PNHP

Sec. Sebelius promotes consumer-directed health plans

Sec. Sebelius promotes consumer-directed health plans

Letter from Secretary Kathleen Sebelius replying to Republican governors

U.S. Department of Health and Human Services
February 24, 2011

As a former governor, I can appreciate your interest in having flexibility to establish an exchange that meets the unique needs of your state and its residents.

Your letter identified four areas for greater state flexibility. Specifically, you called for the ability to (1) exercise maximum flexibility to operate exchanges, and in particular to select the insurers that will participate in the exchange, (2) give states authority to determine essential health benefits that participating plans must offer, (3) waive provisions that might inhibit the availability of consumer-driven plans and health savings accounts (HSAs), and (4) enroll Medicaid beneficiaries into private plans without HHS approval. In each of these areas, the Affordable Care Act offers better opportunities than the current marketplace and gives governors and legislatures broad flexibility to capitalize on those opportunities in reshaping state marketplaces for the 21st century.

*  Selection of Qualified Plans in the Exchanges. In a majority of states today, a small number of health insurance issuers dominate the market, sometimes offering only a single plan or product. In implementing their exchanges, states have the option to allow all insurers to participate in the exchanges (the Utah model), or they can be more active purchasers in shaping available choices (the Massachusetts model). Either way, the exchanges will stimulate broader competition, and consumers will end up with more and better choices.

*  Essential Health Benefits. In today’s market, many individuals and families have limited health insurance options available to them. The number and quality of options typically depend on applicants’ age and health status, and employees of small businesses often have only a single choice. Exchanges will expand consumer choice and give consumers the information they need to comparison shop among their expanded choices. All plans in the individual and small group markets – inside or outside of the exchanges – will provide essential health benefits, which, by law, will be modeled after what a typical employer currently provides today in the private sector. But the law and how states implement it allow a diversity of plan types and benefit designs in exchanges, and states continue to have the option to require coverage of specific, additional benefits.

*  Consumer-Driven Plans. Low-cost, high-deductible plans, including those coupled with HSAs, are growing in popularity. The cost sharing limits required by the essential health benefits package mirror the current out-of-pocket maximum for HSAs under the Internal Revenue Code. Exchanges will offer new choices for consumers because health insurance issuers may offer a variety of plans with broad parameters; consumers who are willing to accept higher cost-sharing in exchange for lower premiums may purchase different levels of coverage. The “bronze” plans and catastrophic coverage for young adults will provide opportunities for expanding enrollment in consumer-driven plans coupled with HSAs. At the same time, exchanges will also improve consumer awareness of options by making it easier to compare plans.

*  Medicaid Flexibility. The Affordable Care Act expands and simplifies Medicaid coverage and provides states with more opportunities to align Medicaid with private health insurance. More specifically, the law permits states to restructure Medicaid coverage to look more like typical private employer coverage, as Medicaid managed care organizations and commercial insurers move into each other’s markets and create new opportunities to enhance continuity of care across Medicaid and commercial populations.

http://www.kaiserhealthnews.org/Stories/2011/February/25/~/media/Files/2011/HHS%20Gov%20Letter%20Feb%2024.pdf?wpisrc=nl_wonk

And…

NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties

Centers for Medicare and Medicaid Services
February 18, 2011

Section H. End of Medicare Advantage Medical Savings Account (MSA) Plan Demonstration Program

In a July 13, 2006, Federal Register Notice (CMS-4123-N) we announced the availability of an opportunity to participate in an MA MSA demonstration project. In the Federal Register notice we said that waivers provided under our demonstration authority would allow interested entities to offer products that more closely resemble high deductible health plans that are offered in conjunction with health savings accounts to the non-Medicare population. We initially established a deadline of July 21, 2006, for applicants that wanted to participate in the MA MSA demonstration program for 2007. We also asked applicants that wanted to participate in the program in 2008 to submit a notice of intent to us as soon as possible.

Overall we had one applicant that participated in the MSA demonstration program in calendar year 2007. There has been no activity under this demonstration program since then. We are not seeking extension of this demonstration program and will not accept applications for participation in this program for plan years 2012 and thereafter.

http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2012.pdf

And…

Nearly Half Of Families In High-Deductible Health Plans Whose Members Have Chronic Conditions Face Substantial Financial Burden

By Alison A. Galbraith1, Dennis Ross-Degnan, Stephen B. Soumerai, Meredith B. Rosenthal, Charlene Gay and Tracy A. Lieu
Health Affairs
February 2011

High-deductible health plans — typically with deductibles of at least $1,000 per individual and $2,000 per family — require greater enrollee cost sharing than traditional plans. But they also may provide more affordable premiums and may be the lowest-cost, or only, coverage option for many families with members who are chronically ill. We surveyed families with chronic conditions in high-deductible plans and families in traditional plans to compare health care–related financial burden — such as experiencing difficulty paying medical or basic bills or having to set up payment plans. Almost half (48 percent) of the families with chronic conditions in high-deductible plans reported health care–related financial burden, compared to 21 percent of families in traditional plans.

