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Can CMS Be a Venture Capitalist?

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By PAUL LEVY
Paul Levy 1

Lisa Suennen, a venture capitalist, writes this post about the provision in the national health care reform act that created the Center for Medicare and Medicaid Innovation (CMI). This agency has $10 billion to “research, develop, test and expand innovative payment and service delivery models that will improve the quality and reduce the costs of care” for patients covered by CMS-related programs. Lisa notes, “What is great about CMI is that they have the authority to run their programs much more like a business would without many historical governmental constraints. ”

I don’t want to be a stick in the mud, particularly as my able friend Don Berwick takes charge of CMS, but I want to point out that previous efforts by the government to be innovative in other fields have failed because:

(1) Venture funding embodies risk-taking. Government usually does not do this because there is a political imperative never to be blamed for misspending taxpayer money. The bureaucracy, therefore, systematically eliminates ideas that are untested.Continue reading…

Op Ed: Dr. No to Run CMS

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By JOHN GOODMAN, PhDPicture 2

Let’s do a thought experiment. Suppose you were a U.S. Senator and the President’s nominee to head CMS appeared at his confirmation hearing:

  • Wearing a Che Guevera t-shirt, sporting the image of a psychopath who apparently enjoyed killing people, or
  • Fondly clutching a copy of Quotations from Chairman Mao, written by a man who presided over the genocidal murder of more people than any other person in the history of the world.

When I was at Columbia University, my fellow students did these sorts of things. I soon learned they were not evil. They simply could not think clearly about moral issues involving collectivism. I view Don Berwick in much the same way.

President Obama took advantage of a short Congressional recess to appoint him to run Medicare and Medicaid without even a hearing. Although the President blamed Republicans, even some Democrats were unhappy with his snubbing of normal Senate prerogatives — something Obama criticized George Bush for doing with the appointment of John Bolton as UN Ambassador.

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Why Obama Made the Right Call on Berwick

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By BOB WACHTER, MD Wachter

The recess appointment of Don Berwick to lead CMS can be seen as a cynical act of political opportunism, sidestepping the Congressional approval process using a tactic worthy of Machiavelli, or Karl Rove. Or it can be viewed as a pragmatic decision by Obama to avoid a lengthy and exasperating re-litigation of the healthcare reform debate.

Death Panels. Been there, done that. So I’m going with Choice #2.

The right side of the blogosphere has erupted, painting Berwick as an effete academic who would have withered under the Klieg lights and piercing questions of the likes of John Ensign and Jim Bunning. Those of us who know Don have no doubt that he would have more than held his own in debating the lessons of England’s healthcare system and the necessity of clear-headed rationing choices. Don is serious, hyper-articulate and intellectually nimble; in a real debate with members of the Senate Finance Committee, all my money would have been on him.Continue reading…

In a Surprise Move, Administration Appoints Berwick to Head CMS

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By MAGGIE MAHAR

Tuesday night the White House Blog explained: “In April, President Obama nominated Dr. Donald Berwick to serve as Administrator of the Centers for Medicare and Medicaid Services (CMS). Many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points.

“But with the agency facing new responsibilities to protect seniors’ care under the Affordable Care Act, there’s no time to waste with Washington game-playing. That’s why tomorrow the President will use a recess appointment to put Dr. Berwick at the agency’s helm and provide strong leadership for the Medicare program without delay.”

A “recess appointment” means that the president is putting Berwick in place while Congress is on recess (i.e. is taking a vacation). As a result, Berwick won’t have to go through a Senate confirmation hearing. Senate conservatives had made it clear that they hoped to defer this hearing for as long as possible.

The White House Blog notes that “CMS has been without a permanent administrator since 2006, and even many Republicans have called on the Administration to move to quickly to name a permanent head.”

