Everyone understands why Congress was so reluctant to cut physicians’ fees. Reimbursements for primary care physicians are very low—so low that 30 percent of Medicare recipients who are looking for a new medical home can’t find one. Cut fees, and fewer doctors will take Medicare patients. The AMA, seniors and the AARP are all up-in-arms. Few politicians like to disappoint this trio.
But why are so many Congressmen willing to cut Medicare Advantage? After all, one out of five seniors is in the program: Won’t they be upset?
The truth is that, as many seniors have discovered, Medicare Advantage fee-for-service (the plan Congress has now voted to phase out by 2011) is not turning out to be an advantage for them.
Here is what David Fillman, an International Vice President of the American Federation of State, County and Municipal Employees (AFSCME), which represents some 1.4 million workers, had to say about MA’s fee-for-service insurance when he testified before Congress in January:
“Insurance companies have targeted our employers for the hard sell, including offers to pass through some of the federal subsidies to state and local governments.”
Fillman rightly calls the subsidies a “windfall” –Medicare pays fee-for-service Medicare Advantage 17 percent more than Medicare would spend if it delivered the services itself.
Public Employees Forced into Medicare Advantage
Fillman goes on to explain: “The new accounting rules issued by the
Governmental Accounting Standards Board (GASB) place a tremendous
strain on public retiree health benefits and add to the lure of these
private Medicare plans. The GASB rules require public employers to
estimate future costs of their retiree health benefits – 35 years into
the future – and publish them on their annual financial statements. To
reduce this paper liability, more public employers are proposing a
switch from their own solid retiree health plans, which include
traditional Medicare, to these private Medicare plans. This is a major factor in public employers’ decisions to switch to Medicare Advantage private fee-for-service plans.
“In my state [Pennsylvania] Governor Rendell plans to replace our
Retired Employees Health Program (REHP) for state government retirees
with a Medicare Advantage private-fee-for-service plan and proposes to
cut our prescription drug benefits,” Fillman explained. “He is
removing retirees who are aged 65 and older from the secure state plan
and forcing them out of the traditional Medicare program. By
removing retirees from the secure state public plan (REHP), the
Governor is denying them their right to access the secure Medicare
program they have paid into all their lives.
“Our retirees are moving from the Medicare defined benefit plan with a
solid wrap-around supplemental, to an unknown plan. Although these
private Medicare replacement plans must be the actuarial equivalent of
Medicare they have a broad hand in shaping the details and setting
co-payments, premiums and the real value of benefits from year to
year.” In other words, the plans are complicated, and the plan you sign
up for this year may not cover the same benefits next year. As Fillman
puts it, “Experts have joked that if you have seen one Medicare
Advantage fee-for-service plan then you’ve seen one MA plan – for that
year.
“Aside from the confusion and added complexity, the forced shift to
a Medicare replacement product can obscure a reduction in benefits and
a shift of costs onto beneficiaries who have limited incomes and may be
in fragile health.”
Advantage supporters like U.S. Senator Tom Coburn, like to argue
that Advantage fee-for-service offers Choice : “Medicare Advantage
offers seniors personal choice and control over their health care
decisions” But if benefits aren’t transparent, how can seniors make a real choice?
“We oppose this forced switch both from our understanding of its
impact on Medicare generally as well as our fellow AFSCME members’
experiences in West Virginia. Those retirees were forced out of
Medicare and into an MA private fee-for-service plan last July,” Fillman observed. “We
also are beginning to hear from AFSCME retirees in Ohio who were just
switched over this month to a Medicare Advantage private
fee-for-service plan.
“In West Virginia, 37,000 retired state employees and teachers covered
by the Public Employees Insurance Agency (PEIA) were forced out of
traditional Medicare and stripped of their supplemental plan. They
were enrolled in Advantra Freedom, an MA plan administered by the
for-profit giant, Coventry Health Care. In November, in PEIA hearings, hundreds of angry West Virginian retirees testified against Advantra Freedom.”
Seniors Tell Their Stories
One senior at the Charleston hearing, Peggy Beavers, complained that
Coventry is “known throughout the country to cut costs any way they
can”, and said she did not understand why she would be forced out of
Medicare into a replacement product offered by “a company that’s all
about making a profit for itself.”
“Specifically,” Filllman testified, “AFSCME is concerned about the
following complaints we have received from West Virginia and other
states regarding PFFS plans. These concerns are typical of the
problems inherent to MA private-fee-for service plans.
- Even though these plans are marketed as nationwide and have no networks – this is false. They limit access to care and choice because significant numbers of doctors and hospitals have refused to accept the card,
especially out-of-state. For example, many West Virginia retirees who
moved out of state could get no doctor to accept the private MA plan.
- MA private fee-for-service plans may offer additional benefits,
such as gym memberships (the only major additional benefit in West
Virginia), or hearing aids and eyeglass coverage, but they modify
their benefits to cut corners in more important areas, such as limiting
hospital days or charging higher co-pays for nursing homes than
Medicare. Indeed, officials in West Virginia actually told a state
legislative committee in November that “we know that … retirees who use
more medical care will be worse off under this plan”.
- PFFS plans more frequently deny claims in order to hold down costs.
- The appeals processes are more difficult under the private plans. Retirees are no longer enrolled in traditional Medicare and must go through the company rather than Medicare’s transparent appeals process. Further, beneficiaries are often bounced between CMS and the insurance company seeking redress.
- The subsidy to the private plans causes government employers, many of whom have secure, self-insured medical plans, to switch
control of their medical decisions to these private companies, break up
their efficient risk pools, and allow private companies to profit off
our retirees.
- The plans are not stable. They can and do pull out of markets, disrupting health care services and causing much anxiety among beneficiaries.
“There is a lack of quality and accountability. These private
replacements for Medicare are exempt from basic quality reporting
requirements.
“In addition, “ Fillman concluded, “we are concerned that Medicare Advantage plans are a drain on our state and its retirees. The
more than one million Pennsylvania seniors who are enrolled in
traditional Medicare are paying about $25 million in extra premiums to
subsidize the 32 percent of beneficiaries who are enrolled in Medicare
Advantage plans. The State is also paying for these subsidies.
The Medicaid program in Pennsylvania pays Part B premiums for
low-income beneficiaries and this cost was an extra $6.3 million in FY
2007.
“When Congress opened up Medicare to private plans, it was based on the
claim that the health insurance industry would be more efficient,
provide more care coordination, and do so at less cost to taxpayers.
PFFS plans do none of the above, and enrollees who are forced into them are no longer enrolled in Medicare.
“Again, the root of these problems is the excessive financial incentives
to develop and market these products which are designed to replace the
tried and true Medicare program. These problems, the trend towards
private plans, and the devastating privatization of our traditional
Medicare program must be addressed. We concur with the recommendations
made by the Medicare Payment Advisory Commission (MedPAC ) that MA
private plans should compete with traditional Medicare on a level
payment playing field.”
Over the last five years, seniors have begun to understand what the privatization of Medicare (Advantage) has really meant to their pocketbooks. Taxpayers don’t understand why the insurance industry needs billions in overpayments if what they provide is truly a more efficient healthcare model. We’re all asking, what happened to the magic of the marketplace private insurers promised us just a few years ago?
