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Tag: Bill Kramer

Paying Physicians for Quality: Lessons from Employers

The House Committee on Energy and Commerce Subcommittee on Health recently held hearings on how to replace the broken sustainable growth rate (SGR) tool for controlling Medicare spending on physician services. I was asked to speak for major employers about their efforts to improve health care quality while containing cost.

Why did the subcommittee invite a business group representative to testify? And why should businesses care about how Medicare pays physicians?

The answer is that employers and the federal government are both major purchasers of health care, and we want government to look to the private sector for ideas to accelerate innovation in how we pay for care. Both public and private purchasers have a stake in building a system based on innovation, value, and measuring what matters.

The Pacific Business Group on Health’s (PBGH) 60 member companies provide health care to 10 million employees and their dependents in all 50 states. For decades, large and small employers alike have been frustrated by the rising costs and inconsistent quality of health care. A major reason for these problems is that the current payment system rewards physicians for more office visits, tests, and procedures, regardless of whether they are needed or result in better health. We need a better, more effective method of physician payment. PBGH members have real-world experience designing and implementing innovations in how providers deliver care and how they are paid for it. Medicare can learn from these efforts to improve quality and control costs.
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Health Exchanges — A New Approach

Why don’t we think about the Exchanges as a place for people to choose their health care, not just their health insurance?

As the Exchanges are being designed, we have a great opportunity to rethink how to help people choose a physician for their care, but our current mindset may get in the way of developing innovative approaches.

Under the Affordable Care Act, each state is expected to establish “health benefit exchanges” for individuals and small employers in order to “facilitate the purchase of qualified health plans.”  This is consistent with the concept of health insurance exchanges that has been developed over many decades.  In this model – used by many large employers as well as existing exchanges such as CBIA’s Health Connections and the Massachusetts Health Connector – the individual consumer or employee is given a choice among several health insurers.

The consumers are given information about the quality, patient satisfaction, and provider networks of each insurer to help them choose the one that best meets their needs, and healthy competition among the health insurers is expected to drive improved value for consumers.  The consumer makes this choice upon initial enrollment and annually thereafter.  Once the consumer has chosen an insurer, the second step is to choose a provider from the list of providers with which the insurers has contracts.  It is seen as a two-step process: (1) choose an insurer, and (2) choose a provider.Continue reading…

Five Big Ideas that Shaped Health Reform

During the Great Health Reform Debate of 2009-10, much of the public discussion and media analysis focused on the political battles, the legislative process and specific elements of the health reform bill.  We talked a lot about daily public opinion polls, the futile search for bipartisanship, the political implications of the Massachusetts special election and the impact on the upcoming mid-term elections.  We also learned more than we probably wanted to about filibuster rules, reconciliation bills and CBO scores.  And we were inundated by detailed descriptions and analyses of the public option, abortion, payment reductions to Medicare Advantage plans, excise taxes on “Cadillac” health plans, and many other specific policy issues.

Future historians, however, will want to look more deeply for the policy frameworks and political forces that shaped the health reform bill.  From a high level vantage point, there are Five Big Ideas that established the fundamental framework for the bill.  With some exceptions, these ideas were not the subject of much public discussion or formal debate in Congress, but each of them shaped the reform bill in fundamental ways. As Ezra Klein and others have observed, much of the form of the health reform bill was established long ago.

1. Managed competition

Why didn’t we go down the path of a single-payer health system?

For many years, a single-payer system was the holy grail of the liberals, and it was the driving force behind the campaigns of many of the current reform advocates.  To the disappointment and frustration of those advocates, however, the battle had already been fought and lost long before the 2009-10 debate.  In 1978, Alain Enthoven published a two-part article in the New England Journal of Medicine entitled “Consumer Choice Health Plan: A National Health Insurance Proposal Based on Regulated Competition in the Private Sector.” The title said it all.  It was a proposal for national health insurance (i.e., providing coverage to everyone) through a structured marketplace of private insurers and providers.  As Enthoven described it in a 1993 Health Affairs article, “The History and Principles of Managed Competition,” his concept built on earlier work by Paul Ellwood, Walter McClure and Scott Fleming, as well as the experience of the Federal Employees Health Benefits Plan (FEHBP). In the 1992 Presidential campaign, both of the candidates endorsed this approach to health reform, and it was one of the foundation elements of Bill Clinton’s reform proposal in 1993.  In the work of many policy experts since then, it became the de facto consensus approach.

