Tuesday, March 31, 2015

England’s NHS provides starter lessons on improving value

Health Affairs
March 2015
English National Health Service's Savings Plan May Have Helped Reduce
The Use Of Three 'Low-Value' Procedures
By Sophie Coronini-Cronberg, Honor Bixby, Anthony A. Laverty, Robert M.
Wachter and Christopher Millett


The pressure to contain health expenditures is unprecedented. In England
a flattening of the health budget but increasing demand led the National
Health Service (NHS) to seek reductions in health expenditures of 17
percent over four years. The spending cuts were to be achieved through
improvements in service quality and efficiency, including reducing the
use of ineffective, overused, or inappropriate procedures. However, the
NHS left it to the local commissioning (or funding) organizations, known
as primary care trusts, to determine what steps to take to reduce
spending. To assess whether the initiative had an impact, we examined
six low-value procedures: spinal surgery for lower back pain,
myringotomy to relieve eardrum pressure, inguinal hernia repair,
cataract removal, primary hip replacement, and hysterectomy for heavy
menstrual bleeding. We found significant reductions in three of the six
procedures—cataract removal, hysterectomy, and myringotomy—in the
program's first year, compared to prior years' trends. However, changes
in the rates of all examined procedures varied widely across
commissioning organizations. Our findings highlight some of the
challenges of making major budget cuts in health care. Reducing
ineffective spending remains a significant opportunity for the US health
care system, and the English experience may hold valuable lessons.

From the introduction

The global financial crisis of 2008 has led to the tightening of health
budgets, and spending is flattening or declining in real terms in many
countries. Simultaneously, soaring demand for health care in the United
States and the United Kingdom, exacerbated by aging populations with
increasingly complex morbidities; the spiraling cost of health
technologies; and growing patient expectations mean that the pressure to
contain expenditures is unprecedented.

Health care inefficiencies cost the United States $750 billion annually.
This has led to initiatives such as the grassroots, nongovernmental
Choosing Wisely campaign, which seek to reduce the usage of overused or
ineffective treatments. The return on investment could be substantial.
However, disinvestment is difficult, since it is hard to define clinical
interventions that are always inappropriate. And, like many other
countries, the United States has underdeveloped systems and mechanisms
to guide disinvestment strategies.

The NHS is a national single-payer system with one of the most developed
centralized systems for assessing clinical and cost-effectiveness in the
world. Thus, it should be well placed to achieve efficiency savings more
rapidly and consistently than other health systems can. However, the 151
local commissioning organizations (funding organizations known as
primary care trusts)—which until March 2013, as explained below, were
responsible for purchasing health care for their resident
populations—received little disinvestment guidance from the Department
of Health or the National Institute for Health and Care Excellence
(NICE). NICE primarily provides guidance on which treatments should be
offered; it offers much less guidance on which procedures to remove or
restrict funding for.

From the discussion

Our analysis shows that the first fiscal year of a major efficiency
savings program in the English NHS was associated with significant rate
reductions in three of the six low-value procedures assessed. This
included a reduction in one relatively ineffective procedure
(myringotomy, which declined by 11.4 percent) and reductions in two
procedures that are effective only in certain circumstances (cataract
removal, which declined by 4.8 percent, and hysterectomy for heavy
menstrual bleeding, which declined by 10.7 percent). Comparable
reductions in clinically effective benchmark procedures were not evident.

Despite the existence of well-developed mechanisms to guide purchasing
decisions in England, there is still a lack of consensus on which
procedures to target for disinvestment. Since its inception, NICE has
produced abundant guidance to inform the adoption of new technologies in
the NHS, but NICE's contribution to disinvestment decisions is less well

In an effort to address this issue, NICE has established a "do not do"
database to support the more efficient use of health resources. However,
the database has had a limited impact on purchasing activity because
recommendations are limited in their scope, often focusing on the use of
specific technologies; are not well publicized; and remain discretionary.

Perhaps reassuringly, our results do not show a clear association
between changes in procedure rates and either neighborhoods'
socioeconomic status or commissioning organizations' financial status.
This suggests that there is no particular pattern of inequity. Unlike in
the United States, where a person's ability to pay (through health
insurance or out of pocket) primarily dictates the level of access to
health care, in England the relationship among finances, neighborhood
deprivation, and access to health services is more complex. For example,
poorer commissioning organizations in England often receive additional
government funding to help address health inequalities.

As more data become available in both the United States and England, it
will be interesting to compare the success of the different approaches
being taken to reduce low-value care. In England the approach is
top-down and specifies the magnitude of savings. In contrast, the United
States has embraced new pricing models such as bundled payments and the
nongovernmental Choosing Wisely campaign to reduce costs. A grassroots
initiative, Choosing Wisely is particularly interesting since it puts a
patient-doctor conversation about unnecessary tests and procedures at
its heart.

From the conclusion

Our analysis suggests that in a single-payer health system with
well-developed centralized mechanisms to assess clinical effectiveness,
it is possible to quickly reduce the rate of some ineffective
procedures. However, significant variations in reductions were found
across local commissioning organizations. This both reinforces the view
that disinvesting in low-value health services is a complex process
involving several factors and highlights the ongoing challenge of
creating affordable and effective health care systems worldwide.



Comment by Don McCanne

Right now in the United States there is an intense campaign to control
health care spending by changing payment systems to reward value over
volume even though the knowledge of methods and effectiveness of doing
this is quite primitive. This study from England's National Health
Service provides some limited insight on this approach.

Two of the factors in determining value are price and how beneficial the
services are. Regarding price, single payer systems relying on a greater
role of government are more effective in establishing appropriate
pricing. In the United States, our fragmented system of financing health
care not only fails to provide us optimal pricing, but, as this article
reminds us, it dictates the level of access to health care based on
ability to pay through insurance or out-of-pocket. In England, under the
National Health Service, price is not a factor at the time patients
access services, thus inequity based on price is essentially eliminated
in their public system (though their private system does introduce an
element of inequity).

On the other hand, whether or not services are of benefit can be much
more difficult to determine. A Merit-based Incentive Payment System
(MIPS) and Alternative Payment Models (APMs) are being initiated or
expanded under the Medicare Access and CHIP Reauthorization Act of 2015
(H.R.2), and yet evidence to date indicates that they have had a
variable and largely only negligible benefit in improving value.

The Choosing Wisely campaign being advanced voluntarily by numerous
professional organizations seems to be effective in selecting services
that are not of adequate benefit. Although admirable, its effectiveness
seems to be restrained by the paucity of procedures and services
selected and by the lack of authoritative oversight of compliance.

In England, the National Institute for Health and Care Excellence (NICE)
has provided much better guidance on which treatments should be offered,
but it has not been as effective as it could be since its
recommendations are only discretionary as to which procedures should
have restricted funding or be disallowed altogether.

Although both England and the United States struggle with ensuring value
in health care, the fact that the U.S. pays more than twice per capita
than England is related to a greater role of government though their
NHS. An example is found in the conclusion the authors offer in this
report: "Our analysis suggests that in a single-payer health system with
well-developed centralized mechanisms to assess clinical effectiveness,
it is possible to quickly reduce the rate of some ineffective procedures."

Instead of moving forward with our feeble efforts at improving value, we
should immediately enact a single payer national health program. Then we
will have a framework in which better value can be attained through
improved pricing and through a system that would actually be effective
in reducing or eliminating spending on some services that lack clinical

But we should not expect dramatic reductions in spending changes based
on effectiveness since this study shows that the process is complex. In
no small part that is due to the fact that there is considerable
low-value care that is not no-value care and thus would be difficult to

This is why it is even more imperative that we move to a single payer
system. It would immediately give us the increased value we are seeking
by eliminating hundreds of billions of dollars in administrative waste.

Monday, March 30, 2015

Uwe Reinhardt's timely comments on ACOs and P4P

The New York Times
March 30, 2015
Pay for Performance Extends to Health Care in Experiment in New York
By Anemona Hartocollis

(A)ccountable care organizations are appearing around the country for
Medicare recipients, with mixed results. New York, which has the
country's largest Medicaid budget, is committing more than $1 billion a
year for five years to the experiment.

"If we succeed, patients will be more likely to get the right tests and
medicine, doctors will benefit as we simplify the business side of their
practices, and businesses will benefit as we hold down health-care cost
growth," Sylvia M. Burwell, secretary of the federal Department of
Health and Human Services, said this month in New York City, during a
visit to promote accountable care organizations.

