Category: Health Policy

May
9

HWR on health care cost trends, reform implementation, and motivations

Posted by Joe Paduda on Thursday, May 9th, 2013 | Comments

This biweekly edition of health Wonk Review covers the recent news that health care cost inflation has moderated, digs into various aspects of ACA implementation, and provides insights on a couple other timely topics.  Read on!

Health care cost trends are slowing…

First up, Health Affairs’ just-released research indicates the decline in inflation could result in a reduction of $770 billion (yup, that’s “billion” with a B) in public program health care costs over ten years.  

I can hear the cheering…

For those looking for a thoughtful and comprehensive consideration of the sustainability of this trend, consider this post from John Holahan and Stacy McMorrow of the Urban Institute; “All of these factors taken together suggest that a return to a high historic growth rates in health care spending may not materialize….we…are cautiously optimistic.”

John Roehrig is less optimistic, using research into economic cycles and related factors to come to a conclusion that “I don’t think either of these studies suggests that spending growth is likely to remain at the 4 percent levels seen over the past four years. [emphasis added] Some portion of the slowdown is permanent but some will be given back during a recovery.

I’ve reviewed these and several other reports, and my takeaway is guarded optimism.  Sure, the economy reduced demand, but there’s no question there are fundamental changes occurring that are affecting care delivery, pricing, and reimbursement.  

While drug costs are not top-of-mind these days, a group of oncologists is plenty cranky about the cost of specialty meds intended for cancer patients.  David Williams gives us his take, quoting one section of the doctors’ opinion piece: ““In the US, prices represent the extreme end of high prices, a reflection of a “free market economy”.

One cannot talk drugs without talking marketing to docs; Gary Schwitzer has highlighted an innovative marketing approach involving Hooters… If you don’t follow Gary, you should.

One area that researchers are paying close attention to is facility costs; Brad Flansbaum’s entry; Brad discusses the problems inherent in reducing costs in the hospital environment – “Most providers employed by hospitals know the drill: increase throughput, implement regulatory changes, monitor hospital measurement and report cards, and of course, reduce costs.  However, despite the growth of “hospital as laboratory” and rise of the inpatient practitioner, we must face facts.  We receive our salary from the beast we wish to slay.” [emphasis added]

Sticking with hospitals, a recent WSJ opinion piece assaulted Medicare’s new hospital re-admissions reimbursement policy; the John Hartford Foundations’ Chris Langston presents a clear-eyed, point-by-point rebuttal that shows why the program is a necessary and important step to improving health care for older adults. The net? The reduction in reimbursement for re-admitted patients appears to be good policy and will likely drive improvements in patient care and quality. 

Implementing reform

A big part of reform’s implementation involves exchanges; Louise Norris ofColorado health Insurance provides a brief overview of the progress his state has made: “Less than a year after the ACA was signed into law, Colorado began the – often contentious – process of creating the state’s exchange.  They’ve been working on it pretty much constantly ever since.  And the result is Colorado’s health insurance exchange is on track to open on time and provide all of the promised services:  small business and individual sales platforms, with an option for employees to select from multiple plan options in the small business exchange.  Jay hasn’t seen data from DC and the other 16 states that opted to run their own exchanges, but guesses they’re also faring relatively well,

Interestingly, the move to electronic health records (EHR) may well lead to higher costs, as providers get better at coding, payers end up paying for more stuff.  That’s one  takeaway from Jonena Relth’s submission on EHR and a recent teleconference on same.

The changes in delivery models may well lead to long-term cost reductions, however patient involvement will be key.  Jason Shafrin’s contribution contemplates the issues inherent in informing Medicare patients they’ve been assigned to an ACO; many may not know…

Neil Versel has also contributed a piece on consumer awareness – or more accurately the lack thereof.  His piece refers specifically to ignorance about telemedicine, and what the industry must do to reduce that ignorance

For those seeking more info on Medicare and the often-mind-numbingly-confusing array of programs, acronyms, and payment schemes, Joanne Conroy MD’s post offers a simple overview of the program.