Every senior in Medicare, whether enrolled in a private Medicare Advantage plan or not, is paying more in Part B premiums to fund insurance industry overpayments. The Medicare Actuaries estimate private industry subsidies will total $150 billion over the next decade, eliminating almost two years of solvency from the Trust Fund.
Medicare will continue to be there for millions of Americans 65 and older, just as it has since 1965. In fact, the Medicare program will be stronger without the massive fiscal burden Medicare Advantage plans impose. Removing this liability from Medicare could also be the first step towards strengthening the program’s long-term solvency.
Count me as unconvinced that the now certain demise of Medicare Advantage is a historic victory for patients or physicians. Granted it is a costly loss for the FOR PROFIT insurance companies. However, many NON-PROFIT HMO’s (the kind that use 96+% of the premium dollar for patient care, not executive salaries or stockholder dividends) also used the better reimbursement of Medicare Advantage to offer value-added services and increase access for Medicare patients while still moderating copays and deductibles. As the result of this “historic victory” these non-profit systems will be forced to restrict access to new Medicare patients and will likewise increase co-pays and deductibles of existing Medicare enrollees. These Medicare patients are not going to find it anymore welcoming by leaving and re-joining the standard Medicare world outside. It’s true that we physicians will not take a 10.6% pay cut on these patients, but whoopee, we have still been losing money on them even before this vote. You can’t make it up in volume. We are not going to absorb these patients who were happy in their non-profit HMO plan, but now are either blocked entry to those previously welcoming plans, or decide to leave because of the increased copays / deductibles. You can argue that this will affect a small number or patients, and I will admit to not knowing the numbers. However, I believe it will affect large numbers in selected states where non-profit HMOs are strong, especially California and the West. I do not have all the answers, but I am convinced that the only system that will work (regardless of the number of payers) is a PRE-PAID system where the providers have the incentive to provide cost-effrective care, without doing procedure after unnecessary procedure to keep stable their incomes in a system where the amount of the reimbursement on a per-procedure or per-encounter basis is actually going down. In this capitated or pre-paid system, the plaintiff’s bar will ensure that care is not with-held merely to maximze profit.
This is not about the docs. This is about Seniors and what the privatization of Medicare (thru Medicare Advantage) has really meant to their pocketbooks. Every senior in Medicare is paying more to fund insurance industry overpayments. The money used to pay Medicare Advantage insurers is coming out of traditional Medicare.
It is time for the Congress to examine whether the extra payments to Medicare Advantage plans are the best use of tax-payers dollars for the beneficiaries the program is designed to serve.
These payments could be used to provide better benefits, like filling in the doughnut hole and reduce out-of-pocket costs for seniors and the disabled, as well as to create a viable alternative to the ineffective sustainable growth rate mechanism currently used to determine the physician payment update.
Traditional Medicare needs to be able to compete on a level playing field with private plans, which requires the elimination of these (bribes) extra payments. Then Medicare will continue to be there for millions of Americans 65 and older, just as it has since 1965.
In fact, the Medicare program will be stronger without the massive fiscal burden Medicare Advantage plans impose. Removing this liability from Medicare could also be the first step towards strengthening the program’s long-term solvency.
Maggie
A question on something you did not address above. Why are 65+ yo former workers, like those referenced, forced to take MA plans as opposed traditional Mcare. Even if they are cut loose from lifelong health benefits from their employers, I would think they could avoid this issue by steering clear of the MA programs.
Then again, I might be missing it, and the problem is they can and they are snookered into bad deals.
Brad
structurally and politically, medicare advantage makes sense only insofar as payments are below average medicare costs in the area involved. we’re reliving the lesson of earlier medicare capitation where providers fled as reimbursement dropped below 100% of average cost. But program doesn’t make sense to government unless this happens — at which point it will no longer make sense to medicare advantage plans. theory is they’ll be more efficient, but there’s scant evidence, if any, that’s happening.
“Why are 65+ yo former workers, like those referenced, forced to take MA plans as opposed traditional Mcare.”
Brad F,
When employers offer retiree health plans to Medicare eligible (65 and over) retirees, Medicare is the primary insurer and the state/city/corporate plan is the supplemental insurer. Moreover, a few months back, the U.S. Supreme Court ruled that employers can offer less generous retiree medical benefit packages to Medicare eligible retirees than what is offered to retirees not yet eligible for Medicare and not run afoul of age discrimination laws.
At the same time, the accounting rule (GASB-45) that Mr. Fillman referenced started to take affect last year for public sector entities and will be fully phased in by 2009. The corporate sector has been subject to a similar accounting rule since 1993. The purpose of the rule is to bring more transparency to public sector finances. The debt rating agencies will use this information in their process of developing bond ratings that help determine the interest rate paid by states and localities when they go to the municipal debt market for short and long term financing. Prior to the rule, politicians had no idea of the long term cost of the promises they agreed to in collective bargaining. Estimates that I’ve seen peg the unfunded liability among all states and localities for pension, health care and other retiree benefits at between $1.5 and $2.0 trillion on a present value basis. In my state of NJ, the liability is $85 billion according to Governor Corzine which compares to “only” $32 billion in state debt which is, itself, among the highest in the country on a per capita basis.
States and localities want to move retirees into MA plans from the state or local plan because it reduces their costs both short term and long term. The 65 and older retiree is already eligible for traditional Medicare, but he or she would have to buy a Medi-gap supplemental policy to replace what the state or local government offered before. The MA plans, with their more generous benefits, often eliminate the need to buy a Medi-gap policy which, for lower income retirees, they couldn’t afford anyway. Medi-gap policies generally cost between $175-$250 per month depending on the plan and where the retiree lives.
When Maggie points out that MA plans can sometimes turn out to be more expensive because they might require a higher co-pay than traditional Medicare for, say, nursing home costs, that’s true enough. However, Medicare only covers skilled nursing facility costs for patients who are discharged from a hospital, and even then it only pays for the first 20 days plus 80% of the next 80 days. After that, the patient needs to self-pay, apply for Medicaid (if poor enough) or rely on long term care insurance if he has it. Besides, that particular issue affects relatively few people in any given year compared to the 43 million people eligible for Medicare and the 10 million who currently have MA plans. Anyone who has an MA plan and is not satisfied can always switch to another one or go back to traditional Medicare when the next annual open enrollment period comes around.
I was disappointed to see the testimony of a public sector union leader given so much publicity on this blog. He is about as objective on this subject as the CEO of Humana, a company which derives 24% of its revenue from MA plans.
It’s an upfront bribe to health plans. Medicare’s long-term problem is trend and whatever managed care’s flaws are, they have shown an ability to limit trend, both in the private market (when allowed) and Medicaid. If the payments persist long-term then there is a problem, but the administration is not going to war over how much money they can give away to plans but to affect a long-term change toward managed care and away from FFS. I’ll add that I’ve yet to hear a defense of the PFFS plans that passes the laugh test, but that’s just a sliver of the conversation.
Barry–
You have a right to your ideology but to suggest that the head of a well-respected public union is not a credible source simply underlines that your point of view is driven by ideology, not fact.
The Medicare Payment Advisory Commission and the Congressional Budget Office Director, Peter Ortzsag agree that the subsidies to Medicare Advantage are a give-away, that Medicare is not getting value for the dollars, and that seniors are not getting good care.
I suppose you think they are not credible either?