In the future, if the experiment works, providers may be paid solely
based on outcomes rather than volume of services, with better-performing
groups earning more than those whose patients are in worse shape.

Perhaps the most unusual alliance is one that brought together more than
1,000 primarily Hispanic doctors serving Upper Manhattan and the South
Bronx and Asian doctors working in the Chinatowns of Manhattan, Brooklyn
and Queens; and North Shore-Long Island Jewish Health System, a hospital
chain that serves a largely middle-class population. The nonprofit
venture they formed, called Advocate Community Providers, counts more
than 770,000 patients, by far the most of the 25 groups taking part in
the program.

The force behind this group is Dr. Ramon Tallaj, a former health
official in the Dominican Republic who moved to the United States in 1991.

But some of the Medicaid panel members questioned the logic of having
such a large, diverse group of doctors and patients like Dr. Tallaj's,
without any obvious connections among them.

"What's the glue that holds them together?" asked Stephen Berger, a
panel member and investment banker.

The sheer size of the group could also make it complicated to track
patients and determine who deserves credit for any improvements in their
health. Patients may continue to see any doctor they wish, even if that
doctor is not in the group.

Likewise, Dr. Tallaj acknowledged that if his patients did well, he
could reap the benefits even if he had not seen them, though he said
that was not his motivation.

Uwe Reinhardt, a health economist at Princeton, thought the idea was not
as promising as some had hoped. "People thought there was maybe more
waste than there actually really is," he said.

Dr. Reinhardt was also dismissive of performance bonuses for doctors.
"The idea that everyone's professionalism and everyone's good will has
to be bought with tips is bizarre."



Comment by Don McCanne

Value rather than volume. Quality rather than quantity. Paying for
performance. Reducing costs by eliminating wasteful services. Making
providers accountable and rewarding them based on the value of their
services. These concepts have become memes in the political and policy
communities yet with very little in the health policy literature to
confirm that these should be the driving principles behind health care
financing reform, though there are quite a few studies that confirm that
these concepts lead to mediocrity, at best.

It is urgent that we reconsider these concepts since in two weeks the
Senate is expected to pass H.B.2 which is designed to change payment
methods from fee-for-service to models of payment that instill these
ideas that are more rhetoric than science-based policy. Yet the rhetoric
is leading to implementation of the Merit-based Incentive Payment System
(MIPS) and Alternative Payment Models (APMs). These will have a major
impact - more negative than positive - on the actual delivery of health
care services.

Who is behind this meme-driven revolution in health care? Much of the
academic policy community. Legislative and administrative staff members.
Politicians. Representatives of vested interests that will benefit from
these changes. Well-meaning consumer organizations. Although some are
driven by greed, most are on meme-fed autopilot and have gathered in
lemming fashion charging forward to a goal in which utopian perceptions
will be dashed by the reality of plowing into the shoals of flawed policy.

Although it is quite disconcerting to read the meaningless rote
responses of some of the more noted representatives of the policy
community, we do have the comfort of of being able to hear from some of
that community who bring us reality by questioning these conclusions
that are based more on wishes than on objective evidence.

One of those on whom we can rely is Uwe Reinhardt. His brief comments in
this article should give the Senate pause as they consider H.R.2.
Current political activity seems to be based on the concept that these
flawed policies can eliminate much of the wasteful health care services
provided. As he tells us, the problem with that rationale is that there
is not nearly as much waste as has been thought. The initial results of
experimentation have confirmed that there just is not that much
recoverable by attempting to reduce or eliminate care that is not

Perhaps Uwe Reinhardt's most important lesson is in his comments about
paying for performance: "The idea that everyone's professionalism and
everyone's good will has to be bought with tips is bizarre." What could
be more fundamental than the ethical foundations driving the
practitioners of the healing arts? The policy people have it all wrong,
and they do not seem to understand why.

Thursday, March 26, 2015

Boehner: H.R.2 begins the process of entitlement reform

United States House of Representatives
March 26, 2015
Debate on H.R.2, "Medicare Access and CHIP Reauthorization Act of 2015"

Speaker of the House John Boehner:

We expect to end the so-called doc fix once and for all. Many of you
know we've patched this problem seventeen times over the last eleven
years, and I decided about a year ago that I had had enough of it. In
its place we'll deliver for the American people the first real
entitlement reform…

Today it's about a problem much bigger than any doc fix or any deadline.
It's about beginning the process of solving our spending problem, and
it's about strengthening and saving Medicare which is at the heart of
that problem. Normally we'd be here to admit that we're just going to
kick the can down the road one more time. But today, because of what
we're doing here, we're going to save money 20, 30, 40 years down the road…

We can't become complacent. We've got more serious entitlement reform
that's needed. It shouldn't take another two decades to do it, and
frankly I don't think we've got that much time. But I'm here today to
urge all of our members to begin that process, and the process begins by
voting yes on H.R.2 today.



Comment by Don McCanne

H.R.2 passed in the House today by a vote of 392 to 37. It goes to the
Senate where it will be voted on tomorrow. But is this really about the
"doc fix" - eliminating SGR? Speaker of the House John Boehner clarifies
that for us. It's about entitlement reform and H.R.2 begins that process.

Entitlement reform…

Wednesday, March 25, 2015

H.R.2 has replaced H.R.1470

H.R.2, "Medicare Access and CHIP Reauthorization Act of 2015" replaces
H.R.1470, "SGR Repeal and Medicare Provider Payment Modernization Act of

Yesterday, March 24, H.R.2 was introduced in the House of
Representatives. H.R. 1470, the subject of recent Quote of the Day
messages, has been included in H.R. 2 as Title I. H.R.2 is the
legislation that the House will pass tomorrow.

The bill is now 263 pages long. It contains the following Titles:

SGR repeal and replacement with MIPS and APMs

Twenty-one Medicare and other health extenders, including extension
of funding for community health centers and the National Health Service

Two year extension of CHIP

Means-tested Medicare premiums and elimination of deductible coverage
in Medigap plans

Twenty-five miscellaneous provisions







In addition, beneficial measures added to H.R.2 should be enacted, but
they need to be sorted out from inappropriate or deleterious policies
that have been added to this act.

At this time Congress should simply repeal SGR, fund CHIP, fund
community health centers and the National Health Service Corps, and
refer all other provisions for further study by the appropriate committees.

Repeal SGR, but don't privatize Medicare

Repeal SGR, but don't privatize Medicare
March 25, 2015
By Don McCanne

In the fervor to finally rid us of the flawed SGR model of setting
Medicare payment rates, Congress is about to pass legislation (HR1470)
that includes ill-advised, misguided and detrimental policies that could
cause irreparable harm to our traditional Medicare program. Instead,
Congress should revise the current legislation to comply with the
following recommendations.


1. Repeal SGR

2. Extend the funding of CHIP for four years

3. Extend funding for community health centers

4. Reject unproven or detrimental policies

a. Reject the Merit-based Incentive Payment System (MIPS) which
threatens the traditional Medicare program by creating an
administratively burdensome but unproven method of replacing volume with

b. Reject the Alternative Payment Models (APMs) as the only options
for escaping MIPS since APMs also remain unproven methods of replacing
volume with value

c. Reject the threat to quality care that can result from burnout of
health care professionals overburdened with the administrative excesses
of MIPS and APMs

d. Reject the false argument that SGR - a policy that has not been
implemented for many years - must somehow be paid for by other
reductions in public spending

e. Reject the political chicanery of introducing unrelated issues
into the legislation such as policy positions on pregnancy termination

f. Reject the expansion of means-tested premiums in Medicare which
would threaten solidarity in support of our Medicare program

g. Reject imposing deductibles under Medigap plans which would cause
too many patients to delay or forgo beneficial health care services

h. Reject these unproven or detrimental policies that would reduce
support of our traditional Medicare program, opening the door for those
who would privatize Medicare through premium-support (voucher) proposals.

