By Robert Lowes
Medscape Medical News, February 6, 2013

Two members of Congress today reintroduced an ambitious bill that would repeal Medicare’s sustainable growth rate (SGR) formula for setting physician pay and gradually phase out fee-for-service (FFS) reimbursement.

One major difference this time around for the bipartisan bill, originally introduced in May 2012, is that its price tag appears considerably lower, making passage more likely.

When Reps. Allyson Schwartz (D-PA) and Joe Heck, MD (R-NV), proposed this legislation last year, the Congressional Budget Office (CBO) had estimated that repealing the SGR and merely freezing current Medicare rates for 10 years would cost roughly $320 billion.

Since then, the CBO has reduced that 10-year estimate on the basis of lower than projected Medicare spending on physician services for the past 3 years. In a budget forecast released yesterday, the agency put the cost of a 10-year rate freeze at $138 billion.

The immediate effect of the bill from Schwartz and Heck, titled the Medicare Physician Payment Innovation Act, would be to avert a Medicare pay cut of roughly 25% on January 1, 2014, that is mandated by the SGR formula. Instead, the bill maintains 2013 rates through the end of 2014.

After 2014, Medicare would begin to shift from FFS to a methodology that rewards physicians for the quality and efficiency of patient care. From 2015 through 2018, the rates for primary care, preventive, and care coordination services would increase annually by 2.5% for physicians for whom 60% of Medicare allowables fall into these categories. Medicare rates for all other physician services would rise annually by 0.5%.

Meanwhile, the bill calls on the Centers for Medicare & Medicaid Services (CMS) to step up its efforts to test and evaluate new models of delivering and paying for healthcare (experiments with medical homes, accountable care organizations, and bundled payments are already underway). By October 2017, CMS must give physicians its best menu of new models to choose from. Two menu options would allow some physicians unable to fully revolutionize to participate in a modified FFS scheme.

The year to transition from FFS to “high quality, high value care” will be 2019 under the legislation. Physicians will either operate in a new, CMS-approved delivery and payment model of their choosing or traditional FFS Medicare. The government would keep FFS rates in 2019 at 2018 levels.

After 2019, physicians still embracing traditional FFS Medicare would see their rates reduced until 2024, when they would be permanently frozen at 2023 levels. Physicians operating in the new models, in contrast, would have the opportunity to earn raises for high-quality, low-cost care.

http://www.medscape.com/viewarticle/778879

A summary of the MEDICARE PHYSICIAN PAYMENT INNOVATION ACT OF 2013 can be downloaded by clicking on the link at the bottom of Rep. Allyson Schwartz’s press release:
http://schwartz.house.gov/press-release/schwartz-and-heck-introduce-bipartisan-legislation-repeal-sgr-and-reform-medicare-1

Comment:

By Don McCanne, M.D.

The Medicare sustainable growth rate (SGR) formula seemed to be an equitable method of slowing the non-sustainable increases in Medicare spending. What happened?

Health care spending continued to increase at very high rates, and these increases were funded by private commercial insurance plans. The funds paid pumped up the supply side in health care while having very little ameliorating impact on the demand side. As our health care system continued to be richly funded (too richly, when compared to other wealthy nations), the Medicare SGR formula fell further behind each year in meeting this ever-increasing demand for more funds.

It soon became apparent that if the SGR rates were imposed, physicians would likely restrict their participation in the Medicare program, first by not accepting new patients, and eventually many of them would drop out of the program altogether. For that reason the SGR reductions were deferred most years, and now they have grown to a deficit of about 26 percent.

When physicians are already dissatisfied with Medicare payment rates (cumulative increases have been less than the medical inflation rate), a further abrupt reduction of 26 percent would surely cause many physicians to bail – either limiting their practices to privately insured patients, or retiring early if the reductions wipe out net income.

Members of Congress do support Medicare, even if some would want to shift costs from the federal budget to the beneficiaries themselves. They do understand that the guillotine effect of imposing these reductions would likely severely impair access for patients due to a lack of willing providers. They know that they have to do something.

