Insight, analysis & opinion from Joe Paduda
It’s starting.
Rep. Stark (D CA) is already talking about cutting subsidies for Medicare Advantage programs, which he claims are costing taxpayers over 12% more than standard Medicaid programs.
This comes as no surprise to loyal readers and those who are old enough to remember when “Pete” Stark was a major player in national health care policy.
Yawn.
It didn’t take the HHS Secretary Mike Leavitt long to start in with the tired rhetoric about the evils of government-run health care(free reg req). Leavitt does not want the Feds to negotiate drug prices. Heck, he doesn’t even want Congress to give the Feds the power to do so.
Why not? What’s the Secretary scared of?
According to him, it’s the old archenemy of all things good – government-run health care. While I too am a firm believer in the power of the free market, Leavitt’s logic falls apart upon even the most rudimentary exam.
By any accounting, Part D has been a boon to the pharmaceutical industry (free registration required). Revenues and profits at Pfizer, Lilly, and other manufacturers have jumped. This will undoubtedly lead to more research dollars available to search for cures for awful diseases, an effort exclusively funded by the US taxpayer that will benefit the entire world.
Aren’t we generous?
The annual Medicare physician price cut season is on us. Next year’s reduction will average 5%, although payments for office visits (evaluation and management codes) will increase by up to 30%, but reimbursement for other procedures will be slashed up to 20%.
Don’t expect this to actually happen; every year the Medicare reductions are reversed by Congress. And this year will be no different. I’d expect Congress will do something to reverse the cuts, at least in part.
There is quite a bit of interest among private equity and venture capital firms in the work comp managed care “space”. These investors seek to buy into companies that are poised for growth, that have a “sustainable competitive advantage”, solid management, long term contracts with customers, and a profitable business model.
A key to success for these investors is to find these firms before the other investors do, which means identifying good companies quickly. Analysts spend lots of time, energy, and brain power analyzing, assessing, and interpreting data. looking for the wheat among the chaff.
A much faster, and probably more accurate way, is to pick up the phone and call the company. Talk to the receptionist, someone in customer service and someone in billing. What they say doesn’t matter nearly as much as how they say it.
Good companies have energy, enthusiasm, and a desire to help that comes through the phone. Not so good ones have none of the above.
Kudos to USAToday for publishing a pretty good article on variations in practice patterns related to back surgeries. In a front page story today, the paper that has been derided by some as “McNews” explores the issues surrounding the explosion in the number of spinal fusions.
The reporting is balanced, insightful, and thorough, a bit of a surprise coming from a paper that prides itself on short sentences, really short words, and lots of color, not depth and nuance.
Noted throughout the article is the primary problem – no one knows how many spinal fusions are the right number, and there is significant disagreement among stakeholders re when a patient should have surgery. (free registration required) That’s all true, and that’s where workers compensation comes in.
Continue reading Workers’ Comp – the answer to the spinal fusion question
Mark McClellan is leaving his post as head of the Center for Medicare and Medicaid Services. He served long and loyally, sticking to the Administration’s line even when facts indicated otherwise, remaining a calming force when Part D enrollment was going nowhere. McClellan is also known for listening hard to suggestions and criticism from all sides, and working diligently to address problems.
Here’s what’s happened during his tenure.
Part D was passed, implemented, and operational. This was a monumental task, and one McClellan was instrumental in accomplishing. It’s not his fault it is a fatally flawed program; well, maybe it is, in some small part, as he was probably involved in writing/editing/opining on the legislation. Nevertheless, under McClellan the program became reality, with the initial enrollment problems addressed (in large part).
Two recent articles highlight the massive inefficiencies in the US health care system. In Philadelphia, five hospitals now have heart transplant programs, even though there are only enough patients for two. The result? Hospitals will not perform enough to gain the experience needed to improve safety and efficiency while lowering variable costs.
