We’re going to start running teasers over here on THCB linking to the great work being done on our sister blog Health 2.0 News. First up is an exclusive, Aetna makes a big buy. — Matthew Holt
Above the Fold
The Wyden-Ryan Plan
House Budget Chair Paul Ryan (R-WI) and Senator Ron Wyden (D-OR) have embraced a Medicare reform plan that in concept borrows heavily from one championed by former New Mexico Senator Pete Domenici and former Clinton budget chief Alice Rivlin.
Specifically, Wyden and Ryan are proposing to alter the earlier Ryan Medicare plan by:
- Continuing to offer the traditional Medicare plan—Ryan would have eliminated it—in addition to a range of private Medicare plans offered by health insurers.
- Tying federal Medicare premium support to an amount equal to the second lowest cost Medicare plan—public or private—available to seniors in each market. Ryan would have set a flat premium support amount in year-one and increased that only at the rate of inflation.
- Instituting a series of consumer protections and medical underwriting rules designed to protect seniors.
- Instituting an annual cap on what the federal government could pay for Medicare at an amount equal to the increase in the nation’s GDP + 1%—Ryan would have capped annual increases in the federal premium support amount at the increase in the consumer price index.
On this blog I have been arguing that the risk for health care costs rising too quickly should not be borne entirely by seniors–that the stakeholders who really run the system should be most accountable. And, that is what the Wyden-Ryan plan would do: “Any increase over that cap will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums,” their plan states.
Continue reading…
Florida’s Problem: Cutting Medicaid May Cost More
Florida is concerned that it spends too much on Medicaid. Unfortunately for policymakers, proposed cuts to Medicaid are likely to be self-defeating according to an Orlando Sentinel article. They may result in more spending as well as boosting the number of people with no coverage – especially children. Components introduced under the guise of personal responsibility –such as charging $10 per month per beneficiary or $100 for non-emergency use of the emergency department– have great intuitive appeal to taxpayers and legislators, yet can backfire in practice.
Experience from Oregon suggests that even modest, sliding scale premiums result in huge drops in coverage. A report from the Health Policy Institute at Georgetown University suggests 82 percent of those who leave coverage would be children, of whom 98 percent would be below the poverty level.
There are clear examples of emergency room overuse, but what’s crystal clear in retrospect is not always evident up front. In any case, hospitals can do their part with effective triage that sends patients to lower acuity settings or back home when patients who shouldn’t be there show up.
Hobson’s Choice
I recently moderated a Crain’s Business Breakfast. The panel included four highly respected Chicago-area hospital CEOs. I questioned the panel on a wide range of topics, from near term operational issues to long term public policy concerns. One expects well-rehearsed answers from senior executives so I was pleasantly surprised by the thoughtfulness and thoroughness of many of their comments. I was rather looking forward to how they would respond to this question, which they had been told in advance:
“Secretary of Labor Hilda Solis recently commented that the healthcare sector continues to be a bright spot for job creation. How is the nation to reconcile the desire for “job creation” with the desire for cost containment?”
First, some background. Secretary Solis is correct – the healthcare sector is a jobs engine. In just the past year, healthcare has added about 325,000 jobs, accounting for perhaps a third of total U.S. job growth. By way of perspective, the rapidly growing energy sector creates about 100,000 jobs annually. Job growth is great, but more jobs in health care means more spending on health care. Despite the technological imperative that propels the system, healthcare remains a labor intensive business. Half or more of hospital spending goes to labor, not including physician expenses. Labor expenses dominate home health and long term care. It is nigh on impossible to reduce healthcare spending without reducing labor spending. Thus, job creation and cost containment are enemies.
I put the ball in the hands of the panelists: do you favor job growth or do you favor spending cuts? The panel punted.
Can Hospitals Exist Without Doctors?
“One cannot run a hospital without doctors, and one cannot run one with them.” – Peter F. Drucker
Yesterday Kaiser Health News ran a piece titled “Hospitals Clash with House Republicans on Medicare Cuts.”
The article revived these questions:
·Are hospitals friends or foes of independent physicians?
·Will the future of hospital-doctor relationships be one of cooperation, collaboration, or cooptation? (On the last bullet point, “cooptation” means hospitals take over the practice of medicine).
·What is the role of hospitals in health reform – hospitals after all have already agreed to $155 billion in Medicare cuts under Obamacare?
But I digress. What is the hospitals’ problem with the Republican legislation? What is the big deal? The Senate will probably not even take up the bill up anyway.
Three big winners of the “Ensuring Safe Transitions” Challenge
Health 2.0 has been running Developer Challenges for the ONC since April. Challenges involve building applications for particular purposes such as this one about ensuring safe transitions. They’re getting very popular (this one had more than 30 entries) and we’re going to be announcing several more winners soon for other challenges. You can also hear more about this on the Health 2.0 Show happening at 11 PT or 2pm ET today! Matthew Holt
At the CMS QualityNet Conference yesterday, National Coordinator for Health IT Farzad Mostashari announced the three winners of the “Ensuring Safe Transitions from Hospital to Home” innovation challenge: Axial Exchange, iBlueButton, and VoIDSPAN. Congratulations to the winning teams!
