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Coordinating Care: It’s A Moral Question, But Not A Hard One

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By JOE FLOWER

Under the headline, “Medicare Plan for Payments Irks Hospitals,” today’s New York Times details the opposition stirred up by the government’s “value-based purchasing” initiative. If you’re buying anything (and the US federal government is the largest purchaser of healthcare in the world), on what basis other than value would you want to buy?

The measure at issue is “Medicare spending per beneficiary” during hospitalization, and in the 3 days before and 90 days after. The hospitals and hospital associations that are complaining have, mostly, two beefs: “Our patients are sicker,” and “We can’t be responsible for what happens, and what tests and procedures doctors order, outside our walls.”

The government’s response to the first is that the system will be adjusted for older populations, more acuity, and other variables. The response to the second is more complex, but it amounts to: “Work it out.”

And there is good reason for this. In studies going back two decades, the Dartmouth Group has shown wide disparities in Medicare payments per beneficiary between regions and between hospitals. A recent Institute of Medicine study took the Dartmouth stats and, in response to all the talk from hospitals that “our patients are sicker,” or “but we have to pay for teaching and research,” re-worked them to back out all those confounding factors. The Dartmouth Group’s study showed that the most expensive areas spent three times as much as the least expensive. After the IOM backed out the confounding factors, the data still showed that the more expensive areas spent twice as much.  And the expense does not vary so much with inner-city status or number of illegal aliens as it does with whether health care in a given area is well-organized and coordinated or unorganized and fractured. It’s a really easy pattern to see if you stare at the maps of expense long enough, and know a lot about different healthcare markets.Continue reading…

Earth to Republicans: You Are In Big Political Trouble Over the Ryan Medicare Plan

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By ROBERT LASZEWSKI

It should now be clear to Republicans they are in trouble over the Ryan Medicare plan.

Yesterday, they lost a seat in a solid Republican New York House district. Their candidate had benefited from lots of money and House leadership attention. The big issue was the Ryan Medicare plan.

All month, Republican Presidential candidates have been walking a tightrope over the Ryan plan–don’t embrace it but don’t criticize it either for fear of offending the base who will drive the primary outcomes next year. You only had to watch the Gingrich implosion to see what happens if you fall off that tightrope.

Next the Senate will take up the Ryan budget. Senate Democrats can’t wait for a vote on it and are making the Ryan Medicare plan the central issue. Already, at least three Senate Republicans have said they will not vote for the House budget over the Medicare issue. Leader McConnell, sensitive to its political vulnerability, has told Senators they are free to vote their conscience on this one.Continue reading…

A New Cost Control Idea – Paying For Outcomes

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By JOHN E. MCDONOUGH

When it comes to reducing or controlling rising health care costs, we face a problem called “the fierce urgency of NOW.”

We have learned from the Medicare and Medicaid budget proposals by Rep. Paul Ryan, R-Wis., that Republicans have no substantive ideas on how to address these costs beyond shifting the bill to consumers and states. We also know that Democrats embedded a lot of promising ideas to generate savings into the health law — concepts ranging from medical homes and accountable care organizations to payment bundling and value-based insurance design. But these ideas will take time before we know if and how well they work.

But time is something we don’t have.

The federal government, states, employers and consumers are all struggling under the pressure of rising health care costs. For them, solutions can’t come soon enough.

State governments are facing a “Medicaid desert” between the end this year of the stimulus package’s enhanced federal matching rate and the 2014 implementation of the health overhaul’s Medicaid expansions. Some worry the sorry choices to address the funding shortfall will come down to cutting benefits, shrinking provider payments, hiking cost sharing and shredding eligibility. Proposals to control spending within Medicare have put that program equally in peril.Continue reading…

Medicare Announces Rules For Quality Bonuses To Hospitals

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By JORDAN RAU

Medicare took its broadest step yet in moving away from its traditional hospital payment method, finalizing a plan to alter reimbursements based on the quality of care hospitals provide and patients’ satisfaction during their stays.

The initiative is the beginning of a transition from paying hospitals on the basis of the amount of care they provide. Many health care researchers believe this fee-for-service system has encouraged unnecessary care, driving up costs and giving hospitals no incentive to economize.

Medicare’s new “value-based purchasing” program was mandated in last year’s health care law. It has sparked less discussion than has another experiment to change Medicare’s payment system through accountable care organizations, where a select group of doctors and hospitals get bonuses if they find ways to save money.

