Health Wonk Review: The New Wright on Health Edition

January 2014 has been a big month in the world of health policy. For starters, it marked the implementation of the major provisions of the Affordable Care Act. Related to that, the President devoted a significant chunk of his State of the Union address to the topic of health reform. And, finally, your host for this edition of the Health Wonk Review–Wright on Health–unveiled a new and improved blog, which, like the ACA itself, will be implemented over an extended period.

Before I jump into all of the wonderful entries from my fellow contributors, I wanted to take a moment to tell you about the steps we’re taking here at Wright on Health. Please indulge my shameless self-promotion for a moment. For starters, we’ve expanded our team of contributing authors. Joining Nicole Fisher and me are Robert “Bob” Hackey, PhD, Professor of Health Policy at Providence College in Rhode Island, and Shirie Leng, MD, an anesthesiologist from Boston.

With these additions, our goal is to provide you with a wider variety of high-quality content, which spans the perspectives of academics, consulting, and clinical medicine. Of course, we’re still looking to grow. If you’ve ever been interested in blogging about health care or health policy, or if you conduct health services research that you think the public would benefit from understanding, we encourage you to join our team. It’s easy to get started. Just send us an email indicating your interest (and that includes you current HWRs). Over the next several months, we’ll be exploring how to work best with the University of Iowa College of Public Health, and making significant improvements to the design and content of the blog, so keep stopping by and checking us out to see what’s new. Now, on to the rest of this edition’s entries!

First,a lot has happened with ACA implementation, and people are still talking about it. We begin with Louise at the Colorado Health Insurance Insider, who explains that when it comes to private insurance on the exchanges, even with the new regulations, plan designs still vary a LOT. You can trust that your plan doesn’t have holes anymore, which is awesome, but it’s still not very easy to compare apples to apples.

On the topic of the exchanges, we also have Wendell Potter, who takes Wall Street Journal reporters to task for a January 18 story that took a “glass is half full” approach to reporting survey about enrollees in ACA’s health insurance marketplaces. The article focused on the fact that 2.2 million who signed up for coverage through the exchanges already had insurance. The real news, Potter says, is that the ACA has been steadily “chipping away” at the number of uninsured ever since it was enacted.

But not everyone feels the same way about the ACA. According to John Goodman who writes about “Risk Adjustments in ObamaCare” at his Health Policy Blog, “There is no such thing as a ‘price’ in the Affordable Care Act….The business model for health insurance companies has been completely turned on its head….[and] These incentives are precisely the opposite of what needs to happen to make the program work.”

At the state level, Anthony Wright of the Health Access Blog takes a look at ACA implementation in California. According to Wright, “We are just starting to make the ACA work, but some are already moving on to the next expansion fight, to cover the remaining uninsured, without regard to immigration status. The ACA both excludes undocumented immigrants, but creates a model that states and counties can build on top of.”

Also at the state level, Joe Paduda of Managed Care Matters chimes in with an update on Medicaid expansion in Michigan. With the Michigan GOP coming out in support of expanding Medicaid, Paduda now expects other states to follow suit, driven in large part by struggling health care systems and hospitals. Just like back in the sixties, it makes too much sense.

And then there’s Target. The firm recently cut health benefits for its employees. The Health Business Blog’s David Williams explains that how you interpret Target’s move depends on your view of the Affordable Care Act. My view is that ObamaCare is a great boon to part-time workers generally, and that not many part-timers will miss their employee sponsored coverage

Then, we have Jason Shafrin, the Healthcare Economist, discussing whether countries with a single-payer healthcare system should subsidize private insurance. He gives examples of Australia, Spain, and the UK, which do so, and looks at why they do it, and whether or not it’s a good idea.

That’s not all that different, really, from the federal government subsidizing the private insurance industry in the spirit of Medicare Advantage. But we’re trying to get away from that model in the post-ACA world by reducing Medicare Advantage payments. Yet, the InsureBlog’s Mike Feehan reports that Medicare Advantage plans may be enjoying a resurgence, as private Medicare Advantage insurers believe they have figured out how to provide better benefits and better service than traditional Medicare, for the same cost.

And, on the issue of who pays what and how much, we have two related posts from the Health Affairs blog on the landmark CMS-Maryland hospital rate-setting agreement. Robert Murray, President of Global Health Payment LLC and former Executive Director of the Health Services Cost Review Commission (HSCRC), Maryland’s groundbreaking all-payer hospital rate-setting agency, writes that the new model “will transform its hospital rate-setting system from a focus on controlling per-case cost toward population health and the total cost of hospital care per capita”; he outlines the policy implications of the agreement and challenges it will face. Carmela Coyle, president and CEO of the Maryland Hospital Association, discusses the ways in which the state’s hospitals will have to change their focus and writes that the agreement, “for the first time on a statewide level, provides the framework of a system that can deliver on the elusive Triple Aim of health care — reducing costs, enhancing quality and patient experience, and improving health.”