In defining this problem, members off Congress think in terms of the federal budget. By postponing the reductions, the money has already been spent, yet it is carried on the books as a deficit. What can Congress do to remove this deficit from the budget without having to increase federal revenues?

Quite simply, they need to find other ways to reduce the projected increases in spending. If you download the summary of the Medicare Physician Payment Innovation Act of 2013 (link above), you will see some of the schemes proposed. Most are already familiar, though many are unproven, and some ideas are innovative. Regardless, they are all methods of slowing the growth in Medicare spending while doing very little that would control spending in the private sector. We will still be faced with the same problem that we have now under SGR. In comparison with private insurance payments, Medicare will continue to trail, and the physicians will grow evermore restless.

Rather than taking one program – Medicare – and trying to make it comply with budget austerity, we need to have a financing system in which the entire health care delivery system complies with a single, universal global budget – a single payer national health program. Yes, there would continue to be turf issues between the factions competing for the funds and the public stewards of the funds, but at least the distribution would be equitable and adequate, which was the intent of SGR in the first place.

There are those who contend that we could never adhere to a budget, that it is impossible to fund all of the care that we need if we are limited by a budget. We need only to look at other nations to see that they, with their publicly supervised global or quasi-global budgets, have been able to provide quality care for everyone at an average of half of what we are spending. We can do it, and with a very rich budget at that.

SGR Repeal Bill Favors Primary Care

By Robert Lowes
Medscape Medical News, February 6, 2013
Two members of Congress today reintroduced an ambitious bill that would repeal Medicare’s sustainable growth rate (SGR) formula for setting physician pay and gradually phase out fee-for-service (FFS) reimbursement.
One major difference this time around for the bipartisan bill, originally introduced in May 2012, is that its price tag appears considerably lower, making passage more likely.
When Reps. Allyson Schwartz (D-PA) and Joe Heck, MD (R-NV), proposed this legislation last year, the Congressional Budget Office (CBO) had estimated that repealing the SGR and merely freezing current Medicare rates for 10 years would cost roughly $320 billion.
Since then, the CBO has reduced that 10-year estimate on the basis of lower than projected Medicare spending on physician services for the past 3 years. In a budget forecast released yesterday, the agency put the cost of a 10-year rate freeze at $138 billion.
The immediate effect of the bill from Schwartz and Heck, titled the Medicare Physician Payment Innovation Act, would be to avert a Medicare pay cut of roughly 25% on January 1, 2014, that is mandated by the SGR formula. Instead, the bill maintains 2013 rates through the end of 2014.
After 2014, Medicare would begin to shift from FFS to a methodology that rewards physicians for the quality and efficiency of patient care. From 2015 through 2018, the rates for primary care, preventive, and care coordination services would increase annually by 2.5% for physicians for whom 60% of Medicare allowables fall into these categories. Medicare rates for all other physician services would rise annually by 0.5%.
Meanwhile, the bill calls on the Centers for Medicare & Medicaid Services (CMS) to step up its efforts to test and evaluate new models of delivering and paying for healthcare (experiments with medical homes, accountable care organizations, and bundled payments are already underway). By October 2017, CMS must give physicians its best menu of new models to choose from. Two menu options would allow some physicians unable to fully revolutionize to participate in a modified FFS scheme.
The year to transition from FFS to “high quality, high value care” will be 2019 under the legislation. Physicians will either operate in a new, CMS-approved delivery and payment model of their choosing or traditional FFS Medicare. The government would keep FFS rates in 2019 at 2018 levels.
After 2019, physicians still embracing traditional FFS Medicare would see their rates reduced until 2024, when they would be permanently frozen at 2023 levels. Physicians operating in the new models, in contrast, would have the opportunity to earn raises for high-quality, low-cost care.
http://www.medscape.com/viewarticle/778879
A summary of the MEDICARE PHYSICIAN PAYMENT INNOVATION ACT OF 2013 can be downloaded by clicking on the link at the bottom of Rep. Allyson Schwartz’s press release:
http://schwartz.house.gov/press-release/schwartz-and-heck-introduce-bipa…

