CHRTLines Blog

Federal Health Research Cuts: You Can’t Have it Both Ways

Mon, 23 Jan 2012 09:00:00 -0500

With lawmakers under increasing pressure to reduce overall federal spending, funding has been limited in many areas of health research and enforcement. Even before the recent focus on deficit reduction, funding for the National Institutes of Health (NIH) has been significantly constrained. In the 10 years prior to fiscal year 2008, the NIH budget grew by 31 percent, to $29 billion. From fiscal year 2008 through fiscal year 2011, the NIH budget grew by only 3%, to $30.6 billion (including a decline between FY 10 and FY 11 to $30.8 billion). In the most recent four-year period, competitive NIH grants were flat.

Cuts have occurred elsewhere in the public health arena as well. In FY 2011, the budget for the Centers for Disease Control was cut by $720 million and cuts look to be deeper in 2012. All predictions from federal budget watchers are for federal resources supporting health research to decline over the next 10 years.

These budget reductions have many implications, and leave us with much to consider. Everything from recent critiques of the FDA to challenges faced by HHS on implementing core functions can be connected to severely-constrained funding levels. In this post, I am focusing on one particular outcome of concern: the issue of conflicts of interest.

The New York Times ran an important and concerning article on the front page of its business section on November 3, 2011. The article described issues of conflict of interest facing several panels, which are developing guidelines for hypertension, cholesterol, and obesity. The Times reported that 20 of the 52 members of these panels—including co-chairs—have been instructed not to vote on crucial parts of the guidelines because of connections with industries affected by the guidelines. The connections include fees for speaking and consulting engagements, which have long been a source of concern in various federal health panels, and others involve industry funding for research.

These challenges are not new. There were scandals about this issue years ago, long before recent cuts in federal funding for research. And, the NIH goes to great lengths to identify conflicts of interest and minimize impact—through disclosure forms and other techniques designed to make the process transparent—but further limits to federal funding for health research will make it increasingly difficult to avoid conflicts of interest going forward.

Medical schools and schools of public health—institutions that have long relied on research dollars from NIH and other agencies to support core science and health innovations—won’t simply cut back on programs; they will look elsewhere for support. And with a shortage of public financing, it is likely they will turn to industry for funding. There simply aren’t a lot of other good alternatives. So, we shouldn’t be surprised to see candy makers or the soft drink industry becoming major sponsors of research on obesity at universities. Or to see the pharmaceutical industry funding guideline-connected research: research that then later causes concerns about the recommendations of federal panels on evidence based medicine.

In the end, we really can’t have it both ways. If we cut public financing, we have to understand the impact of that choice. With less public financing, other sources will be sought. And, just like in campaign financing, we might not like the end result we get.

The Latest (Not Greatest) on Essential Benefits

Mon, 09 Jan 2012 10:02:30 -0500

Well, the federal government has spoken about its intent with regard to defining essential benefits, and the answer is: leave it to the states. As Tim Jost notes in his latest blog post, there are some (probably, most) who assumed the Affordable Care Act would result in more uniformity in essential benefits across the country. But instead (no doubt bowing to a perceived political backlash at this time of difficult discourse in Washington, DC) the Obama administration decided to publish guidelines and establish broad parameters for essential benefits without going into the details.

As Politico noted, the reaction was muted even though there were many disappointed health reform advocates. So why wasn’t there a bigger outcry? Because even the most ardent activists understand what the administration is up against politically.

Had the administration decided to enumerate benefits, it would have opened itself to renewed charges of a government “takeover” of health care and “socialized” medicine. As noted in the New York Times, the administration clearly did not want to give that kind of ammunition to opponents of health reform—particularly in this political year.

During the 2008 presidential campaign, Democratic pollsters admonished the candidates to use certain words and phrases when talking about health reform. One of those phrases was “uniquely American solution.” In today’s political climate, this “uniquely American solution” seems to center around the idea of not telling people what to do: be they consumers with the individual mandate, or states setting up exchanges, choosing qualified health plans, and now, establishing essential benefits. Centralized decision-making (in health care, at least) seems to evoke terms like “socialism” and give fuel to the opponents of reform.

Like so much in today’s political discourse, the critique of centralized decision-making is most unfortunate. It seems to be made in a vacuum, independent of analysis and thoughtful dialogue. A serious discussion—in this case, about how much health policy should be carried out federally and how much at the state or local level—is an important precursor to informed public policy. These kinds of decisions include tradeoffs, and these tradeoffs are most evident when it comes to things like essential health benefits.

