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Non-Alternative Facts About the Healthcare System

The Healthcare Blog - Sun, 02/26/2017 - 14:22

The economic fundamentals of healthcare in the United States are unique, amazingly complex, multi-layered and opaque. It takes a lot of work and time to understand them, work and time that few of the experts opining about healthcare on television have done. Once you do understand them, it takes serious independence, a big ornery streak, and maybe a bit of a career death wish to speak publicly about how the industry that pays your speaking and consulting fees should, can, and must strive to make half as much money. Well, I turn 67 this year and I’m cranky as hell, so let’s go.

The Wrong Question

We are back again in the cage fight over healthcare in Congress. But in all these fights we are only arguing over one question: Who pays? The government, your employer, you? A different answer to that question will distribute the pain differently, but it won’t cut the pain in half.

There are other questions to ask whose answers could get us there, such as:

  • Who do we pay?
  • How do we pay them?
  • For what, exactly, are we paying?

Because the way we are paying now ineluctably drives us toward paying too much, for not enough, and for things we don’t even need.

A few facts, the old-fashioned non-alternative kind:

  • Cost: Healthcare in the U.S., the whole system, costs us something like $3.4 trillion per year. Yes, that’s “trillion” with a “T”. If U.S. healthcare were a country on its own it would be the fifth largest economy in the world.
  • Waste: About a third of that is wasted on tests and procedures and devices that we really don’t need, that don’t help, that even hurt us. That’s the conservative estimate in a number of expert analyses, and based on the opinions of doctors about their own specialties. Some analyses say more: Some say half. Even that conservative estimate (one third) is a big wow: over $1.2 trillion per year, something like twice the entire U.S. military budget, thrown away on waste.
  • Prices: The prices are nuts. It’s not just pharmaceuticals. Across the board, from devices to procedures, hospital room charges to implants to diagnostic tests, the prices actually paid in the U.S. are three, five, 10 times what they are in other medically advanced countries like France, Germany, and the U.K.

  • Value: Unlike any other business, prices in healthcare bear no relation to value. If you pay $50,000 for a car, chances are very good that you’ll get a nicer car than if you pay $15,000. If you pay $2200 or $4500 for an MRI, there is pretty much no chance that you will get a better MRI than if you paid $730 or $420. (Yes, these are real prices, all from the same local market.)
  • Variation: Unlike any other business, prices in healthcare bear no relation to the producer’s cost. None. How can you tell? I mean, besides the $600 price tag on a 69-cent bottle of sterile water with a teaspoon of salt that’s labeled “saline therapeutics” on the medical bill? (Yes, those are real prices, too.) You can tell because of the insane variation. The price for your pill, procedure or test may well be three, five, even 12 times the price paid in some other city across the country, in some other institution across town, even for the person across the hall. Try that in any other business. Better yet, call me: I have a 10-year-old Ford F-150 to sell you for $75,000.
  • Inefficiency: We do healthcare in the most inefficient way possible, waiting until people show up in the Emergency Department with their diabetes, heart problem, or emphysema completely out of control, where treatment will cost 10 times as much as it would if we had gotten to them first to help them avoid a serious health crisis. (And no, that’s not part of the 1/3 that is waste. That’s on top of it.)

So who’s the chump here? We’re paying ridiculous prices for things we don’t necessarily need delivered in the most inefficient way possible.

Why?

Why do they do that to us? Because we pay them to.

Wait, this is important. This is the crux of the problem. From doctors to hospitals to labs to device manufacturers to anybody else we want to blame, they don’t overprice things and sell us things we don’t need because they are greedy, evil people. They do it because we tell them to, in the clearest language possible: money. Every inefficiency, every unneeded test, every extra bottle of saline, means more money in the door. And they can decide what’s on the list of what’s needed, as long as it can be argued that it matches the diagnostic code.

That’s called “fee-for-service” medicine: We pay a fee for every service, every drug, every test. There’s a code for everything. There are no standard prices or even price ranges. It’s all negotiated constantly and repeatedly across the system with health plans, employers, even with Medicare and Medicaid.

We pay them to do it and the payment system demands it. Imagine a hospital system that bent every effort to providing health and healthcare in the least expensive, most effective way possible, that charged you $1 for that 69-cent bottle of saline water, that eliminated all unnecessary tests and unhelpful procedures, that put personnel and cash into helping you prevent or manage your diabetes instead of waiting until you show up feet-first in diabetic shock. If it did all this without regard to how it is paid it would soon close its doors, belly up, bankrupt. For-profit or not-for-profit makes little difference to this fact.

If we want them to act differently, we have to pay them differently.

Paying for Healthcare Differently

But wait, isn’t that the only way we can pay? Because, you know, medicine is complicated, every body is different, every disease is unique.

Actually, no. There is no one other ideal way to pay for all of healthcare, but there are lots of other ways to pay. We can pay for outcomes, we can pay for bundles of services, we can pay for subscriptions for all primary care or all diabetes care or special attention for multiple chronic conditions, on and on, the list of alternative ways to pay for healthcare is long and rich.

There are now surgery centers that put their prices up on the wall, just like McDonalds — and they can prove their quality. There are hospital systems that will give you a warranty on your surgery: We will get it right or fixing the problem is free.

Look: You get in an accident and take your crumpled fender to the body shop. Every fender crumples differently, maybe the frame is involved, maybe the chrome strip has to be replaced, all that. So there is no standard “crumpled fender” price. But it is not the first crumpled fender the body shop has ever seen. It’s probably the 10,000th. They are very good at knowing just how to fix it and how much it will cost them to do the work. Do you pay for each can of Bondo, each disk of sandpaper, each minute in the paint booth? No. They write you up an estimate for the whole thing, from diagnosis to rehab. Come back next Thursday and it will be good as new. That’s a bundled outcome. It’s the body shop’s way of doing business, its business model.

There are new business models arising now in healthcare (such as reference prices, medical tourism, centers of excellence, “Blue Choice” and other health plan options) that force hospitals and surgical centers to compete on price and quality for specific bundles, like a new hip or a re-plumbed heart.

Healthcare is a vast market with lots of different kinds of customers in different financial situations, different life stages, different genders, different needs, different resources, yet we have somehow decided that in pretty nearly all of that vast market there should be only one business model: diagnostic-code-driven fee for service. Change that, and the whole equation changes. It’s called business model innovation. If we find ways to pay for what we want and need, not for whatever they pile onto the bill, they will find ways to bring us what we want and need at prices that make sense. That’s called changing the incentives.

Already Happening

Is this pie in the sky? No, it’s already happening, but in ways that are slow and mostly invisible to anyone but policy wonks, analysts, and futurists like me. The industry recognizes it. Everyone in the healthcare industry will recognize the phrase “volume to value,” because it is the motto of the movement that has been building slowly for a decade. It’s shorthand for, “We need to stop making our money based on volume — how many items on the list we can charge for across how many cases — and instead make our money on how much real value, how much real health, we can deliver.”

Self-funded employers, unions, pension plans, and tribes are edging into programs that pay for healthcare differently with reference prices, bundled prices, onsite clinics, medical tourism, direct pay primary care, instant digital docs, team care, special care for those who need it most, all kinds of things. The Affordable Care Act set up an Innovation Center in the Centers for Medicare and Medicaid Services, and the government has been incrementally pushing the whole system more and more into “value” programs.

Are We There Yet?

So why hasn’t it happened yet? Why aren’t we there yet?

Because it’s hard, it’s different, and it hurts. And there is a tipping point, a tipping point that we have not gotten to yet.

It is very hard to loosen your grip on a business model as long as that business model pays the bills. We built this city on fee for service, these gleaming towers, these sprawling complexes, these mind-bending levels of skill and incomprehensible technologies. To shift to a different business model requires that everybody in the healthcare sector change the way they do everything, from clinical pathways to revenue streams to organizational models to physical plants to capital formation, everything all the way down. And it’s all uncharted territory, something the people who run these systems have not yet done and have little experience in. It’s guaranteed to be the end of the line for some institutions, many careers, many companies.

So far, the government “volume-to-value” or “value-based-payment” programs are incremental, baby steps. They typically add bonus payments to the basic system if you do the right thing or cut payments a few percentage points if you don’t. My colleague health futurist Ian Morrison calls these programs “fee for service with tricks.” They do not fundamentally change the business model.

Private payers such as employers have only gradually been getting more demanding, unsure of their power and status as drivers of change in this huge and traditionally staid industry. Systems such as Kaiser that have a value-based business model (so that they actually do better financially if they can keep you well) still have to compete in a system where the baseline cost of everything they need, from doctor’s salaries to catheters, is set in the bloated fee-for-service market. So movement is slow, and we are not yet at the tipping point.

Back to Who Pays

This is not a libertarian argument that everyone should just pay for their own healthcare out of their own pocket and let the “free market” decide. The risks are far too high, and we are terrible at estimating that risk, financial or medical. All of us are, even your doctor is, even I am. A cancer can cost millions. Heck, a bad stomach infection that puts you in the hospital for 10 days could easily cost you $600,000. Bill Gates or Warren Buffet can afford that, you and I can’t.

We need insurance to spread that risk not only across individuals but across age groups, across economic levels, and between those who are currently well and those who are sick. For it to work at all, the insurance has to be spread across everyone, even those who think they don’t need it or can’t afford it. You drive a car, you have to have car insurance, even if you are a really safe driver. You buy a house, you must have fire insurance, even though the average house never burns down. You own and operate a human body, same thing, even though at any average time you hardly need medicine at all.

If we are to have insurance for everyone, we need to subsidize it for those who have low incomes — and this has nothing to do with whether they “deserve” help, or even with whether healthcare is a right. It’s about spreading the cost of a universal human risk as universally across the humans as possible. At the same time, such subsidies need to be given in a way that helps people feel that they are spending their own money, that they have a stake in spending it wisely. This is not simple to do, but it can be done.

This is also not necessarily an argument for a single payer system. Single payer, by itself, will not solve the problem. It doesn’t change the incentives at all. It just changes who’s writing the check. What the system needs most is fierce customers, people and entities who are making choices based on using their own money (or what feels like it) to pay for what they really need. This forces competition among healthcare providers that drives the prices down. That means the system needs variety, a lot of different ways of paying for a lot of different customers. If we can figure out how to do that in a single-payer system, well then we’re talking.

Obviously the ultimate customer in healthcare is the individual, since medicine is about treating bodies, and we have exactly one to a customer. But the risk is too high at the individual level, and the leverage is too low.

So employers, pension plans and specialized not-for-profit mutual health plans whose interests really line up with the interests of their employees or members can act as proxies. They can force providers of healthcare (hospital systems, medical groups, labs, clinics) to compete for their business on price and quality. They can refuse to pay for things that the peer-reviewed medical literature shows are unnecessary. They can pay for improvements in your health rather than just fixing your health disasters. They can help their members and employees become fierce customers of healthcare with information and with carefully-titrated incentives.

Here’s one example of an incentive: A payer says to its members, “You need a new knee? Great, fine. Here are all the high-quality places you can get that done in your area. You can choose any that you like. But here’s a list of high-quality places in your area that do it for what we call a “reference price” or even less. Choose one of those places, and we will pay for everything from diagnosis to rehab. You can choose a place with a higher price if you like, but you’ll have to pay the difference yourself.” With reference prices, the employee or member partners with the payer in becoming a fierce, demanding customer, and prices for anything treated this way come crashing down.

Both payers and individuals, by being fierce customers, can force the healthcare providers in turn to become fierce customers of their suppliers, forcing pharmaceutical wholesalers and device manufacturers to bid on getting their business. “This knee implant you are asking us to pay $21,000 for? We see you are selling it in Belgium for $7,000. So we’ll pay $7,000 or we’ll go elsewhere.” The “price signals” generated by fierce customers reverberate through the entire system.

What’s the look and feel?

“Healthcare for half” sounds to most people like a Greyhound bus station with stethoscopes, like flea market surgeries, and drive-through birthing centers. Paradoxically, though, a lean, transparent system catering to fierce customers of all types would feel quite the opposite, offering more care, even what might feel like lavish care, but earlier in the illness or more conveniently. It might mean a clinic right next door to your workplace offering private care on a walk-in basis, no co-pay, even your pharmaceuticals taken care of — or you could choose to go elsewhere to another doctor that you like more, but you have to schedule it and pay a copay for the visit. Why will providers make healthcare so convenient and personal? Because if they are paid to be responsible for your health it’s worth the extra effort and investment to catch a disease process early, before it gets expensive.