Consider how the bill was passed. As I described on an earlier post: “the government gave Medicare Advantage a blank check when the program was born, under the cover of darkness, in 2003.
“It’s worth pausing to remember this breech birth. The Medicare Prescription Drug, Improvement, and Modernization Act (also known as the Medicare Modernization Act) came to the House for final approval at 3:30 a.m. on November 22, 2003. It was losing, 219-215, until the House Leadership, in a very unusual move, held the vote open for hours while the Leaders twisted arms. At 5:50 a.m. the legislation passed the House 220 to 215.
“Representative Nick Smith later claimed that he was offered campaign funds for his son, who was running to replace him, in return for changing his vote from “nay” to “yea. ” He subsequently recanted this statement. Nevertheless, the House Ethics Committee and the FBI launched investigations into whether members of the House had in fact offered Smith a bribe to vote for the measure.
“In October 2004, the Committee issued its report, revealing that “Majority Leader Tom DeLay admitted that he offered to endorse Smith’s son Brad, who was running for Congress at the time, in exchange for Smith’s “yea” vote on the Medicare bill,” though the investigation couldn’t find out who offered Smith the money.”
DeLay offered a Congressmen a bribe to vote for Medicare Advantage–which he did.
From the outset, this program has been mired in mud and greed.
Brad
The public employees don’t get to choose which plans their employer (the state) make available just as people who work for a private-sector company can’t choose which plans their employer chooses to make available. (Some employers offer only one choice.)
In this case, insurers bribed the states (by giving the state governments part of the windfall subsidy) to switch
their retired employees from traditional Medicare to Medicare Advantage.
As Fillman explained in his testimony:
” When Congress opened up Medicare to private plans, it was based on the claim that the health insurance industry would be more efficient, provide more care coordination, and do so at less cost to taxpayers. PFFS plans do none of the above, and enrollees who are forced into them are no longer enrolled in Medicare.
“State and local governments see money on the table, and they are, in economist-speak, “acting rationally” and grabbing the cash, at the expense, particularly, of the federal government. It has nothing to do with the superiority of these plans.
“Again, the root of these problems is the enhanced profit incentives paid to these plans, by taxpayers and beneficiaries. Congress should know that cost shifting to the federal government was the top reason for West Virginia’s switch, and frankly, for every other public employer that considers a PFFS plan. West Virginia’s PEIA said its decision was influenced by the higher reimbursements given to MA plans and that “these are federal dollars that will help pay the medical costs of Medicare retirees.” Moreover, PEIA additionally offloaded major costs to the federal government by switching to a Medicare Advantage prescription drug plan.
“With all this cost-shifting, the irony is that in West Virginia, Pennsylvania, and elsewhere, we as a nation are paying more to these private plans, for less.” .
Jim– You wrote : “structurally and politically, medicare advantage makes sense only insofar as payments are below average medicare costs in the area involved.”
Exactly–but costs will never be lower than under traditional Medicare because private sector insurance has so many expenses: advertising, lobbying, providing profits for shareholders.
The private sector would have to be HUGELY more efficient that govt to be able to offer more care for less–and it isn’t.
In this case, it isn’t even as efficient.
Gregory–
You wrote: ‘This is not about the docs. This is about Seniors and what the privatization of Medicare (thru Medicare Advantage) has really meant to their pocketbooks. Every senior in Medicare is paying more to fund insurance industry overpayments. The money used to pay Medicare Advantage insurers is coming out of traditional Medicare.”
Yes exactly. And the fight yesterday was about the insurers. Very few politicians wanted to cut doctors’ fees. What the Republicans were so excited about is the danger that MA woudl be cut.
The Bush administratoin’s goal has been to get rid of Medicare by privatizing it.
Get as many people as possible on MA, drain money from traditional Medicare, announce traditoinal Medicare is bankrupt and, voila, you’ve taken away another plank of the New Deal.
But Bush has failed–just as he failed to do away with Social Security.
It’s worth noting that the person who beat him was Ted Kennedy–a Senator who was there the day the Senate voted to pass Medicare. Kennedy wasn’t going to watch Bush try to do away with Medicare while he was still alive. (And no, I don’t think he was grand-standing. His doctors and family did not want him to go. The man has many flaws–he’s tragically flawed–but this was a brave thing to do.)
Not-so-convinced]
Welcome to the blog. If you’ve been reading it in the past, you know that I admire many of the the not-for-profit HMOS that have managed to stay alive in the West.
But they are in the minority. The majority of insurers taking the Medicare Advantage money are for-profit insurers who don’t know how to manage care and don’t want to manage care. They just want to manage reimbursements.
So while some seniors on good not-for-profit MA plans may be losers, we just cannot afford MA as structured, with so much money siphoned off by the for-profits.
You write:
“The only system that will work (regardless of the number of payers) is a PRE-PAID system where the providers have the incentive to provide cost-effrective care, without doing procedure after unnecessary procedure to keep stable their incomes in a system where the amount of the reimbursement on a per-procedure or per-encounter basis is actually going down. ”
I agree completely. I very much like Kaiser of Northern California (even while agreeing it’s not perfect)
Under health care reform, I would like to see incentives for doctors to join pre-paid large multi-specialty practices. Experience shows that, by and large, they offer the highest quality care at the lowest price.
More and more younger doctors want to work on salary for large medical centers, and so, with time, this will happen . . .
Preserve SS & Medicare:
Indeed, “what happened to the magic of the marketplace we were promised . . .”
-~———-~—-~—-~—-~——~—-~——~–~—
Barry–
You have a right to your ideology but to suggest that the head of a well-respected public union is not a credible source simply underlines that your point of view is driven by ideology, not fact.
The Medicare Payment Advisory Commission and the Congressional Budget Office Director, Peter Ortzsag agree that the subsidies to Medicare Advantage are a give-away, that Medicare is not getting value for the dollars, and that seniors are not getting good care.
I suppose you think they are not credible either?
Consider how the bill was passed. As I described on an earlier post: “the government gave Medicare Advantage a blank check when the program was born, under the cover of darkness, in 2003.
“It’s worth pausing to remember this breech birth. The Medicare Prescription Drug, Improvement, and Modernization Act (also known as the Medicare Modernization Act) came to the House for final approval at 3:30 a.m. on November 22, 2003. It was losing, 219-215, until the House Leadership, in a very unusual move, held the vote open for hours while the Leaders twisted arms. At 5:50 a.m. the legislation passed the House 220 to 215.
“Representative Nick Smith later claimed that he was offered campaign funds for his son, who was running to replace him, in return for changing his vote from “nay” to “yea. ” He subsequently recanted this statement. Nevertheless, the House Ethics Committee and the FBI launched investigations into whether members of the House had in fact offered Smith a bribe to vote for the measure.
“In October 2004, the Committee issued its report, revealing that “Majority Leader Tom DeLay admitted that he offered to endorse Smith’s son Brad, who was running for Congress at the time, in exchange for Smith’s “yea” vote on the Medicare bill,” though the investigation couldn’t find out who offered Smith the money.”
DeLay offered a Congressmen a bribe to vote for Medicare Advantage–which he did.
From the outset, this program has been mired in mud and greed.
Brad
The public employees don’t get to choose which plans their employer (the state) make available just as people who work for a private-sector company can’t choose which plans their employer chooses to make available. (Some employers offer only one choice.)