Writing at healthinsurance.org, Wendell Potter doesn’t see the possible decision of some large insurers to avoid the exchanges as much of an issue; “The number of insurers that participate in the exchanges will vary from state to state, but there should be no shortage of affordable options available, especially when the subsidies – which will be available only for coverage purchased through the exchanges – are factored in.”  Wendell cites Vermont as an example; there are only two likely participants but both have submitted rates that are quite competitive with current products.

Motivations and motivators

Then there’s the motivation of big health plans and their leaders – can you spell M-O-N-E-Y?  I thought you could…The always-engaged Roy Poses MD has two posts; one discussing UnitedHealth’s CEO, his compensation, and UHG’s rather checkered recent past and issues of quality, physician oversight, and patient safety.  Ouch.  Similar concerns exist regarding Amgen’s executive compensation and their recent legal troubles.  

An interesting perspective on the same issue comes from Jaan Sidorov MD MHSA; Jaan wonders if the policy of “no pay for readmissions” could translate into shoddy care for patients who, despite the best of care, still have to be readmitted; If you had to be readmitted through no fault of anyone, wouldn’t YOU want your doctors to be compensated for taking care of you?

Thanks to Maggie Mahar for her post on breast cancer awareness – an effort that I (and others) think has had some significant negative consequences.  Maggie says: “Could it be that breast cancer arareness has become over-awareness? This isn’t happening in other countries. Then again, we are better at marketing fear than any other country in the world. And the pink ribbon campaign is all about marketing.”[emphasis added]

Side-bar note – I’ve long been a critic of the male version of breast cancer awareness; the prostate cancer scare, those who profit from it, and their well-intentioned but harm-causing supporters.

Research says…

John Goodman thinks a recent analysis of Oregon’s Medicaid program is a damning indictment of Obamacare; “a new study finds that (as far as physical health is concerned) there is no difference between being in Medicaid and being uninsured.”

Ezra Klein has a different take on that study; while there’s no question many health status measures did not differ between the Medicaid insureds and uninsured’s, depression was 30% lower among the insured group.  More significantly Ezra notes a wealth of other research has found Medicaid coverage does tend to improve health status.

Thanks to Vince Kuraitis and Leslie Kelly Hall for their editorial on the “duty to share” patient information with the patient.  In the US and the UK, providers have excessive incentives to “hoard” patient data and insufficient incentives to “share” it.  Consistent with a recently released report in the UK, they authors recommend development of an explicit duty to share patient information and discuss barriers and implications.

from the Work Comp World

WorkCompInsider’s Jon Coppelman thinks Massachusetts’ Governor Deval Patrick’s idea to tax workers’ comp indemnity (wage replacement) benefits.  This in a state where those benefits are already inadequate – at best. 

Bad idea, Your Honor.

Mike Allen alerts workers’ compensation payers to the need to prepare for reform; while PPACA doesn’t specifically address workers’ comp, there are a host of implications – especially for tech platforms.

Today’s tech topic

David Harlow’s piece focuses on Massively Open Online Medicine, showing just how diverse – and informed – HWR contributors are. If health sensors and wearable devices do become prevalent, it will likely take a lot of time – and a lot of change by a lot of people and institutions.

May
8

Health inflation is down – and may stay down

Posted by Joe Paduda on Wednesday, May 8th, 2013 | Comments

There appear to be several reasons for the decline in the health care cost inflation rate with a poor economy and resulting job loss and changes in benefit design often cited – rightly – as chief contributors.  There’s some fear that an improving economy and higher employment will return us to the ugly days of 7+ percent health inflation rates.

Possibly. However there are indicators that changes to provider-payer contracts, a reduction in unused facility capacity, growth in medical homes and ACOs, changes in reimbursement methodologies, and less reliance on new technology are having an impact. These factors, and others unknown, look to be responsible for more than half of the decrease in inflation.

Here’s how the authors of a recent article in Health Affairs put it:

“we believe that current trends support cautious optimism that the spending slowdown may persist—a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country, among other factors.”