A few hundred miles away, a (reg req)group of cardiologists in Elyria Ohio have evidently decided that their Medicare patients need angioplasties four times more frequently than the national average. I wonder if it’s the fried dough at the Elyria fair?
CMS is going to change the way it pays physicians. Really. Well, CMS Director McClellan says they will, and soon. Policy types will recall that every year, physician reimbursement for procedures under Medicare is slated to drop by between 3% – 5%, depending on total expenditures the prior year and a really complicated formula (that is never followed). So each year, physicians scream, and every year, politicians say “no, just kidding”, and tweak the reimbursement to send a few more dollars to the docs. And I do mean “few”.
This year expect the same to happen; it is an election year, there are lots of powerful (read “lots of money”) forces in play here, and few elected officials want to take the political hit for cutting Medicare. So far, 80 senators have signed a letter asking that reimbursement levels be increased, not reduced.
Despite the political realities, McClellan is of the opinion that our elected officials will come up with a pay-for-performance scheme for CMS. Whether it ever gets through Congress is another story altogether.
For further edification, I’ll pass on the perspective of Bob Laszewski, long-time national health care policy expert and good friend. Bob’s view is that the increase in utilization driven by physician practice patterns is leading to the huge cost increases we are seeing in Medicare, and the stats back him up. Medicare’s per-service reimbursement in 2006 is essentially unchanged from five years ago, while utilization has gone up dramatically. So, price controls have not worked to hold down medical inflation.
Thus the interest in pay for performance for physicians. While it sounds interesting, it’s really hard to do.
As tough as it’s going to be, I see no better alternative.
Prof. Regina Herzlinger, a well-known advocate of consumer-driven health care and professor at Harvard Business School, has come out in favor of a plan proposed by South Carolina Gov. Mark Sanford that would add choice to the state’s Medicaid program.
According to Dr. H, “Every recipient would obtain catastrophic and preventive coverage as well as a personal health account (PHA). Enrollees could then use their PHA funds to pay for a consumer-driven option of a traditional Medicaid hospital insurance, along with a doctor of their choice; a managed care policy, with its deductibles and copayment; or a network group of local physicians.” OK, sounds reasonable.
She then goes on to say:
(Critics) “believe that Medicaid recipients will overwhelmingly choose the consumer-driven opportunities. But when consumer-driven plans are offered along with other health insurance choices, they are not necessarily the most popular. A 2005 Kaiser Family Foundation survey, for example, found that when enrollees were offered other insurance plans, only about 7 to 15 percent went the consumer-driven route. They also contend that Medicaid enrollees are too poorly educated and lack access to sources of information like the Internet. Although these sources are depicted as high tech, much of what patients learn actually comes from the phone and face-to-face interactions.”
I’m not sure what to make of this. Is Dr. H’s contention that critics need not worry because most Medicaid beneficiaries won’t pick consumer-drive plans? Or is it that Medicaid folks, despite their lower educational level, will grasp health care information as quickly and completely as privately insured people? Or both?
I’m not disagreeing with Dr. H, I’m just not sure where she’s going with this.
I am somewhat confounded by her later assertions in the same article that individuals with chronic conditions covered under consumer-directed plans did a better job complying with treatment, testing, and preventive care directions than individuals in non-consumer-directed plans. Methinks the good doctor confuses a statistical relationship with a causal one.
Back in the day, HMOs recruited members by offering health club memberships, knowing that individuals who were already using clubs and those committed to/interested in improving their health status would join up, incur few claims, and therefore the net expense would be considerably less than if the HMO offered comprehensive diabetes care. Marketing and market segmentation at its best.
Just because these HMOs had a lot of people in health clubs does not mean that their members were healthier because they joined the HMO, it could mean that because the members were healthy to start with, they joined the HMO.
My bet is that the folks with chronic conditions that took care care of themselves in the consumer-directed plans were doing so before they joined. Not, as Dr. H says, that “These plans appear to have transformed how some enrollees approach their healthcare.”
a nod to fierce healthcare for the head’s up.