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A Permanent “Doc-Fix” Remains Elusive

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By NAOMI FREUNDLICHNaomi Freundlich

For now, all those physicians who threatened to make a mass exodus from Medicare can take a breather. Last week, the House voted to once again delay the mandated 21% cut in physician fees by another six months; thereby ensuring that the fight over the sustainable growth rate (SGR) will be resurrected sometime around Thanksgiving.

So far, Congress has kicked the SGR can down the road 10 times since 2003—four times just this year alone. The targets have long been considered unobtainable and the mandated physician payment cuts are opposed in Congress by Democrats as well as Republicans and supported by nearly no one. The level of anxiety among doctors continues to escalate every time the issue is raised—even though the cuts have never gone into effect for more than a couple of weeks. Why not get rid of this devilishly frustrating formula once and for all?

The short answer is that getting rid of the SGR—even though it has never led to any savings in Medicare—is just too expensive on paper. The Congressional Budget Office establishes a “baseline” projection of future spending and revenue that takes into account that all current laws will be enforced. Legislation that eliminates the SGR targets would then be scored by the CBO as adding to the deficit—to the tune of $276 billion between 2011 and 2020 even if Medicare payment rates to doctors were frozen at 2009 levels. In the current economic climate, it will be very hard to get enough members of Congress to agree to a permanent “doc fix” that eliminates the SGR targets without also finding a way to pay for it.

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Dr. Berwick’s Last Stand?

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By MAGGIE MAHAR

Kaiser Health News (KHN) reports that “the nomination of Dr. Donald Berwick to run the agency overseeing Medicare appears to be languishing.”   Friday, KHN’s “Health Policy Week in Review” quoted a story that appeared in the New York Times a few days earlier:

“Hospital executives who have worked with Dr. Berwick describe him as a visionary, inspiring leader. But a battle has erupted over his nomination, suggesting that Dr. Berwick faces a long uphill struggle to win Senate confirmation. Republicans are using the nomination to revive their arguments against the new health care law, which they see as a potent issue in this fall’s elections, and Dr. Berwick has given them plenty of ammunition. In two decades as a professor of health policy and as a prolific writer, he has spoken of the need to ration health care and cap spending and has confessed to a love affair with the British health care system.”

KHN also points out that according to The Hill, although Senate leaders are nearing an agreement to allow more than 60 Obama nominees to be approved to begin work, Berwick is not on the list  . “‘He will not get unanimous consent,’ a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) told The Hill.

I am not at all persuaded that Berwick’s confirmation is in trouble. As the highly-respected president and CEO of the Institute for Health Care Improvement, Dr. Berwick enjoys support that ranges from the AARP to three former directors of the Centers for Medicare and Medicaid (CMS) who served under Republican presidents. “This is not really about Don Berwick,” John Rother, executive vice president for policy and strategy at the AARP told McClatchy Newspapers. “In ordinary times, the nomination of somebody with Don’s record and standing in the field would not be controversial.” Thomas Scully, who led the CMS under President George W. Bush agrees: “He’s universally regarded and a thoughtful guy who is not partisan. I think it’s more about … the health care bill. You could nominate Gandhi to be head of CMS and that would be controversial right now.”Continue reading…

Are Doctors Really Boycotting Medicare?

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By NAOMI FREUNDLICH

Naomi FreundlichAs Congress once again wrestles with “the doctor fix”—yet another postponement of the 21% cut in Medicare reimbursement that went into effect this month—the media has been swirling with stories warning of a mass exodus of doctors out of the federal program. The reason: In 2008 Medicare paid doctors 78% of what they get from private insurers; with the 21% cut they fear that their income will drop even lower.

The reports hit their peak late last week—USA Today wrote that “[t]he number of doctors refusing new Medicare patients because of low government payment rates is setting a new high,” while the American Medical Association announced that 31% of primary care doctors are restricting the number of Medicare patients they take. In a recent survey, the American Academy of Family Physicians found that 13% of respondents didn’t participate in Medicare last year, up from 8% in 2008 and 6% in 2004. Chic Older, executive director of the Arizona Medical Association told the Seattle Times ; “If the 21 percent cut goes into effect, we’re going to have a very severe problem in the state of Arizona.”

