Jun

Government-run health care – how bad is it?

Posted by Joe Paduda on Thursday, June 3rd, 2010 | Comments

There’s been a minor flurry of articles about the Veteran’s Administration health care system recently, a flurry that is both welcome and a bit tardy. It would have been helpful indeed if these had come out during the furor over health reform. Better late than never.
Let’s tackle cost first. The CBO’s most recent report indicates the VA does a much better job controlling cost than the private sector delivery system (used by Medicare). According to the CBO,
“Adjusting for the changing mix of patients (using data on reliance and relative costs by priority group), the Congressional Budget Office (CBO) estimates that VHA’s budget authority per enrollee grew by 1.7 percent in real terms from 1999 to 2005 (0.3 percent annually) [emphasis added] .2 Though not the decline in cost per capita that is suggested by the unadjusted figures, that estimate still indicates some degree of cost control when compared with Medicare’s real rate of growth of 29.4 percent in cost per capita over that same period (4.4 percent per year).”
In contrast, the private insurance sector [pdf] saw premiums increase over 70% over the same period (I know this isn’t exactly apples-to-apples, but no matter how you slice the apple, 70% is still a lot more than 1.7%)
How about patient satisfaction? Again, the VA scores better than the private sector.
“In 2005, VA achieved a satisfaction score of 83 (out of 100) on the ACSI for inpatient care and 80 (out of 100) for outpatient care, compared with averages for private-sector providers of 73 for inpatient care and 75 for outpatient care…For VA, the scores for inpatient and outpatient care were 84 and 83, respectively, while the average scores for the private sector were 79 and 81.”
In the press, Maggie Mahar posted on Phillip Longman’s new edition of Best Care Anywhere; Why VA Healthcare is Better than Yours; quoting Longman’s foreword “Health care quality experts hail it [the VA health care system] for its exceptional safety record, its use of evidence-based medicine, its heath promotion and wellness programs, and its unparalleled adoption of electronic medical records and other information technologies. Finally, and most astoundingly, it is the only health care provider in the United States whose cost per patient has been holding steady in recent years, even as its quality performance is making it the benchmark of the entire health care sector.”
Merrill Goozner published an interview with Longman, who noted “In study after study published in peer‐reviewed journals, the VA beats other health care providers on virtually every measure of quality. These include patient safety, adherence to the protocols of evidence medicine, integration of care, cost‐effectiveness, and patient satisfaction. The VA is also on the
leading edge of medical research, due to its close affiliation with the nation’s
leading medical schools, where many VA doctors have faculty positions.”
Longman’s book is a timely update to his 2007 edition, providing new insights into the effectiveness of the VA’s VistA IT infrastructure and coverage of adoption by the private sector of VistA.
Another recent article noted the system is responsible for 24 million veterans (treating about 5.5 million last year), has a budget of “$50 billion and operates more than 1,400 care sites, including 950 outpatient clinics, 153 hospitals and 134 nursing homes.”
The piece quoted Elizabeth McGlynn, associate director of Rand Health and author of a study of the VA: “You’re much better off in the VA than in a lot of the rest of the U.S. health-care system,” she said. “You’ve got a fighting chance there’s going to be some organized, thoughtful, evidence-based response to dealing effectively with the health problem that somebody brings to them.”
Which brings up this question –
Where would you like to get your health care, and which inflation rate would you prefer?

May

Memorial Day and the VA

Posted by Joe Paduda on Friday, May 28th, 2010 | Comments

A quick post to express a heartfelt thanks to all who serve our country.
It is our responsibility as a nation to ensure they are taken care of, and it is gratifying to see the great strides made by the Veteran’s Administration’s health care system in improving quality and access to care. Sure, they have their problems, but those problems have to be considered in light of the overall strength of the system and the quality of the work performed by the VA’s dedicated staff.
Have a great weekend.

