Not ordinary Democrats or independents — just insurance companies, lobbyists, and old-line politicians.

By Jim Hightower
Other Words, December 11, 2019

We might expect that corporate billionaires and Koch-funded Republican right-wingers would be howl-at-the-moon opponents of a wealth tax, Medicare-for-All, and other big progressive ideas to help improve the circumstances of America’s workaday majority.

But Democrats, too? Unfortunately, yes. Not grassroots activists, but a gaggle of don’t-rock-the-corporate-boat, fraidy-cat elected Democrats.

These naysayers are the party’s old-line politicians, lobbyists, and other insider elites who are now screeching that Democratic candidates must back off those big proposals.

Why? Because, they squawk, being so bold, so progressive, so — well, so Democratic — will scare voters. As one meekly put it: “When you say Medicare for All, it’s a risk. It makes people afraid.”

Excuse me, but in my speeches and writings I say “Medicare for All” a lot — and far from cowering, people stand up and cheer.

In fact, the New York Times just reported that 81 percent of Democrats (and two-thirds of independents) support Medicare for All. Even apple pie doesn’t score that high! It’s simply a lie that the people are “afraid” of the idea of everyone getting public-financed health care.

So who really fears it? Three special-interest groups: Insurance company profiteers, Big Pharma price gougers, and the political insiders hooked on funding from those corporations.

Not only is it a pusillanimous fabrication to claim that the people oppose any changes stronger than corporate minimalism, it’s also political folly. If the Democratic Party won’t stand up for the transformative structural changes that America’s middle and low-income majority clearly wants and needs, why would those people stand up for Democrats?

As the 2016 presidential election taught us so painfully, a whole lot of the working class Democrats the Party counts on won’t.

https://otherwords.org…

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Comment:

By Don McCanne, M.D.

Many would-be political pundits are now saying that if we support single payer Medicare for All, then Trump will be reelected president. Talk about a non sequitur. Yet the media is promulgating this concept, causing some to react by saying that we need to preserve choice of private health plans – as if plans that take away health care choices through restricted provider networks and cost sharing financial barriers would be preferred over a Medicare for All program that really does provide free choice by eliminating networks and cost sharing barriers.

Jim Hightower has it right. We need to stand up and start shouting, lest these pundits drown out our message.

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Congressional Budget Office, December 2019

Share of Total Income Received by Each Income Group

To assess the direct distributional effects of federal fiscal policies, CBO projected each quintile’s share of total income both before and after means-tested transfers and taxes. Income shares are one measure of income inequality: When the share of income received by the top income group grows, income inequality tends to rise. CBO’s projections reflect such a pattern:

• The highest quintile’s share of income before transfers and taxes is projected to increase by 0.7 percentage points between 2016 and 2021, from 54.4 percent to 55.1 percent (see Figure 3 – at link).
• Within that quintile, the growth of shares of total income before transfers and taxes varies in CBO’s projections. For example, for households in the 81st to 90th percentiles, the share decreases by 0.1 percentage points, from 14.9 percent to 14.8 percent. But for households in the top 1 percent, the share rises by 0.6 percentage points, from 15.8 percent to 16.4 percent.
• By contrast, the share of income before taxes and transfers received by the other four quintiles does not grow. The middle three quintiles’ shares decline over the five-year period in CBO’s projections. The lowest quintile’s share remains roughly unchanged at 3.8 percent.

Because higher-income households receive a smaller share of their income in the form of transfers and pay a larger share of their income in taxes, shares of income after transfers and taxes are more evenly distributed than shares of income before transfers and taxes. Nevertheless, in CBO’s projections, the highest quintile’s share of income after transfers and taxes increases even more over the 2016–2021 period than its share of income before transfers and taxes:

• The highest quintile’s share of income after transfers and taxes rises by 1.2 percentage points, from 47.6 percent in 2016 to 48.8 percent in 2021.
• Most of that increase is attributable to households in the top 1 percent, whose share rises by 0.9 percentage points, from 12.5 percent to 13.4 percent.

By contrast, the share of income after transfers and taxes of each of the other quintiles declines over the period.

Projected Changes in Income Inequality

If the distributions of income, means-tested transfers, and federal taxes follow CBO’s projections, income inequality will be greater in 2021 than it was in 2016.

A standard composite measure of income inequality is the Gini coefficient, which summarizes an entire distribution in a single number that ranges from zero to one. A value of zero indicates complete equality (for example, if each household received the same amount of income), and a value of one indicates complete inequality (for example, if a single household received all the income). Thus, a Gini coefficient that increases over time indicates rising income inequality.

Income inequality as measured by the Gini coefficient increased from 1979 to 2016, and CBO projects that it will be higher in 2021. That increase reflects the accelerated growth of household income that is projected to occur at the top of the distribution. The Gini coefficient for income before taxes and transfers is projected to grow from 0.513 in 2016 to 0.521 in 2021—close to its previous peak, which was recorded in 2012 (see Figure 8 – at link).

The Gini coefficient can also be interpreted as a measure of one-half of the average difference in income between every pair of households in the population, divided by the average income of the total population. For example, the Gini coefficient of 0.513 for 2016 indicates that the average difference in income between pairs of households in that year was equal to 102.6 percent (twice 0.513) of average household income in 2016, or about $70,700 (adjusted to account for differences in household size). Similarly, the Gini coefficient of 0.521 projected for 2021 indicates that the average difference in income between pairs of households would equal 104.2 percent (twice 0.521) of average household income in 2021, or about $77,800 (in 2016 dollars).

