qotd: Health policy experts versus everyone else: Why do the experts believe themselves?

ABIM Foundation
May 1, 2014
Results from a National Survey of Physicians
Unnecessary Tests and Procedures In the Health Care System: What
Physicians Say About The Problem, the Causes, and the Solutions

Nearly three-quarters (73 percent) of physicians say the frequency of
unnecessary tests and procedures in the health care system is a very (29
percent) or somewhat (44 percent) serious problem. ….

The top reasons physicians say they order unnecessary tests and
procedures are concern about malpractice issues (52 percent say a major
reason), just to be safe (36 percent), and wanting more information for
reassurance (30 percent). …

The second-tier influences are patients' insistence (28 percent) and
wanting to keep patients happy (23 percent). Third-tier reasons include
other factors such as … the fee-for-service system (5 percent)…. [p 5]

http://www.choosingwisely.org/wp-content/uploads/2014/04/042814_Final-Choosing-Wisely-Survey-Report.pdf

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New England Journal of Medicine
2013; 368:2029-2032
Phasing out fee-for-service payment
By William Frist and Steven Schroeder

The fee-for-service mechanism of paying physicians is the major driver
of higher health care costs in the United States [citation omitted] …..
The long-range solution is [to] shift from a payment system based on a
fee-for-service model to one based on value through mechanisms such as
bundled payment, capitation, and increased financial risk sharing.

http://www.nejm.org/doi/full/10.1056/NEJMsb1302322

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Comment by Kip Sullivan JD

There is an enormous gap between the opinions of the health policy elite
in this country and those of the public, including physicians. The
health policy elite find this gap too boring to analyze. They know why
this gap exists. The problem is not them, it's the hoi polloi and the
doctors. Patients are bewitched by "technology" and think "more is
better," and doctors' minds are warped by the incentives of the
fee-for-service system. It does not occur to health policy experts that
there might be something very wrong with their culture. The idea that
there is even a "culture" within the health policy establishment would
strike the establishment as at best uninteresting and at worst silly.
That this culture might be dysfunctional is unthinkable. In their view,
the only "culture" that needs analysis is that of the medical profession
and of the unwashed masses.

Although the gap between public and expert opinion was documented by the
early 1990s, the health policy community has shown no interest in
understanding its cause. For the health policy elite, there is nothing
to explain: The public is wrong and they are right. Pollster Daniel
Yankelovich articulated the establishment point of view in a 1995 paper
on the muddled debate about the Clintons' Health Security Act. "The
nation's leadership and the public are carrying out a bizarre dialogue
of the deaf," Yankelovich wrote. "The nation's elites have little
trouble conversing with one another, but when it comes to engaging the
public, there is an astonishing lack of dialogue." [p. 8]
http://content.healthaffairs.org/content/14/1/7.full.pdf+html?sid=fa42b84d-5f51-458f-bde1-d42bcbd15855


The problem, said Yankelovich, is the public does not agree with the
experts' diagnosis of the health care crisis. Virtually the entire
health policy establishment thinks US expenditures are high because the
volume of health care is excessive. But the public disagrees. As
Yankelovich put it, "[M]ost Americans attribute the rising costs of
health care to waste, fraud, greed, and inefficiency, [and] they assume
that whatever is wrong can be fixed by cracking down on these
expressions of venality…." [p. 14] The public, Yankelovich concluded, is
"on a collision course with the majority of experts". [p. 14]
Yankelovich's explanation for this standoff was "lack of realism" and
"wishful thinking" by the masses. The elite couldn't possibly be wrong.

The health policy cognoscenti treat the gap between physician and expert
opinion with the same incuriosity and arrogance. The latest evidence of
how drastically physician opinion departs from that of the establishment
appeared in a poll published by the ABIM Foundation (created by the
American Board of Internal Medicine) on May 1. The poll found that only
5 percent of physicians believe the fee-for-service payment method is a
major cause of overuse of medical care. The three most common
explanations doctors offered were variations on the same theme: Reducing
uncertainty. Other polls report similar results
http://www.unitedhealthgroup.com/~/media/UHG/PDF/2012/UNH-Working-Paper-8.ashx
(see p. 8) http://jama.jamanetwork.com/article.aspx?articleid=1719740
(see Table 3).

The health policy elite emphatically disagrees. "The fee-for-service
model is like asking a butcher how much steak you should eat," Jonathan
Gruber, a prominent advisor to the Obama administration, "explained" to NPR.
http://www.npr.org/templates/story/story.php?storyId=106859968

According to former Senator William Frist and Steven Schroeder (see
article quoted above), the "fee-for-service mechanism is the major
driver of higher health care costs."

How do we explain this divergence of opinion? I propose a modest
hypothesis: That the health policy community is as deeply influenced by
incentives peculiar to their profession as physicians are by incentives
peculiar to their profession. I propose that researchers both inside and
outside the health policy community begin their analysis of my
hypothesis by documenting the pattern I have outlined above – the
experts' habit of issuing pronouncements on the allegedly irresponsible
behavior of doctors as the chief cause of the health care crisis – and
comparing that pattern with analogous patterns in physician
explanations. Investigators would then examine the evidence behind the
different world views.

Let me offer an illustration. The paper from the New England Journal of
Medicine quoted above – "Phasing out fee-for-service payment" –
contained one of those extremely rare instances in which proponents of
the FFS-is-to-blame diagnosis tried to document their claim. The
authors, Frist and Schroeder, cited one and only one paper – a paper
published in 2011 by Laugeson and Glied entitled, "Higher fees paid to
US physicians drive higher spending for physician services compared to
other countries."
http://content.healthaffairs.org/content/30/9/1647.abstract The paper
didn't merely fail to support Frist and Schroeder's claim, it
contradicted it. It demonstrated that volume of services (in other
words, overuse) could not explain why expenditures on physicians are so
much higher in the US than in other countries that also rely primarily
on the FFS method, and that higher physician fees in the US explained
the difference. To paraphrase Gerard Anderson et al.
http://content.healthaffairs.org/content/22/3/89.full.pdf+html, it's the
prices stupid, not FFS.

Researchers investigating my hypothesis might ask, What incentives are
Frist and Schroeder exposed to that would incline them to make such a
sloppy mistake? Do proponents of the FFS-is-to-blame mantra and managed
care in general make more money, publish more often, advance faster
within the ranks of politics and academia, have greater access to the
media, or have more luck raising money from foundations than, say,
single-payer advocates or observers who are less passionate about their
criticism of doctors and patients?
I'm not proposing to exempt doctors and patients from similar scrutiny.
I'm proposing that the scrutiny, at long last, become even-handed. I
have little doubt even-handed scrutiny would either force the health
policy illuminati to honor the rules of scientific discourse and stop
promoting diagnoses and solutions with little or no evidence, or it
would lower the credibility of the illuminati in the eyes of the public
and the media. In either event, the decks would be cleared for a real
debate about single payer. Then the most profound gap between the public
(including physicians) and the experts would become more visible: By
large majorities the public supports single-payer.
http://www.pnhp.org/sites/default/files/docs/2011/Kip-Sullivan-Two-thirds-support-medicare-for-all.pdf

qotd: Aflac: American workers are at the edge of a financial cliff

2014 Aflac WorkForces Report
American workers are at the edge of a financial cliff

The economy is showing signs of improving, but Americans' bank accounts
are in need of resuscitation: Put simply, anemic pay raises combined
with sharp increases in out-of-pocket health care costs have creditors
knocking on many consumers' doors.

* 66 percent of employees would not be able to adjust to the large
financial costs associated with a serious injury or illness.

* 13 percent of workers are currently dealing with high medical bills.

* 49 percent of employees have less than $1,000 on hand to pay
out-of-pocket medical expenses.

* 53 percent of workers would need to borrow from a 401(k) and/or use a
credit card to cover unexpected medical costs.

* 8 percent say high medical bills have hindered their ability to save.

* 10 percent say high medical costs have negatively affected their
credit scores.

* 13 percent have been contacted by collection agencies about
outstanding medical bills.

http://workforces.aflac.com/financial-facts.php

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Comment by Don McCanne

A well functioning health care system should make all appropriate health
care accessible to everyone, and paying for the system should not lead
to financial insecurity. The sector of health care financing that the
Affordable Care Act was designed to protect was employer-sponsored
coverage, based on the belief that this was the sector that was
functioning well. Yet the 2014 Aflac WorkForces Report shows that this
sector often is not providing the financial security that patients need.

We should quit trying to finance health care though a multitude of
private and public plans that apply to individuals based on their
continually evolving personal circumstances. That approach creates
tremendous costly and wasteful administrative inefficiencies. Worse,
even what are supposedly the best programs - employer-sponsored health
plans - too often fail to provide the financial security that patients
want and need.

