Congress just had an uncharacteristically big week – with significant implications for healthcare policy. It flew by fast and furious, so here we pause to unpack the most significant developments and what they teach us about the future.
1. The Permanent Doc Fix Effort is Real. You have to hand it to the committees of jurisdiction, they have kept their heads down and plugged away all year at permanently repealing the broken Sustainable Growth Rate (SGR) formula that dictates Medicare payments to doctors. They’ve floated new payment methodologies, added policy addressing the package of “extenders” that perennially travels with the “doc fix,” and now all three have successfully completed bipartisan mark-ups of their respective approaches. Furthermore, the three month SGR patch that was included in the budget deal is an implicit endorsement by congressional leadership that there’s actually a chance this could happen in the first quarter of next year.
The next step is to identify savings to pay the roughly $150 billion price tag, which has always of course been the biggest rub. That process is going to take center stage early next year in a “Super Committee-lite” process of negotiating various potential cuts to healthcare programs. The cynics are still betting against it, but we’re closer than we’ve ever been before to replacing the 15+ year-old SGR.
2. The Long-Term Care Hospital Sector Will Never be the Same. In a lesser-noticed component of the three month doc fix patch alluded to above, Congress eliminated the payment differential for LTCHs (pronounced el taks) and regular inpatient hospitals for patients who do not meet clinical complexity criteria. What began as an esoteric exemption for a small handful of hospitals in the early 1980’s and grew to a $6 billion Medicare benefit annually is now going to start to plateau.
The market liked the change, paradoxically, because it was gentler than some bean counters had recommended and gave plenty of time (four years) for sophisticated companies to adjust. But the hot LTCH business just got some pretty cold water poured on it.
3. The Budget Deal Helps Healthcare Programs. The Murray-Ryan agreement to set spending levels for the next two years alleviated some of the impact of the sequester on discretionary spending programs like those at the FDA, NIH and HRSA. This means that funding for new product approvals, clinical research, workforce development programs and some primary care services will be modestly improved in 2014 and 2015.
Among the sacrifices Congressional representatives placed on the altar of deficit negotiations is an “inflation adjustment” that will shave “only” a few hundred dollars from an average, newly retired Social Security beneficiary’s income each year. But the cruel hoax is that the reduction will amount to as much as $1600 when the beneficiary is older, poorer, and sicker. Many seniors already have a tough time paying for food, rent, and medical care.
Even worse, reductions in beneficiaries’ incomes may well cost government more for potentially preventable hospital and long-term care. Senator Elizabeth Warren and other New England lawmakers should be lauded for splitting from Democratic representatives and the Administration regarding this ill-conceived proposal.
Many senior citizens are already vulnerable to economic hardship. A recent US Census analysis that counts rising medical expenses found that over 1 in 6 elderly people live in poverty, unable to meet basic living expenses, and almost 20% more are living just above the poverty line. Social Security is the only or largest source of income for about 70% of seniors; the average monthly check is only about $1200.
The typical retirement savings of seniors is a paltry $50,000 — barely enough to get through several years’ living expenses, let alone 20-30 years of retirement. This is not the result of cavalier actions by the older generation; these are the Americans whose home values have plummeted, whose defined-benefit pension plans have been decimated or disappeared, and whose retirement accounts were eviscerated by the Wall Street meltdown of the last decade. Yet the current proposal punishes these Americans as if they were at fault for their poverty.
Fidelity Investments has estimated that the average retired couple will need more than $200,000 to pay their out-of-pocket medical expenses during retirement, and that figure is probably conservative.
The arithmetic of Social Security benefit reductions just doesn’t fit with this reality.
Simplistic rhetoric that Medicare is “broken” fails to diagnose where the real challenge lies in creating enduring financial stability for this critical program. Medicare is doing exactly what it was designed to do: draw in funds from working individuals and beneficiaries to help millions of older Americans and people with disabilities pay for medical care. A fundamental problem is how Medicare pays for services and how the delivery system responds to that payment structure.
The current medical care delivery system that Medicare pays for is fragmented, uncoordinated, favors the health care provider over the person receiving care, and is exceedingly expensive. How traditional Medicare pays for services — through a fee-for-service model that values quantity of services over quality of health outcomes — validates the current delivery system. However, with growing overall health care costs, increased use of expensive high-tech medical services, and the coming of age of baby boomers, rising Medicare costs for this broken delivery system threaten to upend the program and bankrupt the nation. But there is hope: Medicare can be used to transform our broken health care system by changing the way it pays for services.
Medicare’s antiquated payment system and the inefficient health care delivery system it encourages creates an even more egregious problem for those individuals who are part of Medicare’s most expensive population: seniors who have chronic health conditions (such as heart disease, asthma or cancer) combined with difficulty with activities of daily life. They see multiple doctors, take numerous medications, and are faced with the difficult task of managing this complex array of providers, services and treatments on their own. The 15 percent of seniors who have both chronic conditions and functional impairments account for nearly one-third of total Medicare costs. Medicare spends almost three times more on these individuals than on those with chronic conditions alone.