The question is: Will Medicare beneficiaries really face a shortage of providers and restrictions on their access to care? Or is this a scare tactic being used for political reasons?

First off, all this is happening against the backdrop of a major political fight in Congress over how much the government should invest in economic recovery. On Friday, the Senate passed a “doc fix” that would postpone the 21% cut in Medicare payments for another six months and provides a 2% increase in reimbursement instead. Unfortunately for doctors—and the seniors they count as patients—Nancy Pelosi has signaled that she may not be willing to settle for such a short-term solution. According to Politico, Pelosi was “caught off guard last week when Reid suddenly opted to pull the Medicare issue out of a jobs and economic relief bill on which the two leaders have been working for months.” For more background on the long history of the “sustainable growth rate” formula that mandates the Medicare cuts (enacted in 1997 by a Republican administration) and the unlikelihood of it ever being instituted long-term, see Maggie’s recent post here.Continue reading…

Nope. Won’t Happen.

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By MAGGIE MAHAR

Friday, June 18, the Senate aproved a plan that blocks a 21 percent cut in Medicare payments to physicians; the axe was scheduled to fall that day. Leadership on both sides of the aisle pushed for the reprieve; it will remain in place for six months. The measure will now need to be considered by the House, which in May approved a fix that would last longer. If the House agrees–and it is all but certain that it will–the 21 percent cut wil be replaced with a 2.2 percent pay hike. The bill will not add to the deficit. The proposal is fully offset by changes in Medicare billing regulations, antifraud provisions and the tightening of some pension rules, eliminating Republican objections that it would push the federal government deeper into debt.

In six months, Congress will have to consider the matter once again, just as it has ever year since 2003. This is the third time this year that Congress has averted Draconian cuts to physician’s payments. What, you might wonder, is going on? Here is the backstory: in 1997, Congress enacted a so-called “sustainable growth rate” (SGR) mechanism to keep Medicare physician reimbursement rates in check. Congress has never allowed the full cuts called for under the SGR formula to take effect and it never will.

Why don’t legislators simply repeal the cuts to doctors’ fees that they have been postponing for years? Why just put off the measure for another six months?

Because too few of our elected representative possess the chutzpah to stand up and say that blind across-the-board cuts were an extraordinarily dumb idea in the first place.

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AMA and Congress: Playing “Chicken” Again

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By JANE M. ORIENT, MD

Nine times in the past eight years, Congress has, at the last second, delayed the automatic cuts in doctors’ Medicare fees that it decreed some 13 years ago to prevent Medicare spending from outpacing other consumer expenditures.

The AMA threatens that doctors, especially primary care doctors, will stop accepting Medicare patients if the cuts go through. Congress hurtles toward the head-on collision, citing runaway budget problems. Doctors are kept in suspense, their claims held in abeyance while carriers wait for Congress to fix the problem retroactively if it has missed its deadline. The AMA claims credit when the wreck is averted, and urges doctors to continue paying their dues while it feverishly works for a permanent “fix.” Only the AMA, it implies, stands between Congress and certain disaster.

Every time cuts are postponed, the next scheduled cut gets deeper. It’s like a balloon mortgage payment in reverse.

And the controversy gives columnists another occasion to rail against those greedy overpaid doctors, unwilling to assume a bit of shared sacrifice despite the economic downturn.

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Doing Their Homework: Times Reporters Respond in Dartmouth Atlas Spat

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By MERRILL GOOZNERMerrill Goozner

Over the weekend, the two New York Times reporters who challenged the core findings of the Dartmouth Atlas of Health stuck to their guns in a detailed response to the rejoinder to their critique. The Dartmouth Atlas, which documents regional variation in Medicare spending, provides the intellectual underpinning for assertions by health care reformers (including those in the White House) that 30 percent of all health care spending is wasted and does not improve either the quality or outcome of care.