It might mean, when your doctor says you need an MRI on that injury, getting on your smart phone to conduct an instant spot auction that allows high-quality local imaging centers to bid for the business if they can do it in the next three hours. It might mean, if you are in frail health or have multiple chronic diseases, being constantly monitored by your nurse case manager through wearables, and visited when necessary or once a week to help keep you on an even keel. It might mean your health system not being so quick to recommend a new knee, and offering instead to try intensive physical therapy, mild exercise and painkillers to see if that can solve the problem first (Pro tip: It often does).

Changing the fundamental business model of most of healthcare will be difficult and painful for the industry. But if we look to other countries and say, “Why do their systems cost so much less than ours? Why can’t we have what we want and need at a price we all can afford?” — this is the answer.

Change the way we pay for healthcare, not just who pays, and we can rebuild the system to be at the same time better and far cheaper.

Categories: OIG Advisory Opinions

The Lifecycle Theory of Saving For Healthcare Needs

The Healthcare Blog - Sun, 02/26/2017 - 13:26

Republicans are bickering over whether to repeal the more costly provisions of Obamacare and allow greater flexibility into the health insurance marketplace. Republican lawmakers were shocked… SHOCKED, to discover net beneficiaries of the Affordable Care Act (ACA) like receiving open-ended subsidies worth thousands of dollars – paid for by other people. Lost in the shuffle are the self-employed, small business owners and individuals whose premiums have skyrocketed – and are no longer affordable – so that others can get a sweet deal.

The status quo cannot go on, of course. Premiums are skyrocketing and insurers are pulling out of the market. HealthCare.gov plans are a bad deal for all except for those receiving subsidies and those with significant health problems. Only about 15 percent of exchange enrollees are those paying the entirety of their own premiums, suggesting consumers don’t consider plans a good value. 

In an ideal world, young people would save for retirement, have an emergency fund and save for future health care needs. A mandatory payroll tax dedicated to individuals’ own health care would be the ideal way to fund their future medical needs. Singapore has such a system, called MediSave accounts. Liberals consider personal accounts to be antisocial, since money in one account cannot be diverted to someone else’s medical bills. However, a dose of antisocial behavior would benefit our health care system.

Under an individualized lifecycle theory of saving for future health care needs, individuals should begin saving while young, giving funds time to accumulate for use later in life. This is similar to the idea behind an individual retirement account. A 10 percent payroll tax may be sufficient to fund most health care over the course of a lifetime until Medicare eligibility. Most young peoples’ premium dollars could accrue in a personal health account, such as a health savings account (HSA). A smaller portion of the premiums for a young person would go for catastrophic insurance. Over time HSA balances would grow and the ratio of HSA deposits to insurance premiums would decline as one’s health risk increases with age. Most people are healthy when young, spending little year after year. The distribution of medical spending by age doesn’t register huge jumps until most people enter their 50s. For instance, health care spending per capita on the elderly is about five times that of children.

In health care there is what’s known as the 80/20 rule. That is: 80 percent of patients consume only about 20 percent of health care dollars. Thus, the 80 percent of patients (whose medical bills are low) could pay for routine medical care out of pocket from an HSA. The remaining 20 percent – those who represent the highest medical claims – would be the only ones whose medical care was paid by insurance.

Health insurance makes it easier to finance costly medical interventions – including those of little value. Having a reliable funding source also stimulates the development of medical technology. As technology increased, so did the cost of care. As care increased so did premiums. The average employer-sponsored health plan now costs $6,435 per individual and $18,142 for a family plan. Cost-sharing has also increased over the past few years as a means to slow the growth in premiums. From 2006 until 2015, average deductibles for employee coverage increased from $303 to $1,088. Ten years ago, only about 4 percent of those with employer coverage had high-deductible health plans; that figure is nearing one-third today (29 percent). Deductibles of $3,000, $4,000, $5,000 or higher are not uncommon in the individual market.

What this means is that Americans are increasingly forced to enroll in costly health plans that reimburse none of their medical bills. It also means many families are spending the equivalent of $18,000 in annual premiums when their annual health care needs are less than 10 percent of that sum. Currently society relies on redistribution of most of your premiums to care for people whose health is more precarious than yours. Care for the sickest 1 percent consumes nearly one-quarter of health care resources. The sickest 5 percent of patients consume half of all health care dollars, while care for the sickest 10 percent consumes two-thirds of medical expenditures. Should some of that be redirected to prevention or personal health accounts? Absolutely!

What if you were in control of your a lifetime HSA (i.e. like a Medical IRA) and you were only required to pay your actuarial risk on a multi-year individual medical health plan? What if instead of cross-subsidizing others who are older and sicker than you, you only cross-subsidized yourself when you are older and sicker?  In this regard you would set aside funds while young that you could draw on when older and sicker and needing the cross-subsidy from your (formerly) younger self. You would probably work closer with doctor and insurer to decide on your treatments – since you may have a lifetime limit on benefits. You could make trade-offs with your money and health; including those others may find objectionable. Suffice it to say our health care system would be in a lot better shape if individuals took more control and were rewarded for their efforts.

Categories: OIG Advisory Opinions

Diversity in SI Swimsuit Issue is Great But Does it Cross the Line?

The Healthcare Blog - Sat, 02/25/2017 - 14:41

Sports Illustrated’s new swimsuit issue is touted as a “diversity issue” intended to celebrate female models of different ages, ethnic backgrounds and figures.  But in featuring plus-size models, does diversity threaten to go too far?

On its face, any movement toward diversity in modelling is admirable – contemporary models of all stripes generally still skew too young, too white and too thin.  And where these models are insufficiently perfect, Photoshop exists to make them even more wrinkle-free, fairer and skinnier.

Luckily, there has been a movement in Europe to rectify at least one of these issues.  Via “skinny model” legislation, France, Italy, Israel and Spain have banned models from working if they are underweight.  In France, penalties for agencies and brands breaking this law range from jail time to hefty fines.  French law also mandates a fine for firms if they fail to clearly note within ads if models have been digitally altered.

From a health perspective, European countries appear to be serious in their attempts to rein in advertisers, designers and photographers.  This is great news –this year’s rookie Sports Illustrated swimsuit model Myla Dalbesio  echoes a concern voiced by many models – that industry-imposed parameters can be arbitrary and demeaning with years of being told that one is “too fat, then too thin”.  Movement toward regulating an industry which, for far too long, has promoted eating disorder-derived emaciated looks such as “heroin chic” deserves oversight and regulation.

However, we must now ensure that the pendulum does not swing too far the other way.  In promoting a wide range of models, Sports Illustrated should emphasize the promotion of health rather than physique.  While it is true that body types differ and that plus-size models can be beautiful, normalization of unhealthily obese models comes with very real risks.

In terms of individual risks, obese women deal with higher rates of heart disease, premature death, poorer quality of life, greater back pain, swings in body chemistry leading to depression, virtually certain onset of type-2 diabetes and knee and hip degeneration, just to name a few downsides.  With regard to societal and economic risks, in 2008 the CDC estimated that direct medical care costs of obesity in the United States were $147 billion with related obesity-related productivity costs ranging from $3.38 billion to $6.38 billion.

These totals are significant and will only grow in the coming years.  The public health epidemic of obesity threatens to devastate American families, and their wallets, for generations to come.  Luckily, being overweight is generally not an immutable characteristic.  With effort and support, it can change for the better and hopefully Americans will strive for a healthy middle ground before it’s too late.

Until then, just as we did (belatedly) for underweight models, it is up to us to remain vigilant against the normalization of obesity in popular media so that it does not proliferate and lead to unhealthy body standards for generations of women. This is not to say that diversity in physiques and imperfections should not to be celebrated in Sports Illustrated’s swimsuit issue.  Seeing a wide range and cross-section of women who are fit and confident should alleviate pressure on young girls and women to live up to an unrealistic, airbrushed ideal.

But that obesity kills is not an alternative fact, it is simply reality.

Jason Chung is a researcher and attorney at NYU School of Professional Studies Sports and Society, an interdisciplinary think tank dedicated to the study of social issues through sports.

Categories: OIG Advisory Opinions

How to Make HSAs Actually Work

The Healthcare Blog - Fri, 02/24/2017 - 14:58

First, let me candidly admit that I have no idea if putting Health Savings Accounts (HSAs for short) at the center of the Trump healthcare rework is a good idea. I do, however, have some insights into what made Bush-era HSA plans fail.

Bush-era HSA’s were unavailable to many Americans, because their health insurance companies and employers ultimately made the decision about whether they would be able sign up for an HSA. Many employers elected not to participate in HSA’s by not purchasing health plans that “came with an HSA”.

I was working at the UT School of Biomedical Informatics during the Bush administration’s attempt to deploy HSA’s. I wanted to research and understand how HSA’s would impact the healthcare system, and I knew that the first step was to sign up for one myself. 

But the University of Texas health plan at the time did not offer an HSA. A little investigation showed that I could not just go to any bank and sign up for an HSA. If I had been able to get an HSA, then I would have been able to take it to another employer if I changed jobs… apparently.

I am not really sure because I was never able to sign up for one.

If they are going to work as a mechanism for healthcare reform, HSA’s must be ubiquitous. In order to be ubiquitous they need to operate smoothly and at the convenience of the consumers, rather than the insurance companies or employers. To be smooth, HSA’s are going to have the following characteristics:

  • Any consumer should be able to go to any consumer financial institution that they use currently for banking purposes and get an HSA. It should just be another account type after savings, checking, money market, etc etc. 
  • Spending money from the HSA should be done using standard debit card, ATM AND credit card mechanisms. That will ensure that consumers can instantly make healthcare purchase decisions using a mechanism they already understand. 
  • Decisions about what is appropriate purchases must be fully automated. If I try to purchase movie tickets using my HSA it should fail instantly. If I go to the doctor or pharmacy, it should work instantly. Implementers will need to pay special attention to places like grocery stores where you can purchase both healthcare purchases and non-healthcare purchases at the same time. 
  • Some healthy lifestyle choices should be partially covered by HSAs. Say $50 per month on gym memberships and another $50 per month on provably healthy food options. If these basic lifestyle changes are not incentivized, HSA’s will have lost one of their core potentials. It does not take much money to get a big change in preventative behavior.
  • HSA providers should be able to experiment with even more clever financial incentives. Perhaps the $50 or month that can be spent on a gym should only work if you prove that you actually went to the gym that month.
  • It should be very simple to transfer HSA funds from one bank to another. This is critical because many of the issues that I am listing are implementation details that will be deployed by HSA providers and not by the Federal Government. Moving to “better” HSA plans has to be simple in order to ensure that there is ongoing competition in their operation.
    The launch of Obamacare was one of the most painful government program launches in US history. Republicans tend to criticize Obamacare for its fundamental design, which they say is unfair. But in many cases, small details in the tactical on-the-ground implementation of Obama’s program was as much to blame for any of it’s problems as any of the design flaws that conservative critics point out.
    There is no reason why a Trump-inspired healthcare reform plan will not suffer from the same implementation hiccups. Will the Trump administration will need to suffer their own healthcare dot gov dot floundering, before they wise up to the underlying reality:


    For healthcare reform, the devil is in the details.

 

Categories: OIG Advisory Opinions

Is DRexit Next?

The Healthcare Blog - Fri, 02/24/2017 - 01:49

Sean MacStiofain said “most revolutions are caused… by the stupidity and brutality of governments.” Regulation without legitimacy, predictability and fairness always leads to backlash instead of compliance.

Here’s a prediction for you: If something is not done to stop MACRA implementation, more physicians will opt-out of Medicare and Medicaid than is fathomable.

Once DRexit begins, there will be no turning back.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is destructive to the physician patient relationship because it prevents physicians from prioritizing patient care. MACRA supporters like to point out this legislation was passed with bipartisan support; in reality, it was passed simultaneously with repeal of the Sustainable Growth Rate Formula.

The Sustainable Growth Rate Formula was enacted through the Balanced Budget Act of 1997 and was designed by lawmakers to control Medicare expenditures. The SGR formula limited the annual increase in cost per Medicare beneficiary to the growth of the national economy. Under the SGR formula, if overall physician costs exceeded target expenditures, a reduction in payments would be triggered. Expenditures continued to climb, so Congress stepped in 17 times with short-term legislation (referred to as “doc fix”) to avert the payment reduction since 2002.

These patches kept increases in physician payments below inflation which ultimately resulted in a huge discrepancy between the actual level of Medicare physician-related spending and the target in the SGR formula. In 2015, if Congress did not act by March 31, payments to Medicare physicians would have been reduced by 21.2 percent.

Enter stage left, MACRA, known as the Permanent Doc Fix, which was passed concurrently with the Sustainable Growth Rate Formula repeal legislation. This was the original repeal and replace. MACRA established yet another new (and untested) method by which to pay doctors. MACRA is the largest scale reform on the American health care system since the Affordable Care Act in 2010 and the jury is still out how great (or not) that system is working for the American people.