In CBO’s projections, inequality increases from 2016 to 2021 even as income grows for all income groups, including those at the bottom of the distribution. That pattern is similar to the one observed during the economic expansion of the mid-1990s, when income grew for households at the bottom of the distribution after a long period of stagnation, while inequality increased because income at the top of the distribution grew more strongly. A similar pattern occurred during the expansion of the mid-2000s.

The Gini coefficient for income after transfers and taxes is lower than the coefficient for income before transfers and taxes because means-tested transfers and federal taxes in the United States are progressive. The degree to which means-tested transfers and federal taxes reduce income equality varies from year to year according to the size and progressivity of the tax and transfer systems. In CBO’s projections, the Gini coefficient for income after transfers and taxes is 0.437 in 2021—0.084 less than the Gini coefficient for income before transfers and taxes (see Figure 9 – at link). That reduction in inequality is smaller than the reduction in 2016, when means-tested transfers and federal taxes reduced the Gini coefficient by 0.090, from 0.513 to 0.423.

https://www.cbo.gov…

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Comment:

By Don McCanne, M.D.

Because of our very high national health expenditures, low- and middle-income individuals and families are unable to afford their proportionate share of health care spending. Fortunately, because we are a wealthy nation, we should be able to pay for health care for everyone by using progressive financing.

The simplest and most equitable method would be to finance the system through progressive taxes, as would be the case with single payer Medicare for All. Since we don’t have such a system now we have had to rely on transfers through various government programs to help finance care for those cannot afford to pay their proportionate share on their own.

This report from the Congressional Budget Office shows how income is distributed amongst households, and it shows how taxes and transfers redistribute income. Then they project the changes they expect in income inequality.

Some important observations:

• The highest quintile’s share of income after transfers and taxes increases even more over the 2016–2021 period than its share of income before transfers and taxes, with most of that going to households in the top 1 percent.
• By contrast, the share of income after transfers and taxes of each of the other quintiles declines over the period.
• Inequality increases from 2016 to 2021 even as income grows for all income groups, including those at the bottom of the distribution.
• The reduction in the projected inequality in 2021 is smaller than the reduction in 2016.

We keep hearing that you can tax all of the income of the wealthy and still we wouldn’t have enough to pay for health care for everyone. Well, first of all, nobody proposes confiscatory taxes on the wealthy. But more importantly, we are already spending $3.8 trillion on health care, and that has been made possible partly because of taxes and transfers already in existence. The amount of additional funds that we will need under single payer Medicare for All is not that great because we will recover hundreds of billions of dollars currently wasted on our profound administrative excesses and on excessive profit margins, especially for pharmaceuticals. If additional funds are required, today’s report shows that we have plenty of leeway at the upper end of the income scale to tap more funds through progressive tax policies. These would be comparatively small adjustments in our tax system that would not in any way impact the lifestyles of the multi-millionaires and billionaires.

Even if we didn’t enact and implement a single payer Medicare for All program, the CBO report still shows that we need more tax policies to correct the excessive maldistribution of income that persists today. There are plenty of potential public programs that could benefit from those revenues, but single payer, improved Medicare for All should be very high on the list.

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By Noam N. Levey
Los Angeles Times, December 17, 2019

Even as soaring insurance deductibles wreak financial havoc on millions of American families, some workers have managed to dodge the affordability crisis.

In Boston, a labor union representing the city’s hotel workers offers its members health coverage with no deductible and family premiums just a tenth of the U.S. average.

This year, workers pay just $16 a month for a single plan and $48 a month for a family plan.

Workers and their families pay nothing out-of-pocket for doctor visits, tests and hospital stays. Even the most expensive specialty drugs cost just $12 per prescription. Generics are $1.

The push by Unite Here, Local 26, to protect Boston hotel workers highlighted the challenges of protecting patients from medical bills, as workers were forced to make difficult choices. But the union’s success — in one of the most expensive healthcare markets in the country — also suggests that Americans may not have to settle for huge deductibles that have put medical care out of reach for millions.

Delivering that peace of mind wasn’t easy. Starting in 2013, when the new health plan debuted, Local 26, which provides coverage for roughly 9,000 union members and their families, had to confront the biggest cause of soaring insurance premiums and deductibles: the high price of U.S. medical care, particularly at hospitals.

It required union members to make a trade-off that many, at first, found unpalatable — giving up access to some of the city’s best known, and most expensive, hospitals.

Local 26, like many unions, had long offered members a health plan, which was largely funded by the hotels that employed its members. Such Taft-Hartley plans, as they are called, are prized by unions, as they typically offer good benefits and have preserved workers’ health protections, even when wages have stagnated.

But Local 26’s plan had a history of struggling, as rising medical costs sapped the plan’s reserves and jeopardized coverage for workers and their families, many of whom are immigrants from Latin America, Africa and East Asia.

In Boston, the 1994 merger of two of the city’s premier academic medical centers — Massachusetts General Hospital and Brigham and Women’s Hospital — created a powerhouse known as Partners HealthCare with unparalleled ability to demand high prices.

When Local 26 officials began their research, they were stunned to see that the Massachusetts General and Brigham and Women’s charged two or in some cases even three times as much as other academic medical centers in Boston.

So, Local 26 put the question to a vote: Should members get a narrower network of medical providers and guaranteed wage hikes? Or should they keep access to all Boston hospitals, but give up raises for 2 ½ years to keep the health plan from going bankrupt?

In the end, two-thirds of the membership backed the switch to the new, limited network plan.

It rolled out in late 2013. Workers got a raise the next year.

Just 2% of employers have eliminated hospitals or health systems from their insurance networks, as Local 26 did, according to a nationwide employer survey by the Kaiser Family Foundation.

https://www.latimes.com…

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Comment:

By Don McCanne, M.D.