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What Good are Health Insurers?

Bill KramerAs the health reform effort moves into the final stages, everyone seems to be taking a whack at health insurers. Some of the insurers’ wounds are self-inflicted, such as WellPoint’s announcement of 39% premium increase for individual policies in California. Some of the attacks are calculated to build public support for health reform, since every good crusade needs a good enemy. Some of the criticism has even suggested that we don’t need private health insurers. Michael Hiltzik asked the question in a recent column “What do we need health insurers for anyway?” James Surowiecki – usually a careful and thoughtful observer of business and economic issues – said the following in a recent article in the New Yorker:

Congress [in its health reform bills] is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them. The truth is that we could do just fine without them: an insurance system with community rating and universal access has no need of private insurers.

Surowiecki goes on to comment on what the world would look like without private health insurers:

In fact, the U.S. already has such a system: it’s known as Medicare. In most areas, it’s true, private companies do a better job of managing costs and providing services than the government does. But not when it comes to health care: over the past decade, Medicare’s spending has risen more slowly than that of private insurers. A single-payer system also has the advantage of spreading risk across the biggest patient pool possible. So if you want to make health insurance available to everyone, regardless of risk, the most sensible solution would be to expand Medicare to everyone.

Not so fast. I would feel more optimistic that this would work if we had a different political system. One of the limitations of this approach is that Medicare’s spending is ultimately determined through the political process. The U.S. political system – for better or worse — allows the health care industry (or any other well-funded interest group) to use its financial resources and lobbying power to increase the flow of government funds into the health sector. The idea that Medicare has a “hammer” to force providers to accept lower payment rates is largely an illusion. In the current system, Medicare can do this only because there is a safety valve, i.e., a large private insurance segment that pays much higher rates to providers. If Medicare gets larger or replaces private insurance altogether, there will be less opportunity to use the safety valve, so providers will step up their efforts to use political pressure to increase payment rates in Medicare. I simply don’t see a strong countervailing political force that would exert sufficient political pressure to hold down costs.Continue reading…

House of Straw or House of Bricks?

Photo for website Feb09 A week ago, before the Massachusetts special election, health reformers felt that their house was almost finished. The edifice of health reform had been built painstakingly using blueprints designed by policy and political experts during the past 10 years. It wasn’t a perfect building — like many construction projects, there were concerns that it would cost too much and wouldn’t be aesthetically pleasing — but most agreed that it would provide shelter for those who had been excluded from health coverage: the uninsured and the medically uninsurable. The imperfections could be fixed later. As many said, this would be the foundation and framework on which an even better health system for the U.S. could be built. And the wolves who had ruthlessly blown down health reform houses in the 1990s and before had been kept at bay.

As the reformers stood on the top floor last week, deciding on the final touch-ups and planning for the housewarming, someone pulled the rug out from under them. The upset election of Scott Brown to fill the late Sen. Kennedy’s seat changed the political calculus. It would not be possible for the Senate to pass a bill including the final modifications, since a unified Republican minority of 41 would be able to block consideration of the bill. It turned out that under the rug was a hole in the floor, and suddenly the reformers were on the next floor down. The reformers might have to leave the top floor unfinished (the modifications that were needed to get House approval), but they could still have a pretty solid building if they could reach agreement.

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Improving the Harvest: Farming and Health Care

I love Atul Gawande’s writings on health care.

He has a rare talent for describing technical details of health care, insurance and finances in terms that most people can understand. His recent article in the New Yorker discussed the current health reform bills’ approach to curbing costs, using the agricultural industry as a potential model.

