Category: Uncategorized

A Doctor’s Vision for Medicare

Oct 21, 2011• 22

By H. Gilbert Welch, MD

Everybody knows what the federal budget’s long-term problem is. The president knows. The Republicans in Congress know. The Democrats in Congress know. The policy community knows. You know.

It’s Medicare.

I am a physician who has been studying Medicare data throughout my professional life. But now that I’m closing in on becoming a beneficiary, I am thinking more about what I’d like my Medicare program to look like.

My Medicare would be guided by three basic principles:

It should not bankrupt our children. Let’s be clear: Medicare is rightly the central source of concern in the deficit debate. Its expenditures are totally out of control, and represent a huge income transfer to the elderly from their children. It’s a program crying out for a budget.

So let’s pick a number — more specifically, a proportion of total economic output — to cap Medicare. Now the number is 3% to 4% of GDP. We can live with that. Distribute it to geographic regions based simply on how many beneficiaries live there. Expect howls of protest: Urban areas will complain their labor costs are higher; rural areas will complain they cannot achieve the same economies of scale. And everybody will argue that their patients are sicker.

Ignore them all: Make it a block-grant program. Sure, this raises other issues, but you get the principle.

For those who view this as a tea party solution, consider this: I drive a 1999 Volvo and live in Vermont — that should tell you something.

It should not waste money on low-yield medicine. I don’t change my Volvo’s oil every 1,500 miles, even though some mechanics might argue that it would be better for its engine. Nor do I buy new tires every 10,000 miles, even though doing so would arguably make my car safer. But in Medicare (as well as the rest of U.S. medical care) such low-yield interventions are routine.

Want Better Treatment From Your Doctor? Be Likeable

Oct 20, 2011• 7

By BRIAN GOLDMAN, MD

Whether at work or at home, pleasantries can make life a lot easier.

And based on the results of a study published in the October 2011 issue of the journal Pain, the same may be true in the doctor’s office.

Researchers from Ghent University in Belgium took forty men and women (seventeen men and twenty three women) – none of whom were health professionals – and showed them photos of six different patients labeled two each with negative traits (e.g. egoistical, hypocritical, or arrogant), neutral traits (e.g. reserved, or conventional), or positive traits (e.g. faithful, honest, or friendly). After viewing the photos, participants watched short videos of the same six patients undergoing a standard physiotherapy assessment for shoulder pain. Then they were asked to rate the level of pain the patients were experiencing while undergoing the assessment.

Here’s where it gets interesting. If two patients in the study had identical levels of shoulder pain, the study participants concluded that the patient with the positive attitude had worse pain than the one with the bad attitude. In other words, if you had pain and had a nice manner, your pain was taken seriously. If you had the same amount of pain and you weren’t deemed “likeable,” your pain was more likely to be ignored or underrated.

The Super Committee: Bracing for More Medicare Cuts

Oct 20, 2011• 4

By MERRILL GOOZNER

I attended a depressing forum on cost-saving ideas for Medicare to present to the Congressional “Super Committee” charged with coming up with $1.2 trillion in budget savings by the end of the year. The tone was ominous, best summed up by Mark Smith, president of the California HealthCare Foundation. “In times of crisis, meat-axes are taken to whole sectors. If you don’t believe me, ask the people who used to work for Lehman Brothers,” he said.

Here’s the backdrop. President Obama in his mid-September budget reduction plan called for coming up with an additional $320 billion in Medicare savings over the next decade, which would be on top of the half trillion dollars in Medicare cost reductions contained in the Affordable Care Act. The president would get there largely by cutting payments to hospitals and other providers, although the president also called for higher premiums on wealthier seniors for physician and drug coverage.

Will the Super Committee look for the same $320 billion in cuts to Medicare? A good case can be made that Medicare’s contribution to the $1.2 trillion recommendation should be less than what the president sought. The Congressional Budget Office’s current baseline projections for federal spending over the next decade has Medicare spending $7.4 trillion out of a total of $44 trillion. That’s 16.8% of ALL federal spending (defense, Social Security, discretionary domestic programs, you name it). Apply that 16.8% to $1.2 trillion and you get about $202 billion as Medicare’s “fair share,” not the $320 billion proposed by the president.