Today, Medicaid plans benefit plans vary—within some guidelines—from state to state. And most health plans tailor benefits for their largest customers and manage risk for smaller customers through benefit design. This means that, over time, health plans can end up with literally thousands of different benefit options for large customers to choose from.

The question is: what value does this benefit variation provide? Yes, it gives autonomy to different decision makers in the system (HR managers, state legislators, labor negotiators and the like) but does it meet any other goals? Does it improve the health of the population? Or the cost effectiveness of health care? The evidence would seem to indicate that it probably does not achieve either of these goals. It does reflect the coverage priorities of decision-makers and presumably represents how they might want to spend health benefit dollars. But, if anything, this plethora of benefit designs and benefit structures adds considerable administrative cost to the system without consideration of the value of the benefits provided with regard to health or wellness. The added cost comes at every level: from the health plans that must train benefit representatives to become familiar with thousands of benefit designs to the providers who have to remember each formulary or other scope of coverage questions before they prescribe care to their patients. Benefit variations add cost to the system.

In most other developed countries, benefits chosen centrally and are generally uniform across population groups. American health care reformers hoped the essential benefits component of the Affordable Care Act would do something similar: help lower administrative costs and clarify benefits for consumers. With the current decision on essential benefits, it does not appear that those goals will be met.

The ACA provisions on essential benefits do advance us from where we are today, but not as far as many hoped we would get. So, it would seem that for now, the “uniquely American solution” on essential benefits is politics-smart, but policy-weak.

Complexity and Confusion: The Challenge of Communicating About the Affordable Care Act

Mon, 19 Dec 2011 09:24:11 -0500

OK, I admit it: we made a mistake.

Earlier this year, we were asked if we had ever seen a one-page flow chart of the Affordable Care Act (ACA) from a consumer perspective. We hadn’t seen one—and after much looking, still didn’t—so we decided to create one ourselves.

It seemed like such a simple idea. Hmmm—not so simple in the end.

The reason it’s not so simple is illustrative of the Obama administration’s problem in communicating the ACA: it is, in fact, extremely complicated—but complicated for a reason (more on that later).

It took us several months and many review cycles to prepare our flow chart for publication. When we finally released it, the chart was shared widely via social media, stimulating some interesting discussions—and a very polite question from a financial policy analyst in California, who asked us if we meant to say “less than” rather than “more than” in one of the flow chart’s boxes.

That very good question caused us to review the whole document once more, and we realized the chart needed further clarification in several spots: in particular, areas relating to parts of the ACA that focus on “affordability tests” (where eligibility for subsidies is determined based on both whether or not an employer offers coverage and the cost of that coverage relative to the employee’s income). There are a number of moving parts in that formula, and our efforts to portray them in an understandable way caused us to short-circuit the clarity. In the corrected version, the employer coverage section goes from six boxes to twelve.

OK, so why is it so hard to depict the consumer perspective in a one-page flow chart? To answer that question, it is important to remember that the ACA is as complicated as it is because it builds on the existing system of financing and coverage rather than replacing it.

President Nixon proposed health care reform in 1971 and 1974 that would have fundamentally changed the structure of health care financing in the country, and President Clinton’s plan would also have made that kind of fundamental change. But both efforts failed to get the necessary political support. One of the lessons that President Obama and today’s Congressional leaders took from those past defeats (and subsequent polling data) was the importance of building on the current system rather than replacing it. After all, more than 70 percent of the U.S. population has private coverage and another 15 percent is covered by Medicare; both populations are generally satisfied with their coverage.

In an effort not to disrupt those happy with what they already had, but still meet the goals of expanding coverage and moderating costs, those who drafted the ACA tried to keep all major structures (public and private coverage) intact—with some “corrections”—but no outright replacement. There was also some early hope that Republicans would support the idea of an individual mandate because the idea had originated with the Heritage Foundation (a conservative think tank) during health reform debates under Clinton.

So, in the art of compromise that has characterized our political process (at least historically), the idea was to expand coverage by requiring everyone to have it, retaining a predominantly employment-linked coverage approach, and subsidizing those considered relatively low income but not low enough to be eligible for Medicaid. Making sure that coverage was affordable, while working within a predominantly employment-connected financing system, required a complex formula designed to let the market work—except when it wasn’t “affordable.”

