Jun
8

Watch out for that hole…

The Fresno Bee editorial page picked up on a study published in the New England Journal of Medicine about the impact of deductibles and copays on compliance. The study analyzed what happened to seniors once they met their coverage limit under a drug program known as Medicare Premium Plus. (this limit was set at $1000)
The results are not terrible surprising – visits to the ER rose, compliance with drug regimens diminshed, blood pressure rose.
We may well see the same result around October, when many seniors will hit the “doughnut hole”; after they have incurred about $2250 in costs, they are responsible for the next $3000 or so, after which coverage kicks in again. If they stop taking their medications, we can expect to see a bump up in ER visits and potentially other services. When you add in their copays and the doughnut hole payouts, a beneficiary who hits $5100 in total expenditures will have paid $3,600 out of pocket.
About 25% of beneficiaries are projected to hit the doughnut hole; 10% will hit the $5100 level and therefore be defined as catastrophic cases.
It is likely that these folks will be less healthy than the seniors who don’t spend that much on drugs. And for many, the drugs are keeping them out of the hospital by managing their blood sugar, hormone levels, lipids, hypertension, psychiatric issues, and chronic pain.
If they stop taking their meds, Part D costs may well come in under projections. The other Medicare “Parts” wiil not be so fortunate.


Jun
5

CMS data release – and their point is…?

To much fanfare, CMS released several data files containing hospital charge and payment data by state, county, (but not by individual facility) for the 30 most common DRGs and elective procedures. National, state and county financial ranges are included, and the volume of services provided at individual facilities are also available.
This is the first of three planned data releases; the next scheduled for this summer is for ambulatory surgical centers followed this fall by hospital outpatient numbers.
Promoted by the Administration as a part of Bush’s “commitment to make health care more affordable and accessible, President Bush directed the U.S. Department of Health and Human Services to make cost and quality data available to all Americans”, the data is available at CMS’ website. I’m not sure how this data will help consumers become better…consumers, but in the meantime here’s my positive spin on the effort.
Here’s my take on what you can do with the data.
1. FIgure out how your payments compare to the Feds’, and use that to assess your contracting strategy.
2. Identify the hospitals that do the most specific procedures, and direct your patients/insureds/injured workers to those facilities…and away from the others.
3. Publish the data (after translating it into English) on your website so patients can draw their own conclusions.
4. Examine the volume of procedures at specific facilities and compare that to your payments to same see if there is a link between experience and efficiency (or at least billing practices).
5. Look at the payment to charge ratio and wonder.
6. Wonder how the release of the data will help consumers make better decisions, as individual hospital charge and payment data is not available.
There seems to be a problem here. How are consumers going to improve their ability to consume if individual facilities’ results are not posted? How could an individual consumer use these data to make better decisions? Do the Feds have a clue?
Here’s the detail on what’s in the files.
Top 30 Elective Inpatient Hospital DRGs” contains the volume and ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. Included are the 30 conditions that had the highest utilization rates among all Diagnosis Related Groups (DRGs). Data are aggregated at the county, state and national level.
“Other Inpatient Hospital DRGs of High Utilization” contains ranges of Medicare payments between the 25th and 75th percentiles for a limited set of conditions treated in U.S. states and counties. These conditions are not among the top 30 utilized Diagnosis Related Groups (DRGs), but were deemed of interest to the Medicare community. Data are aggregated at the county, state and national level.”
What does this mean for you?
See above.


Jun
1

Part D results are…

Part D’s enrollment deadline came and went, and along with it the orgy of claims, counter claims, blames and counter blames. So now that at least a bit of the dust has settled, where are we?
Confused.
Depending on whom you read or watch or listen to, the program has either been a success or a failure, is working or is not, is profitable or a loser, has enrolled “enough” people or has fallen well short.
The reality is as confusing as the perceptions appear to be. In any effort to cut through the spin, I checked in with Bob Laszewski of Health Policy and Strategy Associates. His take is it is too early to tell how things are going, and in the absence of truly meaningful metrics, we’re just going to have to wait and see.
Here’s why there is so much confusion.
There is no consensus on how many seniors have signed up for Part D or have alternate drug coverage under other plans. For starters, health plans and the Feds can’t agree on who is signed up by whom. Some health plans have been told they have thousands more members than they can account for, while others are being told large numbers of their “enrollees” actually signed up for Part D when they already had coverage under Medicare Advantage or another plan.
As near as I can figure it, there are between 8 million and 4.5 million seniors still without coverage. More details to follow…
Meanwhile, Humana, one of the more “successful” health plans in terms of signing up seniors for its Part D programs, recently saw its debt ratings outlook downgraded by AM Best from ‘stable” to “negative” in part due to large Part D enrollment and associated reliance on government contracts and increased capital requirements.
And AM Best may be on to something. The Medicare Trustees recently projected that the Part D program’s costs would increase by 11.5% annually over the next ten years. If those projections hold true, early claims about the currently “favorable” loss ratios may be short-lived.
We’ll have to wait until at least mid-July for reasonably accurate enrollment figures, and accurate financials will take another five months or so. If someone provides numbers in either category before those dates, be skeptical.


