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MedPac on Steroids

I’ve long argued that Medicare reform will pave the way for healthcare reform, and that the Medicare Payment Advisory Commission’s (MedPac’s) recommendations could serve as a brilliant blue print for overhauling Medicare.  (Also see our Century Foundation report on Getting More Value From Medicare).

Now President Obama appears to be backing a proposal that would empower MedPac to realize its vision for reform.  Earlier this week, in a White House meeting with Senate Democrats, the president  reportedly “went out of his way” to mention a bill, introduced by Senator Jay Rockefeller ( D-W.Va)  that would move decisions about Medicare benefits away from Congress, by turning MedPAC into an independent executive agency.  Currently, MedPac is an independent panel that advises Congress. It has no formal power. But under Rockefeller’s bill it would be able to implement its recommendations and fund policy initiatives.

Wednesday afternoon, the White House announced that the President has gone a step further by releasing a letter from President Obama to Senators Max Baucus and Ted Kennedy.  The letter extends the remarks that the president made yesterday, which came close to endorsing Rockefeller’s bill. Writing to Kennedy and Baucus, the  President indicated that the administration could find another $200 to $300 billion for health care reform, linking that proposal to “giving special consideration to the recommendations of the Medicare Payment Advisory Commission” (MedPAC), “a commission,” he noted, “created by a Republican Congress . . . Under this approach,” the president continued, “MedPAC’s recommendations on cost reductions would be adopted unless opposed by a joint resolution of the Congress. This is similar to a process that has been used effectively by a commission charged with closing military bases, and could be a valuable tool to help achieve health care reform in a fiscally responsible way.”

These savings,  he added, “will come not only by adopting new technologies and addressing the vastly different costs of care [in different parts of the country], but from going after the key drivers of skyrocketing health care costs, including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions.”

Giving MedPac the Authority to Take the Politics Out of Fees for Doctors & Hospitals

Under Senator Rockefeller’s bill, MedPac would have the authority to set reimbursements for doctors and hospitals.  As Rockefeller explained in a recent Senate Finace Committee meeting:  “I think that [this is] the best way to take politics out of all of this is to take Congress out of the setting of reimbursements for doctors under Medicare and Medicaid and for hospitals, because there  is a group of 17  . . . completely dispassionate people,” who could do this, Rockefeller explained, referring to MedPac.

“And I think one of the [reasons] you have your $700 billion of wasted money every year,” Rockefeller added,  “is the fact that there are too many political judgments made because there’s too much lobbying and Congress can — you know, unless they’re all health care experts, can fall victim to that. So the idea of MedPAC having the power to set those fees, reimbursement fees, to me is enormously attractive, takes politics right out of it and takes Congress right out of it.”

At the hearing, White House budget director Peter Orszag indicated circumspect support for Rockefeller’s bill: “Your idea of — I think we’ve referred to it as  MedPac on steroids, or a much more powerful role for a body that is widely respected– is one approach.”

What Exactly Does MedPac Recommend?

Until now, most reform advocates have ignored MedPac. The reports that the independent advisory panel issues in March and June of each year are long.  They are dense with detail. And they are very, very smart. The commissioners  understand that health care quality could be higher if we spent less on care.

They have digested the Dartmouth research revealing that when patients in some parts of the country receive more aggressive and more expensive care, outcomes often are worse.  They realize that doctors and hospitals should be rewarded for the quality of the care they provide, not the quantity.  As HealthBeat has reported, they know that the fee schedule that Medicare now follows favors specialists while underpaying primary care physicians,  and they have suggested re-distributing Medicare’s dollars “in a budget neutral way”– hiking fees for primary care while lowering fees for some specialists’ services. They have pointed out that some very lucrative procedures appear to be done too often, in part because they pay so well. The Commission has advised targeting these procedures and comp ring them to alternative treatments—just in case a less expensive approach might turn out to be more effective (and not as risky for the patient), as pricier, more aggressive treatments.

Finally, MedPac notes that some hospitals actually make a profit on Medicare’s payments. This is because these hospitals are more efficient: patients typically spend fewer days in the hospital and see fewer specialists. There are fewer readmissions, And generally, outcomes are better. MedPac suggests that when private insurers pay hospitals more, they may simply be rewarding less efficient hospitals for lower quality care. (And of course, private insurers pass those higher payments along to their customers in the form of higher premiums.)

MedPac goes beyond looking at how we pay providers.  Investigating Medicare Advantage, it has described the care that private insurers are providing as somewhere between “disappointing” and “depressing.”  Taking a look at the boom in hospital construction, MedPac noted, in its March 2008 report that “much of the added capacity is located in suburban areas and in particular specialties, raising the possibility that health care costs will increase without significantly improving access to services in lower income areas”. (Here, I can’t help but think about the current controversy over whether Hackensack University Medical Center should be building a new for-profit facility in a nearby suburb.)

