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Tag: Medicare

A Bizarre Report

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I have been watching the release of the Medicare Trustees reports for many years and I have never seen anything as strange as what happened last week.

Although these reports are normally carefully embargoed, Health and Human Services Secretary Kathleen Sebelius released parts of it (the parts most consistent with the administration’s spin) several days in advance. Then Sebelius, Treasury Secretary Timothy Geithner and other trustees, all with happy faces, appeared for the formal release last Thursday, where one person was notably absent: Medicare’s chief actuary, Richard Foster.

Enterprising reporters who researched all the way to the end of the report (page 281), where Foster’s sign-off signature would normally appear, found instead a statement disowning the entire report, encouraging readers to ignore it, and diverting everyone’s attention to an alternative report prepared by the office of the Medicare actuaries.

As noted the other day at my blog, I think I can safely say this has never happened before in the history of Medicare.

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Government as an Engine for Innovation

I’ve been thinking a great deal about the newly formed Center for Medicare and Medicaid Innovation. (CMI). This entity was established as a result of the Affordable Care Act (the new healthcare reform legislation) and its purpose is 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.  The legislation gives this entity over $10 billion dollars initially and broad authority to figure out new ways of doing things better and differently than before.   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.  That’s great news for innovation, which is sorely needed in the U.S. healthcare system.

Among the key objectives that the administration has discussed is how to transition the collective mindset from one of healthcare to one of health.  In other words, if a person is healthy, they do not need health CARE. This is a very important distinction; it puts the emphasis on prevention and wellness as opposed to what you do when somebody is already sick.  In order to affect such a transition, there must be an emphasis on innovation to change the way we have traditionally looked at the healthcare world.

This is an interesting challenge and one that requires a great deal of thoughtfulness in how to approach the universe of innovation opportunities. As venture capitalists, I and my colleagues vet, select and monitor deals and specifically focus on how we pick winners and avoid losers.  It’s a little like being asked to handicap who’s going to win the World Series, but then again, that is pretty much our job as VCs: to act like Billy Beane and pick those most likely to succeed in a capital efficient way based on detailed analysis of trends and meaningful data, not solely based on experience.Continue reading…

Can CMS Be a Venture Capitalist?

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

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

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

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

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?

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…

If HIT Plan A Doesn’t Work, What’s Plan B?

By VINCE KURAITIS, JD, & DAVID KIBBE, MD

Pop quiz: Among early-stage companies that are successful, what percentage are successful with the initial business model with which they started (Plan A) vs. a secondary business model (Plan B)?

Harvard Business School Professor Clay Christensen studied this issue.  He found that among successful companies, only 7% succeeded with their initial business model, while 93% evolved into a different business model.

So let’s take this finding and reexamine our human nature. In light of these statistics, what makes more sense:

  • Defending Plan A to your dying breath?
  • Assuming Plan A is probably flawed, and anticipating the need for Plan B without getting defensive?

We question many of the assumptions underlying HITECH Plan A. We also want to talk about the need and content for Plan B in a constructive way.Continue reading…

Are Doctors Really Boycotting Medicare?

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…

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