In this case, insurers bribed the states (by giving the state governments part of the windfall subsidy) to switch
their retired employees from traditional Medicare to Medicare Advantage.
As Fillman explained in his testimony:
” When Congress opened up Medicare to private plans, it was based on the claim that the health insurance industry would be more efficient, provide more care coordination, and do so at less cost to taxpayers. PFFS plans do none of the above, and enrollees who are forced into them are no longer enrolled in Medicare.
“State and local governments see money on the table, and they are, in economist-speak, “acting rationally” and grabbing the cash, at the expense, particularly, of the federal government. It has nothing to do with the superiority of these plans.
“Again, the root of these problems is the enhanced profit incentives paid to these plans, by taxpayers and beneficiaries. Congress should know that cost shifting to the federal government was the top reason for West Virginia’s switch, and frankly, for every other public employer that considers a PFFS plan. West Virginia’s PEIA said its decision was influenced by the higher reimbursements given to MA plans and that “these are federal dollars that will help pay the medical costs of Medicare retirees.” Moreover, PEIA additionally offloaded major costs to the federal government by switching to a Medicare Advantage prescription drug plan.
“With all this cost-shifting, the irony is that in West Virginia, Pennsylvania, and elsewhere, we as a nation are paying more to these private plans, for less.” .
Jim– You wrote : “structurally and politically, medicare advantage makes sense only insofar as payments are below average medicare costs in the area involved.”
Exactly–but costs will never be lower than under traditional Medicare because private sector insurance has so many expenses: advertising, lobbying, providing profits for shareholders.
The private sector would have to be HUGELY more efficient that govt to be able to offer more care for less–and it isn’t.
In this case, it isn’t even as efficient.
Gregory–
You wrote: ‘This is not about the docs. This is about Seniors and what the privatization of Medicare (thru Medicare Advantage) has really meant to their pocketbooks. Every senior in Medicare is paying more to fund insurance industry overpayments. The money used to pay Medicare Advantage insurers is coming out of traditional Medicare.”
Yes exactly. And the fight yesterday was about the insurers. Very few politicians wanted to cut doctors’ fees. What the Republicans were so excited about is the danger that MA woudl be cut.
The Bush administratoin’s goal has been to get rid of Medicare by privatizing it.
Get as many people as possible on MA, drain money from traditional Medicare, announce traditoinal Medicare is bankrupt and, voila, you’ve taken away another plank of the New Deal.
But Bush has failed–just as he failed to do away with Social Security.
It’s worth noting that the person who beat him was Ted Kennedy–a Senator who was there the day the Senate voted to pass Medicare. Kennedy wasn’t going to watch Bush try to do away with Medicare while he was still alive. (And no, I don’t think he was grand-standing. His doctors and family did not want him to go. The man has many flaws–he’s tragically flawed–but this was a brave thing to do.)
Not-so-convinced]
Welcome to the blog. If you’ve been reading it in the past, you know that I admire many of the the not-for-profit HMOS that have managed to stay alive in the West.
But they are in the minority. The majority of insurers taking the Medicare Advantage money are for-profit insurers who don’t know how to manage care and don’t want to manage care. They just want to manage reimbursements.
So while some seniors on good not-for-profit MA plans may be losers, we just cannot afford MA as structured, with so much money siphoned off by the for-profits.
You write:
“The only system that will work (regardless of the number of payers) is a PRE-PAID system where the providers have the incentive to provide cost-effrective care, without doing procedure after unnecessary procedure to keep stable their incomes in a system where the amount of the reimbursement on a per-procedure or per-encounter basis is actually going down. ”
I agree completely. I very much like Kaiser of Northern California (even while agreeing it’s not perfect)
Under health care reform, I would like to see incentives for doctors to join pre-paid large multi-specialty practices. Experience shows that, by and large, they offer the highest quality care at the lowest price.
More and more younger doctors want to work on salary for large medical centers, and so, with time, this will happen . . .
Preserve SS & Medicare:
Indeed, “what happened to the magic of the marketplace we were promised . . .”
-~———-~—-~—-~—-~——~—-~——~–~—
Barry–
You have a right to your ideology but to suggest that the head of a well-respected public union is not a credible source simply underlines that your point of view is driven by ideology, not fact.
The Medicare Payment Advisory Commission and the Congressional Budget Office Director, Peter Ortzsag agree that the subsidies to Medicare Advantage are a give-away, that Medicare is not getting value for the dollars, and that seniors are not getting good care.
I suppose you think they are not credible either?
Consider how the bill was passed. As I described on an earlier post: “the government gave Medicare Advantage a blank check when the program was born, under the cover of darkness, in 2003.
“It’s worth pausing to remember this breech birth. The Medicare Prescription Drug, Improvement, and Modernization Act (also known as the Medicare Modernization Act) came to the House for final approval at 3:30 a.m. on November 22, 2003. It was losing, 219-215, until the House Leadership, in a very unusual move, held the vote open for hours while the Leaders twisted arms. At 5:50 a.m. the legislation passed the House 220 to 215.
“Representative Nick Smith later claimed that he was offered campaign funds for his son, who was running to replace him, in return for changing his vote from “nay” to “yea. ” He subsequently recanted this statement. Nevertheless, the House Ethics Committee and the FBI launched investigations into whether members of the House had in fact offered Smith a bribe to vote for the measure.
“In October 2004, the Committee issued its report, revealing that “Majority Leader Tom DeLay admitted that he offered to endorse Smith’s son Brad, who was running for Congress at the time, in exchange for Smith’s “yea” vote on the Medicare bill,” though the investigation couldn’t find out who offered Smith the money.”
DeLay offered a Congressmen a bribe to vote for Medicare Advantage–which he did.
From the outset, this program has been mired in mud and greed.
Brad
The public employees don’t get to choose which plans their employer (the state) make available just as people who work for a private-sector company can’t choose which plans their employer chooses to make available. (Some employers offer only one choice.)
In this case, insurers bribed the states (by giving the state governments part of the windfall subsidy) to switch
their retired employees from traditional Medicare to Medicare Advantage.
As Fillman explained in his testimony:
” When Congress opened up Medicare to private plans, it was based on the claim that the health insurance industry would be more efficient, provide more care coordination, and do so at less cost to taxpayers. PFFS plans do none of the above, and enrollees who are forced into them are no longer enrolled in Medicare.
“State and local governments see money on the table, and they are, in economist-speak, “acting rationally” and grabbing the cash, at the expense, particularly, of the federal government. It has nothing to do with the superiority of these plans.
“Again, the root of these problems is the enhanced profit incentives paid to these plans, by taxpayers and beneficiaries. Congress should know that cost shifting to the federal government was the top reason for West Virginia’s switch, and frankly, for every other public employer that considers a PFFS plan. West Virginia’s PEIA said its decision was influenced by the higher reimbursements given to MA plans and that “these are federal dollars that will help pay the medical costs of Medicare retirees.” Moreover, PEIA additionally offloaded major costs to the federal government by switching to a Medicare Advantage prescription drug plan.
“With all this cost-shifting, the irony is that in West Virginia, Pennsylvania, and elsewhere, we as a nation are paying more to these private plans, for less.” .
Jim– You wrote : “structurally and politically, medicare advantage makes sense only insofar as payments are below average medicare costs in the area involved.”
Exactly–but costs will never be lower than under traditional Medicare because private sector insurance has so many expenses: advertising, lobbying, providing profits for shareholders.