Under MACRA, the Secretary of the Department of Health and Human Services was tasked with implementation of a Merit Based Incentive (MIP) program which consolidated three useless incentive programs into one big colossal unworkable program for eligible physicians everywhere. The legislation also allows for Advanced Alternative Payment Models (APM), which shockingly, are not actually saving money on care.

Even better, MACRA related regulations also addressed incentives for use of health IT by physicians and other care providers. Similar in scope to the Meaningful Use (aka Meaningless Abuse) Program except, now on steroids. The Government Accountability Office in partnership with the DHHS have been assisting with the implementation of electronic health records (EHR) nationwide, while at the same time comparing and selecting programs for providers.

So to recap, Congress has been working on a “doc fix” system in conjunction with every lobby possible on the planet EXCEPT that of Practicing Physicians since 1997. They “repealed and replaced” SGR (first disaster) with the atrocity known as MACRA, which will end in a mass DRexit. They are rapidly moving ahead with non-evidence based payment methods intended to decrease costs, yet are highly unlikely to be successful based on recent studies. On top of all that, they are selecting computer systems for physicians which incentivize computer data entry while discouraging the placement of hands on patients. Did I miss anything?

Recent studies show physicians spend twice as much time on technology than we do with patients. Maybe with full MACRA implementation, we can be retrained as data entry clerks to treat conditions instead of people. Imagine if we just called in prescriptions for hypertension, diabetes, or even started chemotherapy regimens without seeing patients at all? MACRA pays us more for “doing less,” so now we can practice “drive-by medicine.” I wonder if health outcomes will improve and mortality will be lower when compared with “drive-by shootings.”

Controlling costs involves four major pillars of change to our healthcare system, about which I have been writing for some time. Listening to a talk given recently by the executive director for the Association of Independent Doctors, Marni Jameson, helped focus the strategy. The first cost control pillar is to educate patients and lawmakers as to how consolidations of hospitals and medical practices raise costs, reduce quality, decrease access, eliminate jobs, and result in unnecessary testing and procedures. The second pillar is to increase price transparency, so consumers can compare costs and choose the most affordable option. The third pillar is eliminating the onerous ‘facility fee’ to bring payments of hospital-employed doctors in line with the lower payments to independent doctors for the same care. The final pillar is ensuring hospital profits are taxed equally across-the-board, regardless of whether they are non-profit or for profit institutions.
In the next four posts, I will cover these issues in more detail as each deserves its own separate discussion. It will be an interesting mathematical exercise to calculate the forecasted cost savings of these four interventions alone. If you are reading this post, you have skin in the healthcare game, whether as physicians, lawmakers, economists, hospital administrators, government, or IT experts alike. As I have said before, we will ALL be patients eventually.

Categories: OIG Advisory Opinions

The Policymaker’s Guide to Options For Replacing the Cadillac Tax

The Healthcare Blog - Wed, 02/22/2017 - 15:22

As policymakers debate repealing and replacing the Affordable Care Act (ACA or “Obamacare”), disagreement remains over how to address the ACA’s “Cadillac tax.” Rather than repealing the 40 percent tax on high-cost insurance plans outright, many advocates of “repeal and replace” have proposed replacing it with a limit on the tax exclusion for employer-sponsored health insurance (ESI). Doing so would be a wise choice, and limiting the ESI exclusion would both generate significant revenue to pay for an ACA replacement and help to limit the overall growth of health care spending. In this piece, we discuss some of the options available for replacement. 

The Case for Limiting the ESI Exclusion

The ACA’s Cadillac tax is scheduled to go into effect in 2020 and projected to raise about $100 billion through 2027. The purpose of the tax is to indirectly chip away at the ESI exclusion, which itself is projected to lose $2 trillion of income tax revenue (and $1.6 trillion of payroll tax revenue) over the next decade. At first, the Cadillac tax will only affect high-cost health insurance plans – generally those which cost over $11,000 ($29,000 for families) per year – and would likely lead employers to offer cheaper plans in their place. Because the threshold for the tax is indexed to inflation, however, it will affect an increasing number of plans over time.

Though the Cadillac tax is apparently unpopular among politicians, it has broad support among economists on both the left and right. They tend to point to three major advantages of the tax. First and most importantly, by offsetting the uncapped tax benefit for health insurance the tax is believed to be one of the government’s strongest tools to slow the unsustainable growth of health care spending. Second, the tax will increase wages and salaries by limiting the incentive of employers to expand tax-free health insurance benefits instead of paying their workers in higher taxable wages. And finally, the tax is likely to generate substantial tax revenue over time and thus reduce future deficits. While the Congressional Budget Office (CBO) estimates it will raise about $100 billion over the next decade, we estimate it will raise roughly $700 billion in the following decade and more in the years after that.

Importantly, the Cadillac tax is not the only, or even necessarily, the best way to achieve these three important objectives. A more direct limit to the ESI tax exclusion would also slow health care cost growth, increase wages, and reduce future deficits. In fact, recent analysis suggests a direct limit to the ESI exclusion could achieve these goals in a more progressive and efficient way and would have the further benefit of better equalizing the tax treatment of wage- and non-wage income.

Options to Replace the Cadillac Tax

Repealing the Cadillac tax would cost about $100 billion over the next decade. In addition, repealing the ACA’s employer mandate would cost about $200 billion, repealing its Medicare surtax would cost another $150 billion, and repealing the other taxes in the ACA would cost an additional $550 billion.

To ensure new “replacement” coverage provisions are enacted in a fiscally responsible way, lawmakers will either need to retain some of the taxes described above, cover fewer people than under current law, spend far less per person covered than under current law, identify new spending cuts, identify new revenue sources, or some combination.

Changes to the ESI tax exclusion can help to cover these costs. Capping the income tax inclusion at the 75th percentile of plan costs beginning in 2020 would raise $200 billion – enough to fund the revenue loss from repealing the Cadillac tax twice over. Under this policy, companies could offer insurance plans of any size, but employees would pay income tax on any cost above $9,500 ($23,900 for families) just as they would on cash wages. A similar cap set at the 50th percentile level would raise $400 billion over a decade.

Of course, policymakers have a number of other options at their disposal. For example, by our very rough estimates, fully eliminating the income tax exclusion beginning in 2020 would save $1.3 trillion through 2027, more than enough to replace all the revenue loss from repealing the ACA’s taxes and its mandates. Policymakers could also replace the income tax exclusion with a fixed tax credit or deduction, which would retain the incentive to provide insurance but end the incentive to hold the most costly insurance and generate $100 to $200 billion of revenue, depending on how fast they indexed the new tax benefit.

A few other options include limiting the value of the exclusion to the 28 percent bracket (saving $50 billion) so the value of the tax benefit does not rise with income beyond about $250,000; phasing out the exclusion entirely for people making above $250,000 (which would save $200 billion); and eliminating the ability of employers to deduct employee-paid premiums through “cafeteria plans” (saving $250 billion).

Most of the changes to the income tax exclusion described above could be applied to the Social Security and Medicare payroll taxes as well given that the value of employer-sponsored health insurance is also excluded from the payroll tax. The caps in particularly would generate about 50 percent more if also applied to payroll taxes. For example, capping the payroll tax exclusion at the cost of the median plan would save $200 billion, on top of the $400 billion that could be saved by applying that cap to the income tax exclusion. Completely eliminating the exclusion just for the 2.9 percent Medicare payroll tax would generate $250 billion, enough to pay for repeal of the ACA’s Medicare surtax and generate another $100 billion to extend Medicare solvency.

Importantly, though, budget estimates of changes to the payroll tax exclusion should be viewed with caution. For one, the same money cannot be used twice, so any funds that are used to strengthen the Social Security or Medicare trust funds should not also be used to pay for new insurance subsidies or tax cuts. In addition, since Social Security benefits are calculated based on taxed wages, most increases in Social Security revenue will ultimately be eaten up by future increases in Social Security costs.

Still, it is worth considering changes to the ESI exclusion on both on the income and payroll tax side (so long as there is there is no double-counting) in order to pay for “replace” legislation, strengthen trust funds, increase wages, slow health care cost growth, and ultimately reduce future debt levels.

Policymakers should certainly not repeal the Cadillac tax unless they are willing to address the ESI health exclusion or identify other ways to both replace the revenue and slow health care cost growth. The cost to the budget and the health care system would simply be too large.

Categories: OIG Advisory Opinions

Vulnerable Patients and Right to Try. Doing More Harm Than Good

The Healthcare Blog - Tue, 02/21/2017 - 14:19

The McFadyens in 2010. Gabriel, Ellen, Andrew and Issac, aged 6.

In both the House of Representatives and the Senate, legislators have introduced “Right to Try” bills, which purport to give terminally ill patients access to experimental medications prior to Food and Drug Administration (FDA) approval. Vice President Pence recently met with Right to Try advocates, expressing support for the movement in a tweet. Forbes has published perspectives from both sides on the issue: first, a Right to Try proponent, Nathan Nascimento, defended the legislation, while medical ethicist Arthur Caplan’s response illustrated why Right to Try is – at its core – bad policy. A key voice missing from this dialogue, and the one needed most, is that of the patient.

At The Isaac Foundation, we know firsthand what it means for a family to cope with a loved one’s rare disease diagnosis. Over the past decade, our drive to find a cure for Isaac, the organization’s namesake and the son of the foundation’s founder, evolved into a multi-faceted mission to help those suffering from any rare disease. It is from this vantage point that we strongly urge legislators to oppose these proposed Right to Try bills – not only for their inherent flaws – but from creating further inequality for vulnerable patients across the United States.

Right to Try legislation leaves patients’ access to the drugs and devices they seek to the discretion of pharmaceutical and medical device companies. Neither proposed federal bill requires pharmaceutical companies to make their products available to patients who request them. The legislation creates a landscape of unequal access to these potential treatments.

In truth, “Right to Try” is a misnomer and provides nothing to patients in need except the misguided belief that the legislation makes investigational medical products available. A more apt title would be “Right to Beg,” because this is the only “right” this legislation actually gives patients. And this right to beg – or, less provocatively, right to request – has been given to patients in need since 1987, by the very federal agency Right to Try advocates want to abolish – the FDA.

Under the FDA’s expanded access system, to get access to an experimental treatment, patients and their physicians must first petition the pharmaceutical company developing the drug or device they wish to use. Only if the company agrees to provide their still-in-development product does the request reach the FDA. Right to Try advocates insist the FDA is the main barrier to obtaining unapproved drugs, but the agency never gets involved until a company says yes to a request. Nothing in the new legislation changes the primary role of a company. When the FDA is involved in the existing system, it approves over 99 percent of the requests it receives only weeding out the crooks and flimflam artists trying to exploit the dying and their families.  A recent study of the FDA’s expanded access program found that 11 percent of requests were modified after receiving advice from the FDA reviewers about such issues as dosage or dosing schedule showing that the FDA really helps protect patients rather than hindering access.

To help patients, we must remember that it is the company making the new medical product that ultimately determines who, if anyone, gets access. What is a problem worth fixing is patients not knowing how to approach the right company or how to request access to a product. It isn’t difficult to see why patients with the most privilege – those who can leverage social media campaigns directed at the pharmaceutical industry or those who can have important people make phone calls on their behalf – are more likely to get access than are equally sick but less advantaged patients. The proposed federal law does nothing to fix this huge problem.

Much of the pharmaceutical industry performs dismally in making their compassionate use policies known to both patients and physicians. According to a recent report, only 19 percent of the companies investigated had publicly published their policies on compassionate use. A bill passed by Congress this past December aims to solve this problem by requiring that companies publish information on how make a compassionate use request, along with appropriate contact information. This requirement will hopefully level the playing field for access, but the bill provides no specific penalties for noncompliance, Congress needs to fix that as well.

The Right to Try movement is gaining support among the same politicians who wish to repeal and replace the Affordable Care Act (ACA). One measure discussed by Republicans looking to replace the ACA, is to create state-run high-risk insurance pools. The terminally ill would likely receive coverage for their medical care from these pools, while the healthy are insured elsewhere. This system is likely to increase insurance premiums for the sickest people in society. The notion that in certain states, these patients could also purchase unapproved drugs – from profiting pharmaceutical companies who benefit from being able to sell their investigational products to the dying – will create a dangerous inequality between those who can afford the price tag, and those who cannot.

From our experience in and with the patient advocacy community, we understand the unbearable burden of a potentially terminal diagnosis and can see the appeal of Right to Try legislation for those with nowhere else to turn. The Goldwater Institute, a think tank that wrote the model bill on which many state Right to Try bills are based, does a marvelous job of promoting its policy as the last chance for people to extend their lives. Goldwater claims that “Right To Try laws help patients get immediate access to the medical treatments they need before it’s too late,” suggesting their legislation “restores life-saving hope back to those who’ve lost it.”