http://content.healthaffairs.org/content/30/2/322.abstract

Comment: 

By Don McCanne, MD

To appease the Republican governors, HHS Secretary Kathleen Sebelius has attempted to reassure them that they will have considerable flexibility in qualifying insurance plans for the exchanges, in defining optional benefits for the plans, and in privatizing Medicaid. Perhaps the most alarming flexibility being granted to the governors is the ability to offer consumer-driven plans within the exchanges. Why is that a problem?

In her letter, Kathleen Sebelius offers up the bronze plans in the exchanges and the catastrophic plans for young adults as providing opportunities for expanding enrollment in consumer-driven plans. The bronze plans have an actuarial value of only 60 percent, meaning that an average of 40 percent of health care costs must be paid out of pocket. (The inadequate subsidies for silver plans is another topic not addressed here.) The way that both bronze plans and catastrophic plans achieve lower premiums is by
requiring very high deductibles. That is a serious problem.

The current issue of Health Affairs has yet one more article adding to the great body of policy studies on high-deductible plans showing, once again, why they are an inappropriate method of financing health care. This study demonstrates that half of families with chronic conditions in high-deductible plans report health care related financial burdens.

The fact that these plans can be offered with a health savings account (HSA) does not improve the individual’s financial security since these funds still must come from the individual who either funds the HSA to draw on later, or draws the funds from other savings, or, more likely, simply doesn’t have the funds when needed to pay the deductible. An unfunded or depleted HSA is of no value.

Although Republicans have been supportive of the consumer-directed approach of high-deductible plans with HSAs, there is almost unbelievable irony when we look at another favorite of theirs – the privatized Medicare Advantage plans that replace traditional Medicare coverage. Under the Bush administration a Medicare Advantage Medical Savings Account demonstration project was established, duplicating this consumer-directed approach within the Medicare program. Last week HHS announced that this program was being terminated because of a lack of activity. Obviously consumer-directed does not equate with consumer-demanded.

High-deductible plans are under-insurance products that create financial hardships for people who develop health care needs. It is disappointing that Secretary Sebelius is presenting them as an “opportunity.” They’re an opportunity to lose your shirt if you get sick.

We could have done so much better… and still can.

Sec. Sebelius promotes consumer-directed health plans

Letter from Secretary Kathleen Sebelius replying to Republican governors

U.S. Department of Health and Human Services
February 24, 2011

As a former governor, I can appreciate your interest in having flexibility to establish an exchange that meets the unique needs of your state and its residents.

Your letter identified four areas for greater state flexibility. Specifically, you called for the ability to (1) exercise maximum flexibility to operate exchanges, and in particular to select the insurers that will participate in the exchange, (2) give states authority to determine essential health benefits that participating plans must offer, (3) waive provisions that might inhibit the availability of consumer-driven plans and health savings accounts (HSAs), and (4) enroll Medicaid beneficiaries into private plans without HHS approval. In each of these areas, the Affordable Care Act offers better opportunities than the current marketplace and gives governors and legislatures broad flexibility to capitalize on those opportunities in reshaping state marketplaces for the 21st century.

*  Selection of Qualified Plans in the Exchanges. In a majority of states today, a small number of health insurance issuers dominate the market, sometimes offering only a single plan or product. In implementing their exchanges, states have the option to allow all insurers to participate in the exchanges (the Utah model), or they can be more active purchasers in shaping available choices (the Massachusetts model). Either way, the exchanges will stimulate broader competition, and consumers will end up with more and better choices.

*  Essential Health Benefits. In today’s market, many individuals and families have limited health insurance options available to them. The number and quality of options typically depend on applicants’ age and health status, and employees of small businesses often have only a single choice. Exchanges will expand consumer choice and give consumers the information they need to comparison shop among their expanded choices. All plans in the individual and small group markets – inside or outside of the exchanges – will provide essential health benefits, which, by law, will be modeled after what a typical employer currently provides today in the private sector. But the law and how states implement it allow a diversity of plan types and benefit designs in exchanges, and states continue to have the option to require coverage of specific, additional benefits.

*  Consumer-Driven Plans. Low-cost, high-deductible plans, including those coupled with HSAs, are growing in popularity. The cost sharing limits required by the essential health benefits package mirror the current out-of-pocket maximum for HSAs under the Internal Revenue Code. Exchanges will offer new choices for consumers because health insurance issuers may offer a variety of plans with broad parameters; consumers who are willing to accept higher cost-sharing in exchange for lower premiums may purchase different levels of coverage. The “bronze” plans and catastrophic coverage for young adults will provide opportunities for expanding enrollment in consumer-driven plans coupled with HSAs. At the same time, exchanges will also improve consumer awareness of options by making it easier to compare plans.