The private sector would have to be HUGELY more efficient that govt to be able to offer more care for less–and it isn’t.
In this case, it isn’t even as efficient.
Gregory–
You wrote: ‘This is not about the docs. This is about Seniors and what the privatization of Medicare (thru Medicare Advantage) has really meant to their pocketbooks. Every senior in Medicare is paying more to fund insurance industry overpayments. The money used to pay Medicare Advantage insurers is coming out of traditional Medicare.”
Yes exactly. And the fight yesterday was about the insurers. Very few politicians wanted to cut doctors’ fees. What the Republicans were so excited about is the danger that MA woudl be cut.
The Bush administratoin’s goal has been to get rid of Medicare by privatizing it.
Get as many people as possible on MA, drain money from traditional Medicare, announce traditoinal Medicare is bankrupt and, voila, you’ve taken away another plank of the New Deal.
But Bush has failed–just as he failed to do away with Social Security.
It’s worth noting that the person who beat him was Ted Kennedy–a Senator who was there the day the Senate voted to pass Medicare. Kennedy wasn’t going to watch Bush try to do away with Medicare while he was still alive. (And no, I don’t think he was grand-standing. His doctors and family did not want him to go. The man has many flaws–he’s tragically flawed–but this was a brave thing to do.)
Not-so-convinced]
Welcome to the blog. If you’ve been reading it in the past, you know that I admire many of the the not-for-profit HMOS that have managed to stay alive in the West.
But they are in the minority. The majority of insurers taking the Medicare Advantage money are for-profit insurers who don’t know how to manage care and don’t want to manage care. They just want to manage reimbursements.
So while some seniors on good not-for-profit MA plans may be losers, we just cannot afford MA as structured, with so much money siphoned off by the for-profits.
You write:
“The only system that will work (regardless of the number of payers) is a PRE-PAID system where the providers have the incentive to provide cost-effrective care, without doing procedure after unnecessary procedure to keep stable their incomes in a system where the amount of the reimbursement on a per-procedure or per-encounter basis is actually going down. ”
I agree completely. I very much like Kaiser of Northern California (even while agreeing it’s not perfect)
Under health care reform, I would like to see incentives for doctors to join pre-paid large multi-specialty practices. Experience shows that, by and large, they offer the highest quality care at the lowest price.
More and more younger doctors want to work on salary for large medical centers, and so, with time, this will happen . . .
Preserve SS & Medicare:
Indeed, “what happened to the magic of the marketplace we were promised . . .”
-~———-~—-~—-~—-~——~—-~——~–~—
Maggie,
I do accept MEDPAC and CBO (as well as OMB) as credible sources. I also think the PFFS version of Medicare Advantage deserves to be curtailed, primarily because many of the insurers didn’t use the “kick start” period to build a network but resorted to the deeming concept as a way to force providers to accept standard Medicare rates while the insurer collects the extra premium. I think the HMO and PPO versions of MA are reasonable insofar as they offer low income seniors sufficient extra benefits to allow them to avoid buying a Medi-gap policy which they otherwise couldn’t afford. Under traditional Medicare, the coverage is very incomplete because of the lack of an out of pocket maximum exposure, yet there does not seem to be a viable way to provide Medi-gap coverage on a means tested basis to seniors in need but not poor enough to also be eligible for Medicaid. To the extent that Medicare eligible retirees lose employer coverage that they previously had, MA is perceived to offer a richer benefit package than standard Medicare. Alternatively, it’s cheaper than accepting standard Medicare plus paying out of pocket for a Medi-gap plan if he can afford to. It’s rational for many of them to choose MA whether their employer forces them to or not. Presumably, that accounts for why there are now 10 million beneficiaries with MA plans with the number growing each year as 3-4 million people age in to Medicare eligibility. The fact that MA costs taxpayers more money is not really a concern to the individual retiree. He just sees one package as worth more to him than the other.
My main problem with Fillman is that his real agenda was to preserve the traditional insurance previously offered by the state which becomes a supplemental policy at age 65 and is more generous than an MA plan. The states, for their part, are finding the costs of providing retiree health insurance increasingly unaffordable while taxpayers are growing more resentful of what they see as excessively generous gold plated coverage compared to what they themselves have (if they have health insurance at all) and don’t appreciate having to pay ever higher taxes to cover the costs. The states see offloading some of this obligation onto MA as a way to both save money at the state level and placate state taxpayers. If the MA option were not available, the states would not be able to do what some of them are doing and the union would be a lot happier. So, it’s not really about whether MA adds value or not from Fillman’s perspective. Rather, it’s about preserving the very generous benefits that the union members enjoyed before.
Maggie,
I agree that a capitation payment model would be much better, at least in theory, at aligning provider incentives to minimize unnecessary and inappropriate care. Hopefully, there would be mechanisms in place (aside from the tort system) to insure that patients were not under treated either.
I think the main reason why we don’t see a lot more capitation is that providers have little or no confidence in their ability to forecast costs for the patient population they are responsible for, even if they have reinsurance to cover very expensive outlier cases. I have no idea how to remedy this issue or how large a population a large group practice or hospital system thinks they need to accept a capitation contract with reinsurance assuming such insurance can be secured on reasonable terms.
With respect to Kaiser, I would be curious if you have any data on their performance on the metric of hospital in patient days per thousand members under age 65 and how that compares to other large insurers. It would also be interesting to see to what extent, if any, Kaiser’s experience varies by region within its own system, and, if it does, what accounts for it.
Finally, two points on Medicare Advantage. First, insurers say that their pretax profit margin on this business average 3%-6% which implies that most of the extra payments are going into added benefits for seniors. Second, MA plans get risk adjustment payments based on how sick their insured population is compared to a benchmark average. As far as I know, this is the only experiment in risk adjustment payments we have. Any worthwhile systemic reform, including the one proposed by Dr. Emanuel, will need to incorporate risk adjustment. Hopefully, MA is teaching us something useful on this score.
For your reference library:
http://www.senate.gov/~finance/hearings/testimony/2008test/013008mmtest.pdf
(Private Fee-for-Service Plans in Medicare Advantage – Statement of
Mark E. Miller, Ph.D.
Executive Director
Medicare Payment Advisory Commission)
Issues Existing with Medicare and Medicaid (Missouri)
1. Medicaid
In 2005, Missouri experienced the most severe Medicaid cuts since the program began 30 years from then. Already, near 1 million Missourians are uninsured aside from this Medicaid situation. So Blount chops 100,000 dollars from Medicaid this year from those citizens who needed the medical resources the most. In addition, Blount had another 300,000 dollars robbed from Missouri’s Medicaid patients by having their medical benefits greatly reduced. Why? I heard it was to possibly to build more athletic stadiums in the state of Missouri. Furthermore, Blount created a ‘war room’ for corporate lobbyists to dispense gifts during the state’s legislative session for this egotistical psychopath to enjoy those obsequious to him, yet also seems to enjoy the suffering experienced by others, as illustrated with the Medicaid issue, which was the largest cut of any state in the history of the program for those in the most need of resources he cannot conceptualize or care about, as he should. Our administration seems to share similar traits as this man.