One of his basic points is similar to one I have made before. He describes two kinds of problems: “those which are amenable to a technical solution and those which are not. Universal health care coverage belongs to the first category . . . Problems of the second kind [referring to rising health care costs], by contrast, are never solved, exactly; they are managed.”

I would frame it somewhat differently. The two basic kinds of problems are those, which are amenable to a government solution, and those which are best addressed using decentralized market forces.

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A “Third School” of Cost Containment?

By Bill Kramer

Is there a “Third School” of reformers that could help Bill Kramerus resolve the long debate about how to contain health care spending?  Drew Altman’s recent column describes the history of the debate between the “Regulators” and the “Marketeers”, and he suggests that a new school of thought – the “System Reformers” – is in the ascendance.  According to Altman:

The Systems Reformers believe that the best way to bend the cost curve is not through external market incentives or regulatory controls, but from the inside out, by creating a smarter health care system with the information base, new delivery models and payment incentives that will improve quality and lower costs. . . .

The Systems Reformers’ paradigm is reflected in the “bending the curve” elements of the health reform legislation currently in Congress, which mostly come in the form of pilot projects and experiments. These include tests of ideas like Accountable Care Organizations, “pay for performance” and “bundled payments,” as well as efforts to create a smarter, evidence-based health delivery system through comparative effectiveness research.

He describes the Systems Reformers’ approach as a  “third leg of the stool of cost containment strategies.”

While Altman is right about the importance of the Systems Reformers’ ideas, I don’t consider this to be a new paradigm.

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Let’s Not Lose Sight of the Goals

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I love Daniel Schorr.  I’ve never met him in person, but I love his voice and his insights about politics on NPR’s Weekend Edition.  But this morning I was disappointed.  After listening to his comments on the Olympics and Iran, I looked forward with anticipation to his thoughts about the Senate Finance Committee’s accomplishments earlier this week on health reform legislation.  When asked whether a “real health care bill” is likely to pass later this year, he said, “Well, it begins to look more [likely] . . . that there will be a bill.  The question is not whether there will be a bill . . . but what will be left in the bill, because so many things have been taken out.”  I could almost hear him sigh.  He went on to talk about the fact that the public option is not a part of the Senate Finance bill, although it might be restored in full or part (through a trigger mechanism or health cooperatives) as the bill moves through Congress. Let’s step back for a minute.  (This is what I usually rely on Schorr to do for us.)  Where were we a year ago?  Although advocates of health reform were encouraged that the health care crisis was getting a lot of attention in the Presidential election campaign, the outlook was not rosy. Obama and McCain were neck and neck, and McCain’s reform proposal was so weak as to be laughable.  The pundits and pollsters were predicting that the Democrats would get about 56 seats in the Senate – not enough to overcome a filibuster.  And there was serious concern that even if Obama were elected, health reform would be crowded out by other major crises – the threat of a serious economic depression, the banking collapse, Iraq/Afghanistan/Iran, energy and global climate change, and who knows what else.  In October 2008, the likelihood of serious comprehensive health reform was probably about 25%.

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A Town Hall Meeting 3000 Miles from Washington, DC

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Seaside, Oregon, is about as far away from Washington, DC, as you can get in the continental U.S.  Not quite 3000 miles, but almost (2860 to be exact).  And it seemed very far away from the sound and fury of the health care debate in the nation’s capital when I attended a Town Hall meeting last Friday.  Sen. Ron Wyden was the speaker at the event, which was attended by over 400 people crowded into the Seaside High School cafeteria.

As we waited, the crowd was calm and polite, but there was a murmur of anticipation and an undercurrent of tension.  We had all seen the stories about disruptions and threatened violence at similar Town Hall meetings across the country.  Would it happen here?  We could see people standing at the back with signs opposing health reform.  Would they interrupt the proceedings and cause problems?  We all respect freedom of speech, but somehow it wouldn’t seem like “freedom” if someone else was shouting us down and disrupting our attempts to learn about the health reform proposals.

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