Rankings of state health care quality

The single most valuable governmental agency is the Agency for Healthcare Research and Quality.
AHRQ’s latest published research is the report on health care quality in all 50 states and DC. Measurements of over 100 indicators in 14 areas, the report indicates how each state compares in each area to national averages. AHRQ has tried to prevent interstate comparisons by releasing 50 separate reports, an indication of the agency’s desire to focus not on ranking each state but on identifying areas each state can improve upon.
Indicators included nursing home quality, percentage of seniors who receive flu shots (interesting metric given last year’s flu vaccine debacle), kidney dialysis effectiveness, suicide rates, counseling for medicare recipients who smoke on smoking cessation, and others. It will come as no surprise that no single state came out well in all metrics. In fact, there is remarkable inconsistency within states. Illinois is an example; according to the Chicago Tribune; “


Global Medical Forum Annual Meeting

A few semi-random observations from this excellent conference.
1. The rate of inflation in medical expenses in the EU is essentially identical to that in the US. This despite the major differences between the systems; drug and procedure price controls, very limited access to some new technology, end-of-life care restriction/rationing, and mandatory coverage. Yes, our expenditures are higher, but that is only because we started from a higher base. The EU’s costs are going up just as fast as the US’.
2. Generic drugs are much more expensive in the EU than in the US, partly because most countries in the EU set “reference prices” that effectively keep prices high when drugs come off patent. According to panelists in the session I moderated, this serves to reduce the incentive for drug companies to innovate, as their returns are quite adequate for absolutely no risk.
Compare this to the new drug development business, where 10,000 compounds are required to deliver one new drug, and the reference-priced generics look like a much better business.
3. The new intellectual property protection law in India, passed within the last couple of months, has already generated strong interest from pharmas in moving or locating drug R&D as well as manufacturing in that country. The highly educated workforce, 300 million-strong population of middle class consumers, and new patent protection will likely make India a very powerful force in pharma, and sooner rather than later.


Medicaid subsidizing employers?

Ten employers in Florida, several of whom are receiving substantial tax breaks from the state, have a total of 49,100 employees enrolled in Medicaid. Florida is one of the few states that does not require employers receiving such tax breaks to provide health insurance as a requirement for the subsidy.
The subsidized companies, WalMart, Publix Super Markets, Winn-Dixie Stores, Burger King Corp. and Walgreen Co have an estimated 29,900 employees and/or family members enrolled in Medicaid.
According to the St. Petersburg Times,
“Combined, these five firms have been approved by the state for up to $10.8-million in tax credits and tax refunds for at least 3,805 jobs


Medicare drug program to cost states $$

In a posting on www.signalhealth.com, John Rodat has written an excellent summary of the unintended (or perhaps not…) consequences of the Medicare Drug program. Namely, and I quote…
–“Lots of Medicaid clients are also Medicare clients.
–Lots of these “dually eligible” folks are sick and use lots of pharmaceuticals.
This is especially so for those in nursing homes
–So when the Federal government created the new pharmaceutical benefit, it recognized that it would be paying for drugs that were previously being paid for under Medicaid. That would simply have shifted the cost from states to the Federal government
To offset that effect, the new law includes a provision (tenderly called the “clawback”) that establishes a formula by which the states pay the Federal government.”
And, this formula may well cause some states to pay the Feds more than they gain from the Medicare Drug program…
Kudos to Mr. Rodat for his insight.
What does this mean for you?
More supply-fueled demand for drugs means higher total Rx costs.


Taxation of health benefits

The Presidential Panel on Federal Tax Reform heard testimony from two economists that “federal tax subsidies to employers and employees for health insurance, flexible spending accounts and new health savings accounts do not promote the expansion of basic health coverage and increase the number of uninsured residents.” (source California HealthLine)
The Panel, chaired by ret. US Sen John Breaux (LA) is working to assess the impact of the Federal tax deduction for health care benefits, which amounts to a $188 billion subsidy today and will reach $250 billion “in several years.”
The reasoning behind the testimony and hearings lies in the apparent disconnect between the subsidy and it’s impact on the uninsured. Simply put, higher income individuals benefit from the subsidy, while lower-income people are more often uninsured as their employers do not offer the benefit, they are marginally employed, or cannot afford their employer-sponsored coverage.
To address this disconnect, one of the economists testifying recommended “limited subsidies for health insurance in combination with refundable tax credits to help low-income and uninsured residents purchase coverage.”
Why is this important to you?
The President has promised to halve the Federal deficit over the next four years, and huge subsidies for health insurance are likely to be a leading target. The perception in Washington is that the subsidy works to minimize individuals’ concern about and focus on managing their health care; think “ownership society”.
If Bush is truly committed to deficit reduction and the ownership society, health insurance tax benefits are a likely target.


