Fwd: qotd: HMOs score poorly on access

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-------- Original Message --------
Subject: qotd: HMOs score poorly on access
Date: Thu, 28 Mar 2013 12:35:24 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



State of California
Office of the Patient Advocate
HMO Quality Ratings Summary - 2013

"Health Care Quality is getting the right care at the right time."

* poor
** fair
*** good
**** excellent

First rating is for "HMO provides recommended care,"
and the second rating is for "Getting care easily":

*** * Aetna Health of California, Inc.
*** * Anthem Blue Cross - HMO
*** ** Blue Shield of California - HMO
*** * CIGNA HMO
*** * Health Net of California, Inc.
**** ** Kaiser Permanente - Northern California
**** * Kaiser Permanente - Southern California
*** * Sharp Health Plan
*** * UnitedHealthcare of California
*** ** Western Health Advantage

http://reportcard.opa.ca.gov/rc2013/hmorating.aspx


Comment: California's Office of the Patient Advocate defines health
care quality as getting "the right care at the right time." So how well
are the HMOs doing?

To assess whether or not the right care is being provided, the HMOs
report their compliance with standard Health Plan Employer Data and
Information Set (HEDIS) measurements. The HMOs make certain that their
health care professionals are aware of the 37 HEDIS measurements that
will be made, and that they know that it is important to be certain that
compliance is documented.

All ten of the California HMOs were able to document that they were
either "good" or "excellent" at providing the right care for these 37
measured clinical recommendations. No measurement was made of the
hundreds of thousands of other clinical decision processes that take
place. It remains debatable as to whether 37 HEDIS measurements are
adequate to determine if the HMO is always good or excellent at
providing the right care, but there are those of us who have our doubts
(pardon the cautious, restrained language).

So regardless of whether or not it was the right care, was it provided
at the right time? Patients were surveyed about "experiences in getting
appointments with doctors and other providers when needed and getting
tests, treatments and other care without delay." No HMO was rated
excellent; no HMO was rated good. Three were rated fair, and seven were
rated poor. At least from the patients' perspective, care was not being
provided at the right time.

Under a single payer system, patients have free choice of their health
care professionals and institutions. HMOs take away that choice,
subjecting patients to severe financial penalties should they obtain
care outside of the HMO. The results of this survey suggest that, once
HMOs have captive patients, they limit access by limiting system
capacity and by establishing queues that are beyond the tolerance of
their patients.

The delegated model of HMOs has no place in a single payer system since
they function more as intrusive private insurers rather than as truly
integrated health care delivery systems.

HMOs that are fully integrated health care delivery systems, such as
Kaiser Permanente, do have a place in a single payer system. Right now,
Kaiser is heavily dependent on workers enrolling in Kaiser's plans
through their employment, often choosing Kaiser as their least-worst option.

Once we have a single payer system with patients choosing their health
care based on perceived quality, to compete successfully with the rest
of the health care delivery system, Kaiser will have to show that they
can deliver the right care at the right time. After all, that's what
single payer is all about.

Fwd: qotd: A joint-replacement pavilion limited to prima donna doctors and rich patients

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-------- Original Message --------
Subject: qotd: A joint-replacement pavilion limited to prima donna
doctors and rich patients
Date: Tue, 26 Mar 2013 12:16:29 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



MercuryNews.com
March 25, 2013
Fremont's Washington Hospital: Joint replacement patients, doctors
excluded from new facility
By Ashly McGlone

When Robert Cantley needed both knees replaced in August, he was
expecting to recover from the surgery at Washington Hospital's fancy,
new $42.7 million Center for Joint Replacement.

According to hospital marketing brochures, the center offered "A Higher
Level of Care" in a 20,000-square-foot space featuring 25 private
patient rooms, a "breathtaking physical therapy space" and a beautifully
landscaped therapy garden.

Instead, Cantley did his physical therapy sessions in a dimly lit
hallway on the sixth floor of the main hospital in what he described as
"a miserable set of circumstances."

Cantley's physician, Dr. John Jaureguito, who has been on the medical
staff at Washington for 18 years, said the arrangement means his
patients get "second-class" treatment. "Therapy is literally in the
hallway," he said. "I've never come across anything like this before."

What Cantley and many other patients at the public hospital didn't know
was that access to the new center, the only facility of its kind in the
Bay Area, is restricted to just two orthopedic surgeons at the hospital
-- the only ones on the Washington staff who met 24 criteria set by the
hospital.

Those two doctors -- long the hospital's primary joint replacement
specialists -- played a critical role in the creation of the lucrative
new center, and one of them acknowledges he helped create the criteria
that have excluded many of his fellow surgeons. Some of those surgeons
and their patients are crying foul, saying the result is a "two-tier"
system of care that favors wealthier patients and chosen doctors.

"It is a community hospital, serving the public," Cantley, 78, told the
publicly elected Washington Township Health Care District board at a
meeting last month. "The public in no way, shape or form should be
excluded from the new wing."

The only two surgeons who qualified, Dr. John Dearborn and Dr. Alexander
Sah, received a five-year contract from the hospital to staff the center
through May 2017 while maintaining their status as independent
contractors, not employees, according to the contract.

The average single joint-replacement surgery performed at Washington
Hospital in 2011 cost nearly $160,000, more than twice the California
average, state data show.

According to one of Dearborn's secretaries, neither he nor Sah accepts
Medi-Cal or Alameda Alliance, which serve low-income residents, but
typically carry lower reimbursement rates for doctors and hospitals than
does Medicare.

http://www.mercurynews.com/bay-area-news/ci_22853885/fremonts-washington-hospital-patients-doctors-excluded-from-new


Comment: There are ten orthopedists on the staff of Washington Hospital
in Fremont, California who perform joint-replacement surgery, but only
two are allowed to use the hospital's state-of-the-art Center for Joint
Replacement. The Center charges more than twice the average for
California, while the two approved surgeons apparently have a policy of
discouraging low-income residents, including Medi-Cal patients.

Perhaps the most appalling consequence is that the patients of the other
eight orthopedists receive their post-op physical therapy in the hallway
of the main hospital rather than in the new "breathtaking physical
therapy space."

As a community hospital, serving the public, and with pressure from the
state Department of Public Health and the Washington Township Health
Care District, it is likely that this arrangement will be modified.

So what does this have to do with health care reform? We can ask
ourselves if a single payer system that separately budgets capital
improvements would have ever allocated funds for a state-of-the-art
center serving only two prima donna surgeons and their affluent patients
exclusively. Of course not. Attention surely would have been directed to
a decision on whether or not it was even appropriate to establish a
separate joint replacement pavilion. Likely the funds would have been
better spent on improving or replacing existing surgical and physical
therapy facilities.

Achieving the goal of health care justice for all will be made that much
more difficult if our health care professionals and administrators fall
below the ethical plane that we envision for the healing arts.

Fwd: qotd: Can we recover waste by identifying geographic variations in health care?

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-------- Original Message --------
Subject: qotd: Can we recover waste by identifying geographic
variations in health care?
Date: Mon, 25 Mar 2013 12:10:23 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The National Academies
Institute of Medicine
Interim Report of the Committee on Geographic Variation in Health Care
Spending and Promotion of High-Value Health Care: Preliminary Committee
Observations (2013)

A geographic value index would adjust payment to all providers within a
defined area based on aggregate measures of spending and quality. The
committee sought to determine empirically whether providers within a
defined area behave similarly (e.g., exhibit similar patterns of service
use across sub-regions, clinical conditions and quality measures).
Consistent with a body of literature, analyses commissioned by the
committee observed variation in health care spending at every geographic
level (Hospital Referral Regions, Hospital Service Areas, Metropolitan
Statistical Areas) studied, and additional research found variation
among hospitals within Hospital Referral Regions, among physicians in
the same group practice, and even within individual providers when
treating different conditions. Further, Hospital Referral Regions do not
consistently rank high or low across quality measures, nor is there a
consistent relationship between utilization and various quality
measures. These preliminary observations suggest that a geographic value
index would reward low-value providers in high-value regions and punish
high-value providers in low-value regions.