Medical bill related financial insecurity would disappear for everyone
if we would replace our current fragmented financing system with a
single payer national health program that included first dollar
coverage. Since it would use progressive financing, each of us would be
able to afford it.

This is a simple concept. We don't need the Aflac duck to explain it to us.

qotd: ACA exchange plans are creating new administrative headaches for physicians

Medical Group Management Association
May 2014
MGMA ACA Exchange Implementation Survey Report

Medical Group Management Association (MGMA) conducted member research in
April 2014 to better understand the impact of the Affordable Care Act's
(ACA) insurance exchange implementation on medical group practices.

Summary of Findings

MGMA noted three main themes within the findings.

OBTAINING COVERAGE INFORMATION

Practices have experienced difficulty identifying patients with ACA
exchange coverage and obtaining essential information related to that
coverage.

• 62% of respondents reported moderate to extreme difficulty with
identifying a patient that has ACA exchange coverage as opposed to
traditional commercial health insurance.

• Compared to patients with traditional commercial coverage, nearly 60%
of respondents indicated that for patients with ACA exchange coverage it
is somewhat or much more difficult to:

• Verify patient eligibility

• Obtain cost-sharing or network information

• Obtain information about the plan's provider network in order to
facilitate referrals

"We are going to have to hire additional staff just to manage the
insurance verification processs."

"Identification of ACA plans has been an administrative nightmare."

"We thought we would be able to identify ACA insurance exchange products
by their insurance card, but quickly found out this isn't so. "

PATIENT COST-SHARING

Practices are facing a number of challenges related to patient
cost-sharing for ACA exchange coverage.

• 75% of respondents reported that patients with ACA exchange coverage
are very or extremely likely to have high deductibles compared to
patients with traditional commercial coverage.

• Practices reported significant patient confusion about the substantial
cost-sharing related to many ACA exchange products, and practices are
working to help patients understand the complexities of their coverage.

• Practices cited some of the main reasons for not participating with
ACA exchange products were related to concerns about financial burdens
from patient collections (such as burdens related to collecting high
deductibles from patients and concerns about financial liability from
the 90-day grace period).

"Patients have been very confused about benefits and their portion of
the cost. Once the patients find out their deductible, they've cancelled
appointments and procedures."

"The at-risk piece of eligibility is tremendously hard to determine and
explain to patients."

"Patients don't always understand how health insurance works, so we've
been engaging in educational events for the community."

NETWORK LIMITATIONS

Practices have concerns about the impact of the network design of many
ACA exchange products.

• Almost half of respondents reported they have been unable to provide
covered services to ACA exchange patients because the practice is out of
network.

• 20% of respondents reported that their practice was excluded from a
narrow network that they would have liked to participate in and 10% of
respondents chose not to participate in a narrow network.

• Narrow networks may create challenges related to patient referrals for
appropriate treatment and hospital care. Even if the practice is
included in the network, without robust representation by a wide range
of providers, it may be difficult for a practice to coordinate a
continuum of care consistent with the patient's needs.

"Many patients purchased products with a very narrow network and didn't
understand the ramifications. They are very upset once they learn that
they can't go to the specialist or hospital of their choice. As primary
care providers, we are now faced with the extra burden of trying to find
them care within their new narrow network. Payer directories are
woefully inaccurate and impossible to rely on."

"Former patients were shocked to learn about their very narrow network
of providers. It was terrible to have to inform them of their lack of
coverage."

"We are consistently denied 'out of network' approvals for the very sick
who truly need to continue their care with providers who have worked
with the patient for years."

http://www.mgma.com/government-affairs/issues-overview/aca/aca-exchange-implementation-report/aca-surveyreport_online_2?ext=.pdf

Statement of Susan Turney, MD, MS, FACP, FACMPE, president and CEO of MGMA:

"Physician group practices are expressing dissatisfaction with the
complexity and lack of information associated with insurance products
sold on ACA exchanges. The more administrative complexity introduced
into the healthcare system, the less time and resources practices can
devote to patient care. Even though there hasn't been a huge influx of
patients into physician offices as many predicted, simple tasks such as
obtaining patient insurance coverage information or finding specialists
for in-network referrals have proven to be significant challenges."

http://www.mgma.com/about/mgma-press-room/press-releases/2007-2012/mgma-statement-on-effect-of-aca-exchange-implementation-on-medical-group-practices

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Comment by Don McCanne

Much has been written about the consequences of the high deductibles and
narrow networks of the ACA exchange plans in impairing access and
affordability for patients. This new survey demonstrates that these same
features add more administrative headaches for physicians who are
already overburdened by the administrative complexity of our
dysfunctional health care financing system. For those who could care
less about the physicians, keep in mind that these ACA plan features are
preventing physicians from assisting patients in obtaining the health
care that they should have. It is really about the patients.

The quotations in the report above are especially helpful to our
understanding of the problems because they reveal the real world
consequences of the highly flawed ACA exchange infrastructure.

Single payer would eliminate the confusion over coverage, the barriers
of patient cost sharing, and the loss of choice due to network
limitations. People would simply get the care that they need when they
need it.

qotd: 2014 Milliman Medical Index

Milliman
May 20, 2014
2014 Milliman Medical Index
By Christopher S. Girod, Lorraine W. Mayne, Scott A. Weltz, Susan K. Hart

$23,215. That's how much is spent in 2014 on healthcare for a typical
American family of four covered by an average employer-sponsored health
plan according to the 2014 Milliman Medical Index (MMI).(1) And yet
while the amount has more than doubled over the past 10 years, growing
from $11,192 to $23,215, the 5.4% growth rate from 2013 to 2014 is the
lowest annual change since the MMI was first calculated in 2002.

Although the annual rate of increase is down, it is still well above the
rate of growth in the consumer price index (CPI).(2)

Employers pay the largest portion of healthcare costs, contributing
$13,520 per year, or 58% of the total. However, increasing proportions
of costs have been shifted to employees. Since 2007, when the economic
recession began, the average cost to employers has increased 52% — an
average of 6% per year — while the expenses borne by the family, through
payroll deductions and out-of-pocket costs, have grown at an even faster
rate, 73% (average of 8% per year).

So far, the emerging reforms required by the Patient Protection and
Affordable Care Act (ACA) have had little direct impact on the cost of
care for our family of four in 2014 because this family tends to be
insured through large group health plans. Some of the most far-reaching
reforms are focused on access to insurance in the individual and small
employer markets. Additionally, while the reforms are having immediate
impacts on premium rates in those markets (the individual market, in
particular), it is unclear whether they will ultimately have meaningful
effects on growth in the cost of healthcare services.


(1) The Milliman Medical Index is an actuarial analysis of the projected
total cost of healthcare for a hypothetical family of four covered by an
employer-sponsored preferred provider organization (PPO) plan. Unlike
many other healthcare cost reports, the MMI measures the total cost of
healthcare benefits, not just the employer's share of the costs, and not
just premiums. The MMI only includes healthcare costs. It does not
include health plan administrative expenses or profit loads.

(2) Over the 10-year period from 2004 through 2014, CPI has increased by
approximately 2.3% per year, while the MMI has average annual increases
of 7.6%.

http://www.milliman.com/mmi/

Milliman Research Report: 2014 Milliman Medical Index (12 pages)
http://www.milliman.com/uploadedFiles/insight/Periodicals/mmi/pdfs/2014-mmi.pdf


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Comment by Don McCanne

The Milliman Medical Index (MMI) is an important number because it
represents the actual cost of health care, excluding health plan
administrative costs and profits, for a typical family of four insured
by an employer-sponsored PPO (preferred provider organization). Keep in
mind that the workforce and their young families are a relatively
healthy sector of our society, yet the health care costs for that family
in 2014 are now $23,215.

We are reassured that the rate of increase is the lowest in years - only
5.4%. But that is not so reassuring when you consider that the rate is
still well above the rate of growth in the CPI (consumer price index).
In fact, over the last ten years, the MMI has increased an average 7.6%
whereas the increase in the CPI has averaged only 2.3%.

Although the rate of increase in the MMI has decreased to 5.4%, that is
still a one year increase in health spending of $1,185. That is quite a
hit for a family that has seen stagnant wages for the last couple of
decades.

Another important observation is that increasing proportions of the cost
increases have nominally been shifted to the family - through higher
payroll deductions and greater out-of-pocket costs. In actuality, most
economists agree that the employer's share of the costs is actually paid
by the employee in the form of forgone wage increases.

Median household income for 2012 was $51,017. Although that does not
represent the same family unit as the MMI, it does give a very rough
idea of what a strain that $23,215 imposes on family budgets. It is
clear that the financing of health care must be progressive.

Thomas Piketty's treatise on Capital in the 21st Century describes our
inequality in income and wealth. It takes very little imagination to see
how a publicly financed single payer system would slightly temper the
inequities while ensuring health care for everyone.

qotd: Sen. Bernie Sanders - Panel Discussion on Single Payer Health Care

May 21, 2014

Senator Bernie Sanders

Single Payer: Where do we go from here?