The Medicare sustainable growth rate (SGR) formula seemed to be an equitable method of slowing the non-sustainable increases in Medicare spending. What happened?
Health care spending continued to increase at very high rates, and these increases were funded by private commercial insurance plans. The funds paid pumped up the supply side in health care while having very little ameliorating impact on the demand side. As our health care system continued to be richly funded (too richly, when compared to other wealthy nations), the Medicare SGR formula fell further behind each year in meeting this ever-increasing demand for more funds.
It soon became apparent that if the SGR rates were imposed, physicians would likely restrict their participation in the Medicare program, first by not accepting new patients, and eventually many of them would drop out of the program altogether. For that reason the SGR reductions were deferred most years, and now they have grown to a deficit of about 26 percent.
When physicians are already dissatisfied with Medicare payment rates (cumulative increases have been less than the medical inflation rate), a further abrupt reduction of 26 percent would surely cause many physicians to bail – either limiting their practices to privately insured patients, or retiring early if the reductions wipe out net income.
Members of Congress do support Medicare, even if some would want to shift costs from the federal budget to the beneficiaries themselves. They do understand that the guillotine effect of imposing these reductions would likely severely impair access for patients due to a lack of willing providers. They know that they have to do something.
In defining this problem, members off Congress think in terms of the federal budget. By postponing the reductions, the money has already been spent, yet it is carried on the books as a deficit. What can Congress do to remove this deficit from the budget without having to increase federal revenues?
Quite simply, they need to find other ways to reduce the projected increases in spending. If you download the summary of the Medicare Physician Payment Innovation Act of 2013 (link above), you will see some of the schemes proposed. Most are already familiar, though many are unproven, and some ideas are innovative. Regardless, they are all methods of slowing the growth in Medicare spending while doing very little that would control spending in the private sector. We will still be faced with the same problem that we have now under SGR. In comparison with private insurance payments, Medicare will continue to trail, and the physicians will grow evermore restless.
Rather than taking one program – Medicare – and trying to make it comply with budget austerity, we need to have a financing system in which the entire health care delivery system complies with a single, universal global budget – a single payer national health program. Yes, there would continue to be turf issues between the factions competing for the funds and the public stewards of the funds, but at least the distribution would be equitable and adequate, which was the intent of SGR in the first place.
There are those who contend that we could never adhere to a budget, that it is impossible to fund all of the care that we need if we are limited by a budget. We need only to look at other nations to see that they, with their publicly supervised global or quasi-global budgets, have been able to provide quality care for everyone at an average of half of what we are spending. We can do it, and with a very rich budget at that.

National Health Service Corps expands the primary care workforce

U.S. Department of Health & Human Services, February 6, 2013
The National Health Service Corps awarded more than $10 million in funding for loan repayment to 87 medical students in 29 states, the District of Columbia and Puerto Rico, who will serve as primary care doctors and help strengthen the health care workforce, Department of Health and Human Services Secretary Kathleen Sebelius announced today.
Made possible by the Affordable Care Act, the National Health Service Corps’ Students to Service Loan Repayment Program provides financial support to fourth year primary care medical students in exchange for their service in the communities that need them most.
As a result of historic investments in the Affordable Care Act and the Recovery Act, the numbers of National Health Service Corps clinicians are at all-time highs. The number of providers serving in the Corps has nearly tripled since 2008. Today nearly 10,000 National Health Service Corps providers are providing primary care to approximately 10.4 million people at nearly 14,000 health care sites in urban, rural, and frontier areas.
http://www.hhs.gov/news/press/2013pres/02/20130206a.html
And…