Health policy leaders suggest that, to improve value, payment reforms
need to create incentives to encourage behavioral change in the locus of
care (provider and patient), and thus payment should target
decision-making units, whether they be at the level of the individual
providers, hospitals, health care systems, or stakeholder
collaboratives. Payment reforms contained in the ACA (e.g., value-based
purchasing, accountable care organizations, bundled payments) and being
tested in the commercial market and Medicaid, do target decision makers
rather than geographic areas. Because these reforms are relatively new,
there is little evidence to date about their effects on the value of
care. Nevertheless, the results of the subcontractors' work for this
study suggest that tying a decision-making unit's payment to its
actions, as these reforms do, is preferable to induce desired changes in
care. Further, because post-acute care, particularly home health and
skilled nursing, is a major source of unexplained variation in Medicare
spending, reforms that address incentives to overuse post-acute care,
including fraud in that use, could have a large impact on health care
efficiency.

http://www.iom.edu/Reports/2013/Geographic-Variation-in-Health-Care-Spending-and-Promotion-of-High-Care-Value-Interim-Report.aspx


Comment: Health care spending tends to fall under a Bell curve. Most of
it falls in the middle, but some falls under the low end (low-cost) and
some falls under the high end (high-cost). The Dartmouth studies have
confirmed the geographical nature of this distribution. Thus much
attention has been directed to devising methods of recovering the
allegedly excessive spending in the high-cost regions. This report casts
doubt that such an effort would be productive.

To begin with, the Bell curve or Gaussian distribution (normal
distribution) is to be expected even when resources are being used
properly. Further, this variation is found not only between geographic
regions, but also between hospitals within the same regions, between
physicians within the same group practices, and even by the same
physicians managing different conditions. Thus measures designed to
reduce spending only in geographical regions at the high end will be too
blunt because they would reduce not only high-cost care of lower value,
but they also would reduce legitimately high-cost care that is providing
full value.

The authors of this Institute of Medicine report suggest that payment
reforms instead should target decision makers rather than geographical
areas. The decision makers include individual providers, hospitals,
health care systems, and stakeholder collaboratives. Health payment
reforms of the Affordable Care Act are designed to do just that. These
include measures such as accountable care organizations, value-based
purchasing, and bundled payments. Of course, adjusting payments based on
these and similar reforms are much more complex administratively than
merely adjusting payments based on regional spending levels.

It is questionable as to whether or not such payment systems could ever
be effective in significantly improving value in the entire health care
system since most impacts of the payment models are effective only at
the margin, if even there. Further, Gaussian distributions would apply
to these new models as well, making it likely that payment adjustments
would be inappropriate for some, even if appropriate for others.

Think of the Bell curve again, but for decision makers rather than
geographical regions. Many have suggested that 30 percent of health care
represents wasteful spending. What if you lop off the upper 30 percent
of care under the Bell curve? First you have to believe that you can
identify low-value care in advance - a highly unlikely scenario. Then
you have to assume that all care in the lower 70 percent provides value
whereas that in the upper 30 percent does not - a preposterous assumption.

What about the lower 30 percent of the curve. Does it really represent
high-value, low-cost care? Or does it represent care that is not being
delivered (and therefore not measured), even if it should be. Shouldn't
we be directing more efforts to be sure that we are meeting patient
needs, even if it could increase health care spending?

We are looking for ways to slow down the outrageous increases in
spending for what is often mediocre care. These feeble measures that are
designed to tweak decision makers are complex and likely will cost as
much to administer as any meager savings that they could realize. Some
of the ideas may be worth pursuing, such as value-based purchasing, but
we should not deceive ourselves that these are the grand solutions for
our excessive spending.

All other wealthy nations provide care for everyone at much lower costs,
and they have done it without playing these pseudo-wonk policy games. We
can't rely on silly, little tweaks. We need fundamental reform of our
health care financing system. We need a single payer national health
program.

Fwd: qotd: Another chance to quickly view the two illuminating cost curve graphs

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-------- Original Message --------
Subject: qotd: Another chance to quickly view the two illuminating cost
curve graphs
Date: Sat, 23 Mar 2013 10:18:39 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Since it is likely that most of you did not click on the link for the
article used in yesterday's Quote of the Day, "The Cost Curve Is
Bending, but Not for All of Us," you missed seeing two illuminating
graphs that, in just a couple of seconds, show you that we actually can
control our future health care costs while providing care for everyone.

Figure 1 shows the pronounced differences in 1) the cost curve of
Medicare (S&P Medicare Index) and 2) the cost curve of
privately-financed care: private insurance plus private self-funded
employer groups (S&P Commercial Index).

Figure 2 shows the pronounced differences in 1) the health care cost
curve of the fragmented, dysfunctional system of the United States and
2) the health care cost curve of the single payer system in Canada
(Canada's medicare).

Click on this link... right now, while it's in front of you.

http://www.pnhp.org/print/news/2013/march/the-cost-curve-is-bending-but-not-for-all-of-us

Then share it with others.

Thanks,

Don McCanne

Fwd: qotd: The Cost Curve Is Bending, but Not for All of Us

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-------- Original Message --------
Subject: qotd: The Cost Curve Is Bending, but Not for All of Us
Date: Fri, 22 Mar 2013 06:32:41 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Physicians for a National Health Program
March 21, 2013
The Cost Curve Is Bending, but Not for All of Us
By Don McCanne, M.D.

"If the piece has a hero, it's an unlikely one: Medicare, the government
program that by law can pay hospitals only the approximate costs of
care. It's Medicare, not Obamacare, that is bending the curve in terms
of cost and efficiency."
- Richard Stengel, managing editor, TIME, regarding "Bitter Pill' by
Steven Brill

Experience has shown that the efforts of private insurers are relatively
feeble when compared to the tremendous power of government administered
pricing. This is demonstrated by the S&P Healthcare Economic Indices,
which indicate the change in the average per capita cost of health care
services. When breaking down the S&P Healthcare Economic Composite Index
into the S&P Healthcare Economic Medicare Index and the S&P Healthcare
Economic Commercial Index (private insurers and large self-funded
employer groups), it is clear that Medicare has bent the cost curve when
compared to the private commercial insurers (Figure 1 - available at
link, below).

Even though Medicare has done a better job than the private sector at
getting prices right, comparisons with other nations have shown that we
can do even better. The United States and Canada were on the same
trajectory in growth of health care costs until Canada adopted its
medicare program – a single payer national health program administered
in each province. Figure 2 (at link below) demonstrates that, compared
to the United States, Canada has effectively bent the cost curved for
their entire national health expenditures.

Let's keep bending the Medicare cost curve, but not just for seniors and
people with disabilities. Let's bend it for all of us.

http://www.pnhp.org/print/news/2013/march/the-cost-curve-is-bending-but-not-for-all-of-us


Comment: The full article explains how extending an improved Medicare
to everyone as a single payer system would finally achieve for us that
elusive goal of bending the cost curve - bringing the growth in health
care costs down to sustainable levels.

Just seeing the two graphs mentioned above would make clicking on the
link to the full article well worth your time. The concept is so
important that you should consider sharing it with others. Our nation
needs to understand that we can have an affordable, high quality health
care system that serves all of us well, but not if we don't change the
direction of reform.

Fwd: qotd: Low cost eHealthInsurance plans exposed

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-------- Original Message --------
Subject: qotd: Low cost eHealthInsurance plans exposed
Date: Thu, 21 Mar 2013 06:47:07 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



eHealthInsurance
March 18, 2013
eHealth Data: Premiums 47% Higher for Individual Health Insurance Plans
with Comprehensive Health Benefits

Today eHealth, Inc., parent company of eHealthInsurance.com, America's
first and largest private online health insurance exchange, released a
'Cost of Comprehensive Health Benefits' report. This new report shows
that average monthly premiums for individual health insurance plans are
forty-seven percent (47%) higher than average when they cover a
comprehensive list of eight health benefits.

Since 2005, eHealth's Cost and Benefits report has tracked the
percentage of plans surveyed that cover eight health benefits deemed to
be comprehensive by eHealth, including: Laboratory and X-Ray; Emergency
Services; Prescription Drugs; Chiropractic; Maternity; OB/GYN; Periodic
Exams; and Well Baby care.

In 2010, the Affordable Care Act (ACA) created a new list of ten
Essential Health Benefits (EHBs) that all major medical health insurance
plans must cover at an actuarial value of 60% or more in order to
fulfill the federal mandate for health coverage, beginning in January of
2014. Those EHBs include: ambulatory patient services; emergency
services; hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care.