Apr

Two points – EHR and the government’s incompetence

Posted by Joe Paduda on Thursday, April 8th, 2010 | Comments

Bill Sota posted a brief piece about the Veterans Administration’s adoption and use of Electronic Health Records, citing: “Good news on the cost savings performance of Vista which is the VA’s electronic medical record system:”
Bill is referring to the primary source, an article in Health Affairs:
“The VA spent proportionately more on IT than the private health care sector spent, but it achieved higher levels of IT adoption and quality of care. The potential value of the VA’s health IT investments is estimated at $3.09 billion in cumulative benefits net of investment costs.” [emphasis added]
Two points.
1. The VA is a very, very large health system that has implemented an EHR program and saved taxpayers over $3 billion dollars – so far. Implementing EHR is difficult, time-consuming, and a lot of work. Yet it can, and has, been done.
2. This is a creditable result, and one that should encourage other integrated health systems to find out what the VA has done and, perhaps, do something similar. After all, if the gubmint can do it, it should be child’s play for the vaunted free market…
Unfortunately, it appears as if the private sector isn’t as competent in this area as the VA. Within the article itself are a couple telling conclusions. First, the VA spends considerably more (as a percentage of total expenditures) on IT than the private sector does. Yet the VA’s ratio of IT capital spending to total spending is considerably less than the private sector’s.
The VA spends more on IT, with a big chunk of that invested in implementation and maintenance. And the results show the impact:
“The VA has achieved close to 100 percent adoption of several VistA components since 2004. In contrast, the private health care sector has not reached significant adoption of any of these systems. Adoption in the private health sector of inpatient electronic health records stands at 61 percent; use of inpatient bar-code medication administration is at 22 percent; computerized physician order entry adoption stands at 16 percent; and outpatient electronic medical record adoption is at 12 percent”
Finally, the implementation of the VA’s VistA system has delivered significant improvements in the quality of care delivered. Here are just a couple examples (quoted from the articleº:
– For preventive care process measures such as cancer screenings, the VA had higher performance during 2004-2007 relative to the private health care sector
– VA patients with diabetes had better glucose testing compliance and control, more controlled cholesterol, and more timely retinal exams when compared to the Medicare health maintenance organization (HMO) private-sector benchmark.
– The VA averaged about fifteen percentage points higher than the private sector on preventive care for patients with diabetes and seventeen percentage points higher for patients with diabetes who have well-controlled cholesterol
What does this mean for you?
EHR can, and has, delivered significant savings and RoI while increasing quality.
The next time someone bemoans the government’s incompetence and complete lack of ability to run anything, tell them about the VA. And tell them to stop parroting Fox talking points; they are a poor substitute for actual thinking.

Apr

Britain’s NHS to run US Health Insurance Exchange, control costs

Posted by Joe Paduda on Thursday, April 1st, 2010 | Comments

As one who haas heartily criticized the health reform bill for it’s apparent avoidance of any real cost control, I was quite surprised to hear that there are two meaningful – and very significant – cost control mechanisms contained in the new law. Both rely on using proven methodologies to attack administrative and medical costs and both have been widely tested.
I don’t doubt they’ll work as intended, but I have serious doubts about the willingness of physicians and many patients to accept these provisions.
Buried deep within the 2000+ page health reform bill is a paragraph that called for sealed bids from potential vendors interested in managing the national health exchange component of health reform, bids that would have to exceed certain standards in order to be considered. Those standards, when closely examined, are the operating metrics used by Britain’s National Health Service’s External Markets Programme.
As no American company or not for profit organization has the necessary experience required by the law, it certainly appears as if this provision was intended to allow, if not require, HHS Sec. Kathleen Sibelius to award the contract for administering the National Insurance Exchange to the NHS.
This isn’t as far-fetched as it may sound. The NHS was awarded a similar contract two years ago in India, and is currently managing the health systems in the BVIs, Barbados, the Falkland Islands, and most recently is reportedly close to a deal to revamp Iceland’s troubled health system.
Details are scarce; as one might imagine the Administration is loathe to provide any information at a time when refom opponents are in full voice and the media is following reform very closely. Don’t expect to hear anyone in Washington speaking on the record about this anytime before July; with Congress out of session and vacations in full swing any uproar will be kept to a minimum.
As if that wasn’t enough, sources within HHS have confirmed the long-circulating rumors that Dr. Sir James Watson, former head of Britain’s NICE program, will be heading up the federal government’s medical guideline development project. Watson is reknowned for his ability to identify the most cost-effective procedures with minimal data, a talent that will serve him well in the grossly-underfunded new department.
Watson will have to be a quick study, as Americans will be justifiably concerned with the prospect of the architect of Britain’s medical cost control program in such an influential position.
What does this mean for you?
Less work on the part of physicians or patients as HHS will be determining which procedures are, and are not, ‘necessary’.