NHSC Clinician Retention

National Health Service Corps
In addition to the recruitment of providers, the NHSC also works to retain primary care providers in underserved areas after their service commitment is completed to further leverage the Federal investment and to build more integrated and sustainable systems of care.
Short- and Long-Term Retention Rates
A 2012 retention assessment survey found that 82 percent of NHSC clinicians who completed their service commitment in the Corps continued to practice in underserved communities in the short-term, defined as up to one year after their service completion. Fifty-five percent of National Health Service Corps clinicians continue to practice in underserved areas 10 years after completing their service commitment.
Short-term retention increased by 28 percent when compared to the 2000 survey’s rate of 64 percent. The 2012 long-term retention (10 years after service completion) of NHSC clinicians in underserved areas is 55 percent, a 6 percent increase when compared to the 2000 rate of 52 percent. Long-term retention rates are higher for those who serve in rural as opposed to urban communities.
Retention: Primary Medical Care Providers
Physicians who completed their NHSC commitment more than 10 years ago had the highest retention rates as compared with physician assistants (PAs), nurse practitioners (NPs), and certified nurse midwives (CNMs). Ten years after their service commitment was completed, the retention rate for physicians was 60 percent. For nurse practitioners and certified nurse midwives, it was 59 percent; and for physician assistants it was 42 percent.
http://nhsc.hrsa.gov/currentmembers/membersites/retainproviders/retentio…
And…

About the NHSC

National Health Service Corps
NHSC-approved sites are health care facilities that provide outpatient, ambulatory, primary health services in Health Professional Shortage Areas (HPSAs), which are communities with limited access to care. Sites (with the exception of Federally Qualified Health Centers and Indian Health Service sites) must apply to become an NHSC site.  Once approved, NHSC sites gain access to desperately-needed primary care providers. NHSC providers often continue to work at their sites after they complete their NHSC service commitments.
Strengthening and growing our primary care workforce is critical to keeping this nation healthy. As more Americans gain access to health care, it is critical there are qualified health care providers to serve them. The NHSC, through its providers and sites, plays an important role in helping to address the country’s primary care shortage.
http://nhsc.hrsa.gov/corpsexperience/aboutus/index.html

As we assess the severe deficiencies in our primary care infrastructure, it is important to recognize the phenomenal contribution of our National Health Service Corps in helping to meet the primary care needs in rural and urban Health Professional Shortage Areas.
Today’s HHS release reporting that 87 more medical students have been granted funds for student loan repayment in exchange for service in the NHSC, is great news as far as it goes, but it seems that an average of fewer than two per state is hardly a modest advance.
At a time when the politicos in Washington are talking about spending cuts, it seems that we should be reassessing programs such as this one. We should be spending more money on this important reinforcement of primary care.
Even if we had an improved Medicare for all, this program would be invaluable in helping to correct some of the structural problems within the health care delivery system. In fact, it would be great if it evolved into a program that would provide better access to ever more of us. Backing into a national health service would not be all that bad of an idea.

Roseanna Sommers, Susan Dorr Goold, Elizabeth A. McGlynn, Steven D. Pearson and Marion Danis
Health Affairs, February 2013

Abstract

Having patients weigh costs when making medical decisions has been proposed as a way to rein in health care spending. We convened twenty-two focus groups of people with insurance to examine their willingness to discuss health care costs with clinicians and consider costs when deciding among nearly comparable clinical options. We identified the following four barriers to patients’ taking cost into account: a preference for what they perceive as the best care, regardless of expense; inexperience with making trade-offs between health and money; a lack of interest in costs borne by insurers and society as a whole; and noncooperative behavior characteristic of a “commons dilemma,” in which people act in their own self-interest although they recognize that by doing so, they are depleting limited resources. Surmounting these barriers will require new research in patient education, comprehensive efforts to shift public attitudes about health care costs, and training to prepare clinicians to discuss costs with their patients.

From a discussion of Implications

The focus-group discussions revealed the following barriers to participants’ choosing less expensive care: the salience of unlikely but highly upsetting possibilities; a desire for zero risk, rather than for reasonable risk reduction; an assumption that price always signals quality; the misperception that health care sustainability can be achieved by eliminating wasteful spending alone, without needing to forgo some marginally beneficial care; and the belief that choosing more expensive care constitutes a kind of victory for patients over the insurance companies.

