Nobody Should Get Rich Off Obamacare

By Evan Soltas
Bloomberg View, December 3, 2013 For an industry that’s supposed to be burdened by the launch of Obamacare, the health-care business is doing pretty well. Stocks of health-care companies are up almost 40 percent this year, the strongest performance of any sector in the S&P 500. How about the medical-technology manufacturers that were slapped with an excise tax? Doing just fine. The hospital chains that face lower reimbursement rates from Medicare patients? They’re doing well, too. Health care is a business, and businesses are supposed to make money. Still, it’s a bit concerning that health-care investors are so upbeat just as President Barack Obama’s health-reform law goes into effect. The law will give the insurance industry millions of new customers and subsidizes its products. It brings millions of others into the market for health-care services through its Medicaid expansion. If health-care investors are throwing a party, it might be because the rest of us are paying for it. http://www.bloomberg.com/news/2013-12-03/nobody-should-get-rich-off-obamacare.html?alcmpid=view

Comment:

By Don McCanne, M.D. To pass the Affordable Care Act, President Obama was convinced that he had to gain the support of the health financing and health care industries. He did. Look who’s profiting. Who loses? Those who will have to pay much more out of pocket for health care because of higher deductibles. Those who lose choice of their physicians and hospitals because of narrower provider networks, and end up losing catastrophic protection because of care inadvertently received out of network. Those who will be contributing through taxes or insurance premiums far more than they should have to because of the profoundly wasteful administrative excesses of our dysfunctional financing system. That’s most of us. The improvements in insurance plans for the few – guaranteed issue and community rating – do not begin to offset the deterioration that is beginning to take place in the employer-sponsored plans where most of us receive our health care coverage. There are a few of us who will gain, some by being enrolled in Medicaid and some by receiving subsidies for exchange plans, but the numbers of us who will lose is far greater than the numbers who will win. We could have had reform in which we would all be winners – an improved Medicare that covers everyone. Even those who will gain through Medicaid or subsidies would gain much more under a single payer system. But no, political feasibility dictated that the vested stakeholders of the medical-industrial complex be the ones who get the money, while the rest of us pay more and get less.

Why It’s OK to Pay Bone-Marrow Donors

By Sally Satel
Bloomberg View, December 1, 2013 Locating a marrow donor is often a needle-in-a-haystack affair. The odds that two random individuals will have the same tissue type are less than 1 in 10,000, and the chances are much lower for blacks. Allowing compensation for donations could enlarge the pool of potential donors and increase the likelihood that compatible donors will follow through. So the ruling by a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit was promising news for the 12,000 people with cancer and blood diseases currently looking for a marrow donor. Shaka Mitchell, a lawyer in Nashville, Tennessee, and co-founder of the nonprofit MoreMarrowDonors.org… invited a team of economists to evaluate the effects of the ruling on people’s willingness to join a registry and to donate when they are found to be a match. The researchers were to specifically assess whether cash payments would be any more or less persuasive than noncash rewards or charitable donations. Now comes the bad news. On Oct. 2, the U.S. Department of Health and Human Services proposed a new rule that would overturn the Ninth Circuit’s decision. The government proposes designating a specific form of bone marrow — circulating bone-marrow stem cells derived from blood — as a kind of donation that, under the 1984 National Organ Transplant Act, cannot be compensated. The strongest opposition to compensation comes from the National Marrow Donor Program, the Minneapolis-based nonprofit that maintains the nation’s largest donor registry. Michael Boo, the program’s chief strategy officer, says of reimbursement, “Is that what we want people to be motivated by?” HHS is presumably under pressure from the National Marrow Donor Program. The department does not otherwise explain its proposed rule except to claim that compensation runs afoul of the transplant act’s “intent to ban commodification of human stem cells” and to “curb opportunities for coercion and exploitation, encourage altruistic donation and decrease the likelihood of disease transmission.” Each year, 2,000 to 3,000 Americans in need of marrow transplants die waiting for a match. Altruism is a virtue, but clearly it is not a dependable motive for marrow donation. (Sally Satel, is a psychiatrist and a resident scholar at the American Enterprise Institute.) http://www.bloomberg.com/news/2013-12-01/why-it-s-ok-to-pay-bone-marrow-donors.html

Comment:

By Don McCanne, M.D. Imagine trading bone marrow in the commodities market. It could be very lucrative. In no time at all, the prices could be driven over what we are now paying for the newer cancer drugs – $100,000 and more – maybe much more. And don’t stop at bone marrow. Think of the trade that could be generated in other human organs. Is there no end to the commodification of health care? How did we end up here? Is the compulsion to look for market solutions so great that we abandon all sense of humanity? People who think like this – do they have a soul?

