By Bruce Chernof, MD

Simplistic rhetoric that Medicare is “broken” fails to diagnose where the real challenge lies in creating enduring financial stability for this critical program. Medicare is doing exactly what it was designed to do: draw in funds from working individuals and beneficiaries to help millions of older Americans and people with disabilities pay for medical care. A fundamental problem is how Medicare pays for services and how the delivery system responds to that payment structure.

The current medical care delivery system that Medicare pays for is fragmented, uncoordinated, favors the health care provider over the person receiving care, and is exceedingly expensive. How traditional Medicare pays for services — through a fee-for-service model that values quantity of services over quality of health outcomes — validates the current delivery system. However, with growing overall health care costs, increased use of expensive high-tech medical services, and the coming of age of baby boomers, rising Medicare costs for this broken delivery system threaten to upend the program and bankrupt the nation. But there is hope: Medicare can be used to transform our broken health care system by changing the way it pays for services.

Medicare’s antiquated payment system and the inefficient health care delivery system it encourages creates an even more egregious problem for those individuals who are part of Medicare’s most expensive population: seniors who have chronic health conditions (such as heart disease, asthma or cancer) combined with difficulty with activities of daily life. They see multiple doctors, take numerous medications, and are faced with the difficult task of managing this complex array of providers, services and treatments on their own. The 15 percent of seniors who have both chronic conditions and functional impairments account for nearly one-third of total Medicare costs. Medicare spends almost three times more on these individuals than on those with chronic conditions alone.

Continue reading “A Window of Hope for Fixing Medicare”

By Elliot Fisher, MD & Jonathan Skinner

Since 1973, when Jack Wennberg published his first paper describing geographic variations in health care, researchers have argued about both the magnitude and the causes of variation.  The argument gained greater policy relevance as U.S. health care spending reached 18 percent of GDP and as evidence mounted, largely from researchers at Dartmouth, that higher spending regions were failing to achieve better outcomes.   The possibility of substantial savings not only helped to motivate reform but also raised the stakes in what had been largely an academic argument.   Some began to raise questions about the Dartmouth research.

Today, the prestigious Institute of Medicine released a committee report, led by Harvard’s Professor Joseph Newhouse and Provost Alan Garber, that weighs in on these issues.

The report, called for by the Affordable Care Act and entitled “Variation in Health Care Spending: Target Decision Making, Not Geography,” deserves a careful read. The committee of 19 distinguished academics and policy experts spent several years documenting the causes and consequences of regional variations and developing solid policy recommendations on what to do about them.  (Disclosure: We helped write a background study for the committee).

But for those trying to make health care better and more affordable, whether in Washington or in communities around the country, there are a few areas where the headlines are likely to gloss over important details in the report.

And we believe that the Committee risks throwing out the baby with the bathwater by appearing, through its choice of title, to turn its back on regional initiatives to improve both health and health care.

What the committee found

The report confirmed three core findings of Dartmouth’s research.

First, geographic variations in spending are substantial, pervasive and persistent over time — the variations are not just random noise. Second, adjusting for individuals’ age, sex, income, race, and health status attenuates these variations, but there’s still plenty that remain. Third, there is little or no correlation between spending and health care quality. The report also effectively identifies the puzzling empirical patterns that don’t fit conveniently into the Dartmouth framework, such as a lack of association between spending in commercial insurance and Medicare populations.

Continue reading “Making Sense of Geographic Variations in Health Care: the New IOM Report”

By Douglas Holtz-Eakin & Kenneth Thorpe

Every day, 10,000 people in the U.S. celebrate their 65th birthday, making each one of these seniors eligible for Medicare. The very program that gives America’s seniors access to affordable health care will turn a youngish 48 on July 30, but in a biting irony, it could go bankrupt before reaching its 65th birthday.

We cannot wish away or ignore the reality that Medicare’s Part A trust fund — the portion that pays hospital claims — is currently projected to run out of money by 2026. The good news, however, is that it is possible to put Medicare on a sustainable path if we can surmount current political hurdles.

It is no secret that Washington is better known for what it is not doing than what it is doing these days. Partisan gridlock has proved to be an insurmountable impasse for potentially worthy legislative efforts. This is especially true when it comes to making the changes needed to sustain Medicare’s future, where Washington is truly making things much harder than they need to be.