Medicaid Round Four

The Senate and House have very different ideas of what to do with Medicaid in coming years; this difference of opinion may deadlock the two bodies on overall budget negotiations.
Briefly, the Senate passed a budget with no cuts in Medicaid funding; the House version has $20 billion in budget reductions. The latest news indicates the Senate may be willing to compromise, but conservatives in the House appear to be less interested in restoring the funding the Bush Administration has axed from Medicaid.
As reported in California HealthLine;


Medicare pay for performance gets a push

Even though it’s just a small one, it is stilll significant. Rep Nancy Johnson (R) CT (my home state) is promoting a drastic change in the way Medicare pays physicians. Rep. Johnson is calling for a pay-for-performance scheme to replace Medicare’s fee schedule arrangement.
Details below, but in case you can’t read that far, think of this.
1. many state workers comp fee schedules are based on Medicare’s. What are the implications for state programs?
2. Group health reimbursement is often tied to Medicare as well…
3. Medicare is based on paying for services needed for and delivered to a population that is over 65. If the reimbursement arrangement changes, and it factors in some kind of “performance” metric, will it even be possible to adapt that to younger populations?
Now that your head hurts, here’s the details…
According to California HealthLine;
“Johnson said that, although physician performance measures and systems to collect data on performance are not perfected, lawmakers must move to address the issue because of scheduled reductions in Medicare physician reimbursements over the next several years. Elimination of the SGR (Sustainable Growth Rate) system “is the only possibility,” Johnson said, adding, “It’s unfortunate that we have to do this two years in advance of the technology.”
Johnson also indicated that lawmakers could enact “a one-year fix of physician payment while a more permanent system is being designed,” although she hopes to enact permanent revisions to the Medicare physician reimbursement system this year, CQ HealthBeat reports. She estimated that the replacement of a 1.5% reduction in Medicare physician reimbursements for fiscal year 2006 with a 1.5% increase would cost $11 billion over five years.”


Medicaid, Round three

It appears that Medicaid is safe, at least in the Senate, from Pres. Bush’s attempt to cut $14 billion over five years. Smith, Republican Sen. of Oregon, claimed to have enough votes to pass an amendment restoring the dollars, and creating a Commission to study Medicaid.
According to California HealthLine,
“Smith said at least six Republicans support the amendment. A vote is expected as early as Wednesday. According to the Post, the budget resolution’s current language prevents lawmakers from filibustering legislation to implement entitlement cuts, allowing it to be approved by a simple 51-vote majority (Washington Post, 3/16).
Smith said, “I’m afraid of the consequences for the disabled if we do Medicaid reform in a hurry,” adding, “I’m specifically … concerned about how Medicaid cuts are first made against mental health coverage” (Schuler, CQ Today, 3/15).
However, the House may be a different story. Representatives are not sanguine about the possibilities of reaching agreement on a budget compromise if the amendment passes the Senate. In fact, HealthLine goes on to state:
“The House Budget Committee on March 9 proposed a FY 2006 budget resolution that would require the House Energy and Commerce Committee, which has jurisdiction over Medicaid, to find $20 billion in savings over five years ”
This bout may be a long one.


State approaches to health care coverage

Families USA sponsored a conference last month entitled “Health Action”, which pulled together a variety of leading lights from politics, policy, government and the private sector to discuss individual states’ efforts to improve access to and coverage for health care.
Key findings include:
1. many states recognize that health care is “an unavoidable issue, and every sort of option


Ban on specialty hospitals may be extended

Two reports on so-called “specialty hospitals” were released yesterday in hearings on Capitol Hill. The Medicare Payment Advisory Commission’s (MedPAC) report calls for an extension of the ban on construction of new specialty hospitals. For those who have not been keeping up on this rather esoteric (but critically important) issue, there has been a Federal ban in place preventing the construction of these facilities, which are typically for-profit and partially owned by the physicians practicing at the facilities.
The rationale behind the ban was a concern that these facilities were “skimming” the profitable patients, leaving tertiary and primary hospitals the indigent, Medicaid, and less-healthy patients. According to California HealthLine, the report addressed this concern directly, noting:
“The MedPAC report, presented to the Senate Finance Committee on Tuesday, states that physician-owned specialty facilities could “corrupt clinical decisions and lead to inappropriate care.” The report also said that, relative to full-service hospitals, specialty hospitals generally treat healthier patients, focus on higher-cost procedures, treat fewer Medicaid beneficiaries and do not have lower costs.
The report recommends that Congress recalculate Medicare prospective payments to acute care hospitals to more accurately reflect the cost of care and prevent financial incentives for hospitals to select healthier patients (CQ HealthBeat, 3/8).
MedPAC’s findings were not entirely echoed by a CMS report presented at the same hearing. (Source California HealthLine)
“CMS “unexpectedly released” its preliminary report on specialty hospitals. Thomas Gustafson, deputy director of the CMS Center for Medicare Management, said the CMS study shows “measures of quality at [physician-owned] cardiac hospitals were generally at least as good and in some cases better than the local community hospitals.”
In addition, “[c]omplication and mortality rates were lower at cardiac specialty hospitals even when adjusted” for patient-sickness levels, he testified. CMS conducted its study by examining six markets, which represent 11 of the 59 cardiac, surgery and orthopedic specialty hospitals approved in 2003 as Medicare providers.
The CMS report also found that doctors who have invested in specialty facilities do not refer patients exclusively to the specialty hospitals but they do refer a greater share of patients to specialty facilities than to full-service hospitals. ”
Out here in the real world, there is evidence that specialty facilities do skim the patient pool. A full-service, multi-hospital health care system (client of Health Strategy Associates) has been losing patients to a physician-owned ambulatory surgery center for over a year. Anecdotal information strongly indicates that the patients seen at the doc-owned ASC are more likely to be privately insured or covered by workers’ comp (a profitable payer in this state).