But this latest payment change affects twenty times more hospitals than would ACOs. More than 3,000 acute care hospitals will have their payments adjusted starting in October 2012.Continue reading…

Fixing The Failure At Physician Compare

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By MICHAEL MILLENSON

The launch of Medicare’s Physician Compare website at year-end should have been a watershed event in the long campaign for health care transparency and patient empowerment. Instead – and it pains me to write this – Physician Compare is a case study in how the interests of the average citizen can be shunted aside by indifferent government, lazy journalists and solipsistic special interests. That remains true despite all of those involved being Good People Trying To Do The Right Thing.

In reality, the site is confusing and unfriendly to consumers, painfully slow and, worst of all, factually unreliable. Put bluntly, the agency, whose leader famously called himself a “patient-centered … extremist” in a 2009 Health Affairs article, has produced a consumer tool that practically shouts, “We couldn’t care less whether any consumer ever uses this.”

Fortunately for CMS, most of the journalists writing about the site apparently did little more than cut and paste the government press release description of it into their own stories. If I were a federal flack, I’d drink a toast to that famous Marx Brothers movie line: “Who are you going to believe, me or your own eyes?”

Continue reading…

Controlling the Medicare Budget — Time to Fast Forward to 1999?

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By ROGER COLLIER

The Congressional Budget Office estimates that the government deficit will exceed one and a half trillion dollars this year, with federal health care annual expenditures expected to hit the trillion dollar mark by 2012. The largest federal health care program is, of course, Medicare, with costs projected to be close to $600 billion in 2012, and growing at around seven percent a year thereafter, although forecast to drop to a mere six percent annual increase if and when the Accountable Care Act is fully implemented.

Republicans and Democrats have each offered proposals to reduce projected Medicare expenditures, Republicans by shifting much of the cost of the program to beneficiaries, Democrats by passing responsibility to the already hobbled and politically endangered Independent Payment Advisory Board. Neither proposal has any realistic chance of passage.

Maybe it’s time to blow the cobwebs off the 1999 proposal from the National Bipartisan Commission on the Future of Medicare.

The Commission, co-chaired by Democratic Senator John Breaux and Republican Representative Bill Thomas, was created by Congress as part of the Balanced Budget Act of 1997, back when bipartisan cooperation was still sometimes possible. The Commission spent nine months examining Medicare’s program structure and costs and alternative approaches to reform, with the two co-chairs issuing their joint recommendation in March 1999. The co-chairs’ recommendation was, however, supported by only ten of the seventeen Commission members, one short of the number required for formal adoption, with the more liberal members generally opposed to the proposal’s cost control approach. Ironically—in the light of subsequent economic events—one key reason for the failure of the co-chairs’ proposal to gain more support was the booming economy of the later Clinton years, combined with the success of already enacted program changes dictated by the Balanced Budget Act.

Despite its failure to achieve the two-thirds majority needed for adoption, the 1999 proposal includes some recommendations that together look more practicable and potentially more politically acceptable than those of either Representative Ryan’s Republican plan or President Obama’s Democratic proposal:Continue reading…

There Aren’t Enough Rich People To Pay For Medicare And Medicaid

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By ROBERT LASZEWSKI

I hear more and more of my progressive friends arguing, in the context of deficit reduction, that we should be raising taxes before getting aggressive about reducing the cost of Medicare and Medicaid — as well as Social Security.

To a point, I agree.

This country is in such a hole that it is senseless to deny that at least some new taxes will be needed to pay for all of the nation’s bailouts and accumulated debts.

For instance, progressives would like to end the $1 trillion cost over ten years of the Bush tax cuts for those making more than $250,000 a year.

I also believe that ending those tax cuts is necessary.

But if you’re looking to better understand the budget policy choices we face, I highly recommend the March 2011 Congressional Budget Office study, “Reducing the Deficit: Spending and Revenue Options.” The CBO prices out about all of the budget options.Continue reading…

Controlling the Medicare Budget – Two Infeasible Proposals

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By ROGER COLLIER

How to slow Medicare’s escalating costs has been the big health care policy issue this month, with Republicans and Democrats offering competing proposals, each part of broader plans for reducing the federal deficit—projected to be $1.5 trillion this year, with the government borrowing 40 cents for every dollar it spends.