Conclusion

If patients and clinicians do not discuss and consider costs during the clinical encounter, the alternatives are problematic. Clinicians might make cost-conscious decisions—for example, judging when high-priced resources such as operating room times, hospital beds, imaging, and specialty referrals are warranted—without informing patients that cost considerations influenced their decisions. Evidence from other countries indicates that clinicians do occasionally limit the use of medical interventions on the basis of concerns about cost. Yet another alternative would be to make cost-conscious allocation decisions at the organizational level, with minimal clinician involvement.

Given the long-term projections about health care costs in the United States, it is inevitable that physicians will face increasing pressures to deliver cost-effective care to their patients. Doing so openly, in a way that allows patients an opportunity to hear the justification for cost-conscious decisions and to be active agents in thinking through treatment choices when feasible, is consistent with physicians’ ethical duties to be transparent with patients and to provide patient-centered care.

But this study’s findings suggest that for cost to be an explicitly recognized and discussed factor in clinical decisions, public attitudes about health care costs must first undergo a significant shift.

http://content.healthaffairs.org/content/32/2/338.abstract

Comment:

By Don McCanne, M.D.

Much attention is being directed today toward the very high costs that plague the U.S. health care system. That attention has not equated with effectiveness in controlling costs, as we witness continued increases in spending in spite of introduction of policies that may be well-meaning but not very effective, that may add to the administrative excesses of our system, and that sometimes are detrimental such as when we erect financial barriers to beneficial health care services.

Some of the emphasis has been directed toward increasing the engagement of the “medical consumer” in the decision process, often through the policies of consumer-directed health care. These policies are designed to make patients “better health care shoppers” by forcing them to recognize costs as they spend some of their own money on health care. The most common measure is to increase the deductibles and other forms of cost sharing that the patient must face when accessing care.

This important study used focus groups to determine the attitudes of potential patients toward injecting cost considerations into the delivery of health care. Patients don’t like it. They feel that they should receive the care that they should have without insurers or public programs making decisions on covering care based on cost considerations. Even if it is their own money, they do not want to compromise their care based on cost.

Other high-quality systems that are much less expensive than ours are able to provide care with first dollar coverage, eliminating the requirement that the patient be involved or even concerned about the costs of the care that they receive. We do not need to create an environment of distrust by the patient that would be engendered by thoughts of health care services being withheld for reasons of cost.

We can make far better clinical decisions based on studies generating guidelines such as those by the British National Institute for Health and Clinical Guidance (NICE). An example of how this works is in their guidance for “Cetuximab, bevacizumab and panitumumab for the treatment of metastatic colorectal cancer after first-line chemotherapy,” available at this link: http://guidance.nice.org.uk/TA242/Guidance/pdf/

If we replaced our fragmented, dysfunctional financing system with an efficient single payer system, and then applied rational decision making processes for diagnostic and therapeutic interventions, we would not have to have the patient involved in spending decisions. Those decisions could be made on a macro-system basis by better planning of system capacity and distribution, and then incorporating a greater element of evidence-based decision making.

We really don’t need angry, me-first patients provoked by having cost decisions forced upon them, particularly when the cost transparency demanded by the advocates of consumer-directed health care creates hostility towards health care professionals and third party payers whom they believe are withholding care that they should have, whether it is true or not.

