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Return to McAllen: A Father-Son Interview

• 32

By IAN ROBERTSON KIBBE


By now, Dr. Atul Gawande’s article on McAllen’s high cost of health care has been widely read.  The article spawned a number of responses and catalyzed a national discussion on cost controls and the business of medicine.  It even made it’s way into the President’s address to the AMA.

Almost overnight, McAllen and the Rio Grande Valley were thrust into the national health care spotlight – the once sleepy border town became, not a beacon on a hill, but a balefire in the valley, representing much of what is wrong with the current medical culture.

But, McAllen wasn’t always like something from an old Western, where doctors run wild and hospital CEO’s compete like town bosses.  I remember McAllen quite differently.  I remember it, because as it turns out, it was where I was born.Continue reading…

The Case for Home Health Care

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By GEORGE TALER, MDTaler

While Congress is debating health reform and struggling to accomplish the apparently competing goals of reducing costs while improving quality, I am part of a program that does both. As co-director of the Washington Hospital Center’s Medical House Call Program, I visit the sickest, frailest Medicare patients who consume a wildly disproportionate amount of Medicare dollars. Not only am I providing better care for my patients, I’m doing it where they want it — at home. House calls allow me to better manage their chronic conditions by seeing their medications, diet and home life and enabling me to better support their caregivers and coordinate their medical care. The math is simple: the better I do, the happier they are and the fewer times they need to visit an expensive hospital or nursing home. Shockingly, this proven approach that reduces unnecessary spending is being overlooked in the current reform debate.

Take one of our patients, Mrs. C, who has heart failure and pulmonary disease. She is chair- and bed-bound. She relies on her daughter for all her basic needs and cannot easily get to the office. Through our program, a team of doctors, nurse practitioners and social workers can visit Mrs. C at home and provide care on-site. We can manage her heart and lung problems on the spot, rather than having to wait until her symptoms are so severe that she has to go to an emergency department by ambulance. Additionally, avoiding the hospital means Mrs. C is less likely to face medical complications from a hospital visit. The accrued savings pay for a year’s worth of house calls for eight patients. Our program has shortened the hospital stays of 600 patients by a quarter, and reduced hospitalizations at end of life by 75 percent.Continue reading…

Costs v Coverage: Krugman gets it–Brooks is almost quite close

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By Matthew Holt

So Paul Krugman, the NY Times Nobel Prize winning lefty columnist, says this (and echoes what I’ve been saying for a while)

So where in America is there serious consideration of moving away from fee-for-service to a more comprehensive, integrated approach to health care? The answer is: Massachusetts — which introduced a health-care plan three years ago that was, in some respects, a dress rehearsal for national health reform, and is now looking for ways to help control costs.

Why does meaningful action on medical costs go along with compassion? One answer is that compassion means not closing your eyes to the human consequences of rising costs. When health insurance premiums doubled during the Bush years, our health care system “controlled costs” by dropping coverage for many workers — but as far as the Bush administration was concerned, that wasn’t a problem. If you believe in universal coverage, on the other hand, it is a problem, and demands a solution.

So universal coverage systems find that they can’t just let the health care system increase costs because there is no safety valve of the uninsured to dump out of the system. We’re all in it.

Continue reading…

Eliminating Medication Waste in Long-Term Care Can Help the White House Pay for its Health Plan

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By CARLA CORKERN

Corkern2 The news of an $80 billion White House deal with drug companies to lower Medicare drug costs targets $30 billion in savings for consumers covered by Medicare Part D, but the sources of the remaining $50 billion in savings that is supposed to accrue to the government “have not been identified at the moment,” according to an Administration spokesperson.

With the Administration scrambling to find ways to pay for a much-wanted healthcare package estimated to top a trillion dollars in just 10 years, every few billion in potential savings counts.  That’s why the government should take a close look at the extraordinary amount of medication waste that is literally flushed down the toilet every year in long-term care (LTC) facilities.