This vision of access to medications for millions of Americans who desperately need them is laudable. However, our analysis of the state Right to Try bills that have been passed reveals that no one is getting access to anything that they could not have gotten without these laws.  The cruel reality of Right to Try is that it does not grant patients immediate access to any treatments. Right to Try traffics in false hope, and as advocates for desperate patients, we believe they deserve better.

As patient advocates we know that Right to Try laws can’t and won’t help our loved ones, some of whom are fighting for their lives. What supporters tout as a beacon of hope does nothing to change the reality for patients in need – and risks making Americans’ access to healthcare even more unequal..

We urge legislators to focus on measures that will provide assistance, not empty words, to those in need.

Andrew McFadyen is the executive director of The Isaac Foundation and a member of the NYU School of Medicine’s Working Group on Compassionate Use and Pre-Approval Access. Alexandra Hall is the Managing Director of Policy & Patient Support at The Isaac Foundation. Kelly McBride Folkers is a research associate at the Division of Medical Ethics at the NYU School of Medicine.

Categories: OIG Advisory Opinions

A Million Jobs in Healthcare’s Future

The Healthcare Blog - Tue, 02/21/2017 - 12:35

“The Future is Here. It’s Just Not Evenly Distributed.”

It’s true.

Science fiction writer William Gibson said that right. We simply have to look around enough – now – to find out what the future holds.

The future may never be evenly distributed. But it’s surely becoming the present faster.

What would you do when…

Here are a series of what-would-you-do-when questions to think about. Each of these are a reality today, somewhere.

There’s more medical data than insight

Kaiser Permanente presently manages 30 petabytes of data. Images. Lab tests. EHRs. Patient data. Billing. Registries. Clinical trials. Sooner than later, most medical devices (big and small) will become smart. They will have an IP address like a Fitbit and send data over the cloud.

What would happen when medical data expands to exabytes, zettabytes, and may be even a yottabyte (10^24)?

What it means for jobs: Expect a boom in data-related opportunities. Data scientists. Visualization gurus. Statisticians. Mathematicians who can build predictive models. Anyone who can spot wisdom from information.

Genetic programming becomes the new software gig

People interested in programming are well-suited to become biologists of tomorrow because ATGC (the genomic alphabet) can now be tinkered digitally using tools like CRISPR.

[Read: A programming language for living cells]

If you are a developer, you could join a bio hackerspace or create your own. Explore how programming can make foul-smelling E.coli develop the fragrance of bananas.

Lab tests are performed on a chip

After failing inspection tests, the troubled blood-testing company Theranos is now shifting its focus to a lab-on-a-chip virus detection model. It’s aligning itself to a clear trend. Microfluidics, as the field is known, is at the cusp of changing the diagnostics market.

What it means for jobs: Think of expansion of jobs related to chemistry, mechanical engineering, bio-sensing, fluidics, optics, acoustics, micro-electronics, mobile programming, RFID, circuit design, and instrumentation.

Blood is delivered by drones

Zipline already delivers blood to remote areas in Rwanda through lightweight drones. John Hopkins recently partnered with Flirtey to deliver medical supplies. We are not too far when drone delivery becomes mainstream.

What it means for jobs: If you are in aviation, logistics, delivery, aeronautics, geo-mapping, disaster/emergency management, equipment repair, material science, electronics, security, control engineers, fleet management, the future of healthcare welcomes you.

People seem to live much longer than your grandma

By 2040, it’s estimated that one in five people in the US will be a senior citizen. Let’s assume Calico, Human Longevity Inc. and others succeed in providing us with a partial longevity fix (beyond 120 years). If that happens, we will have a very large global population of old people.

What it means for jobs: New opportunities in caring for the old, nursing, elderly homes, government services, health insurance, and medical devices. Simply extrapolate existing jobs in aging from the present to spot the future.

Your phone knows you more than your spouse

Advances in artificial intelligence will soon help your phone know you more than yourself, not just your spouse. The movie Her even imagined what it might be like to be in love with your AI.

What it means for jobs: Outside of AI-related opportunities for software/hardware professionals, jobs that require teaching computers medical skills (e.g. Sloan Kettering oncologists taught IBM Watson) will proliferate. When cheap robots serve the average person, people with empathy (such as nurses) will be sought after.

Cataract surgery is safer with a robot

By 2020, the market for medical robots will be $17+ billion. Robots will expand a surgeon’s capabilities. Sometimes, they will perform surgeries on their own.

What it means for jobs: Other than obvious jobs for engineers and technicians, think of jobs surrounding medical robotics. Design. Equipment repair. Training. Refurbishing. Components. Sales. Maintenance.

Mindfulness is part of your prescription

In Tools of Titans, Tim Ferris says 80% of his Titans had some kind of guided mindfulness practice. Your cardiologist may soon prescribe meditation to keep your stress at bay. Calming apps will mushroom. Alternate therapies will spread.

Much like yoga, meditation/mindfulness will descend from the yogis in the mountains and go mainstream.

What it means for jobs: There will be demand for regular people (not just sagely gurus) who can teach mindfulness and conduct guided sessions online/offline. A need for experts who can guide people through integrated/holistic medicine will emerge.

3D printing before complex surgery becomes a medical guideline

Startup SiMMo3D prints organ models using data from MRIs or CT scans, creating replicas of diseased or healthy parts. Recently, 3D printing helped surgeons prepare for a 27-hour marathon surgery to separate conjoined twins.

What it means for jobs: When 3D printing becomes an integral part of medicine, expect a boom in jobs associated with 3D printing-as-a-service, organ design, medical retail, bio-printing, material science, implants, prosthetics, orthodontics, medical education, and pharmaceuticals.

Your insurance rewards you for eating healthy

John Hancock insurance rewards vitality points to its customers for staying healthy. Points for buying sprouts. Points for swimming.

Imagine the amount of patient data that insurances would accumulate if such programs become mainstream. Pay-for-performance/value would become the basis of health insurance.

What it means for jobs: The health insurance industry will need underwriters who can develop new pay-for-performance models. Think of more jobs in population health, quality of care, healthcare informatics, case management, risk assessment, financial architects, claims/benefits specialists. Jobs related to ongoing risk adjustment based on continuous health tracking inside smart homes and driverless cars.

Cancer becomes a chronic condition

Leukemia, ovarian cancer, some lymphomas are today considered chronic conditions – ongoing and subject to lifelong treatment but not life-ending. More types of cancers could become chronic. More cancer patients could live longer.

What it means for jobs: Other than core clinical needs such as in radiology, this trend signals a need for people in palliative care, counseling, cancer care communities, patient navigators, care coordination, specialized nursing, and medical statistics.

It just keeps growing and growing…

Some experts opine that machines will replace today’s jobs. May be. May be not.

When you look around in healthcare, you will often find the past mingling with the future. Your doctor may use a stethoscope (invented in 1816) and lookup IBM Watson (invented in 2010) to diagnose you.

Healthcare is a gigantic industry that touches nearly everyone in every part of the world. It will integrate with every other industry, changing its present scope.

With global population estimates at 8.5 billion by 2030, increasing chronic illness amongst people, newer viruses and diseases, increased policy and scrutiny, healthcare will increasingly occupy a greater share of every country’s GDP.

[Read: The Rising Billions and Healthcare’s Expanding Global Market]

The imminent future of healthcare will bring newer business opportunities into its fold. Thousands of new professions.

In the US, healthcare employs 12+ million people. Worldwide, WHO estimates a workforce shortage of 12.9 million people by 2035.

A million jobs? It’s pocket change for healthcare.

Praveen Suthrum is president and co-founder of NextServices, a healthcare technology and management company. You can read more articles on his blog.

Categories: OIG Advisory Opinions

The Definitive Guide to Repealing & Replacing Obamacare

The Healthcare Blog - Mon, 02/20/2017 - 16:23

“So how about it, Nash? You scared?”

“Terrified… mortified… petrified… stupefied… by you.” (–A Beautiful Mind)

Fear is now a sign that you are an intelligent, educated, open-minded and caring person. Being scared is incontestable proof that you have a beautiful heart. When it comes to your health, there is palpable terror that soon, very soon, the bad guys will take away Obamacare, which was the source of health care and life itself for many.

Obamacare is Now Officially the Status Quo

Obamacare went into effect only three years ago, but in the age of information technology, years are like decades. Obamacare  is deeply and solidly entrenched in the health care landscape. There is zero chance that anybody will be able to dig up its rhizomic growth into the actual practice of medicine, so let’s play along and see what can be done about the large shiny part, visible to the naked eye, namely health insurance.

Traditionally, health insurance coverage is segmented into public insurance, employer group insurance and individual markets. However, considering the changes introduced by Obamacare, a different classification, may be in order:

  1. People who have all or most of their health care paid for
  2. People who have some of their health care paid for
  3. And people who must pay for all their health care on their own. 

Health insurance for all classes now includes a fixed set of “essential benefits”, no limits on lifetime spending and prohibition from factoring preexisting conditions into coverage decisions has been expanded to include non-group policies. This is the post Obamacare status quo. This is what the Republican Party is currently endeavoring to repeal and replace. It is important to note that while approximately 90% of Americans are eligible for either fully or partially subsidized health insurance, there is a 10% “donut” hole of mostly middle class, mostly precariously employed people, left to fend for themselves.

Democrats are poking fun at Republicans for lacking an Obamacare replacement plan after six years of complaining and symbolically voting to repeal the law multiple times. The irony here is that the GOP has plenty of plans that could have been put in place in 2008 and even in 2012, but not today. Why? Because none of the old plans are equal, let alone better, than the new status quo. The simple fact is that on its face, and for the short term, Obamacare helps far more people than it hurts. The other simple fact is that the one overriding fiduciary responsibility of members of Congress is to get themselves reelected.

The Basic Laws of Repeal and Replace

With that in mind and considering that for some peculiar reason getting rid of Obamacare was a major campaign promise for both the GOP and the new President, I would like to humbly suggest an entirely scientific set of basic laws for repealing and replacing Obamacare.

Zeroth Law of R & R: Drain the swamp

If two systems (insurance and hospitals) are in profitable relationship with a third system (government), they are in profitable relationship with each other. This law helps define the notion of corruption.

First Law of R & R: Do no harm

No harm now and no harm in the future. No harm while you’re healthy and no harm if you get sick. Every American covered by some type of health insurance should be no worse than he or she currently is. Premiums should not be higher. Out of pocket spending should not be higher. Benefits included should not be fewer. Access to and choice of doctors and hospitals should not be reduced. And finally, government spending should not increase by too much either. If this law sounds to you like some sort of ridiculous wizardry, it isn’t. There are plenty of places to look for, and find money, other than working people’s pockets. Additionally, failure to comply with this basic law will guarantee loss of elected office for anybody remotely associated with such folly. Equivalently, perpetual election machines of the first kind (hurting people) are impossible.

Second Law of R & R: Fix what’s broken

Fix what the people say is broken, not what dead economists might have said is broken. Premiums, especially for unsubsidized people, are too high. Deductibles are way too high not just for those who have to pay full price for insurance, but increasingly so also for employer sponsored workers. Choice of doctors and hospitals is being narrowed for everybody, except the very rich and the very well connected. Those are the three things that voters need Congress to fix. Blabbering about death spirals and actuarial risk pools will get you zero (0) votes in your next election. Reducing Federal government spending on health care by a few billion dollars means nothing (0) to voters who have to cover the shortfall from their own individual pockets or go without. Equivalently, perpetual election machines of the second kind (ignoring people) are impossible.

Third Law of R & R: Watch your language

Do not lie to the American people and do not use words you don’t fully understand just because self-described experts use those words often in casual conversation. Don’t tell people that their health care will be affordable if they open another empty savings account. Don’t insult the intelligence of sick people by telling them that if they band together with other very sick people they’ll be able to buy more affordable health insurance. Do not tell States that cutting Federal support for Medicaid will finally free the States to innovate. First, the “dishonest” press will roast you alive, and second, your “base” of forgotten men and women will be forgetting all about you. Equivalently, perpetual election machines of the third kind (lying to people) are impossible.

Repeal & Replace for Dummies

Based on the four simple laws above, I would like to submit one possible sequence of broad steps to “repeal and replace” Obamacare.

  • Step 0: Get rid of the individual mandate. It is irksome to many, it accomplishes nothing, and it’s already gone anyway. This, in and of itself, satisfies the minimum requirement for stating that Obamacare has been repealed.
  • Step 1: Take a baseline of who has what in the way of health insurance, and this includes covered benefits, because reducing health insurance prices by cutting benefits violates the First and Third Laws.
  • Step 2: Exclude programs where Obamacare changed little to nothing. Ignore the small changes and per the First Law, leave expansions in place.
  • Medicare, VA and other military related – Leave those out. Fix the VA separately.
  • Medicaid – Leave it alone, except make sure the remaining Republican governors expand it in their (your) states (threats, waivers and whatever it takes to help them save face).
  • Employer insurance – Leave the 26 year old children and the removal of lifetime limits in place because neither one makes much difference to affordability (preexisting conditions were never an issue for this group).