Much of the current debate has focused on reforms that would only slightly defer Medicare’s pending insolvency, with the potential for mere cost-shifting. With many of those recommendations, political disagreement is so strong that an extremely limited chance exists to pass a compromise version. However, even if enacted, these reforms would only address the symptoms of Medicare’s condition rather than the underlying problem. The result would only help Medicare limp to its 65th birthday at best.

There is a much more meaningful reform out there that addresses the underlying problem, and, surprisingly, bipartisan consensus exists around the need to end the fee-for-service system in Medicare.

The current fee-for-service payment system compensates physicians and other health care providers for each service they deliver, such as an office visit, test or other procedure. While it is critical that providers be fairly compensated, Medicare’s fee-for-service structure contributes to inefficient care that is often disconnected with actual patient outcomes. It has accelerated the program’s financial imbalance with inflationary spending that has little or no connection to helping beneficiaries get healthier.
Continue reading “Can Medicare Reach Its 65th Birthday?”

By Sean Boulger

The FTC has found that healthcare fraud has been on the rise lately, and will likely continue to increase until October. Let’s talk about how to spot the scams and avoid any problems when you’re ready to make the switch over to Obamacare.

The Obamacare Card Scam

One of the most popular healthcare scams that’s  been circulating as October 1st approaches is known as the “Obamacare card.” It’s a technique used by fraudsters to steal consumers’ credit card information and social security numbers.

How does the Obamacare card scam work? Basically, victims get a phone call from someone claiming to represent the government. The caller informs them that they need this insurance card to be eligible for coverage under the Affordable Care Act, or they may say the Obamacare card provides extra discounts. They ask for private personal information so they can send you the card.

But there’s no such thing as an Obamacare card — you’re just giving your info to scammers and identity thieves.

By Leslie Kernisan, MD

This past week, the NYT New Old Age Blog featured a post about me and my practice. Titled “Walking Away from Medicare,” it describes my decision to opt-out of Medicare and create a different kind of geriatric practice.

It has generated quite a lot of comments: 163 at my latest count. Most of them judge me pretty harshly. It seems that many people feel that I’m doing this for the money. And that I don’t care about society or older people.

Of course, if you know me or if you’ve been reading this blog, then you’ll know that nothing could be further from the truth. My practice is fairly small, in part because my goal in having this practice was to have a way to keep working with patients and families, while having the flexibility to pursue my other professional interests. Since I started the practice, I’ve spent most of my time writing for this blog, learning about the worlds of digital health and healthcare innovation, and thinking about how we can teach geriatrics directly to caregivers.

Continue reading “Not Walking Away From Medicare”

By David Mokotoff, MD

For all of those out there anticipating the 2014 official role out of Obamacare, also known as the ACA (Affordable Care Act), here is a cautionary tale.

Many years ago, as I was growing my cardiology practice, it became evident that diagnostic services for my specialty, like stress tests, echocardiograms, etc., were done less efficiently and cost more at the local hospital, then in the office. This stimulated many groups in the 1980s and 90s to install their own “ancillary” diagnostic services. Patients loved not having to deal with the long waits and higher copay prices at the hospitals. And yes, the cardiologists did increase their revenues with these tests. However, lower costs to patients, insurance companies, Medicare, and improved patient satisfaction were just as powerful a stimulus to the explosive growth of these diagnostic tests, and later even cardiac catheterization labs, when integrated into the physicians’ offices.

As the growth in testing spiraled upward, the hospital industry saw their slice of the outpatient revenue pie nosedive. Hospital lobbyists and policy-makers cried foul and complained of greed and self-referral, which they said was spiking the rapid rise in healthcare costs.

Studies laying blame on self-referrals being the major culprit for escalating healthcare costs, have been inconclusive. However, after years of lobbying and the passage of ACA, the hospital industry finally had the weight of the Federal government on their side. It did not take long for Medicare to start dialing back the reimbursements for in-office ancillary tests and procedures, and outpatient cardiac catheterization labs were one of their main targets. Hospitals had lost millions of dollars to the burgeoning growth of these labs inside the cardiologist’s office.