A Panel Discussion

Sen. Bernie Sanders (I-Vt)
Robert Weissman, President, Public Citizen
Gerald Friedman, Professor, Economics, University of Massachusetts at
Amherst
Dr. Margaret Flowers, PopularResistance.org
Dr. Andrew Coates, President, Physicians for a National Health Program
Michael Lighty, Director of Public Policy, National Nurses United


Dr. Andrew Coates: In a modern democracy, it seems to me that it's a
responsibility of the government to guarantee all necessary care to
everyone in the democracy, and also to protect the privacy of the
decision making between the patient and his or her caregiver. And if you
think about that a little bit further, what would it mean if we had
national health insurance? What would it mean if we had access to all
necessary care? - we didn't have to worry when our mother needed to
make a transition to a nursing home.; we didn't have to worry when our
child got leukemia; we didn't have to worry… like all of my patients -
every patient I have in the hospital is worried about the money problems
that are going to follow their illness. And it is an absolute national
disgrace - Yes, we can indict that, but let's think about that the other
way. What kind of freedom would we have if we could travel anywhere we
wanted and know that there would be an adequate health care
infrastructure? - if the Adirondacks - with an underserved population in
my own state - has hospitals with the support staff they needed? This
would be liberating. And it would change the political culture of our
nation to the idea that we can do this together. We all deserve basic
human dignity, and we should all be free - and I think that health care
is such a modern necessity that that can take our democracy to that place.

Video (drag time marker to 25 minutes for start of forum):
http://www.sanders.senate.gov/single-payer-where-do-we-go-from-here

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Comment by Don McCanne

This video should be shared with others to assist in disseminating the
message of the moral imperative of single payer.

So where do we go from here? The simple answer is forward. We need to
continue with education, coalition and grassroots efforts so that the
nation will understand that we, as a democracy, can bring health care to
everyone while eliminating the pecuniary punishment inflicted on those
unfortunate enough to have health care needs.

qotd: Gruber and colleagues call for more research on health plan competition

The National Bureau of Economic Research
NBER Working Paper No. 20140
May 2014
More Insurers Lower Premiums: Evidence from Initial Pricing in the
Health Insurance Marketplaces
By Leemore Dafny, Jonathan Gruber, Christopher Ody

Abstract

First-year insurer participation in the Health Insurance Marketplaces
(HIMs) established by the Affordable Care Act is limited in many areas
of the country. There are 3.9 participants, on (population-weighted)
average, in the 395 ratings areas spanning the 34 states with federally
facilitated marketplaces (FFMs). Using data on the plans offered in the
FFMs, together with predicted market shares for exchange participants
(estimated using 2011 insurer-state market shares in the individual
insurance market), we study the impact of competition on premiums. We
exploit variation in ratings-area-level competition induced by United
Healthcare's decision not to participate in any of the FFMs. We estimate
that United's nonparticipation decision raised the second-lowest-price
silver premium (which is directly linked to federal subsidies) by 5.4
percent, on average. If all insurers active in each state's individual
insurance market in 2011 had participated in all ratings areas in that
state's HIM, we estimate this key premium would be 11.1% lower and 2014
federal subsidies would be reduced by $1.7 billion.

From the Conclusion:

Given the incipiency of these markets, this study is but a first step in
what will surely become a deeper and broader literature on insurance
exchanges and the nature and significance of competition among exchange
participants. There is substantial room for further research on how
competition affects pricing and other outcomes in this market. Future
studies will be easier to execute once information about consumer
enrollment decisions has been released, and once the market is in
longer-term equilibrium. These conditions will allow researchers to
apply well- established supply-side methodologies to studying
competition on the exchanges. Such research will permit more-nuanced
conclusions and recommendations regarding the impact of competition and
competition-related policies on various outcomes of interest. Given the
large federal role in developing and regulating the exchanges, and in
subsidizing the purchase of plans offered on the exchanges, research on
how competition affects consumer choice and insurer behavior is of
critical importance.

http://www.nber.org/papers/w20140

****


Comment by Don McCanne

This study makes an attempt to support the theory that as the number of
competing insurers increases within each of the 395 ratings areas for
federally facilitated marketplaces, the premiums decrease. Though the
title is quite clear that "more insurers lower premiums," the actual
data are quite fuzzy.

If you look at Figure 2 in the report, there is considerable scatter
around the weighted regression line, and if you eliminate just a few of
the outliers from the 395 ratings areas, there is no obvious correlation
between numbers of insurers and premiums.

Nevertheless, to make their point they used two what-ifs. They project
that premiums for the second lowest cost silver plan were 5.4 percent
higher than they would have been simply because one insurer - United
Healthcare - declined to offer plans through the exchanges. Further,
they project that if all insurers already active in each rating area
were to participate in the exchanges then the premium for this silver
plan would have been 11.1 percent lower. It seems to be a leap to state
that competition has been shown to be successful in lowering premiums
because it would have been so with other competitors participating in
the exchanges even though those other competitors did not actually
participate. At least it demonstrates an unwavering belief in the
competition theory being tested, which really wasn't tested, but, what if?

Of greater concern is their concluding comment. They state, "There is
substantial room for further research on how competition affects pricing
and other outcomes in this market." Also, "Given the large federal role
in developing and regulating the exchanges, and in subsidizing the
purchase of plans offered on the exchanges, research on how competition
affects consumer choice and insurer behavior is of critical importance."

Jonathan Gruber, who helped develop both the Massachusetts plan and the
Affordable Care Act, is a co-author of this NBER paper. He had told us
that the proven model of single payer had to be rejected because of lack
of political feasibility, yet in its place we had to adopt a model using
health plan competition - a model that needs further research to see how
it will affect consumer choice and insurer behavior. What? We enact this
for the entire nation, and then we'll see how it works?

Actually we do not need further research on private insurance plans
competing within an exchange. We have had decades of experience with the
Federal Employees Health Benefits Program, and with California's CalPERS
for public employees and the Pacific Business Group on Health for
employer-sponsored plans. Each of these exchanges offered a choice of
competing private plans. Yet health care costs continued to escalate at
intolerable rates. Plans competing within exchanges have not been
effective in slowing health care inflation to levels found in other nations.

The authors contend that more research on health plan competition is of
"critical importance." Baloney. We've had all the research we need on
health plan competition. What we need is to get rid of the private
health plans, fix Medicare, and then provide it to everyone. Now.

qotd: Vladeck: Provider Concentration And The Failure Of Market Theory

Health Affairs
May 19, 2014 (online)
Paradigm Lost: Provider Concentration And The Failure Of Market Theory
By Bruce C. Vladeck

The belated rediscovery of provider prices as a significant contributor
to the high costs of US health care (although the data were there in the
literature all along), coupled with the presumed role of provider
concentration in producing some of the upward pressure on prices, has
created a serious conundrum for those who seek to apply conventional
economic reasoning to matters of health policy. The conundrum arises
from the conflict between the presumed per se undesirability of
increased concentration and the fact that many of the causes of that
increase may themselves be highly desirable — or at least practically
unavoidable.

The dilemma posed for policy makers and analysts arises from the
assumption that increased concentration is intrinsically a bad thing,
even though many good things seem to be happening as provider
concentration progresses. On the one hand, the number of independent
health care providers appears to be decreasing as a result of hospital
mergers and acquisitions, the agglomeration of physicians into larger
and larger group practices, and the alignment of physician practices
with hospitals. The relationship between increased provider
concentration and increased prices has long been conventional wisdom
(even if recent data and analyses have called that wisdom at least
partially into question). Ergo, such increases in concentration should
be opposed.

On the other hand, at least some of the factors driving increased
concentration are widely believed to improve care and population health,
or at least to encourage greater efficiency in the delivery of health
care services. These factors include growing clinical integration across
previously atomized providers; the dramatic reduction in use of
inpatient services, which decreases the number of full-service hospitals
needed in any given market; the mandatory adoption of expensive
information technologies; and the growing experimentation with payment
schemes in which providers bear at least some degree of financial risk.

Sage: 'Getting The Product Right'

Sage is trying to address the very real and very significant costs of
the inefficiency that permeates the US health care system. Recognizing
that the power to influence prices that comes with increased market
power theoretically reduces the incentives for efficiency, Sage proposes
to reduce that power by redefining what health care payers buy. This, in
turn, would presumably give consumers greater ability to make informed,
price-sensitive decisions about which health services they wished to
consume.

Antitrust analysis is generally complicated in markets with
differentiated products. Sage's proposal would either exacerbate that
problem or require the creation of a new authoritative regulatory
structure to determine exactly how new products should be defined.