The United States spends an estimated $1.25 billion annually on direct cost of wasted medications in LTC settings – and this is before the Baby Boomer generation has entered the scene.  Long-term care facilities, pharmacies, wholesalers and manufacturers are expected to incur an additional quarter billion in costs annually due to the labor, distribution and operations costs for distributing and disposing of unused medications.  Throughout this process there are 800,000 medication errors made every year in these facilities.

In February of 2009, The American Society of Consultant Pharmacists (ASCP) surveyed its membership – pharmacists that work in the LTC industry – on the topic of unused medications.  The top three concerns of respondents were preventing diversion, developing cost-effective disposal procedures, and reducing the overall amount of pharmaceutical waste.

Where does all this waste and error originate?  A majority of the approximately 17,000 LTC facilities in the U.S. receive medications in punch cards, cassettes, and/or unit-dose packaging that are delivered on a daily basis by a local or regional offsite LTC pharmacy.  These medications are predominately covered through Medicare Part D.

The most prevalent type of packaging is disposable 30-day punch cards, often referred to as “bingo-cards,” which are sent when the prescription is ordered and every time it is refilled.  However, when a prescription is discontinued or the patient is transferred, discharged, or passes away before the supply is exhausted, the unused medications are either destroyed onsite or sent back to the pharmacy.

However, the ability to return and credit unused medications was not addressed when Medicare Part D was created.  And, because no electronic claim crediting process is available, pharmacies must bill upfront by dispensing the entire supply of medications, up to 30 days, with any unused medications becoming waste.  The pharmacy gets paid either way, because there is no incentive to offer credit for unused medication.

A pharmacy that wants to offer credit for unused medication must use what is known as post-consumption billing – but this requires a hassle that creates cash flow delays and reporting burdens that make it all but impossible to manage.

Baby Boomer demographics indicate long-term care facilities will soon be the new epicenter of spiraling medication costs, and the waste occurring today is astounding.  Medication distribution systems in LTC have not fundamentally changed in decades.  In addition, the current systems are riddled with errors that cost untold billions, and our environment is tainted with unused medications that are flushed or incinerated ever year.  The only group that really benefits from this mess is the pharmaceutical companies.

The U.S. taxpayer can no longer afford the status quo.  While policymakers have their sights set on major reform, they should pursue the needless waste that is growing in this segment of healthcare.

To do that, policymakers and regulators should look for ways to increase automation of medication dispensing in long-term care facilities.  This process is well established in acute care settings, where waste has been virtually eliminated and patient safety has improved dramatically.

Now is the time to incentivize long-term care facilities and the pharmacies that serve them to replace the status quo with systems that will free up taxpayer dollars for health reform, and deliver safer care to our rapidly growing senior population.

More on long-term care reform:

Carla Corkern, is CEO of Talyst,
Bellevue-based automated medication-management company. Previously she worked as
chief operations officer at aerospace supply-management company Vykor,
overseeing areas including software development, customer support.

Costs Are Not The Same As Rates

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By PAUL LEVY

Many “old” media outlets do not identify the authors of their editorials. Thus, when an opinion is offered, you have no way of knowing who wrote it or what their qualifications are. Your only recourse when there is something unsupported or absurd used to be to send a letter to the editor, where you have about a 0.5% chance of being chosen for publication. And they would edit what you sent in. Then, blogs were invented.

This thought was prompted last week when I read a New York Times editorial entitled, “Financing Health Care Reform.” Here’s the quote in question:

Meanwhile, it will be important to get some guaranteed fast savings from the health care industries by cutting and reallocating hundreds of billions of dollars from projected spending on Medicare and Medicaid, as the Obama administration has proposed and Congress is considering. Just to be sure, Congress ought to establish a fail-safe mechanism that could impose additional cuts after a few years if savings are less than projected.