Our twelve-man group had a safe and successful lab for about ten years. Then after the ACA was passed, Medicare began to cut the reimbursements for global and technical fees in this area. The cuts were so Draconian that it became impossible financially to continue the service. Never mind that we could provide the same service as the hospital more efficiently, with better patient satisfaction, and at a third of the cost.

Continue reading “How Misplaced Reimbursement Incentives Drive Healthcare Costs Up”

By David M. Walker

Oct. 1, 2013 is a focus of increasing anxiety in this country. That’s the date when enrollments begin for the federally run health insurance exchanges, created under the Affordable Care Act (ACA). No one really knows what to expect, but it could be far worse than advertised —and for a reason that has more to do with the federal deficit than health care.

What’s anticipated is unsettling enough. President Obama speaks of inevitable “glitches and bumps” in the implementation. Senate Finance Committee Chairman Max Baucus (D-Mont.) sees the possibility of “a huge train wreck” if the public isn’t adequately educated and prepared. Supporters of the ACA, especially Democrats in the Congress, are nervous about taking the blame if the exchanges don’t unfold as intended.

All these worries are legitimate. The American people, already burdened by a numbingly complex, inefficient and inequitable tax system, now wonder if an increasingly government-run health care system will follow suit. Many are concerned that some employers will dump their current health care plans and pay the relatively modest fine. There’s also worry that young people will opt out of the exchanges (preferring to pay the small penalty), leaving the exchanges with a disproportionately older and sicker pool. Then there’s the very real uncertainty surrounding the ACA’s ultimate cost — illustrated by the impact of Medicare alone, which the Office of the Chief Actuary of Medicare estimates could cost cost $10 trillion more than claimed.

Amid all these concerns and speculations, almost no attention is being paid to the opportunity that the ACA’s insurance exchanges could represent for state and local governments’ retiree health care programs. It’s time to think about it because the consequences could be far-reaching.

States in a deep hole

We already know that many state and local governments are in a financial hole that keeps getting deeper. A newly released report by the U.S. Government Accountability Office (GAO) makes clear that, absent significant reforms, the fiscal picture for most state and local governments will steadily worsen through 2060. A main cause, in addition to Medicaid, is the cost of health care for state and local government retirees. These largely unfunded obligations are similar to the pressures on the federal government to fulfill its unrealistic Medicare promises.

Continue reading “When Retiree Benefits and Obamacare Collide”

By Berenson, Pronovost & Krumholz

While working to develop a broad set of outcome measures that can be the basis for attaining the goals of public accountability and information for consumer choice, Medicare should ensure that the use of performance measures supports quality improvement efforts to address important deficiencies in how care is provided, not only to Medicare beneficiaries but to all Americans.

CMS’ current focus on reducing preventable rehospitalizations within 30 days of discharge represents a timely, strategic use of performance measurement to address an evident problem where there are demonstrated approaches to achieve successful improvement [6]. Physicians and hospital clinical staff, if not necessarily hospital financial officers, generally have responded quite positively to the challenge of reducing preventable readmissions.

CMS has complemented the statutory mandate to provide financial incentives to hospitals to reduce readmission rates by developing new service codes in the Medicare physician fee schedule that provide payment to community physicians to support their enhanced role in assuring better patient transitions out of the hospital in order to reduce the likelihood of readmission [7]. CMS recently announced that after hovering between 18.5 percent and 19.5 percent for the past five years, the 30-day all-cause readmission rate for Medicare beneficiaries dropped to 17.8 percent in the final quarter of 2012 [8], simplying some early success with efforts to use performance measures as part of a broad quality improvement approach to improve a discrete and important quality and cost problem.

However, this Timely Analysis of Immediate Health Policy Issues 3“CMS’ current value-based purchasing efforts, requiring reporting on a raft of measures of varying usefulness and validity, should be replaced with the kind of strategic approach used in the national effort to reduce bloodstream infections.”approach is not without controversy.