Therein was the challenge. The current American structure of health care financing is not a straightforward system; in fact, it isn’t a system at all. The ACA doesn’t create a unified system either: it fills cracks in the existing structure to address key issues of coverage, cost and quality. As a result, the ACA does indeed create something similar to a Rube Goldberg machine.

But make no mistake: coverage under the ACA is complicated because it reflects what was politically possible. Americans said they did not want radical change. So in the end, the ACA is the system Americans asked for, even if they don’t understand it.

We could have had simple. We could have had a system that reduced complexity, increased coverage, and reduced administrative costs (and put many policy wonks and consultants out of business!). That system could have been called Medicare for All. If the goal was simple and clear and easy to understand, that would have been it. But, until America is ready for simple and clear, our now corrected (we hope!) flow chart is here.

The Unintended Consequences of Reimbursement Changes and Interplay with Practice Patterns

Mon, 05 Dec 2011 10:00:00 -0500

As we continue to focus on health care spending, it is important to look at the tools we’ve tried already and learn from our experience – especially our mistakes.

In health care, it seems that every action taken to reduce spending leads to an equal and opposite reaction elsewhere in the system. This issue has been well illustrated by the Congressional debate on the sustainable growth rate (SGR) formula since 1998 (for more on SGR see our 5/10/2010 blog post). While health policy analysts and people in both parties agree on the need for a fix—and have lots of ideas for it—every solution is fraught with major problems and creates winners and losers, and that makes the politics of change extremely difficult.

Another illustration of this type of a problem can be seen in payment changes made to oncology drugs. The issue of payment for oncology drugs delivered in physician offices has been a topic of much debate among health plans over the past 10 years. There was little doubt that the amount paid for these drugs by most payers was highly inflated relative to their cost, and that payments were providing “windfall” profits to oncologists who provided chemotherapy in their offices. In January of 2005, Medicare significantly lowered its payments for physician-administered drugs—a change that many private health plans followed. Specifically, the change lowered the amount paid for these drugs from the average wholesale price (AWP) to the average sales price (ASP) of the drugs, plus a 6 percent margin. The AWP was an artificially set price that was not what physicians were actually paying for the drugs. The ASP rate was intended to more than adequately cover the cost of the drug along with the cost to administer it. The ASP was significantly lower than the AWP—in some cases, quite dramatically so.

So, what happened as a result of this change? The November 2, 2011 New England Journal of Medicine reports on a fascinating study that describes some of the impacts of that change with regard to one disease – lung cancer. In the United States overall, the rates of chemotherapy treatment for lung cancer went up after the payment change, by 10 percent within 60 days of the payment change and about double that within six months of the change. That is, as rates for these drugs were cut, on average, physicians in the United States started providing more treatments to patients.

Clearly, this change is a concerning one from a patient care standpoint: one wonders about the impact on patient outcomes and care from this additional chemotherapy. But, perhaps unfortunately, the change is not entirely surprising—target income theory notes that as prices are cut, providers will seek to offset those cuts by providing more or different services (an experience quite in evidence with the SGR).

What was most surprising in the study reported on in the NEJM, however, is that this change was not uniform across the country—it varied quite significantly geographically. For example, use rates for chemotherapy went up quite significantly in New Hampshire, Minnesota, and the District of Columbia (and in many other states), but down in Idaho, South Dakota, and North Dakota. Indeed, there is no discernible pattern among the states that increased use considerably, modestly, or not at all. And, this change was certainly not driven by a change in patient characteristics between the states.

If we look just at the experience of the SGR, we can see that it is essential to think about the unintended consequences of reimbursement changes. But, looking more deeply at the example of these chemotherapy drugs helps us understand that the picture is even more complex than we might have thought. What do we learn when we add in this complexity? If nothing else, this study is a reaffirmation that local practice patterns are essential: geography is indeed destiny and all health care is local.

Looking at cost trends in broad averages isn’t enough. If we are going to have any sustained success at changing this cost picture, it will take aligned incentives that are not focused on price alone and that take human behavior into account. Anything less and we will be destined to repeat the mistakes we have made so brilliantly made in the past.