The implications are vast.  At the highest level, lower medical trend allows employers and their employees to use cash for other purposes, alleviates some of the pressure for Medicare reform and reduces deficit and debt projections.

This last may be the most significant implication – an analysis indicates public-sector health spending over the next ten years may be $770 billion lower than projections.  

What does this mean for you?

Those of us with grey hair and fading eyesight have seen too many of our hopes for cost control crushed to get overly excited.  Nevertheless, this is far better than the proverbial stick in the eye…

 

May
7

Health care spending is stabilizing – why?

Posted by Joe Paduda on Tuesday, May 7th, 2013 | Comments

There have been a plethora of reports of late indicating health care spending trend has decreased significantly – to an average of 3.9 percent since 2009; the trend appears to be continuing today.  This after annual increases ranged from 6.2 to 9.7 percent between 2000 and 2007.  While there’s no denying an increasing portion of costs have been borne by insureds dealing with higher out-of-pocket costs, there’s something else going on here.

The question is – what?

The quick answer is – several things.

First, the continued sluggish economy; recent research published by the Kaiser Family Foundation attributes about three-quarters of the decline to the recession; others think it is only about a third.

Second, increased deductibles and co-pays account for about a fifth, according to some researchers.

More encouraging is the sense (and it is ONLY a sense) that the new contracts between insurers and providers are partially responsible.  

Health plans and providers (mostly health care systems) are increasingly basing reimbursement less on fee-for-service and more on accountable-care type methodologies, wherein providers benefit from delivering less, not more care.  The evidence for this is best described as “anecdotal data”; several health plans are reporting lower inpatient admissions, reduced length of stay, fewer expensive procedures, more generic meds, better care for chronically ill patients along with fewer acute episodes.

This is a big deal – a very big deal.  We will be digging into this for the rest of the week.

Apr
15

Sequestration’s impact on health care

Posted by Joe Paduda on Monday, April 15th, 2013 | Comments

For most, the federal budget sequestration (that’s the event, sequester is the verb, as in “to sequester, thanks Gary) has yet to make itself felt.

For some, it’s all too real; one person’s waste is another person’s livelihood.

Here’s a few ways the sequestration stalemate in Washington is affecting health care.

So, what does this mean for you?

Well, reduced reimbursement for hospitals, doctors, and drug companies may mean more cost shifting to privately insured patients.

That’s the macro issue.  On a personal level, cuts will affect individuals relying on free vaccinations, wages from medical research funded by NIH, Medicare reimbursement for their salaries, jobs for newly graduated nurses, and residency programs for newly-minted MDs.

There will also be a long-term, downstream impact that we won’t feel for some years – the FBI will not have any new agent classes for at least two years.  That’s not good for health care fraud investigations.  

Apr
10

“Disability” is increasing…why?

Posted by Joe Paduda on Wednesday, April 10th, 2013 | Comments

Are we suffering traumatic injuries from falling trees, collapsing scaffolds, dangerous industrial machines?

Is it because so many of us work at jobs requiring intense physical labor, and we are working long hours long past middle age?  Conversely, is it the very sedentary nature of many jobs that saps energy and wastes muscle?

Could it be we are just living longer than we ever have, and our bodies, programmed by evolution to live long enough to procreate, just aren’t built to stay strong, flexible, and resilient for decades?

Or are we way too fat, get far too little exercise, eat lousy food, and blame everyone but ourselves for the consequences?

Is it the continuing high unemployment rate and dearth of good-paying jobs?

And/Or – and here’s the scary thought – is it the definition of “disabled” that’s changed – both the public one and the way some view themselves?

This is becoming an increasingly critical question – as the number of Americans on Social Security for “disability” has increased rather dramatically – doubling from 1985 to 2005. In 1984 2.2% of the working-age population was receiving Social Security Disability Insurance (SSDI); 4.1% was in 2005.  This increase was, according to a paper published by the National Bureau of Economic Research, driven by a change in the definition of disability:

The most important factor is the liberalization of the DI screening process that occurred due to a 1984 law. This law directed the Social Security Administration to place more weight on ap-plicants’ reported pain and discomfort, relax its screening of mental illness, consider applicants with multiple non-severe ailments, and give more credence to medical evidence provided by the applicant’s doctor.