Limited income parents suffered the most with this atrocity, as more than 50,000 of them lost medical coverage for their families. And after Blount stated in 2007 that Missouri is now strong, prosperous, and vibrant regarding the state’s budget and the robust economy, he never repaired or acknowledged at all the damage he did to those suffering Missourians in 2005, and never indicated to do what he should have done, which having notable degrees of remorse, regret, and guilt. Remember that most on Medicaid in Missouri are children through what is called the SCHIP Medicaid program. There are also over 100 thousand children uninsured. If SCHIP does not expand as people wish, that number could easily reach 200,000 children.
In the U.S., the total cost of Medicaid is around 300 billion dollars a year. States have their own discretion on how their Medicaid programs are operated, and this is largely unexamined by the other contributor to Medicaid, the federal government, as it should be according to the laws involved with the proper administration of Medicad.
The joy he must experience in seeing or knowing of the suffering of others must continue to elate him, as the Missouri House of Representatives rejected a bill to expand Medicaid coverage greatly needed due to the actions of the governor those years ago recently, simply because he has the ability to do so.
Medicaid is also a necessity for those in need that are residents in the over 500 nursing homes in Missouri. The Nursing Home Inspectors already are accused of ignoring deficiencies in these nursing homes, which may include malnutrition and bed sores of the residents, and the inappropriate use of pharmaceuticals as well. Further unsettling is that such inspections with such reckless disregard normally take place only once a year. The inspectors should be monitored by the GAO because of safety issues in nursing homes that continue and appear unresolved, yet it seems to continue. For example, around 25 percent of Missouri nursing homes were found to have deficiencies recently that were authentic and concerning. The rest of the nation only has a rate of 15 percent. Also, the Nursing homes in the United States are only covered by Medicaid, as typically, nursing homes cost each patient over 5 thousand dollars a month without this much needed support.
Aside from the problems mentioned already with nursing homes, combined by the loneliness and desperation of those who stay at these facilities, the mental disease of dementia is a common disease as we get older and is seen in Nursing homes, and identified with those at these locations, yet are treated inappropriately, if at all, I understand. Basically, dementia is a disease of cognitive and brain dysfunction that usually is not reversible. If it’s the cortical kind of dementia, it is combined with Alzheimer’s disease. If it is the sub cortical kind, look for Parkinson’s disease to be experienced with these patients. Such patients are inappropriately prescribed and given inappropriate if not deadly medications, such as atypical anti-psychotics, which cause high rates of pneumonia and premature death in the elderly population who have dementia.
To complicate Missouri’s health care situation further, and because close to 90 percent of Missouri counties are rural, with most lacking hospitals, there is only one doctor for every 3500 or so residents in such counties in this state. There is something to help called a Certificate of Need, or CON. Issued by regulatory agencies, they authorize healthcare facility creation and expansion as determined by the perceived needs of any community. Only a small number of states seem to have a formal CON process to activate this system, such as the addition of new nursing facility beds. Missouri fortunately is a state that is entitled to this requirement if the providers have a 90 percent occupancy for 4 quarters. Created by the American Health Care Association, the last CON was called a Medicaid payment system clearinghouse. I’m not sure why this was involved with the CON program.
There are around 5 million people in Missouri are and have Medicaid. The state of Missouri pays 20 percent of that bill, with the government paying the rest. While the states manage Medicaid for their state, CMS monitors and regulates the states, but that does not mean that this DHHS division actually does this in a complete and beneficial method for the citizens of Missouri. In 1990, Medicaid came out with the drug rebate program, which helped many. The Missouri Healthnet Division is responsible for making the best of the MO Medicaid funds, with frequent drug utilization reviews to determine the level of access to covered pharmaceuticals, as they manage these funds.
With seniors, government health care programs pay for quite a bit. For example, Long Term Care (LOC) costs Missouri about 2 million dollars a year. About 10 million elderly U.S. residents are in LTC facilities. Only Medicaid pays for this service as well, as mentioned earlier. Homecare is one form of LTC, and preferable to many. The underfunding of Medicare for LTC has increased around 50 percent in less than a decade, which amounts to around 5 billion dollars per year. Missouri is one of the states with the greatest disparity between the actual cost of providing suitable medical care and Medicaid reimbursements. This, of course, is damaging for nursing facility residents who have also had their ‘allowable costs’ progressively lowered as well. The result of this decline means that each individual patient has a daily shortfall of over 20 dollars a day. Missouri ranks about 7 percent in the nation in reference to this type of neglect. Aside from decreased health care quality of the elderly, these people may become very sick and could result in their lifespan shortened due to lack of access of medical attention that may delay the progression of any existing diseases they may have. There are also skilled nursing facility patients, most of who rely on Medicaid to pay for their care and services. The state of Missouri decides what is allowed regarding their care.
To no one’s surprise for the most part, the federal government essentially is disregarding the humane responsibility they have to the citizens in this population in the United States with ensuring they have appropriate health care by allowing such flaws to continue to exist.
The Medicaid for children again is called SCHIP, and was created over 10 years ago. This program is facing funding shortfalls in many states, with Missouri topping the list thanks to the governor. Of course, Bush vetoed a bill for SCHIP expansion and reauthorization recently, and the House was unable to over-ride this veto and some other vetos Blunt has implemented for the benefit of the U.S. citizens. The cost for this SCHIP program for children is around 4 billion dollars a year, and residents are concerned about children not receiving medical attention due to the severe shortages that continue to exist with the state’s Medicaid funds. Some governors, however, appear to be void of such concern, and therefore clearly do not share the concern of their citizens.
2. Medicare
Medicare is primarily health insurance provided by our government for those over 65 years of age, along with other situations, such as those with disabilities. Medicare began the same year Medicaid did, and it was a decent program to implement. About 50 million people in the United States have Medicare, which costs around 300 billion dollars every year. Unfortunately, various market forces have infected Medicare for decades now. However, Medicare has become more confusing for the cardholders over the years. Most recently, a part D was added to assist with paying for prescription drugs. Part A covers hospital stays and f/u stays in skilled nursing facilities for up to 100 days. Part B covers preventative medical care, ancillary services, which include medical treatment received in a health care facility, which includes a doctor’s office, as well as covering for medical equipment, all determined as medically necessary by CMS, who administers not only Medicare components already mentioned, but also Medicaid, SCHIP, CLIA, and HIPPA. CMS also reports to Medicare about the utilization of Medicaid by the state.
Since Medicare is the insurance for this population, doctors and others are somewhat reliant on reimbursement from the program, just as they are with other forms of insurance. A few years ago, the Senate Finance Committee passed a spending cut package that dropped over 10 billion dollars from Medicare and Medicaid over the next five years after the package was activated. This was due to the federal government wanting to cut 35 billion from the federal budget. Yet at the same time, the Senators agreed to boost doctors’ Medicare payments by over 10 billion dollars over 5 years that replaced a scheduled 5 percent or so cut that physician groups understandably were opposed to upon becoming aware of it. Furthermore, Medicare randomly assigned the members to a plan they may be completely unaware about until they are denied healthcare at a clinic, perhaps.
Then there is the issue of Medicare Fraud, which the CMS freely admits knowledge of, yet prosecutions seem rare, yet lucrative to the prosecutors with settlement agreements, which averages about a billion dollars a year from the wrongdoers and the settlements they pay. Also, when CMS spoke on this last year, the DHHS announced a pilot program to catch such people who rob taxpayers by over-billing Medicare in the amount of several billions of dollars every year.