Tuesday, March 24, 2015

SGR Fix: APMs threaten physician burnout (RAND)

RAND Corporation
March 19, 2015
Effects of Health Care Payment Models on Physician Practice in the
United States
By Mark W. Friedberg, Peggy G. Chen, Chapin White, Olivia Jung, Laura
Raaen, Samuel Hirshman, Emily Hoch, Clare Stevens, Paul B. Ginsburg,
Lawrence P. Casalino, Michael Tutty, Carol Vargo, Lisa Lipinski

The project reported here, sponsored by the American Medical Association
(AMA), aimed to describe the effects that alternative health care
payment models (i.e., models other than fee-for-service payment) have on
physicians and physician practices in the United States. These payment
models included capitation, episode-based and bundled payment, shared
savings, pay for performance, and retainer-based practice. Accountable
care organizations and medical homes, which are two recently expanding
practice and organization models that feature combinations of these
alternative payment models, were also included. Project findings are
intended to help guide efforts by the AMA and other stakeholders to make
improvements to current and future alternative payment programs and help
physician practices succeed in these new payment models.

Physician Incentives and Compensation

Practice leaders described transforming certain practice-level financial
incentives (especially those concerning cost containment) into internal
nonfinancial incentives for individual physicians, choosing instead to
appeal to physicians' sense of professionalism, competitiveness, and
desire to improve patient care. Common nonfinancial incentives included
performance feedback and selectively retaining or terminating their
physicians based on quality or efficiency performance.

Generally speaking, alternative payment models had negligible effects on
the aggregate income of individual physicians within our sample.

Physician Work and Professional Satisfaction

Within our sample, alternative payment models had not substantially
changed how physicians delivered face-to-face patient care. However, the
overall quantity and intensity of physician work had increased because
of growing patient volume expectations and ongoing pressure for
physicians to practice at the "top of license" (e.g., by delegating less
intense patient encounters to allied health professionals), which was
described as a potential contributor to burnout because lower-intensity
patients could be an important source of respite for busy physicians.

Additional nonclinical work, particularly documentation requirements,
created significant discontent. Physicians recognized the value of
documentation tasks that were directly related to improvements in
patient care, such as identifying patients with diabetes to facilitate
better management of all patients with this condition, but they disliked
the extra burden generated when documentation requirements were
perceived as irrelevant to patient care.

Most physicians in practice leadership positions were optimistic and
enthusiastic about alternative payment models, while most physicians not
in leadership roles expressed at least some level of apprehension,
particularly with regard to the documentation requirements of new
payment models. Overall, even these physicians seemed to believe that
major changes in payment methods would continue and acknowledged that
some changes were useful. Nevertheless, their attitude was frequently
one of resignation, rather than enthusiasm, because their day-to-day
work life was more difficult and included burdens they did not believe
would improve patient care.

Factors Limiting the Effectiveness of New Payment Models as Implemented

Physicians and practice leaders described encountering three general
types of operational problems in new payment programs that limited their
effectiveness and sapped physicians' enthusiasm for them.

First, physicians and practice leaders participating in a variety of
alternative payment models described encountering errors in data
integrity and timeliness, performance measure specification, and patient
attribution (the process by which patients are assigned to a specific
physician or practice). These payment models shared characteristics that
might have made errors more likely: They were administratively more
complex than FFS payment; some required payers to develop new
measurement systems; and some were deployed for the first time quite
quickly, without a "dress rehearsal" in which errors could be corrected
before payments were on the line.

Second, physicians had a variety of concerns about the implementation of
performance and risk-adjustment measures underlying PFP, shared savings,
and capitation programs. Broadly speaking, these concerns stemmed from a
sense that the multiplicity of measures within and across programs could
distract physician practices from making the changes to patient care
that were actually the ultimate goal of many payment programs.

Third, the influence of uncontrollable, game-changing events in shared
savings and capitation programs (e.g., the introduction of very
high-cost specialty drugs) sapped physician practices' enthusiasm for
these payment models. Finally, some physicians reported that they could
not understand exactly what behaviors were being encouraged or
discouraged by certain performance-based payment programs—even after
seeking clarification from payers.

Increased Stress and Time Pressure

New nonclinical work for physicians was almost universally disliked,
especially when there was no clear link to better patient care. For
example, frustration was common when physicians believed they were being
asked to spend more time on documentation solely to get credit for care
they had provided already. Overall, increased stress on physicians might
directly harm the quality of patient care and might also serve as a
marker that physicians are concerned about the quality of care they are
able to provide.

Full report (142 pages):


Comment by Don McCanne

HR 1470, which Congress is scheduled to approve in only two days (March
26), would replace the flawed Sustainable Growth Rate (SGR) method of
determining Medicare payments with a new Merit-based Incentive Payment
System (MIPS). MIPS introduces considerable administrative complexity
which would be a great burden to physicians, but the legislation allows
physicians to opt out of MIPS by joining Alternative Payment Models
(APMs) such as Accountable Care Organizations (ACOs) or Patient Centered
Medical Homes (PCMHs). This RAND study of APMs reveals that physician
members of APMs are at very high risk of BURNOUT.

Some believe that the onerous structure of MIPS was designed
specifically to drive physicians into APMs, especially ACOs. But is
moving from burnout to burnout really progress?

From the report: "(physicians') day-to-day work life was more difficult
and included burdens they did not believe would improve patient care."
Further: "Overall, increased stress on physicians might directly harm
the quality of patient care and might also serve as a marker that
physicians are concerned about the quality of care they are able to

This legislation will require physicians to submit to MIPS requirements
or join an APM, in either case incurring a high risk of burnout. But
health care should really be about the patient. Well, this does affect
patients, but in a bad way. Stressed-out physicians unintentionally
provide lower quality care. This is the exact opposite of the intent of
this legislation, assuming that higher value is intended to represent
higher quality.

Supporters say that getting rid of SGR is not only worth the legislative
compromise, but that the new MIPS provides the additional benefit of
improving quality, not to mention some CHIP funding being thrown in as
well. As we have seen, quality will likely be worse instead because of
the inevitable burnout. But now the supporters are responding with the
usual: "perfect being the enemy of the good," "art of legislative
compromise," "bipartisan support," "making sausage," and "must move on
to other priorities."

It's tempting to tell them what to do with their sausage, but, above
all, we should speak out loudly on behalf of our patients. This
legislation will make health care worse. With only two days left and the
steamroller in full momentum, can we do anything to prevent this
injustice about to be inflicted on patients and their health care

Monday, March 23, 2015

MIPS - Learn to live with it

House Committees on Energy & Commerce and Ways & Means
March 20, 2015
Working Framework of SGR Package

Repeal and Replace Medicare Physician Payment System. The legislation
repeals the flawed SGR formula and replaces it with HR 1470, SGR Repeal
and Medicare Provider Payment Modernization Act (replaces SGR with MIPS,
the Merit-based Incentive Payment System)

Children's Health Insurance Program (CHIP). This provision preserves and
extends CHIP, fully funding the program through September 30, 2017.

Medicare, Medicaid, and Other Health Extenders. The legislation extends
all of the extenders included in the Protecting Access to Medicare Act
of 2014 (PAMA, the most recent SGR patch) in addition to funding for
Community Health Centers through 2017.

Other Medicare Reforms.1) Medicare DMEPOS Competitive Bidding
Improvement Act (HR 284). (2) The Protecting Integrity in Medicare Act
(HR 1021).


(1) Income-related Premium Adjustment. Starting in 2018, this policy
would increase the percentage that beneficiaries pay toward their Part B
and D premiums in two income brackets (roughly 2 percent of
beneficiaries): for individuals with income between $133.5-160K
($267-$320K for a couple), the percent of premium paid increases from 50
percent to 65 percent. For those with income between $160-214K ($320-
$428K for a couple), the percent increases from 65 percent to 75 percent.

(2) Medigap Reform. The proposal limits first dollar coverage on certain
Medigap plans by prohibiting plans from covering the Part B deductible.
Change applies only for future retirees starting in 2020.

(3) Increase Levy Authority on Payments to Medicare Providers with
Delinquent Tax Debt.

(4) Hospital Update. Under current law, hospitals will receive a 3.2
percentage point adjustment in addition to their base payment rate in
FY18. This policy would phase-in this update incrementally.

(5) Additional Medicaid DSH Savings.

(6) 1 Percent Market Basket Update for Post-Acute Providers



The Wall Street Journal
March 22, 2015
What Measures Should Be Used to Evaluate Health Care?
By Melinda Beck

There's little agreement among patients, providers and insurers



Health Affairs Blog
January 24, 2014
Primum Non Nocere: Congress's Inadequate Medicare Physician Payment Fix
By Jeff Goldsmith

With this legislation, Congress is preparing yet again to enshrine in
statute another payment strategy that is both unproven and highly

The proposed legislation casts in concrete an almost laughably complex
and expensive clinical record-keeping regime, while preserving the very
volume-enhancing features of fee-for-service payment that caused the SGR
problem in the first place. The cure is actually worse, and potentially
more expensive, than the disease we have now.