Now we’re down to about 18 million insureds in dramatically different situations. Half are subsidized to various degrees based on their Federal Poverty Level (FPL). People with less than 400% FPL (a bit south of $50,000 per year) get some form of subsidy for the premiums, but many are struggling with outrageous deductibles. Those who make less than 250% FPL get help with their high deductibles as well. The 8-9 million who pay full price, along with 7 million of the uninsured, are in desperate need of relief from Obamacare. Add to that an increasingly large portion of employees whose employers “offer” exceedingly high deductible plans, and you have your Obamacare resentment in a nutshell.

  • Step 3: The easiest and cheapest solution to the problem would be to allow people on the individual market to purchase Medicare coverage and direct all Federal subsidies (which will need to be spread out more broadly) back into Medicare. There should be no objection from the health insurance industry since they all seem eager to leave those tiny markets anyway. But of course, nobody is going to do that, because this would appear to be “government run health care” of the “socialized medicine” variety.
  • Step 3 (alternate A): Allow all subsidized people on the Obamacare exchanges to “buy” into local Medicaid plans, which should reduce cost significantly, and use the savings to broaden the subsidies to include the hurting half, with an option to get more “coverage” if they use those new subsidies to buy into Medicaid as well. Personally, I don’t find this alternative very appealing, certainly not as appealing as the Medicare option, but again, seeing how all Medicaid is privatized now and how health insurers are making fortunes from Medicaid, there should be no serious objections. This alternative violates the Second Law when it comes to choice of doctors.
  • Step 3 (alternate B): If increasing membership in Medicare or Medicaid (or both) is too much of a political hot potato (and it is), let’s use some of those buzzwords y’all enjoy throwing around to create a market-based solution. We have around 18 million people who participate in the individual market and perhaps another 13 million who fit the profile, but choose not to participate. We are talking about at most 10% of Americans.  I am pretty sure that some “brave” health insurance companies (preferably non-profits) would be willing to bid for contracts to insure these people. You can do this by state or by region “across state lines”. Here’s the deal: people don’t need choices of health insurance plans. They need choices of doctors and hospitals.
    • One generously subsidized HMO plan with an adequate but narrower network, which is essentially a Medicaid style option, but more expensive (go figure).
    • One less generously subsidized PPO plan with a comprehensive network, which is similar to a Medicare Advantage PPO.
    • You can add in your “health savings accounts” here, but only if they are fully or partially funded by the Federal government in lieu of direct payment to insurers. This is also a good place to experiment with subscription based comprehensive care, a.k.a. direct primary care (DPC), which introduces a small element of free-market competition into the health care delivery system.
  • Step 4: Limit employer high deductible plan offerings, because what is a reasonable deductible for the CEO, is most definitely not reasonable for the assembly line worker. If you think Obamacare is a huge problem now, wait until the employer health insurance sector collapses, and it will if left to its own devices. Yes, fully funded health savings accounts (and DPC) could be used here as well.
  • Step 5: If you are serious about providing relief to the people, the government cost for replacement will be higher than the current Obamacare costs. To reduce health care insurance prices, you will need to consider the Zeroth Law of R & R and intervene in the pricing of health care products and services, such as drugs, devices, technology, regulations, the predatory environment created by consolidation of health systems, and the deprofessionalization of physicians.

Since all sides in this debate have strong ideological convictions or equally powerful financial interests, preventing them from civil collaboration, the most likely result of this R & R effort is that the people will end up getting hurt, again. But if the 2016 election wasn’t a clear enough message for you, here is another Nobel Prize worthy message attributed to John Nash (or rather the writers of A Beautiful Mind):

“If we all go for the blonde and block each other, not a single one of us is going to get her. So then we go for her friends, but they will all give us the cold shoulder because no one likes to be second choice. But what if none of us goes for the blonde? We won’t get in each other’s way and we won’t insult the other girls. It’s the only way to win. It’s the only way we all get laid.”

Categories: OIG Advisory Opinions

Population Health Isn’t Working Out Quite the Way They Said It Would. What’s Going On?

The Healthcare Blog - Mon, 02/20/2017 - 13:51

I hate shots.  Every year when flu season rolls around, I think, “what’s in it for me?” The answer is, “it isn’t for me. It’s for the herd.” I am young and healthy enough that I am unlikely to die of the flu but I have children, older people and vulnerable patients I care about it, so I get a flu shot every year.

This is true population health. I get a flu shot for the benefit of others. Population health has been extended to a much larger set of activities that have no communal benefit. One patient with diabetes doesn’t benefit from another getting a foot exam. (Mammograms, colonoscopies, no communal benefit. STD screening, on the other hand, fits in the category of true population health.)

This distinction matters. Here’s why:

  1. People are keenly aware of being told to do things that aren’t for their personal benefit.
  2. People reject recommendations that don’t match their health needs.
  3. People are much more likely to follow recommendations from people they trust.  Points 1 & 2 above undermine trust.

Lively discussion with my fellow panelists at upcoming HIMSS17 panel on consumer engagement highlighted my own misgivings about the absence of the patient’s individuality and voice in population health efforts. We all want better health in the population, but are we going about it in the right way?

Population health puts people into categories by conditions (diabetes, hypertension, depression), age, lab results and medical billing data. These categories presume their own importance. When in fact, psychosocial, behavioral and environmental factors determine individual health far more.  Patient goals, preferences and barriers to care tell us what stands between that patient and better health. Without this data, population health efforts are undermined.

Here’s an example from my own practice as a psychologist. I learned that “depression” wasn’t a useful category except when I needed to bill with a diagnostic code to get paid. A person in mourning, a postpartum mom with catastrophic feelings, a socially isolated geriatric patient, a mid-career professional struggling with unmet ambitions, a sad teenager having a first psychotic episode or a disabled veteran unable to sustain relationships have almost nothing in common but all could be labeled as “depressed.” Standard recommendations for depression, especially medication, are useless in treatment planning as the root cause of ‘depression’ is rarely something medicine can treat. Depression, the symptom, risked distracting me from the root cause. Diabetes, hypertension and depression can all be looked at as symptoms that do not necessarily share root causes. Population health groups people by these conditions and risks prioritizing those groupings over other (more important) diagnostic and therapeutic models.

Population health efforts are actually making us dumb, blind and deaf to the patient’s true health needs.

In a 15-minute visit, it’s a zero sum game. When the provider is pummeled with gaps in care alerts and practice guidelines, the more the provider attends to the EHR, the less they attend to, look at, listen to and learn from the patient. When the population health need gets attention, is it at the expense of the individual’s need? Care plans driven by population health diagnostic categories are more formulaic, symptom-focused and may ignore root causes. As such, they are less likely to be successful. Then, when patients fail in flawed care plans, we indulge in blaming and name-calling: “non-compliant” or “non-adherent.”

‘Non-compliance’ is an appropriate act of patient resistance to an inappropriate care plan. Resistance is an act of self-affirmation, a rejection of a care plan that doesn’t match true health needs. Vive La Resistance! We don’t need compliance, we need collaboration.

When 50% of patients don’t adhere to medications or guidelines for screening tests, the “standard recommendations” are failing, not the patients.  Resistance is the consumer voice telling us medications cost too much or that they secretly wonder if the medication is working. Resistance communicates the individual’s fear of quit smoking because they will gain weight. Resistance is a form of communication that needs to be welcome. Standard recommendations need to adjust. Then, our patients are co-conspirators, plotting their journey to health, working against all the forces that will undermine them. We need to stop blaming patients for non-compliance and stop pressuring providers to be enforcers.

What if we turn the standard approach inside out and start by asking patients:  “what are your health goals?”   “What is your biggest health concern?”

If we allow people to build Pathways to Health, to choose their own adventure, at their own pace, we can prioritize steps to health at an achievable pace. (By the way, mammograms, flu shots, colonoscopies, foot exams, and eye exams, medications can all be offered as steps on a Pathway to Health. Population health services like pharmacists, nutritionists, social workers and care managers can all be offered in response to patient needs.)

Technology can support this beautifully and take an enormous workload off providers. Through our work at Vital Score, we have directly observed hundreds of primary care visits. We use Motivational Indexing to capture and categorize people’s goals, needs and barriers to health and we responsively offer patient-driven Pathways to Health. Our results show that when people self-identify needs and self-refer to services, their participation rate increases up to 20x. People own their choices because their choices are personally driven for their own benefit. It’s not only better for workflow, it’s better for outcomes.

I have come to the conclusion that population health will not succeed until it is driven from the ground up from patient needs. The top down approach is a Herculean effort without yet enough reward.

Hilary Hatch is the Founder and CEO of Vital Score

Categories: OIG Advisory Opinions

Dashboards Are For 737 Pilots, Not Physicians.

The Healthcare Blog - Mon, 02/20/2017 - 11:23

You’re right, Dr Hatch.  Nobody’s feels like they’re winning.  Last week I was in a room with a group of physicians, and the Chief Medical Officer of an ACO was explaining to them that he could give them all dashboards that they would love.

But the physicians didn’t look like they were dreaming of the same valentines.  “What would we do with a dashboard?”  Said one.  “Is this another Meaningful Use requirement gone bad?” Said another.

The undertone is that “we didn’t sign up for this population health” stuff.  Physicians are intellectually challenged by, and find meaning in the personal conversations and diagnostic puzzles that are well represented in caring for individual people.  We are not intellectually challenged by the need to remind patients to get a colonoscopy, mammogram or flu shot. 

Two decades ago, David Slawson and Allen Shaughnessy introduced the concept of POEMs and DOEs to medical educators as a way for us to help students distinguish between important and unimportant medical literature.  A POEM is a paper that expresses Patient Oriented Evidence (that) Matters.  An example might be a study that demonstrates that patients who eat fewer hamburgers will live longer lives.  A DOE is Disease Oriented Evidence:  a study that demonstrates that a given finding or intervention is associated with an intermediate outcome that we hypothesize will lead to better outcomes.  The study that shows a statin medication lowers cholesterol (but doesn’t reduce heart attacks) is DOE.  When teaching medical students, I would offer an easy way to discern DOE from POEM:  ask if grandma would understand the guidance, and be able to act on it herself.   Eating fewer hamburgers extends life?  Check.  AmazingStatin Lowers LDL Cholesterol?  Nope. 

The way that “population health” is being promoted today makes the same mistakes that a third year medical student who doesn’t understand the DOE/POEM distinction would make:  based on an incomplete dataset, we offer guidance/decision support/recommendations, or “care gap reminders” (all synonyms – all flawed) to harried providers who are already having a hard time keeping their noses above water. 

Just as patients are resisting, so too are the physicians, and for similar reasons:

  1. All people want to feel autonomy.  We want to understand what’s really best for this person – not this segment of the population.  We don’t trust a computer to tell us what to do. 
  2. We need to focus on the root causes – and the solutions to THOSE problems, rather than checking a box to satisfy an algorithm.  Does depressed patient with diabetes and hypertension need a prescription for medication?  Or do they just need a prescription for exercise?   Population health products and processes guide us toward the former.  Most would agree that the latter would be a better answer.

But all is not lost.  To get out of this care cascade, we first need to change the way we talk about the solutions.  We don’t need population health platforms.  We need personalized, proactive health management tools.  We can use these tools to initiate a conversation between the care team and the individual.  We can use these tools to develop insight into the patterns of care that are most associated with health, and the patterns of care (and living) that are less associated with health.  Instead of a dashboard aimed at the physician – showing where we have failed – perhaps a shared view of a patient’s spectrum of opportunities would emerge.  With this shared view, a patient can identify health goals, and the physician will now (finally) be engaged with the patient.  Full circle: patients and care providers collaborating (rather than resisting) toward shared success.  Guidelines, POEMs, and data are all essential parts of this picture, but the product is an elegant facilitator of shared decisions rather than a control interface for the captain. 

So I’ll end where you did, Dr Hatch:  let’s stop this Sisyphean work on “population health,” and shift our focus to personalized proactive health!

Jacob Reider, MD is the CEO of the Alliance for Better Health

Categories: OIG Advisory Opinions

A Reset For Physicians?

The Healthcare Blog - Mon, 02/20/2017 - 11:02

Last week, the nominee to run the Centers for Medicare and Medicaid Services, Seema Verma testified before the Senate Finance Committee. She conveyed a message akin to that of her new boss, Health and Human Services Secretary Tom Price, a physician and House of Representatives veteran: the federal government has made life miserable for providers adding unnecessary complexity and cost.