It is common to hear that many union members are opposed to Medicare for All because they do not want to give up their health plans (Taft-Hartley plans) gained through years of tough union negotiations. But these plans have required trade-offs, frequently forgoing wage increases. In this instance, the trade-off for Unite Here was agreeing to a narrower provider network, forgoing care at two of Boston’s premier academic medical centers – Massachusetts General Hospital and Brigham and Women’s Hospital (Partners).

As a result of this trade-off, what the workers do see is how small the premiums are that are deducted from their paychecks and how little their out-of-pocket cost sharing is. The trade-off of losing access to Partners hospitals seemed to be worth it. But what they do not see is the employers’ contributions to the plan premiums which are paid for through forgone wage increases.

The union members are losing in two ways. Their benefits are less comprehensive than the benefits included in the single payer model of Medicare for All, including network restrictions not found in Medicare for All. Also, since single payer is funded through progressive taxes, the modest incomes of Unite Here members would result in lower tax payments than they are now paying in forgone wages. It’s just that the difference is not visible to them so they don’t see that it is a much better deal for them – better benefits at a lower cost.

The keepers of the Taft-Hartley trust funds seem to have a disconnect in logic when they oppose single payer reform. They look at the pot of gold they manage, and they seem to think that it has much greater value than the credit appearing in federal balance sheets. Of course, the federal funds are guaranteed by our government whereas the union trust funds, as this article indicates, can have “a history of struggling,” and may not be as secure as they would be in the U.S. Treasury.

But there are individuals within the union movement who clearly understand the superior benefits of single payer Medicare for All who can explain it to the rest of them. Just ask the National Nurses United.

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By Wendell Potter
Twitter, December 16, 2019

Lately I’ve noticed some Democratic politicians defending the current healthcare system by saying it preserves “choice” for Americans. As a former health insurance exec who helped draft this talking point, I need to come clean on its back story, and why it’s wrong and a trap. 1/11

When I worked in the insurance industry, we were instructed to talk about “choice,” based on focus groups and people like Frank Luntz (who wrote the book on how the GOP should communicate with Americans). I used it all the time as an industry flack. But there was a problem. 2/11

As a health insurance PR guy, we knew one of the huge “vulnerabilities” of the current system was LACK of choice. In the current system, you can’t pick your own doc, specialist, or hospital without huge “out of network” bills. So we set out to muddy the issue of “choice.” 3/11

As industry insiders, we also knew most Americans have very little choice of their plan. Your company chooses an insurance provider and you get to pick from a few different plans offered by that one insurer, usually either a high deductible plan or a higher deductible plan. 4/11

Another problem insurers like mine had on the “choice” issue: people with employer-based plans have very little choice to keep it. You can lose it if your company changes it, or you change jobs, or turn 26 or many other ways. This is a problem for defenders of the status quo. 5/11

Knowing we were losing the “choice” argument, my pals in the insurance industry spent millions on lobbying, ads and spin doctors — all designed to gaslight Americans into thinking that reforming the status quo would somehow give them “less choice.” 6/11

An industry front group launched a campaign to achieve this very purpose. Its name: “My Care, My Choice.” Its job: Trick Americans into thinking they currently can choose any plan they want, and that their plan allows them to see any doctor. They’ve spent big in Iowa. 7/11

This isn’t the only time the industry made “choice” a big talking point in its scheme to fight health reform. Soon after Obamacare was passed, it created a front group called the Choice and Competition Coalition, to scare states away from creating exchanges with better plans. 8/11

The difference is, this time *Democrats* are the ones parroting the misleading “choice” talking point. And they’re even using it as a weapon against each other. Back in my insurance PR days, this would have stunned me. I bet my old colleagues are thrilled, and celebrating. 9/11

The truth, of course, is you have little “choice” in healthcare now. Most can’t keep their plan as long as they want, or visit any doctor or hospital. Some reforms, like Medicare For All, *would* let you. In other words, M4A actually offers more choice than the status quo. 10/11

So if a politician tells you they oppose reforming the current healthcare system because they want to preserve “choice,” either they don’t know what they’re talking about – or they’re willfully ignoring the truth. I assure you, the insurance industry is delighted either way. 11/11

https://threadreaderapp.com…

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Comment:

By Don McCanne, M.D.

With the help of the media, the political community opposed to single payer Medicare for All has convinced us that we do not want an undesirable “one-size-fits-all” model of health care reform that takes away our choices. They have countered with an advertising campaign touting “My Care, My Choice” which supposedly protects “patient choice in health care.” In his Twitter thread, former health insurance executive and current health justice advocate Wendell Potter exposes the fraud behind this framing.

Though the private insurance industry claims they are protecting choice in health care, they are not. They are protecting their market of private health plans in which you can choose what health care you are willing to give up by being restricted to networks that limit your choices of physicians and hospitals, limit your affordability of care through high deductibles and other cost sharing, or limit your choice to a plan offered by your employer.

The irony is that the one-size-fits-all plan – single payer Medicare for All – is the plan that does give you your choices of physicians, hospitals and other health care services and products. It is the plan that works for all whereas the My-Care-My-Choice private plans take away many of your choices in health care.

I don’t like to call someone a liar, but when the insurance industry tells you that they are “fighting to protect patient choice in health care,” they are flat out lying. Insurers do not provide health care, and they sharply restrict what health care they will pay for, thus taking away choices in health care.

The Lie of the Year award just went to President Trump for his 80 false statements about the whistle-blower. But I would have voted to grant the award to the private insurers for their claim that they are fighting to protect patient choice in health care when their products are quite specifically designed to take health care choices away from patients.

