GAO

“This GAO report sheds new light on the behavior of physicians reaping personal gain by referring patients to services at locations where they have an ownership interest. The analysis suggests that financial incentives for self-referring providers is likely a major factor driving the increase in referrals for these services. As Congress looks to reign in unnecessary spending, my colleagues and I should explore this area in greater depth,” Rep. Waxman said.

Explore you should, Representative Waxman. For if you look beyond the GAO’s conclusions, you will find that what we really need are bundled payments and a regulatory environment that supports, not inhibits, innovation to improve high-value health care.

Just because physicians have come together to manage their own futures doesn’t mean that their intent is to collude and increase costs. Could it not also indicate that health-care professionals have joined together to provide better care in a more efficient manner that reduces waste and unnecessary services to save the system money?
Continue reading “Physician Collaboration Isn’t Collusion to Increase Costs”

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In 2009, Rick Scott founded Conservatives for Patients’ Rights, a health care pressure group opposed to President Obama’s health reforms.

In 2010, Scott ran for governor of Florida on a mission to repeal Obamacare.

In 2012, Scott … will work to implement Obamacare.

For some conservatives, it’s a shocking reversal. Leaders of Americans for Prosperity, the conservative organization backed by the influential Koch brothers, were publicly disappointed in the Florida governor — who not so long ago said the Affordable Care Act was “the biggest job killer in the history of the country.”

Now, it will be Scott’s job to help implement it.

Changing Tune

Given his prominence, Scott’s move from Obamacare opponent to grudging supporter may be the biggest symbolic shift on the law since its passage.

The Florida governor was reportedly pressured by state legislators to negotiate with federal officials over the ACA, once November’s election made clear that Obamacare was here to stay.

But Scott won’t be the last GOP official to change his tune. More health care groups in other Republican-led states are putting similar pressure on their leaders to opt into the ACA’s Medicaid expansion, in hopes of securing additional dollars for providers.

Continue reading “What the Rick Scott Decision Says About the Future of Health Care in the U.S.”

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The New York Times and other media outlets are trumpeting a new GAO report that blasts an ongoing $8 billion Medicare demonstration project. CMS has put the money towards a new pay-for-performance scheme for Medicare Advantage plans. The media have focused their attention on part of the GAO study describing how most of the money will go to average performing plans (those receiving as few as three “stars” out of a possible five), with 90 percent of plans receiving some sort of bonus.

If that were the gist of the GAO complaint, then the GAO would have been the ones guilty of wasting taxpayer money for writing a useless report. But the key elements of the GAO report pertain to a different matter: will the demonstration allow CMS to determine whether the new pay-for-performance scheme is superior to the existing scheme? Here the GAO report gets bogged down in the details of research methodology. The media understandably got lost in this discussion and have given this part of the report short shrift. As a result, I expect politicians to blast CMS for “giving $8 billion to bad health plans” and other stuff of nonsense.

Let me explain why it is pointless to focus on how the money is distributed among Medicare Advantage plans. The purpose of any pay-for-performance scheme is to provide incentives for improving quality. (A scheme that rewards the best plans but does nothing to alter the status quo really is a waste of money.) Some of the comments by the GAO and aped by the media would have you believe that the best way to improve quality is to reward the top achievers. Tell this to parents of a D student who would be grateful to see their child get C’s. Should they tell their child “we will take you on a nice vacation but only if you get all A’s?” Talk about killing motivation.

Continue reading “GAO and CMS Spar over Research Methods: Media (as usual) Miss the Boat”

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The Government Accountability Office (GAO) recently released a report that cites “substantial variation” in the prices paid for implantable medical devices in the Medicare program, and a lack of robust data needed to properly compare the prices paid for these devices across surveyed hospitals. A key driver of both of these findings is the existence of confidentiality clauses in medical device purchasing contracts that prohibit hospitals from sharing prices with third parties, including physicians, the health plans that pay for these devices, and patients.

It was with a sense of déjà-vu that I read this report; in 2010, UC Berkeley professor James Robinson and I published a series of briefs looking at variation in implantable device prices in California hospitals as part of a joint Value-Based Purchasing of Medical Devices project between the Berkeley Center for Health Technology and the Integrated Healthcare Association (IHA). This project included data collection on device costs, total surgical costs, complications, and length of stay for seven orthopedic and cardiac procedures in 45 California hospitals.

The data, as well as a series of IHA-sponsored roundtable conversations with stakeholders, found the same thing that the GAO report finds: a lack of transparency in device prices, sometimes driven by clauses that prohibit hospitals from disclosing the prices paid for devices, a lack of alignment between hospitals and the physicians practicing within their facilities, and very substantial variation in both the prices paid for devices and the total costs of the procedures used to implant these devices. For example, the average cost hospitals paid for knee implants ranged from $3,408 to $10,830, and the average paid for implantable cardioverter-defibrillators ranged from $19,578 to $35,916. There was also a substantial amount of within-hospital variation in device prices.

Continue reading “Price Variation and Confidentiality in the Market for Medical Devices”

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