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cindywilliams

Controlling the Medicare Budget – Two Infeasible Proposals

Apr 20, 2011• 115

By ROGER COLLIER

How to slow Medicare’s escalating costs has been the big health care policy issue this month, with Republicans and Democrats offering competing proposals, each part of broader plans for reducing the federal deficit—projected to be $1.5 trillion this year, with the government borrowing 40 cents for every dollar it spends.

Unfortunately, neither the Medicare proposal of Representative Paul Ryan’s House Budget Committee, nor that offered in response by President Obama, can be considered realistic.

Both proposals do have some merits. Representative Ryan’s plan for switching Medicare to a quasi-voucher premium support program in which beneficiaries would pay part of the premium for their choice of health plan could make seniors more cost conscious and introduce more competition among insurers. President Obama’s proposed strengthening of the Independent Payment Advisory Board provision of the ACA by lowering the trigger point for IPAB action would force further efforts to reduce costs, while doing much to remove Medicare policy from lobbyist-vulnerable political considerations. Both, if implemented, would effectively guarantee that federal Medicare expenditures would drop dramatically from current projections.

Neither, however, has any chance of enactment. The Congressional Budget Office’s projection of the average 65-year-old paying more than two-thirds of the cost of Medicare coverage by 2030—and more than twice as much as under the present program—almost certainly dooms Representative Ryan’s proposal. (The CBO’s assumption of the continuation of the differential between traditional Medicare and insurers’ equivalent offerings can be questioned, but it’s the forecast of the unfortunate 65-year-old’s 68 percent share of the tab that will resonate for seniors, their lobbyists, and their political supporters.)Continue reading…

Stubborn

Apr 20, 2011• 6

By LISA SUENNEN

This week I had the occasion to be at UCLA for a very interesting meeting (more on that in a future post). As I arrived at LAX to return my rental car, I drove past a huge billboard at the corner of 96^th Avenue and Airport Blvd (just across from the Renaissance Hotel) that made me do a double take. The billboard, said in gigantic white letters on a red background: “This year thousands of men will die from stubbornness.”

Naturally, my first thought was this: Why thousands? If men can die from stubbornness, aren’t they all doomed? If stubbornness is the proximate cause of death, we are looking at a wipe-out of society on a pretty imminent basis. The bad news: no more future generations. The good news: no one will hassle us women about buying too many shoes and all the top-paying private equity jobs will soon be available.

So figuring that I had misread this billboard, I actually made a U-turn and drove past it again (not sure what made me do it: alarm or wishful thinking). What I noticed on my second pass was the very fine print, which said, “Learn the preventative medical tests you need. AHRQ.gov.”

The billboard is apparently part of an U.S. Government Agency for Healthcare Research and Quality Department ad campaign targeted to get men to stop avoiding the doctor and to go and get the medical screening tests recommended each year, such as those for cholesterol, diabetes, high blood pressure, cancer and other illnesses.Continue reading…

ACO Fairy Tale Faces a Rumpelstiltskin Moment

Apr 19, 2011• 3

By MICHAEL MILLENSON

The ACO fairy tale is drawing perilously close to an unhappy ending.

The government’s long-awaited draft regulations on Accountable Care Organizations have brought a dose of ugly reality to a concept that’s always seemed coated with a patina of pixie dust. Unless those regs are substantially changed before the clock strikes Jan. 1, 2012 — the statutory date for ACO implementation — Cinderella’s going to turn back into a scullery maid and the horse-drawn carriage transporting her to the Health System Transformation Ball will be revealed as nothing more than four mice and a pumpkin.

The essence of the ACO concept is using financial incentives to reward doctors and hospitals for redesigning care processes to provide “high quality and efficient service delivery,” in the words of the Patient Protection and Affordable Care Act. As I wrote last fall, ACOs have been the one reform beloved by Republicans and Democrats; doctor groups and insurance companies; policy wonks and profit-seeking capitalists. This unusual unanimity was due in part to a lack of specifics that enabled every stakeholder to gaze upon the ACO and see reflected their very own version of Prince Charming.

Conservatives hail the ACO as marketplace medicine, while liberals focus on organized systems of care replacing fee-for-service chaos. Providers applaud a reform that places them at its center, while health plans know that providers asked to bear financial risk — if an ACO doesn’t measure up, the government won’t pay up — will seek out actuarial experts like them as partners. ACOs also are expected to require the products and services sold by a host of consultants and entrepreneurs.Continue reading…

Bureaucrats vs. Entrepreneurs

Apr 19, 2011• 17

By JOHN GOODMAN

I used to think the biggest obstacle to getting agreement about health care reform was ideology (socialism vs. capitalism). Then I decided it was sociology (engineers vs. economists). I now am inclined to believe it is psychology (bureaucrats vs. entrepreneurs).