Mar

The ethics of clinical guidelines – the payers’ dilemma

Posted by Joe Paduda on Tuesday, March 30th, 2010 | Comments

In preparing for a talk on the ethics of comparative effectiveness I’m to give at the Geisinger Clinic in Danville PA in April, I’ve been interviewing medical directors from several health plans and workers comp insurers, along with physicians – both practicing and managing, in an effort to get their views on guidelines.
I’ve been somewhat surprised at what I’ve learned.
The real problem may not be payers’ efforts to deny medical care, but their willingness to ‘go along to get along’; to avoid making tough coverage decisions, and when in the slightest doubt, to approve the procedure/drug/treatment/therapy rather than run the risk of upsetting someone.
One would think payers would be keenly interested in supporting and using evidence-based clinical guidelines; costs would be reduced and outcomes improved, benefiting both patients and profits. And one might very well be wrong.
Payers operate in a market where public opinion matters a lot; if the payer has a negative image, it will be harder to convince employers and their employees to sign up for their health plan. It may also be harder to convince physicians and other providers to join and stay in their provider networks. And families may well be reluctant to carry an insurance card from a payer known for their tight controls on medical care.
We all know that restricting unnecessary care is not bad or immoral, but to the general public, it can certainly look like a profit-driven effort to cut costs, regardless of the effect on patients. To be sure, payers’ public efforts to terminate patients on the flimsiest of excuses and refuse coverage to anyone who might actually get sick haven’t helped their image. But the sense I get from the medical directors and practitioners I’ve spoken with is they are quite reluctant to deny treatment.
Part of this may be influenced by reality – when claims costs go up, so do premiums, and so does the health plan’s top line. There are few industries where built-in inflation results in near-double-growth same-store growth every year; health insurance is certainly one. This ‘reality’ is closely related to health plans’ motivations. Wall Street demands revenue growth, and for those health plans that are for-profit, their primary obligation is to their stockholders.
Allowing questionable treatments drives up revenues which benefits stockholders.
Of course, it isn’t anywhere near that simple or straightforward in the real world. Health plans’ profits are higher if medical costs are lower – at least over the short term. And most of the health plan execs I know are honestly trying to ensure their members get the care they need, care that they can’t afford if they approve any and all treatments no matter how ineffective.
But there is no question payers face an ethical dilemma, one complicated by patient demand, provider relations, market influences, and the obligation to their owners. (I’m not addressing the not for profits in this post)
A lot of Federal (taxpayer) dollars are going to be spent on comparative effectiveness research over the next few years, and if there’s a better use of my money I’m not aware of it. It is widely acknowledged that much of what we spend is wasted on unnecessary tests, advertising-driven consumer demand, unproven treatments and procedures that benefit device companies, specialists, and facility owners far more than patients.
It’s also equally clear that reining in those costs is going to be incredibly difficult, because much of it occurs in the somewhat grey area between procedures that are clearly useless or harmful, and those that are undeniably appropriate. And that grey area is where hundreds of billions are spent every year.
What does this mean for you?
Perhaps an ethical dilemma.