The Death of CLASS

Mon, 21 Nov 2011 08:59:05 -0500

Last spring when my colleagues and I were teaching a class on health insurance in America at the U-M Ford School of Public Policy, we asked our students to write their final papers on what they would change about the Affordable Care Act. Three of our earnest and committed students took on the task of trying to make the Community Living Assistance Services and Supports program (CLASS Act) workable. All three came up with approaches for increasing enrollment in CLASS and making it more financially sustainable over the long term.

As my colleagues and I talked about how to grade these papers, we considered to what degree the students’ solutions were workable. (One of my fellow instructors felt strongly there was simply no way to fix CLASS.) In the end, all the students who took on the challenge of fixing the CLASS Act earned grades in the “A” range because they demonstrated strong understanding of the Act and its pitfalls, proposed thoughtful solutions, and wrote extremely well.

But even so, we were not convinced that any of their solutions could fix the problems inherent in CLASS. And, as events have unfolded, they are at least in good company, since the Secretary of HHS was unable to find a solution for CLASS as well.

The CLASS Act was intended to avert a significant societal problem: increased demand for long term care due to the aging of the population. The cost of long term care causes many seniors to lose their assets and puts an increasing burden on many state Medicaid programs, since Medicaid is generally the only payer to provide coverage for long term care beyond skilled nursing.

The CLASS Act was included as Title 8 in the Patient Protection and Affordable Care Act passed in 2010, championed by Senator Ted Kennedy, who had long felt leaving long term care out of Medicare had been a major mistake. He knew the reality of the aging of the population in the U.S. and the growing need for long term care services. But, from the moment the CLASS Act was passed, it got particular focus from critics of the ACA who argued the program could not become sustainable and would be a cost burden on the federal government in the end.

Ironically, CLASS was included in the savings estimate by the CBO and supported the analysis that the ACA would reduce the deficit. How so? Because premiums would be collected to support long term care coverage long before expenses would be incurred. Congressional intent was for CLASS to be self-sustaining for at least 75 years.

But the Act was designed to be voluntary. That is, the idea was to require employers to offer long term care coverage—and employees to pay for it, in full—but also allow employees to opt out of the coverage if they did not want it. It was this voluntary aspect that made it so difficult to make CLASS financially workable. After 19 months of discussion and analysis, Kathleen Sibelius announced on October 14, 2011 that the Department had not figured out a way to make CLASS sustainable and they were therefore effectively “putting it on the shelf.”

This conclusion was reached based on an understanding of the way private long term care coverage performs over time. Even advocates for CLASS acknowledge that private long term care coverage offered by employers has had a low participation rate—about 2 percent—too low to make the coverage financially viable. The low rate means that only those who are pretty certain they are going to need the coverage purchase that coverage, leading to adverse risk. And while financial strategies could be employed to mitigate this risk, changes to the law would be required – changes not likely to pass in this political climate.

What does the untimely death of CLASS tell us? In some ways, it says more about us and the limits of market-based solutions than it does about federal politics or technical issues with the law. The death of CLASS is really about the unwillingness of Americans to plan for the future. Perhaps it is our boundless optimism that we will never be old or infirm—that technology will find the answer to longevity before we have to face our mortality. But the fundamental problem with CLASS is our low rate of purchase of long term care coverage when it is offered. In the end, a voluntary approach to long term coverage just won’t work. Insurance is all about spreading the risk and sharing the cost. Just like in health care more broadly, halfway measures don’t work. It is time to commit to long term care for all, if that is what we want.

Is a national health service really such a bad idea? The VA Example

Mon, 07 Nov 2011 09:30:00 -0500

Many Americans have an almost visceral reaction against what is sometimes called "socialized medicine." Socialized medicine is often discussed in the context of the British Health Service – where the government is both the payer and the employer of those delivering care. But the irony is, we have a superb example of a very similar approach here in America: the U.S. Department of Veterans Affairs.

With roots back to the 1600s, the modern Veterans Administration (VA) was formed in the 1930s to provide a range of services to returning veterans. In 1930 there were 54 VA hospitals; today there are 171 medical centers, more than 350 outpatient, community, and outreach clinics, and 126 nursing home care units. In 2006, the Veteran’s Health Administration employed more than 200,000 full-time equivalent employees and provided services to more than five million veterans and another 400,000 individuals throughout the country.

