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I’ve seen a number of responses to the news that the Medicare demonstration projects were not successful. Some have claimed that they were only demonstration projects, and the fact that some succeeded means we should look into those further. Others asserted that this once again proves that the government is incapable of making the health care system better.
As to the first point, it’s hard to get excited about this. By chance alone, a couple of programs were likely to save money. Four out of 34 reducing hospitalizations (when the best of them might have had inadequate data)? Hardly something to get excited about. Remember that two out of the 34 actually saw increased hospitalizations, too. I think it’s totally reasonable to think hard before just assuming there was something special about those four programs, and throwing more money at them.
But I think the latter point, made by Peter Suderman, is a bit of an over-reach as well. It’s important to remember that these were attempts by private hospitals and private physicians to change the way they care for patients. Granted, government was paying the insurance bills through Medicare, but this would have looked awfully similar if a private company had footed the bill. And, yes, private insurance companies have tried to use care coordination and disease management to reduce costs as well.
In last week’s Wall Street Journal, Princeton economist Alan Blinder exposes four myths about the federal deficit. He saves the most important myth for last. After noting that the long term deficit problem does not cut across all areas of spending, he observes that the problem is almost entirely rooted in the need to fund Medicare and Medicaid. If we base future spending projections on past trends, then Blinder is absolutely correct. Spending growth on Medicare and Medicaid nearly always outstrips the growth in tax revenues. The main contributors to spending growth – demographics, labor costs, and, especially, technology – are likely to keep this trend alive indefinitely. Blinder challenges us to focus the debate about the deficit on the key facts, which essentially means that we should focus on Medicare and Medicaid spending. Let me take up his challenge.
Let’s start with the obvious debating points. There is a lot of fat in both programs. CMS just acknowledged that as much as 10 percent of spending in Medicare and Medicaid is “improper.” This does not include spending on defensive medicine, unnecessary services demanded by fully insured patients, unwarranted variations in practice, and all the other usual suspects. Nor does it reckon with all the waste due to poor health behaviors, although eventually the grim reaper will have his say and dying is usually very costly no matter how well you have pampered your body along the way.
Lots of health startups out there are trying to zero in on ideas that will improve the lives of patients with chronic conditions. And even though patients are the target audience of this technology, companies seem to be designing their products by first asking, “What will health care providers and and health insurers pay for?” It makes sense, assuming that these two groups will foot the entire bill for electronic health (e-Health) innovations. But it doesn’t make common sense. Why not design the tech for those who are going to use it in the end?
The discussion came up at the Digital Health Summit, a two day conference at the International Consumer Electronics Show. Health 2.0′s Matthew Holt moderated a segment called “Who’s Paying the Bill for e-Health?” When Holt asked a panel if consumers would be willing to pay, Senior Advisor of of the American Association of Retired Peoples Bill Walsh indicated that most AARP members would answer “no.”
“What they’re telling us about mobile health is, ‘Gee, this is interesting but why isn’t my insurance company paying for this? This is just another medical device,’” Walsh said.
Perhaps Newt Gingrich’s book Saving Lives & Saving Money has been quietly redacted of a few lines since its original 2003 printing, because otherwise a simple read of the copies now in circulation would find a blueprint for Obamacare just like the first printing did. I dusted off my old, autographed, copy and re-read it, and am providing some highlights for THCB readers.
Much of the book does propose market-based solutions, such as the use of disease management programs to “dramatically improve outcomes.” However, the book also calls for bigger government, in the form of (1) drug coverage for seniors (since passed) and (2) a “tripling” of the National Science Foundation budget.
In addition to those two specific calls for increased government spending, the first printing contains language that might comfort Don Berwick more than Fox News, and not just because Dr. Berwick gets favorably mentioned twice.
Some samples:
P. 31: “The number of uninsured in America is a threat to our civilization.”
P. 54 “Don Berwick[has] pioneered the translation of the teachings of quality experts such as Edwards Deming and Joseph Juran to the healthcare profession.”
P 59 “It is justified to mandate the use of electronic systems to drag the medical system into the 21st century.”
Finally a proposition to stop the epidemic of ASD (Autism Spectrum Disorder). But is it valid? An expert panel at the American Psychiatric Association is proposing to do just that. The D.S.M., Diagnostic and Statistical Manual of Mental Disorders is undergoing the most dramatic revision in 17 years. The D.S.M. is the standard used to diagnose mental disorders.
By new definitions, most of those now diagnosed with high functioning Aspergers will lose their diagnosis. Experts believe that this will stem the rising tide of numbers of those diagnosed with ASD, numbers which now are reaching “epidemic proportions.”