Ginsburg And Pawlson: Let Consumers Decide What To Buy

The authors' theory seems to be that if increased provider consolidation
limits the ability of insurers to exert downward pressure on prices,
then the solution to high prices is transferring an increasing share of
the purchasing function to individual consumers through higher
out-of-pocket liabilities and the development of tiered networks, which
offer different prices to consumers with ostensibly different
preferences. However, this prescription only exacerbates the underlying
problem. No matter how much information — the magical potion in many
market-based approaches to health policy — atomized consumers may have,
it is almost certainly less than that of even the most indolent
insurance company.

Ginsburg and Pawlson also appear to be in favor of narrowing provider
networks as a way of reducing providers' leverage in negotiations with
payers and thereby holding prices down. They note that in the 1990s such
policies engendered significant consumer resistance because of the
restrictions they imposed on access to providers. However, they seem not
to mind the fact that such resistance may be minimized in the future by
the growing inability of many households to afford the kind of health
care they prefer. Such an approach not only fails to counteract the
growing economic inequality in this country but also appears to
legitimate it.

The Myth Of The Sovereign Consumer

One effect of changes in health financing in the past two decades is
unavoidably clear, if too often overlooked or minimized in importance by
the health policy community: The average individual with health
insurance is considerably worse off now than twenty years ago.
Out-of-pocket payments are much higher, for both premiums and
copayments; cash on the barrelhead is increasingly required for services
that used to be provided first and billed for afterward; and the numbers
of avaricious debt collectors and medically related bankruptcies
continue to soar.

At the same time, consumers are regularly inundated with self-serving or
downright erroneous information from health insurers, providers, and
entrepreneurs alike about health care services and their use that
carries the implicit message that any illness or financial difficulty is
essentially the fault of the consumer.

It is ironic that the increased unaffordability of routine health care
is exactly the problem that historically led to the creation of health
insurance programs in both the public and private sectors. Those who are
quick to applaud the expected demise of employer-sponsored coverage in
the United States overlook the extent to which large employers, eager at
least to not offend their employees, historically used their purchasing
power with insurers to protect those employees (as well as to maintain
an enormous de facto cross-subsidization of the less healthy employees
and family members by the healthier ones).

Of course, government insurance programs wield this purchasing power
more directly, more openly, and—when it comes to the effect on provider
prices and the minimization of out-of-pocket liabilities for individual
households—far more effectively. In other words, Medicare and Medicaid,
and their beneficiaries, are much less at risk of increased prices
resulting from provider concentration than are most private insurers or
privately insured people.

Those who are uneasy about further increasing the government's role in
minimizing price growth in health care might do well to compare today's
high-deductible plans to the historical experience of Blue Cross plans
with private-sector monopoly control (which hardly ever paid hospitals
more than their actual costs) and first-dollar coverage.

As a proud former rate setter in both state and federal governments, I
confess to an absence of alarm at these authors' recognition that if
none of their nostrums work, rate regulation may become increasingly
unavoidable. But I am skeptical of the political likelihood of a return
to rate setting; nor am I entirely convinced of its desirability. The
exercise of government power is one way to constrain sellers in
concentrated markets, but not the only one.

It is conceivable, for instance, that one explanation of the relatively
low rate of hospital price increases in recent years is that private
insurers, in response to some of the first- and second-order pressures
generated by the Affordable Care Act, are actually negotiating
aggressively with hospitals, instead of just passing on increases to
their customers or enrollees, as was standard practice in the past.

Instead of continuing to try to impose axiomatic and solipsistic
theories on a reality to which they increasingly fail to apply, we need
to figure out what kind of health care system we really want and how
much we are prepared to pay for it. Then we need to invent or
reconfigure the social institutions that we will have to have to get
that system.

http://content.healthaffairs.org/content/early/2014/05/13/hlthaff.2014.0336


Comment by Don McCanne

In health care, there is plenty of evidence that cooperation benefits
patients much more than does competition. Working together to provide
the best care for the patient is far better than competing to obtain the
best business outcome for the health care providers. The current
increasing consolidation in the health care delivery system shines light
on these conflicting dynamics.

In this paper, Bruce Vladeck provides a perspective in response to
different views of this topic released in online papers and presented at
a Health Affairs briefing this morning, sponsored by The Commonwealth
Fund. Although the discussion was primarily about the impact of provider
concentration in the health care marketplace, the issues go well beyond
that.

As Vladeck mentions, historically the Blue Cross plans exerted private
sector monopoly control while providing first dollar coverage. Now the
coverage has deteriorated, impairing access to care and leaving patients
exposed to major costs. The dynamic that we need to be looking at is not
the balance between the market clout of the consolidating health care
providers and the purchasing power of insurers as representatives of the
payers, rather the important dynamic, again according to Vladeck, should
be configuration of the social institutions that will allow us to pay
for the health care system that we really want.

Although Vladeck suggests that insurers may have become more aggressive
price negotiators, he nevertheless makes it clear that the government
price setters - Medicare and Medicaid - have had much more clout.

Consolidation that improves efficiency, effectiveness and access for the
benefit of the patient is great. Other nations have shown that you do
not need to limit consolidation or concentration to prevent overpricing
in such imbalanced markets. All you need is government price
administration such as we would have with a single payer financing
system. That would eliminate the superfluous private insurers with their
wasteful administrative excesses and inefficiencies that stem from our
dysfunctional fragmentation of health care financing.

qotd: Is your doctor in your network? Use a recorder when you ask your insurer.

Reuters
May 15, 2014
California consumers say duped by Blue Shield's limited Obamacare plans
By Terry Baynes

Consumers who purchased new health plans from Blue Shield of California
have sued the insurer, claiming they were misled into thinking the
insurance would cover their desired doctors and hospitals.

In their complaint filed in California state court on Wednesday, San
Francisco residents John Harrington and Alex Talon accused Blue Shield
of misrepresenting that their plans, sold on California's health
exchange, would cover the full provider network advertised on the
company's website.

They sued on behalf of a class of people who had purchased so-called
"preferred provider organization" plans from the insurer only to realize
that the doctor and hospital networks for their plans were limited.

Harrington bought a so-called silver plan on California's online
exchange while Talon bought a platinum plan through the insurer's
website. They said they made their choices based on Blue Shield's
alleged representations that their doctors would be covered.

After receiving medical treatment numerous times between January and
March, Harrington and Talon later discovered that their providers were
not covered, forcing them to pay the charges out-of-pocket, the
complaint said.

http://www.reuters.com/article/2014/05/15/us-usa-healthcare-blueshield-idUSBREA4E0VN20140515

****

Los Angeles Times
May 15, 2014
Recording seems to refute claims made by Anthem
By David Lazarus

David Cienfuegos said his wife was told by Anthem Blue Cross that his
doctor was part of the insurer's coverage network, but then was left
with the tab for about $5,800 in medical costs after Anthem insisted
that it never said any such thing.

In this case, though, Cienfuegos, 40, has a digital recording of the
Anthem rep clearly saying his surgery would be covered.

And he's suing to hold the insurer accountable.

In its Feb. 19 letter rejecting Cienfuegos' appeal, Anthem said the
company's own records show that "no specific provider was mentioned in
the conversation nor was it noted you were misinformed about
participating status for this specific provider in question."

That's just b-i-z-a-r-r-e.

Cienfuegos' wife can be heard on the recording spelling out the
provider's name, and the Anthem rep can be heard confirming both his
in-network status and that the procedure would be covered.

http://www.latimes.com/business/la-fi-lazarus-20140516-column.html

****


Comment by Don McCanne

One of the more important reasons given for using private health plans
as a basis of reform was that they were working well and people were
happy with them. The Blues - Blue Cross and Blue Shield - were held out
as prime examples of well functioning plans. Although patients did not
like being restricted to provider networks, the lists were quite
comprehensive, so it worked. But now…

Both the Blue Shield and the Blue Cross plans in California are using
more restricted networks in Covered California - the insurance exchange
under the Affordable Care Act. Even the plans with the highest coverage
- the platinum plans - are using these narrower networks.

It is a problem enough for the patients who are having difficulty
finding out which physicians and hospitals are on the plan, but these
anecdotal accounts confirm that the insurers are not a reliable source
of that information either. And when the insurers are wrong, they still
have the chutzpah to try to make their own clients absorb the losses.

Not only do individuals frequently change their coverage, the provider
lists also frequently change. Since the lists are now narrower, there is
a much greater probability that patients will lose continuity of care
because of the unstable coverage and unstable networks.

There will be many more lawsuits like these, which may then cause the
insurers to relax their restrictions. Yet far too many will still be
caught in this out-of-network trap. And the insurers will not stop
there. They will introduce yet more market innovations that will be
designed to reduce their obligation to pay for health care. After all,
they are businesses, not public service organizations.