I came to this realization after reading through a long list of comments to a Health Alert I posted the other day about a health care entrepreneur (more on that below).

The entrepreneurial approach is the way we are trying to solve big problems in many other fields. Take the Ansari X Prize, established by citizen-astronaut Anousheh Ansari and her husband, Amir. They awarded $10 million to the first group to build a privately-funded spacecraft capable of carrying three people 100 kilometers above the earth’s surface twice within two weeks. Interestingly, 26 teams from seven nations spent more than $100 million competing to win the prize.Continue reading…

Rest in Peace: Personal Health Records (PHRs)

Apr 18, 2011• 17

By JOHN M. GROHOL

While doing some research the other day on personal health records (PHRs), I came across this article, describing Revolution Health’s announcement — without much media attention — about dropping its PHR at the beginning of 2010. (Disclosure: I worked for Revolution Health in 2005-2006, and now have a business relationship with the company that acquired them, Everyday Health.)

The most interesting statement I found in this brief news article was, “The e-mail did not indicate why the company decided to terminate its PHR service. The company advised users to download their PHR as a .pdf file and save the document for their records.”

Ah, a PDF. Yes, that’ll make it extremely easy to get that data into some other PHR (sarcasm alert).

And that led me to understand the underlying problem with all PHRs today, and the problem PHRs have always had — nobody trusts the companies who offer them, and few people understand what they are or why they should care.

I kind of chuckle when I hear a company describe that a part of its business strategy is the personal health record. I first heard of a PHR back in 1999, when I worked for drkoop.com, at that time competing for the #1 spot as the leading consumer health website with WebMD (drkoop.com lost). Drkoop.com’s management had this brilliant idea that everybody would want — and pay for — a personal health record online. In fact, this was the founding principle of the company that eventually became drkoop.com (as seen in one of their SEC 10k filings from that time):

To say that the idea of a personal health record (or personal medical record, as they called it) has been kicking around the Internet for a long time would be an understatement. (Drkoop.com dropped the idea altogether after a falling out with their PHR development partner, HealthMagic.)

Our company was founded in July 1997 as Personal Medical Records, Inc. During 1997 our primary operating activities related to the development of software for Dr. Koop’s Personal Medical Record System.

The 100% Estate Tax

Apr 18, 2011• 24

By MERRILL GOOZNER

There is a dangerous but beguiling econometric logic behind the idea that turning Medicare over to the insurance industry will lower health care costs. It’s an idea that could catch on if the general public became convinced that there is nothing we can do acting together as a society to lower the cost of care. Only the market can do it, the Republicans claim. Force seniors (or the poor or anyone, for that matter) to have more skin in the game, and they’ll use their clout as consumers to separate the wheat from chaff in modern medicine. Expensive, wasteful tests, procedures, and drugs will wither for lack of customers.

Democrats, in attacking the Republican plan that passed the House yesterday, relentlessly hammered away at the cost to future seniors of having “more skin in the game.” Two-thirds of the cost of care within a decade of Medicare privatization in 2023 will fall on them. But the 2030s must seem very far away to people in their 40s and 50s. Isn’t it likely that they won’t think about that far-off time, but instead grab on to the promise of future lower costs, which, let’s be frank, the Affordable Care Act (health care reform) may not be able to achieve.

So here’s the real argument young and middle-aged people need to hear, and the real reason why the “more skin in the game” argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That’s why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, Financial Times, The American Prospect and The Washington Post. You can read more pieces by Merrill at GoozNews, where this post first appeared.

Summary of CMS Proposed Rule on Accountable Care Organizations

Apr 18, 2011• 1

By JORDAN T. COHEN

(Second in a series. See Part 1.)

CMS recently released the proposed rule that will regulate PPACA’s Medicare Shared Savings Program (MSSP). The MSSP relies on the accountable care organization (ACO) model in order to generate and distribute savings. HealthReformWatch.com has discussed the general framework for ACOs before. Clocking in at nearly 500 hundred pages, the proposed rule helps to flesh out what was largely a philosophical exercise in cooperative health care delivery. Below are what I believe to be a number of key pieces of the proposed rule.

Proposed Rule Highlights

The 2 ACO Models – (425.7)

There will be two ACO models. The choice between models appears to be largely geared towards minimizing ACO risk while hospitals and providers are first bringing their ACOs online.

One-Sided Model: A one-sided ACO shares in the savings, but is not on the hook to share in any of the losses (i.e., costs surpassing the ACO’s benchmark as determined by CMS, see below).
Two-Sided Model: A two-sided ACO shares in both the savings as well as the losses.