Let’s renew our fight for single payer Medicare for All – the inclusive size that really does fit all – perfectly.

How about that for a sound bite: “Medicare for All – the inclusive size that really does fit all – perfectly.”

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By Drew Altman, Kaiser Family Foundation
Axios, December 16, 2019

The cost of private health insurance is out of control, compared to Medicare and Medicaid. You see that clearly if you take a long-term view of recently released federal data on health spending.

Why it matters: This is why the health care industry — not just insurers, but also hospitals and drug companies — is so opposed to proposals that would expand the government’s purchasing power. And it’s why some progressives are so determined to curb, or even eliminate, private coverage.

By the numbers: Per capita spending for private insurance has grown by 52.6% over the last 10 years.

• Per-capita spending for Medicare grew by 21.5% over the same period, and Medicaid 12.5%.

Private insurance generally pays higher prices for care than Medicare, which generally pays more than Medicaid.

• There’s a long-running debate about whether public programs deliver efficiency because of their purchasing power, or simply underpay.
• Democrats have proposed a variety of steps to curb health care costs, including cutting payments for out-of-network care, competition from a public insurance plan, and steep payment cuts through Medicare for All.
• Industry opposes most of them.

The bottom line: The industry knows cutting government spending can only go so far. Any effort to rein in health care costs will have to confront the growth in the cost of private insurance.

https://www.axios.com…

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Comment:

By Don McCanne, M.D.

Other studies have shown that the higher level of health care spending in the United States compared to other nations is due to higher prices and not due to higher utilization. Yet our higher prices are not bringing us better outcomes, on average.

The decade of 2008 to 2018 shows us that the private insurance industry has been far less effective in controlling spending increases than have our government programs – Medicare and Medicaid – in spite of the implementation of the Affordable Care Act. But the issues are different for each of these programs.

Medicaid, being a welfare program for low-income individuals and families, has been chronically underfunded primarily because of the lack of a strong political voice for those served by the program. Under a single payer Medicare for All program, this problem of underfunding would be eliminated since Medicaid beneficiaries would be moved into an equitable, universal program that covered everyone.

Although the rate of spending increases per Medicare enrollee over the past decade has been almost twice that of the Medicaid program, it has been less than half the rate for private health insurance. Considering that our national per capita health expenditures are about twice the average of other wealthy nations, it would seem illogical to push Medicare rates up to those of the private insurance sector. We do not have a pressing need to use public funds to pad private profits. Nevertheless, in some instances Medicare payments have been inadequate to ensure the viability of institutions such as rural hospitals, especially those with low volumes or a high percentage of uninsured, indigent patients.

Because Medicare payments often tend to be more modest than those of the private insurers some opponents of single payer are making outrageous claims such as fees for the health care delivery system would have to be cut by 40 percent. First of all, the method of determining payments would not be the same as with the current Medicare program. Hospitals would be paid through global budgets, much as fire departments are. Fee-for-service or capitation rates would be negotiated at a level that would ensure that the capacity of the system is adequate. That is, rather than being compensated at current Medicare rates, the system would be funded under an improved financing infrastructure at rates that would meet legitimate expenses and provide fair margins while avoiding gouging the taxpayers. Besides, reduction in payments that are made possible by reducing administrative overhead waste may be able to be achieved without any reduction in net income.

In looking at the graph you can see that the greatest source of our excessive health care spending is through the private insurers. When you think of what the insurance industry does, you can understand why that might be the case. Their primary business product is administrative services. The more they can sell to us, the more successful is their enterprise. The funds that they hold to pay medical claims are our funds, not theirs, whether they receive them through premiums or through government taxpayer subsidies. The greater the volume, the more administrative services they can sell us. Also, though they distribute about 85 percent of their revenues as medical benefits (medical loss ratio) they keep the other 15 percent or so for the administrative services they are selling us and for profits (or margins for the non-profits). So it is to their advantage to contract with hospitals and physician groups for higher rates since they keep a percentage of the total spent. It is no wonder that the spending curve for private insurers is so much higher than the public insurers who continue to strive for administrative efficiency and are not looking for profits (i.e., no need to shift our taxes from one column (revenues) to another (profits) on our federal budgetary balance sheets).

The private insurers are responsible for much of the excessive spending in our health care system, primarily in two ways. Besides their own profound administrative excesses, for which we pay, they place a tremendous administrative burden on the health care delivery system, for which we also pay. In addition, they have been far less effective in controlling excessive prices (think drugs, or oligopolistic hospital consolidation) than have been the public insurers. For those who challenge this contention, look again at the graph above. The private insurers have to go.

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U.S. Department of Health and Human Services, Office of Inspector General, December 2019

The risk adjustment program is an important Medicare Advantage (MA) payment mechanism. It levels the playing field for MA organizations (MAOs) that enroll sicker beneficiaries who need a more costly level of care. This helps to ensure that sicker beneficiaries have continued access to MA plans. Chart reviews can be a tool to improve the accuracy of risk-adjusted payments by allowing MAOs to add and delete diagnoses in the encounter data based on reviews of patients’ records. However, chart reviews—particularly those not linked to service records—may provide MAOs opportunities to circumvent the Centers for Medicare & Medicaid Services (CMS) face-to-face requirement and inflate risk-adjusted payments inappropriately.

Why OIG Did This Review

We undertook this study because of concerns that MAOs may use chart reviews to increase risk-adjusted payments inappropriately. Unsupported risk-adjusted payments are a major driver of improper payments in the MA program, which provided coverage to 21 million beneficiaries in 2018 at a cost of $210 billion.