Enough. Time for a single payer national health program.

qotd: LIVE STREAMED - Sen. Sanders, May 21 panel, Single Payer: Where Do We Go from Here?

Wednesday, May 21, 2014, 10 a.m. Eastern, 7 a.m. Pacific

Watch the event live:
website: www.sanders.senate.gov <http://www.sanders.senate.gov/>

Senator Bernie Sanders

SINGLE PAYER: WHERE DO WE GO FROM HERE?

Sen. Bernie Sanders will be joined by experts and advocates to highlight
the need for a single-payer system in the United States. The summit will
include discussion on how we can transition to a health care system
offering universal access and next steps for single payer advocacy.


Panelists:

Robert Weissman, President, Public Citizen, Washington, District of Columbia

Gerald Friedman, Professor, Department of Economics, University of
Massachusetts at Amherst, Amherst, Massachusetts

Dr. Margaret Flowers, PopularResistance.org, Baltimore, Maryland

Dr. Andrew Coates, President, Physicians for a National Health Program,
Albany, New York

Michael Lighty, Director of Public Policy, National Nurses United,
Oakland, California


SD-430, Dirksen Senate Building

If you cannot attend in person, WATCH THE EVENT LIVE on Senator
Sanders' website: www.sanders.senate.gov <http://www.sanders.senate.gov/>


For flyer of event:
http://www.sanders.senate.gov/download/single-payer-health-care-flyer?inline=file

qotd: LIVE STREAMED - Sen. Sanders, May 21 panel, Single Payer: Where Do We Go from Here?

Wednesday, May 21, 2014, 10 a.m. Eastern, 7 a.m. Pacific

Watch the event live:
website: www.sanders.senate.gov <http://www.sanders.senate.gov/>

Senator Bernie Sanders

SINGLE PAYER: WHERE DO WE GO FROM HERE?

Sen. Bernie Sanders will be joined by experts and advocates to highlight
the need for a single-payer system in the United States. The summit will
include discussion on how we can transition to a health care system
offering universal access and next steps for single payer advocacy.


Panelists:

Robert Weissman, President, Public Citizen, Washington, District of Columbia

Gerald Friedman, Professor, Department of Economics, University of
Massachusetts at Amherst, Amherst, Massachusetts

Dr. Margaret Flowers, PopularResistance.org, Baltimore, Maryland

Dr. Andrew Coates, President, Physicians for a National Health Program,
Albany, New York

Michael Lighty, Director of Public Policy, National Nurses United,
Oakland, California


SD-430, Dirksen Senate Building

If you cannot attend in person, WATCH THE EVENT LIVE on Senator
Sanders' website: www.sanders.senate.gov <http://www.sanders.senate.gov/>


For flyer of event:
http://www.sanders.senate.gov/download/single-payer-health-care-flyer?inline=file

Fwd: qotd: Measuring low-value care in Medicare

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-------- Original Message --------
Subject: qotd: Measuring low-value care in Medicare
Date: Thu, 15 May 2014 11:08:05 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



JAMA Internal Medicine
May 12, 2014
Measuring Low-Value Care in Medicare
By Aaron L. Schwartz, BA; Bruce E. Landon, MD, MBA; Adam G. Elshaug,
PhD, MPH; Michael E. Chernew, PhD; J. Michael McWilliams, MD, PhD

Abstract

Importance: Despite the importance of identifying and reducing wasteful
health care use, few direct measures of overuse have been developed.
Direct measures are appealing because they identify specific services to
limit and can characterize low-value care even among the most efficient
providers.

Objectives: To develop claims-based measures of low-value services,
examine service use (and associated spending) detected by these measures
in Medicare, and determine whether patterns of use are related across
different types of low-value services.

Design, Setting, and Participants: Drawing from evidence-based lists of
services that provide minimal clinical benefit, we developed 26
claims-based measures of low-value services. Using 2009 claims for 1 360
 908 Medicare beneficiaries, we assessed the proportion of beneficiaries
receiving these services, mean per-beneficiary service use, and the
proportion of total spending devoted to these services. We compared the
amount of use and spending detected by versions of these measures with
different sensitivity and specificity. We also estimated correlations
between use of different services within geographic areas, adjusting for
beneficiaries' sociodemographic and clinical characteristics.

Main Outcomes and Measures: Use and spending detected by 26 measures of
low-value services in 6 categories: low-value cancer screening,
low-value diagnostic and preventive testing, low-value preoperative
testing, low-value imaging, low-value cardiovascular testing and
procedures, and other low-value surgical procedures.

Results: Services detected by more sensitive versions of measures
affected 42% of beneficiaries and constituted 2.7% of overall annual
spending. Services detected by more specific versions of measures
affected 25% of beneficiaries and constituted 0.6% of overall spending.
In adjusted analyses, low-value spending detected in geographic regions
at the 5th percentile of the regional distribution of low-value spending
($227 per beneficiary) exceeded the difference in detected low-value
spending between regions at the 5th and 95th percentiles ($189 per
beneficiary). Adjusted regional use was positively correlated among 5 of
6 categories of low-value services (mean r for pairwise,
between-category correlations, 0.33; range, 0.14-0.54; P ≤ .01).

Conclusions and Relevance: Services detected by a limited number of
measures of low-value care constituted modest proportions of overall
spending but affected substantial proportions of beneficiaries and may
be reflective of overuse more broadly. Performance of claims-based
measures in supporting targeted payment or coverage policies to reduce
overuse may depend heavily on how the measures are defined.

Excerpts from the Discussion

In this national study of selected low-value services, Medicare
beneficiaries commonly received care that was likely to provide minimal
or no benefit on average. Even when applying narrower versions of our
limited number of measures of overuse, we identified low-value care
affecting one-quarter of Medicare beneficiaries. These findings are
consistent with the notion that wasteful practices are pervasive in the
US health care system.

Although these findings suggest that direct approaches to measuring
wasteful care may be tractable and informative, other findings
underscore potential challenges in developing and applying direct
measures of overuse. In particular, the amount of low-value care we
detected varied substantially with the clinical specificity of our
measures. Estimates of the proportion of Medicare beneficiaries
receiving at least 1 measured low-value service decreased from 42% to
25% when we used more restrictive definitions that traded off
sensitivity for specificity, and the contribution of low-value spending
to total spending decreased from 2.7% to 0.6%.

Thus, the performance of administrative rules to reduce overuse through
coverage policy, cost sharing, or value-based payment (eg, pay for
performance) may depend heavily on measure definition. Such strategies
may be appropriate for select services whose value is invariably low or
whose low-value applications can be identified with high reliability.
For other services, however, more sensitive measures could result in
unintended restriction of appropriate tests and procedures by coverage
and payment policies, whereas more specific measures could substantially
limit the effect of these strategies. Provider groups seeking to
minimize wasteful spending — for example, in response to global budgets
— may be able to distinguish appropriate from inappropriate practices at
the point of care without having to use rigid rules derived from
incomplete clinical data.

Although our analysis suggests that common drivers of low-value care
exist, our study did not identify specific determinants of wasteful
care. Factors associated with low-value care may also be associated with
high-value care.

http://archinte.jamanetwork.com/article.aspx?articleid=1868536&utm

****


Comment by Don McCanne

As we look for methods of slowing the increases in health care spending,
much attention is being given to devising methods of identifying and
reducing the amount of unnecessary care provided today. This article
contributes to that discussion by showing the potential impact of
measuring low-value care in Medicare patients. The results are quite
disappointing.

When more sensitive versions of the measures were used, a very large
number of Medicare beneficiaries were found to be receiving services
categorized as low-value, but they were unable to determine whether or
not the care provided was actually wasteful in the various clinical
circumstances. Thus policies that would reduce these services could
result in "unintended restriction of appropriate tests and procedures by
coverage and payment policies."

When more specific versions of the measures were used, the potential
cost savings were very small, thus "substantially limit(ing) the effect
of these strategies." Adjusting between sensitivity and specificity
trades off the inappropriate labeling of beneficial care as being of
low-value, with the failure to identify enough of the clinical instances
that were truly of low-value. Regardless of the sensitivity or
specificity, mistakes will be made in classifying what truly is or is
not low-value care.

As a cost saving measure, it would appear that such an approach would be
administratively complex with costs that could offset a significant
proportion of the very modest gains in recovery of charges for low-value
care.

The authors note that health care professionals working within global
budgets "may be able to distinguish appropriate from inappropriate
practices at the point of care without having to use rigid rules derived
from incomplete clinical data." Clinical judgement trumps empirical
computer algorithms.

It is not as if the policy community does not already know how to
recover some of the profound waste in our system. Just the
administrative savings alone recovered by adopting a single payer system
would be enough to pay for the care that people are not now receiving
that they should be. But our policymakers don't seem to be giving up in
their anything-but-single-payer pursuit of cost containment in health
care. Their obsession is pathological.