Unfortunately, neither the Medicare proposal of Representative Paul Ryan’s House Budget Committee, nor that offered in response by President Obama, can be considered realistic.

Both proposals do have some merits. Representative Ryan’s plan for switching Medicare to a quasi-voucher premium support program in which beneficiaries would pay part of the premium for their choice of health plan could make seniors more cost conscious and introduce more competition among insurers. President Obama’s proposed strengthening of the Independent Payment Advisory Board provision of the ACA by lowering the trigger point for IPAB action would force further efforts to reduce costs, while doing much to remove Medicare policy from lobbyist-vulnerable political considerations. Both, if implemented, would effectively guarantee that federal Medicare expenditures would drop dramatically from current projections.

Neither, however, has any chance of enactment. The Congressional Budget Office’s projection of the average 65-year-old paying more than two-thirds of the cost of Medicare coverage by 2030—and more than twice as much as under the present program—almost certainly dooms Representative Ryan’s proposal. (The CBO’s assumption of the continuation of the differential between traditional Medicare and insurers’ equivalent offerings can be questioned, but it’s the forecast of the unfortunate 65-year-old’s 68 percent share of the tab that will resonate for seniors, their lobbyists, and their political supporters.)Continue reading…

The 100% Estate Tax

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By MERRILL GOOZNER

There is a dangerous but beguiling econometric logic behind the idea that turning Medicare over to the insurance industry will lower health care costs. It’s an idea that could catch on if the general public became convinced that there is nothing we can do acting together as a society to lower the cost of care. Only the market can do it, the Republicans claim. Force seniors (or the poor or anyone, for that matter) to have more skin in the game, and they’ll use their clout as consumers to separate the wheat from chaff in modern medicine. Expensive, wasteful tests, procedures, and drugs will wither for lack of customers.

Democrats, in attacking the Republican plan that passed the House yesterday, relentlessly hammered away at the cost to future seniors of having “more skin in the game.” Two-thirds of the cost of care within a decade of Medicare privatization in 2023 will fall on them. But the 2030s must seem very far away to people in their 40s and 50s. Isn’t it likely that they won’t think about that far-off time, but instead grab on to the promise of future lower costs, which, let’s be frank, the Affordable Care Act (health care reform) may not be able to achieve.

So here’s the real argument young and middle-aged people need to hear, and the real reason why the “more skin in the game” argument can never work for seniors or other vulnerable populations, including them when they reach that age. Seniors and the poor account for over half of health care spending. Within those groups, 5 percent of the population accounts for 50 percent of health care costs; and 20 percent of the population accounts for about 80 percent. These costs come for the most part at times when economic incentives have no influence at all on medical decision-making: in medical crises; in treating chronic conditions; and, for most Medicare patients, in the last six months of life.

That’s why a voucher program for Medicare, which will shift an increasing share of those inevitable costs onto the elderly themselves, can fairly be categorized as a 100 percent estate tax or death tax. People under 55 need to know that if the plan crafted by Rep. Paul Ryan were passed, most of them will never have a cent to leave to their children. It will all go to the health care industry to support the American way of dying.

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, Financial Times, The American Prospect and The Washington Post. You can read more pieces by Merrill at  GoozNews, where this post first appeared.

Three Formulas

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By MERRILL GOOZNER

During the last election campaign, Tea Party-backed Republicans across the country rode to power on a tidal wave of advertising attacking health care reform as a cut in Medicare.  It is. If efficiency programs like the accountable care organizations being formed across the country don’t hold down spending by about $500 billion over the next decade, an Independent Payments Advisory Board would make recommendations for holding growth in Medicare spending to the growth in the domestic economy (GDP) plus one percentage point.

In most years when the economy is humming along, that would be about 4 percent. Over the past decade, health care spending for seniors grew at about 6 to 7 percent — the same as health care spending for the rest of the population. So if the Medicare delivery system reforms don’t work, Congress will either have to adopt the IPAB’s recommendations or institute cuts of its own to ratchet down spending.

This week, President Obama upped the ante to meet his budget deficit reduction targets over the next decade. Medicare spending would be held to GDP plus 0.5 percent, another approximately $300 billion in cuts. About $50 billion would come from eliminating unnecessary errors and hospital re-admissions. The rest was unexplained.Continue reading…

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