Focus Groups Highlight That Many Patients Object To Clinicians’ Focusing On Costs

Roseanna Sommers, Susan Dorr Goold, Elizabeth A. McGlynn, Steven D. Pearson and Marion Danis
Health Affairs, February 2013
Abstract
Having patients weigh costs when making medical decisions has been proposed as a way to rein in health care spending. We convened twenty-two focus groups of people with insurance to examine their willingness to discuss health care costs with clinicians and consider costs when deciding among nearly comparable clinical options. We identified the following four barriers to patients’ taking cost into account: a preference for what they perceive as the best care, regardless of expense; inexperience with making trade-offs between health and money; a lack of interest in costs borne by insurers and society as a whole; and noncooperative behavior characteristic of a “commons dilemma,” in which people act in their own self-interest although they recognize that by doing so, they are depleting limited resources. Surmounting these barriers will require new research in patient education, comprehensive efforts to shift public attitudes about health care costs, and training to prepare clinicians to discuss costs with their patients.
From a discussion of Implications
The focus-group discussions revealed the following barriers to participants’ choosing less expensive care: the salience of unlikely but highly upsetting possibilities; a desire for zero risk, rather than for reasonable risk reduction; an assumption that price always signals quality; the misperception that health care sustainability can be achieved by eliminating wasteful spending alone, without needing to forgo some marginally beneficial care; and the belief that choosing more expensive care constitutes a kind of victory for patients over the insurance companies.
Conclusion
If patients and clinicians do not discuss and consider costs during the clinical encounter, the alternatives are problematic. Clinicians might make cost-conscious decisions—for example, judging when high-priced resources such as operating room times, hospital beds, imaging, and specialty referrals are warranted—without informing patients that cost considerations influenced their decisions. Evidence from other countries indicates that clinicians do occasionally limit the use of medical interventions on the basis of concerns about cost. Yet another alternative would be to make cost-conscious allocation decisions at the organizational level, with minimal clinician involvement.
Given the long-term projections about health care costs in the United States, it is inevitable that physicians will face increasing pressures to deliver cost-effective care to their patients. Doing so openly, in a way that allows patients an opportunity to hear the justification for cost-conscious decisions and to be active agents in thinking through treatment choices when feasible, is consistent with physicians’ ethical duties to be transparent with patients and to provide patient-centered care.
But this study’s findings suggest that for cost to be an explicitly recognized and discussed factor in clinical decisions, public attitudes about health care costs must first undergo a significant shift.
http://content.healthaffairs.org/content/32/2/338.abstract

Much attention is being directed today toward the very high costs that plague the U.S. health care system. That attention has not equated with effectiveness in controlling costs, as we witness continued increases in spending in spite of introduction of policies that may be well-meaning but not very effective, that may add to the administrative excesses of our system, and that sometimes are detrimental such as when we erect financial barriers to beneficial health care services.
Some of the emphasis has been directed toward increasing the engagement of the “medical consumer” in the decision process, often through the policies of consumer-directed health care. These policies are designed to make patients “better health care shoppers” by forcing them to recognize costs as they spend some of their own money on health care. The most common measure is to increase the deductibles and other forms of cost sharing that the patient must face when accessing care.
This important study used focus groups to determine the attitudes of potential patients toward injecting cost considerations into the delivery of health care. Patients don’t like it. They feel that they should receive the care that they should have without insurers or public programs making decisions on covering care based on cost considerations. Even if it is their own money, they do not want to compromise their care based on cost.
Other high-quality systems that are much less expensive than ours are able to provide care with first dollar coverage, eliminating the requirement that the patient be involved or even concerned about the costs of the care that they receive. We do not need to create an environment of distrust by the patient that would be engendered by thoughts of health care services being withheld for reasons of cost.
We can make far better clinical decisions based on studies generating guidelines such as those by the British National Institute for Health and Clinical Guidance (NICE). An example of how this works is in their guidance for “Cetuximab, bevacizumab and panitumumab for the treatment of metastatic colorectal cancer after first-line chemotherapy,” available at this link: http://guidance.nice.org.uk/TA242/Guidance/pdf/
If we replaced our fragmented, dysfunctional financing system with an efficient single payer system, and then applied rational decision making processes for diagnostic and therapeutic interventions, we would not have to have the patient involved in spending decisions. Those decisions could be made on a macro-system basis by better planning of system capacity and distribution, and then incorporating a greater element of evidence-based decision making.
We really don’t need angry, me-first patients provoked by having cost decisions forced upon them, particularly when the cost transparency demanded by the advocates of consumer-directed health care creates hostility towards health care professionals and third party payers whom they believe are withholding care that they should have, whether it is true or not.