Recent analyses show the VA outperforming both Medicare and the private sector on overall quality and cost. Adjusting for the changing mix of patients, the Congressional Budget Office estimated the growth of VA budget authority per enrollee (in real terms) to be just 1.7 percent from 1999 to 2005 (0.3 percent per year), while Medicare’s real rate of growth was 29.4 percent in cost per capita (4.4 percent per year) and private health insurance premiums increased from a low of 5.3 percent (1999) to a high of 13.9 percent (2003). While private sector data were not adjusted for changes in benefit design, few would doubt that real cost growth in the private sector was higher than the VA’s for the same period.

Of course, the VA has certain inherent advantages over other health systems. For example, federal law enables the VA to purchase pharmaceuticals at lower prices than virtually any other payer, and because the VA is a single system with a defined set of benefits, it is less administratively complex than the highly pluralistic private sector.

In the 1990s, VA leadership began a concerted effort to improve quality. They adopted key tenets proposed by the Institute of Medicine and disseminated them throughout their facilities and programs. By the mid-2000s, the VA began to be recognized as a leader in health care quality and safety. A study in the New England Journal of Medicine showed VA patients receiving quality of care better than the Medicare fee-for-service system. And, a study reported in the Annals of Internal Medicine noted that 67 percent of VA patients received the care specified by key quality indicators, compared with 51 percent of the patients in the national sample.

While there are many potentially confounding variables when analyzing the VA’s performance compared to the private sector or Medicare (e.g., different benefit designs; different patient populations; different geographic distribution), there is little doubt that it supports the view that a fully federally funded and run entity can provide high-quality care at a lower cost than the private sector. In looking at the reasons behind this performance, the Congressional Budget Office concluded that the “VA’s structure as a vertically integrated system that operates on an appropriation may have helped the system to focus on providing the best quality of care possible for a given amount of funds.” This finding is consistent with what has been found with health care internationally: strong, centralized systems have generally outperformed the United States with both lower per capita health spending and better population health performance.

While some in the U.S. believe that a centralized, federally-run system could not work in this country, the VA is a clear, real life demonstration that that belief is simply not true.

Jumping to Conclusions: Employer Surveys and the Affordable Care Act

Mon, 24 Oct 2011 09:58:41 -0400

While there has been considerable attention of late focused on the Affordable Care Act and the courts, many states, health care providers, and employers are continuing to move forward on the assumption that the Affordable Care Act will stay in effect—at least in its broadest dimensions. While a Supreme Court decision is now expected by the end of the 2012 term, getting ready for implementation of the major provisions of the ACA that go into effect in 2014 cannot wait for that court decision.

Much has been made about provisions in the Affordable Care Act affecting employers: expansions of benefits, affordability provisions, automatic enrollment requirements, and limited penalties for not offering coverage. Surveys abound, predicting what employers will do as a result of the ACA, and they are wildly different: predicting everything from a significant decrease in the number of employers offering coverage post-reform to a significant increase.

The Affordable Care Act is complex, and many employers know only the well-publicized elements of the law. Most surveys to date have been conducted by asking employers about various future scenarios, and human resource directors have responded based on those scenarios. At best, these surveys are highly speculative. And, even with a deeper understanding of the law and its key provisions, we believe most employers won’t jump to decisions about whether or not to continue offering coverage but will rather take a wait and see approach to see how some of the new structures—like health insurance exchanges—develop over time.

When employers respond, for example, that they would likely drop health benefits as a result of the Affordable Care Act, they may be thinking about only one part of the equation: the current cost of premiums and the likelihood that direct penalties for dropping health coverage will be less than the premiums they pay. But that answer doesn’t take into account what the competition will do, how important health benefits are to attracting a skilled work force, and/or what wage pressure might develop if employers that are currently offering health coverage drop it and encourage employees to purchase their coverage on the Exchange. All of these issues are more complex and will take considerable sorting out by employers.

To help employers better understand the relevant provisions of the ACA, we developed and published a guide called The Affordable Care Act for Midsize and Large Employers. This guide highlights some of the nuances employers will need to consider when thinking about changes they might make to their health benefit plans: nuances such as—how many of their employees are part time, how rich are the benefits they offer today, and how health insurance benefits relate to the average compensation levels of their employees. Our hope is that this guide will inform employers and help them begin to think about the relevant questions as they determine their best future direction for employee health benefits.

The Affordable Care Act will set in place a whole series of changes to the health insurance market place that are interrelated and will lead to some fundamental differences from the ways health coverage is purchased today. How those changes affect the employer market will be an unfolding story over many years. Becoming educated on what those changes are is, however, something all employers can and should do starting right now.