This past week, the NYT New Old Age Blog featured a post about me and my practice. Titled “Walking Away from Medicare,” it describes my decision to opt-out of Medicare and create a different kind of geriatric practice.
It has generated quite a lot of comments: 163 at my latest count. Most of them judge me pretty harshly. It seems that many people feel that I’m doing this for the money. And that I don’t care about society or older people.
Of course, if you know me or if you’ve been reading this blog, then you’ll know that nothing could be further from the truth. My practice is fairly small, in part because my goal in having this practice was to have a way to keep working with patients and families, while having the flexibility to pursue my other professional interests. Since I started the practice, I’ve spent most of my time writing for this blog, learning about the worlds of digital health and healthcare innovation, and thinking about how we can teach geriatrics directly to caregivers.
Growing older with health care and support needs is a “people” issue; not a partisan one.
As the entitlement debate rages on and the health care system evolves, the bottom line remains that there needs to be more affordable and accessible options for all people who need long-term care. This is the kind of care that we are all likely to need at some point in our lives as we age; it will range in scope from everyday assistance such as getting groceries, to more comprehensive help in the form of assisted living or nursing home care. Those few who are fortunate enough not to face these kinds of needs personally are likely to need to care for a loved one at some point in their lives, such as a parent, grandparent, or spouse. As a country, we seem blind to these realities, even as the short window that we have to make a meaningful difference for the emerging older population is closing rapidly.
The fact is that roughly 70 percent of Americans over the age of 65 will need some form of long-term care, on average for three years. Yet most people, when asked, think they will never need this kind of care.
To make matters even worse, many individuals mistakenly believe that Medicare will pay for long-term services and supports even (it does not). The result is a public that is woefully underprepared and ill-equipped to prepare for what are probably inevitable health needs.
This gap in knowledge and awareness has contributed to our current “non-system” of financing long-term care, in which people are left to fend for themselves to pay for services or spend down to near poverty levels to qualify for Medicaid; for only then is public help available. This is neither a sustainable nor a dignified policy. We need to develop a better model that will ensure that all Americans can age with dignity, choice, and independence. But what would that look like?
As a physician, I believe we have perfected the health care delivery model for 1972 that focuses on acute care, and is not necessarily designed to meet the needs of individuals living for an extended period of time with multiple chronic conditions. What we need today and into the future is an updated toolbox for financing long-term care that serves the needs of a 2013 population. In 1965, the average life expectancy was 69 years old. If an older person experienced a major health event—a heart attack or stroke, for example—they might have recovered, but they probably did not live much longer beyond that event. Today, with advances in medicine and technology and the increased number of intensive care units and critical care units, people are living longer than ever before, but with functional impairments and multiple chronic conditions. The delivery model we have today is not designed to meet these growing care needs, and the financial strains on individuals and families are significant.
What user personas do healthcare technology designers and entrepreneurs have in mind as they create their products? And how often is it the family caregiver of an elderly person?
This is the question I found myself mulling over as I wandered around the Health Refactored conference recently, surrounded by developers, designers, and entrepreneurs.
The issue particularly popped into my head when I decided to try Microsoft Healthvault after listening to Microsoft’s Sean Nolan give a very good keynote on the perils of pilots and the praises of platforms (such as HealthVault).
Why? Because they all require way too much effort to enter long medication lists. Which means they are hardly usable for my patients’ families.
Could HealthVault do better? Having heard generally promising things about the service these past several months, I signed up and decided to pretend I was the daughter of one of my elderly patients, who had finally decided to take Dr. Kernisan’s advice and find some online way to keep track of Mom’s 15 medications.
Sigh. It’s nice and easy to sign up for HealthVault. However, it’s not so easy to add 15 medications into the system. When I click the “+” sign next to current medications, I am offered a pop-up box with several fields to complete.
Years ago, as a family physician in Louisiana, I made house calls. Certain patients were too sick or too hurt to get to my office. Sometimes a condition or injury had worsened, requiring my evaluation bedside. I would visit patients at home for the simplest of reasons: home was where they needed care.
By the mid-1980s, the pressures of time and money prevented most physicians from making house calls anymore. But I kept seeing patients at home until I retired from my practice after 29 years. Home visits enabled me to better detect, diagnose and treat most health conditions. Many of the patients I saw might otherwise have wound up in an emergency room and eventually been admitted to a hospital.
If we hope to rein in health care costs and improve quality, we need, in effect, to bring back the house call. Americans are living longer than ever before and a higher percentage of the population is elderly, with both trends sure to accelerate drastically in the decades ahead. Baby Boomers are now turning age 65 at the rate of roughly 10,000 per day.