The public challenge launched in September of 2011 in conjunction with Partnership for Patients and under the auspices of the ONC’s Investing in Innovation (i2) program. The Challenge asked developers to create solutions that improve patient safety and facilitate care transitions for patients discharged from hospitals to other care settings (including but not limited to homes, nursing homes and hospices). Statistically, nearly one in five patients discharged from a hospital is readmitted within 30 days. Many of the readmissions can be prevented by simple improvements in communication and coordination from the point of care delivery through and past discharge.Continue reading…
Obama-cares (if you’re under 26)
CDC data just in, reported by Jonathan Cohn at THR, suggests that the impact of allowing young people to stay on their parent’s insurance (or as Michael Cannon would say, forcing employers to cover dependents up to the age of 26) is having a big impact. Up to 2.5 million adults under the age of 26 have moved into coverage. Frankly I’m not surprised. There’s always been a huge group of uninsured young adults moving between high school and college and the workforce. And if you hadn’t noticed, there’s a recession on and good jobs with insurance are hard to find. I know at least three young adults working in the semi-contingent labor force who are on their parents’ insurance. Of course they’d better hope they don’t turn 26 before 2014. But even this little gain is something the Democrats need to punch home about the Republicans: Those bastards want to take your kid’s insurance away! And they do.
Obituary: RIP to the EHR
I just received another email from another EHR Vendor pandering to physicians to implement their technology so that the physician so they can access some usability incentive to use technology that they should already be using. Here is the offending language:
“State Medicaid providers across the country have an unprecedented opportunity to collect over $21,000 in EHR incentives in the last few weeks of 2011. If you’re already using Xxxxxxxx Xxxxxx, there are a few easy steps you can take to earn your incentive.“
This is just so wrong on so many levels to me. First, I find it completely incongruous that we have to incent physicians to use a simple tool that is designed to make their life easier, their practice more efficient, and their care more effective. I can’t recall, but I didn’t see the need to incent the stethoscope, antibiotics, or any other health innovations.
Second, the offer itself is just dripping with the grease and slime of “taking” something “while the getting is good”. Does anyone care that this “stimulus” money is subject to the grossest abuses? That it will be misapplied? That most of it is being doled out to people who have already implemented these technologies and now are getting a little gloss on top? Does anyone care that our country is broke and this is just another program that is unsustainable, unnecessary, and incapable of producing its intended results. Is there any evidence that this is having an impact?Continue reading…
Medicare Advantage Quality, Savings, Access and Satisfaction: Can We Have It All?
Imagine a Medicare Advantage (MA) policy which increases the quality of health care for seniors, saves the government money, brings MA to the few remaining places that don’t have it, and puts checks in the hands of senior citizens. What you are about to read should do all that, in theory. However, I’m sure there are practical issues that I am overlooking, and I am hoping to attract comments noting those issues that, as Woody Allen once said, can take this from being a notion to an idea, and eventually a concept.
First, each county would have a “default” plan that would automatically enroll people on their 65th birthday, rather than have the traditional plan serve as the default option. (Those of us already in an HMO with a Medicare option can stay in it, seamlessly, rather than join the default plan.) Anyone could still opt out into the traditional plan or another MA plan, of course, at any time.
The default plan is chosen based partly on its Stars rating, but partly on a bid process, in which plans offer to pay the government for the right to be this default plan. The payment would be substantial for three reasons:
1. In some highly populous counties, MA is profitable enough to support fifteen or twenty plans, far more than would survive in a competitive market with market-based pricing. Much of this “excess profit” would be bid back to the government by the default plan, in exchange for access to many more enrollees;
2. Member acquisition costs for the default (“opt-out”) plan would be a small fraction of the $500- $1000 that a new member costs in today’s opt-in MA environment. Much of this savings would be included in the bid;
3. The bid would be calculated not based on just on one year’s profit, but rather on the expected lifetime value of a member, taking into account projected member retention and any scheduled or anticipated relative reductions in reimbursement.
What Really Needs to be Done About the Critical Shortage of Cancer Drugs
Hospitals nationwide are experiencing shortages of critical generic intravenous drugs. We believe a fundamental reason for this national shortage is government price controls. With these limits there is little incentive to invest in new facilities and technologies, leading to equipment failures. Manufacturers have little economic incentive to prepare proactively for the quality assurance issues that routinely arise in the manufacturing of a sterile injectable compound. To reincentivize this process, the market needs to be free. spurring more manufacturers to produce these drugs, encourage reinvestment in facilities and the stockpiling of reserves.
The drugs in shortest supply include those used in critical care units such as norepinephrine for shock, antibiotics for infections, and cancer chemotherapy. Almost all are generics and manufactured by a just few companies. Among the oncology drugs in short supply are cytarabine and leukovorin. Cytarabine is the best single drug for acute myeloid leukemia. Leukovorin is used in childhood acute lymphoblastic leukemia.
These are older “off patent” drugs. As generics, they are far less expensive that newer drugs. They have stood the test of time, are still used extensively and are necessary for optimal patient care. Individual patients need exactly the right drugs on precisely the right schedule – no substitutes; now, not later. As pointed out in Congressional testimony and a Wall Street Journal editorial, these shortages are having a major negative impact for ongoing clinical trials designed to improve cancer treatment results. Another critically needed cancer drug is Doxil, a drug used for the treatment of many cancers. It is sold by Johnson and Johnson (J&J) and until recently it had been manufactured on contract for J&J by Ben Venue Laboratories. Unfortunately, Ben Venue is exiting the contract drug business. Thus, Doxil is not currently available. Prior to 2003, Medicare paid for cancer chemotherapy injectables based on the average wholesale price. But with no transparency, some distributors or physicians could reap huge profits. To combat this and with the best of intentions, a new system was developed as part of the Medicare Modernization Act of 2003, based instead on the average selling price updated quarterly.