Still, there were precious few ideas at this morning’s forum that would come up with even a fraction of that total. Robert Berenson of the Urban Institute and Steve Phurrough of the Agency for Healthcare Research and Quality, both former top-ranking officials at the Center for Medicare and Medicaid Services, outlined a series of steps CMS could take to get better pricing, stop paying for uncalled for operations, and only pay the price of the “least costly alternative” when medical interventions are comparable. But most of those changes would require Congressional approval (fat chance), and none of the examples given (they spent a lot of time talking about implantable cardio-defibrillators, where an estimated 25% to 30% of the million operations each year are in patients who don’t really need them) raised more than a billion dollars.

Lessons from the CLASS Act

Oct 20, 2011• 1

By David Dranove

Last week, the Obama Administration decided not to implement the Community Living Assistance Services and Supports (CLASS) Act. This Act authorized the Department of Health and Human Services (DHHS) to sell a low price/limited benefit long term care insurance (LTCI) plan, provided that the plan would be actuarially sound. The Act also required DHHS to perform a 75 year financial projection. After a year of analysis, DHHS concluded that there was the plan could not cover its costs and so it pulled the plug on CLASS.

I first learned about CLASS when I was asked by a senior economist in DHHS to provide a strategic assessment of the business prospects for CLASS. DHHS officials were appropriately concerned that the low price/limited benefit plan would almost surely suffer from adverse selection and end up losing money. So they wanted to know whether CLASS could offer additional LTCI plans to cover the losses in the base plan. I persuaded Cory Capps (a former colleague and partner with BatesWhite, an economic consultancy) and Leemore Dafny (my current colleague at Northwestern) to help with the analysis. We shared ideas with economists working within DHHS.

We viewed this as a traditional market analysis. Anyone can enter a market and lose money – the base CLASS plan would be a poster child for this obvious point. We wanted to understand whether there were any opportunities to turn a profit in the LTCI market. We also wanted to understand why, if there are profits to be had, private insurers had not already exploited these opportunities?

The Untimely Death of Long-Term Health Insurance

Oct 18, 2011• 17

By Robert Reich

The Administration’s decision to pull the plug on long-term health insurance in the new healthcare law (so-called Community Living Assistance Services and Support or, as it was known by healthcare insiders, CLASS) offers an important lesson.

As written, the law had three incompatible parts.

First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.

Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums.

Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.

Yet if the healthier didn’t enroll, the program would have to be financed entirely by the relatively unhealthy — which meant premiums would have to be even higher. So high, in fact, that even the relatively unhealthy wouldn’t be able to afford it.

End of story. End of program.

Dr. Watson I Presume

Oct 18, 2011

By JOHN MOORE

Little over a month ago, IBM and WellPoint announced an agreement wherein WellPoint will deploy IBM’s latest and greatest super computer and artificial intelligence mega-mind Watson. Watson’s claim to fame was its ability to beat the human Jeopardy champions much like Big Blue beat reigning chess champion Garry Kasparov in 1997. Since that Jeopardy match, IBM has been quite vocal about its desire to apply Watson in the medical arena, we’ve been buried in press releases and briefings, but the WellPoint announcement is the first one of any real consequence. Having interviewed both IBM and WellPoint, following is our review and assessment.

Background:
Watson is a relatively new form of artificial intelligence, based to some extent on neural networks. What is unique about Watson is that it has been developed (trained) to understand the nuances of language. It is a question & answer system that uses among other techniques, natural language processing, to extract meaning out of unstructured data. In developing Watson for the Jeopardy challenge, one of the key design parameters was for Watson to answer a question in under three seconds – plenty fast enough in a diagnosis/treatment decision scenario. This is a key reason why Watson may have enormous utility in the healthcare sector where so much data is unstructured, the pace of change is so high and the ability to chose the optimum treatment patient plan for a given diagnosis is less than ideal today.

Why Not a Nurse?

Oct 18, 2011• 21

By John Goodman

After Hurricane Katrina hit New Orleans, several hundred thousand refugees descended on Dallas, Houston and other Texas cities. Many of them needed medical care. Unfortunately, Texas wasn’t prepared.

If a natural disaster hit Oregon, the victims would have fared much better. The state’s 8,500 nurse practitioners (NPs) are free to come to the aid of people in need of care, with no legal obstruction. In Oregon, nurses with the proper credentials and licensure may open their practices anywhere they choose and operate in the same capacity as a primary care physician without oversight from any other medical professionals. They can draw blood, prescribe medications, and even admit patients to the hospital.