The data presented in this report do not reflect the impact that new
Essential Health Benefit (EHB) standards will have on plan prices, nor
does the report take into account other factors that may impact the cost
of health insurance in 2014. Not only do some of the benefits differ and
overlap, but chiropractic care is not deemed to be an EHB by the ACA.

"These data provide valuable insight into the cost of health insurance
plans as consumers prepare to enroll in the more comprehensive health
plans that will become available with the Affordable Care Act," said
eHealth Senior Vice President of Carrier Relations Robert Hurley. "Our
report does not provide an 'apples to apples' comparison of plans that
cover the essential health benefits established in the Affordable Care
Act, but it does provide some interesting insight into the potential
impact that new benefits standards could have on the cost of health
insurance plans in the individual health insurance market."

http://news.ehealthinsurance.com/news/ehealth-data:-premiums-47-higher-for-individual-health-insurance-plans-with-comprehensive-health-benefits

And...

Los Angeles Times
March 19, 2013
Richer health benefits cost 47% more, industry report warns
By Chad Terhune

"I think consumers can expect new health plans next year are going to be
somewhere between 40% to 60% more expensive," said Bob Hurley, eHealth's
senior vice president of carrier relations. "I think there is a fair
amount of concern that the health plan requirements are too rich."

http://www.latimes.com/business/money/la-fi-mo-health-insurance-rates-20130319,0,2057027.story


Comment: Many critics of the Affordable Care Act (ACA) say that the
health plans to be offered in the proposed state insurance exchanges
should be replaced with plans that have fewer regulatory requirements
and that can be sold across state borders. They often cite the bargain
prices of plans offered by eHealthInsurance as an example of how we
could make health insurance more affordable for everyone. So what is
eHealthInsurance offering?

By their own analysis, eHealthInsurance does not consider their plans to
be comprehensive unless they offer the eight benefit categories listed
in the article excerpt above. If those benefits are included, the
premiums are 47 percent higher for both individual and family plans than
the premiums for their cheapest plans. Note that these eight benefits
are not the same as the ten benefit categories that are required as
essential health benefits under ACA, so it is likely that the premiums
under ACA will be even more than 47 percent higher than the cheap
eHealthInsurance plans. This doesn't even take into consideration cost
sharing such as the deductibles.

There is already concern that the benchmark silver plans under ACA, with
an actuarial value of only 70 percent (patient pays 30 percent of costs,
which might be partially offset by income-indexed subsidies), may leave
patients vulnerable to excessive out-of-pocket costs. If the stripped
down eHealthInsurance plans were allowed as replacements for exchange
plans, it is inevitable that most enrollees would face financial
hardship should they develop significant medical problems.

So what is the response of eHealthInsurance? eHealth senior vice
president Robert Hurley says, "I think there is a fair amount of concern
that the health plan requirements are too rich."

This exposes the highly touted low cost eHealthInsurance plans as the
shoddy plans that they are. You might be nominally insured, but don't
you dare get sick.

Fwd: qotd: What "forgiveness formula" would be appropriate for medical debt?

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-------- Original Message --------
Subject: qotd: What "forgiveness formula" would be appropriate for
medical debt?
Date: Wed, 20 Mar 2013 12:03:09 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
March 20, 2013
Forgiveness Formulas
By Casey B. Mulligan, Economics Professor, University of Chicago

In an ideal world, collecting debts would be as simple as asking debtors
to pay their obligations when they are able to. But in reality most
businesses have found that they need to obtain other assurances, such as
collateral or the option to shut off services to a delinquent payer.
Otherwise it is too easy for debtors to claim hardship and walk away
without paying.

On the other hand, many families and other debtors do experience genuine
hardship. In those cases it can be compassionate and even efficient to
at least partly forgive the debts of people who have fallen on hard
times. Many economists see loan defaults as (sometimes) an
efficiency-enhancing form of risk-sharing.

One approach would be for lenders to develop and disclose a "forgiveness
formula" that would clearly define "hard times" and indicate precisely
what kind of forgiveness is possible. The advantage of forgiveness
formulas is that distressed borrowers can be certain where they stand
with the lender and can readily evaluate whether they were treated "fairly."

Hospitals are also known to partly forgive medical debts incurred by the
uninsured, while they make no accommodation for many others. Some states
require hospitals to explain in writing how they go about discounting
charges for hardship patients, but you might guess that hospitals worry
that patients will game those calculations in order to pay less.

One advantage of health reforms that get more people on health insurance
is that by getting people to pay for their health care before they get
sick, the reforms reduce the number of cases in which clear forgiveness
has to be traded off with formula gamesmanship.

NYT Reader Response:

Don McCanne
San Juan Capistrano, CA

A forgiveness formula for hospitals?

Other nations have been successful in providing health care to everyone
at a cost much below that of our dysfunctional system here in the United
States. Their programs often have first dollar coverage; therefore
medical debt is almost unheard of - certainly a minuscule fraction of
what we have here.

Instead of establishing strategies for forgiveness in the future,
wouldn't it be more logical to establish a health care financing system
in which debt forgiveness would never need to be a consideration?

http://economix.blogs.nytimes.com/2013/03/20/forgiveness-formulas/

Fwd: qotd: The cost of failing to use government price negotiation for drugs

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-------- Original Message --------
Subject: qotd: The cost of failing to use government price negotiation
for drugs
Date: Tue, 19 Mar 2013 13:32:24 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Center for Economic and Policy Research (CEPR)
March 2013
State Savings with an Efficient Medicare Prescription Drug Benefit
By Dean Baker and Nicole Woo

Americans pay far higher prices for prescription drugs than do people in
other wealthy countries. The reason that other countries spend so much
less on drugs is that their governments negotiate prices with the
pharmaceutical industry. The United States government could adopt the
same approach with the Medicare drug program and use its market leverage
to negotiate the same, or even lower, prices as are paid by other
wealthy nations. This issue brief finds the potential savings to states
would be enormous, cumulatively between $31 billion and $73 billion over
10 years, and also each state individually could expect significant
savings. California leads the way, with potential savings between $3.3
and $7.8 billion. The next six top-saving states are Florida, New York,
Texas, Pennsylvania, Ohio and Illinois, all with projected savings of at
least $1 billion per year.

http://www.cepr.net/index.php/publications/reports/state-savings-with-an-efficient-medicare-prescription-drug-benefit


Comment: Those who have followed health policy closely are already
aware that we could have had much lower drug spending in the Medicare
Part D drug program had we authorized government price negotiation with
the pharmaceutical industry, just as other governments have done so
successfully. This new report from CEPR puts a price on the waste that
we tolerate merely because we don't place demands on our legislators to
fix the system.

Think about this a little bit more. If we demanded government price
negotiation not only for those of us enrolled in the Part D Medicare
program, but for all of us who need prescription medication, just think
of how much more reasonable our pharmaceutical spending would be. We
could do this simply by adopting a single payer, improved Medicare for
all program.

But the drug savings would be only the beginning. By now, most of you
are aware of the many other single payer policies that would produce
enough total savings to ensure high-quality care for all of us, while
making our health care delivery system affordable for the entire nation.
Why are we not beating down the doors of Congress?

Fwd: qotd: A disaster in the making - defined contribution for employer plans

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-------- Original Message --------
Subject: qotd: A disaster in the making - defined contribution for
employer plans
Date: Mon, 18 Mar 2013 12:59:04 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Wall Street Journal
March 17, 2013
To Save, Workers Take On Health-Cost Risk
By Anna Wilde Mathews

Last fall, two big employers embarked on a radical new approach to
employee health benefits, offering workers a sum of money and allowing
them to choose their health plans on an online marketplace. Now, the
first results are in: Many workers were willing to choose lower-priced
plans that required them to pay more out of their pockets for health care.

The new online marketplace, operated by consulting firm Aon Hewitt, a
unit of Aon PLC, was used by more than 100,000 employees of Sears
Holdings Corp. and Darden Restaurants Inc. (Olive Garden and Red
Lobster), as well as Aon itself, to pick plans for 2013. The employers
gave workers a set contribution to use toward health benefits, and they
could opt to pay more each month to get richer plans, or choose cheaper
ones that might have bigger out-of-pocket fees, such as higher deductibles.

Such employer-centric marketplaces, known as private exchanges, are
separate from the public exchanges created by the federal health
overhaul law, which will be set up by state and federal governments.
However, the public exchanges, serving individual consumers and small
businesses, will operate on a similar principle of allowing people to
shop for health coverage in an online marketplace.

