates for the private Medicare Advantage (MA) plans, while neglecting the traditional Medicare program. This has allowed the MA plans to charge lower premium rates and to provide extra benefits which then gives the private plans an unfair competitive advantage over the traditional fee-for-service Medicare program (FFS). The resulting marketing advantage has been effective in increasing enrollment in the private MA plans.

Once enrollment increased in the private plans it was assumed that CMS would decrease funding of the traditional FFS Medicare program causing it to wilt on the vine (or be drowned in a bathtub, in the words of Grover Norquist). It looks like we are entering that phase.

One innovative accounting maneuver for FFS Medicare available to CMS is making a “budget neutrality adjustment.” Imagine the variables that they can conjure up to make these adjustments. Whatever they did, they are rationalizing a 10.6 percent reduction in FFS payments beginning in January – this in a system that many complain is already chronically underfunded.

What do you suppose physicians will do five months from now when they see a ten percent reduction in their FFS Medicare payments? That’s on top of the stresses of a pandemic and a recession. And the private insurance sector and their Wall Street barons are going to have the answers? We may be headed for more disruption, and not the good kind.

A well designed, single payer Medicare for All program could salvage our health care system, but we have to elect public stewards who are dedicated to the best interests of patients. Supporting the system through adequate funding is in the best interests of patients.

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