These changes had the effect of both increasing the number of new DI awards and shifting their composition towards claimants with low-mortality disorders. For example, the share of awards for a primary impairment of mental illness rose from 16 percent in 1983 to 25 percent in 2003, while the share for a primary impairment of musculoskeletal disorders (primarily back pain) rose from 13 per-cent in 1983 to 26 percent in 2003.

The number of working-age folks receiving SSDI reached 8.8 million at the end of last year.  That’s about 4.4 percent of the working age (18-64) population, an increase of 0.3 percent over the last seven years.

There’s been an increasing amount of attention paid to this issue; that’s both warranted and appropriate.

Yet I’m reminded of something Jennifer Christian MD told me years ago; “there’s no condition so disabling that there isn’t someone in the US with that condition working full time today.”

So, what is it?

My sense is it is all of the above. Some are really hurting or unable to work at jobs they can perform, others lazy, some dispirited, some enabled by physicians, many just getting older and wearing down, many unable to find good-paying jobs.

What does this mean for you?

Big, knotty problems aren’t fixed by simple answers or assignment of blame.  They are fixed by understanding drivers and the various moving parts needed to assemble solutions. 

 

Apr
8

Medicaid expansion – waiting for the alternatives

Posted by Joe Paduda on Monday, April 8th, 2013 | Comments

Lost in the political arguments over whether or not to accept federal dollars to expand Medicaid is a rather basic question – what happens if you don’t expand Medicaid?

This is especially important in states such as Florida and Texas, Louisiana and New Mexico, states where over a quarter of the working-age population don’t have health insurance.

If these states don’t expand Medicaid, those people will remain uninsured, safety-net providers will not be able to provide care for them, and hospitals’ financials will deteriorate, some drastically.

In Texas, Louisiana, and Florida, there’s little chance that Medicaid will be expanded, yet there are no alternative solutions proffered by opponents. The politicians in opposition seem content to allow hospitals to fail and people to suffer and die.  Some do this in the name of freedom, others fiscal prudence, yet the result is the same in both cases.

People who can’t afford or can’t get health insurance need solutions, yet all they are getting from expansion opponents are sound bites.  Where’s the leadership, the courage, the bold and innovative solutions?

I’m pretty sure “freedom” to a single mother with kids suffering from asthma and diabetes means freedom from worry, from the gnawing fear that she’ll have to quit her job because she earns too much to qualify for Medicaid in Texas/Louisiana/Florida.  But it’s either that, or go bankrupt when her kids need care.

What does this mean to you?

Depends on your concern about others and your definition of freedom.

 

Apr
1

Sequester’s impact on hospitals – only CMS could come up with this

Posted by Joe Paduda on Monday, April 1st, 2013 | Comments

The budget sequester is going to cut reimbursement rates for many providers – starting today many will see a 2 percent reduction for Medicare.  That’s going to hurt, but there’s good news as well – for some providers.

According to CMS, the most recent guidance from Congress on implementation of the sequester for Medicare providers requires CMS to “ensure reductions in reimbursement are not based on any currently-in-force profiling, bonus, ACO, e-billing or other reimbursement-altering methodology or process…”  CMS’ Office of the General Counsel’s interpretation of this guidance is it prohibits any staff-based input into “determining, deciding, or selecting which or to what extent bills, providers, locations, or procedures” will be affected.

As a result, as of today, CMS will begin implementing the “random sequenced reimbursement reduction program”, or RSRRP.  While the final details of this have yet to be worked out, early indications are it involves setting reimbursement at zero for every fiftieth provider bill; bills so affected will be pended and routed to the “further action required” queue (typically utilized for bills with missing data elements or demographic.