As for the drug industry, in its June 2008 report to Congress MedPac observed that “researchers have shown that bias in industry-sponsored trials is common.” Because we lack disinterested, “evidence-based” information about new products, MedPac noted “we do not know which treatments are necessary for which types of patients. Guidelines do not exist . . . to delineate how much care is typically needed . . . and when patients are unlikely to improve with additional treatment.” In the same report, MedPac cast a cold eye on just how quickly we adopt bleeding-edge medical product and procedures to treat “most common clinical conditions” without “credible, empirically based information” to tell us “whether they outperform existing treatments and to what extent.” In other words, we need unbiased comparative effectiveness research. Those who make a profit on new products and procedures should not be involved.

These are exactly the radical but truthful recommendations that would make any well-paid health care lobbyist shudder.  No wonder the Bush administration ignored MedPac’s advice for eight years.

Now, a new White House is taking MedPac’s recommendations to heart. And Congressional leaders also seem to recognize the link between Medicare reform and national healthcare reform.  In April, HealthBeat reported that Senate Finance Chairman Max Baucus had declared that Medicare would become “the big driver” behind national health reform. Now, it’s becoming clear what Baucus meant.

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in Barron’s and Institutional Investor. She is the author of “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the healthcare system, and the increasingly influential HealthBeat blog, one of our favorite health care reads and where this piece first appeared.

Reconciliation — or War?

Reconciliation. It’s an odd word for something that could precipitate a knock-down, drag-out fight in Congress, but the process that Senate Democrats agreed last week to adopt if health care reform legislation isn’t passed by October 15 was originally intended to reconcile differences among House and Senate budget bills.  What the process does is to replace the usual Senate requirement of a three-fifths majority—needed to end a filibuster, but also consistent with Senate traditions of compromise—by a simple majority.

So, with the Democrats having decided on an aggressive approach (Republican Senator Michael Enzi has called it “like a declaration of war”), what are the implications for the reform legislative process (beyond making Congressional Republicans mad)?

First, is October 15 an absolute drop dead date?

The answer is, not quite. Not only does the reconciliation process provide for up to twenty hours of debate (which could move the deadline out by just two or three days), but Senate Democratic leaders might prefer to continue negotiations on a reform bill if they felt they were close to the magic sixty votes.  This would require the vote of at least one Republican, as well as the only Independent (Joe Liebermann), but would allow Democrats to claim bi-partisan support—even if only a little.

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An Open Letter to the New National Coordinator for Health IT: Part 3 — Certification As The Elephant in Health IT’s Living Room

6a00d8341c909d53ef01157012476e970b-pi In the first and second parts of this series we talked about how and why there is no universal definition for the term “EHR.” Instead there is a legitimate, growing debate about the features and functions that “EHR technologies” should offer physicians seeking to qualify for HITECH incentive payments. We explored the layers of network technology, suggesting that federal regulators should “separate the data from the applications.”

We also argued that there is much to learn from development platforms, recently and in the distant past, that have used standards to open the aperture of innovation. The best of these standards have reflected the experience of what works rather than specifying how to make it work. Defining the standards for data, devices, and network technologies too restrictively could choke off innovation, rendering HITECH’s offerings whose expense and complexity are a barrier to, rather than an incentive for, adoption by physicians. Incoming National Coordinator for HIT David Blumenthal, MD seems to have been considering just this concern when he recently wrote:“… [M]any certified EHRs are neither user-friendly nor designed to meet HITECH’s ambitious goal of improving quality and efficiency in the health care system. Tightening the certification process is a critical early challenge for ONCHIT.”

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The Health IT Stimulus and FQHCs — Don’t Forget About Us!

James Kahn There is a critical element in the American Recovery and Reinvestment Act (ARRA) that targets funds for Federally-Qualified Community Health Centers (FQHCs).  An FQHC is an organization defined by the Medicare and Medicaid statutes that receives funding under Section 330 of the Public Health Service Act.  FQHCs provide primary care services for all age groups and provide preventive health services on site to some of the country's most vulnerable populations, and they are an important part of this country's primary care delivery system.  Among services that FQHCs must provide directly (or by arrangement with another provider) include: dental services, mental health and substance abuse services, transportation services necessary for adequate patient care, hospital and specialty care.  There are more than 16 million Americans who are served by FQHCs.

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The Public Plan–Mutual Assured Destruction?

6a00d8341c909d53ef01157023e340970b-piI typically don’t talk about my travels on this blog but something happened this week that bears reporting.

Whether
the federal government should or should not offer a public health plan
alternative to compete with private insurers in the under-age-65 market
is a hot topic in Washington and in the market.

I recently posted on it in detail: The Public Plan Option for the Under-Age-65 Market—The Biggest Health Care Controversy on the HillThis
past week I met separately with two health insurance CEOs—both
well-known leaders in the business and both from highly regarded
not-for-profit plans.

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A Broker’s Lament: We Brought This On Ourselves

Sinibaldi_2
A huge segment of the American population is simply far too strapped to ever afford the premiums and costs associated with health insurance/health care as it is structured today.