The Times‘ original critique (see this GoozNews post) contained three main ideas:

  • The Dartmouth researchers fail to adjust their maps for regional variations in prices;
  • The Dartmouth researchers fail to adjust their maps for illness burden; and
  • The assertion that more spending leads to worse outcomes is not borne out by the data. In some cases more spending leads to better outcomes.

Some of this back-and-forth may sound like a quibble over language. Is it “30 percent” of health care is wasted or “up to 30 percent,” as the Dartmouth researcher now state in public? Reed Abelson and Gardiner Harris provide a link to the original 21-page response to their queries. “We think the 30 percent estimate could be too low,” the Dartmouth researchers wrote in a highlighted section.

On the other hand, the Times reporters appear to be taking a step back on the price issue. They went back to David Cutler, the Harvard health care economist whom they originally quoted. Cutler told them that the original 2003 articles by John Wennburg and Elliott Fisher of Dartmouth that appeared in the medical literature did, in fact, adjust for price. “But he said he agreed with the Times assertion that most of the atlas’s maps and rankings, as distinct from the group’s academic work, are not fully adjusted for prices,” Abelson and Harris wrote.

Notably, Cutler is now hedging his bets on the “30 percent is waste” argument. “Some believe that number is higher, and others think that it’s lower,” he wrote in the latest Health Affairs. “But there is little disagreement that health care is characterized by enormous waste.”

In my view, it is the dispute over quality that really needs to be explored by other researchers and policymakers. Eliminating waste ought to improve quality. It has always been true in manufacturing that reducing steps and reducing waste not only reduces costs, but it improves the quality of the finished product.

There’s no reason to think it won’t be true in delivering a complicated service like health care, which some have compared to building and flying jet airplanes. Doing more than necessary to get the job done will only increase the possibility that errors will occur in the process, which in health care translates into more complications, further costs and, in some cases, lost lives.

Yet the Times reporters continue to assert through their dissection of the Dartmouth data that more spending on more services may actually result in higher quality. They go back to the original research — the two studies published in 2003 — to make their point:

The researchers are incorrect in saying that the results of those 2003 studies were “all in the same direction.” In fact, two of the various measures of quality and mortality cited in the articles actually seemed to show that more spending could correlate to better care. [footnotes 2 and 3] Heart attack patients in the most expensive regions, for example, were more likely to receive necessary beta blockers – a positive correlation between spending and quality. Similarly, hip fracture patients experienced “a small decrease in mortality rates” in more expensive places – another positive correlation.

We have very poor metrics for measuring quality of care, and one of the examples they cite shows why. Giving beta blockers is a “process” measure. We know from clinical trials that giving beta blockers after a heart attack improves outcomes. But does it improve outcomes the same in regions where the ratio of obesity-related heart attacks to stress related heart attacks differ? Does it have the same effect in regions with higher proportions of mild heart attacks (because they are more likely to use a sophisticated blood test to categorize chest pains as a heart attack) than it does in a region with a higher proportion of serious heart attacks?

These are the confounding variables that no data set can capture adequately until it fully reflects both the diagnoses of the incoming patients as well as the care delivered. The Dartmouth Atlas data, which relies on Medicare claims, falls far short of that goal. And the Times reporters, by trying to re sift the data to make a counterpoint, only add another blind man’s hands on the elephant in the room — the absence of electronic data about the actual medical conditions of the patients behind those Medicare claims.

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, The American Prospect and The Washington Post. His most recent book, “The $800 Million Dollar Pill – The Truth Behind the Cost of New Drugs ” (University of California Press, 2004) has won acclaim from critics for its treatment of the issues facing the health care system and the pharmaceutical industry in particular. You can read more pieces by Merrill at  GoozNews, where this post first appeared.