Fwd: qotd: High cancer drug prices

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-------- Original Message --------
Subject: qotd: High cancer drug prices
Date: Wed, 14 May 2014 11:48:36 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Journal of Oncology Practice
May 6, 2014
High Cancer Drug Prices in the United States: Reasons and Proposed Solutions
By Hagop Kantarjian, MD, David Steensma, MD, Judit Rius Sanjuan, Adam
Elshaug, MPH, PhD and Donald Light, PhD

The increase in cancer drug prices in the last 15 years has many
contributing factors and is harming our patients and our health care
system. It represents to many cancer experts a crossing of a moral line
between reasonable profits and profiteering, in a situation involving a
human catastrophe: patients who have developed cancer, and who may die
because they cannot afford the treatment. With typical out-of-pocket
expenses of 20% to 30%, the financial burden of cancer treatment would
be $20,000 to 30,000 a year, nearly half of the average annual household
income in the United States. Many patients (estimated 10% to 20%) may
decide not to take the treatment or may compromise significantly on the
treatment plan. This difficult situation poses three relevant questions:
(1) Are cancer drug prices too high? (2) Are they hurting patients and
our health care system? and (3) Can we do something about it? The answer
to each is affirmative. It is also our obligation as cancer doctors to
keep patients from "harm and injustice." If high prices make drugs
unaffordable and inaccessible, thus causing harm, then we should voice
our concerns and advocate for solutions.

What would be a just price for a cancer drug? A simple answer would be a
price that recognizes that most risks and costs of development are borne
by the public through tax breaks and public funding, so that cancer
drugs are affordable. The prices would maintain reasonable profits to
drug companies but remain fair, accessible and affordable to patients
and to the health care system.

What are some potential solutions? The United States is on the precipice
of great change in how we measure value in health care. In a recent
survey of US oncologists, 80% favored more use of cost-effectiveness
data in coverage decisions. In 2011, the American College of Physicians
outlined the position that "There should be a transparent and publicly
acceptable process for making health resource allocation decisions with
a focus on medical efficacy, clinical effectiveness, and need, with
consideration of cost based on the best available medical evidence."
Several solutions could help reduce cancer drug prices. Reviewing and
reducing the research bureaucracy and burdens could eliminate
unnecessary steps that increase cost, delay timelines, and shorten drug
patent times. Allowing Medicare to negotiate drug prices, eliminating
pay-for-delay strategies; allowing importation of drugs from abroad for
personal use; and allowing PCORI and other cancer advocacy groups,
experts, or committees to consider cost in their recommendations, would
all enhance the capacity of market forces to produce more reasonable
cancer drug prices. Professional societies representing cancer
specialists and advocating for cancer patients should be involved in
reducing the hype around new cancer drugs that do not have a major
impact on patient outcomes. They could also develop pathways and
guidelines that incorporate estimates of a drug "value" (benefit,
toxicities, cost, etc). A broad-based group representing cancer experts,
PCORI, patients and their advocates, regulatory bodies, and
pharmaceutical and insurance companies could review the new drugs for
their cost and benefit after US Food and Drug Administration approval,
and formulate cancer treatment pathways that incorporate the costs and
benefits of cancer drugs. Such structures are in place in many other
countries. These include, for instance, the Pharmaceutical Benefits
Scheme in Australia, the Pharmaceutical Market Restructuring Act in
Germany (AMNOG; affects prices in 31 countries), and others (Canada,
United Kingdom, New Zealand, France, etc). These structures have been
documented to result in more reasonable cancer drug prices (based on
expected benefits), which improves affordability and promotes high
levels of access for the population. For manufacturers, this creates
predictable markets with strong drug penetration, and ultimately
generates better profits to drug companies.

http://jop.ascopubs.org/content/early/2014/05/06/JOP.2013.001351.abstract

****


Comment by Don McCanne

As this article indicates, there are many things that could be done to
reduce prices of, not just cancer drugs, but all new drugs that enter
the market with exorbitant pricing. Just think how much easier this
would be under a single payer system.

Fwd: qotd: Price competition in establishing provider networks - a very weak tool

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The New York Times
May 12, 2014
More Insured, but the Choices Are Narrowing
By Reed Abelson

In the midst of all the turmoil in health care these days, one thing is
becoming clear: No matter what kind of health plan consumers choose,
they will find fewer doctors and hospitals in their network — or pay
much more for the privilege of going to any provider they want.

These so-called narrow networks, featuring limited groups of providers,
have made a big entrance on the newly created state insurance exchanges,
where they are a common feature in many of the plans. While the sizes of
the networks vary considerably, many plans now exclude at least some
large hospitals or doctors' groups. Smaller networks are also becoming
more common in health care coverage offered by employers and in private
Medicare Advantage plans.

Insurers, ranging from national behemoths like WellPoint, UnitedHealth
and Aetna to much smaller local carriers, are fully embracing the idea,
saying narrower networks are essential to controlling costs and managing
care.

"We have to break people away from the choice habit that everyone has,"
said Marcus Merz, the chief executive of PreferredOne, an insurer in
Golden Valley, Minn., that is owned by two health systems and a
physician group.

Nonetheless, for people who are directly picking plans in the open
markets, insurers say price is turning out to be critical. People "are
weighing affordability and breadth of network," said Karen Ignagni, the
chief executive of America's Health Insurance Plans, an industry trade
group. "What we're finding is individuals are experiencing a preference
for affordability," she said.

http://www.nytimes.com/2014/05/13/business/more-insured-but-the-choices-are-narrowing.html?hp&_r=0

****

The Washington Post
November 26, 2009
White House defends cost-containment efforts in health-care reform bills
By Shailagh Murray

Critics of the Democratic bills point to cost control as a chief
deficiency. Karen Ignagni, president of America's Health Insurance
Plans, said the Senate bill includes only "pilot programs and timid
steps" to reform the health-care delivery system, "given the scope of
the cost challenge the nation faces."

Unless lawmakers institute changes across the entire system, Ignagni
said in a statement Wednesday, "Health costs will continue to weigh down
the economy and place a crushing burden on employers and families."

http://www.washingtonpost.com/wp-dyn/content/article/2009/11/25/AR2009112503474.html

****


Comment by Don McCanne

During the health reform process, AHIP health insurance lobbyist Karen
Ignagni stated repeatedly that health insurance is not going to be
affordable unless lawmakers do something to control health care costs.
So is health care cost containment a function of the government or a
function of private insurers? Let see how this is playing out.

According to Ignagni, in 2009 the Senate bill - the Affordable Care Act
- contained only timid steps to control costs. It was clear that the
government was not going to play any major role in controlling costs -
certainly not in regulating health care prices, as they do quite
successfully in most other wealthy nations.

The public sector uses administered prices. The private sector depends
more on price competition within the marketplace. Because the government
did not act, the insurance industry has to depend on private market
approaches, even though Kenneth Arrow had shown long ago that market
dynamics do not work in health care.

In markets, price competition is an important tool. But in health care,
only at the margin can price shopping be effective. The private insurers
have been inserted as our price shopping intermediaries. They force
hospitals and physicians to compete on price, and they then exclude from
their plans those that fall short of the lowest bids. Even though they
claim that they select their networks based on quality, it is the lower
prices that allow them to keep their insurance premiums competitive.

This process is not new. Establishing plan networks with contracted
payment rates was the most important innovation during the managed care
revolution. That did slow temporarily the rate of increase in health
care costs. What is new is that the plans are trying to drive much
harder bargains with providers that want to be part of their now
narrower networks. In response, hospitals and physicians are now
consolidating in order to be "must have" providers that insurers need
for their networks. Of course, that weakens the negotiating position of
the insurers. So we are seeing a loss of choice of health care
professionals and institutions in exchange for only very modest
reductions in health insurance premiums.

More recently, Karen Ignagni is claiming that consumers are choosing
"affordability" (lower premiums) over "breadth of network" (greater
choice of providers). According to the industry, it is the patients who
elect to go the cheap - a classic example of blaming the victim. Most
people buying insurance are relatively healthy but are concerned about
the very high premiums, so they will choose plans with lower premiums,
often not even knowing which providers are in the networks. But that
does not mean that they would prefer to give up access to physicians and
hospitals whom they trust and where they believe that they could get the
best care.

Thus we can have distorted price competition in the dysfunctional health
care marketplace with the self-serving insurers functioning quite
ineffectively as our price shopping intermediaries as they take away our
choices in health care, or we can have a single government entity that
uses administered pricing in a system that allows us free choices in
health care and makes it affordable for all through progressive public
funding. Price competition in establishing provider networks is a very
weak tool to contain costs, and losing choices in health care is too
great of a price to pay.

We do not have to choose between affordability and breadth of network.
We can make health care affordable for all of us while getting rid of
the insurers and their restrictive networks, that is if we're willing to
quit playing the victim role.