*  Medicaid Flexibility. The Affordable Care Act expands and simplifies Medicaid coverage and provides states with more opportunities to align Medicaid with private health insurance. More specifically, the law permits states to restructure Medicaid coverage to look more like typical private employer coverage, as Medicaid managed care organizations and commercial insurers move into each other’s markets and create new opportunities to enhance continuity of care across Medicaid and commercial populations.

http://www.kaiserhealthnews.org/Stories/2011/February/25/~/media/Files/2011/HHS%20Gov%20Letter%20Feb%2024.pdf?wpisrc=nl_wonk

And…

NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties

Centers for Medicare and Medicaid Services
February 18, 2011

Section H. End of Medicare Advantage Medical Savings Account (MSA) Plan Demonstration Program

In a July 13, 2006, Federal Register Notice (CMS-4123-N) we announced the availability of an opportunity to participate in an MA MSA demonstration project. In the Federal Register notice we said that waivers provided under our demonstration authority would allow interested entities to offer products that more closely resemble high deductible health plans that are offered in conjunction with health savings accounts to the non-Medicare population. We initially established a deadline of July 21, 2006, for applicants that wanted to participate in the MA MSA demonstration program for 2007. We also asked applicants that wanted to participate in the program in 2008 to submit a notice of intent to us as soon as possible.

Overall we had one applicant that participated in the MSA demonstration program in calendar year 2007. There has been no activity under this demonstration program since then. We are not seeking extension of this demonstration program and will not accept applications for participation in this program for plan years 2012 and thereafter.

http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2012.pdf

And…

Nearly Half Of Families In High-Deductible Health Plans Whose Members Have Chronic Conditions Face Substantial Financial Burden

By Alison A. Galbraith1, Dennis Ross-Degnan, Stephen B. Soumerai, Meredith B. Rosenthal, Charlene Gay and Tracy A. Lieu
Health Affairs
February 2011

High-deductible health plans — typically with deductibles of at least $1,000 per individual and $2,000 per family — require greater enrollee cost sharing than traditional plans. But they also may provide more affordable premiums and may be the lowest-cost, or only, coverage option for many families with members who are chronically ill. We surveyed families with chronic conditions in high-deductible plans and families in traditional plans to compare health care–related financial burden — such as experiencing difficulty paying medical or basic bills or having to set up payment plans. Almost half (48 percent) of the families with chronic conditions in high-deductible plans reported health care–related financial burden, compared to 21 percent of families in traditional plans.

http://content.healthaffairs.org/content/30/2/322.abstract

To appease the Republican governors, HHS Secretary Kathleen Sebelius has attempted to reassure them that they will have considerable flexibility in qualifying insurance plans for the exchanges, in defining optional benefits for the plans, and in privatizing Medicaid. Perhaps the most alarming flexibility being granted to the governors is the ability to offer consumer-driven plans within the exchanges. Why is that a problem?

In her letter, Kathleen Sebelius offers up the bronze plans in the exchanges and the catastrophic plans for young adults as providing opportunities for expanding enrollment in consumer-driven plans. The bronze plans have an actuarial value of only 60 percent, meaning that an average of 40 percent of health care costs must be paid out of pocket. (The inadequate subsidies for silver plans is another topic not addressed here.) The way that both bronze plans and catastrophic plans achieve lower premiums is by requiring very high deductibles. That is a serious problem.

The current issue of Health Affairs has yet one more article adding to the great body of policy studies on high-deductible plans showing, once again, why they are an inappropriate method of financing health care. This study demonstrates that half of families with chronic conditions in high-deductible plans report health care related financial burdens.

The fact that these plans can be offered with a health savings account (HSA) does not improve the individual’s financial security since these funds still must come from the individual who either funds the HSA to draw on later, or draws the funds from other savings, or, more likely, simply doesn’t have the funds when needed to pay the deductible. An unfunded or depleted HSA is of no value.

Although Republicans have been supportive of the consumer-directed approach of high-deductible plans with HSAs, there is almost unbelievable irony when we look at another favorite of theirs – the privatized Medicare Advantage plans that replace traditional Medicare coverage. Under the Bush administration a Medicare Advantage Medical Savings Account demonstration project was established, duplicating this consumer-directed approach within the Medicare program. Last week HHS announced that this program was being terminated because of a lack of activity. Obviously consumer-directed does not equate with consumer-demanded.

High-deductible plans are under-insurance products that create financial hardships for people who develop health care needs. It is disappointing that Secretary Sebelius is presenting them as an “opportunity.” They’re an opportunity to lose your shirt if you get sick.

We could have done so much better… and still can.