She challenged the value of electronic health records especially in small practices and rural settings and likened interoperability to a bridge too far. And she observed that Medicare and Medicaid, that cover 128 million Americans accounting for $1 trillion in federal spending, should play a leading role in fixing the problems it has created.

In their confirmation testimony, both Verma and Price were particularly deferential to the plight of physicians, explicitly associating the profession’s challenges with laws and regulations that frustrate clinicians and compromise patient care.

It’s clear the role physicians will play in the post Affordable Care Act era will be a prominent theme under their leadership.

The realities are these:

1.    Physicians are respected: Gallup polls have consistently placed physicians ahead of all other professions and just behind nurses and pharmacists. By contrast, Congress and car salespersons are at the bottom. Since 2001, Gallup’s surveys have shown the public’s level of respect for physicians has been relatively unchanged, while other professions have seen erosion. 

2.    Medicine is a high profile profession: Daytime and prime time TV would be void of content were it not for medical drama: from Gunsmoke’s Doc Adams to Marcus Welby, Doogie Howser and House, pop culture includes a unique depiction of the heroics and humanity of this profession. And, as a result of the Physician Sunshine Act and 5000 websites where physician profiles can be obtained, the profession’s visibility is unparalleled. At least 80% of adults have searched online for insight about a physician they have seen on sites like HealthGrades.com, Vitals.com, Yelp.com, YP.com, RevolutionHealth.com, RateMD.com, Angieslist.com, Checkbook.org, Kudzu.com, and ZocDoc.com

3.    The running a medical practice is a tough business: coordinating care with multiple payers and capturing mandated quality measures costs $40,069 per physician (Caslino et al Health Affairs 3/16). More than 250,000 have elected to work under employment agreements with hospitals to mitigate the hassle. Federal regulations mandating the implementation of electronic medical records, quality reporting and participation in value-based purchasing programs have led the majority of physicians to suspect the profession’s future is not bright.

4.    U.S. physicians are paid well: median compensation for physicians varies widely by specialty, with the lowest paid (hospitalists, psychiatrists, intensivists, internists, pediatricians, and family physicians) earning 5 times the average U.S. household and the highest specialties (orthopedics, invasive cardiology, plastic surgery, gastroenterology, and radiation oncology) earning 11 times the average. And for many specialties, additional income is earned from in-office procedures, ownership of diagnostic and surgical facilities, and practice related investments. (Modern Healthcare 2016 Physician Compensation Survey). Nonetheless, 28% of physicians saw their income shrink last year as a result of increasing administrative costs in their practices (Nerdwallet).

5.    Most physicians aren’t happy: the average physician waited 9 years after undergraduate school to begin practice (AMA) and three in four left with debt averaging $166,750 (Nerdwallet). Per the Physicians Foundation Survey, the majority are dispirited and burnout is an issue for growing numbers. While the majority would choose medicine as a career again and incoming MCAT scores remain high, the intangibles of the profession seem to be fading among many medical students.

6.    Demand for physician services is increasing faster than the supply: Last year, only 83% of adults and 92% of children saw a physician or advanced practice nurse (CDC) accounting for almost 1 trillion visits. Per the AAMC, the shortage of physicians is acute: between 46,000 and 90,000 including 13-31 PCPs with the most acute needs in rural areas (Institute of Medicine). The fact is no one knows for sure what the shortage is, since the 51 states and territorial licensing boards monitor clinician practice activity differently. Four of five physicians say they’re over-extended and three in four think additional physicians are needed. Given the doubling of the senior population in the next two decades and increased role of mid-level practitioners, it’s difficult to know for sure how the profession should address its demand. But it’s clear how patient care is delivered is likely to change as technologies and incentives change. 

But for the profession to maintain its central role in reforming healthcare, it must be more effective in addressing four issues for which it will likely be held accountable:

1-Health costs and affordability: National health expenditures last year were $3.35 trillion, or $10,435 per capita. The recommendations of physicians to patients drive 80% of these costs, though physicians are unaware of and not trained to consider costs in their recommendations. (AMA Code of Ethics). The scoring for the Merit-based Incentive Payment System (MIPS) reflects growing regulator assignment of cost-management as a core competence of medical professionals: in 2019, only 10% of physician performance will be weighed against effective cost controls, increasing to 15% in 2020 and 30% in 2021 (against 30% for quality, 15% for clinical practice improvement and 25% for use of information technologies). (CMS). As part of the MACRA reimbursement program, physician compensation by Medicare under MIPS will be adjusted plus/minus 4% based on their performance in these four categories. As a result, physicians will be forced to pay closer attention to costs, whether comfortable or not.

2-Patient adherence: patients rely on their physicians for treatment recommendations, and 80% augment these with their own online searches. But patient adherence to treatment recommendations is problematic: most prescriptions are either not filled or not followed as directed (Lexis/Nexis Risk Solutions 2016). The majority of newly diagnosed patients do not receive follow-up communication from their practitioner unless the diagnosis is grave. And adherence to treatment recommendations, which ranges from 50-63% depending on the condition, is enhanced by follow-up interaction with an individual’s physician (CapGemini). Non adherence costs $300 billion yearly for avoidable hospitalizations and mortality. It’s an opportunity and challenge for the profession!

3-Weeding out bad actors: for $9.95, anyone can obtain a report on disciplinary actions taken by the Federation of State Medical Boards against a clinician. But physician misconduct and impairment, conflicts of interest that might influence a treatment recommendation, and non-adherence to evidence-based practices far exceed these official reports. The majority of physicians practice ethically and with integrity putting their patients’ interests first. But like every profession, there are bad actors, and medicine’s aggressiveness in weeding them out has been lacking.

4-Integrating technologies that improve care coordination and outcomes: two in three U.S. adults believes telehealth and online interaction with their physician would improve care and they expect to pay for this service (American Well Telehealth Survey 2015). The majority want access to their own medical record and think clinicians who are accessible online are more current in their training and expertise. They recognize that electronic medical records are useful in improving care coordination, diagnostic accuracy and error avoidance. But most practitioners have resist their use fearing exposure to liability and additional costs as their rationale. E-health and data-driven healthcare is here to stay: how the profession embraces both is its challenge.

No doubt, Dr. Price and CMS Director Verma will seek to restore the professions’ sense of purpose by tackling the administrative costs and complexity of practicing medicine. It’s music to the ears of physicians who are understandably anxious about the future for their profession.

But addressing these four challenges is equally important and they’re keys to the system’s future as well.

Transforming healthcare is not about hospitals, insurers and the profession of medicine. They play key roles, but it’s ultimately about patients—the role they’ll play and the choices they make. 

Categories: OIG Advisory Opinions

The Public Health Enemy at the Gate

The Healthcare Blog - Sun, 02/19/2017 - 10:56

President Donald Trump  keeps getting kicked around in court when challenges are brought against his ban on travel from seven predominantly Muslim nations. Trump says he wants to halt the flow of people who might be planning attacks. What we cannot forget is that the kind of attack he has in mind is not confined to bombs and shootings. Trump is terrified that immigrants bring diseases with them. If racism fails, public health will likely afford Trump the rationale he seeks for making it difficult for those he does not like to enter our country.

The president is a self-described germaphobe. He has doubts about vaccines. He likely does not wake up every day to thrill at the latest advances in science. This is a president who might possibly let an infectious disease do what he has so far not been able to accomplish by impugning the country or religion of immigrants he doesn’t like: provide the basis for a ban.

The threat of a pandemic is yet another avenue he could possibly embrace to create a Fortress America. He might demand more walls, quarantine stations at airports and one-way tickets home for every potential human vector — including the frail, kids and pregnant women. No one who is sick, might be sick or who can be smeared as the source of Americans getting sick would get in.

Pandemic flu, Zika, yellow fever, West Nile and a host of other maladies are likely to keep popping up over the next four years. The news media are great at stoking fear about all of them. Public officials are ill-prepared to know what to do about any of them.

This environment of panic and ignorance is right up the president’s fear-mongering alley. It is ideal for imposing the kind of ban that Trump desires without having to try to explicitly exclude Mexicans, Muslims or any other group that he and his supporters despise: See a disease emerging overseas, up go the restrictions on entry.

Think I am wrong? Remember during his campaign that Trump repugnantly and falsely argued that Mexican migrants bring “tremendous infectious disease” into the United States. During the Ebola outbreak he used his favorite mode of communication, Twitter, to argue that doctors who treat Ebola patients “are great” but shouldn’t be allowed to seek treatment back here if they get sick. “Treat them, at the highest level, over there,” he said.

There was more: “The U.S. cannot allow EBOLA infected people back. People that go to far away places to help out are great — but must suffer the consequences!” And he topped all this ill-informed armchair epidemiology by noting that “the U.S. must stop all flights from EBOLA infected countries or the plague will start and spread inside our borders.”

The health care and scientific community had better be ready to spread the facts when the next infectious disease appears and President Trump invokes microbes to close the borders.

Art Caplan heads the bioethics program at NYU. This post first appeared in the Chicago Tribune.

Categories: OIG Advisory Opinions

Don’t Get Too Distracted By the Smoke Coming Out of Washington

The Healthcare Blog - Thu, 02/16/2017 - 11:59

Health care has risen to the top of the national agenda and Washington policymakers are once again debating how to affordably provide coverage and care for Americans. It is a discussion we welcome. But in the meantime, let’s not lose sight of the fundamentals that will ultimately produce greater value for our health care dollars.

At the heart of a high-performing health system is quality outcomes. For consumers to make informed decisions, they’ll need more data—reliable, actionable data. Health plans operating in managed care are accustomed to demonstrating their value and in fact have performed well under such scrutiny.

The National Committee for Quality Assurance (NCQA), a national organization dedicated to measuring and improving health quality, has published annual evaluations of every private, Medicare and Medicaid health plan in the country for more than a decade.

The most recent health plan ratings released by NCQA last month show a strong connection between not-for-profit plans based in the community and high-quality, high-value care. It’s something that we at the Alliance of Community Health Plans (ACHP) and the Association for Community Affiliated Plans (ACAP) have long understood.

Looking only at plans that earned ratings of 4.5 or 5 out of 5 in NCQA’s ratings — about the top 10 percent of plans — a majority are our community-based, not-for-profit member plans.

  • 10 of 15 plans in Medicaid rated 4.5 or 5 were community-based, not-for-profit plans.
  • 26 of 58 commercial plans rated 4.5 or 5 were community-based, not-for-profit plans.
  • 14 of 32 Medicare plans rated 4.5 or 5 were community-based, not-for-profit plans.

Our organizations combine to represent a distinct minority of the hundreds of health insurance companies in the U.S. Why is there a concentration of high performance among not-for-profits?

Simply being not-for-profit allows plans to focus more on quality care and less on Wall Street. Without pressure to meet quarterly earnings targets, not-for-profit plans have more room to make long-term investments in quality improvement and members’ health. That’s one reason studies repeatedly find not-for-profit Medicaid health plans spend more of each premium dollar on medical care and less on administrative overhead (including shareholder dividends) than their for-profit counterparts.

Our member health plans have deep roots in the communities they serve, leading to connections with allied organizations, including groups that advocate for senior citizens, legal aid for low-income individuals, housing, nutrition, transportation and other community resources. 

An abiding commitment to the community means our plans stay put, whether times are good or bad. Community-based not-for-profits can’t and don’t migrate to other service areas in search of favorable market conditions. Instead, our plans compete on the basis of quality, service and wise use of resources, leading to innovation in areas ranging from technology to human services.

At Geisinger Health System, which serves consumers in Pennsylvania and New Jersey, online physician scheduling is available at several hospitals. The health plan’s members can use the service free of charge by downloading an app to their smartphone. Through the app, patients can locate providers, read reviews and set up appointments with primary care physicians and specialists. Geisinger has also begun providing refunds to dissatisfied customers, a program that has cost little and resulted in valuable feedback for constant improvement.

Several of our members are working to address social determinants of health. CareOregon knows access to housing is key to living a healthy life. The health plan has awarded more than $360,000 in grants to six organizations across the state of Oregon that work to keep vulnerable families in their homes. CareOregon staff selected the groups based on their ability to help members overcome barriers to both health care and stable housing.

Through a partnership with the local HUD authority, Community Health Services and Metro Family Practice, UPMC in Pittsburgh, Pennsylvania, developed the shelter plus care program to offer high-need members housing support and reduce hospital readmissions. Initially, the program included 22 members. Within the first year, 13 of the participating members experienced significant decreases in medical costs and remained in stable housing. UPMC plans to expand the program to include 50 members.

ACHP and ACAP members are uniquely positioned to deliver high-quality, high-value care. These not-for-profit plans’ focus on the communities they serve leads to innovative, tailored approaches to addressing the specific needs of the regions where they operate. It’s this approach that sets our members apart—and at the top of quality ratings.