But the ACA is not the final piece of health care legislation to consider. Billy Wynne of Healthcare Lighthouse describes and comments on legislation recently introduced by Senator Ron Wyden (along with bicameral, bipartisan co-sponsors) that would reform Medicare through an emphasis on improving care for the chronically ill. With Senator Wyden ascending to the Finance Committee Chairmanship in the coming weeks, the bill is getting a considerable amount of attention.

Rounding things out, Roy Poses at Health Care Renewal shares two related posts on an unusual case: CareFusion’s large payment to a company owned by a prominent physician who also was co-chair of a National Quality Forum committee.  The Department of Justice alleged the payment was a kickback meant to have the co-chair “throw” an NQF standard so that it would favor the CareFusion product. Skeptical NQF reviewers, however, smelled something wrong and wrote the product out of the final standard. CareFusion has now paid a $40.1 million settlement. This case is important as it shows how far those desperate to sell their product or service may be willing to go to promote it, how deliberately created conflicts of interests really may be kickbacks and bribes, and how skeptical health care professionals must be about the various well-intended edicts from on high that rain upon them.

And, finally, last but not least, Julie Ferguson of Workers’ Comp Insider notes that the recent explosion at the Omaha Nebraska feed plant that killed two and injured many others has all the hallmarks of a combustible dust incident. Many point to the failure of OSHA and the Obama administration’s to take regulatory action on passing a combustible dust standard, something that has lagged since the 2008 Imperial Sugar Refinery explosion that killed 14 workers and injured 36.

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The Latest Health Wonk Review

Wright on Health gets a nod in the latest edition of the Health Wonk Review, hosted by David Williams at the Health Business Blog. For a fair and balanced view of ACA implementation, I suggest you read it.

 

Massachusetts Wins the Prize for Most Expensive Healthcare

It has recently been brought to the attention of the good citizens of Massachusetts that we spend more than anybody else on healthcare.  According to the Massachusetts Health Policy Commission report published recently, Massachusetts spends 16.6% of it’s economy on healthcare, as opposed to the national average of 15%.  The expense is in both higher utilization and higher prices.  It is across all payer types.  The most cost is associated with hospital care and long-term care/home health care.  The report goes on for many pages with reference to lots of charts and graphs.  I cannot pretend to understand all of it, and I defer to Dr. Paul Levy, who knows a lot more about this sort of thing than I do, in a post he recently wrote for The Health Care Blog (http://thehealthcareblog.com/blog/2014/01/09/the-data-are-wrong-our-patients-are-sicker/).  The best I might be able to do is to de-code some of the language in the Executive Summary.  To wit:

1. “Significant trends are occurring in the provider and payer market. For providers, the delivery system is growing increasingly concentrated in several large systems, with a larger proportion of discharges occurring from major teaching hospitals and hospitals in their system.”

Partners and Caregroup, along with a couple of for-profits, have eaten up pretty much all the formerly-independent hospital systems and physician practices.  While this means they can negotiate more effectively with vendors, it does not mean that potential cost savings gets passed on to anybody below the CEOs.

2. “…many provider organizations seek to re-orient care delivery around patient-centered, accountable care models, though significant challenges such as misaligned payment incentives, persistent barriers to behavioral health integration, and limited data and resources remain.”

This is nice-speak for “A lot of groups are moving toward accountable care organizations, without any real evidence that care in this model is better or that it’s any cheaper.”

3. “In addition, public and commercial payers are increasingly developing alternative payment methods that aim to alter supply-side incentives. However, there are significant challenges in implementation, including wide variation in these types of contracts covering Massachusetts providers, both within and across payers, as budget levels, risk adjustments, and other terms are negotiated.”

Everybody has a different deal.  Everything can be negotiated.

4. “The operating expenses that hospitals incur for inpatient care differ by thousands of dollars per discharge, even after adjusting for regional wages and the complexity of care provided. Some hospitals deliver high-quality care with lower operating expenses, while many higher-expense hospitals achieve lower quality performance.  Operating expenses are driven in part by market dynamics. Hospitals that are able to negotiate high commercial rates have high operating expenses and cover losses they may experience on public payer business with income from their higher commercial revenue, while hospitals with more limited revenue must maintain lower expenses.”

