A number of pundits are citing the systemic failure of ACOs, after additional Pioneer ACOs announced withdrawal from the program – Where do you weigh in on the prognosis for Medicare and Commercial ACOs over the next several years?”
Peter R. Kongstvedt
Whoever thought that by themselves, ACOs would successfully address the problem(s) of [cost] [access] [care coordination] [outcomes] [scurvy] [Sonny Crockett's mullet in Miami Vice Season 4]? The entire history of managed health care is a long parade of innovations that were going to be “the answer” to at least the first four choices above (Vitamin C can cure #5 but sadly there is no cure for #6). Highly praised by pundits who jump in front of the parade and declare themselves to be leaders, each ends up having a place, but only a place, in addressing our problematic health system.
The reasons that each new innovative “fix” end up helping a little but not occupying the center vary, but the one thing they all have in common is that the new thing must still compete with the old thing, and the old thing is there because we want it there, or at least some of us do. The old thing in the case of ACOs is the existing payment system in Medicare and by extension, our healthcare system overall because for all the organizational requirements, ACOs are a payment methodology.
Continue reading “ACOs Are Doomed / No They’re Not”
Filed Under: Tech, THCB
Tagged: Accountable Care Organizations, Care, Care coordination, Cyndy Nayer, Medicare Advantage, Network, Pioneer ACOs, PPO, Quality, Sonny Crockett's Mullet, Vince Kuraitis
Nov 4, 2014
Despite the political angst, the doomsday predictions and a very rocky launch, the Affordable Care Act has enabled more than 8 million Americans to acquire insurance coverage through the public exchanges.
Health insurance increases the probability that patients will access the medical care they need. And my colleagues at Kaiser Permanente are already seeing some positive stories emerging as a result.
They’ve shared dozens of stories with me about patients with undiagnosed medical problems who are now receiving treatment. In particular, I enjoyed hearing about two new patients in Northern California who’ve benefited from being insured.
They came in with life-threatening cancer: One, a mother with a uterine malignancy, and the other, a young man with a testicular mass. Both had gone years without medical care because they were unable to afford it. And now – thanks to medical coverage, early diagnosis and successful treatment – both will live.
But expanding access to health insurance is only the first step. Improving health care delivery is the next step in this journey.With all the acrimony in our nation’s capital, bipartisan agreements are few and far between.
Medicare Advantage may be the one platform on which both parties can stand. Examining this program and why it has proven so successful offers us insights into where we as a nation might choose to go.
Medicare Advantage: A History Born from Necessity
Since the Medicare program was created in 1965, the federal government has been insuring citizens over the age of 65.
This original form of Medicare, called traditional Medicare, was and remains a “fee-for-service” program. That means the Centers for Medicare and Medicaid Services (CMS) – the agency that administers the Medicare program – pays individual physicians for the services they provide to Medicare beneficiaries.
Think of a service as an office visit, a test or a procedure. The price for those services is determined by the agency’s Physician Fee Schedule.
Beginning in 1978, Medicare beneficiaries had a second option. They could enroll in private Health Maintenance Organizations (HMOs) under a “risk contract” between CMS and the HMOs.
Continue reading “Medicare Advantage: Moving toward a Better Model for American Health Care”
Filed Under: THCB, The Business of Health Care
Tagged: Centers for Medicare & Medicaid, HMOs, Medicare Advantage, physician fee schedule, Robert Pearl, The ACA
May 8, 2014
Late last Friday after the financial markets closed, the Centers for Medicare and Medicaid Services (CMS) issued its annual notice of 2015 payments to private insurers who sell Medicare Advantage plans to seniors. Its determination that a 3.55% cut is in order was spelled out in a complicated 148-page explanation of its methodology.
The net impact of changes to “coding intensity” adjusted for geographic variation essentially means insurance companies would see a 1.9% cut in their payments per Avalere’s calculations.
But there’s more to the story than the Medicare Advantage payment adjustment. The difference between last year’s Round One rate negotiation and this year’s Round Two is significant.
Medicare Advantage (MA) plans enroll 28% of seniors. It is popular: enrollment increased from 5.3 million in 20104 to 16 million today—a 9% increase last year alone. MA plans are required to offer a benefit “package” at least equal to Medicare’s covering everything Medicare allows, but not necessarily in the same way.
Continue reading “Medicare Advantage Round Two: Negotiation Will Not Be the Same”
Filed Under: The Business of Health Care
Tagged: CMS, Health Plans, Insurers, Medicare, Medicare Advantage, Paul Keckley
Feb 28, 2014
After half a lifetime of following the Medicare program, on October 1, 2013, I became a Medicare beneficiary. I turned 65 on October 31. I’m part of the leading edge of baby boomers joining the program, ten thousand a day. We’re going to change this program, both by how we use it and what we expect its keepers in Washington to do to improve it.