Feb

Hospitals’ strategy – survival thru cost shifting

Posted by Joe Paduda on Thursday, February 25th, 2010 | Comments

Over the next few weeks, I’m going to be writing extensively about the death spiral of the American health insurance system, a fate as certain as it is unthinkable.
As enrollment in private insurance plans declines, and the Medicaid population increases, providers will have to increasingly rely on the remaining private pay patients to cover the costs of the uninsured and, in the case of Medicaid, under-reimbursed. I’ll begin the discussion with a story that clearly illustrates the problem.
Hartford Hospital’s announcement that its primary strategic focus is to achieve a “Solid Foundation” is prima facie evidence of the future of health care – the continuation of the private insurance death spiral.
In its press release, HH says:
“Negotiating with managed care companies is one key element of Solid Foundation. In 2010, Hartford Healthcare has two more major contracts to negotiate, and these contracts have a common thread – historic underpayments from private insurance companies. Hartford Healthcare physicians and hospitals have been paid too little for too long compared to hospitals across the country with similar services and capabilities.”
That’s not to say they’re out there looking to make billions; HH is aiming for margins in the 1% – 2% range.
But in order to make those modest margins, HH is going to have to fill beds – and the data indicate the Hartford area has too many beds, which will result in higher costs without an improvement in quality of care.
Compared to New Haven, CT, [link opens the Dartmouth Atlas for New England as pdf] Hartford has 23% more excess bed capacity and hospital costs that are more than 10% higher per capita.
I don’t know if the hospitalization rate in New Haven is appropriate or not; I don’t know if the hospitalization rate in Hartford is appropriate or not. I do know that one of the two, or perhaps both, aren’t the ‘right’ rate.
Hartford Hospital is responding to its need to preserve it’s organizational existence, and therefore will push hard to raise reimbursement while filing beds, a double hit for private insurers and employers who are being ‘taxed’ to help offset declining reimbursement from CMS and an increase in the number of Connecticut citizens without health insurance.
An intelligent approach to our nation’s coming health care disaster would be to address the supply issue. Reduce the number of beds in Hartford (while I don’t know there are too many in Hartford, that’s a pretty good guess).
What does this mean for you?
Until intelligence appears in the health care reform debate, you’ll see more and more announcements like Hartford Hospital’s. While they work to solidify their financial foundation, we’ll be watching our nation’s health care system crumble.

Nov

Controlling technology, improving health, cutting cost – not as hard as you may think

Posted by Joe Paduda on Monday, November 9th, 2009 | Comments

The use – and misuse – of technology in medicine is not only a major cost driver, it is also a major cause of unnecessary pain and suffering.
Far too many carotid endarterectomies were performed in a misguided effort to reduce
If we are to have any hope of slowing down the rate of increase in medical costs, we have to stop the abuse of unproven and potentially harmful technology.
WorkCompCentral [sub req] has a great piece on a program run by the State of Washington that does just that. The Health Technology Assessment program “assesses various devices, procedures, medical equipment and diagnostic tests, then issues recommendations that public payers must follow[emphasis added]. Those public payers include the Department of Labor & Industries, which runs the state’s monopoly workers’ compensation program.”
According to an article in the New England Journal of Medicine, HTA determines reimbursement on these technologies for programs including:
“Medicaid, the workers’ compensation program, the state government employee benefit plan, and the corrections department [which] provide $2.9 billion in benefits annually to approximately 773,000 Washington citizens through direct fee-for-service plans”
Before the wingnuts start spouting about death panels, know that the HTA has been widely accepted by politicians from both parties, it passed with a single ‘nay’ vote in 2006, supported by both the state Hospital and Medical Associations, and while individual conclusions may draw opposition, the program itself is viewed very positively.
The process is rigorous. According to the NEJM;
“The program’s assessments are based on a thorough, systematic review of the evidence related to the effectiveness, safety, and cost-effectiveness of a product or service, with each type of evidence examined separately. After considering the “most valid and reliable” evidence on all three of these dimensions, the health technology clinical committee — which must be made up of practicing clinicians — arrives at one of three recommendations: covered without conditions, covered with conditions (such as criteria defining medical necessity), or not covered. The entire process must be transparent.”
HTA is important because it shows what can happen when government intervenes intelligently and carefully. So far, HTA has rendered opinions and set policy on:
* Arthroscopic surgery for osteoarthritis of the knee. (Not covered.)
* Discography for uncomplicated degenerative disk disease. (Not covered.)
* Implantable drug-delivery systems for chronic, non-cancer-related pain. (Not covered.)
* Lumbar fusion for uncomplicated degenerative disk disease. (Covered, with conditions.)
* Upright or positional medical resonance imaging. (Not covered.)
* CT colonography. (Not covered.)
* Pediatric bariatric surgery. (Not covered for patients 18 or younger. Covered with conditions for patients between the ages of 19 to 21.)
These actions have reduced costs by over $20 million since its inception three years ago.
What does this mean for you?
Payers should look closely at following Washington’s lead.