Operating expenses make no sense.  There is no consistency.  Going to a big fancy hospital with a big fancy name does not mean the care you get will be better, but it will likely be more expensive because the fancy hospital also has things that make a lot of money, like imaging machines and advanced non-invasive procedures.

5. “An estimated 21 to 39 percent ($14.7 to $26.9 billion in 2012) of health care expenditures in Massachusetts could be considered wasteful.”

No translation needed.  I could give you a hundred examples of waste right now, but anecdotal evidence is not data.  Massachusetts HPC has the data.

6. “Persistently high-cost patients – those who remain high-cost over multiple years – are easier to identify for care improvement and better health outcomes. These patients represent 29 percent of high-cost patients and make up 15 to 20 percent of Medicare and commercial spending in Massachusetts. Interventions that have been shown to improve the efficiency of care for high-cost patients include: prevention of conditions that often lead to expensive health crises; process and operational improvements that reduce the cost of episodes that are common among high-cost patients; and care management resources to support patients to manage their care more effectively and better coordinate care for patients across multiple provider settings.”

We know who the highest cost patients are and if we had better ways of encouraging prevention, managing diseases so they don’t get out of hand, and helping people take care of themselves in the community, we’d spend less.  Maybe.

So there you go!  Maybe these things can be addressed, maybe they can’t.  In the meantime, save your pennies, Massachusetts residents.  You’re gonna need them.

 

The Latest Numbers on Exchange Enrollment

The government has released the latest numbers on enrollment in the health insurance marketplace, and the news is mixed. As of December 28th, there were roughly 2.2 million Americans enrolled in private insurance through the new system of exchanges created by the Affordable Care Act. That’s a decent number, especially when you consider that the marketplace only opened on October 1, and was beset with enormous technical problems for more than a month. In fact, the government data indicate that approximately 1.8 million enrollees (nearly 82% of the total to date) took action in the month of December.

The complete report is here. Among some of the other interesting numbers contained in the report, the marketplace websites have received some 53.2 million visits since October 1, and marketplace call centers have fielded nearly 11.3 million phone calls. More than 4.3 million applications have been completed, so the nearly 2.2 million who have selected a plan is likely to continue going up. That’s the good news.

The bad news is that young adults represent a smaller proportion of new enrollees than many had hoped to see. The concern here is that if healthy young adults do not enroll in the marketplace, then premiums may be higher than expected, since the risk pool will be based largely on older, less healthy individuals. In part, this could be linked to the provision that allows children to stay on their parents’ policy until age 26. If you look at the numbers, only 15% of enrollees are under age 26, while another 15% are between the ages of 26 and 34. The largest group, though, is those ages 55 to 64, just shy of the Medicare eligibility age. According to The New Republic’s Jonathan Cohn, there’s encouraging evidence from Massachusetts that shows that young people may just procrastinate a bit, waiting longer to obtain coverage. If that holds true here, we may see the biggest spike in young adult enrollment in February and March as the deadline for avoiding the IRS tax penalty looms.

Most individuals (60%) have signed up for a 70/30 “silver” plan, while 20% have enrolled in less expensive 60/40 “bronze” plans, and a combined 20% have enrolled in more expensive 80/20 “gold” or 90/10 “platinum” plans. A very small number–just less than 1%–have purchased catastrophic coverage. What is notably absent from the report is a breakdown of plans by actuarial value and age group. We know that, by law, only individuals under 30 are able to purchase catastrophic coverage, but that’s a mere sliver of total enrollment. What types of plans the young and healthy sign up for matters. In the same way that the young and healthy are needed in the marketplace in general to keep premiums affordable, if they tend to gravitate to certain plan tiers, that may have adverse effects on premiums.

For example, if the young and healthy decide to comply with the mandate, but purchase the least expensive coverage they can obtain, they are likely to gravitate towards the bronze plans. Consequently, the bronze plans will have lower premiums both because they offer less coverage, and because they are covering a healthier risk pool. By contrast, if the young avoid the more expensive gold and premium plans, those plans will have higher premiums over time both because they offer more coverage, and because they are covering a less healthy risk pool. That type of activity is not entirely unexpected. After all, those who anticipate using more health care are more likely to spring for one of the more expensive plans with better benefits. The real question, though, is the extent to which this type of selection happens, and whether the more expensive plans will remain affordable over time.