Here are some reflections upon joining Medicare.
1-Don’t Refer to Me as “Retired”, Please. I’m still working (hard) and paying Medicare as well as income taxes taxes every month. Like most of my fellow boomers, I lack the financial cushion I want in order to stop working. Additionally, for what it’s worth, like all too many boomers, I don’t know how not to work. So my main goal, which is closely aligned with the country’s, is to stay healthy enough to keep working long enough to be able to retire comfortably when I wish to do so.
I plan on staying a long way away from the expensive parts of our healthcare system, if only to avoid being inadvertently harmed. Rest assured that if I know I’m dying, you won’t find me in a hospital if I have any say in the matter.
I don’t consider myself “entitled” to Medicare, or to subsidies from younger people. I’m paying more than $400 a month in Part B fees and the special assessment on Part D that got tacked on in the Affordable Care Act. After what I’ve already paid in, that’s not exactly a flaming bargain. I’ve paid Medicare enough over my working lifetime to buy a house, and will pay more Medicare taxes for years to come for each month that I work. Nothing makes me angrier than the suggestion that I’m somehow sponging off my kids by participating in Medicare.
2- The Regular Medicare Program is a Relic. There is a lot of political fog enshrouding Medicare. Personally, I could care less about the politics of this program. The big choice was fairly cut and dried: either regular Medicare plus a supplemental plan or Medicare Advantage. After logging onto Medicare.gov, I found the regular Medicare benefit completely incomprehensible- chopped up into Parts that may have made legislative sense in the 1960’s. If you included the supplemental coverage, there were just too many moving parts that didn’t seem to fit together into a unified benefit.
So I chose Medicare Advantage. It’s simple to understand and user-friendly, and looks a lot like my previous coverage. My doctor is a participating physician as is my beloved community hospital, Martha Jefferson. And the price is right: zero dollars after my Part B premium. More than 40% of boomers are picking Medicare Advantage, largely because it’s easy to use and remains a bargain. It will eventually be half the program.
Continue reading “What I Expect From the Medicare Program”
Filed Under: OP-ED, THCB
Tagged: Jeff Goldsmith, Medicare, Medicare Advantage, Medicare B
Nov 16, 2013
I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.
As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try to make sense of it.
This blog post is quite long because the subject matter is complicated. If you want to cut to the chase, see my conclusion and summary at the end of this post.
Allow me to list a few of the questions people are asking and give you my take on it.
Will current seniors suffer under the Romney-Ryan Medicare plan?
No. Let me start by saying something that will likely surprise you. If I could be king for a day, I would prohibit anyone over the age of 60 from voting in this election. This election is really about the future and the big decisions on the table are about the long-term government spending and entitlement issues that should be made by younger voters who will have to pay for them and will benefit or suffer from them.
Those in their 60s and older are almost surely going to cruise to the end with the benefits they now have.
Whether its Obama’s Medicare plan, based heavily on the Medicare cost control board imbedded in his health reform bill (which doesn’t begin to impact hospital costs until 2020), or the Romney/Ryan Medicare premium support plan (that has no effect on anyone now over the age of 55), today’s seniors’ benefits are insulated from this issue.
Continue reading “All Hell Hath Broken Loose”
Filed Under: OP-ED, THCB
Tagged: 2012 Election, Accountable Care Organizations, entitlements, Market Freedom, Medicare, Medicare Advantage, Medicare Prescription Drug Plan, Mitt Romney, national budget, Paul Ryan, President Obama, Risk adjustment, Robert Laszweski, Senior Care, The ACA
Aug 21, 2012
Rewarding quality health plans is an admirable goal for the Medicare Advantage program. Unfortunately, the current system of linking star ratings to bonus payments and rebate adjustments instituted by the Patient Protection and Affordable Care Act (and expanded by the CMS Quality Bonus Payment Demonstration) fails to achieve that goal, and depending on its specific implementation, may even be counterproductive.
Because criteria for evaluation are not published until after the period for which performance will be evaluated, there is no possibility that MA plans will be able to improve their performance to achieve the goals CMS intends to incentivize. Any adjustment plans will be able to make to their bids or plan offerings would have to be aimed at increasing enrollment in counties with the highest bonuses and rebates based on data from performance in previous years, possibly at the expense of improving their performance in the future.
The system rewards beneficiaries for choosing those plans favored by the selected CMS criteria, rather than the plans that best meet their needs. In effect patients whose preferences, health status, and even counties of residence, don’t match the CMS model of a highly rated plan will be at a disadvantage. Simultaneously, the system will likely reduce the scope of choice available to MA-eligible beneficiaries, and reduce competition among MA plans.
Finally, the system rewards beneficiaries for living in counties with low poverty rates (since relatively wealthier counties tend to have more plans with higher ratings), thus adversely impacting poor beneficiaries even more than non-poor beneficiaries.