Fwd: qotd: Hospital Ownership Of Physician Practices Is Associated With Higher Prices And Spending

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-------- Original Message --------
Subject: qotd: Hospital Ownership Of Physician Practices Is Associated
With Higher Prices And Spending
Date: Mon, 12 May 2014 12:55:18 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Health Affairs
May 2014
Vertical Integration: Hospital Ownership Of Physician Practices Is
Associated With Higher Prices And Spending
By Laurence C. Baker, M. Kate Bundorf and Daniel P. Kessler

The share of US physician practices owned by hospitals more than doubled
from 2002 to 2008. This trend toward vertical integration between
hospitals and physicians means that more producers of complementary
services that were once independent are now either commonly owned or
related by contract.

Whether this trend has been good for consumers has been the subject of
considerable debate. On the one hand, vertical integration has the
potential to improve the quality and efficiency of care by reducing what
are broadly described by economists as "transaction costs." For example,
closer ties between physicians and hospitals can improve communication
across care settings and reduce wasteful duplication of diagnostic tests.

On the other hand, vertical integration may hurt consumers by allowing
hospitals and physicians to raise prices. By employing or contracting
with physicians, hospitals may increase their market power by amassing
control over a larger bundle of services or by depriving their rivals of
a source of or destination for referrals. In addition, vertical
integration may increase physicians' incentives to supply unnecessary
treatments if such treatments are used as a vehicle to pay what are
effectively kickbacks for inappropriate referrals.

Understanding how vertical integration of physicians and hospitals
affects spending and the quality of care has become especially important
in recent years. The Affordable Care Act creates incentives that are
likely to intensify the historical trend toward vertical integration.
The act rewards doctors and hospitals that join together in an
accountable care organization (ACO) by making them eligible for cash
bonuses from Medicare. In theory, ACOs affect only how providers relate
to Medicare. However, most health policy analysts believe that in
practice, these organizations will increase the extent to which doctors
and hospitals bargain with private purchasers jointly instead of
independently.

From the Discussion

Vertical integration can have both socially beneficial and socially
harmful effects. There is almost universal agreement that greater
coordination of care, especially between physicians and hospitals, would
be in patients' best interests. At the same time, health policy analysts
have expressed the concern that integration can have unintended harmful
consequences for consumers. According to economic theory, vertical
integration has the potential to increase the market power of providers,
especially hospitals, and to encourage physicians to supply
inappropriate treatments by facilitating hospitals' payments of
kickbacks that would be illegal if they were made formally.

Our study had two key findings. First, in its tightest form, vertical
integration appears to lead to statistically and economically
significant increases in hospital prices and spending. This is
consistent with the hypothesis that vertical integration increases
hospitals' market power. We found that a one-standard-deviation increase
in the market share of hospitals that own physician practices was
associated with significant increases in prices and spending of 2–3
percent. In comparison, a one-standard-deviation increase in the
hospital Hirschman-Herfindahl index increased prices and spending by 4–6
percent.

Second, the consequences of looser forms of vertical integration were
more benign and potentially socially beneficial. Increases in these
forms of integration did not appear to increase prices or spending
significantly and may even decrease hospital admission rates. This
finding is consistent with the hypothesis that vertical integration can
improve the coordination of care.

However, the effects on volume associated with these types of
integration were small — so small that they did not generate a
significant reduction in hospital spending. In addition, although our
estimates of the effect of contractual integration on price were
statistically indistinguishable from zero, the imprecision of our
estimates limited our ability to confidently assess their true impact.

http://content.healthaffairs.org/content/33/5/756.abstract

****


Comment by Don McCanne

An intent of the Affordable Care Act was to reduce health care spending
through the establishment of more efficient integrated health systems,
operating as accountable care organizations. The ultimate integration is
for hospitals to assume ownership of physician practices. This study
demonstrates that this form of vertical integration does not reduce
prices and spending but rather increases them, likely through the
anti-competitive effects of such consolidation. Looser forms of vertical
integration (contracts rather than ownership) also failed to achieve a
reduction in hospital spending.

One important aspect of this study that will likely escape the attention
of the policy community is that they used data from Truven Analytics
MarketScan - a data base of claims filed by privately insured people who
obtained insurance through a participating employer. Thus the
ineffectiveness in recovering through lower prices the efficiencies of
the consolidated systems represents a failure of the private insurance
industry, whether functioning as insurers or as administrators for
self-insured employers.

So maybe vertically integrated systems, in which the hospitals own
physician practices, have the market clout to prevent efficiency savings
from being passed on to the purchasers of health care, but if we had a
single payer financing system, our public stewards would ensure that we
paid the right amount through administered pricing rather than being
victim to unfairly leveraged market negotiations. We need to replace
marketplace oligopolies with our own public monopsony - an improved
Medicare for all.

Fwd: qotd: Should we pay for screening tests?

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-------- Original Message --------
Subject: qotd: Should we pay for screening tests?
Date: Fri, 9 May 2014 12:54:59 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The New York Times
April 30, 2014
The Problem With Free Health Care
By H. Gilbert Welch

The Affordable Care Act does have its flaws. Here's a big one: It favors
screening over diagnosis.

While the distinction may seem arcane, it has real-world implications.
Screening is what we offer to the well; it's the effort to find
abnormalities in those who do not have signs or symptoms of disease.
Because screening is considered part of preventive care under the
Affordable Care Act, it is provided at no charge.

Diagnosis is what we offer to those who do have signs or symptoms of
disease. Because diagnosis is not preventive care, it is subject to
deductibles and co-payments.

I wish money wasn't such a powerful incentive in medical care. But the
economists are right: Incentives matter. Right now they favor lower risk
patients (those being screened) over higher risk ones (those with signs
and symptoms).

They also encourage a feeding frenzy among providers to recategorize
diagnostic testing as screening. Free screenings were seen as a way to
get people through the door and ideally to find and address problems
before they become more dangerous and expensive.

But in practice, it may not work this way. Some hospitals offer free
screening knowing full well that the costs will be more than made up for
by all the subsequent services required. More testing, false alarms and
overdiagnosis are all part of screening. And if you make it free,
patients are less likely to give proper consideration to these potential
harms — not to mention the potential for a lot of out-of-pocket costs
down the line.

Here's the fix: Eliminate the incentive mismatch between screening and
diagnosis. Treat them equally.

We need people to consider medical care carefully, and that's what cost
sharing is all about.

http://www.nytimes.com/2014/05/01/opinion/the-problem-with-free-health-care.html

****

The New York Times
May 8, 2014
Letter
When Cost Deters Care

To the Editor:

H. Gilbert Welch is right to be concerned that patients will forgo
diagnostic mammograms, colonoscopies and other kinds of care for serious
conditions if they aren't free, as "prevention" is under the Affordable
Care Act ("The Problem With Free Health Care," Op-Ed, May 1).

Studies show that even patients who need emergency care for a
potentially serious problem will go without it if they are in a
high-deductible health plan (although this increases their risk of
subsequent hospitalization). And therein lies the problem. While cost
sharing discourages overuse of medical care, it worsens a greater
problem, that of underuse.

In an 11-nation survey by the Commonwealth Fund, more than a third (37
percent) of Americans reported not going to the doctor when sick or not
filling a prescription because of cost, compared with a small percentage
of people in Britain, Sweden and Norway. The difference: They have
single-payer systems in which care is generally free at the point of
service.

Ida Hellander
Chicago, May 2, 2014

The writer is director of health policy and programs for Physicians for
a National Health Program.

http://www.nytimes.com/2014/05/09/opinion/when-cost-deters-care.html?ref=opinion

****

The Commonwealth Fund
November 13, 2013
Access, Affordability, and Insurance Complexity Are Often Worse in the
United States Compared to 10 Other Countries
By Cathy Schoen, Robin Osborn, David Squires, and Michelle M. Doty

Synopsis

A 2013 survey conducted in 11 countries finds that U.S. adults are
significantly more likely than their counterparts to forgo health care
because of the cost, to have difficulty paying for care even when they
have insurance, and to deal with time-consuming insurance issues.

http://www.commonwealthfund.org/Publications/In-the-Literature/2013/Nov/Access-Affordability-and-Insurance.aspx

USPSTF A and B Recommendations
http://www.uspreventiveservicestaskforce.org/uspstf/uspsabrecs.htm

****


Comment by Don McCanne

H. Gilbert Welch has been a leading voice in warning us about the costs
and adverse consequences of overdiagnosis. When there is little benefit
but greater potential harm and expense for a given diagnosis, it usually
would be better if that diagnosis had never been made. This is
especially true when a screening test is done on a healthy individual if
it leads to a diagnosis that will be of no help but could result in harm
to the patient.