Since I don’t know the author(s) or whether he/she/they actually know anything about Medicare and Medicaid, I am uncertain how to respond to this suggestion. Except to say: “Are you out of your mind?” Medicare rates just barely cover costs today, and Medicaid rates have not covered their costs in years.

This is all part of a general confusion about cost savings versus appropriation savings, a point I made back in March:

Continue reading…

The Case for Comparative Effectiveness Research

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By RAHUL PARIKH, MD

When I was a kid growing up in Los Angeles, there was this local TV show my dad used to enjoy  watching called Fight Back with David Horowitz.  Basically, Horowitz, a TV reporter and consumer advocate, used to put the claims a manufacturer made about their products to the test—whether it was if Samsonite luggage could withstand abuse from a Gorilla or Bounty really was the “quicker picker upper,” it was on its show and ended up either endorsed or debunked by it.  It was Consumer Reports come to life, if you will—pitting products against one another to see which one was worth putting down some hard earned dollars for.

Now, over 30 years later, we in medicine are just getting around to doing the exact same thing that Horowitz was with retail way back in the 1970s—comparing the claims made by drug and device makers about their products.

Continue reading…

Musings on Payment Reform

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By CHARLIE BAKER

Charlie_headshot

Charlie Baker is the president and CEO of Harvard Pilgrim, a nonprofit health plan that covers more than 1 million New Englanders. Charlie is a regular contributor to THCB, where he has authored posts on national health reform (See: “Is Massachussetts a Model for National Reform?”  and related issues facing the healthcare sector. (For example: “Shifting Costs From Public To Private Payers“). His posts also appear at his own blog, Let’s Talk Health Care.

This week Charlie confirmed a longstanding rumor, announcing that he will be giving up his position at Harvard Pilgrim at the end of July to run as a GOP candidate for governor of Massachusetts. You’ll find more about his campaign on his web site, CharlieForMA.com.

The Commonwealth of Massachusetts – along with a number of other states (including New Hampshire and Maine) and the federal government – is kicking around a number of ideas concerning payment reform.  The argument goes something like this – since the current health care system, led by the gigantic Medicare program, pays primarily on a fee for service basis.  This “do something” payment model encourages clinicians and hospitals to do “more” for patients than they might do otherwise, if they weren’t encouraged to “do something” to get paid.  Add to that the fact that fee for service – again led by Medicare – pays more for new technology than it does for existing technology, and less for primary care, and you have the primary ingredients in the recipe that’s driven our system to be technologically driven, volume driven, fragmented and very expensive.

In Massachusetts, the group that’s working on payment reform seems to think the solution to this problem is to move everyone away from fee for service and into something that’s being called, “global budgets.”  Put simply, global budgets are a new and improved form of capitation.  Let me be clear on this one – I’m actually a big fan of both.  I believed in capitation when I worked in state government, and I worked for a medical practice (Harvard Vanguard Medical Associates) before I came to Harvard Pilgrim that was built on global budgets.

And before I go any further, I would offer up the cover story in this month’s issue of Health Leaders Magazine – titled “Bundling By Decree” as a solid a representation of the pros and cons of this debate as it winds its way through the national discussion around health care and payment reform.  This article is primarily about bundling payments around episodes of care, but the issues it raises – in both directions – apply in either context.

With that said, I wonder about whether or not global budgets, at least in the short term, are the answer to our health care cost and quality problems.  For some provider organizations, global budgets work – but they work in large part because those particular clinicians believe in them, and want to practice in environments that are based on them (like Harvard Vanguard/Atrius HealthCare).  But that represents a fairly small slice of the practicing clinician community – I’m guessing 10-15 percent.  Maybe 20.  It’s also not clear to me that this issue, above all else, drives our cost/quality problem, since many other countries that spend a lot less than we do on health care and have solid clinical results use fee for service payment systems too.

As far as I can tell, those other countries that spend less than us on health care do two things differently than we do.  First, they spend less on each service than we do – sometimes a lot less.  They also have robust primary care systems.  This, in particular, is just the opposite of our approach.  Our payment policies – and as a result, our medical education system – have been disinvesting in primary care for years.