CMS risk-adjusts payments by using beneficiaries’ diagnoses to pay higher capitated payments to MAOs for sicker beneficiaries―which may create financial incentives for MAOs to make beneficiaries appear as sick as possible. MAOs report these diagnoses via CMS’s MA encounter data system and RAPS based on services and chart reviews (i.e., MAO’s reviews of a beneficiary’s medical record to identify diagnoses that a provider did not submit or submitted in error).

To be eligible for risk adjustment, a diagnosis must be documented in a medical record as a result of a face-to-face visit. Although CMS requires MAOs to identify chart reviews in the encounter data, CMS does not require MAOs to link these chart reviews to a specific service associated with the diagnoses. This may provide MAOs opportunities to circumvent CMS’s face-to-face requirement and inflate risk-adjusted payments inappropriately.

What OIG Found

Our findings highlight potential issues about the extent to which chart reviews are leveraged by MAOs and overseen by CMS. Based on our analysis of MA encounter data, we found that:

• MAOs almost always used chart reviews as a tool to add, rather than to delete, diagnoses—over 99 percent of chart reviews in our review added diagnoses.
• Diagnoses that MAOs reported only on chart reviews—and not on any service records—resulted in an estimated $6.7 billion in risk-adjusted payments for 2017.
• CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that MAOs did not link to a specific service provided to the beneficiary―much less a face-to-face visit.
• Although limited to a small number of beneficiaries, almost half of MAOs reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016.

These findings raise three types of potential concerns. First, there may be a data integrity concern that MAOs are not submitting all service records as required. Second, there may be a payment integrity concern if diagnoses are inaccurate or unsupported— making the associated risk-adjusted payments inappropriate. Third, there may be a quality-of-care concern that beneficiaries are not receiving needed services for potentially serious diagnoses listed on chart reviews, but with no service records.

Despite the potential for MAOs to misuse chart reviews, CMS has not reviewed the financial impact of chart reviews in the encounter data on risk-adjusted payments. CMS has not assessed variation across MAOs in their chart review submissions. In addition, CMS has not analyzed the quality of care provided to beneficiaries who may have serious health conditions and may not be receiving needed services. Finally, CMS has not yet performed audits that validate diagnoses reported on chart reviews in the encounter data against beneficiaries’ medical records. CMS reported that it plans to begin audits that would include such chart reviews later this year.

What OIG Recommends

We recommend that CMS (1) provide targeted oversight of MAOs that had risk-adjusted payments resulting from unlinked chart reviews for beneficiaries who had no service records in the 2016 encounter data, (2) conduct audits that validate diagnoses reported on chart reviews in the MA encounter data, and (3) reassess the risks and benefits of allowing chart reviews that are not linked to service records to be used as sources of diagnoses for risk adjustment. CMS concurred with these recommendations.

Findings

Less than 1 percent of chart reviews deleted risk-adjustment-eligible diagnoses from the MA encounter data for payment year 2017

Diagnoses that MAOs reported only on chart reviews―and not on any service records―resulted in an estimated $6.7 billion in risk-adjusted payments for 2017

CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that MAOs did not link to any service provided to the beneficiary

Although limited to a small number of beneficiaries, almost half of MAOs reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016

CMS has not validated diagnoses or reviewed the financial impact of diagnoses reported on chart reviews in the encounter data

Conclusion

The risk adjustment program is an important mechanism for accurately reimbursing MAOs based on the differences in health status across beneficiaries. It levels the playing field for MA organizations (MAOs) that enroll sicker beneficiaries who need a more costly level of care. This helps to ensure that sicker beneficiaries have continued access to MA plans. Chart reviews can be a tool to improve the accuracy of risk-adjusted payments by allowing MAOs to add and delete diagnoses in the encounter data based on reviews of patients’ records. We found that MAOs’ chart reviews almost always resulted in added diagnoses (over 99 percent of chart reviews), and almost never deleted diagnoses (less than 1 percent).

CMS uses the diagnoses from chart reviews to determine risk-adjusted payments―as long as the diagnoses are based on a face-to-face visit between beneficiaries and their providers. Diagnoses that MAOs reported only on chart reviews—and not on any service records—resulted in an estimated $6.7 billion in risk-adjusted payments for 2017.

Of the $6.7 billion in risk-adjusted payments, CMS based an estimated $2.7 billion on diagnoses that MAOs did not link to any service provided to the beneficiary in 2016. Allowing unlinked chart reviews provides opportunities for MAOs to circumvent CMS’ face-to-face requirement and inflate risk-adjusted payments inappropriately. Although limited to a small number of beneficiaries, almost half of MAOs reviewed had risk-adjusted payments from unlinked chart review for beneficiaries where there was not a single record of any service being provided to them in all of 2016. For beneficiaries with unlinked chart reviews, and no records of services in all of 2016, it is not at all clear what services were used to generate diagnoses added on these chart reviews.

These findings raise three types of potential concerns. First, there may be a data integrity concern that MAOs are not submitting all service records as required. Second, there may be a payment integrity concern if diagnoses are inaccurate or unsupported—making the associated risk-adjusted payments inappropriate. Third, there may be a quality of care concern that beneficiaries are not receiving needed services for potentially serious diagnoses listed on chart reviews but no service records. Despite the potential for MAOs to misuse chart reviews, CMS has not yet validated the diagnoses reported on chart reviews and has not reviewed the financial impact of chart reviews on risk-adjusted payments.