Basic Time frame and Structure

Not surprisingly, ACO hopefuls must form an agreement with CMS directly. ACOs under the MSSP must last for not less than three years after the application has been approved. (425.18). The performance period will be 12 months. The ACO must have at least 5,000 beneficiaries, and must include a sufficient number of primary care physicians to treat the ACO beneficiary population.Continue reading…

Did Nine Patients Have to Die?

Apr 18, 2011• 2

By MICHAEL KIRSCH, MD

Recently, nine patients died in Alabama when they received intravenous nutrition that was contaminated with deadly bacteria. This type of nutrition is called total parenteral nutrition, or TPN, and is used to nourish patients by vein when their digestive systems are not functioning properly. It is a milestone achievement in medicine and saves and maintains lives every day.

What went wrong? How did an instrument of healing become death by lethal injection? What is the lesson that can emerge from this unimaginable horror?

This tragedy represents that most feared ‘never event’ that can ever occur – death by friendly fire. No survivors. Contrast this with many other medical ‘never events’ as defined by the Centers for Medicare and Medicaid Services, such as post-operative infections, development of bed sores in the hospital or wrong-site surgery. Under the ‘never events’ program, hospitals will be financially penalized if a listed event occurs. Many physicians and hospitals are concerned that there will be a ‘never events’ mission creep with new outcomes added to the list that don’t belong there. Medical complications, which are unavoidable, may soon be defined as ‘never events’.

Do we need a new category of ‘never ever ever events’ to include those that lead to fatal outcomes?

The facts of the Alabama deaths have started to emerge. Apparently, a water faucet in the pharmacy was contaminated. Protocols and processes are violated every day in all spheres of professional life; and we usually get away with them. The absence of serious consequences breeds complacency, which is shattered by an occasional tragedy. Isn’t it after a horrible traffic accident that a local government decides to erect street lights that were requested by local residents for years? I read earlier today that the Federal Aviation Administration is requiring extensive inspections of a few hundred airplanes when small cracks were discovered in a few of them. This followed a near disaster when a 5 foot hole burst open in the roof of an airplane during flight. The plane landed and all survived. Of course, a very different outcome was possible.

Three Formulas

Apr 18, 2011• 51

By MERRILL GOOZNER

During the last election campaign, Tea Party-backed Republicans across the country rode to power on a tidal wave of advertising attacking health care reform as a cut in Medicare. It is. If efficiency programs like the accountable care organizations being formed across the country don’t hold down spending by about $500 billion over the next decade, an Independent Payments Advisory Board would make recommendations for holding growth in Medicare spending to the growth in the domestic economy (GDP) plus one percentage point.

In most years when the economy is humming along, that would be about 4 percent. Over the past decade, health care spending for seniors grew at about 6 to 7 percent — the same as health care spending for the rest of the population. So if the Medicare delivery system reforms don’t work, Congress will either have to adopt the IPAB’s recommendations or institute cuts of its own to ratchet down spending.

This week, President Obama upped the ante to meet his budget deficit reduction targets over the next decade. Medicare spending would be held to GDP plus 0.5 percent, another approximately $300 billion in cuts. About $50 billion would come from eliminating unnecessary errors and hospital re-admissions. The rest was unexplained.Continue reading…

Fostering Innovation in Healthcare IT

Apr 18, 2011

By JOHN MOORE

As in most sectors, innovation in healthcare IT (HIT) is by and large incremental. A tweak here and added feature there to some existing application, e.g., what we are seeing today from EHR vendors as they strive to meet meaningful use criteria. Occasionally, we may see a vendor develop something new and novel – one might put porting their EHR application onto an iPad as an example of such – but really, is that innovation or just an attempt to meet existing customer needs by tweaking software to meet the design criteria of a new form factor?

Innovation, true innovation that breaks from existing norms is exceedingly rare. Even in an industry sector such as HIT where we are seeing an unprecedented amount of money being spent, it has been difficult for this analyst firm to find real innovation that gets us excited and thinking beyond the limited constructs that seem to keep this industry perpetually incased, like an insect, in amber. Part of the reason lies with tradition (culture), another part with entrenched interests (existing/legacy IT vendors) and arguably the most important business models.

But that may begin to change as nothing elicits innovation more than a substantial change to core models of doing business. The Center for Medicare and Medicaid Services (CMS) recently released proposed rules for the establishment of Accountable Care Organizations (ACOs), which is a move towards bundled payments. Here in Massachusetts, the Governor announced introduced a bill as well to “expand the use of alternative payments and significantly reduce fee-for-service payments by end of 2015.” It is actions such as these that will open the floodgates ushering in some truly innovative approaches to optimizing the delivery of quality care.Continue reading…