In the short term, I’m not sure global budgets solve this disinvestment problem.  First of all, it’s financial and operational whiplash for a system that’s been running on fee for service for years.  That, all by itself, will take some getting used to.  It’s also not clear that Medicare or Medicaid – which make up 50-60 of the payments to providers to begin with – would also adopt global budgets.  If they don’t, having private sector payors using global budgets and the public sector payors using fee for service is just about  the worst outcome I can think of for providers and their patients.  The mixed messages these two payment models would send about what matters and what’s important would be virtually undecipherable.

This makes me wonder if our short term approach shouldn’t focus instead on changing the message all payors send under the current fee for service system to providers by improving the way we pay for primary care.  No one thinks we can possibly deliver integrated, coordinated care if we don’t send some signals to the medical and medical education community that primary care matters.  If a young medical student can make $250 an hour in primary care – or $1,000 an hour in dermatology – or $2-3,000 an hour in cardiology or orthopedics – how hard do you think it is to get that person into primary care?  The answer is it’s wicked hard – and the declining number of students going into primary care coming out medical school for the past decade is proof positive of that.  We used to be 50/50 primary care / specialty care.  Now we’re 70/30, and some of the anecdotal information suggests that kids coming out of U.S. medical schools are now running 15/85 primary care/specialty care.

Think about it.  No one disputes the fact that primary care has a key role to play in care management and care coordination – especially as the Baby Boomers get older.  The state’s Payment Reform Commission says global budgets will take three to five years to implement – and expects that every doctor will be using an EMR as one of its requirments for success.  Will this approach really grab today’s medical students and practicing clinicians and say – ”HEY!  It’s time to invest in primary care!”  In the short term, I think we’re more likely to get more capacity, faster, into primary care by boosting, on a relative basis, the fees paid to primary care providers by the private plans, Medicare and Medicaid.

Over time, maybe everybody gets to global budgets, but in the meantime, I think we need to do more to support primary care.

Op-Ed: Health Care Re-invention and Personal Responsibility More Critical to Reform than Government Intervention

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By DR. STEPHEN KARDOS

Stephen Kardos

President Obama should be commended for addressing the challenge that’s facing our nation’s health care system. While Democrats and Republicans agree that the health system is broken (since 1975, per person annual health spending has grown 2.1 percent faster than overall economic growth per person¹), there is no clear agreement on the next steps that need to be taken to fix the problem.

President Obama has offered the idea of implementing a national health care plan; however, in its current iteration, his plan doesn’t address what’s broken with the system. Instead of flooding the system with 46 million more insured persons and spending $1.2 trillion over the decade, Obama should look to the hard evidence that indicates a third of all health dollars currently spent each year (more than $750 billion) are wasted. That lump sum should be brought back into the system to care for the uninsured and reduce the national deficit at the same time.Continue reading…

The Affordability Model

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By ROBERT LASZEWSKI

Capital_2Most health care experts agree the reason our system is so
unaffordable is because of all of the waste  and unnecessary care—up to
30% of what we spend.I will suggest that it will take the
genius of individual creativity to separate the 70% of this health care
system that is the best in the world from the 30% that is waste.So
far, the Congress has focused more on entitlement expansion then
fundamentally reforming the system and tackling the real
problem—getting all the excess costs out. The result so far is
expensive health care proposals and no real reform.How can we actually make the health care system affordable as we expand coverage? I will suggest a three-pronged attack:

Continue reading…

Three Initiatives to Reduce Costs and Increase Health Care Efficiencies

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By DALE H. YAMAMOTO

Yamamoto,_Dale_2006 Two major objectives underlying all current health care reform proposals are to reduce health care costs and to improve the quality of health care delivery. In my recent essay, part of the Society of Actuaries’ new essay collection on health care reform, I touched upon this health care efficiencies topic. There are three potential initiatives that may be undertaken by the government and the private sector:

  • Common provider fees
  • National data warehouse
  • Physician council

These initiatives assume the creation of something similar to a National Health Board described in Tom Daschle’s book, Critical: What We Can Do About the Health-Care Crisis. This will to help provide input and organization on the health care reform work to be done.