May
12

Part D financials make no sense

A new study released by Part D advocacy group Medicare Today makes a compelling case for seniors’ enrollment in Part D. Authored by the Lewin Group (an excellent and unbiased health care reseach and analysis firm) the study makes a compelling case for seniors to enroll.
It makes an equally compelling case for adverse selection.
The only seniors who are signing up are those that can make money on the program. They make money because their premiums will be less than what they are spending on drugs today (or would be tomorrow). The Lewin report provides details on who benefits the most, what the average cost is ($37.43/month), and what benefits accrue to individuals with which conditions. It’s really well done.
Make no mistake; this is not insurance.
The Part D program is akin to an ATM card where you can withdraw any amount you want, as long as you pay a set minimum price. So, seniors, no dummies when it comes to managing money, can pretty quickly figure it out.
What’s missed in the discussion about Part D is the better off seniors are, the worse off taxpayers are. The ATM account has to be funded by someone, and that someone is the beleagured taxpayer.
This is nothing short of bizarre. The Feds are actively and aggressively encouraging enrollment in a program that will cost three-quarters of a trillion dollars over the next ten years, while cutting taxes that will be needed to pay for this program.
What does this mean for you?
Really high taxes in a few years. Followed by a taxpayer revolt. After which Congress will likely authorize the Feds to negotiate pricing with big pharma. Because the only other choice is to cut benefits, and seniors would never allow that.


May
10

What’s the fuss about the Part D “deadline”?

Listening to all the noise about the upcoming Part D enrollment deadline you’d think if you don’t sign up now you’ll never be able to. Nothing could be further from the truth.
For seniors who enroll in Part D after the “deadline”, their premiums will be increased by 1% for each month post-deadline. So, if the premium is $25.00 now, it will be $28.00 in a year. Now, I know many seniors live on fixed incomes, but the extra three bucks is not likely to break most individuals.
Especially when one considers the decision process seniors are going thru. They look at their drug bills today, see if they can save money by enrolling in Part D, and if they can, they do, and if they can’t, they don’t. And when they can save money by enrolling, they will.
Plan sellers could change their premiums between now and when a senior decides its finally worth it to enroll, but they can do that anyway.
So the deadline is not a “line in the sand”, but it sure makes for good press. It’s too bad that the mass media is not doing a better job of educating seniors about the soft deadline, instead choosing to create a false crisis.


Apr
25

Part D enrollment myths

Rather than do the ‘reinvent the wheel’ thing, I’ll just refer you to other folks who have been “fact checking” the Administration’s claims about the 30 million who have “signed up for” Medicare Part D.
The net is this – out of the 21.3 million eligibles (not covered under some other Medicare or other Rx program), a bit over one-third have signed up for stand-alone Part D.
Matt Holt replays a Wall Street Journal article that (finally!) breaks down the actual enrollment stats by source (something Kate Steadman, Matt, and I have been blogging on for months…).
This makes me nuts because it will be used by some to make the point that governmental approaches to health care coverage do not work. And in this case, they’ll be dead on.