There is an issue of doctors having their Medicare reimbursements cut by the Senate Finance Committee. Doctors are reimbursed by Medicare by a list of codes provided to them by CMS to illustrate to doctors that they have the discretion on what the doctor is allowed to collect from Medicare. Late last year, a closed meeting was held to discuss reversing a scheduled reduction in physician fees exceeding 10 percent that was planned to take place at the start of 2008. A one year moratorium regarding this cut was suggested. Physicians were included with many others scheduled for Medicare reductions. Finally in the summer of 2008, a veto-proof passage of a Medicare reform bill halted any Medicare reductions to physicians until at least 2009. At the same time, a Medicare Improvements for Patients and Providers act was passed- designed ultimately to improve Medicare and ensure the health of those on this program. 90 percent of doctors see Medicare patients. It appears the will of the people was acknowledged with the passage of this act. Because seeing Medicare patients is no longer affordable to doctors because of reimbursement issues with Medicare. And Medicare does have its share of flaws, such as the Medicare Advantage, designed as a solution to the shortfalls of the Medicare program. About 20 percent signed up for Medicare Advantage Medicare that was marketed aggressively to seniors regarding this element of their Medicare, yet was passed by congress and signed by the president. Now, regulations are being considered by the administration to limit their Medicare entitlements in other ways because of their mistake. Medicare Advantage cuts could deprive seniors of needed pharmaceuticals for the restoration of their health or to delay the progression of an existing disease they may have.
Then there are other cuts that are now in effect with Medicare reimbursement reductions, but were intended to begin shortly after the passing of the Balanced Budget act of 1997, which capped medical therapy for Medicare pts. at a maximum reimbursement of 1500 dollars per session for outpatient services that was initially suppose to be activated in 1999. Thanks to three moratoriums that were allowed after 1999 that provided an extension of the caps requirement until 2005, when the caps were mandated, yet were placed with what was called an ‘exceptions processes. This permits certain types of therapy to exceed the cap limit if the Medicare patient meets certain diagnostic and clinical criteria determined by their relevant health care provider. This process was authorized by the Deficit Reduction act of 2005. The process exception existed though a couple of more acts that were passed and activated until June of 2008. And the therapy sessions max out at a little over 1800 dollars a session at this time of implementation of the caps for services with the exceptions process expired at this point as well.
The intention of both Medicare and Medicaid was to assist others in medical need who are unable to obtain such needs due to their condition or their income. A few bad apples, from doctors to government officials, have contaminated the intent of these programs and health care to those who need it the most is being taken away from them, even though they have done nothing wrong.
Yeah, I’d say that our Health Care System a crisis.
“Compassion is the basis of all morality.” — Arthur Schopenhauer
Dan Abshear
The long post by Dan Abshear about Medicaid problems in Missouri gives me a chance to discuss this aspect of the subject, one that is often ignored by universal system advocates. Only about one in five children nationally on Medicaid traditionally have been able to find a dentist willing to take the program. Yes these children are technically insured with a Medicaid insurance that covers basic dental care, but the dental profession for the most part has just refused to accept the program. It pays too little and dentists are not hungry enough.
That dental experience brings up the spectre of what might happen if there is universal coverage but not enough supply side resources to meet the demand. If there are not enough providers with clear enough guidance as to what constitutes good care, just what kind of rationing will take place?? What can be done to minimize this kind of access problem even with universal coverage?
Dan, Robert and Barry– Thanks
Dan–
Welcome. Thank you for the long, and I’m afraid all-too-true statement about what is wrong with our health care system.
Compassion is indeed the foundation of morality–and the major problem with health care in the U.S. is that we don’t have enough “solidarity.”
We are too divided by income and class and don’t identify with each other.
I would like to see both Medicaid and SCHIP folded into Medicare. They should be federal programs. Some states won’t
fund them adequately because they can’t–they are too poor. (Alabama)
Other states simply won’t (Texas, Floridia, and your example, Missouri, stand out.)
There is no reason why a poor child in Alabama should have less access to care than a poor child in
Massachusetts. We’re all Americans.
Health care providers who care for Medicaid patients also should be paid at least as much as providers are paid to treat Medicare patients. Today, fees are so low that Medicaid patients have a very hard time getting access to good care.
I could go on–but the bottom line is that health care reform must ensure that all Americans have the same comprehensive benefits that you and I would want for our families. A two-tier or three-tier system is unacceptable. Health care is a right and a necesssity. Without good health a person cannot pursue the other opportunities guaranteed under our constitution.
Robert—Thanks very much for sending that link. This week-end, I’m writing about Medicare reform, and that came at exactly the right time.
Barry– You write;
“I think the main reason why we don’t see a lot more capitation is that providers have little or no confidence in their ability to forecast costs for the patient population they are responsible for, even if they have reinsurance to cover very expensive outlier cases”
This is true–this is why capitation makes most sense for very large group practices where expensive outlier cases are balanced by healthy patients who don’t need much treatment.
Kaiser in Northern California is particularly good, as is Kaiser in Colorada. I’m told that Kaiser is seen as a benchmark for good, solid evidence-based care by people like Dr. Jack Wennberg (founder of the Dartmouth reserach), Dr. Don Berwick (founder of the highly respected Instiutet for HealthCare Improvement. ) Also doctor satisifaction and patient satisfaction is high at Kaiser, as shown for low turn-over.
The West has more experience with evidence-mbased multi-specialty pre-paid health care, and some of the best health care in the country can be found there. In other parts of the country solo practice and small practices lead to fragmented care, a lack of co-ordination and uncertain quality,
No one is looking over the physician’s shoulder. He may or may not be following recent guidelines. He may be 20 years behind the science. He may be very charming and well-liked, but who knows if he’s practicing good medicine? (The nurses at the hosptial where he operates know –but they don’t dare talk unless they want to be fired and/or sued.)
On Medicare Advantage– Medicare cannot afford to pay-for-profit insurers a 6% profit on services that it could provide, directly, for so much less.
As part of its latest recommendations, MedPac is advising Congress to completely cut the subsidies to the insurers and pay them just 100% of what it would cost Medicare to provide the same service. MedPac suggests that if the private sector is indeed more efficient than the public sector, it should be able to figure out innovative ways to provide more benefits and services than Medicare for the same amount of money. If they
can’t they will drop out of the problem.
Since many REpublicas as well as Democrats feel that insurers are over-paid under MedPac–and basically hate the 2000 Medicare Modernization Act–I suspect that they will slash the subsidies next year. McCain actually voted against the Medicare Modernization Act, so, if elected, he too is likely to support cutting the bonsues.
Another problem with Medicare Advantage is that doctors don’t like to take it. They are much more likely to take traditional Medicare. As teh Texas Medical Assocation explained to me recently, Medicare pays in 30 days. Insureres can take 60 days, 90 days–and there is much more hassle involved in being reimbursed.
Of course the head of a union should try to hang onto the heatlh benefits that his workers have been promised. This is his job.
And others confirm what he says about quality under Medicare Advantage, bait and switch, lack of transparency, etc.
Government workers generally earn lower pay than they would for a simliar job in the private sector, but have better benefits.
It’s a trade=off and unions represnting public unions wisely (I think) always chose benefits over wages. They, and many of their members realize that employers who give you higher benefits are not going to give you higher wages.