It isn't the employees of government (local, county, state or federal) who will demand immediate change. It isn't the employees of institutional companies (the Motorolas, GEs, Microsofts of the country) who will demand change. It isn't those on Medicare or Medicaid or the VA who will demand change. It isn't the wealthy. It isn't the poor. And, it isn't the vast majority of health insurance agents who work with large group clients (because, while that market is becoming ever more difficult and the work more taxing, they're still selling SOMETHING to these bigger businesses and government entities).

Why don't these people see what I'm seeing? Simply because, while they are feeling the effects of the rise in health care/health insurance costs and the downturn in the economy, most of these businesses and their employees and dependents (and the affluent) have yet to have a clue about how expensive things really are (or in the case of the rich, they can still afford their out-of-pocket expenses). The agents who market to large employers are still making lots of money (I know, I rub elbows with them at my local Health Underwriters meetings once a month).

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Comparing the Effectiveness of Comparative Effectiveness Research

An increased investment in comparative effectiveness research to gather additional evidence on what medical therapies and technologies work best is often cited as a fix for the nation’s rising health costs.

Unfortunately, lessons from its use abroad and in the U.S. show that this dramatically overstates its benefits as a cost-containment tool.

Comparative effectiveness research entities, such as England’s National Institute for Health and Clinical Excellence (NICE) and Germany’s Institute for Quality and Efficiency in Health care (IQWiG), have not led to decreased national health spending on new technologies. NICE recommendations are thought to account for 10 percent of the increase in England’s health costs.

And as Tara Parker Pope reminded us this week in her NY Times Well column, the uptake and adoption of the evidence, which is just as important as the research, varies widely among physicians.

While it hasn’t always been called comparative effectiveness research, the U.S. has plenty of evidenced-based guidelines for physicians and has a long, sordid history with technology assessment (another name for CER).

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Divided we might get somewhere, but not yet

Matthew HoltThe NY Times describes the Republican-less lobbyist meetings with Democrats that are allegedly getting 
towards a consensus on an individual mandate as the way to universal health care. Funnily enough some of those same groups (e.g. The Business Roundtable & the NFIB) appear to be lessening their commitment to the worthily named “Divided we Fail” campaign.

And then on the second page of the NY Times article there’s this:

Many businesses, crushed by soaring health costs, say they now support changes in the health care system as a way to control their costs. But in its summary of the recent discussions, Mr. Kennedy’s office said, “There was little consensus on the employers’ role.”

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Connecting the dots–Uninsured people are poor!

A bunch of random articles all hit at once on Wednesday morning. And they win the John Madden award for stating the bleedingly obvious. This is kind of  a companion piece to my rant about Friday’s NY Times article on the health industry and its political allies and adversaries sitting down to come to consensus.

Inquiry featured a worthy study. It tried to suggest that high costs “crowd out” health insurance spending.

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Five Reasons For Hope

Over the past decade as a CIO, I’ve had successes and failures. I’ve learned about leadership in a crisis , how to resolve disputes, and how to serve my customers/employees/superiors . As I watch the first few days of the Obama administration, I have a great deal of respect for the initial activity, as seen through the lens of my own leadership experience. Here are five reasons I have great optimism for the new administration:

1. Smart People – Obama is surrounding himself with smart people, regardless of party affiliation or ideology. In my experience, A-level leaders surround themselves with A-level staff, since they are not intimidated by people who are smarter or more experienced. However, B-level leaders surround themselves with C-level staff who do not question the ideas and actions of their leader, resulting in sycophants rather than a strong leadership team. Of course, as we learned from Jimmy Carter’s presidency (he’s been a great post-president), the smartest people are not always the most successful people, but I have great faith in the new team!

2. Listening – As I’ve described in my blog about leading change , the most important part of Kotter’s principles is to build a guiding coalition. By engaging the stakeholders and listening to their priorities for change, Obama has created powerful grass roots momentum.

3. Doing the right thing – A wise person once said “When one bases his life on principle, 99 percent of his decisions are already made.” Should we drill for oil in the Arctic? Should government decide what therapeutic options doctors and their female patients can talk about? Should government decide science policy based on religious beliefs? The answers to these questions should be clear if we objectively ask ourselves what seems like the right thing to do based on the best objective evidence. The Obama administration is doing that.

4. Let the ideas flow – The web “democratizes data”. Ideas need to flow freely and as country we need to come to consensus about our priorities based on open and transparent communications. The Obama team, with the able assistance of Blue State Digital and other technology partners, has created Change.gov and Whitehouse.gov to reduce information silos.

5. Embrace technology – Obama is the first president to have a computer on his desk. Obama will keep his Blackberry. The communication systems in the Whitehouse will be upgraded to Web 2.0 technologies. Working with better technology will result in better,faster decisions and more enlightened management.

Will the Obama administration be perfect? No. Will the change management ahead be easy? No. Will we get to the right decisions faster and regain the respect of the world. Absolutely.

Have hope.

John Halamka is the CIO at Beth Israel Deconess Medical Center and the author of the popular Life as a Healthcare CIO blog, where he writes about technology, the business of healthcare and the issues he faces as the leader of the IT department of a major hospital system. He is a frequent contributor to THCB.

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