Companies offering the exchanges say that a lot of employers are
considering the approach. "The interest level is like nothing I've ever
seen," said Eric Grossman, a senior partner at Mercer.

Change in workers' choices:

Consumer-Directed Health Plan (Higher deductible)
2012 - 12%
2013 - 39%

Health Maintenance Organization (HMO)
2012 - 18%
2013 - 14%

Preferred Provider Organization (PPO)
2012 - 70%
2013 - 47%

http://online.wsj.com/article/SB10001424127887323639604578366420251188326.html


Comment: Be prepared. Very shortly you will be hearing from the
supporters of consumer-directed health plans (CDHPs) of the phenomenal
success of these plans wherein you put consumers in charge of the money
to be used for their health plan purchases. In the first year of this
program, there has been a massive shift from more traditional preferred
provider organizations (PPOs) to these CDHPs. But you have to understand
why this is really terrible news.

Under the traditional employer-sponsored defined benefit health plans,
the employers purchase plans for their employees, with the employees
paying a percentage of the premium. If the employer offers options, the
employee will often select the plan that requires a lower contribution -
typically a PPO, but with enough benefits to provide some health security.

Under this newer model of employer-sponsored defined contribution health
plans, the employers give a fixed amount of money to each employee to be
used to select plans from these private insurance exchanges. Since the
employees become responsible for 100 percent of the premium costs above
the employer defined contribution, the employees have a much greater
incentive to choose plans with the premiums that are closest to the
amount of the employer defined contribution - typically a cheaper CDHP.

The experience in the first year alone, with this Aon-operated exchange,
23 percent of employees dropped PPOs, and 4 percent dropped HMOs,
resulting in increased enrollment in CDHPs from 12 percent in 2012 to an
astonishing 39 percent in 2013!

While the CDHP advocates spread the word that giving consumers control
of their health insurance dollars will lower health care spending by
allowing employees to "buy only the insurance that they need," they will
remain silent on what really happened. They shifted risk from the
employers and their insurers onto the backs of the employees.

How does this work? First, it is important to understand that the
workforce and their young families are the healthiest sector of our
society. When selecting a plan, it is understandable that many workers
would prefer to take home more money in exchange for the risk of paying
more out of pocket in the unlikelihood of a major medical event
occurring in the next year. People who live check-to-check welcome
trading a higher net income for accepting more risk should a low-odds
event happen to them.

Keep in mind that a minority of workers or their family members actually
will face major medical events. Should that occur, these individuals,
who have quite modest incomes, will be responsible for huge medical
bills - bills because of the very high deductibles, high coinsurance,
and all costs of out-of-network care in these plans that tend to have
more limited networks.

This is a setup for personal bankruptcy. Should these CDHP-enrolled
employees lose their bets and end up with major injuries or major
medical disorders, a very large percentage of them will face this
prospect . This is exactly the opposite of what their health care
coverage should be providing. The system should ensure that financial
barriers to care are removed so that patients can access the care that
they need without having to face severe financial hardship.

So when the CDHP advocates tout the success of empowered health care
insurance shoppers, they will be able to claim that it works really well
for most workers and their families (only not for those who end up
needing health care). We need to keep exposing this con job.

Fwd: qotd: Are hospitals underpaid by Medicare?

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-------- Original Message --------
Subject: qotd: Are hospitals underpaid by Medicare?
Date: Fri, 15 Mar 2013 11:39:32 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
March 15, 2013
Economix
What Hospitals Charge the Uninsured
By Uwe E. Reinhardt

Steven Brill's exposé on hospital pricing in Time magazine predictably
provoked from the American Hospital Association a statement seeking to
correct the impression left by Mr. Brill that the United States hospital
industry is hugely profitable.

In this regard, the association can cite not only its own regularly
published data, but also data from the independent and authoritative
Medicare Payment Advisory Commission, or Medpac, established by Congress
to advise it on paying the providers of health care for treating
Medicare patients.

As shown by Chart 6-19 of Medpac's report from June 2012, "Health Care
Spending and the Medicare Program," the average profit margin (defined
as net profit divided by total revenue) for the hospital industry over
all is not extraordinarily high, although for a largely nonprofit sector
I would rate it more than adequate.

The hospital association also correctly points out that under the
pervasive price discrimination that is the hallmark of American health
care, the profit margin a hospital earns is the product of a complicated
financial juggling act among its mix of payers.

Payers with market muscle — for example, the federal Medicare and state
Medicaid programs — can get away with paying prices below what it costs
to treat patients (see, for example, Figure 3-5 and Table 3-4 in Chapter
3 of Medpac's March 2012 report).

With few exceptions, private insurers tend to be relatively weak when
bargaining with hospitals, so that hospitals can extract from them
prices substantially in excess of the full cost of treating privately
insured patients, with profit margins sometimes in excess of 20 percent.

It is noteworthy that in its critique of Mr. Brill's work, the
association statement is completely silent on this central issue of his
report. A fair question one may ask leaders of the industry is this:

Even if one grants that American hospitals must juggle their financing
in the midst of a sea of price discrimination, should uninsured, sick,
middle-class Americans serve as the proper tax base from which to recoup
the negative margins imposed on them by some payers, notably by public
payers?


NYT posted comment:

Don McCanne
San Juan Capistrano, CA

Regarding Medicare paying prices below costs, the 2013 Medpac report was
just released, and it states, "We find that costs do vary in response to
financial pressure and that low margins on Medicare patients can result
from a high cost structure that has developed in reaction to high
private-payer rates."

Thus the failure of private insurers to adequately control spending in
hospitals paradoxically has resulted in excess spending on Medicare
patients due to a high cost structure.

Under a well designed single payer system, not only would this price
discrimination be eliminated, but global budgeting of hospitals would
replace this wasteful, fragmented system of financing health care.

Imagine our police and fire departments billing indiscriminately for
their services. What a mess that would be. We receive a far greater
value by using global budgets based on department needs. In the same
manner, our hospitals should be globally budgeted based on the health
care needs of the community.

http://economix.blogs.nytimes.com/2013/03/15/what-hospitals-charge-the-uninsured/

***

If you wish to be able to participate effectively in informed
discussions of Medicare spending, you should download Medpac's March
2013 Report to Congress an "Medicare Payment Policy" (435 pages):

http://www.medpac.gov/documents/Mar13_EntireReport.pdf

Fwd: qotd: Steven Brill on using single payer to "clean up the system"

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-------- Original Message --------
Subject: qotd: Steven Brill on using single payer to "clean up the system"
Date: Thu, 14 Mar 2013 08:16:45 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Politico
March 14, 2013
Experts debate all-payer setups vs. Medicare for all
By Brett Norman

Health care prices are too damn high.

That's the punch line to the provocative Time magazine piece "Bitter
Pill" by Steven Brill, who laid out his diagnosis of the problem
Wednesday at a Center for American Progress panel.

He cited sky-high hospital executive salaries and operating margins,
monopolistic and opaque pricing by providers and a fearsome lobbying
force — many times larger than those of the oil and gas or defense
industries — that has beaten policymakers into submission.

"The lap-doggery to the health care industry is bipartisan," he said.
The article has sent hospitals and other stakeholders to the wall in
defense of the system, and it's fueling debates in policy circles.

But while many policy experts agree with much of Brill's diagnosis of
factors that are driving up costs, there's far less consensus on what to
do about it.

Brill said the voluminous feedback he's received since publishing the
article breaks down along two lines. Conservatives believe consumers
need to have more "skin in the game" — to pay more of health costs so
they become more conscientious shoppers and put pressure on providers to
more efficiently compete for their business. And liberals see the
solution in Medicare-for-all, a single-payer system, amplifying the
negotiating might the federal health care program already leverages to
keep costs down.

Brill rejected the single-payer possibility as impractical in his
article but now says that he is increasingly siding with that camp.
"It's sort of the cleanest way to clean up the system," he said.

Brill believes that the federal health care law in general does little
to control costs and will most likely drive up the cost of insurance
because of new requirements for more robust coverage.

He gave little credence to the Beltway policy wonk goal of transforming
the health care system away from paying for quantity of services
provided to paying for health outcomes and the quality of care. He said
similar efforts to move the legal profession away from billing by the
hour and toward meeting performance benchmarks have either failed or
proved more expensive.

http://www.politico.com/story/2013/03/experts-debate-all-payer-setups-vs-medicare-for-all-88835.html


Comment: Steven Brill provided such a convincing argument for using
Medicare as a universal program to control health care spending that he
now seems to be convincing himself that we should look beyond the
current approach of dismissing single payer as impractical. As he says,
single payer is "sort of the cleanest way to clean up the system."