By Gerald F. Riley
Centers for Medicare & Medicaid Services, Medicare & Medicaid Research Review , 2012: Volume 2, Number 4

Background: Medicare managed care enrollees who disenroll to fee-for-service (FFS) historically have worse health and higher costs than continuing enrollees and beneficiaries remaining in FFS.
 
Objective: To examine disenrollment patterns by analyzing Medicare payments following disenrollment from Medicare Advantage (MA) to FFS in 2007. Recent growth in the MA program, introduction of limits on timing of enrollment/disenrollment, and initiation of prescription drug benefits may have substantially changed the dynamics of disenrollment.

Conclusions: Despite substantial changes in policies and market characteristics of the Medicare managed care program, disenrollment to FFS continues to occur disproportionately among high-cost beneficiaries, raising concerns about care experiences among sicker enrollees and increased costs to Medicare.

Discussion

Despite substantial changes in policies and market characteristics of the Medicare managed care program, disenrollment to FFS continues to occur disproportionately among high-cost beneficiaries. Disenrollees had higher risk scores and incurred higher risk-adjusted payments than beneficiaries in FFS. Their high risk scores are in contrast to the risk scores of the general MA population, most of which is enrolled in plans with average risk scores similar to or less than local FFS experience (United States Government Accountability Office, 2010). Recent studies have also shown that MA plans continue to experience favorable selection through enrollment of low-cost beneficiaries (MedPAC, 2012; Riley, 2012). These research findings suggest a pattern of selective disenrollment whereby disenrollees are sicker and more expensive than the beneficiaries who remain enrolled in MA plans. This selective disenrollment potentially increases Medicare costs through the return of high-cost beneficiaries to the FFS sector, leaving behind a healthier and lower-cost population in the capitated MA sector.

The Affordable Care Act mandated changes to MA payment methods that will result in significant decreases in payment rates and bring them closer in line with plan costs. This may intensify pressure on plans to encourage selective disenrollment.

Disenrollees from PPOs and PFFS plans incurred lower payments post-disenrollment than disenrollees from HMOs and similar types of plans, and their average payments were closer to predicted levels. Possible explanations include a less chronically ill disenrollee population from PPO and PFFS plans, or less unmet demand for services when they transitioned to FFS. Less selective disenrollment from PPO and PFFS plans may be attributable to the more extensive network of providers available under these types of plans. Beneficiaries with chronic illnesses have a greater choice of physicians to manage their conditions and have more opportunities to switch providers if they become dissatisfied with their care. This expanded choice of providers may reduce the incentives for chronically ill enrollees to leave these types of plans.

http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/MMRR/Downloads/MMRR2012_002_04_A08.pdf

Comment:

By Don McCanne, M.D.

Earlier studies of the Medicare + Choice plans and more recent studies of the successor Medicare Advantage plans have shown that, when it comes to managed care, the healthy go in and the sick come out. Taxpayers are paying more for the healthier, less-costly patients who are enrolled in the Medicare Advantage plans, and then pay more for the sicker patients who return to the traditional Medicare program (adverse selection). This CMS study adds to that evidence.

One interesting finding in this study is that those enrolled in PPO or FFS Medicare Advantage plans did not show as great post-enrollment cost increases. It is likely that the patients did not experience as much of a limitation in services in PPO plans, such as those offered by Blue Cross and Blue Shield, since their networks tend to include a much larger percentage of the physician population.

There are two important take-home points here. One is that we should stop wasting taxpayer funds on both the excesses of the Medicare Advantage plans, and the costly adverse selection burden that they place on the traditional Medicare program.

The other point is that we should reject the policies of the private insurance sector that is taking away our health care choices by establishing networks of health care providers. Our traditional Medicare program includes a choice of any provider, except for the rare physician who totally opts out of the Medicare program.

For greater economy and expanded choice, we should change to a program of an improved Medicare for everyone.