In this instance, the RSRRP bills will be held until such time as “adequate funding exists to complete the adjudication and reimbursement process.” [emphasis added]

Hospital organizations are, understandably, up in arms over the cuts, asserting they are arbitrary, capricious, and will cause significant harm to many hospitals, including the most vulnerable safety-net institutions.  An American Hospital Association report indicates the sequester will reduce spending by some $10.7 billion in 2013 alone, noting: “Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our nation to achieve deficit reduction” An AHA spokesperson went further: “Hospitals will have to make tough choices about which services to maintain because of potential cuts since hospitals will maintain the highest quality for whatever services they provide…”

Responding to the criticism, HHS Sec Kathleen Sibelius noted that her hands were, in effect, tied as Congress “effectively prevented HHS from taking any action to ameliorate the effect of the sequester.  Quoting from the report, Sec. Sibelius said: “the “blunt and indiscriminate” effect of the sequester calls to mind an HL Mencken quote; “the people get the government they deserve, and they deserve it good and hard.”

When asked how long the RSRRP bills might be held in limbo, a spokesperson responded: “ask Congress, and encourage your readers to do the same.”
What does this mean for you?

Likely more cost-shifting from hospitals seeking to make up lost revenue.  

Mar
20

There is NO OBAMACARE RFID CHIP!

Posted by Joe Paduda on Wednesday, March 20th, 2013 | Comments

Among the top all time posts on MCM was the one a couple weeks ago about the right wing and nut-o-sphere’s claim that the feds are going to require anyone signing up for health insurance will be implanted with an RFID chip containing their medical and financial records.

As of this am, there were 12.386 views of that post.  I kid you not.

To repeat – there is NOTHING in the PPACA legislation or regulations about any RFID chip.

These conspiracy theorists either intentionally or ignorantly mis-read the PPACA’s Medical Device Registry language – which is clearly intended to track medical devices – hip replacements, pacemakers, spinal cages and the like – to “facilitate analysis of postmarket safety and outcomes data.” This language – which is quite simple and quite clear is mis-interpreted to imply that we all are going to get a chip implanted somewhere on our persons.

Of course we need to get these devices tracked – many fail, many are recalled, and there are many complications arising from these devices.  Rather than having no way to figure out who has an implant from the Acme Hip Bone Implant Device Co. by sorting thru paper documents, it only makes sense to have a central source that can identify the Acme patients.

Not only is there nothing in any document about this, but the tin-foil hat crazies propagating this rubbish cite a bill that was never even passed (HR 3200) and is not law as their source for this nefarious plot.  And, it has been refuted by Snopes and about a hundred other investigators.

But the monsters-under-the-bed crowd don’t let facts interfere with their claims – oh, no, not this guy.

There have also been a flood of comments from people claiming this is some part of a master plan of the Illuminati, or the FreeMasons, or some other obscure group bent on world domination.  After posting a couple comments, I’ve trashed the rest.

Mar
6

Obamacare – criticisms considered

Posted by Joe Paduda on Wednesday, March 6th, 2013 | Comments

Over the last week I’ve had several conversations with folks opposed to Obamacare/the Affordable Care Act.  Their criticisms are focused in several general areas:

  • it doesn’t do enough to control costs;
  • it is too expensive and we can’t afford it;
  • it is socialized medicine and violates our country’s foundational free market principles; and/or
  • it is intrusive and injects government into the doctor:patient relationship.

As I’ve said ad nauseum, PPACA (pronounce Pea-Pak-A) is so obviously a product of our vaunted-but-deeply-flawed political system that it should serve as a warning to all future legislators.  It was NEVER supposed to pass and become law as-is; if the Dems hadn’t completely screwed up the Senatorial election in Mass, thereby losing their veto-proof majority in the Senate and therefore had to pass the reform bill already passed by the House in the lame duck session, this conversation never would have happened.

Alas, it did, and here we are.

So, on to the complaints.

We can’t afford it.