Improvements have been modest, and some suggest that readmission rates are often outside the hospital’s control, so CMS’ new policy unfairly penalizes hospitals that treat patients who are the sickest [9]. And while readmission in surgical patients is largely related to preventable complications, readmissions in medical patients can be related to socioeconomic status. Also, some have questioned the accuracy of CMS’ seemingly straightforward readmission rate measure, finding that some hospitals reduce both admissions and readmissions—a desirable result—yet do not impact the readmission rate calculation [10]. And one of this paper’s authors (R. Berenson) has suggested a very different payment model that would reward hospital improvement rather than absolute performance, thereby addressing the reality that hospitals’ abilities to influence readmission rates do vary by factors outstside of their control [11].

Continue reading “2. Use quality measures strategically, adopting other quality improvement approaches where measures fall short.”

By Anubhav Kaul, MD and Sindhu Kubenderan

Critically ill Medicare patients, who are battling for stable health at the end of life, are victims of repeated hospitalizations, especially after being discharged to a skilled nursing facility (SNF).  The cycle of hospitalizations is an indicator of poor care coordination and discharge planning – causing the patient to get sicker after every “bounce back” to the hospital.  Total spending for SNF care was approximately $31 billion in 2011; with an estimated one in four patients being re-hospitalized within thirty days of discharge to a SNF.[1]

Each readmission leads to further test and treatments, higher health care costs, and most importantly, patient suffering.  It is hard to imagine that patients would prefer to spend their last few months of life shuttling from one healthcare setting to another and receiving aggressive interventions that have little benefit to their quality and longevity of life.  The heroic potential of medical care should not compromise the patient’s opportunity to die with dignity.   A hospital is not a place to die.

Medicare beneficiaries are eligible to receive post-acute care at SNFs, after a three day hospital admission stay.  SNFs provide skilled services such as post-medical or post-surgical rehabilitation, wound care, intravenous medication and necessities that support basic activities of daily living.  Medicare Part A covers the cost of SNF services for a maximum of 100 days, with a co-payment of $148/day assessed to the patient after the 20^th day.  If a patient stops receiving skilled care for more than 30 days, then a new three day hospital stay is required to qualify for the allotted SNF care days that remain on the original 100 day benefit.  However, if the patient stops receiving care for at least 60 days in a row, then the patient is eligible for a new 100 day benefit period after the required three day hospital admission.[1]  It is evident that the eligibility for the Medicare SNF benefit is dependent on hospitalizations – many of which may be a formality and a source of unnecessary costs.

Continue reading “The Bounce Back Effect”

By Richard Kaplan

The Sound Bite:

Increased longevity costs will bankrupt medicare.

Fact or Fiction?

This is partly fact, partly fiction. Medicare entitlement begins when a person ages in at 65, however just because beneficiaries are living longer does not necessarily mean higher Medicare costs.

The customary formulation of this myth is that Medicare is doomed by its own success in keeping its beneficiaries alive. Not only will the ranks of the program’s beneficiaries increase as the vaunted baby boom generation reaches the statutory age of eligibility, but because people are staying alive longer, Medicare’s costs will explode. The first part of this contention is indisputably true: entitlement to Medicare occurs when a person reaches age sixty-five, and the baby boom generation that is generally calibrated as starting in 1946 has arrived at that threshold. As a result, additional Medicare beneficiaries enter that program every day, and because the baby boom generation dwarfs any preceding age cohort, it is highly likely that more beneficiaries will be added to the program than are lost as older beneficiaries pass away. Consequently, the number of Medicare beneficiaries will inexorably increase over the next decade or so. Ceteris paribus, more beneficiaries mean higher aggregate costs.

The second part of the contention, however, is myth. Just because today’s Medicare beneficiaries live longer than did their predecessors does not necessarily translate into higher costs for the Medicare program. The source of this apparently counterintuitive proposition is the panoply of programmatic limitations that Medicare imposes on its coverages, regarding the myth that Medicare pays for long-term care. More specifically, beneficiaries who live longer typically do incur higher cumulative health care costs over their post-sixty-five lifetimes, but many of those costs are not borne by the Medicare program. This phenomenon is well illustrated by the following graph from an important analysis that appeared in The New England Journal of Medicine:

FIGURE 1: Cumulative Health Care Expenditures From the Age of 65 Years Until Death, According to the Type of Health Service and the Age of Death

Continue reading “Fact Check:Will Increased Longevity Bring Down Medicare?”