Speaker promotes single-payer health care system in Portsmouth

By SCOTT E. KINNEY
Foster’s Daily Democrat (N.H.), Feb. 24, 2011

PORTSMOUTH — Nearly 60 city residents gather in the Levinson Meeting Room of the Portsmouth Public Library Wednesday night to educate themselves on the continued fight for a single-payer health care system.

Katie Robbins, national coordinator of Healthcare-NOW!, addressed the crowd espousing the benefits of a proposed single-payer system she said would not only provide savings for those in need of care but accessibility to all.

Healthcare-NOW! is an advocacy organization focused on the American health care system, and moving for the passage of national, single-payer healthcare legislation.

“I see great injustice in our health care system,” she said.

Robbins added while recent legislation has made steps to improve the system, the struggle for proper, affordable care carries on.

“Within 10 years, 23 million Americans are expected to be uninsured,” she said. “The crisis continues.”

Robbins pointed to the current system, which she said is controlled by private insurance companies, which in turn drive up prices to increase profits, all to the detriment of the insured.

“The existence of private insurance companies is preventing us from moving to a socially responsible, single-payer system,” she said.

Robbins cited Vermont, where discussions are currently under way to change the state health care system to a single-payer model, as an example of how such a system can work at the local level.

City Councilor Bob Lister was among the crowd Wednesday.

He said, speaking for himself, not on behalf of the board, “We know what the cost of health care is doing to the city budget. It really diverts our mission.”

Lister said he was present at the evening meeting to educate himself and understand the options.

Those in attendance were asked to join the national group and to get the word out about a single-payer health care system.

More information about Healthcare-NOW! can be found at www.healthcare-now.org.

http://www.fosters.com/apps/pbcs.dll/article?AID=/20110224/GJNEWS_01/702249753

Look to Canada

Letters, Boston Herald, Feb. 25, 2011

In response to your editorial “Single-payer fan ‘fesses up” (Feb. 23) that suggests a single-payer health care program in our state would bring long wait times, I would point to Canada, which delivers health outcomes as good as ours for half the price per person. The median wait time for cardiac surgery in Ontario is not months, but 16 days. And those patients are not left with bills that lead to medical bankruptcy. As a doctor, I agree with Terry Dougherty in his support for single-payer care.

— Susanne L. King, Lenox, Mass.

http://news.bostonherald.com/news/opinion/letters/view/20110225look_to_canada/

Shumlin outlines health care plan

By John Flowers
Addison County (Vt.) Independent, Feb. 24, 2011

MIDDLEBURY, Vt. — Gov. Peter Shumlin told Porter Medical Center officials on Tuesday to be patient in weathering what he believes will be a short-term financial storm en route to a new, single-payer health care system he said will bring long-term success and financial sustainability to the industry.

Shumlin, who took office last month, made his remarks at Porter’s annual meeting before a crowd of more than 100 hospital physicians, staff, consumers and board members who have voiced many concerns about recent state and federal health care policy that has included under-reimbursement through the Medicaid program and an ever increasing medical provider tax.

Such policy, Porter officials contend, helped create a $2 million loss for the medical center last fiscal year and the prospect of another big loss this year.

Shumlin said that in the short-term, he has little choice but to consider increases in such areas as the provider tax on hospitals and home health agencies, an assessment he said helps leverage federal Medicaid dollars. He said the state is facing a fiscal year 2012 revenue shortfall of around $176 million.

“I am trying to balance the need of balancing the budget and taking care of our most vulnerable citizens while maintaining the ability to draw down federal dollars,” Shumlin said.

Meanwhile, the governor is banking on the Legislature passing a single-payer health care plan he believes will cut medical costs, provide better service and ensure more predictable payments to providers.

That single-payer system must accomplish three things, according to Shumlin:

• Treat health acre “as a right and not a privilege.”

• Make sure that the health care follows the patient and that it not be a responsibility of the employer.

“That’s a huge jobs creator,” Shumlin said of taking the health insurance burden off employers. It is a factor the governor said could “reverse the osmosis on the bridge” of Vermonters going across the border for the tax advantages of New Hampshire.

Shumlin rejected suggestions that Vermont would see a huge influx of health care-dependent people if it adopts a single-payer system. He argued that Vermont is already a popular destination point for those seeking benefits that currently include Dr. Dynasaur, Catamount Health and the Vermont Health Access Plan.

“We’ve got the best plan in the country; it’s just that we can’t afford it,” Shumlin said.

“Small, rural hospitals will not survive,” he added of the current system. “You can’t ask (Porter President) Jim Daily and others to run a railroad in a system where you get 40 cents on the dollar from one customer, 50 cents on the dollar from another and every blue moon someone walks in the door and gives you a dollar for a dollar’s work. It doesn’t work.”