If we're not sure new advanced payment schemes actually work, if we
haven't actually gotten them right, then we have no business compelling
or incenting 680 thousand practicing physicians to use them. We're not
going to get clinical practice where we want it to go with an elaborate,
individualized operant conditioning schedule with four domains and sixty
eight "core measures", and billions more spent on the IT systems and
clerical support to document them. We need to reward teamwork, not

It isn't just physicians that should be guided by Hippocrates' maxim,
"First Do No Harm," but our policymakers as well.



Comment by Don McCanne

We're there. The SGR extension expires March 31, and Congress is leaving
for a two week recess this Friday, March 27. Not only is there strong
bipartisan Congressional support for HR 1470, the SGR repeal and
replacement act, but there is also overwhelming support from the AMA and
other physician societies and from other influential interest groups
such as Families USA. The bill will pass this week.

The last two Quote of the Day messages have discussed some serious
defects in this legislation, especially the problems with the
Merit-based Incentive Payment System (MIPS). But that part of the bill
is a given. What is new today is the one page summary of the intended
amendments that will be added before enactment of the bill (see "Working
Framework of SGR Package," above).

Two items in these proposed amendments are of particular concern: 1)
Means-testing of Medicare Part B and Part D premiums, and 2) Prohibiting
Medigap plans from covering the Part D deductible.

Under means-tested premiums, higher-income individuals will be required
to pay larger premiums, undermining the support of this influential
group for the traditional Medicare program. Since they will be paying
higher premiums, many likely would prefer to select their own coverage
from a market of private Medicare plans - a goal of those supporting
privatization of Medicare through the premium-support model of reform.
Thus this provision would be a significant incremental step towards

Prohibiting Medigap plans from covering Medicare Part B deductibles
expands the implementation of consumer-directed approaches to financing
health care. It advances the conservative agenda of requiring more
personal responsibility on the part of patients, often expressed by the
repulsive "skin in the game" rhetoric. Much has been written about the
potential adverse consequences of deductibles, but the more ominous
portent of this measure is that it establishes the principle that all
health care must conform with the consumer-directed model. As we have
seen, the use of ever higher deductibles is rapidly expanding in
employer-sponsored plans, and this opens the door for the same rapid
increase in cost sharing to occur with Medicare.

But back to the basic bill - using the MIPS to replace the SGR. In the
last two Quote of the Day messages it was pointed out what an
administrative nightmare MIPS would bring us. What should be
particularly alarming is that these new required administrative
procedures have not been shown to either significantly decrease the
volume of medical services, or improve quality - supposedly the two
goals of payment reform.

As Jeff Goldsmith states about last year's version of the same policies,
"The proposed legislation casts in concrete an almost laughably complex
and expensive clinical record-keeping regime, while preserving the very
volume-enhancing features of fee-for-service payment that caused the SGR
problem in the first place. The cure is actually worse, and potentially
more expensive, than the disease we have now."

Tune in to C-Span this week for the latest chapter in their epic fiction
series: Democracy in America.

Wednesday, March 18, 2015

Blue Shield of California loses its state tax-exempt status

Los Angeles Times
March 18, 2015
With billions in the bank, Blue Shield of California loses its state
tax-exempt status
By Chad Terhune

Authorities have revoked the tax-exempt status of nonprofit Blue Shield
of California, potentially putting it on the hook for tens of millions
of dollars in state taxes each year.

The move by the California Franchise Tax Board comes as the state's
third-largest health insurer faces fresh criticism over its rate hikes,
executive pay and $4.2 billion in financial reserves.

The highly unusual action comes after a lengthy state audit that looked
at the justification for Blue Shield's taxpayer subsidy.

Now, a company insider has sided with critics. Michael Johnson, who
resigned as public policy director last week after 12 years at the
company, said the insurer has been "shortchanging the public" for years
by shirking its responsibility to Californians and operating too much
like its for-profit competitors.

On Wednesday, Johnson plans to launch a public campaign calling on
executives to convert the insurer into a for-profit company and return
billions of dollars to the public that could be used to bolster the
state's healthcare safety net. He estimates the company could be worth
as much as $10 billion.

In 1996, a similar conversion of Blue Cross of California — now part of
Anthem — generated $3 billion to establish the California Endowment and
the California HealthCare Foundation.

The company defends its work on behalf of Californians. It cites its
long-standing support of health reform and numerous efforts to make
coverage more affordable.

"Blue Shield as a company and management team firmly believes it is
fulfilling its not-for-profit mission and commitment to the community,"
said company spokesman Steve Shivinsky.

In 2011, amid a backlash over rate increases, the insurer capped its
profits at 2% of annual revenue and gave back about $560 million to
customers and community groups from 2010 to 2012. Blue Shield has also
contributed more than $325 million over the last decade to its own
charitable foundation.

But some consumer advocates and health-policy experts say those gestures
are lacking in light of the company's stockpile of cash.

Blue Shield's surplus of $4.2 billion at the end of 2014 is four times
as much as the Blue Cross and Blue Shield Assn. requires its member
insurers to hold to cover future claims.

Critics also note the company hasn't served the state's poorest
residents on Medi-Cal and it has frequently run afoul of state
regulators. The 2011 disclosure of a nearly $5-million salary for its
former chief executive drew protests.

Some consumer groups have also questioned whether certain Blue Shield
spending is out of line with its nonprofit mission.

For instance, the company contributed about $10 million to defeat a
ballot measure last year seeking rate regulation. It spent $2.5 million
for a luxury box at the new professional football stadium in Santa
Clara, Calif.

Critics have also long complained about Blue Shield's lack of disclosure.

Blue Shield was founded by the California Medical Assn. as part of a
national movement by hospitals and doctors to form prepaid health plans.

The company is a "mutual benefit" nonprofit — "dedicated to charitable,
religious or public purposes," according to California corporation law.



Comment by Don McCanne

Many of us in California were very upset when Blue Cross of California
converted to a for-profit (WellPoint, then Anthem) and immediately
changed its behavior to fulfill its responsibilities to its shareholders
as a profit-making business. We immediately saw "insurance innovations"
that redirected its business goals from taking care of patients to
taking care of shareholders.

It was particularly disappointing to see non-profit Blue Shield of
California adopt similar insurance innovations in order to remain
competitive in the California insurance market. From the perspective of
health care "consumers," Blue Shield and Blue Cross remained virtually

Blue Shield of California has annihilated the dream of those who
believed that the United States could adopt a universal system of
private, non-profit insurance companies like they have in Switzerland.
There are many serious problems with the Swiss model, but some believed
that a market of well-regulated, non-profit insurers would make optimal
patient care a priority. Blue Shield of California has now demonstrated
to us that this pipe dream would only become another nightmare in the
saga of private insurance markets in the U.S.

We need to banish them and establish our own public program - an
improved Medicare for all.

Tuesday, March 17, 2015

“Paying for value” could mean the end of small family practices

March 15, 2015
A Boehner-Pelosi prescription for Medicare doc fixes
By Jennifer Haberkorn and David Rogers

In a rare display of bipartisanship, House leaders are actively pursuing
a deal to permanently change the way Medicare pays doctors and to extend
a children's health program for two years.

While details are still being ironed out, the basic contours are clear:
The plan would permanently eliminate the Sustainable Growth Rate, the
outdated formula that calls for frequent and deep cuts to Medicare
providers, and replace it with a new payment system. This is a priority
for both parties to end the need for frequent "doc fixes."

The replacement policy agreed to by the House Energy and Commerce and
Ways and Means committees and the Senate Finance Committee would move
away from volume-based payments, in which physicians are paid based on
the number of tests or procedures ordered, into a value-based system.
That would reward them with higher payments when they meet performance
thresholds on improved care and quality.

This new system would set up a series of quality measures that
physicians will have to meet and would incentivize care coordination,
particularly for patients with chronic care needs in which multiple
doctors are involved.

The replacement policy is widely supported by medical organizations. But
some critics argue the bill is too vague and that its reporting
requirements could be ruinous to small practices.

"Aspirationally, it is correct, but we don't know enough about how to
measure value," said Robert Berenson, the former vice chairman of the
Medicare Payment Advisory Commission. "This could mean the end of small
general practices for all practical purposes."