We understand that MAOs need a mechanism to add diagnoses to the encounter data that providers have neglected to include in the service information submitted to the MAO. However, in the absence of monitoring and oversight by CMS, our findings raise questions about the vulnerabilities associated with using chart reviews, particularly unlinked chart reviews, as this mechanism.

https://oig.hhs.gov…

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Comment:

By Don McCanne, M.D.

We have long complained about the devious methods that the private Medicare Advantage plans use to cheat taxpayers. Originally they selectively marketed their plans to healthy populations while being paid at rates representing average health care costs for Medicare beneficiaries. Since the healthier 80 percent of the population uses only 20 percent of health care, this strategy of marketing to the healthy has been quite profitable for the Medicare Advantage plans.

To counter this fraud, the government introduced risk adjustment. The insurers that included individuals with greater costs would be paid at higher rates for that less healthy population. Today’s report from CMS’s Inspector General confirms that the insurers have found another way to game the system. They began to use chart reviews to “correct” the diagnoses that were to be submitted to CMS – diagnoses that would determine whether they were entitled to higher payments based on the patients’ risk evaluations. Over 99 percent of the corrections added new diagnoses whereas less than 1 percent deleted risk-adjustment-eligible diagnoses. These additional diagnoses based on diagnoses from chart reviews that were not linked to records of services actually rendered resulted in a $6.7 billion windfall for the private Medicare Advantage plans. Thus the plans have been successful in continuing to enroll the large, relatively healthier portion of the Medicare population while reporting them as sick enough to merit additional risk adjustment payments.

From the OIG report: “Of the 137 parent organizations reviewed, 10 parent organizations drove 79 percent of the risk-adjusted payments from chart reviews. These 10 parent organizations enrolled 70 percent of MA beneficiaries.” Thus this has occurred on a massive scale, perpetrated by the big boys. Although the report does not list these organizations, it is well known which companies have enrolled 70 percent of the Medicare Advantage beneficiaries.

Appendix D of the OIG report is a letter from CMS administrator Seema Verma indicating general agreement with the OIG recommendations, when it is difficult to come to any other conclusion than CMS has been complicit with the private insurers in perpetrating this fraud (this is my gut feeling and not a legal opinion). She repeatedly condemns the concept of Medicare for All while celebrating the private Medicare Advantage plans.

Yesterday’s Quote of the Day discussed President Trump’s Executive Order designed to further privatize Medicare. The administration is attempting to shift greater control of the Medicare program to the Medicare Advantage plans with transitional recommendations that would move the patients in the traditional fee-for-service Medicare program into the marketplace, presumably eventually placing the private plans in complete control of the entire Medicare program. Can you imagine how that would bend the concept of Medicare for All? Put the crooks in charge and hit the taxpayers even harder.

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By Donald J. Trump
The White House, October 3, 2019

(Excerpts)

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Purpose. The proposed Medicare for All Act of 2019, as introduced in the Senate (“Medicare for All”) would destroy our current Medicare program, which enables our Nation’s seniors and other vulnerable Americans to receive affordable, high-quality care from providers of their choice. Rather than upend Medicare as we know it, my Administration will protect and improve it.

“Medicare for All” would not only hurt America’s seniors, it would also eliminate health choices for all Americans. Instead of picking the health insurance that best meets their needs, Americans would generally be subject to a single, Government-run system. Private insurance for traditional health services, upon which millions of Americans depend, would be prohibited. States would be hindered from offering the types of insurance that work best for their citizens. The Secretary of Health and Human Services (Secretary) would have the authority to control and approve health expenditures; such a system could create, among other problems, delays for patients in receiving needed care. To pay for this system, the Federal Government would compel Americans to pay more in taxes. No one — neither seniors nor any American — would have the same options to choose their health coverage as they do now.

Instead of ending the current Medicare program and eliminating health choices for all Americans, my Administration will continue to protect and improve Medicare by building on those aspects of the program that work well, including the market-based approaches in the current system. The MA component, for example, delivers efficient and value-based care through choice and private competition, and has improved aspects of the Medicare program that previously failed seniors.

Sec. 2. Policy. It is the policy of the United States to protect and improve the Medicare program by enhancing its fiscal sustainability through alternative payment methodologies that link payment to value, increase choice, and lower regulatory burdens imposed upon providers.

Sec. 3. Providing More Plan Choices to Seniors.

(a) Within 1 year of the date of this order, the Secretary shall propose a regulation and implement other administrative actions to enable the Medicare program to provide beneficiaries with more diverse and affordable plan choices. The proposed actions shall:

(i) encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services;

(ii) include a payment model that adjusts supplemental MA benefits to allow Medicare beneficiaries to share more directly in the savings from the program, including through cash or monetary rebates, thus creating more incentives to seek high-value care; and

(iii) ensure that, to the extent permitted by law, FFS Medicare is not advantaged or promoted over MA with respect to its administration.

(b) The Secretary, in consultation with the Chairman of the Council of Economic Advisers, shall submit to the President, through the Assistants to the President for Domestic and Economic Policy, a report within 180 days from the date of this order that identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.

Sec. 5. Enabling Providers to Spend More Time with Patients. Within 1 year of the date of this order, the Secretary shall propose reforms to the Medicare program to enable providers to spend more time with patients by:

(c) conducting a comprehensive review of regulatory policies that create disparities in reimbursement between physicians and non-physician practitioners and proposing a regulation that would, to the extent allowed by law, ensure that items and services provided by clinicians, including physicians, physician assistants, and nurse practitioners, are appropriately reimbursed in accordance with the work performed rather than the clinician’s occupation.