• Cost-containment. The governor suggested a few ideas to help achieve lower costs, including issuing citizens a health card that would record the medical service they received and the amount due. The card would also provide complete access to medical records. Shumlin said the medical card could save around 9 cents on each medical dollar spent by reducing the current bureaucracy involved with insurance company payments.

“This is basically using technology to contain costs and get rid of waste,” Shumlin said.

The governor also suggested the medical industry move from a fee-per-service system to one in which the provider is compensated for keeping people healthy.

“The perils are huge; I get it,” Shumlin said. “There are landmines everywhere.”

But he said the dangers of not pursuing a single-payer plan would be far worse. He said Vermont spent $2.5 billion on health care eight years ago. That sum has risen to $5 billion this year and is projected to go up by another $1.6 billion by 2015.

“The current system is just not sustainable,” Shumlin said.

He added there will be several deal-breakers for any health care bill that arrives on his desk. Shumlin said he won’t sign legislation that costs more money, that doesn’t contain health care costs, that allows insurance companies to become a hindrance to quality care, that rations services, or that perpetuates the current billing bureaucracy.

“If we can get this one right, by 2014, I am convinced we will grow jobs, grow economic opportunities,” Shumlin said.

Clearly, not everyone who listened to Shumlin’s talk in Middlebury College’s McCardell Bicentennial Hall was sold on his plan. Several Porter officials questioned Shumlin’s math and the wisdom of state government taking an even larger role in an industry upon which it has already foisted economic challenges. Porter Hospital laid off four workers earlier this month with the prospect of additional reductions in the future. Daily noted that he has been walking through the Porter campus lately with a serious eye on what the institution can do without.

But Shumlin reiterated sweeping change will be necessary to reverse an unsustainable course.

“What’s killing Porter is what’s killing every health care entity in the state,” Shumlin said. “It is the reimbursement system, it is the amount of resources we are throwing at it and that fact that Vermont businesses and individuals can’t keep up. We are all moving to higher and higher deductibles throughout insurance plans for more and more money.”

http://www.addisonindependent.com/201102shumlin-outlines-health-care-plan

Personal data breaches for 4.9 million patients

Massachusetts General Hospital settles potential HIPAA violations

U.S. Department of Health and Human Services
February 24, 2011

The General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

http://www.hhs.gov/news/press/2011pres/02/20110224b.html

And…

Report details health care reform theft

By Susan R. Miller
South Florida Business Journal
February 23, 2011

As the nation moves toward growing use of electronic medical records, data vulnerability becomes increasingly evident.

A new report released on Wednesday by Kaufman, Rossin & Co., showed 4.9 million patients had their personal health information compromised as a result of 166 data breaches that occurred during the first year of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

All of the breaches occurred between Sept. 21, 2009 and Sept. 21 2010, the first year when breach incidents were publicly reported to the Secretary of the Department of Health and Human Services.

http://www.bizjournals.com/southflorida/news/2011/02/23/report-details-health-care-reform-theft.html

And…

athenahealth

An increasing majority of physicians finds that EHRs slow them down during the exam.

Sixty percent of physicians agree with the statement that the EMR/EHR “slows down the doctor during patient exams.”

http://www.athenahealth.com/index.php?open=26

Comment: 

By Don McCanne, MD

Although Congress gave up on trying to provide health insurance coverage for everyone, they did try to deliver on the promises of higher quality, fewer errors, greater efficiency, increased security of patient health information, and lower costs through measures designed to expand the use of IT (information technology), especially through EMRs (electronic medical records). Are these promises being fulfilled?

Before delivering on the other promises, a health IT system must first, above all, ensure confidentiality of patient information. Today the Department of Health and Human Services released a report confirming that perhaps the most prestigious medical institution in the nation – Massachusetts General Hospital – is being fined $1,000,000 for violation of patient privacy rules. The documents were left on a subway train. Though this was not directly an IT breach, read on.

Yesterday a report was released by Kaufman, Rossin & Co., an accounting firm, that showed that, in the last year alone, almost five million patients had their personal health information compromised due to various other unrelated data breaches.

In this age of cloud computing, personal electronic data can easily be transmitted into cyberspace for all the world to see forever. Sure, the various vendors and stewards of the systems can show you their great security safeguards so there is no need to be concerned. Then how in the… did these 4.9 million patients have their personal health information compromised?

And the other IT promises? We covered this in a qotd last month (Jan. 21) in reviewing an article from PLoS Medicine. Quoting from that article:

“Our systematic review of systematic reviews on the impact of eHealth has demonstrated that many of the clinical claims made about the most commonly deployed eHealth technologies cannot be substantiated by the empirical evidence. Overall, the evidence base in support of these technologies is weak and inconsistent, which highlights the need for more considered claims, particularly in relation to the patient-level benefits, associated with these technologies. Also of note is that we found virtually no evidence in support of the cost-effectiveness claims.”