Comment by Don McCanne

The rhetoric sounds great. We are moving away from paying for the volume
of health care provided, and we are going to pay for value instead.

In reality, volume will always be an important factor in determining
health care costs. Maybe there are marginal expenses that can be
reduced, but most services are clinically appropriate and do have
relatively fixed costs involved. Reducing volume has really been code
language for using various schemes such as accountable care
organizations and bundling of payments to reduce prices. These schemes
have an almost negligible impact on reducing volume.

What is this increased value that the industry envisions? Usually they
are referring to quality measures. Yet those measurements are very
primitive. As Robert Berenson says, "we don't know enough about how to
measure value." Yet reducing payments for volume and giving rewards for
Mickey Mouse quality scores increases administrative complexity -
increasing busy work without increasing value.

Do we really want to do this? Again, quoting Robert Berenson, "This
could mean the end of small general practices for all practical
purposes." My personal primary care physician is a solo practitioner. I
should have to give him up simply because some policy people believe
that we should continue down this path when there is very little support
that these measures will either reduce costs or increase quality?

What the policy people do know is that an improved Medicare that covered
everyone for the same amount that we are spending today is the most
effective way to improve value. We should go where the action is. Once
there, we can tweak the system for quality and volume.

Friday, March 13, 2015

Patients lack enough assets to pay insurance cost sharing

Kaiser Family Foundation
March 11, 2015
Consumer Assets and Patient Cost Sharing
By Gary Claxton, Matthew Rae, and Nirmita Panchal

While concerns about cost sharing are not new, the recent coverage
expansions under the ACA put a new focus on what it means for coverage
to be affordable. The goal of the law was to cover more of the
uninsured, many of whom have limited means. The law requires most people
to have health insurance, if they can afford to pay the premium, or to
pay a penalty. The issue for some families, however, is that the
policies with affordable premiums may have cost sharing requirements
that would be difficult for them to meet when they access services. Many
of the policies in the state and federal marketplaces have significant
cost sharing, as do many policies provided to people at work. The ACA
provides cost-sharing assistance to some, primarily to those with
incomes below 200 percent of poverty purchasing through a state or the
federal marketplace. Others potentially face much higher out-of-pocket


Overall, three in five (63%) households have enough liquid financial
assets to meet the lower deductible amounts ($1,200 single/$2,400
family) while one-half (51%) can meet the higher deductible amounts
($2,500 single/$5,000 family). These percentages are similar for
single-member and multi-member households, but vary significantly by
family income. Only 32% of households with incomes between 100% and 250%
of poverty can meet the lower deductible amounts, while one-in-five can
meet the higher deductible amounts. In contrast, 88% of households with
incomes over 400% of poverty can meet the lower deductible amounts and
three-in-four (79%) can meet the higher amounts.

Out-of-Pocket Limits

Out-of-pocket limits are higher than deductibles and meeting them is
more difficult for many families. Forty-eight percent of households have
enough liquid financial assets to meet the lower out-of-pocket limits
($3,000 single/$6,000 family) and 37% can meet the higher limits ($6,000
single/$12,000 family). The percentages are quite low for households
with incomes between 100% and 250% of poverty, with 18% having enough
liquid financial assets to meet the lower out-of-pocket limits and 11%
being able to meet the higher limits. Among households with incomes over
400% of poverty, 75% have enough liquid financial assets to meet the
lower out-of-pocket limits while just 62% can meet the higher limits.


Many non-elderly, non-poor households lack the resources to meet the
deductibles and out-of-pocket limits that they may encounter in the
private insurance market. Many households have insufficient liquid
financial assets to meet the specified cost sharing measures, and the
situation for net financial assets is no better. Not surprisingly, the
difficulties are greater in households with lower incomes and with
someone who lacked health insurance.

While the ACA provides for reduced cost sharing for some people with
incomes below 250% of poverty that purchase coverage in a state or the
federal marketplace, there is no assistance with cost sharing for those
with higher incomes or for those obtaining coverage through a job.
Substantial shares of households with incomes between 250% and 400% of
poverty would be unable to meet even the lower out-of-pocket limits with
their current resources, and meaningful shares of households with
incomes over 400% of poverty would have problems as well.



Comment by Don McCanne

This important study demonstrates one of the most serious deficiencies
in our dysfunctional system of health care financing: the mismatch
between the personal financial assets that most Americans have and the
cost sharing in the form of deductibles and out-of-pocket limits
required by their insurance plans. Far too many individuals, should they
have significant medical needs, do not have adequate liquid assets to
cover the level of cost sharing required by most plans today.

Look at the most favorable example above: 25% of higher-income families
(families with incomes over 400% of poverty) do not have enough liquid
financial assets to pay lower out-of-pocket limits of $3,000
single/$6,000 family. Worse, 38% of these higher-income families do not
have enough liquid assets to pay higher out-of-pocket limits of $6,000
single/$12,000 family (the 2015 out-of-pocket limits for plans in the
ACA exchanges are even higher: $6,600 individual/$13,200 family).
Further, net financial assets are usually lower than liquid financial
assets because of family debt; families are even more broke than their
cash on hand would indicate.

Except for those with the very highest incomes, our current flawed
system of financing health care through private plans creates financial
hardship for far too many of us who require significant amounts of
health care. Today's private insurance products are inadequate.

What is the source of support for this deficient coverage? Private
insurers want to maintain access to markets by keeping their premiums
competitive. They do this partly by shifting costs to patients' pockets.
Neoliberal and conservative politicians want to keep spending on
government premium subsidies to a minimum, so they support cost sharing
policies that reduce premiums. Libertarian and conservative ideologues
want to place health care consumers in charge of spending their own
money. If they don't have enough funds, well, that's too bad. They
should have had enough personal responsibility to establish their own
health savings accounts and fully fund them before medical needs arose.

Private insurers we can certainly do without. But what about the
ideologues? Is there no place in this country for egalitarianism and
social solidarity? I cringe when I think about current trends advancing
income and wealth inequality as the social fiber continues to shred.

We desperately need a single-payer, improved Medicare for all, with
first dollar coverage. Let's harness the forces of social solidarity so
we can achieve that goal.

Thursday, March 12, 2015

Correction - medical loss ratio

Correction - medical loss ratio

Today's Quote of the day included the following:

"The architects of the Affordable Care Act (ACA) rejected the solution
that would have worked - a single payer national health program - and
instead included in their legislation a requirement that private
insurers are allowed to keep, for their own administrative costs and
profits, no more than 80 percent (individual and small group insurance
markets) or 85 percent (large group markets) of the premiums collected.
Insurers refer to this percentage that they have to spend on patient
care as the medical loss ratio, i.e., paying for health care is a loss
to them."

The 80 and 85 percent mentioned are, of course, the medical loss ratios.
Obviously then the amount of the premium that the insurers are allowed
to keep is 20 percent for individual and small group plans and 15
percent for large group plans.

Getting rusty.

Wednesday, March 11, 2015

CORRECTION: Rep. McDermott’s American Health Security Act


(My thanks to Chuck Pennacchio for catching my error. - Don)

In the Quote of the Day for March 9, 2015 - "Rep. Jim McDermott
introduces The American Health Security Act of 2015" - I wrote the

"Those of us at Physicians for a National Health Program support John
Conyers' H.R.676, which would establish a national single payer program
(after all, "national" is in our name). Those who believe that we should
follow the lead of Saskatchewan and first establish single payer on a
state level may prefer H.R.1200/S.1782. Regardless, since these bills
will not receive a vote in the current Congress, they should be used as
advocacy pieces as we explain to the public why single payer is an


For clarification, the 2013 version of The American Health Security Act
states the following:

(a) In General.--There is hereby established in the United States a
State-Based American Health Security Program to be administered by the
individual States in accordance with Federal standards specified in, or
established under, this Act.
(b) State Health Security Programs.--In order for a State to be
eligible to receive payment under section 604, a State shall establish a
State health security program in accordance with this Act."

In my casual reading of this, I assumed that the state could decline to
establish a State Health Security Program, thereby forfeiting the
federal funds. However, Sec. 404 states the following:

(a) Submission of Plans.--
(4) States that fail to submit a plan.--In the case of a
State that fails to submit a plan as required under this subsection, the
American Health Security Standards Board Authority shall develop a plan
for a State health security program in such State."