As the older demographic expands, so, too, does the number of people who live with chronic diseases, chiefly diabetes, high blood pressure and heart failure. About three in four of Americans age 65-plus suffer from more than one such chronic condition. The single biggest and fastest-growing contributor to healthcare costs is chronic disease. That’s why an estimated, 49% of our health care costs go toward 5% of Medicare beneficiaries.
Yet the U.S. health care system is still based on a massive misconception: that health care for the sickest of the sick, typically the elderly and the chronically ill, should be carried out almost exclusively in institutions, primarily hospitals, but also nursing homes and assisted living facilities. And that health care delivery should consist largely of, say, a trip to the emergency room or a four-day hospital visit for pneumonia. That kind of episodic engagement represents short-term thinking. When it comes to health care, hospitals are essential, but are only a part of the answer.
This is partly fact, partly fiction. Medicare entitlement begins when a person ages in at 65, however just because beneficiaries are living longer does not necessarily mean higher Medicare costs.
The customary formulation of this myth is that Medicare is doomed by its own success in keeping its beneficiaries alive. Not only will the ranks of the program’s beneficiaries increase as the vaunted baby boom generation reaches the statutory age of eligibility, but because people are staying alive longer, Medicare’s costs will explode. The first part of this contention is indisputably true: entitlement to Medicare occurs when a person reaches age sixty-five, and the baby boom generation that is generally calibrated as starting in 1946 has arrived at that threshold. As a result, additional Medicare beneficiaries enter that program every day, and because the baby boom generation dwarfs any preceding age cohort, it is highly likely that more beneficiaries will be added to the program than are lost as older beneficiaries pass away. Consequently, the number of Medicare beneficiaries will inexorably increase over the next decade or so. Ceteris paribus, more beneficiaries mean higher aggregate costs.
The second part of the contention, however, is myth. Just because today’s Medicare beneficiaries live longer than did their predecessors does not necessarily translate into higher costs for the Medicare program. The source of this apparently counterintuitive proposition is the panoply of programmatic limitations that Medicare imposes on its coverages, regarding the myth that Medicare pays for long-term care. More specifically, beneficiaries who live longer typically do incur higher cumulative health care costs over their post-sixty-five lifetimes, but many of those costs are not borne by the Medicare program. This phenomenon is well illustrated by the following graph from an important analysis that appeared in The New England Journal of Medicine:
FIGURE 1: Cumulative Health Care Expenditures From the Age of 65 Years Until Death, According to the Type of Health Service and the Age of Death
Dementia is a chronic disease of aging that robs people of cognitive function, leaving them unable to tend to even the most basic activities of living. But demented persons can live for many years, incurring long-term care bills that can leave surviving spouses impoverished and estates depleted.
In a study published recently in the New England Journal of Medicine, my colleagues and I reported that the total costs of paying for care for seniors with dementia in the United States are expected to more than double by 2040. Medicaid pays these costs for the poor, and some people have private insurance. But for large numbers of elderly Americans, dementia brings not only human suffering but financial ruin as well.
Designing and building a program to protect Americans from the cost of dementia care is a daunting and expensive task, one that probably cannot be accomplished without the help of the federal government. The federal government has broad experience in creating health safety nets and has been expressing concern over the state of the nation’s long-term care systems for some time now. If Congress and the administration need a reason to act, our numbers on costs can provide it.
Currently, some 15 percent of Americans 71 or older have dementia. That is about 3.8 million people; a large number to be sure, but one that will pale by comparison to the 9.1 million expected to be suffering from the disease by 2040.
Our report, The Monetary Costs of Dementia in the United States, estimated that in 2010 Americans spent $109 billion for dementia care purchased in the market place, like nursing home stays. Factoring in the costs of informal care—provided by family members or others outside of institutional settings—the total cost of caring for dementia patients grew to between $159 billion and $215 billion.
A few weeks ago, The Health Care Blog published a truly outstanding commentary by Jeff Goldsmith, on why practice redesign isn’t going to solve the primary care shortage. In the post, Goldsmith explains why a proposed model of high-volume primary care practice — having docs see even more patients per day, and grouping them in pods — is unlikely to be accepted by either tomorrow’s doctors or tomorrow’s boomer patients. He points out that we are replacing a generation of workaholic boomer PCPs with “Gen Y physicians with a revealed preference for 35-hour work weeks.” (Guilty as charged.) Goldsmith ends by predicting a “horrendous shortfall” of front-line clinicians in the next decade.
Now, not everyone believes that a shortfall of PCPs is a serious problem.
However, if you believe, as I do, that the most pressing health services problems to solve pertain to Medicare, then a shortfall of PCPs is a very serious problem indeed.
So serious that maybe it’s time to consider the unthinkable: encouraging clinicians to become Medicare PCPs by aligning the job with a 35 hour work week.
I can already hear all clinicians and readers older than myself harrumphing, but bear with me and let’s see if I can make a persuasive case for this.