The highly touted accountable care organizations (ACOs) called for in the Patient Protection and Affordable Care Act are a variety of ill-defined health delivery organizations having only one thing in common: an integrated IT system using EMRs. Not only are these systems expensive and vulnerable to security breaches, the report from athenahealth shows that EMRs also slow down patient care. Why are we placing all our bets on ACOs?

This has all been a distraction that has diverted us from doing what we really need to do – establish affordability and universality through an improved Medicare that covers everyone. Can’t we get on with that task now?

Personal data breaches for 4.9 million patients

Massachusetts General Hospital settles potential HIPAA violations

U.S. Department of Health and Human Services
February 24, 2011

The General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

http://www.hhs.gov/news/press/2011pres/02/20110224b.html

And…

Report details health care reform theft

By Susan R. Miller
South Florida Business Journal
February 23, 2011

As the nation moves toward growing use of electronic medical records, data vulnerability becomes increasingly evident.

A new report released on Wednesday by Kaufman, Rossin & Co., showed 4.9 million patients had their personal health information compromised as a result of 166 data breaches that occurred during the first year of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

All of the breaches occurred between Sept. 21, 2009 and Sept. 21 2010, the first year when breach incidents were publicly reported to the Secretary of the Department of Health and Human Services.

http://www.bizjournals.com/southflorida/news/2011/02/23/report-details-health-care-reform-theft.html

And…

athenahealth

An increasing majority of physicians finds that EHRs slow them down during the exam.

Sixty percent of physicians agree with the statement that the EMR/EHR “slows down the doctor during patient exams.”

http://www.athenahealth.com/index.php?open=26

Although Congress gave up on trying to provide health insurance coverage for everyone, they did try to deliver on the promises of higher quality, fewer errors, greater efficiency, increased security of patient health information, and lower costs through measures designed to expand the use of IT (information technology), especially through EMRs (electronic medical records). Are these promises being fulfilled?

Before delivering on the other promises, a health IT system must first, above all, ensure confidentiality of patient information. Today the Department of Health and Human Services released a report confirming that perhaps the most prestigious medical institution in the nation – Massachusetts General Hospital – is being fined $1,000,000 for violation of patient privacy rules. The documents were left on a subway train. Though this was not directly an IT breach, read on.

Yesterday a report was released by Kaufman, Rossin & Co., an accounting firm, that showed that, in the last year alone, almost five million patients had their personal health information compromised due to various other unrelated data breaches.

In this age of cloud computing, personal electronic data can easily be transmitted into cyberspace for all the world to see forever. Sure, the various vendors and stewards of the systems can show you their great security safeguards so there is no need to be concerned. Then how in the… did these 4.9 million patients have their personal health information compromised?

And the other IT promises? We covered this in a qotd last month (Jan. 21) in reviewing an article from PLoS Medicine. Quoting from that article:

“Our systematic review of systematic reviews on the impact of eHealth has demonstrated that many of the clinical claims made about the most commonly deployed eHealth technologies cannot be substantiated by the empirical evidence. Overall, the evidence base in support of these technologies is weak and inconsistent, which highlights the need for more considered claims, particularly in relation to the patient-level benefits, associated with these technologies. Also of note is that we found virtually no evidence in support of the cost-effectiveness claims.”

The highly touted accountable care organizations (ACOs) called for in the Patient Protection and Affordable Care Act are a variety of ill-defined health delivery organizations having only one thing in common: an integrated IT system using EMRs. Not only are these systems expensive and vulnerable to security breaches, the report from athenahealth shows that EMRs also slow down patient care. Why are we placing all our bets on ACOs?

This has all been a distraction that has diverted us from doing what we really need to do – establish affordability and universality through an improved Medicare that covers everyone. Can’t we get on with that task now?

Looking to cure what ails us

By Amy Bartlett
Siuslaw News (Florence, Ore.), Feb. 18, 2011

With a shared passion for health care reform, a group of Northwest physicians, calling themselves “Mad as Hell Doctors,” have been traveling the country to get the word out about changing what they term a “fragmented, broken health care ‘non-system.’”

The doctors were in Florence Tuesday for an evening of discussion, videos, and a little light-hearted music to educate the public and garner support for the Affordable Health Care for All Oregon Act, which was introduced recently in the Oregon House by Rep. Michael Debrow, and will later be introduced to the Senate by Sen. Chip Shields. Both Dembrow and Shields are Portland democrats.

The doctors, some of whom are also members of the Oregon chapter of Physicians for a National Health Program, have worked with other health care advocacy groups to draft the language for the new bill, now HB 3510, which calls for the establishment of a single-payer health system.

The campaign has been promised committee hearings in both the House and Senate, which have yet to be scheduled.

The doctors argue that single-payer coverage “would cure what ails us.”