In Texas, which has some of the most stringent regulations in the country, however, a nurse practitioner can’t do much of anything without being supervised by a doctor who must:

Not oversee more than four nurses at one time.
Not oversee nurses located outside of a 75 mile radius.
Conduct a random review of 10 percent of the nurses’ patient charts every 10 days.
Be on the premises 20 percent of the time.

Note that under the rubric of “nurse,” there are a host of subcategories. In general, nurse practitioners have the skills to prescribe, treat and do most things a primary care physician can do. They generally must have completed a Registered Nurse and a Nurse Practitioner Program and have a Masters or PhD degree. In addition, there are physician assistants, registered nurses, licensed vocational nurses, emergency medical technicians, paramedics and army medics. In most states, each of these categories has its own set of restrictions and regulations, delineating what the practitioners can and can’t do.

The Big Lie

Oct 18, 2011• 3

By Paul Levy

There is a wonderful expression in politics, “If you say something often enough, it becomes the truth.” Of course, it doesn’t really become the truth. A lie retold is still a lie. But, you can succeed in diverting political attention, especially in today’s news environment, when reporters are not given enough time and bandwidth to really explore issues.

Take today’s New York Times story about Massachusetts health care costs by Abby Goodnough and Kevin Sack. The thesis is that the introduction of capitated, or global payments, will offset cost increases resulting from universal health care access. The reporters give credence to the premise, even though there is not empirical support for the conclusion. Indeed, such support as exists in Massachusetts suggests that the manner in which global payments were introduced resulted in higher, rather than lower, costs. The story also fails to discuss consumer concerns about such plans, which would limit choice.

But then, the reporters retell the big lie, the one that suggest that concerns about the cost trends of the dominant provider group have been alleviated by a recently signed contract. Ready? Here you go:

Under market and political pressure, Partners also agreed to renegotiate its contract with Blue Cross Blue Shield and accept lower reimbursements, which is expected to save $240 million over three years. … Blue Cross Blue Shield of Massachusetts said payments to Partners would increase at about 2 percent a year rather than the previously anticipated 5 percent to 6 percent.

Let’s deconstruct this.

Join Us For Tomorrow’s Health 2.0 Show

Oct 18, 2011

Join us, tomorrow, October 19th at 10:00 AM PST as Matthew and Indu recap highlights from the 5th annual Health 2.0 Conference in San Francisco. They’ll be joined by two special guests: first, Alexandra Drane of Eliza will discuss and take another look at the popular Unmentionables panel. Then, Marco Smit, President of Health 2.0 Advisors will take a deeper dive into the special VC Advisory Session as well as the newest addition to Health 2.0, Matchpoint.

Also, our very own Jean-Luc Neptune will announce three upcoming Code-a-thons as part of the Health 2.0 Developer Challenge, and review the newest online challenges.

If you’d like to see past episodes of The Health 2.0 Show, check out our archives.

The Health Care Reform Law: What’s the Big Deal?

Oct 17, 2011• 62

By William D. Leach

I’m not an attorney, so I cannot help the federal judges struggling to figure out whether the individual insurance mandate in President Obama’s healthcare law violates the interstate commerce clause of the U.S. Constitution. But as a taxpayer (and formerly a professor of public policy), it’s hard for me to understand what all the fuss is about.

The Patient Protection and Affordable Care Act created a monetary incentive for all taxpayers to obtain health insurance. Beginning in 2014, people without insurance will pay more to the IRS than people with insurance. Like the tax code as a whole, the rules for calculating the size of the penalty are incredibly complex. But once the penalty is fully activated in 2016, a single individual with no dependents will pay an extra $695, or 2.5% of his or her applicable income, whichever is higher. An uninsured family of four with annual income of less than $110,000 will typically pay $2,085 more than it would if insured.

This tax penalty is known as “the individual mandate.” It’s an important part of the new law because starting in 2014, insurers are prohibited from denying coverage or charging higher rates based on preexisting conditions. Without the mandate, people might wait to buy insurance until they needed medical care. To keep insurance affordable for patients and profitable for insurers, healthy people need to pay for coverage before they get sick.

Various courts have viewed the tax penalty in different ways. But some have concluded that it is a huge encroachment on individual rights. As a ruling from the U.S. 11th Circuit Court of Appeals put it, “This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy.”