Maggie,
To drive provider incentives toward cost-effective and appropriate care and away from overtreatment and unnecessary care, I think we need to move toward a capitation payment model and away from the traditional fee for service approach. The issue is how do we get there?
Since CMS drives payment policy in the U.S., the leadership is going to have to come from them. If I were CMS, I would be thinking in terms of requiring doctors and hospitals to use interoperable electronic records in order to be able to do business with Medicare and Medicaid. Federal taxpayers should help to subsidize the investment necessary to get electronic records up and running but only for providers who will agree to a capitation payment approach by some date certain in the future (within 3-5 years, perhaps).
In addition to making it easier to collect data to evaluate performance and figure out what works and what doesn’t, electronic records will also help to eliminate duplicate testing and adverse drug interactions, especially in hospitals. Beyond that, the combination of increasing the capital intensity of medical practice that the cost of electronic records will contribute to plus the need for a large base of patients to make capitation viable should, over time, force doctors who practice solo or in small groups to join larger groups or be squeezed out of the business. For hospitals, having PCP’s working for them who can practice cost-effective care and keep patients healthy and out of the hospital will become the road to superior profitability instead of being a money loser under the current fee for service system.
The two questions I have are: (1) how close are we to effective interoperability standards that are a prerequisite for electronic records to work to their full potential and (2) how large a patient panel or hospital system is needed to make a capitation model viable, even with reinsurance for expensive outlier cases? I would be especially interested in hearing the perspective of some of the doctors on the blog.
Barry– I agree about capitation and electronic medical records–though I would add that government (taxpayers) are going to have to make a huge investment their.
The vast majority of doctoors in this country work in practices of 1-5 doctors. For them, health IT is an enormous expense–they won’t enjoy the economies of scale to make it pay off for many, many years.
If they are in primary care, pediatrics, family docs, etc. chances are they are already having a hard time making their overhead.
Taxpayers will have to make the investment for them. This will be a major part of the cost of health reform–which is why we will need to save money in other places–cutting waste, negotiating for discounts on drugs, cutting bonuses to Medicare Advantage.
In terms of how close we are to having ” effective interoperability standards that are a prerequisite for electronic records to work to their full potential,” see Niko’s recent post on Vista here
http://www.healthbeatblog.org/2008/06/sapping-vistas.html
His post drew this response from “Trusted M.D.” :
“The best thing the VA has going for it is VistA, it’s universal electronic record system.
“I have used it extensively as a medical student and resident, and it works well. If the government were serious about implementing electronic records, it would install and support physicians for using VistA completely free of charge.
“Instead, they’re killing it. Yeah, doesn’t make sense to me either.”
Mostly to Barry, in regard to interoperability standards:
I built my first, partial EHR system around 1969 or 1970. It didn’t do much more except keep cumulative lab test values by patient, and perhaps do a little trending. Today, however, when I go to my physicians, the only reason that they have trending, perhaps correlations with medications, etc., is that I keep my own records.
At least for small offices, I see the problem much more with the end user interface and much less with interoperability. When my physicians get lab reports, it goes to a computer in their office, owned by the lab, that prints a separate report for each blood draw.
I would not be surprised if the interface between the computer at the main lab, and the office, already is in HL7 application format. Certainly, for tests with numeric values, it’s trivially easy to write a program that organizes data by patient — but there doesn’t seem to be any clinician demand, so the labs don’t try to compete.
I happened to have a visit a few days ago, and my primary physician had a new nurse, who had the usual “and why are you here today?” question. For some reason, I handed her the report and plan I prepare for the physician, and I thought, for a moment, that I was going to have to treat her for hysterics or shock. She kept repeating that she never saw a chart so usefully organized.
The package I gave her started with 2 pages (longer than usual, but with some references) of the issues for the day, my own monitoring, and my recommended actions. These are followed by medication lists, significant medical history, cumulative labs with some statistical trending, and home monitoring information. If I make suggestions on treatment, I do a quick literature review (we’ve agreed that he trusts mine), my differential and informed risk-benefit analysis, and, as an appendix, the relevant journal articles with highlighting for the important part.
The various sections of my “packaged” are organized and presented to be useful. One feature of my own is color coding: the red reasons for visit are cardiovascular, which match the red medications and the red history; the green for endocrine, and so forth.
My notes are organized in something inbetween SOAP charting format and a consultant report. Indeed, the latter has turned into a running joke — when one of my past physicians sent me a copy of his progress note on my visit, I replied with a “patient’s progress note”, reviewing my understanding of our agreements, additional information that occurred to me after the visit, and a cheerful closing “thank you for letting me see this very interesting physician.”
Now, I’m not suggesting that the average patient can or should prepare this sort of thing. My question is how many physicians know this sort of preparation is even possible? Even if there were funding, would physicians use the reports? Would they enter the information they need to enter? Sometimes, I feel like I’m doing a teaching visit — with the new cardiologist, I took the ECG out of his hand, arranged it on the desk with some past data, and some recommendations for action, pointing out how they related in a way he hadn’t seen.
Why can’t I get a job building systems like this? I suspect demand is as much a problem as is funding.
I like my primary care provider, but I know he has given up on having his staff spend the time needed to get around formulary restrictions and the like. I plan to propose that when this comes up, I grab a spare desk in his office, use my middle name, and be pseudo-staff to argue with the insurer. *sigh*
Howard,
Thanks for the very informative post about interoperability. Regarding your own record keeping, all I can say is, wow! I thought I was reasonably diligent about asking for copies of test results, surgeons’ operation reports, etc. and filing them in a three ring binder in case I need to provide the information at a later time if the doctor who generated the records can’t find them because he still operates in a paper based system. I’ll bet there are very few patients anywhere who do what you do and fewer still who have built a knowledge base comparable to yours. I especially love the color coding.
I’m becoming increasingly convinced that the single biggest core problem with our healthcare system is fee for service payment. It rewards doing more procedures and seeing more patients while it penalizes efficiency and cost-effectiveness. Without capitation and widespread adoption of electronic records, I don’t think we will see much improvement in healthcare value for money. Side issues like tort reform, drug price negotiation, and lower administrative costs won’t get us very far toward closing the gap between medical cost growth and GDP growth. If CMS forces payment toward capitation over some reasonable time period, doctors’ incentives regarding electronic records should change radically. Lower paid physician extenders should be able to competently enter data from test results, physician office notes, etc. to update the records. It would also become increasingly necessary for doctors who practice solo or in small groups to merge or join larger groups in order to compete effectively. At a minimum, hospitals should be required to adopt electronic records much more quickly, and we should move toward bundled payments for expensive surgical procedures to give them an added incentive to do so.
I am so totally confused. I am getting ready to retire and need to find a medical plan that is suitable to me at the least cost possible. It seems to me, going wit medicare and then getting a supplementary plan is extremely costly. (a few hundred dollars a month) Who can afford that. While an advantage plan is much much lower in cost. I spoke to people at the insurance companys tht offer advantage plans and also to ins. companys that offer supplementary plans and I cannot seem to get an answer why a supplementary plan would be better. I really need help.
Medicare will continue to be there for millions of Americans 65 and older, just as it has since 1965. In fact, the Medicare program will be stronger without the massive fiscal burden Medicare Advantage plans impose. Removing this liability from Medicare could also be the first step towards strengthening the program’s long-term solvency.