“Single-payer is the fiscally responsible thing to do,” said Dr. Paul Hochfeld, an emergency room physician from Corvallis, who described a single-payer system as one in which “we pool all our money (which could include progressive income tax, payroll tax and other funding sources), we put everybody in the same risk pool and we provide care for everybody.”

Hochfeld said taxpayers already foot the bill for health care in this country, but many do not enjoy the benefits.

The nation is divided into different risk pools that taxpayers support, he explained: Medicare, which is a very expensive risk pool because it’s for older people; Medicaid, which is also expensive because it is for disabled and poor people; veterans; and Indian Health Service. He said the taxpayer then gives tax subsidies to the insurance companies to cover healthy people.

“The very process of dividing the country up into all these risk pools and the process of these insurance companies fighting for the lowest risk pools of the employed people, costs us about 20 to 30 percent of all of our health care dollars,” said Hochfeld. “It adds nothing to the health of people and actually complicates the lives of providers who have to spend time and money dealing with all of these insurance companies because they all have different sets of rules.”

It is estimated that physicians spend $60,000 per year handling insurance claims.

Not everyone who receives care is able to pay; hence, providers charge higher fees to make up for lost revenue. Health insurance premiums are inflated to cover the cost of the uninsured.

“You are not only paying with taxpayer money, but you are also subsidizing the uninsured through your premiums.

http://www.thesiuslawnews.com/v2_news_articles.php?heading=0&story_id=4117&page=72

Mass. Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney / State House News Service
Boston Herald, Feb. 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty’s comment, made during a budget hearing at the Boston Public Library, prompted his boss, Secretary of Health and Human Services JudyAnn Bigby, to interject: “That’s his personal opinion.”

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

A single payer system would replace the state’s patchwork of nonprofit and private insurers with a single, public insurer through which all health care dollars would flow to hospitals, doctors and other health care providers. Supporters say it would eliminate administrative waste and ensure that all residents receive adequate coverage.

But while supporters point to single payer models used by other countries and tout the idea as a cost saver, critics warn the system would result in government bureaucrats deciding what services to cover and how to pay for them, would reduce the quality of care and would disrupt relationships between doctors and patients.

Hundreds of thousands of Massachusetts residents have endorsed the approach. In fact voters in 14 House districts –including five that backed Scott Brown for U.S. Senate – voted overwhelmingly last year to support a non-binding ballot question that asked, “Shall the state representative from this district be instructed to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?”

A similar question passed in 10 other House districts in 2008.

Although last session 50 members of the Legislature supported a single payer model, the issue has lacked support from the upper echelons of the Legislature and the Patrick administration.

A single payer plan would scrap Massachusetts’s landmark health care system, which relies on the private insurance marketplace, and that backers have credited with helping insure about 98 percent of the population. Backers of the existing structure, while acknowledging that health care costs have continued to climb, note that the state has covered about 430,000 residents since the inception of health care reform in 2006. Individuals are required to purchase health insurance, and low-income residents without access to health care through their employers may obtain partially or fully-subsidized care through the state’s Connector Authority, an exchange that pairs consumers with private plans, or through MassHealth.

This session, only 32 members signed on to the single payer proposal, although the sponsors include several high-ranking lawmakers: Rep. Stephen Kulik, vice chair of the Ways and Means Committee; Rep. Martha Walz, assistant vice chair of the Ways and Means Committee; Reps. Ellen Story and Byron Rushing, members of Speaker Robert DeLeo’s upper leadership team; and eight House committee chairs. The bill’s lead sponsors are Rep. Jason Lewis (D-Winchester) and Sen. James Eldridge (D-Acton). Last session’s lead sponsor, Rep. Matthew Patrick (D-Falmouth) was ousted at the polls by Republican David Vieira.

Benjamin Day, executive director of Mass Care, a single payer advocacy group, noted that only six of the lawmakers in the 14 House districts whose voters endorsed single payer health care signed onto the bill. He asserted that many members of state government’s health care hierarchy support single payer health care but keep it to themselves.

“Everyone is making political considerations, tactical considerations,” he said.

Day said supporters of a single payer system are eyeing Vermont, which recently elected a Democratic governor who ran on a platform that included a single payer system.

“If Vermont passes it, that will be such an incredible boon,” he said.

Day noted that Vermont has hired key players in Massachusetts’ own landmark health reform efforts, including Jonathan Gruber, a member of the Massachusetts Connector Authority board and Anya Rader Wallack, a health care consultant who previously headed the Massachusetts Medicaid Policy Institute.

Proposals to advance a single payer system have fallen in and out of favor for decades. Before he became Senate president in 2003, Robert Travaglini was the lead sponsor of a proposal to create a task force charged with recommending ways to implement single payer health care in Massachusetts, although he later endorsed the current system, which Gov. Mitt Romney signed into law in 2006.