Fwd: qotd: Don't look for workplace wellness programs to produce significant cost savings

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-------- Original Message --------
Subject: qotd: Don't look for workplace wellness programs to produce
significant cost savings
Date: Wed, 13 Mar 2013 12:58:00 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Health Affairs
March 2013
A Hospital System's Wellness Program Linked To Health Plan Enrollment
Cut Hospitalizations But Not Overall Costs
By Gautam Gowrisankaran, Karen Norberg, Steven Kymes, Michael E.
Chernew, Dustin Stwalley, Leah Kemper and William Peck

This study examined the effectiveness of a program put in place by BJC
HealthCare, a hospital system based in St. Louis, Missouri, that tied
employees' eligibility to participate in the system's most generous
health plan with participation in a wellness program. We found
reductions in inpatient costs but similar increases in non-inpatient
costs. Therefore, we conclude that although the program did cut some
hospitalizations, it did not save money for the employer in the short
term. This finding underscores that wellness program incentives under
the Affordable Care Act are unlikely to greatly reduce health care
spending over the short run.

http://content.healthaffairs.org/content/32/3/477.abstract#aff-7

And...

Health Affairs
March 2013
Wellness Incentives In The Workplace: Cost Savings Through Cost Shifting
To Unhealthy Workers
By Jill R. Horwitz, Brenna D. Kelly and John E. DiNardo

The Affordable Care Act encourages workplace wellness programs, chiefly
by promoting programs that reward employees for changing health-related
behavior or improving measurable health outcomes. Although there may be
other valid reasons, beyond lowering costs, to institute workplace
wellness programs, we found little evidence that such programs can
easily save costs through health improvement without being
discriminatory. Our evidence suggests that savings to employers may come
from cost shifting, with the most vulnerable employees — those from
lower socioeconomic strata with the most health risks — probably bearing
greater costs that in effect subsidize their healthier colleagues.

Despite the proliferation of wellness programs, drawing reliable
conclusions about their financial returns on investment is difficult.
Safeway credits its program with holding per capita health care costs
flat from 2005 to 2009. However, employers' reports are largely
anecdotal. Some of them may attribute savings to wellness programs that
could have resulted from unrelated causes, such as concurrent benefit
restructuring or selection via restrictions on participation in the
programs to certain job categories. A review of employer wellness
studies concludes that they commonly suffer from insufficient controls,
selection, and inadequate data.

http://content.healthaffairs.org/content/32/3/468.abstract


Comment: Workplace wellness programs were included in the Affordable
Care Act partly as a means of promoting better health, but also as a
means of reducing future health care spending though prevention of
disease. The problem is that there is little empirical evidence that
there is a potential for large cost savings from these programs. The two
articles cited tend to confirm that wellness programs should not be
relied upon to control future spending.

In no way does this mean that workplace wellness programs should be
abandoned. Promoting health is a beneficial endeavor and should be
encouraged. Rather, there are two other take-home lessons from these
articles.

If financial incentives are included in wellness programs, they should
be very carefully designed. The article by Jill Horwitz and her
colleagues shows that savings to employers may result in the shifting of
costs to employees who are more vulnerable due to their lower
socioeconomic status which is associated with greater health risks.
Using wellness funds for the already healthy while penalizing the more
vulnerable is not wise policy.

The other lesson is that we should not pretend that wellness programs,
along with the other tweaks in the Affordable Care Act, are going to
bring us enough cost savings such that we can abandon efforts to enact
the fundamental reforms that we need to ensure that absolutely everyone
receives essential health care services under a program that we can afford.

Enacting a single payer national health program - an improved Medicare
for all - is perhaps the most important step that we can take to promote
wellness for all of us. Of course, there are many other public health
measures that we should support, including addressing our serious
socioeconomic inequities and injustices. But enacting single payer would
be a great first step.

Fwd: qotd: Analysis of Pennsylvania's single payer proposal

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-------- Original Message --------
Subject: qotd: Analysis of Pennsylvania's single payer proposal
Date: Tue, 12 Mar 2013 11:48:51 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



March 5, 2013
The Pennsylvania Health Care Plan
Impact and Implementation
By Gerald Friedman, Ph.D., Professor of Economics, University of
Massachusetts – Amherst

Executive Summary

Pennsylvania is on an unsustainable economic path. Health care costs
are absorbing a growing share of personal income. Between 1991 and 2009,
spending on health care in the Commonwealth increased by $60 billion,
rising nearly twice as fast as state income. Little of this increased
spending can be attributed to improvements in health care. Instead, the
fastest growth has been in administration and billing operations...
while a growing number of Pennsylvanians are without adequate health
insurance or access to needed care.
The Pennsylvania Health Care Plan (PHCP) would put the state on a
sustainable path by controlling health care costs while giving all
citizens access to quality health care. It would establish a
single-payer system to finance health care -- paying for all necessary
medical care including hospital care, visits to doctors / nurses,
occupational and physical therapy, prescription drugs, medical devices,
medically necessary nursing home care and home health care. By reducing
administrative costs and anti-competitive market practices, the PHCP
could save $33 billion in 2014, almost 23% of existing medical spending.
These savings would allow the expansion of coverage to all Pennsylvania
residents while still saving over $17 billion, or $1,335 per person.
The PHCP would be funded by a 10% payroll tax paid by employers and a 3%
levy on income paid by recipients. The shift from insurance premiums and
out-of-pocket expenses to taxes linked with income would lower health
care spending for over 80% of Pennsylvanians.

Businesses and local governments would also benefit, saving on payroll
costs as well as the premiums paid to cover the "administrative costs"
associated with private health insurance. By lowering payroll costs, the
PHCP would make Pennsylvania businesses more competitive, producing an
additional 120,000 – 200,000 new jobs.

(Legislation to be introduced March 19 in the Pennsylvania Senate as SB 400)

http://healthcare4allpa.org/wp-content/uploads/2013/03/EISExecutiveSummary.pdf

Full report (38 pages)
http://healthcare4allpa.org/wp-content/uploads/2013/03/EconomicImpactStudy3513.pdf


Comment: Another single payer study... another result that makes single
payer the imperative. Are we slow learners? Or what?

Fwd: qotd: Would busting up our consolidated health care market lower prices?

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-------- Original Message --------
Subject: qotd: Would busting up our consolidated health care market
lower prices?
Date: Mon, 11 Mar 2013 13:31:21 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Health Affairs Blog
March 6, 2013
No Competition: The Price Of A Highly Concentrated Health Care Market
By Diane Archer

As health care costs swell, the private insurance system that covers
most working Americans is in crisis. Americans are paying higher and
higher premiums for increasingly threadbare coverage, and employers are
getting out of the business of providing health care altogether. Rising
costs cannot be attributed purely to improving technology or increasing
operating costs for providers, because Medicare has controlled per
capita spending more effectively than commercial insurers that provide
employer-sponsored coverage.

Rather, commercial insurers cannot contain costs because the pricing
mechanism for medical services is broken. When it comes to health care,
competition simply isn't working.

Prices in the private sector are out of control. On average, private
insurers pay 25 percent more than Medicare for physician services and 30
percent more for hospital care. What's more, both public and private
sector payment rates for doctors in America are far and away the highest
in the world, and research suggests that these high rates are among the
principal reasons health care is so much more expensive in this country
than elsewhere.

These international gaps are much wider in the private sector. For
instance, private payments for an office visit in the United States cost
70 percent more than those abroad, while public payments are 27 percent
higher.

Rather than being influenced by competition, health care prices are
largely set by insurers and providers with monopoly power to maximize
profits. Big hospital chains and provider groups dominate most local
markets and extract extremely high rates from dominant insurers, which
are motivated by fear of losing market share if they fail to attract
these providers to their networks.

Commercial health plans have little bargaining power when they negotiate
prices with monopolistic providers. In fact, even insurance industry
lobbyists admit that private health plans cannot hold down the cost of
health care. Insurers choose instead to adapt to this non-competitive
environment.

So what is to be done?