Apr
13

Medicare cutting physician reimbursement

Physicians will be getting coal in their stockings from Uncle Sam come Christmas, 2006. It looks like Medicare reimbursement will be cut by 4.6% for 2007, just in time for those holiday credit card bills.
For several years, these cuts have been mandated to take place on the first of the year as part of Medicare’s legal requirement to maintain expenses under a “sustainable growth rate”, or SGR. Up till now Congressional action has prevented the cuts from taking place, but the budgetary constraints on Medicare growth are likely to force Congress’ hand.
While that is bad enough, this is by no means the end of the bad news. According to California Healthline, the potential cut “represents the first in a series of reductions that will decrease reimbursements by 34% over the next nine years, during which time physician costs likely will increase by 22%.”
The cuts are a result of calculations by CMS based on 2005 increases in utilization of minor services and increased prices. Not surprisingly, the major driver was utilization.
Price fixes are a blunt instrument, but an effective one, at least for the Feds. While these cuts will reduce Federal expenditures, they will undoubtedly lead to higher costs for private payers, as physicians shift costs to their group health patients.
If this continues for many more years, we will have private payers and their insureds subsidizing more than 50% of the cost of Medicare patients.
Sounds like nationalized health care…
What does this mean for you?
Priivate payers’ costs will increase as physicians seek to recoup lost income.


Apr
12

Part D enrollee satisfaction

The Washington Post published results of a study that indicate a generally modest level of satisfaction with Part D among enrollees. According to the Post, “Three-fourths of Medicare beneficiaries enrolled in the drug benefit say paperwork to sign up was easy to complete, and almost two-thirds say the program saves them money…”
I’d just point out that seniors are pretty sharp consumers, and the ones who signed up for Part D are likely those who did the math to figure out the cost-benefit.
This is called adverse selection, and is the main reason the program will not be successful over the long term. Simply put, the ones who sign up are the ones who will get more in benefits than they will pay in premiums.
Matt Holt’s Fierce Healthcare points out that the Post erred in stating that 29 million had signed up for Part D – this number actually included all seniors with some form of drug coverage from Medicaid, Medicare Advantage, or other sources, and grossly overstates the actual enrollment – which is about 30% of eligibles.
Also of note is this stat – among all seniors surveyed, (those with and without Part D coverage), 41% approve of the benefit and 45% don’t. Leaving aside the health policy issues of Part D, it sure does not look like a political win for the current Administration.


Mar
29

Part D’s failure is good news for pharmacies

I noted a couple weeks ago the problems pharmacies in Texas have been encountering with Part D – slow pays, no pays, missing information, higher staffing costs, and the like. Now word comes that California pharmacies seem to be suffering the same side effects of Part D.
The news comes from the Sacramento Bee (free registration required), and was triggered by reports of a home-delivery pharmacy shutting its doors, at least in part due to payment problems associated with Part D. According to the Bee;
“In a CPA (California Pharmacy Association) survey about Medicare Part D, 55.8 percent of independent pharmacies said the drug program’s timing of payments has created a “significant negative financial impact” on their business.”
Ohio pharmacies, especially the independents, are also experiencing financial troubles they attribute largely to Part D. While many of these issues were recognized early this year, the financial impacts are only now really starting to be felt.
The independents don’t have large chains’ financial backing nor buying power; this will make it very difficult for those in anything less than excellent financial shape to survive while Part D is sorted out. As independents account for 43% of all pharmacies, this is no small issue.
The good news is few eligible seniors have signed up for Part D. This presents us with an interesting picture – the success of a program designed to get more drugs to more people may well have killed off many independent pharmacies.
Only in Washington could they have come up with something so creatively destructive.


Mar
27

Whither part D? or Wither Part D?

It’s not often the President of the United States does health benefit plan enrollment meetings, so Bush’s recent national tour touting Part D stands out as one of the more unique moments in health benefits history. But this is more than an interesting factoid, because Bush’s speaking tour came about because of the dismal enrollment rates seen to date. And with the enrollment period ending in less than two months, it does not look like things will get much better.
While the President touts the enrollment of 25 million seniors into the program so far, 20 million of those had coverage before the program started. That leaves a total of 23 million seniors eligible for enrollment – out of which 5 million, or less than 22% have taken the plunge.
As I’ve been saying all along, any voluntary benefits plan with participation under 70% is in trouble – so Part D looks to be in big trouble.
If enrollment stays slow and low, Congress may well have to extend the enrollment period. While Bush has said that is a non-starter, he also threatened to veto any Congressional action on the Dubai Ports deal. This turned out to be a hollow threat, and with Congress increasingly independent of the White House, and Republicans seeking to salvage anything from the ashes of Part D, an extension could well be in the works.
(Bob Laszewski was the first to characterize Bush’s role in enrollment meetings)