Common Provider Fees

All of the major health plans spend a lot of time contracting with physicians, laboratories and hospitals for their network programs. Ten years ago, there were marked differences in these contracts between the major plans. Today, these differences have narrowed significantly so that many experts consider them a tie in many cases.

The first initiative is to create one common contract between all health plans and providers. To accomplish this, a national group comprised of government personnel and knowledgeable provider contractors from the health plans will set national guidelines. Regional contracting groups will be entirely made up of current health plan contractors and will do the local contracting under national guidelines.

This initiative will, in the long run, save administrative costs for both health plans and providers. Health plans will likely only need a handful of people in this area to act as liaisons with the new contracting entity. Today, physician offices spend an inordinate amount of time on administrative negotiations with health plans on fee payment levels. Under this initiative, providers will deal with one contractor and their fees will be the same for all health plans.

Next steps for this type of arrangement include pay-for-performance and other quality improvement initiatives that will be easier to implement on a national basis with a common contracting mechanism.

National Data Warehouse

The Holy Grail of health care is defining quality. And, a key to better understanding quality health care delivery is through health claims and utilization data. All health plans independently attempt to develop quality metrics, but in many communities of the country, they do not have the needed volume of data to calculate statistically significant results. Pooling all claims data together will allow more robust analysis and hasten the establishment of quality criteria for providers. This type of quality analysis needs to be valuable to both payers and consumers. For payers, quality analysis helps them potentially understand payment mechanisms, quality providers, regional differences and medical management techniques. For consumers, there is a better understanding of practice and potentially cost differences of providers. So, the primary purpose for creating a national data warehouse will be to develop key quality measures that all parties can agree on. This, in turn, could be communicated to the general population.

Agreements of data sharing will need to be negotiated among the health plans, and limitations of the data need to be recognized. Staffing of the analysis needs to come from the health plans and the medical community—not academia. Researchers will need a strong practical background in order to understand the key drivers of health care costs and quality.

Physician Council

A byproduct of the data warehouse will be the reporting of medical procedures. Analysis of data will assist a panel of physicians in identifying “low hanging fruit” of commonly done procedures that have a large variation in cost by community. After identifying a number of these procedures, a better understanding of the reason for the variations will be conducted. Targeted communication will be made to the profession, for procedures where there are clear best practices that could reduce the variation.

As the medical practice evolves, these best practices need to change to match new technologies so these new guidelines will be constantly reviewed. In addition, new best practices will continuously be added to the guidelines. Guidelines should be flexible enough to continue to allow professional judgment of physicians in the treatment of their patients.

The physician council itself will be made up of practicing physicians. These participants will not hold permanent positions. Regional councils are needed to account for regional differences in practices and to promote physician cooperation. The regional councils will allow a process for local physicians to get counsel and to gain input into the national council.

The creation of the guidelines will better assure good quality health care delivery throughout the country. These will provide a means to more efficiently spread new technologies developed in one community to other communities.

Summary

These three initiatives will create a foundation for health care reform. The timeframe for fully evolving these measurements will take some time, but five years is a very reasonable expectation to create meaningful metrics. Finally, the creation of the physician council will provide a more efficient means to communicate best practices for more procedures.

Dale H. Yamamoto, FSA, FCA, MAAA is an independent consultant with his own firm, Red Quill Consulting, in Barrington, IL. He has testified before Congress on the topic of health care reform and Medicare and has delivered speeches at a number of professional actuarial and industry meetings.  A former Vice President of the Society of Actuaries’ Board of Governors, Dale has published several articles on the subject of group benefits.

More on cost-reduction:

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