The Patient Protection and Affordable Care Act ("ACA") will for the
first time guarantee the overwhelming majority of Americans access to
good coverage, a huge step forward. But it expands coverage mostly by
relying on the dysfunctional private insurance market. There is no
evidence that the newly created exchanges will exert any downward
pressure on prices, given the experience of private plans to date.

Congress needs to recognize that players in the private health care
marketplace will continue to set excessive rates until they are stopped.
These exorbitant rates are not only hurting working people, they are
also driving up Medicare costs and imposing a massive burden on
taxpayers and the federal government. Doctors and hospitals are
conditioned to expect higher and higher rates and demand higher payments
from public programs.

Congress has three options to rein in runaway prices: It can use
Medicare-style techniques to set rates or rate ceilings in the
commercial marketplace, including in the new health insurance exchanges,
just as every other developed nation does. It can give people under 65
the choice of a public health insurance plan that works like Medicare,
competes against the private health plans, and brings down costs. Or it
can do both.

Over the long-term, the federal government might be able to address the
broken pricing mechanism by enforcing antitrust laws more aggressively
than before to break up monopolies in health care markets. But it is
worth remembering that even heavily regulated insurance markets – such
as Medicare Advantage or the exchange system in Massachusetts – have not
been particularly successful at controlling costs. The simple fact is
that the array of existing incentives for commercial insurers does not
tend to drive down prices. Given the direction of commercial insurance,
relying on the current version of "competition" is destined to
jeopardize access to health care for millions of working Americans while
driving public spending upward.

http://healthaffairs.org/blog/2013/03/06/no-competition-the-price-of-a-highly-concentrated-health-care-market/


Comment: The increase in anti-competitive consolidation of hospitals
and physician groups is thought to be contributing to our high health
care spending, especially since private insurers have been very feeble
price negotiators in this concentrated market. Does that mean that we
need the government trust busters to step in to introduce more
competition in health care?

As Noble laureate Kenneth Arrow demonstrated a half century ago, there
are many reasons that merely busting up consolidated health systems
could never lead to a functioning competitive market in health care.
Besides, the cost escalation has always been with us, long before the
more intense consolidation efforts began. As far as the wish to achieve
lower prices through competition, we can forget about competing
hospitals, competing physician groups, competing accountable care
organizations, and, especially, competing private insurance plans.

As far as what we should do, Diane Archer suggests either extending
Medicare's administered pricing function to private insurers as well, or
providing a Medicare-like plan that competes with the private insurers,
or both.

During the debate over the "public option," we explained how merely
adding another insurance option, even though government-run, to our
highly dysfunctional, fragmented system of financing health care would
have very little impact on achieving our goals of universality, equity,
efficiency, and affordability.

Although government-administered pricing has been effective for
Medicare, using it for private insurers also would fall short of these
goals since the dysfunctional system would still remain in place. Even
combining price controls and a public plan option together would still
be inadequate, for the same reasons.

So what should we do? Instead of continuing to apply patches to our
current system, we should replace it with an improved Medicare that
makes health care affordable for all of us. There would be no need for
public option plans, nor for government rate setting of private
insurance, if we got rid of the overpriced and inefficient market of
private health plans.

Fwd: qotd: Only 2% of individual plans meet "essential health benefit" requirements

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-------- Original Message --------
Subject: qotd: Only 2% of individual plans meet "essential health
benefit" requirements
Date: Fri, 8 Mar 2013 10:15:08 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



HealthPocket
March 7, 2013
Almost No Existing Health Plans Meet New ACA Essential Health Benefit
Standards
By Kev Coleman

Given that health insurance plans will have to meet new minimum coverage
standards starting in 2014, HealthPocket examined the current
marketplace of individual health plans to measure the market disruption
that will occur as these plans are replaced by plans compliant with the
new standards.

Our research took the Affordable Care Act's Essential Health Benefits as
our starting point. The Essential Health Benefits are the minimum
categories of health insurance coverage that every qualified health plan
must have starting January 1, 2014. HealthPocket then examined 11,100
individual health plans across the United States to see how many plans
had coverage in each of the Essential Health Benefit categories.

The data shows that there will be a near complete transformation of the
individual and family health insurance market starting in 2014. Less
than 2% of the existing health plans in the individual market today
provide all the Essential Health Benefits required under the Affordable
Care Act (ACA).

On average, the health plans provided 76% of the ACA's Essential Health
Benefits. Benefits such as hospitalization, emergency care, and
ambulatory services (such as visits to a primary care doctor or
specialist) were covered by almost all plans in one form or another. A
more detailed analysis of our results revealed that the missing 24% of
Essential Health Benefits were concentrated around a few categories.

Dental and vision care for children was the least likely of the
Essential Health Benefits to be provided in base benefits for a health
insurance plan. Only one out of four plans nationally had these benefits
within their base coverage. Looking at these benefits at a more granular
level revealed that only 8% of plans provided coverage for dental
check-up services. Maternity coverage was nearly as infrequent as
pediatric dental and vision coverage. Two thirds of health plans did not
offer their beneficiaries prenatal, delivery, and postnatal healthcare
coverage. Substance Use Disorder Coverage was frequently absent in
health insurance coverage as well. Only half of plans covered inpatient
and outpatient services for substance use issues (e.g. alcohol or drug
addiction). Mental health coverage was slightly better with six out of
ten plans covering inpatient and outpatient treatment.

Implications for Health Insurance Premiums?

One of the questions raised by the results of this study is whether the
coverage expansion required by the ACA will cause premiums to rise in
2014. Although the answer to that question is beyond the scope of this
study, premiums could rise due to a combination of factors, including:

* The closing of the coverage gap as described in this study

* Guarantee issue provisions that will allow people with pre-existing
medical conditions to enroll in health plans

* ACA actuarial value requirements on the maximum out-of-pocket costs
that can be charged to beneficiaries

http://www.healthpocket.com/healthcare-resources/few-existing-health-plans-meet-new-aca-essential-health-benefit-standards#.UTnodq4tb3V


Comment: One of the problems that needed to be addressed by the
Affordable Care Act (ACA) was the fact that health plans in the
individual market have very skimpy benefits - benefit packages that were
designed by private insurers who were attempting to keep their premiums
competitive. This study confirms the extent of the inadequacies of these
plans.

In response, ACA included a mechanism to require a minimum basic level
of essential health benefits (EHB). The expansion of the benefits to be
covered, along with guaranteed issue to those with preexisting
disorders, and placing a maximum on out-of-pocket costs, will all result
in significantly higher premiums for plans offered in the individual
market. That is in spite of the fact that many will still find the
benefits to be deficient, and will still face large out-of-pocket costs
because of the low actuarial values of the plans that most people will
select.

Even with subsidies, these plans will be expensive. And for those who do
not qualify for subsidies? Maybe those potential purchasers would
finally see the wisdom of establishing an equitable public system of
financing health care through progressive taxes - a single payer
national health program. They certainly aren't going to like what they
are going to get under ACA.

Fwd: qotd: Private insurers continue with unreasonable premium increases

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-------- Original Message --------
Subject: qotd: Private insurers continue with unreasonable premium
increases
Date: Thu, 7 Mar 2013 08:31:22 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Los Angeles Times
March 6, 2013
Blue Shield and Aetna to raise healthcare rates over state objections
By Chad Terhune

Despite objections from regulators, health insurers Blue Shield of
California and Aetna Inc. are proceeding with double-digit rate
increases that state officials said were unreasonable.

Officials at the California Department of Managed Health Care said
increases that average more than 11% for about 47,000 individual and
small-business policyholders of Blue Shield and Aetna were unreasonable.
But state officials don't have the authority to reject changes in
premiums, and increasingly health insurers refuse state demands to lower
rates.

"I am disappointed that after lengthy negotiations, Blue Shield and
Aetna were unwilling to bring their proposed health plan increases down
to a reasonable level," said Brent Barnhart, director of the Department
of Managed Health Care.

Last year, Aetna led the way for the industry's more defiant stance by
proceeding with an 8% rate hike on some small-business policyholders
despite objections from the state insurance department. In January,
California Insurance Commissioner Dave Jones scolded Anthem for
proceeding with an 11% premium hike for small businesses that he
determined was excessive.

http://www.latimes.com/business/la-fi-health-insure-rates-20130307,0,1301629.story


Comment: It is no surprise that in California - a state that can review
insurance premium increases but has no power to control them - private
insurers are proceeding with premium increases deemed to be
unreasonable. The surprise is that our elected representatives continue
to keep in charge of our health care spending an industry that uses us
as instruments to achieve their own business ends.