Ceci Connolly is President and CEO of the Alliance of Community Health Plans, a coalition of nonprofit, regional plans serving nearly 19 million people.

Margaret A. Murray is CEO of the Association for Community Affiliated Plans, a group of 59 not-for-profit Safety Net Health Plans which collectively serve more than 17 million people through Medicaid, Medicare, CHIP and the Marketplaces.

Categories: OIG Advisory Opinions

A Measure of Insight on MACRA

The Healthcare Blog - Thu, 02/16/2017 - 11:13

Featured Presentation: http://bit.ly/2lhvpjM

A 2016 study by Researchers at Weill Cornell Medical College and the Medical Group Management Association found that physicians and their staff spend between 6 and 12 hours per week processing and reporting quality metrics to the government – at a cost of $15.4 billion a year.

As a recent Health Catalyst MACRA survey confirms, that burden is expected to significantly worsen in 2017 and beyond as physicians struggle to report quality metrics for the Medicare Access & CHIP Reauthorization Act (MACRA) – the federal law that changes the way Medicare pays doctors. Commercial health insurers are expected to follow the government’s lead with similar programs of their own. In complex organizations, successfully achieving performance targets and submitting accurately for MACRA incentives will require integrating multiple measures across financial, regulatory and quality departments.

To help identify and align healthcare organizations’ selection of the MACRA quality measures, Health Catalyst® today announced the release of MACRA Measures & Insights™ Built on an industry-leading data and analytics platform integrating over 120 data sources including claims and all major EMRs, the new application helps healthcare organizations track and monitor all MACRA measures across multiple departments.

Moreover, with MACRA Measures & Insights, organizations for the first time can quickly spot areas where their physicians are performing best, and therefor which quality measures to report to Medicare to maximize payment under MACRA.

Register here: http://bit.ly/2lhvpjM

Categories: OIG Advisory Opinions

Trump Issues Obamacare Proposed Rule to “Increase Patients Health Insurance Choices For 2018”

The Healthcare Blog - Wed, 02/15/2017 - 09:00

CMS this morning released the following statement:

The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule for 2018, which proposes new reforms that are critical to stabilizing the individual and small group health insurance markets to help protect patients. This proposed rule would make changes to special enrollment periods, the annual open enrollment period, guaranteed availability, network adequacy rules, essential community providers, and actuarial value requirements; and announces upcoming changes to the qualified health plan certification timeline.

“Americans participating in the individual health insurance markets deserve as many health insurance options as possible,” said Dr. Patrick Conway, Acting Administrator of the Centers for Medicare & Medicaid Services.  “This proposal will take steps to stabilize the Marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options. They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

The rule proposes a variety of policy and operational changes to stabilize the Marketplace, including:

    • Open Enrollment Period: The rule proposes to shorten the upcoming annual open enrollment period for the individual market. For the 2018 coverage year, we propose an open enrollment period of November 1, 2017, to December 15, 2017.  This proposed change will align the Marketplaces with the Employer-Sponsored Insurance Market and Medicare, and help lower prices for Americans by reducing adverse selection.
    • Special Enrollment Period Pre-Enrollment Verification: The rule proposes to expand pre-enrollment verification of eligibility to individuals who newly enroll through special enrollment periods in Marketplaces using the HealthCare.gov platform. This proposed change would help make sure that special enrollment periods are available to all who are eligible for them, but will require individuals to submit supporting documentation, a common practice in the employer health insurance market. This will help place downward pressure on premiums, curb abuses, and encourage year-round enrollment.
       
    • Guaranteed Availability: The rule proposes to address potential abuses by allowing an issuer to collect premiums for prior unpaid coverage, before enrolling a patient in the next year’s plan with the same issuer. This will incentivize patients to avoid coverage lapses.
       
    • Determining the Level of Coverage: The rule proposes to make adjustments to the de minimis range used for determining the level of coverage by providing greater flexibility to issuers to provide patients with more coverage options.
       

  • Network Adequacy: The proposed rule takes an important step in reaffirming the traditional role of states to serve their populations. In the review of qualified health plans, CMS proposes to defer to the states’ reviews in states with the authority and means to assess issuer network adequacy. States are best positioned to ensure their residents have access to high quality care networks.
     
  • Qualified Health Plan (QHP) Certification Calendar: In the rule, CMS announces its intention to release a revised proposed timeline for the QHP certification and rate review process for plan year 2018. The revised timeline would provide issuers with additional time to implement proposed changes that are finalized prior to the 2018 coverage year. These changes will give issuers flexibility to incorporate benefit changes and maximize the number of coverage options available to patients.
     

The proposed rule can be found, here: https://www.federalregister.gov/documents/2017/02/17/2017-03027/patient-protection-and-affordable-care-act-market-stabilization

Categories: OIG Advisory Opinions

Teaching Health Delivery Science in the Digital Age

The Healthcare Blog - Tue, 02/14/2017 - 19:39

Our health system is facing an existential crisis. We’re not alone. As the largest hospital in the western United States and a member of the 2016-17 U.S. News & World Report Best Hospitals Honor Roll, Cedars-Sinai Medical Center is known for its exceptional quality of care… but also for its high cost of care. In an era of value-based healthcare financing and full-risk contracts, it is an existential challenge for health systems like Cedars-Sinai to bend the cost curve while maintaining or improving patient outcomes, satisfaction, and safety. If we can’t bring down costs, then insurance companies may take their business elsewhere.

To meet the challenge, healthcare systems like ours must become facile with managing and interpreting big data; learn how to implement health information technology in clinical practice; perform continuous self-assessments to ensure high-quality, safe and effective care; measure and address patient preferences and values; master the principles of digital health science; and, ultimately, ensure all these activities are cost-effective. This is exceedingly hard to do, but there is a science for doing it all. It’s called health delivery science.

We recently launched a new Master’s Degree program in Health Delivery Science (MHDS) at Cedars-Sinai, the first of its kind in the nation. Having struggled with the challenges of adapting to the requirements of value-based healthcare, we’ve learned enough lessons to fill not only a textbook, but an entire curriculum. So, we decided to develop a comprehensive degree program to teach others about our own successes and failures. We hope that other organizations can benefit from our blueprint. This article outlines our new curriculum as a framework for how to define and teach health delivery science in the digital age.

Developing a Health Delivery Science Curriculum

In developing our program, we recognized the importance of combining disciplines that are often taught separately, but should be presented together: digital health science; health analytics; healthcare financing; and performance improvement. We also believe that students should not be housed in a traditional university tower, but instead must be integrated directly within the front lines of healthcare delivery. We think that’s a difference that makes a difference.

Because health delivery science is a hands-on discipline, we created a curriculum that combines didactic skills with an applied capstone project where students work directly with experts throughout the health system. Students gain hands-on expertise in data visualization, data-analytic and cost-effectiveness analysis software programs; learn about modern digital health science, including mobile health (mHealth) applications, wearable biosensors, social media analytics and electronic health records (EHR); and upon completing the program are prepared to enter a wide array of healthcare employment and leadership positions.

We divide our curriculum into four academic cores surrounding the capstone project 

Figure. Health Delivery Science Curriculum Map

Health Informatics Core

A modern degree in health delivery science needs to acknowledge the incredible advances in health information technology and digital health science. We believe that digital health science is now a mandatory competency that health systems must master to enable success. In our health informatics core, students learn best practices in how to select, validate, and implement health technologies on the front lines of care. They learn about wearable biosensors, electronic health records, clinical decision support, social media epidemiology, and mobile health applications. Students explore real-life case studies at Cedars-Sinai and beyond, learning from practitioners in the field actively using digital health in the clinical trenches.

Our curriculum allows students to explore how digital technologies drive clinical decisions and offer value to healthcare organizations, their patients, and their staff. We do this in partnership with our Cedars-Sinai / Techstars health technology accelerator along with talented staff from our Enterprise Information Services (EIS) department – the “IT” group at Cedars-Sinai.

Yet, despite the promise of using digital monitoring in large-scale patient populations, students must also acknowledge that the promise of remote monitoring is not yet rigorously tested at scale. There is a need for more research supporting population health monitoring with digital devices. Data are relatively limited about the predictive ability of wearable data in everyday clinical practice. It remains unclear whether data from wearable biosensors meaningfully correlate with clinical outcomes, how this information should be collected at scale for population health management, and how to interpret the results in the context of other metrics such as patient reported outcomes or laboratory markers. Our curriculum explores these issues in depth, ensuring that our students become “technoskeptics” while still maintaining a healthy dose of “technophilia.”

The curriculum also examines various technologies gaining traction in digital health, including telemedicine, virtual reality (VR) and augmented reality (AR) interventions, and social media platforms, among others. We conclude the digital health core by studying a framework for making smarter decisions in the age of digital health — a model that brings together what the clinician knows, what the patient wants, and what the technologies predict.

Data Analytics Core

In our data analytics core, we introduce students to the evolving concepts of “big data” (a hackneyed yet still useful term) and review how massive data networks can inform healthcare analytics in ways never previously possible. Students review health analytic techniques, including data acquisition and management from data warehouses, data manipulation in Excel, and data visualization using Tableau software. We study vignettes where healthcare analytics made a difference, recognize the important limitations of health analytics, and think creatively about how to parlay analytic techniques to transcend how things are usually done and, instead, build a future for how healthcare should be optimally analyzed and delivered.

Healthcare Financing Core

It is a profound fact that 18% of our gross domestic product in the U.S. is dedicated to healthcare. In the healthcare financing core, our students learn how to be good stewards of the financial resources supporting healthcare. They learn how to perform their own cost-effectiveness analyses, a critical skill that is in high demand, and learn about healthcare cost accounting and budgeting. The curriculum not only teaches the textbook theory of healthcare financing and cost-effectiveness, but also provides students with hands-on skills to conduct these analyses using real data from within the health system. Other topics include systematic review and meta-analysis, health related quality of life and utility measurement, budget impact modeling and quality assessment of health economic models. The curriculum provides tools to determine how best to balance limited resources with demands to deliver high-quality care. We incorporate principles from statistics, psychometrics, decision analysis, information technology, epidemiology and medicine to illustrate how employing decision science can allow us to make the best healthcare decisions possible when the stakes are high.

Performance Measurement and Improvement Core

It is one thing to understand the theory of health delivery science, but quite another to deliver the goods on the front lines of care. In our performance measurement and improvement core, students learn strategies for changing clinical practice and improving quality, a field referred to as “implementation science.” We created a curriculum that teaches students how to measure quality, improve quality of care, and then evaluate if those improvements are working. The classroom work is closely linked to real-world applications, with examples drawn from ongoing hospital, health system and policy initiatives from around the country. Our students learn about implementation science and performance improvement technique like LEAN and Six Sigma, all with the goal of combining didactics with applied, practical skill building.

The Capstone Project

We bring it all together with the capstone project – this is the real “secret sauce” of the program. The capstone project affords unparalleled opportunities to gain applied skills that reinforce classroom didactics. From the beginning of their time in the program, each student is assigned to work within an operational or research team in the health system; their work culminates in a formal presentation to hospital leadership. There is no substitute for applied experiences; our students don’t just learn health delivery science, they do health delivery science. And that makes all the difference when entering the workforce.

For more information about the MHDS program, watch this video for a brief visual tour, and visit this website for details about the curriculum and learning objectives.

Brennan Spiegel is Director, Cedars-Sinai Master’s Degree Program in Health Delivery Science

Categories: OIG Advisory Opinions

Travel Ban Is Revealing—but Does Not Threaten American Medicine

The Healthcare Blog - Mon, 02/13/2017 - 22:11

A 90-day ban on travel from seven countries has sparked tremendous outpourings of worry or outright opposition by some 33 medical organizations.

“The community is reeling over the order, fearing that it will have devastating repercussions for research and advances in science and medicine,” states an article in Modern Healthcare.

Certainly the order is disrupting the lives of individual physicians who have won coveted positions in American medical institutions and were not already in the U.S. when the order was issued. Also their employers have a gap in the work schedule to fill. War tears people’s lives apart, however innocent they may be. And countries that sponsor terrorism have effectively declared war on the U.S.

But is American medicine so fragile that it can’t survive a 90-day delay in the arrival of physicians, most of them trainees, from Iran, Iraq, Libya, Syria, Yemen, Somalia, and Sudan? After all, every year more than a thousand seniors in U.S. medical schools do not land a position in a post-graduate training program through the annual computerized “Match” of graduates with internships.