C’mon, folks, as if the US health care system was affordable BEFORE Obamacare.  And, the recent announcement by Ala. Sen Jeff Sessions that the ultimate cost will be $6.2 trillion was flat-out wrong; his projections assumed the cost-control provisions of PPACA would be ended.  In fact, the Hill reported:

“the U.S. deficit will decline 1.5 percent as a share of the economy over the next 75 years, according to the GAO. Auditors attributed 1.2 percent of this improvement to the Affordable Care Act.”

Fact is, there are cost control provisions in PPACA, and unless they are repealed, they will reduce the deficit.  Two, the IPAB for one and ACOs, are promising – if only because neither has been proven. But I see another part of PPACA as likely the most effective; the mandate and prohibitions against underwriting.   If we all have to get insurance, and insurers can’t make money by risk selection and actually have to manage care (horrors!!), they’ll actually have to work on improving health, reducing morbidity, and improving the delivery of care – and eventually controlling cost thru their creative approaches.

Dirty truth folks, back in the old days (which includes every day up till 1/1/2014) health insurers spent most of their time/brain power/resources not on managing care, disease management, population health, or any other “health care” thing – but on underwriting. Nope, they worked hardest on figuring out first – who was likely to incur a claim, then second – how can we avoid insuring them.

That game’s over.  Now, insurers are stuck with all of us – healthy, fat, diabetic, blind, fit, gluten-free yoga enthusiasts, old, young, pregnant, single, whatever.  And if they are going to survive, insurers damn well have to figure out how to keep us – all of us – healthy and out of the doctors’ offices/ER.

Their game has changed more than anyone could possibly understand.

Why? Cause the heavy hand of government (that would be a government elected by us, folks) essentially said “enough of this crap.  Figure out how to control costs and improve health, or you’re out of business.”

The PPACA essentially changed – and leveled – the playing field.  The rules are clear.  And so are the penalties.  

Is it perfect? Hell no.  Is any legislation ever perfect?  Same answer.  But it is a LOT better than what we had before. Which, for those with short memories, was a completely out-of-control health system with declining numbers of insureds and rapidly rising costs.

 

Feb
18

Medicaid expansion will…expand.

Posted by Joe Paduda on Monday, February 18th, 2013 | Comments

As governors look more closely at the benefits – and costs (political and financial) of the Medicaid expansion slated to begin next January, more and more are deciding it isn’t such a bad thing after all.  Ohio’s governor has been pushing his supporters in this direction for some time, and Gov Kasich is joined by several of his fellow GOP governors including Michigan, Arizona, Nevada, New Mexico and North Dakota.  I’d expect Florida will also join the list; I listened to Gov Rick Scott uncomfortably listen to a Florida hospital CEO make his pitch in a meeting last fall, and a compelling pitch it was.

While this may be politically distasteful for some, it’s simply common sense, with a big dose of fiscal reality thrown in.  The reality is this: taxpayers from every state will finance the expansion, with their federal tax dollars paying for 100% till 2017 and 90% thereafter.  So, states that don’t accept the expansion will be providing funding for those that do.

Second, hospitals in particular are screaming for support.  For those who would decry Medicaid expansion as yet another entitlement we can’t afford, the hospitals respond that they are the ones hurt by this noble stance, as they’re providing care to the uninsured.  With the number of uninsured around the 50 million mark, those without insurance get much of their care at hospital emergency rooms.   Medicaid expansion will add about 8 million more people to the insured rolls, greatly lessening the burden on hospitals. It will also add about $300 billion over a decade to hospital revenue.

With those kind of dollars floating around there’s no doubt more states will join Kasich et al and agree to Medicaid expansion. 

So what does this mean?

A few things.

Providers will protest the low, and decreasing, reimbursement for Medicaid recipients. Something is far better than nothing, so safety-net providers will grudgingly accept the deal. The savvy ones – and there are many – will realize that fee-for-service reimbursement is a loser’s game, and push very hard to adopt and prove out different models of delivering care and paying for it.

This is a very good thing.

More coverage for more people lessens the need for providers to shift costs to private insureds, workers’ comp claimants, and auto/liability claimants.