Thus, although the American Health Security Act would establish a
state-based program, this legislation, as it is written, would not allow
one or more states to establish their own single payer programs while
other states are left with their current systems intact, as all states
would be required to participate (though they could join together in
regions). So this legislation in its 2013 version could not be used to
establish a single-state, single-payer plan - modeled after Saskatchewan
- within the United States.

In a previous Quote of the Day I had discussed a draft of legislation
that would allow states to act on their own while receiving funds that
are currently used in other federal health care programs. Unfortunately,
I didn't realize that the draft was confidential. On learning so, we
withdrew the post from the PNHP website. Although it still has not been
introduced as legislation, it is important to realize that the concept
has been and will continue to be under consideration.

In a note of irony, it appears that the 2013 version of this Act would
replicate the issues in King v. Burwell. Sec. 404(a)(4) would require
the federal government to develop a state health security program in any
state that failed to submit its own plan. Yet, under Sec. 101(b), it
appears that any state that failed to establish its own health security
program would not be eligible to receive funds under Sec. 604 - Federal
payments to states - from the American Health Security Trust Fund. What
would Justices Scalia and Alito make of that? "It says what it says."

At any rate, whenever we finally have a receptive Congress, whatever
bill that would be introduced would have an extensive markup before it
would be enacted. So we do not want to bog down in minutiae at this
stage. In the meantime, the primary thrust of my prior message on the
McDermott legislation still holds: "State versus federal is a secondary
issue. We'll have neither unless the people understand and start
demanding single payer. Let's work on that."

Tuesday, March 10, 2015

Economic Analysis of the New York Health Act

Economic Analysis of the New York Health Act
March 6, 2015
By Gerald Friedman, PhD

This report analyzes the economic effects of the New York Health Act
(the "Act"), which would establish a comprehensive, universal health
insurance program for all New Yorkers. The Act would replace the
current multi-payer system of employer-based insurance, individually
acquired insurance, and federally sponsored programs (e.g., Medicare and
Medicaid) with a single billing pipeline funded by broad-based
progressively graduated assessments collected by the State and based on
income and ability to pay, thereby reducing administrative bloat and
monopolistic pricing and dramatically reducing the cost of health care
to New Yorkers even while extending and improving the provision of care.

The New York Health Act would finance medical care with substantial
savings compared with the existing multi-payer system of public and
private insurers. By reducing administrative and other waste and
eliminating health insurance company profits and excessive prices for
drugs and medical devices, the New York Health Act would increase real
disposable income for the vast majority of residents. It would
simultaneously increase employment by reducing the burden of health
insurance on business. Some of these savings would be used to extend
coverage to the 7% of New York residents still without insurance under
the Affordable Care Act; other savings would be reinvested in the
health-care system to improve coverage for the growing number with
inadequate coverage. In addition to improving New Yorkers' health by
reducing barriers to access to health care, the Plan would eliminate the
financial penalty associated with health problems. It would also reduce
economic inequality by replacing the current regressive system of health
insurance finance with contributions proportional to income and ability
to pay.

Conclusion: Better Health Care, Found Money, and Fairness

The New York Health Act would produce substantial health and economic
gains for New York. The new system would create such large economies in
the administration of health care that all of those currently uninsured
could be given access to health care with money left over. Furthermore,
by financing health care with assessments based on ability to pay, the
New York Health Act would produce large savings for the great majority
of New York residents. Finally, by reducing business costs, it would
also lead to expansion in employment.

(Professor Friedman is Chair of the University of Massachusetts at
Amherst Economics Department.)

Economic Analysis - Gerald Friedman, PhD

Bill A5062-2015,Gottfried/S5062-2015,Perkins - Provides for
establishment of the New York Health plan
Sponsor - Richard Gottfried, Assembly/Bill Perkins, Senate

Press Release – Economic Study Shows Benefits of Universal Healthcare
Bill - 3/10/15


Comment by Don McCanne

The New York Health Act, introduced by New York Assembly Health Chair
Richard Gottfried and in the Senate by Sen. Bill Perkins, and supported
by the economic analysis of Prof. Gerald Friedman, is important because
it demonstrates how much health care reform can be accomplished on a
state level, especially when we have a Congress that is dominated by

Is this a single payer bill? The study refers to a "single billing
pipeline." Rather than being limited by labels, states wishing to go
ahead with reform now and not wait for a receptive Congress should
support any and all beneficial policy measures possible, including
whatever can be accomplished with existing waivers and through
negotiations with the U.S. Department of Health and Human Services.

In this analysis, Prof. Friedman estimates that through this
legislation, New York can achieve the goals of universality,
comprehensiveness, equity, free choice of providers, and removal of
cost-sharing barriers to care, while achieving a net savings of $45
billion in the first year alone - funds that could be used for much
better purposes than administrative waste.

For any given state, the economic advantage would depend on the
specifics of the state legislation and might vary based on the economic
assumptions used in the analysis. The important point is not the
specific details of this particular analysis but rather that introducing
as many single payer policies as possible does result in major
improvements of the functioning of the financing infrastructure while
significantly reducing the profound waste inherent in our current
dysfunctional system.

Our primary goal remains to bring health care justice to everyone in the
nation by enactment of a federal single payer system - an improved
Medicare for all. In our state efforts we cannot set aside this goal
since it is our prime goal. But Richard Gottfried and his colleagues
have demonstrated the types of policies that we can apply on a state
level as a transition until we can enact reform for the entire nation.

Friday, March 6, 2015

Let’s do something; let’s innovate!

JAMA Forum
March 4, 2015
Innovating Care for Medicare Beneficiaries: Time for Riskier Bets and
Embracing Failure
By Ashish K. Jha

Of all the pressing challenges in the US health care system, lack of
innovation in delivery may be the most important.

This lack of innovation in how we do things is a major reason why health
care productivity has been so low and high spending has had insufficient
benefits for patients.

A major premise of the Affordable Care Act (ACA) was that it would spur
new models of care delivery. The architects of the ACA understood that
old models of care delivery impeded gains in productivity, made it
difficult to improve patient outcomes, and made the health care delivery
system inefficient. In response, the ACA established the Center for
Medicare and Medicaid Innovation (CMMI), which is responsible for
changing how we deliver health care. The ACA provides CMMI with $1
billion per year for 10 years, much larger than the budgets of the
Agency for Healthcare Research and Quality and the Patient-Centered
Outcomes Research Institute, 2 entities that have gotten far more
attention. Will CMMI achieve the meaningful new models of care delivery
that our health care system needs? It is unclear, but there is reason
for concern.

A Mixed Picture

Four and a half years after launch, CMMI appears to have funded 36 new
programs, of which we have evaluations for 9. Nearly all the evaluations
are positive, although careful examination of the reports paints a far
more mixed picture. Most programs are having minimal effects, on the

For example, the Comprehensive Primary Care Initiative, across 6 states,
seems to have a monthly savings of $14 dollars (2% of total Parts A and
B spending) per patient, compared with controls, a savings that actually
turns negative when the costs of the program are included. The effects
on quality are minimal, as well.

Betting on Nontraditional Players

Foremost, CMMI needs to make meaningful bets on nontraditional
players—such as startups and small delivery organizations—that are
trying to fundamentally upend health care delivery. Next, focusing on
organizations that are using technology in radically different ways,
employing nontraditional personnel to facilitate care, and targeting new
locations for care delivery would also be helpful. Focusing on
nonincumbents and taking risks with nontraditional care models would pay
much bigger dividends than the marginal savings that current programs
are likely to generate.

But they would come at a cost: a high failure rate. Advocates of the
current CMMI approach would argue that such failures are unpalatable,
given the current political environment. Although that is surely true,
the broader health care community must give CMMI the space to fail. Even
the talented, highly capable people running CMMI can't have success
rates much higher than those seen in Silicon Valley, where comparably
smart investors are using their own money to make bets. But, if they are
willing to be risky—and willing to fail—they can have a profound effect
on the way health care is delivered. And that will be an investment
worth making.



The New England Journal of Medicine
March 4, 2015
Market-Based Solutions to Antitrust Threats — The Rejection of the
Partners Settlement
By Regina E. Herzlinger, D.B.A., Barak D. Richman, J.D., Ph.D., and
Kevin A. Schulman, M.D.