When should screening tests be done? The decisions should be made by
patients after their health care professionals provide them with
adequate information regarding the potential benefits and adverse
consequences of the screening procedures. That advice should reflect the
latest information available from sources such as the U.S. Preventive
Services Task Force (USPSTF). In fact, the Affordable Care Act
specifically covers, without charge, level A and B preventive service
recommendations of the USPSTF. (Link above - USPSTF recommendations are
updated as new information becomes available.)

Dr. Welch would add one other consideration. He would require patients
to pay a portion of the costs for the screening tests just as they would
for diagnostic testing used to evaluate specific symptoms or signs. It
is well known that if people have to pay for screening tests that they
should have, many will decline them simply because of the expense. This
can result in adverse health outcomes or even death. If a screening test
warrants an A or B USPSTF rating, its benefits do outweigh the potential
harm, and it should be offered to the patient without placing it behind
a "paywall" (deductible, coinsurance or copayment).

Dr. Welch has it backwards. We should eliminate the incentive mismatch
between screening and diagnosis, but we should do that by removing the
paywalls for diagnostic and therapeutic services rather than creating
new ones for preventive screening.

PNHP's director of health policy, Ida Hellander, has it exactly right.
Rather than overuse, we have a much greater problem with underuse of
beneficial health care services, and cost-sharing paywalls worsen that
problem.

The Commonwealth Fund study that Dr. Hellander cites shows that the
United States has a much greater cost-related access problem than do the
other ten wealthy nations studied, yet those nations spend far less on
total health care than we do, without the necessity of erecting these
paywall financial barriers to care.

We can thank Dr. Welch for his great work in explaining to us the
potential negative consequences of screening tests. With this
information we can better inform the patient who has to make the
decision on undergoing screening. But we can also thank Dr. Hellander
for her great work on explaining to us why health care should be based
on patient need rather than on the patient's ability to pay.

Quite simply, patients should have the care that medical science
dictates they should have, if they want it, but not denied that care
because they feel they cannot afford it.

Fwd: qotd: Should hospitals become the insurers?

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-------- Original Message --------
Subject: qotd: Should hospitals become the insurers?
Date: Thu, 8 May 2014 10:08:14 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



The Fiscal Times
March 27, 2014
Hospitals plot the end of insurance companies
By Rob Garver

At The Atlantic's Health Care Forum in Washington on Thursday [March
27], health care and business professionals said that there's an
increasing trend in the industry toward cutting insurance companies out
of the process entirely, as large, regional hospital systems move into
the insurance business.

Dr. Kenneth L. Davis, CEO and president of Mount Sinai Health System,
the largest health care provider in the state of New York, said that
starting next year, Mt. Sinai will begin offering its own Medicare
Advantage plan. It will look for other opportunities to bring premium
payments directly into the hospital system, rather than filtering them
through insurance companies.

Davis said he expects organizations similar to his to move in the same
direction. "Inevitably the large systems are going to move to take part
of the premium dollar," he said.

For both non-profit systems like Mt. Sinai and for-profit systems, he
said, retaining more and more of the health care premiums paid by
consumers is essential to providing a full spectrum of care. He said
that his system's St. Luke's Hospital in New York runs a psychiatric
program that loses $14 million per year. It's "not sustainable," he
said, so the system needs to cross-subsidize the money-losing services
that it nonetheless must continue to provide, with income from more
profitable services, such as orthopedic surgery.

http://www.thefiscaltimes.com/Articles/2014/03/27/Hospitals-Plot-End-Insurance-Companies

****


Comment by Kip Sullivan JD

The media is doing a good job of telling the public that consolidation
within the hospital industry accelerated dramatically after the
Affordable Care Act was enacted. The media is doing a terrible job of
explaining why.

The flabbiness of managed-care speak is part of the problem. So too is
the tendency of merger partners in all sectors of the economy to feign
disinterest in market power and to claim their merger was motivated only
by a desire for greater efficiency. These problems were on display
during a recent interview of Dr. Kenneth Davis, CEO of Mount Sinai
Health System (an enormous hospital-clinic chain), by Corby Kummer, a
senior editor for the Atlantic.
http://www.theatlantic.com/live/events/health-care-forum/2014/

The Fiscal Times summary of that interview, quoted above, accurately
portrays what Davis said. He mentioned two motives for his recent
acquisition of other hospitals: (1) to ensure that services that lose
money for Mt. Sinai, such as pediatrics, psychiatry, and obstetrics, are
cross-subsidized by money-making services such as orthopedics; and (2)
to create an entity large enough to bear insurance risk. But Dr. Davis
failed to explain why Mt. Sinai should have to cross-subsidize anything
or bear any insurance risk, and Mr. Kummer's vague questions failed to
clarify Dr. Davis's opaque remarks.

Dr. Davis was one of several experts convened on March 27 by The
Atlantic for a forum on "fundamental questions underlying" the
Affordable Care Act. Mr. Kummer began the interview with this gentle
question: "How should people be viewing… the size of these health care
systems?"

Dr. Davis first replied with his cross-subsidization argument. He
claimed cross-subsidization was possible only "in an integrated health
care system" that can create "efficiencies both in clinical care and
corporate infrastructure." He said the Roosevelt Hospital was going to
become a "real mecca for orthopedics," and that in turn would make
adequate financing of underfunded services possible.

Note the unspoken, undocumented assumptions lurking under these
statements, including:

• Control of numerous hospitals and clinics by a single corporation
results in "efficiencies;"
• Mt. Sinai's management, not society through its government, should
decide how much doctors should be paid, and
• Mt. Sinai should seize the power to do that by gobbling up other
providers.

Some version of the second question did enter Mr. Kummer's mind, but he
couldn't figure out how to pose it. "Is one way of bending the cost
curve trying to equalize that hierarchy of reimbursement, or is that
just too much to hope for?" he finally blurted out. Davis dodged the
question (see Davis's answer at 5:30 into the interview).

Rather than rephrase his question, Kummer raised another subject. He
asked Davis if Mt. Sinai intended to start its own insurance company.
Davis said it wasn't clear yet whether Mt. Sinai would create an
insurance company in partnership with an existing insurer or "with our
own license," but he had no doubt Mt. Sinai would become an insurance
company.

Rather than question why hospitals should be branching into the
insurance business, Kummer asked: "Does the Affordable Care Act make it
easier for you to think in terms of offering this product?"

"No, it's the macroeconomics of health care that is forcing this," Davis
replied. "It's large systems coming together that are large enough to
take actuarial risk…. You need a certain size and scale to be able to
take risk."

Can you imagine a more abstract answer? Some force majeure was making
Davis build an empire so he could "take actuarial risk." Kummer bought it.

A good interview would have helped listeners understand the policies
that have triggered periodic spasms of merger fever in our health care
system, and the arguments for and against letting those policies
persist. The most important cause of the rapid consolidation of our
health care system is the 40-year-old campaign waged by the powerful
managed care movement to blame the fee-for-service method for overuse of
health care, and to replace that method with capitation and other
methods of forcing doctors and hospitals to bear insurance risk. The
zenith of this campaign was reached in March 2010 with the enactment of
the Affordable Care Act. This campaign conveniently ignores the role of
high administrative costs inflicted on the system by our multiple-payer
system and by managed care itself.

The media occasionally drops a hint that the attack on fee-for-service
is the original cause in the chain of causes leading to merger fever.
For example, the New York Times article on Mt. Sinai's merger with
Continuum Health Partners last year quoted Richard Ravitch, a member of
Mt. Sinai's board, saying: "'The fee-for-service system is going to be
history shortly," it will be replaced with a system of "bundled
payments" that shift insurance risk to hospitals, and to handle that new
system hospitals will "need a population that's larger than what any one
[hospital] has … today."
http://www.nytimes.com/2013/07/17/nyregion/2-hospital-networks-agree-to-merge-raising-specter-of-costlier-care.html


But the article made no effort to explain why the fee-for-service method
should be terminated, why a system of "bundled payments" would be
better, and who is promoting these notions. The nation badly needs the
mainstream media to connect the dots between the demonization of
fee-for-service and the latest merger spasm in our health care system.

The dots could be connected quite simply, as follows:

• Managed care advocates, including leaders of both political parties,
think overuse is the cause of our health care crisis, and that overuse
is caused by the fee-for-service method;
• The managed care movement's demonization of fee-for-service and its
lionization of shifting risk onto hospitals and doctors means providers
must consolidate in order to bear insurance risk.

Once the dots are connected, society can then ask, Is it true that
overuse is our main problem and fee-for-service causes it, and if not,
is there a better way to solve the health care crisis?

For single-payer advocates, the answer is clear. It makes utterly no
sense to replace the existing insurance industry with a hospital-based
insurance industry. The existence of multiple, privately controlled
insurers is the problem. Shifting control over those insurers from the
traditional insurance industry to the hospital industry does not solve
that problem. We need one publicly controlled insurer.