Grading a Physician’s Value — The Misapplication of Performance Measurement

By Robert A. Berenson, M.D., and Deborah R. Kaye, M.D.
The New England Journal of Medicine, November 28, 2013 Perhaps the only health policy issue on which Republicans and Democrats agree is the need to move from volume-based to value-based payment for health care providers. Rather than paying for activity, the aspirational goal is to pay for outcomes that take into account quality and costs. In keeping with this notion of paying for value rather than volume, the Affordable Care Act (ACA) created the “value-based payment modifier,” or “value modifier,” a pay-for-performance approach for physicians who actively participate in Medicare. By 2017, physicians will be rewarded or penalized on the basis of the relative calculated value of the care they provide to Medicare beneficiaries. Although we agree that value-based payment is appropriate as a concept, the practical reality is that the Centers for Medicare and Medicaid Services (CMS), despite heroic efforts, cannot accurately measure any physician’s overall value, now or in the foreseeable future. The value modifier is meant to provide differential payment to a physician or physician group under the Medicare Physician Fee Schedule on the basis of the quality of care furnished as compared with the cost. To reduce the burden on physicians, CMS has based the value modifier on the Physician Quality Reporting System (PQRS). The meager rate of physician participation in the PQRS suggests that something is fundamentally wrong — physicians simply do not respect the measures, and for good reason. PQRS measures reflect a vanishingly small part of professional activities in most clinical specialties. A handful of such measures can provide a highly misleading snapshot of any physician’s quality. Research shows that performance on specific aspects of care does not predict performance on other components of care. Primary care physicians manage 400 different conditions in a year, and 70 conditions account for 80% of their patient load. Yet a primary care physician currently reports on as few as three PQRS measures. The challenge of accurately assigning costs to an individual physician is similarly daunting. Current methods for case-mix adjustment do not adequately capture variations in patients’ illness severity, complicating coexisting conditions, or relevant socioeconomic differences — differences beyond the physician’s control that affect the cost of care. And we currently don’t know how to attribute to an individual physician the costs that Medicare beneficiaries generate across the health care system. Even if we had better measures, behavioral economists would still challenge the pay-for-performance concept, at least for professionals such as physicians and teachers, who must manage complex situations and creatively solve problems. These critics argue that rewarding professionals on the basis of a particular performance measure has the potential to crowd out the intrinsic motivation to perform well across the board, not just on the few activities being measured. http://www.nejm.org/doi/full/10.1056/NEJMp1312287?query=TOC

Comment:

By Don McCanne, M.D. The “value-based payment modifier” – an adjustment in payments to reward physicians for improving value in the health care they provide, or to punish them for providing lower value – is yet another example of the often misguided measures in the Affordable Care Act allegedly designed to improve our health care system, when, in fact, the fundamental reforms in the health care financing system that we really needed were barely touched upon, in deference to the private insurance industry. It will be difficult to change from a volume-based system (fees based on volume of services provided) to a value-based payment system when we still do not know how to define the value of physician services, as Drs. Berenson and Kaye explain to us in this NEJM article, though they do suggest some other modest measures that might have some benefit. It is fine to continue research on measures that have a potential for improving value in health care, but it is almost criminal to ignore a concept that has already been proven in other nations to dramatically increase value – potentially a far greater increase than all of the other measures combined that are included in the Affordable Care Act. Of course, that concept is single payer financing. Let’s first enact an improved Medicare for all, and then we could tweak the system with measures that might provide incremental improvements in value. But first things first.

Doctors: New Health Care Plans Raise Red Flags

By Louise Radnofsky
The Wall Street Journal, November 26, 2013 Physicians groups told Obama administration officials Tuesday that they are worried that new insurance plans under the Affordable Care Act offer only limited networks of providers and low reimbursement rates for doctors, and that could make it difficult for millions of those enrolled to actually get health care. As the Journal has reported, some health plans don’t include big brand-name health providers in their networks and are slashing how much they’ll pay medical practices for treating the newly covered. Representatives from the major physician lobbying groups raised these issues Tuesday in a White House meeting with health officials including Chris Jennings and Jeanne Lambrew of the White House, and Chiquita Brooks-LaSure of the Centers for Medicare & Medicaid Services. “Some of the things were not a surprise to them… they’re acutely aware,” Shawn Martin, a top lobbyist for the American Academy of Family Physicians, said after the noon meeting. The American Medical Association, the American Academy of Family Physicians, American Academy of Pediatrics, and American College of Physicians, the American Osteopathic Association, the American Medical Group Association and the American Association of Nurse Practitioners were among the groups present, participants said. http://blogs.wsj.com/washwire/2013/11/26/doctors-new-health-care-plans-raise-red-flags/

Comment:

By Don McCanne, M.D. The new health plans to be offered in the exchanges are avoiding excessive premium increases by using narrow networks of physicians and by lowering payment rates for health services. The leaders of our nation’s leading organizations of health care professionals are concerned enough about what this might do to patient access that they met with Obama administration officials at the White House. The administration officials were already “acutely aware” of these problems. Of course, they were. They result from fundamental design flaws in the financing model of the Affordable Care Act. The model was designed by and for the private insurance industry. It is likely that members of these professional organizations are not only concerned about the patients, narrow networks and lower payments have a direct effect on their livelihoods. In a well designed system, patients must always come first, but the professionals taking care of the patients should be content as well. Grumpy doctors and nurses detract from an optimal patient care environment. There will be more discontentment as the Obamacare model of high-deductibles, narrow networks, and payment restrictions extend to employer-sponsored private plans. These trends will no doubt expand with the proliferation of private insurance exchanges catering to employers – exchanges outside of the government-operated Obamacare exchanges. Even the private Medicare Advantage plans are being modified in response to their overpayments being pared back. UnitedHealth, the nation’s largest private insurer, has notified thousands of physicians that they are being dropped from their Medicare Advantage network. Do we really want to keep headed in this direction? The traditional Medicare program does not use narrow networks. Patients have their choice of their health care professionals. Medicare payment rates are higher than the rates expected to be offered by most of the exchange plans. It would not take much to improve Medicare, and then it would be an ideal program for covering everyone. You can bet that the representatives of these professional groups didn’t ask for single payer to be put on the table. Too bad.

Health at a Glance 2013 – OECD Indicators

OECD, November 21, 2013

Editorial: From expenditure growth to productivity growth in the health sector

By Stefano Scarpetta, Director for Employment, Labour and Social Affairs Almost six years since the start of the global financial and economic crisis, economic conditions vary widely across OECD countries, with the United States, Canada and Japan on a path to recovery, while the economic prospects of many European countries remain subdued. After a period in which, as part of the stimulus packages, greater resources were channelled to welfare and social protection programmes, the shift towards restoring sound fiscal conditions has often implied substantial cuts in public spending. Like other government programmes, health care has been the target of spending cuts in many OECD countries. The crisis has had a profound impact on the lives of citizens across the world, and has tested the resilience of many families as they see their wealth and incomes decline. Millions of people have joined the ranks of the unemployed and millions more are experiencing financial stress. The combined effects of the crisis with the associated recent expenditure cuts as well as health care reforms have led to uncertainty about the impact on the health and well-being of the population. The most recent OECD health statistics, presented in this edition of Health at a Glance, provide a comprehensive picture of how health systems have evolved during the crisis and the challenges which lie ahead. Growth in health spending has slowed markedly in almost all OECD countries since 2008. After years of continuous growth of over 4% per annum, average health spending across the OECD grew at only 0.2% between 2009 and 2011. Total health spending fell in 11 out of the 34 OECD countries between 2009 and 2011, compared to pre-crisis levels. Not surprisingly, the countries hit hardest by the economic crisis have witnessed the biggest cuts in health expenditure growth. In order to limit or reduce public health expenditures, countries have worked to lower the prices paid for publicly financed health care, including cutting the price of medical goods, particularly pharmaceuticals. Governments have targeted hospital spending through budgetary restrictions and cuts to wages. Several countries including Greece, Ireland, Iceland and Estonia have reduced nursing wages in response to the crisis as well as those of salaried GPs. Expenditure on prevention and public health has also been cut since 2009. Further, in several OECD countries, patients are now expected to assume a greater share of health costs. There is evidence that more people in countries such as Greece and Italy are foregoing medical care due to financial constraints, reflecting reduced household incomes, but also perhaps rising out-of-pocket costs. Low-income groups are the worst affected, although they are likely to have the highest health care needs, and they may be foregoing necessary care such as medicines or routine medical check-ups for chronic conditions. This may have long-term health and economic consequences for the most vulnerable groups in society. Many of the reforms implemented since the start of the crisis have had an immediate impact on public expenditure. Some have been controversial, with considerable unrest and political pressure from industry groups, and some may also have had undesirable consequences for access, outcomes and equity. For example, greater out-of-pocket costs are likely to reduce health care use among those in highest need, leading to greater inequity and inefficiency over the longer term. In the new, more constrained, fiscal climate, the challenge for health care policy makers is to preserve quality health care coverage for the whole population while converting a system built on notions of unconstrained growth to one that is based on greater productivity and fiscal sustainability. This challenge is not new. Countries have pursued the twin objectives of efficiency and equity in health for decades. The economic crisis means that health care policy makers must swiftly and convincingly adopt a health care productivity agenda. Health at a Glance 2013 – OECD Indicators (213 pages): http://www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf

Comment:

By Don McCanne, M.D The 2013 edition of OECD’s “Health at a Glance,” in text, graphs and tables, provides updates of international comparisons of indicators of health and health systems. The graphs are likely familiar to many of you. This report is worth downloading just to have the updates. The editorial discusses the stresses on health systems resulting from the Great Recession, and the government responses to those stresses. A trend that should alarm us all is that “patients are now expected to assume a greater share of health costs.” Further, more people are forgoing medical care due to financial constraints. There is concern that the responses may be having undesirable consequences for access, outcomes and equity. The editorialist emphasizes that nations should pursue the objectives of efficiency and equity by adopting a new health care productivity agenda. Improving productivity is fine, but for the United States, it is imperative that we immediately adopt a financing infrastructure that ensures equity. All other OECD nations are light years ahead of us on that.