Imagine a scenario in which Medicare would demand unreasonable increases
in premiums. It would never happen. Medicare is a service model designed
to serve us, the people. Private insurers are business models designed
to serve their own business interests.

Did anyone ever think that it might be a good idea to dismiss the
private insurers and provide Medicare for all of us?

Fwd: qotd: Steven Brill explains his "Bitter Pill"

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-------- Original Message --------
Subject: qotd: Steven Brill explains his "Bitter Pill"
Date: Wed, 6 Mar 2013 06:04:34 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Reuters
March 5, 2013
Coming up with "A Bitter Pill"
By Steven Brill

For the past 10 days I've been interviewed on various television and
radio shows about the article I wrote for the March 4 issue of Time,
called "A Bitter Pill." It's all about how exorbitant prices and
profits are at the core of the crisis America uniquely faces when it
comes to financing healthcare, the cost of which now accounts for
roughly a fifth of our gross domestic product.

Invariably a question has come up in these interviews about how I
thought of that approach. So, since this is supposed to be a column
about good story ideas, I think I'll use it to explain the genesis of "A
Bitter Pill" in more detail than I've been able to on the talk show circuit.

During the long debate over President Barack Obama's health insurance
reform proposals, a question kept nagging at me: Everyone on all sides
seemed to accept as a given that healthcare was wildly expensive, and
the only debate seemed to be over who should pay for it. I wondered:
Well, why is it so expensive in the first place?

I had no idea what the answers were. But it seemed obvious that there
was only one way to find out: If you want to know why something is so
expensive, figure out every element of its costs. In other words, follow
the money.

As those who have read the article or heard about it now know, I found
that all my initial suspicions were wrong. By following the money, I
discovered that our healthcare prices are out of whack for a reason that
was hiding in plain sight — a reason that should be obvious to anyone
who has ever been a healthcare consumer, which means all of us: There is
no such thing as a free market in healthcare, if one defines a free
market as a place where there is some balance of power between the buyer
and the seller. Instead, healthcare is – except when Medicare is the
buyer – a lopsided seller's market. That became clear at both ends of
the money trails I followed – from the patients' lack of any knowledge
of what they were buying or its prices, much less any leverage to
bargain over it, to the sellers' ability and willingness to charge
absurdly high prices on everything from gauze pads to ambulance services
to cancer wonder drugs.

In other words, everyone along the supply chain – from hospital
administrators (who enjoy multimillion-dollar salaries) to the salesmen,
executives and shareholders of drug and equipment makers ‑ was reaping a
bonanza. The only exceptions, I found, were those actually treating the
patients ‑ the nurses and doctors (unless the doctors were gaming the
system by reaping consulting fees from drug or device makers or setting
up diagnostic clinics in their practices in order to steer patients
there for expensive tests).

http://blogs.reuters.com/stories-id-like-to-see/2013/03/05/coming-up-with-a-bitter-pill/

Comment: These excepts from Steven Brill's explanation of how he came
to write "Bitter Pill," his TIME special report on exorbitant prices and
profits in U.S. health care, reveal that there are two elements that
come out untarnished: 1) most of the doctors and nurses actually
treating the patients, and 2) Medicare.

The first point is very reassuring, but the second point should be a
call to action. As Brill writes, "healthcare is – except when Medicare
is the buyer – a lopsided seller's market." We really do need to make
Medicare, in an improved version, a buyer for all of us.

***

For those who have not yet read the 36 page report, "Bitter Pill," it
can be downloaded at the following link. The point to glean from the
article is how well Medicare works, which should lead you to the
conclusion that we need an improved Medicare for all of us, as opposed
to merely accepting the relatively ineffectual tweaks that he suggests
at the end of the article.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

Fwd: qotd: Medicare Part D drug program wide open to conflicts of interest

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-------- Original Message --------
Subject: qotd: Medicare Part D drug program wide open to conflicts of
interest
Date: Tue, 5 Mar 2013 08:13:05 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Department of Health and Human Services
Office of Inspector General
March 2013
Gaps in Oversight of Conflicts of Interest in Medicare Prescription Drug
Decisions

Objectives

1. To assess sponsors' Pharmacy and Therapeutics (P&T) committees'
conflict-of interest-definitions.
2. To determine whether sponsors' P&T committees established objective
processes to determine and manage committee members' conflicts of interest.
3. To determine whether the Centers for Medicare & Medicaid Services
(CMS) oversee sponsors' P&T committee compliance with
conflict-of-interest requirements.

Findings

Most sponsors' P&T committees had limited definitions of conflicts of
interest, which could prevent them from identifying conflicts
* Half of P&T committees' definitions did not address conflicts
prohibited by Federal regulations
* P&T committees' definitions did not always address relationships
with other entities that could benefit from formulary decisions
* More than two-thirds of P&T committees' definitions did not address
employment

Many sponsors' P&T committees allowed members to determine and manage
their own conflicts of interest
* Nearly two-thirds of P&T committees relied on members to determine
whether financial interests constituted conflicts
* More than three-quarters of P&T committees relied on members to
recuse themselves from discussions and votes

CMS does not adequately oversee sponsors' P&T committee compliance with
Federal conflict-of-interest requirements
* CMS does not review P&T committee conflict-of-interest information
* Data discrepancies would prevent CMS from identifying with
certainty the members of each P&T committee

Conclusion and Recommendations

Our findings reveal that both sponsors and CMS conduct limited oversight
of P&T committee conflicts of interest, compromising their ability to
ensure that financial interests do not influence formulary decisions.
Specifically, we found that without direction and oversight from CMS,
many sponsors' P&T committees have limited oversight of members'
conflicts of interest. Additionally, we found that CMS does not
adequately oversee compliance with the Federal requirement that at least
one physician and at least one pharmacist on each committee be free of
conflict.

To address limitations in how P&T committee members' conflicts are
defined, determined, and managed, we recommend that CMS:

* Define PBMs as Entities That Could Benefit From Formulary Decisions

* Establish Minimum Standards Requiring Sponsors To Ensure That
Safeguards Are Established To Prevent Improprieties Related to
Employment by the Entity That Maintains the P&T Committee

* Establish Minimum Standards Requiring Sponsors To Ensure That an
Objective Process Is Used To Determine Whether Disclosed Financial
Interests Are Conflicts

* Establish Minimum Standards Requiring Sponsors To Ensure That an
Objective Process Is Used To Manage Recusals Because of Conflicts of
Interest

* Oversee Compliance With Federal P&T Committee Conflict-of-Interest
Requirements and Guidance

Agency Comments and Office of Inspector General Response

CMS did not concur with our first and second recommendations, concurred
with part of our third and fourth recommendations, and concurred with
our fifth recommendation.

CMS maintained that it is not necessary to conduct additional P&T
committee conflict-of-interest oversight because current formulary
reviews and P&T committee audits appropriately protect beneficiaries
from any adverse effects of potential conflicts of interest.

If conflicts of interest among P&T committee members are not addressed,
beneficiaries may receive inferior therapies when safer or more
effective therapies are available, limited Medicare dollars may be
wasted to pay for inappropriate treatment, and public confidence in the
Federal Government may be undermined. In contrast, CMS asserts that
conflicts of interest would not disadvantage beneficiaries or the
Federal Government because it believes that formulary decisions
influenced by conflicts would result in higher premiums and the plan
would be priced out of the marketplace.

https://oig.hhs.gov/oei/reports/oei-05-10-00450.pdf


Comment: When the conservatives enacted the Part D drug program for
Medicare, they designed it as a private sector solution, using private
insurer sponsors and private pharmacy benefit managers (PBMs), while
specifically prohibiting any competing public drug plan.

An important function of these intermediaries is to select the drugs to
be covered through their formularies, balancing the adequacy of drug
selection with the opportunity for profit not only for the insurer
sponsors and the PBMs, but also for the pharmaceutical firms supplying
the drugs. This function is carried out by the sponsors' own Pharmacy
and Therapeutic (P&T) committees, and not by the government.

The potential for conflict of interest within these P&T committees is
enormous. This is why this report from the Office of the Inspector
General (OIG) is so important. The committee members are in a position
to advocate for the interests of the insurer sponsors, or the PBMs, or
the pharmaceutical firms. Decisions which benefit any or all of these
would likely be detrimental to the patients who pay premiums and a
portion of the Part D drug costs, and to the taxpayers who help fund the
Part D program of Medicare.