Health care consumers won a significant victory when Massachusetts
Suffolk County Superior Court Judge Janet Sanders blocked a settlement
that would have allowed Partners HealthCare, the system that dominates
the Boston area, to acquire three additional health care providers in
eastern Massachusetts. Sanders concluded that the acquisitions "would
cement Partners' already strong position in the health care market and
give it the ability, because of this market muscle, to exact higher
prices from insurers for the services its providers render."

If this decision is not overturned on appeal, consumers will now be
spared those projected price increases. But there is an even bigger
reason for New Englanders to celebrate the judge's ruling. The danger
lay not only in Partners' expanded dominance but also in the degree to
which the settlement would have shut out other innovative competitors.

Health care delivery does not rely on fixed assets whose returns should
be guaranteed. Rather, it relies on services and interactions between
caring clinicians and patients in need. This concept is lost when public
policy focuses on regulating returns on invested capital rather than on
promoting the provision of high-quality, innovative, efficient clinical
services. Innovative, low-cost competitors to most hospital services
could abound — for example, telemedicine providers and community-based
urgent care centers. Such innovations may represent the public's best
hope for sustainable health care. But the proposed settlement could have
squashed opportunities for innovation, since it conceded Partners'
dominance and tried only to contain it.

We need policies that challenge expansions and preserve competition, not
those that assist the dominant player. We have our own list: encouraging
payment reform that rewards quality and cost-effectiveness; liberalizing
scope-of-practice regulations, licensing rules, and other prohibitions
to allow more efficient use of human resources; ensuring that
professional regulations, state boundaries, and FDA rules do not impede
telemedicine and digital products that enable mobile health management;
and refining antikickback rules and reimbursement restrictions to enable
providers to pursue creative, integrated ventures that could
revolutionize the delivery of care. And there is much that attorneys
general can do to promote such innovation-oriented policies.

Instead of focusing solely on regulating dominant hospital systems,
policymakers should also pursue strategies that can foster real
competition and innovation in the price, accessibility, and quality of care.



Comment by Don McCanne

Where would this world be without the sage advice of some of the great
thinkers of the past and present?

"Don't just stand there. Do something!"

"Don't accept the status quo. Innovate!"

"Don't regulate. Allow markets freedom to compete!"

Thank goodness that these have been our guiding principles in health
care for the past century so that now we have the highest quality health
care system and the lowest costs, that is except for all of the other
nations that have placed a priority on public policies over private

We still haven't learned. We are spending billions of taxpayer dollars
on just doing something… anything. The CMMI innovations that we have
funded have had, at best, only minimal benefits at the margin. In fact,
the savings have turned negative when the costs of the programs are
included. Worse, the effects on quality have been negligible as well. In
these efforts, we're spending more and buying nothing.

Yet we continue to allow the clarion call for innovation and competition
to drown out the message of reform that would finally include absolutely
all of us in a high-performance health care delivery system that finally
would be truly affordable. Of course, that reform would be a single
payer national health program. Our immediate task is to make our clarion
call drown out theirs. As it is now, our is hardly a peep. (Think not?
Google innovation in health care - 377 million results - and single
payer health care - 2 million results.)

Thursday, March 5, 2015

Deterioration in employer-sponsored health plans

Center for American Progress
March 3, 2015
The Great Cost Shift
Why Middle-Class Workers Do Not Feel the Health Care Spending Slowdown
By Topher Spiro, Maura Calsyn, Meghan O'Toole

In recent years, the growth in overall health care costs has slowed
dramatically. But for millions of Americans with employer-sponsored
insurance, or ESI, this slowdown is illusory. From 2008 through 2013,
the average annual growth rate of employees' monthly premium
contributions and out-of-pocket expenses, adjusted for inflation, was
more than double that of average annual growth in real per-capita
national health care spending, which was less than 2 percent per year.
This growth has also outpaced employers' costs of offering these
benefits by more than 40 percent.

Employees experiencing higher health care costs tend to blame the
Affordable Care Act, or ACA, even though the law largely leaves the
employer-based system alone. In fact, many employers report that the ACA
has had only a negligible influence on their health care costs.

The actual reason why employee and employer costs are increasing at
different rates is because employers have, over time, shifted greater
responsibility for health care expenses to their employees through
higher deductibles, higher copayments, and higher coinsurance — a
practice that began long before the passage of the ACA. Other employers
pay smaller shares of their employees' health care premiums.

To some degree, this long-term cost shifting has contributed to the
overall health care slowdown. Increased cost sharing discourages the use
of health care — individuals tend to spend less on their health care
when they are subjected to higher fees or deductibles — which has
lowered overall health care spending. Employees with higher cost sharing
are more likely to avoid or delay even beneficial and cost-effective
care. Employers, insurers, and public health care programs benefit from
these savings, while individual employees with significant health care
needs face greater out-of-pocket costs. Employees have increasingly
reported that their health care costs are unaffordable. In other words,
almost everyone in the health care system is realizing savings, but
employees' costs are rising.

Unlike changes to wages, which are straightforward and transparent,
these types of changes to employees' health benefits can be hard to
understand, making cost-shifting efforts difficult for employees to detect.

The Great Cost Shift (full 31 page report can be downloaded at this page):


Comment by Don McCanne

One of the most important goals of the Affordable Care Act was to
preserve the part of our health care financing system that supposedly
was working quite well: employer-sponsored insurance. However, in a
process that had already begun and has further intensified since the
beginning of ACA implementation, the coverage for employees has
deteriorated, with costs being shifted from the employer to the employee
without a commensurate increase in wages, leaving employees considerably
worse off - especially those employees with greater health care needs.

This report from the Center for American Progress provides an excellent
explanation of the mechanisms of this shift in spending from the
employer to the employee. Unfortunately, their neoliberal
recommendations for correcting this problem are grossly inadequate. Not
only would they leave in place the otherwise highly flawed model of
financing health care through a multitude of private health plans, they
would merely increase transparency of this shift that has been taking
place, while increasing administrative complexity by requiring employers
to return half of the savings to the employee, and, yes, they would
throw in three free primary care visits per year - big deal!

This problem is serious and requires truly transformative change.
Instead of allowing employers to continue to implement their current
agenda of introducing further relatively opaque changes that will
compound the deterioration of the effectiveness of their health plans,
we should terminate these plans and replace them with a far more
efficient, equitable, and effective single payer national health program.

A single payer system would end employers' concerns about excessive
increases in health care costs, not to mention relieving them altogether
from the need to maintain a health benefit program. Much more
importantly, it would ensure truly affordable, reasonably comprehensive
health care benefits not only for all of their employees, but for
everyone else in the nation as well.

Wednesday, March 4, 2015

Tsung-Mei Cheng on the success of Taiwan’s single payer system

Health Affairs
March 2015
Reflections On The 20th Anniversary Of Taiwan's Single-Payer National
Health Insurance System
By Tsung-Mei Cheng


On its twentieth anniversary, Taiwan's National Health Insurance (NHI)
stands out as a high-performing single-payer national health insurance
system that provides universal health coverage to Taiwan's 23.4 million
residents based on egalitarian ethical principles. The system has
encountered myriad challenges over the years, including serious
financial deficits. Taiwan's government managed those crises through
successive policy adjustments and reforms. Taiwan's NHI continues to
enjoy high public satisfaction and delivers affordable modern health
care to all Taiwanese without the waiting times in single-payer systems
such as those in England and Canada. It faces challenges, including
balancing the system's budget, improving the quality of health care, and
achieving greater cost-effectiveness. However, Taiwan's experience
with the NHI shows that a single-payer approach can work and control
health care costs effectively. There are lessons for the United States
in how to expand coverage rapidly, manage incremental adjustments to the
health system, and achieve freedom of choice.

Lessons Learned

The most important lesson of Taiwan's experience is that the
single-payer approach can offer all citizens timely and affordable
access to needed health care on equal terms, regardless of the patient's
social, economic, and health status; sex; age; place of residence; and
employment status.

A second lesson is that a single-payer model such as Taiwan's can
control costs effectively. It is administratively simple and inexpensive
and is the ideal platform for a powerful health IT system. It also
facilitates global budgeting, if that is the only way to keep health
spending in line with the growth of GDP.

A third lesson is the importance of investing heavily, up front, in a
modern IT infrastructure. A modern IT system such as Taiwan's allows the
government to have information about health utilization and spending in
almost real time.

Fourth, Taiwan's case illustrates that health policy makers should not
miss windows of opportunity for major health reform. Enabling factors
include rapid economic growth, which makes it easier to redistribute
resources; strong popular demand for reform; strong political
leadership; a broad social and political consensus on the ethical
principles that guide the health system; and the availability of a cadre
of competent civil servants motivated and able to implement reform.