Oct

Syracuse University – the new home of UCR

Posted by Joe Paduda on Friday, October 30th, 2009 | Comments

We now know who will replace Ingenix as the nation’s provider of usual, customary and reasonable (UCR) data; we also know when (by the end of 2010). As to the how, that’s a bit less certain.
Syracuse University will be the home of a non-profit data house’ to be called FAIR Health (Fair and Independent Research Health); Cornell, Upstate Medical Center, SUNY Buffalo, and the University of Rochester will also contribute (got to spread the largesse around). (full disclosure – Syracuse is my alma mater)
The new entity will be funded at least in part by the $100 million NY Attorney General Andrew Cuomo has gotten in settlements from Ingenix’ UCR database customers. In addition to Cuomo’s successes, Ingenix’ parent company, UnitedHealth Group paid $350 million earlier this year to settle a class action suit, and other legal action is continuing which Cuomo expects to add to the $100 million total. The cash will be used to develop the database and set up a mechanism to deliver data to payers and consumers via a website. This last is a great idea – providing health care consumers and providers with access to UCR data should help promote transparency and enable price comparisons by consumers and price competition by providers.
FAIR will be headed up by SU Professor Deborah Freund, an expert in health economics, Distinguished Professor of public administration and economics in SU’s Maxwell School and Senior Research Associate at Maxwell’s Center for Policy Research. Dr Freund has a wealth of experience on the academic side of health policy and economics and has published on a wide range of topics in those fields.
I’ll see if I can stop in for a chat when I’m back up on the Hill in January for another alumni meeting.
The timetable seems…aggressive – there’s a lot to do to avoid some of the problems that plagued Ingenix’ MDR and PHCS databases; non-existent quality control on source data and inadequate volume of data in some areas are just two of the problems that led to the settlements. While Freund et al at FAIR may want very much to provide comprehensive, clean data that covers all procedures delivered by all providers, they don’t control the quality, accuracy, and consistency of the data collected by health insurance companies and other payers. And after the Ingenix debacle, they sure want to be absolutely positively comfortable with their data before they release it to the public.
My guess is the website and initial data will be up and running by the end of next year, but it won’t be comprehensive. Even if FAIR is able to come up with standards and a rigorous QA process, it will take more time for payers to develop and implement processes to ensure the data they provide FAIR meets those standards.
And you can bet your last hundred million that no payer is going to send data they aren’t absolutely sure is up to snuff.
What does this mean for you?
Good news, as the new UCR provider will help reduce payers’ exposure.
Health plans have a new vendor to work with – on the vendor’s terms.
Over the longer term, there’s another ‘outcome’ – Health data quality is about to go under the microscope, and the view may be pretty ugly. Healthplans and other payers may well have to upgrade their technology, training, and staffing to meet FAIR’s demands
Background
For those who don’t follow these things on a daily basis (hard to believe I know), some background. Years ago, the health insurance industry’s lobbying and service arm (HIAA) aggregated and compiled physician charge data as a service to its members. HIAA collected the data and fed it back to members, who then used the data to determine how much they should pay providers in specific areas for specific services (services defined by CPT codes). HIAA was taken over/disappeared about a decade ago, and Ingenix took over the aggregation and distribution of the data, which has become known as “UCR” for “Usual, Customary, and Reasonable”.
For about ten years, all was fine, at least as far as most insurers were concerned. Sure, physicians complained at times and consumers railed about the low reimbursement paid by companies citing their UCR, but the complaints didn’t really make any difference until Cuomo got involved. The problem arose when a few folks in New York complained about the amount they still owed providers after their insurers had paid their portion – according to Ingenix’ UCR. After a lengthy investigation, Cuomo found reason to charge UHC and other insurers, and that action ultimately resulted in this settlement.

Oct

How horrible is Medicare?