These impacts are inconsistent with the overall policy purpose. The goal of incentivizing quality health plans is legitimate and admirable; that goal will not be achieved by the rating structure currently being put into place.
Continue reading “Medicare Advantage Star Ratings: Detaching Pay from Performance”
Filed Under: Uncategorized
Tagged: American Action Forum, bonus payments, CMS, Douglas Holtz-Eakin, Medicare Advantage, Pay for Performance, Quality, The ACA
May 23, 2012
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”
Filed Under: Uncategorized
Tagged: David Dranove, GAO, Medicare Advantage, Pay for Performance
Apr 24, 2012
Imagine a Medicare Advantage (MA) policy which increases the quality of health care for seniors, saves the government money, brings MA to the few remaining places that don’t have it, and puts checks in the hands of senior citizens. What you are about to read should do all that, in theory. However, I’m sure there are practical issues that I am overlooking, and I am hoping to attract comments noting those issues that, as Woody Allen once said, can take this from being a notion to an idea, and eventually a concept.
First, each county would have a “default” plan that would automatically enroll people on their 65th birthday, rather than have the traditional plan serve as the default option. (Those of us already in an HMO with a Medicare option can stay in it, seamlessly, rather than join the default plan.) Anyone could still opt out into the traditional plan or another MA plan, of course, at any time.
The default plan is chosen based partly on its Stars rating, but partly on a bid process, in which plans offer to pay the government for the right to be this default plan. The payment would be substantial for three reasons:
1. In some highly populous counties, MA is profitable enough to support fifteen or twenty plans, far more than would survive in a competitive market with market-based pricing. Much of this “excess profit” would be bid back to the government by the default plan, in exchange for access to many more enrollees;
2. Member acquisition costs for the default (“opt-out”) plan would be a small fraction of the $500- $1000 that a new member costs in today’s opt-in MA environment. Much of this savings would be included in the bid;
3. The bid would be calculated not based on just on one year’s profit, but rather on the expected lifetime value of a member, taking into account projected member retention and any scheduled or anticipated relative reductions in reimbursement.
Continue reading “Medicare Advantage Quality, Savings, Access and Satisfaction: Can We Have It All?”
Filed Under: THCB
Tagged: AARP, Medicare Advantage
Dec 13, 2011
Most of us breathe a sigh of relief when we reach Medicare age because we think we will have coverage until we die. And we will. But we may not get all the options we want. Medicare Open Enrollment period officially opens Saturday October 15th, but the insurance companies that administer the Medicare program announced their 2012 plans and rates this past weekend. There was good news and bad news.
Whether you are 16 or 66, getting dumped is a humiliating and frustrating experience. Last week, some residents of my county received a letter from their insurance company saying that their Medicare managed care plan will no longer be offered here next year. Yep. Dumped by Anthem Blue Cross.
In some places around the country, there will be no real choice of managed care options in 2012. In my county only one managed care plan will be offered and it will cost $192 a month. Other counties that Anthem dumped will be left without any managed care plans at all. It’s not just California, though. Medicare beneficiaries in Virginia saw Optima drop out of the market for 2012, citing $20 million losses for that managed care business, and 500,000 enrollees in states offering Coventry or WellCare will also see their managed care options reduced.
Will more insurance companies drop their managed care business when they realize they cannot continue to make the same profits they have been making? Perhaps. Even though the number of plans dropping out of the market is small this year, is it a national trend? Actually, so far it is nothing like a national trend.
In fact, earlier this month, federal officials said they expected a 10 percent increase in enrollment in Medicare Advantage plans, and they said premiums will be 4 percent lower on average in 2012 with benefits remaining consistent with 2011 plans. Which is all well and good if you live in a place where there is still a lot of competition for you as a Medicare beneficiary. But if you do not?
Continue reading “Medicare’s Wild Ride”
Filed Under: OP-ED, THCB
Tagged: Medicare Advantage, Medicare Open Enrollment
Oct 14, 2011
The Obama administration has told us how it intends to change Medicare many times and in many places.
It wants to replace fragmented decision making by independent doctors with coordinated care delivered by doctors working in teams, connected to a medical home. It wants Medicare to purchase quality, not quantity. It wants decisions to be evidence-based. It wants electronic records in order to standardize care and reduce errors.
So how does the administration plan to get all this done? It plans to spend hundreds of millions of dollars on pilot programs to try all these ideas out and then ……
Wait a minute. Aren’t these ideas already being tried out somewhere? Yes. In Medicare, as a matter of fact. How well are they working? As a long-time critic of managed care, I admit the results look pretty good.
Continue reading “Health Policy Schizophrenia”
Filed Under: THCB
Tagged: Accountable Care Organizations, John Goodman, Medicare, Medicare Advantage
Aug 22, 2011