“We would nip [the rising Autism rate] in the bud,” said Dr. Fred R. Volkmar, director of the Child Study Center at the Yale School of Medicine and an author of the new analysis of the proposal.
There has been an argument raging for years with one faction claiming that the numbers are merely the results of better diagnoses, while many experts still hold that that still doesn’t account for the fact that one child in a hundred is now diagnosed with ASD.
I will suggest that most of us believe the way to control health care costs, and at the same time maintain or improve quality, is to both use the managed care tools we have developed over the years, and perhaps more importantly, change the payment incentives so that both cost control and quality are upper most in the minds of providers and payers.
The Congressional Budget Office (CBO) has just released an important review of Medicare’s results in testing those ideas. The news is not good.
From the CBO’s blog post:
In the past two decades, Medicare’s administrators have conducted demonstrations to test two broad approaches to enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program. Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly. Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.
In an issue brief released today, CBO reviewed the outcomes of 10 major demonstrations—6 in the first category and 4 in the second—that have been evaluated by independent researchers. CBO finds that most programs tested in those demonstrations have not reduced federal spending on Medicare.
If you’re a hammer, you just want to smash nails; if you’re a programmer, you just want to build features. But features do not a successful product make. This is the central myopia that eventually blinds even the most brilliant engineer-entrepreneurs, unless they’re smart enough to surround themselves with people who can check their bias.
If you want an interesting example of this phenomenon, look no further than Adam Bosworth, the co-founder and chief technology officer at San Francisco-based health gamification startup Keas. There’s no question about this guy’s brilliance. At Citicorp in the late 1970s, he invented an analytical processing system that helped the bank predict changes in inflation and exchange rates. At Borland, he built the Quattro spreadsheet, and at Microsoft, he built the Access database. He was one of the first to propose standards for XML—the foundation of most Web services today. At Google, he helped to develop Google Docs before moving on to start Google Health.
But as everyone knows, Google Health was a failure—and so was Bosworth’s next effort, Keas, at least until the venture-backed startup went through a dramatic pivot in 2010. How Bosworth figured out that his old approach wasn’t working, and how Keas reinvented itself as a provider of health-focused games for large employers, is the tale I want to tell you today.
I’ve had the luck to attend medical school in the city of San Francisco during what will be looked back on as the start of transformational change in our health care system. My growing interest in technology and new business models as the disruptive forces behind this change, as well as marriage to a technology entrepreneur, has me frequently rubbing elbows with movers and shakers in the digital health space. One question I constantly receive (other than how I feel about being replaced by a computer) is how to get ideas and products in front of practicing physicians for product feedback or to test the market. Even more commonly, I’m asked why we are so resistant to technology and change in the way we practice. My reply usually takes some form of the following.
1. Show us the data.
The robust system medicine has developed for testing innovations in clinical care, disseminating these ideas, and transforming practice standards is being entirely overlooked (or alternatively scoffed at for being too cautious and slow) by most entrepreneurs. We insist on data to show that the newest pharmaceutical drug, procedure, or implantable device is safe and at least as efficacious as placebo, (and due to comparative effectiveness, this may soon become as compared to the standard of care). It should not be any different for an EKG iPhone app I use to rule out a myocardial infarction in your mother, or a motivational weight loss app the patient invests days of their time into with no results. These are not restaurant recommendations where a failure means bad sushi. These are people’s lives and well being, and we feel it’s unethical to start recommending unproven products.Continue reading…
Insurance exchanges have to be up and running in all of the states by October 2013 in order to be able to cover people by January 1, 2014.
If the states don’t do it, the feds have to be ready with a fallback exchange. States have to tell HHS if they intend to be ready by January 1, 2013.
The White House just released a report saying that good progress is being made in 28 states. That begs the question, what about the other 22?
Writing in Kaiser Health News, Julie Appleby recently reported that HHS has let just two contracts toward building the federal fallback exchanges. One is for $69 million to build the data hub so that federal agencies can share data with the exchanges–the IRS for example. The other contract is more directly related to building federal fallback exchanges, a $94 million contract.
But in their progress report today, the administration said that they have already advanced $729 million to the states for exchange construction––17 of those states receiving $1 million, or less. So, more than $700 million has gone to 33 states–and that is just federal money to date.
If the feds are going to be ready to launch 10 or 20 federal fallback exchanges these numbers just don’t compute. It is going to take a lot more than the $94 million HHS has contracted for to launch that many federal exchanges in the states that refuse to do so.Continue reading…
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