But don't worry. This program was set up to allow the free market to
work its magic. Apparently this is not only the agenda of the
conservatives who established this program, this laissez-faire approach
is also being followed by the current "liberal" administration.

In her letter in response to the OIG report, acting CMS administrator
Marilyn Tavenner wrote, "... if a P&T committee were to create a
formulary while operating under a potential conflict of interest,
because a discriminatory formulary would not be approved, the only
potential impact would be that the bid could be more expensive and,
therefore, less competitive. Beneficiaries could easily evaluate these
higher premiums in the marketplace and choose a more efficient plan to
meet their needs. As a result, we could expect that any authentic
conflicts of interest, given our level of formulary review, would
disadvantage the sponsor and not the beneficiary or Medicare program."
Note that this is the exact opposite of what is stated above.

Have you tried to shop for Part D plans? Though the premium might be the
first feature you see, the complexity of the various benefits, and
especially the differences in the formularies are very difficult to make
sense of. How can you look up medications that may be prescribed for you
next year when you don't even know what those medications are? And are
you really going to carry a formulary with you each time you see the doctor?

How nonsensical this dependency on the power of the market is can be
understood by comparing the prices we get through the privatized version
of the government Medicare Part D program, with the prices we get
through the government purchases of drugs for the VA system. The VA pays
about 40 percent less for drugs than paid under Medicare Part D (Austin
Frakt). It seems that the only magic in the marketplace is the increased
revenues that these intermediaries can glom off of us pathetic saps.

With HHS Secretary Kathleen Sebelius pushing private Medicare Advantage
plans (yesterday's message), and soon-to-be-confirmed CMS Administrator
Marilyn Tavenner pushing private Medicare Part D drug benefits, we have
the private sector pretty well covered. One more step to the defined
contribution premium support proposal and the private sector will have
it locked up.

Our love of the marketplace brings to mind Puck's comment to Oberon,
"Lord, what fools these mortals be!"

Fwd: qotd: GAO finds CMS negligent in risk adjustment for Medicare Advantage plans

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-------- Original Message --------
Subject: qotd: GAO finds CMS negligent in risk adjustment for Medicare
Advantage plans
Date: Mon, 4 Mar 2013 11:19:36 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



United States Government Accountability Office (GAO)
Report to Congressional Requesters
January 31, 2013
Medicare Advantage
Substantial Excess Payments Underscore Need for CMS to Improve Accuracy
of Risk Score Adjustments

What GAO Found

GAO found that the cumulative impact of coding differences on risk
scores increased from 2010 through 2012 and was greater than the Centers
for Medicare & Medicaid Services' (CMS) risk score adjustment of 3.4
percent for each of the 3 years. In updating the analysis from its
January 2012 report, GAO estimated that cumulative Medicare Advantage
(MA) risk scores in 2010 were 4.2 percent higher than they likely would
have been if the same beneficiaries had been enrolled continuously in
Medicare fee-for-service (FFS). For 2011, GAO estimated that differences
in diagnostic coding resulted in risk scores that were 4.6 to 5.3
percent higher than they likely would have been if the same
beneficiaries had been continuously enrolled in FFS. This upward trend
continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.

CMS's adjustment to risk scores for 2010 through 2012 to account for
diagnostic coding differences was too low, resulting in estimated excess
payments to MA plans of at least $3.2 billion. CMS's annual 3.4 percent
reduction in risk scores is equivalent to $2.8 billion in 2010, $3.0
billion in 2011 and $3.2 billion in 2012. According to GAO's estimates,
the amount of the excess payments to MA plans after accounting for CMS's
adjustments was $0.6 billion in 2010, between $1.1 billion and $1.6
billion in 2011, and between $1.5 billion and $2.9 billion in 2012.
Cumulatively across the 3 years, this equals excess payments of between
$3.2 billion and $5.1 billion.

For 2013, CMS continues to use the risk score adjustment of 3.4 percent
it used in 2010, 2011, and 2012. To conduct its data-based analysis, CMS
officials reported that they used the same methodology used in 2010, but
they incorporated more recent data.

CMS officials stated that they believed there was policy discretion with
respect to the most appropriate adjustment factor but did not identify
the specific source of their authority to consider factors other than
the required data analysis when determining the adjustment amount. While
CMS did not change its risk score adjustment methodology for 2013,
agency officials said they may revisit their methodology for future years.

Concluding Observations

Risk adjustment is important to ensure that payments to MA plans
adequately account for differences in beneficiaries' health status and
to maintain plans' financial incentive to enroll and care for
beneficiaries regardless of their health status. Our work confirms that
differences in diagnostic coding caused risk scores for MA beneficiaries
to be higher than those for comparable beneficiaries in Medicare FFS in
2010, 2011, and 2012. CMS's decision to use a 3.4 percent adjustment to
risk scores for 2010 through 2012 instead of the higher adjustments
called for by our analysis resulted in excess payments to MA plans. The
existence of such excess payments indicates that CMS's adjustment does
not accurately account for differences in treatment and diagnostic
coding between MA plans and Medicare FFS—the stated goal of the statute
that required CMS to develop a diagnostic coding adjustment. In our
January 2012 report, we recommended that CMS take steps to improve the
accuracy of the adjustment to account for excess payments due to
differences in diagnostic coding. We noted that CMS could, for example,
account for additional beneficiary characteristics, include the most
recent data available, identify and account for all the years of coding
differences that could affect the payment year for which an adjustment
is made, and incorporate the trend of the impact of coding differences
on risk scores. CMS's adjustment for 2013 is the same as it used in
2010, 2011, and 2012. However, given our finding that this adjustment
was too low and resulted in estimated excess payments to MA plans of at
least $3.2 billion, we continue to believe that it is important for CMS
to implement our recommendation that it update its methodology to more
accurately account for differences in diagnostic coding.

http://www.gao.gov/assets/660/651712.pdf

And...

U. S. Department of Health & Human Services (HHS)
News Release
September 19, 2012
Medicare Advantage remains strong

"Thanks to the Affordable Care Act, the Medicare Advantage and
Prescription Drug programs have been strengthened and continue to
improve for beneficiaries," said (HHS Secretary Kathleen) Sebelius.

For the third year in a row, the Centers for Medicare & Medicaid
Services (CMS) used authority provided by the Affordable Care Act to
protect beneficiaries from significant increases in costs or cuts in
benefits.

http://www.hhs.gov/news/press/2012pres/09/20120919a.html


Comment: The private Medicare Advantage plans, offered as an option to
traditional Medicare, have been cheating taxpayers by selectively
enrolling healthier, lower-cost patients, though being paid at full
rates, and more recently by coding patients as having more complicated
conditions in order to qualify for higher, risk-adjusted payments. The
GAO now provides us with further evidence that Secretary Sebelius and
HHS/CMS have been complicit in this fraud.

The Affordable Care Act included provisions to reduce the overpayments
to the private Medicare Advantage plans. This GAO report shows that
HHS/CMS ignored GAO's recommendations to improve their risk adjustment
methodology, recommendations that should have reduced overpayments due
to the embellished diagnostic codes being submitted by the Medicare
Advantage plans. HHS/CMS refused to improve the accuracy of their
adjustments, which has already resulted in overpayments to these private
plans of between $3.2 billion and $5.1 billion.

Why would they do this? Secretary Sebelius has repeatedly touted the
Medicare Advantage plans, and has made efforts to expand enrollment in
them, even though they cost the taxpayers more money. Overpaying them
allows the plans to offer greater benefits in order to entice
individuals to enroll. This is leading to further privatization of
Medicare, opening up opportunities for Paul Ryan and other members of
Congress to push future Medicare beneficiaries into his "premium
support" proposal - a voucher plan to privatize Medicare.

Although the Medicare Advantage programs are more expensive, the intent
is to expand enrollment and then make a simple change - convert the
financing to a defined contribution (premium support), shifting more of
the costs to Medicare beneficiaries through higher premiums and then
through greater cost sharing (higher deductibles, etc.) to keep the
premiums from skyrocketing beyond the means of most seniors.

President Obama has said that he is quite willing to put Medicare on the
table as part of the austerity program being advanced by the budget
hawks. Secretary Sebelius is advising him on "strengthening" Medicare.
Be afraid. Be very afraid.