 

The meaning of success

How should we define the success of the Affordable Care Act (ACA)? In recent months, news reports focused on the number of new enrollees as a key test of the law. Although the troubled performance of the healthcare.gov website during October and November delayed enrollment for hundreds of thousands of potential subscribers, Obama administration officials and Congressional Democrats hailed a surge in enrollment at the end of the year as proof that the law would fulfill its promise of providing affordable coverage to millions of uninsured Americans.

To date, enrollment numbers paint a decidedly mixed portrait of the ACA’s impact. Speaking on September 30, 2013, HHS Secretary Kathleen Sebelius declared that “success looks like at least 7 million people having signed up by the end of March 2014.” By late December, however, Sebelius hailed the fact that 2.1 million people had signed up for coverage through the new exchanges as evidence that the law was now working well. Earlier in the month, President Obama cited the increased pace of enrollment as proof that “the demand is there, and the product is good.” Even the most optimistic estimates, however, suggest that signups continue to lag far behind the administration’s own goals.

Obama administration officials responded to criticism about the widespread cancellation of individual insurance market policies in late 2013 by exempting millions of Americans who faced “unexpected natural or human-caused events” that prevented them from obtaining coverage from the individual mandate. Ironically, this decision, which sought to mollify Congressional critics and their outraged constituents, further undermines the prospects for meeting its enrollment targets and exacerbates an already serious credibility gap for Democratic candidates in the upcoming Congressional elections. Democrats continue to emphasize a “moving average” approach to measuring the success of the health insurance exchanges, pointing out that the pace of enrollments increased steadily once the website’s “glitches” were ironed out in late November. However, a failure to meet the administration’s own goal of 7 million new enrollees by the end of March 2014 will provide Republicans with a new policy story just in time for the 2014 campaign season.

Unfortunately for Congressional Democrats, increased enrollments did little to rehabilitate the image of the ACA in the eyes of the public. In a CNN poll released in on December 23, support for the law fell to 35% – a new low – despite significant improvements to healthcare.gov as a result of the “tech surge” in late November. The new polls highlight a troublesome trend for Democratic candidates who heed President Obama’s call to close ranks behind the ACA. Core Democratic constituencies now oppose the law, including 60% of women. Furthermore, in an ironic twist, 63% of those polled expected to pay more for health care after the implementation of the Affordable Care Act. In its current form, the ACA promises to be a millstone around the necks of vulnerable Congressional Democrats in 2014. Unless the Obama administration and other supporters of reform can reassure a doubtful public about the problem-solving capacity of American political institutions, the ACA may prove to be a classic Pyrrhic victory. In short, administration officials may win small battles over improving the performance of website, but lose the larger war over public support for government-led health care reforms.

The continued unpopularity of ObamaCare more than three and a half years after its enactment reflects a much deeper concern than simply website snafus or insurance cancellations. As I’ve argued elsewhere, ObamaCare has done little to restore public faith in the ability of government to solve social problems. Unless and until the administration begins to meet its own targets, the political fallout of the ACA will cast a long shadow over the 2014 elections … and beyond.

 

One Week Into the Heart of the ACA

The Affordable Care Act was enacted all the way back in 2010. But, even before then, critics were asserting that this new law would more or less destroy the American economy, insert Uncle Sam squarely between patients and providers, and initiate the end of freedom as it ushered in socialized medicine. That was nearly 4 years–and 40 repeal attempts–ago, and yet, the sky remains intact above us.

Sure, there have been some major bumps in the road along the way. No one, including perhaps most of all the President, was thrilled to receive cancellation notices in the mail from their insurers after being told they could keep their plans if they liked them. Others, particularly if they–or those they work with–are young and healthy, have seen some increases in their insurance premiums, and have attributed those increases to the new law, as if insurance premiums weren’t on a steady upward trajectory well before anyone ever heard the name Barack Obama. And, of course, the infamous healthcare.gov website was a tremendous embarrassment in the early days, threatening to derail enrollment efforts critical to the functioning of the new health insurance exchanges. Most of this has been, or is currently being, addressed by the Obama administration. And, it is helpful to keep in mind that this new law represents an enormous undertaking. Health care represents 18% of the American economy. Changing something that large takes time and is certainly prone to mistakes along the way. Similar efforts, like the implementation of Social Security and Medicare were also beset with more than their fare share of problems.

But now that we’re one week into the real heart of the ACA, with the most key provisions now implemented as of January 1, 2014, what has really changed? Has the government prevented you from seeing any doctor you wish? Have your taxes gone up exponentially? Are you now paying more for health care and getting less? Has a “death panel” convened to decide your fate? Or has life, somehow, gone on much as it did before? Some of you may say, “Yes, my taxes increased.” or “Yes, my health insurance premiums have increased.” For some, that is inevitably true, and I would not disagree.