Posted by Joe Paduda on Tuesday, October 27th, 2009 | Comments

Depends on who you ask. If you ask group practice administrators about how Medicare compares to the private insurance industry, it is pretty darn good – in several categories, Medicare Part B is rated higher than any other large payer.
That’s partly due to the lousy performance of some of the private insurers, but administrators actually rate Medicare’s responsiveness, transparency, prompt payment, and overall administrative functions highly.
Yes, you read that correctly.
On a five-point scale, with 5 the highest rating, the much-maligned and oft-decried public plan for the aged has an overall satisfaction rating of 3.6, with Aetna at 3.1 and UnitedHealthcare bringing up the rear at 2.5.
Medicare was considered the most timely responder to inquiries, with Aetna second and UHC at the back of the pack; the same standings hold for accuracy and consistency of the payer’s responses to questions, speed of payment (Medicare 4.1, Aetna 3.5, UHC 3.1), disclosure of payment policies, and claims appeal process (Aetna was excluded from the report).
Medicare doesn’t appear on the list of questions regarding satisfaction with the contracting process, except in the ‘willingness to disclose the fee schedule’ category, where it is again rated at the top. This isn’t surprising, as CMS is not engaged in ‘2-way good-faith negotiations’ nor do practices have ‘leverage during the negotiation process’. I don’t know if responders didn’t ask about Medicare or if Medicare was ranked at all; I’ll let you know when I hear back from the Medical Group Management Association (MGMA), the organization that conducted the study.
As with any study or survey, you can find data to support any perspective.
That said, the ratings of the health plans are generally consistent with those reported by the Verden Group, an independent firm focused on helping providers deal with managed care organizations.
Aetna received top marks for clarity of communications, and was rated the most ‘provider friendly network’ by respondents to the Verden Survey in 2008.
As the public option becomes possible once more, and opponents lament the inefficiency, lousy service, and incompetence of the faceless bureaucrats that run Medicare, it is helpful to know what the people on the other end of the transaction think.
If you listen to them, on a number of fronts, Medicare’s a darn sight better than most of the private insurers they have to deal with

Oct

A Quarter Trillion Dollars – from where?

Posted by Joe Paduda on Tuesday, October 20th, 2009 | Comments

That’s what it is going to cost to ‘fix’ Medicare’s physician reimbursement problem. A bill introduced into the Senate, and now scheduled for a vote within days would eliminate the Medicare Sustainable Growth Rate (SGR) program (which determines, or is supposed to determine, what docs get paid by the Feds for procedures) while adding another quarter trillion dollars to the program’s deficit.
Really.
The Medicare SGR formula/process was set up six years ago to establish an annual budget for Medicare’s physician expenses. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for hte following year would be adjusted downward.
And for the last six years, reimbursement – according to SGR – should have been cut, but each year it was actually raised, albeit marginally. The result is a deficit that is now almost 250 billion dollars, a deficit that we’\re carrying on our books, and, by the way, is not addressed in the Senate Finance Committee’s reform bill. In order to pass, the bill, S 1776, will have to get at least 60 Senators to agree to waive a budget point of order because the measure is not offset in the budget – that is, there isn’t a cut of a quarter trillion in spending elsewhere in the budget, so the bill, which goes by the feel-good title of Medicare Physician Fairness Act of 2009 (MPFA) will add a quarter-trillion bucks to the deficit.
Physicians are, not surprisingly, all in favor of the bill – even if there are no details on what the ‘new reimbursement’ methodology or levels will be. Certainly not in the bill itself, which takes less than a minute to read. If you’re looking for what replaces SGR, and how Medicare will control costs, don’t look in the bill – it isn’t there. It looks like the docs think anything is better than the SGR; at least that’s what their thinking appears to be today.
But what about the cost? Where are we going to come up with a quarter trillion dollars, while adding another eight hundred billion or so for the big health reform bill? Does the MPFA have some magic bullet, a money tree, a golden goose provision?

Sources on Capitol Hill tell me this isn’t just a Democratic measure, but one that will likely garner perhaps a half-dozen Republicans voting ‘aye’. Both Harry Reid (D NV) and Minority leader McConnell have agreed the Senate will proceed to vote on S. 1776 next week.
Well, what can you expect from a body that voted in favor of Medicare Part D, and as a result added $8 trillion to the Medicare unfunded liability? This is a measly quarter-trillion, less than 3% of the Part D boondoggle.
Jeezus H Flippin Christmas. This is nuts.

Category: Health Care Issues