Sec. 6. Encouraging Innovation for Patients. Within 1 year of the date of this order, the Secretary shall propose regulatory and sub-regulatory changes to the Medicare program to encourage innovation for patients by:

(b) modifying the Value-Based Insurance Design payment model to remove any disincentives for MA plans to cover items and services that make use of new technologies that are not covered by FFS Medicare when those items and services can save money and improve the quality of care.

Sec. 9.

(b) The Secretary shall study and, within 180 days of the date of this order, recommend approaches to transition toward true market-based pricing in the FFS Medicare program. The Secretary shall submit the results of this study to the President through the Assistants to the President for Domestic and Economic Policy. Approaches studied shall include:

(i) shared savings and competitive bidding in FFS Medicare;

(ii) use of MA-negotiated rates to set FFS Medicare rates; and

(iii) novel approaches to information development and sharing that may enable markets to lower cost and improve quality for FFS Medicare beneficiaries.

Sec. 11.

(b) Within 1 year of the date of this order, the Secretary shall identify and remove unnecessary barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate the development of market-driven prices.

https://www.whitehouse.gov…

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Moving To A Market-Driven Medicare Program

By Brian J. Miller and Gail R. Wilensky
Health Affairs Blog, December 5, 2019

(Excerpts)

As the debates amongst Democratic presidential candidates over single-payer health care reaches new heights, the Trump administration recently responded with its latest executive order targeting health care, laying out the administration’s vision for the future of the Medicare program.

Recent administration efforts have tracked traditional market-oriented principles, with previous White House policy positions and executive orders focused on choice and competition. In this post, we review the latest executive order addressing the Medicare program, how agencies could assist with its implementation, and the political challenges it brings.

Medicare Advantage: Market-Driven Medicare

Medicare Advantage (MA), the market-driven alternative to the traditional fee-for-services Medicare program, plays a central role in the executive order.

The executive order proposes further flexibility in benefits and plan design: Medicare Medical Savings Accounts (MSA), supplemental benefits, and telehealth services. Politically popular with many conservatives, MSAs have had little uptake since their introduction.

Previous CMS efforts to broaden use of telehealth services could be expanded in multiple ways, most notably by integrating availability of telehealth services into star ratings and network adequacy requirements—beneficiaries should be able to choose not only when but how they receive medical services.

Medicare Advantage And Traditional Medicare: Wrestling For Dominance

A longstanding complaint from health plans is the differential treatment of private plans as compared to fee-for-service Medicare. The executive order proposes leveling this playing field with multiple opportunities for positive change in not only program administration but also in rulemaking and legislative activity.

To capitalize on the budgetary and care coordination benefits of MA for both beneficiaries and government, CMS could modify the enrollment process to promote auto-enrollment into high-performing MA plans. This would likely require additional legislative authority and could prompt objections by progressive Democrats. However, it would help shift the balance from an open-ended financial commitment—fee-for-service Medicare—to a risk-adjusted capitated-plan product—MA—thus facilitating long-term budgetary control over the Medicare program.

Further changes in payment rates are also proposed, which is likely to bring vigorous, or even rancorous debate. Increasing Medicare fee-for-service rates to commercial rates as specified in the executive order would likely be financially unsustainable, stressing the already strained financial footing of the Medicare program—the latest Medicare Trustees Report estimating depletion of the Hospital Insurance Trust in 2026.

Further adjustments of network adequacy requirements for telehealth services would allow MA plans to better serve rural and underserved markets. This change would require CMS—and the medical community as a whole—to better delineate which services can be safely and effectively delivered remotely, in addition to creating guidelines for when a physical exam is required. While a small part of the executive order, this could promote significant changes in both documentation and medical practice, with the potential to reinvigorate the practice of clinical medicine.

Health Plan Administration: Unsexy And Important

For much of health plan administration, the devil is in the details.

The order directs the Department of Health and Human Services to share information regarding practice patterns with providers and to provide beneficiaries with cost and quality data. The former would provide additional and potentially useful information to both practitioners and practice administrators about cost and quality based upon existing quality metrics, albeit additional work regarding disease and episode-based outpatient groups would be required to make the information clinically and administratively meaningful. Research shows that consumer interest in “report cards” is growing and that consumers can choose high-value care when cost and quality data are presented together, suggesting that health plans—including CMS—have an opportunity to help steer consumers to use cost and quality information to make better decisions.

Finally, while sensible, aspects of the executive order targeting supervision requirements for non-physician providers would require modification of state laws regarding scope of practice. Equalization of payment rates for non-physicians (currently at 85 percent of physician rates) would increase costs, and likely require both rulemaking and legislative change.

Thoughts For Policy Makers

The Medicare executive order represents a vision for a market-based Medicare program. With more than half a century of price setting in Medicare fee-for-service, we have failed to control health care expenditure growth. Now is the time to try something different.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

Congress and both Republican and Democratic administrations have periodically introduced policies that benefit the private Medicare Advantage (MA) plans while neglecting much needed reform in the traditional fee-for-service Medicare program. The goal has been to convert Medicare into a private, market-based program by giving the private MA plans a competitive advantage over traditional Medicare. The current Presidential Executive Order seems to be an effort to abandon, for the present, the goal of “shrinking Medicare and drowning it in a bathtub” to one of converting traditional Medicare into a market-based program which then would have to compete with the private plans, or perhaps be assimilated by them.

The Executive Order calls for specific actions to move the process forward. But this is not new; it has been going on for decades.

As an example, Gail Wilensky – coauthor of the Health Affairs article above – has been fighting for years to prohibit supplemental Medigap plans from covering the deductibles under Medicare. A point that is dear to the pro-market advocates in health care is that people who need medical care must feel the pain of “having skin in the game” by requiring out-of-pocket payment as a condition of receiving health care services. Wilensky won. Next month insurers will be prohibited from issuing new Medigap plans that protect beneficiaries from exposure to deductibles (grandfathered plans will be phased out by attrition).