Lessons For The United States

Taiwan's experience demonstrates that with competence and goodwill, the
challenge of adding a large influx of newly insured citizens can be met.
Health systems appear to be adaptive, and the case of Taiwan illustrates
that incremental improvements on reform are possible.

Taiwan's experience also might induce Americans to think more deeply
about the term freedom of choice. In health care, freedom of choice
could mean choice among health insurance carriers and health insurance
contracts, choice among health care providers, or both. For Taiwan's
citizens, freedom of choice among providers of health care trumped
freedom of choice among insurance carriers and contracts. These
citizens' high satisfaction with their health system suggests that they
still endorse that choice. By contrast, in the United States freedom of
choice among insurance carriers and products ranks above freedom of
choice among health care providers, which often is limited to narrow
networks of providers.

A growing body of literature has shown that by international standards,
enormous human resources are used in the United States to facilitate
choice among insurers and insurance products, process claims, and
annually negotiate a payment system that results in rampant and
bewildering price discrimination. Relative to the less complex health
systems elsewhere in the industrialized world, the US system is a poor
platform for the effective use of modern health IT.

According to a recent report by the Institute of Medicine, the US system
has excessive administrative costs that in 2009 amounted to $190
billion. That is more than it would cost to attain true universal health
care in the United States.

It is not this author's role to prescribe what Americans should or
should not do in regard to freedom of choice. But it is appropriate to
invite readers to think more deeply about the relative benefits and
costs of their choices. It is remarkable that in cross-national surveys,
Americans have consistently given their health care delivery system
relatively high marks, but their health system relatively poor ones.

(Tsung-Mei Cheng is a health policy research analyst at the Woodrow
Wilson School of Public and International Affairs, Princeton University,
in Princeton, New Jersey.)



Comment by Don McCanne

The people of the United States have continued to watch our health care
spending increase far beyond that of all other nations. We have watched
the quality of our insurance coverage deteriorate as insurers take away
our choices of physicians and hospitals and shift more costs to those
with health care needs, often causing the very financial hardships that
health insurance should be preventing. And we have continued to tolerate
leaving tens of millions uninsured.

For the past generation we also have been observing the natural
experiment in single payer healthcare financing taking place in Taiwan -
Taiwan serving as the experimental subject and the United States as the
control. As Tsung-Mei Cheng explains in this Health Affairs article, it
has been a spectacular success for Taiwan. Had we adopted a similar
program twenty years ago, today everyone would be covered, no one would
face financial hardship because of medical bills, we would have freedom
of choice of our physicians and hospitals, we would have eliminated much
of our profound administrative waste, and our total national health
expenditures would have followed a lower trajectory and thus would be
much less than they are today.

What is it about American exceptionalism? In our stubbornness, we are
going to continue our feeble search for policy solutions to our
intolerable deficiencies and inequities in health care, when we have
before us one of the nearest to perfect natural experiments ever
completed - in precisely the reform that we need. By the definition,
"much better than average," exceptional we are not. Or by the
definition, "deviating from the norm," we should have no pride in either
our health care system or in our obstinate refusal to apply proven
health policies that would inject much needed remedies into our sick system.

At our PNHP meetings and in the health policy literature, Tsung-Mei
Cheng has provided us with an abundance of observations and data that
should illuminate for us a clear path forward for reform. We just have
to make good use of her contributions. We can begin by sharing this
Health Affairs article with others who care about the future of our
health care system.

Tuesday, March 3, 2015

PNHP release on King v. Burwell

Physicians for a National Health Program (PNHP)
Press Release
March 3, 2015
Health law's complexity invites attack, even as it fails to cure
ailment: doctors group

King v. Burwell shows how Affordable Care Act's corporate-inspired,
convoluted structure makes it an easy target for opponents

Latest legal challenge threatens to add more than 8 million people to
the ranks of the tens of millions who are currently uninsured, leading
to an additional 8,000 'excess deaths' annually linked to lack of insurance

'This case is yet another reason to swiftly move beyond the failing ACA
to a simpler, publicly financed, improved-Medicare-for-All system that
would cover everyone, make care affordable, and control costs,' says
president of single-payer physicians' group

March 3, 2015

Mark Almberg, PNHP communications director, (312) 782-6006,
mark@pnhp.org <mailto:mark@pnhp.org>

The following statement was released today by leaders of Physicians for
a National Health Program, a research and educational organization of
19,000 doctors who support single-payer national health insurance, or
"an improved Medicare for all."

This week's arguments before the Supreme Court in the case of King v.
Burwell demonstrate once again how the Affordable Care Act's
administrative complexity and flaws – largely reflecting its
accommodation to the private health insurance industry and other
corporate, profit-oriented interests in U.S. health care – make it
vulnerable to legal attacks by its opponents.

The ACA clearly lacks the simplicity and legal robustness that a
single-payer plan would have. Single payer would be simple: everyone in
the U.S. would be covered for all medically necessary care in a single
program financed by equitable taxes.

If the court upholds King and his fellow plaintiffs' challenge to
premium subsidies in over 30 states, the health and financial harms to
our patients will be considerable. By some estimates, more than 8
million people will quickly lose insurance coverage, increasing the
intolerable suffering we already see today.

One consequence of this loss of coverage would be an additional 8,000
"excess deaths" each year – deaths linked to lack of insurance. That
figure is over and above the estimated 30,000 annual preventable deaths
that are currently occurring under the ACA due to its having left 30
million people uninsured. This is completely unacceptable.

Regardless of how the court rules, the unfortunate reality is that the
ACA won't be able achieve universal coverage. It won't make care
affordable or protect people from medical bankruptcy. Nor will it be
able to control costs.

The ACA is fundamentally flawed in these respects because, by design, it
perpetuates the central role of the private insurance industry and other
corporate and for-profit interests (e.g. Big Pharma) in U.S. health care.

In contrast, a single-payer system – an improved Medicare for All –
would achieve truly universal care, affordability, and effective cost
control. It would be simple to administer, saving approximately $400
billion annually by slashing the administrative bloat in our
private-insurance-based system. That money would be redirected to
clinical care. Copays and deductibles would be eliminated.

A growing section of the insured population is already facing very high
copays, deductibles and coinsurance, deterring them from seeking needed
care. This trend is toxic and unsustainable.

Physicians can't wait for an effective remedy any longer, nor can our
patients. The stakes are too high.

Dr. Robert Zarr, a Washington, D.C.-based pediatrician who will be in
front of the Supreme Court building on Wednesday at 10 a.m. Eastern, is
president of Physicians for a National Health Program.

Zarr said today: "The King v. Burwell case is yet another reason to
swiftly move beyond the failing ACA to a simpler, publicly financed,
improved-Medicare-for-All system. Such a system would cover everyone,
make care affordable, and control costs. Based on our experience with
the Medicare program and the experience of other nations, we know it
will work. It's the only moral and fiscally responsible thing to do."



Comment by Don McCanne

The Supreme Court case of King v. Burwell is appropriately receiving
extensive coverage in the media since the decision of the Court has the
potential to cause perhaps 8 million individuals to lose their health
insurance, plus it would adversely impact health insurance markets
through spiraling premiums due to adverse selection.

Even though a decision prohibiting subsidies in federally-administered
state exchanges would be disastrous, the hype over this case obscures
the much more intolerable disaster of perpetuating the inequities and
injustices of our current health care financing system. The consequences
of continued inaction on single payer reform constitutes proportionately
a much greater disaster, regardless of the outcome of King v. Burwell.
Over 30 million will still remain uninsured, tens of millions will
experience financial hardship in the face of medical need, perhaps even
personal bankruptcy, while private insurers will continue to take away
our choices of physicians and other health care professionals, take away
our choices of hospitals, and take away our choices of pharmaceuticals
that our physicians say we should have.

Merriam-Webster includes as two of the definitions of "state": "a
politically organized body of people usually occupying a definite
territory; especially one that is sovereign," and "the operations or
concerns of the government of a country." It would be tragic if the
court ruled that this silly argument on the meaning of "state" had
enough substance to allow a few ideologically-driven Supreme Court
justices to deprive 8 million people of insurance coverage. But it would
be a much greater tragedy if we allow this to divert us from
accomplishing the imperative: establishing a single payer national
health program - an improved Medicare for all.