After another chance through the Supplemental Offer and Acceptance Program, or SOAP, hundreds of seniors are still without a job. This means that they cannot get a license to practice in the U.S., however desperate rural communities or inner-city hospitals are to find a physician, and their four years of rigorous, costly post-college education are wasted. Yet James Madara, CEO of the American Medical Association (AMA), is worried about vacant residency slots, according to a Feb 3 article in MedScape by Robert Lowes.

Entry to medical school is highly competitive, so presumably all the students are well-qualified. Can it be that graduates from Sudan are better trained? Does the U.S. have so few young people capable of and interested in a medical career that we have to depend on a brain drain from countries that are themselves desperately short of physicians?

For all the emphasis on “cultural competence” in American medical schools, and onerous regulations regarding interpreters for non-English speakers, what about familiarity with American culture and ability to communicate effectively with American English speakers? Some foreign-born graduates are doubtless excellent, but many American patients do complain about a communication gap. So why do some big institutions seem to prefer foreigners? Could it be that they want cheap, and above all compliant labor? Physicians here on an employment-related visa dare not object to hospital policy.

Whatever the reasons for them, here are some facts about the American medical work force:

One-fourth of practicing physicians in this country are international medical graduates (IMGs), who are more likely to work in underserved areas, especially in primary care, according to Madara. According to the Accreditation Council for Graduate Medical Education (ACGME), 10,000 IMGs licensed in the United States graduated from medical schools in the seven countries affected by the ban.Immigrants account for 28% of U.S. physicians and surgeons, 40% of medical scientists in manufacturing research and development, and 15% of registered nurses, according to the Institute for Immigration Research at George Mason University. More than 60,000 of the 14 million workers in health-related fields were from the seven countries affected by the ban.

Is medicine, like agriculture, now filled with “jobs that Americans won’t do”? Actually, we have more than enough Americans who love medical work. But some of best doctors are being driven out by endless bureaucratic requirements, including costly “Maintenance of Certification™” programs that line the pockets of self-accredited “experts” but contribute nothing to patient care. They are being replaced (substituted for) by “mid-levels” with far less training. Then there are thousands of independent physicians having to retire or become employees because they can’t afford the regulatory requirements—soon to be greatly worsened by MACRA, the new Medicare payment system. Physician “burnout” is becoming so bad that we lose up to 400 physicians—the equivalent of a large medical school class—to suicide every year.

The U.S. should be a beacon to attract the best and brightest, and it should welcome those who want to become Americans. Unfortunately, the lives of Americans, as well as the opportunities of aspiring foreign-born doctors, are threatened by those who desire to kill Americans and destroy our culture. These must be screened out.

Meanwhile, the reaction of organized medical groups to the travel ban is spotlighting serious problems in American medicine.

Categories: OIG Advisory Opinions

Say You’re Sorry, Donald

The Healthcare Blog - Mon, 02/13/2017 - 22:10

I’ve never met Dr. Suha Abushamma or Dr. Kamal Fadlalla. 

But of all the frustrating stories circulating since President Trump issued an executive order barring immigrants from several predominantly Muslim countries, their travails hit closest to home. 

Both Suha and Kamal are internal medicine resident physicians. From Cleveland Clinic and Brooklyn Interfaith Medical Center, respectively. Like me, they have endured the rigorous calling that is American medical training, including not only graduation from medical school, but also the completion of four board exams, a vigorous interview process, acceptance to a medical residency and ultimately working long hours caring for very sick patients.

In fact, they must have excelled – only the best foreign medical graduates gain entry to medicine residency in America.

Yet what was their reward for such hard work? After President Trump’s travel ban last month, Dr. Abushamma was physically deported to Sudan from John F. Kennedy airport in New York and her work visa was withdrawn. On the same day, Dr. Fadlalla was barred reentry to America after visiting family in Sudan, despite having an active specialty occupation visa.

After several courts challenged the executive order last weekend, both Dr. Abushamma and Dr. Fadlalla were able to return home during the interregnum while the ban is lifted. 

The doctors’ exclusion from the United States was not only an atrocity from a moral perspective, but also from a practical and functional standpoint. When a resident physician is unable to work, there are broader ramifications outside of their immediate absence. 

Who takes care of their clinic patients? Who fills in for them during in-patient rotations on the hospital wards? A rising physician’s personal medical education is not only disturbed, but the residency program may be stretched thin, forcing some physicians to work overtime and potentially violate hour restrictions. 

What’s even more ironic is that since the federal government pays all medical residents’ salaries, President Trump’s administration actually continued to compensate both doctors during their “banishment” despite not permitting them to work. 

Ultimately, the greatest harm falls on the most vulnerable – American patients. A medical resident’s absence creates a domino effect that harms the whole community. 

Luckily, there are fail-safes such as coverage schemes and “sick-pull” lists built into residency programs in order to deal with a resident’s absence, which their hospitals surely utilized.

But despite the heavy publicity received by the two physicians’ cases, the Trump administration was silent and likely ignorant of the potential aftermath of a medical resident’s absence.

At the very least, while the legal details of the travel ban reversal and the justice department’s rebuttals are elucidated, the Trump administration ought to apologize to the doctors and their respective medicine programs for their unjust exclusion from the country. Ideally, the government would go one step further and retroactively pay for their travel expenses.

By its nature, medicine is an inclusive, ecumenical and optimistic calling, the central mission of which is a humane desire to help and heal. Physicians are also lifelong students. The Trump administration ought to bear in mind the sage-like writings of Sir William Osler, a father of modern medicine – “The true student is a citizen of the world, the allegiance of whose soul, at any rate, is too precious to be restricted to any one country.”

Geoffrey Rubin is a cardiology fellow in New York. His commentaries have appeared New England Journal of Medicine, Pulse, JAMA Cardiology and The New York Times.

Categories: OIG Advisory Opinions

Should We Blame Technology For the Growth In Healthcare Spending?

The Healthcare Blog - Mon, 02/13/2017 - 22:09

Should we blame technology for the growth in healthcare spending?  Austin Frakt, a healthcare economist who writes for the New York Times, thinks so.  Citing several studies conducted over the last several years, he claims that technology could account for up to two-thirds of per capita healthcare spending growth.

In this piece, Frakt contrasts the contribution of technology to that of the ageing of the population.  Frakt notes that age per se is a poor marker of costs associated with healthcare utilization.  What’s important is the amount of money spent near death.  If you’re 80 years old and healthy, your usage of healthcare services won’t be much more than that of a 40-year-old person.

So far, so good.  But should we accept the proposition that technology is the culprit for healthcare spending growth?  Says Frakt:

Every year you age, health care technology changes — usually for the better, but always at higher cost. Technology change is responsible for at least one-third and as much as two-thirds of per capita health care spending growth.

Frakt’s position is common among mainstream economists who come to their conclusions through the application of complex mathematical models of the economy.  The studies Frakt cites all use statistical analysis to try to disentangle the relationships between a number of interacting cost factors (e.g., demographics, GDP growth, income growth, insurance growth, etc.) before drawing conclusions about the relative contribution of each of these factor.

The models, however, necessitate making assumptions that may not hold true.  Moreover, technology spending is generally not measured directly.  Instead, the models first explain spending on the basis of other measurable factors (e.g., demographics), and then attribute to technology the share of spending that remains “unexplained.”

But if we resist the seduction of quantitative models and, instead, apply common sense reasoning, it becomes apparent that the conclusion that technology per se drives the crisis of out-of-control spending growth is manifestly untenable.

To see this, it is helpful to imagine a simpler context where healthcare spending is decided voluntarily by patients and their families.

In such a context, a company may speculate that a particular technology (say, one that produces artificial limbs), could serve a certain need.  The company then makes an entrepreneurial decision to develop, manufacture and sell artificial limbs on the basis of an estimate of the willingness of patients to pay for the limbs at a price sufficiently high to cover the costs of production and allow for some profit.

The technology company obviously takes a risk.  It may err in its estimation of how patients will value its product: If the asking price is above the one patients are willing to pay, it will incur a loss and may go out of business.  On the other hand, if the asking price is below the level at which patients value artificial limbs, the company will succeed and make a profit.

What is certain, however, is this:  if the company succeeds and patients are willing to pay for the product, healthcare spending will increase, but that will not be viewed as a problem.  If patients voluntarily pay for artificial limbs—or for bionic hearts, xeno-transplanted pancreata, or miracle longevity pills—it is because they value the technology more than the money they have parted with, or else they would keep the money.  Overall welfare is increased, and there is no reason to blame technology.

Admittedly, some patients may later regret their purchase.  But such a regret does not in itself indicate that technology is at fault for the increased spending.  It simply means that those patients miscalculated the value they personally derived from the technology.

This potential for miscalculation is something many mainstream healthcare economists frown upon.  In 1963, Nobel Prize-winner economist Kenneth Arrow gave fresh impetus to the field of healthcare economic theory in a seminal paper calling attention to this potential for miscalculation and attributing it to “product uncertainty:” Because of sickness, and because of the complexity of medical care and technology, patients are unable to make proper value decision.  They can miscalculate in two ways.

First, producers and service providers may take advantage of the situation and obtain a higher price than would otherwise be established under normal “competitive” market mechanisms.  Arrow (and many economists following him) therefore recommend various government regulations to mitigate the effect of this “information asymmetry.” (I have previously shown that the standard assumptions put forth by Arrow and others regarding the effects of information asymmetry in medical care are refuted by historical evidence.)

Second, patients may miscalculate in the other direction and forego technology that could potentially be beneficial to them.  Healthcare economists also find this possibility intolerable and invariably favor government intervention to promote or finance health insurance so as to avoid self-rationing by patients.

The problem with these interventions, apart from their inherent paternalism, is that they do nothing to “bridge” the maligned information gap that can lead patients to miscalculate value.  In fact, they widen it.

In the first instance, the regulation of technology means that regulators substitute their own value for those of patients.  It is regulators who decide what level of evidence and what level of risk is acceptable for a technology to be legalized.  In doing so, they deprive patients from even knowing about certain products.  They thus make the information gap infinitely large.

In the second instance, the provision of health insurance impairs the ability of patients to make proper value decisions since they no longer bear the full cost (or even any cost) of the technology.  Therefore, they are more likely to seek out technology that they might not have purchased at an unhampered market price.

The natural tendency for patients who are shielded from costs to over-utilize healthcare technologies naturally drives the price of technology upwards, so long as the insurer is willing to accommodate this demand.  In most cases, in fact, insurance companies do end up paying for technology.  This goes to show that Frakt and the modeling studies he cites have it exactly backwards: it is increased spending that causes increasingly high technology prices, not the other way around.

Mainstream healthcare economists have long minimized the potential for health insurance to lead to increased spending.  In his same 1963 paper, published 2 years before the enactment of Medicare, Arrow had asserted that

The welfare case for insurance policies of all sorts is overwhelming.  It follows that the government should undertake insurance in those cases where this market, for whatever reasons, has failed to emerge.

Arrow did consider that health insurance might increase demand for healthcare, but he minimized that possibility and left it to future economists to obtain empirical evidence to determine the extent to which so-called “moral hazard” (the tendency for insurance to increase demand) would affect prices in healthcare.  With Arrow’s reassurance, the government embarked on a massive program that has subsidized the demand for not only healthcare technology, but for services and products across the entire healthcare sector.

Because economic analysis is poorly suited for empirical study (since the factors involved change constantly, may not be fully accounted for, and interact with one another), obtaining persuasive evidence for the effect of health insurance on spending has taken decades to materialize.  Recently, however, Amy Finkelstein, a prominent MIT healthcare economist, was able to analyze a large set of historical data on spending patterns before and after the introduction of Medicare.  In regards to the relationship between spending growth and technology, she commented that:

…there is widespread consensus that technological change is the driving force behind the growth in health spending.  But this just kicks the can down the road.  What then drives technological change in medicine?

…[In my recent study] I find evidence that the introduction of Medicare encouraged the adoption of new medical technologies…Now we find that when large-scale insurance changes lead to a big aggregate increase in demand, hospitals have an incentive to adopt new medical technologies.  People will use these technologies because they are not paying for them out-of-pocket…

It therefore looks like insurance, by increasing demand because it lowers the price [to the patient] of medical care, encourages both the adoption of new technologies…and, further down the pipeline, the innovation and development of these new technologies.

In fact, Finkelstein showed that “the introduction of Medicare [caused] …enormous spending effects” and that “the spread of insurance played a very big role in driving health care spending growth over the second half of the twentieth century.”

Whether Finkelstein’s study will eventually persuade other economists, such as Frakt, remains to be seen.  But it is noteworthy that her historical evidence is only confirming what should have been demonstrable by careful reasoning all along: subsidies raise prices and massive subsidies raise prices massively.

So here’s a paradox to conclude with.  Compared to technology, ideas are cheap.  But when bad ideas are concocted into a widely embraced but faulty economic theory, the result can be ruinously expensive.

Categories: OIG Advisory Opinions