Another example is that each year Democratic legislators have joined their Republican colleagues in pressuring CMS to ensure that the private MA plans receive very generous taxpayer contributions which has resulted in their stellar performance on Wall Street. (Do campaign contributions constitute a quid pro quo?)

As Miller and Wilensky state, “The Medicare executive order represents a vision for a market-based Medicare program.” The transformation is almost complete. Our vision of health care justice for all through a single payer model of reform will be much more difficult to achieve if we not only have to enact and implement an improved Medicare for all but we also have to drain the swamp created by the medical-industrial complex and their market-based approach to health care. Keep in mind that the insurers and the venture capitalists and their brethren are taking over and becoming the health care delivery system. If you check the smoke signals, they are already well positioned to dictate the terms of reform.

Our inertia has been quite effective in letting us get to this appalling state of reform. Miller and Wilensky state, “Now is the time to try something different.” Well, yes. The single payer model of an improved Medicare for All. But continued inertia won’t get us there.

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By Jessie Hellmann
The Hill, December 10, 2019

“Medicare for All” supporters scored a victory Tuesday with a long-awaited hearing in one of the House’s most powerful committees, putting more focus on the health care proposal that has divided the field of 2020 Democratic presidential candidates.

The Energy and Commerce Committee discussed the single-payer health plan backed by White House hopefuls Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) after a sustained campaign led by Rep. Pramila Jayapal (D-Wash.), a co-chairwoman of the Congressional Progressive Caucus, and other members of the party’s liberal wing.

“Our movement is alive and well,” she told The Hill on Tuesday. “We’re just continuing to bring more and more people on board, and we’ll have more hearings, but these are substantive discussions, which is what really excites me.”

Medicare for All previously received hearings in the Ways and Means, Education and Labor, and Budget committees.

Jayapal’s Medicare for All bill has the most co-sponsors — 119, more than half of the Democratic caucus — of the measures debated.

Jayapal said she and other backers are working to shore up support, and she expects to have two more hearings in the House next year.

https://thehill.com…

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“Proposals to Achieve Universal Health Care Coverage”

Subcommittee on Health of the Committee on Energy and Commerce, December 10, 2019

Video of Hearing:
https://energycommerce.house.gov…

Testimony of the Honorable Pramila Jayapal (D-WA):
https://energycommerce.house.gov…

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The Seventh Annual Global Health Economics Colloquium

UCSF-UC Berkeley-Stanford Colloquium – Medicare-for-All: How to Do It Right

Date and Time:
Friday, January 24, 2020
8:30 AM – 5:00 PM PST

Location:
International House
2299 Piedmont Avenue
Berkeley, CA 94720

About this Event:

Single payer / Medicare-for-All is newly on the national political agenda. Two leading Democratic presidential candidates support it. Yet transforming how we pay for health care is a major task. If Medicare-for-All is adopted, how can we best design it to achieve universal coverage, high quality care, and affordability?

In this colloquium, we gather leaders in Medicare-for-All design from the U.S. along with international health system experts. The discussion will review current plans in Congress and from candidates, and will highlight the best approaches and trickiest issues in implementing Medicare-for-All.

Speakers Include:

• Rep. Pramila Jayapal (D – WA), Chief Sponsor, HR 1384 Medicare for All Act 2019
• Emmanuel Saez PhD, Professor of Economics, Director, Center for Equitable Growth, U.C. Berkeley
• Jeffrey D. Sachs PhD, University Professor and Director of the Center for Sustainable Development at Columbia University (by video).
• David U. Himmelstein MD and Stephanie J. Woolhandler MD, Distinguished Professors, City University of New York at Hunter College; Lecturers, Harvard Medical School; co-founders of Physicians for a National Health Program.
• Joseph Kutzin, Lead, Health Financing Team, World Health Organization

https://www.eventbrite.com…

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Comment:

By Don McCanne, M.D.

Yesterday I watched livestream the entire hearing of the Health Subcommittee of the House Energy and Commerce Committee. The high point was the five minute testimony of Congresswoman Pramila Jayapal (WA-07) wherein she presented the basis of H.R. 1384, the Medicare for All Act of 2019 (link above) – a single payer model of an improved Medicare that includes everyone. Endorsement of the legislation was provided by Jean Ross, RN, Co-President, National Nurses United.

Other models that might be loosely grouped together as “Medicare for Some” were also discussed, but it was clear that they all fell short of the single payer version, in that they neglected to repair, to one degree or another, most of the major flaws in our current health care financing system.

The protracted comments and questions by the committee members fell roughly into three categories: endorsement of single payer Medicare for All, endorsement of public option Medicare for Some models, and Republican rejection of any expansion of Medicare (except private Medicare Advantage plans), peppering their statements with misleading rhetoric and factually-challenged remarks. An example of the latter is a statement made by witness Scott Atlas: “Single‐payer systems in countries with decades of experience have proven to be inferior to the US system in virtually every important objective measure of access to care and quality” – a blatant lie.

The good news is the growing support for single payer Medicare for All. Jayapal’s single payer bill is the only one that is co-sponsored by over half of the Democratic caucus.

Particularly exciting news (for me anyway) is that there will be a colloquium in Berkeley January 24 on “Medicare-for-All: How to Do It Right” (details at the link above). It will feature some of the most gifted experts in single payer reform, aka Medicare for All. I hope your schedules will allow some of you to attend. The event should turn up the rheostat on the reform movement.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.