But, for others, the world is a much brighter place as of January 1, 2014. The phrase “pre-existing condition” is no longer a part of insurance companies’ vocabulary. That means that the middle-aged woman with breast cancer who was unable to buy insurance because she was already sick, is now able to get covered and receive the care she desperately needs. In many states, Medicaid has been expanded to everyone with incomes up to 138% of the federal poverty level. That means that the childless adult who works full-time for minimum wage is now able to have health insurance for the first time. And, across the country, the health insurance exchanges are open for business and subsidies are available for those with incomes between 100% and 400% of poverty. That means that a father or mother with a family of four, who works for a small business that doesn’t offer insurance benefits, can get federal assistance to buy insurance as long as they earn less than $94,200. These changes are real and they are positive. And, I would contend, not only has the sky not fallen, but for many it also looks to be a brighter shade of blue. But, we are just getting started, and 2014 is full of new opportunities and challenges, as these experts predict.

 

Doctors: Beware The Doc Fix

Let’s talk about the Doc Fix.  No it doesn’t mean that surgeons will get any less cranky or that your urologist will improve his bedside manner.  What I am talking about in this case is the Sustainable Growth Rate formula. You see, the Center for Medicaid and Medicare Services, or CMS, has to figure out every year how much it’s going to pay for things. The SGR is supposed to ensure that as fees for everything in healthcare go up, the rate of increase does not outpace the growth of GDP. In a complicated middle-man maneuver, CMS sends a report to the Medicare Payment Advisory Commission, which in turn advises Congress on how much medicare spent last year and how much it’s targeted to spend next year.  There is a conversion factor that adjust payments based on how much over or under the target cost was the previous year.  The SGR is that conversion factor, and believe me unless you have the beautiful mind of John Nash you don’t want to know how it’s calculated.  The SGR was formulated in 1997 and, put simply, is a way to control costs.

So the SGR is a formula to control medicare costs.  OK.  So what’s the problem?  The problem is that as healthcare spending has outpaced GDP, every year since 2002 physician reimbursement has gone down.  The SGR demands it, because every year cost is over the target.  And every year Congress, under the heavy lobbying of the AMA, passes short-term overrides to prevent these cuts.  And why is THIS a problem, since everything Congress does these days is emergency short-term fixes?  Money. The gap between what the SGR says we should pay for medicare and what it actually costs is about $300 billion.  The gap will get bigger and bigger.  But what’s the alternative?  Here’s what the Society for Hospital Medicine blog says:

“To earn greater or equal revenue, we will need to achieve prespecified process of care and health outcome targets (VBP or value-based payment) on top of the old reimbursement chassis.  Additionally, participating in alternate payment models (APM’s), e.g., patient-centered medical homes, will garner increased rewards.  A caveat, APM’s work for ambulists, but not for hospitalists—and SHM has responded to CMS with proposals.  The same goes for VBP mismatches.”

What?  I have no idea what most of that means but, as a physician, the phrase “we will need to achieve pre- specified process of care and health outcome targets” strikes fear into my heart and puts ice into my veins.  You see, what Congress is suggesting is that instead of tying medicare payments to GDP, they should link the payments to quality measures or performance-based incentive programs.  That would be great if there were anything like actual meaningful quality measurement metrics.  Quality measurements have to be things that are easily understood numerically.  Number of people counseled on smoking.  Number of flu vaccines.  Number of people getting pre-operative antibiotics.  Number of time-outs before surgery.  Number of people tested for prostate cancer.  These are NOT measure of quality.  They are measures of compliance by physicians who must blindly check boxes in order to ensure that their “quality” matches what a panel of experts say is quality. Not only do quality measures not measure quality, they impose the increasingly onerous documentation requirements physicians face every day.

According to Forbes(http://www.forbes.com/sites/brucejapsen/2013/12/13/in-rare-bipartisan-moves-congress-may-remedy-medicare-doc-fix-in-2014/) the AMA thinks this is a great idea:

“(Thursday’s) strong, bipartisan votes by the Senate Finance and House Ways and Means committees, following similar action last October by the House Energy and Commerce Committee, shows that there is overwhelming, bipartisan support for ending the SGR in a fiscally responsible manner and closing the book on the annual cycle of draconian Medicare physician payment cuts and short-term patches,” said Dr. Ardis Hoven, president of the American Medical Association. “This long-overdue policy change provides the stability that physicians need to pursue delivery innovations that help improve patient care and reduce costs for American taxpayers.”

I suspect Dr. Hoven hasn’t practiced medicine in quite some time.