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

Study: Research costs much lower than drug companies claim

Net Median Costs per Drug $13 to $204 million, not $1.3 billion

Press Release, Feb 21, 2011

Pharmaceutical companies continue to claim that high research and development (R&D) costs make it necessary for them to charge high prices and retain long ownership of patents to recoup costs. But a new study co-authored by UVic health economist Rebecca Warburton and Donald W. Light of the University of Medicine and Dentistry of New Jersey demonstrates that high R&D estimates have been constructed by industry-supported economists to support the companies’ claims.

The widely accepted figure promoted by industry-supported economists is US$1.3 billion to discover and develop a new drug.  This estimate, however, was done on a costly subsample and then generalized to all drugs, inflating the estimate for the average new drug by about 7 fold.

TAXPAYERS CONTRIBUTIONS

The $1.3 billion estimate also does not include the substantial contributions by taxpayers through R&D-related tax write-offs. Taxpayers indirectly pay for about 39 percent of company R&D, a substantial reductions in a company’s net costs.

The industry-based figure also includes a large sum inserted for the cost of discovery, even though no one has solid figures on what those costs are. The cost of discovery can range from serendipity to 30 years of frustrating research to find a key compound. Light and Warburton conclude that cost estimates can only be done for development and not basic research.

Light and Warburton also found that independent evidence showed the $1.3 billion estimate was based on trials much larger than reported by the FDA (US Food and Drug Administration) and the National Institutes of Health. The estimate was also based on trials lasting longer than the lengths that companies reported under audit. Finally, the percent of trials that failed was higher than independent sources showed, which multiplies the costs of trials that succeed.

FOREGONE PROFITS AS “COSTS”

Half the $1.3 billion estimate is not real costs but a high estimate of profits that companies would have made if they had not developed drugs but just put their money in bonds or equities. Industry-supported economists used an estimate of those profits more than twice the return on capital conventionally used and counted this high estimate as a “cost of R&D.” “Estimated profits get converted to ‘costs’, and then companies press to get that money back as well as a good return on it,” explained Light. “This amounts to charging high prices to get profits on profits.”

Light and Warburton used the median cost because a few very expensive drugs skew the average and result in a misleading figure. They corrected for inflated numbers and multipliers. The median net corporate R&D cost per new drug was only $59.4 million, plus the unknown cost of discovery, which varies 30 fold.  This estimate is in line with audited figures submitted by companies. “We found that the net median corporate costs varied greatly, from $13 million to $204 million, depending on the kind of drug,” Light said.

GOVERNMENT PROTECTED PRICES NOT WARRANTED

“The European Parliament is increasing market protections that will delay generic competition and extend monopoly prices,” Warburton said. “Lobbyists have persuaded European leaders that companies need more time to recover billions in research costs, when R&D costs are really a fraction of the $1.3 billion average claimed.”

PRACTICAL IMPLICATIONS

This study strengthens the view that drugs companies do not need prices as high as they are to recover R&D costs, and their corporate risks are much lower than claimed. Most of their R&D products are scores of drugs with few proven advantages over existing drugs that can command higher, government-protected prices. Gross profits are spent more for marketing than research in order to maximize the number of patients taking these drugs. A large number of clinical trials are conducted for marketing and signing up lead clinicians. These form elements of The Risk Proliferation Syndrome described in a new book, The Risks of Prescription Drugs.  The result is millions of patients exposed to adverse side effects with few offsetting benefits.  Prescription drugs are now the 4th leading cause of death and result in about 2 million hospitalizations a year. They have also become a major cause of auto and trucking accidents.

The article, “Demythologizing the high costs of pharmaceutical research,” has been printed in BioSocieties, an interdisciplinary journal for the social studies of life sciences. It is available at http://www.palgravejournals.com/biosoc/journal/vaop/ncurrent/index.html, or by clicking here.

Media contacts:
Donald W. Light  at (609) 216-0071 or dlight@princeton.edu or Rebecca Warburton (Public Administration) at 250-885-8469 or rnwarbur@uvic.ca

Massachusetts' Medicaid director comments on single payer

Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney
Boston Herald
February 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

Comment: 

By Don McCanne, MD

It is no surprise that so many individuals are suggesting that we may be heading toward a single payer system. It is becoming more obvious that the federal reform effort and the Massachusetts plan on which it was based have proven to be the most expensive model of reform while falling short on the goals of universality, efficiency and equity, as was predicted by those of us at PNHP and others. But these words from Terry Dougherty, director of the Medicaid program for Massachusetts, are of paramount significance since he has first hand experience with one of the cornerstones of reform – expansion of the Medicaid program.

When someone who really knows what we’re actually doing within this expensive, dysfunctional model of reform says that single payer has “got to be better,” we should listen. Listen, and then act.