E-Prescribing: Waiting for the tipping point

Tue, 11 Oct 2011 09:00:00 -0400

Many of those working to improve health care in America have advocated for the use of electronic prescribing as an important tool for improving patient safety and moderating health care cost trends. A recent report released by the U.S. Government Accountability Office (GAO) documents abuses in the Medicare drug benefit that underline the potential value of electronic prescribing tools. According to the GAO report, some beneficiaries were able to obtain more than a year’s worth of narcotics by “shopping” different doctors. Electronic prescribing tools can enable health plans, physicians, and pharmacists to detect doctor-shopping, and assure that multiple prescriptions are not filled for the same condition within a given time period. Such an approach can both protect the health of patients who may receive duplicate prescriptions in error, and prevent fraud and abuse by those who seek prescription drugs for non-medical purposes.

In a recent review of the literature on e-prescribing, our center noted that despite the evident potential of e-prescribing, use is still very low. In 2010, only 25 percent of eligible prescriptions were prescribed using electronic tools. Indeed, Michigan had the second highest rate of e-prescribing in the country in 2009 – 20 percent – up from 4 percent in 2007. But even though rates are increasing, they are still extremely low relative to the opportunity. In a recent issue brief, the Center for Studying Health Systems Change found that in 2008, 42 percent of physicians in the country had access to e-prescribing, but only one-third were routinely using the technology.

The American Recovery and Reinvestment Act (ARRA) included significant components to promote the use of electronic medical records (EMRs). Starting this year, there are incentives for physicians who document “meaningful use” of EMRs, and starting in 2015, there are disincentives for physicians who don’t. There is already evidence that physicians are responding to these incentives to some degree, and because e-prescribing is included as part of EMR meaningful use standards, these incentives/disincentives may provide impetus for a further increase in e-prescribing. However, there are many who believe that the uptake is too slow and the incentives and disincentives included in the ARRA won’t make a big enough difference in the use of these tools.

So, why is it we can know so well that something will improve quality and safety and yet don’t use it to its potential? One key reason: the increasing availability of information and technology often outstrips the speed at which human systems change. The meaningful use guidelines recognized this by providing not only incentive and disincentive funding but also technical assistance to help physicians make the needed changes. Aligning incentives between public and private payers such that physicians get consistent messages and consistent support to embrace technology will also help.

But technical assistance and aligned incentives will only help to the extent that physicians want that help and are open to change. There is a telling statistic in the study reported by the Center for Studying Health Systems Change: the degree of e-prescribing use by age of physician. Of physicians over age 60 with access to e-prescribing, 66.5 percent used it routinely, compared to 87.2% of physicians between the ages of 29 and 40.

It would be nice if the trend toward adoption of EMR/e-prescribing didn't rely on the retirement of older physicians. But it does appear that over time, one way or another, we will eventually reach a tipping point, and e-prescribing will become the norm, not the exception.

Health Care Quality and Cost Improvement: State-based approaches can’t go it alone

Mon, 26 Sep 2011 09:30:00 -0400

It is difficult to find an issue that is more politically contentious than health care; particularly the policy changes and programs that are needed to assure that Americans have access to needed care. The liberal position tends to see health care as a right, and seeks a strong centralized public role in assuring that all Americans have access to the same kinds of benefits and care. The conservative position sees fiscal and personal responsibility as the top priorities; tending to favor decentralized, private market solutions.

Most would agree central authority does a better job assuring equity of coverage to a defined set of benefits (best evidenced in Medicare, where there is a uniform, national benefit package). There is less agreement on whether centralized or decentralized authority is preferable in terms of health care quality improvement and effective cost control, but there is strong evidence in support of the need for centralized authority to accomplish these goals.

The case for central authority begins with a critique of state/local government authority. The problem with state based approaches is that a significant degree of decision making is delegated to each of the 50 states, making it extremely difficult to achieve uniformity unless there are strict and prescriptive federal guidelines. Most often it creates a situation where there is success based on anecdote: we hear about the innovation that occurred in Massachusetts through its health reform initiative, or the single payer system planned for Vermont, or Hawaii’s success in reducing its rate of uninsured. These glowing stories of success blithely gloss over the fact that these are truly exceptions, in aggregate affecting less than 5 percent of the U. S. population with little or no chance of adoption by other states.

Even when the federal government partners with the states to meet policy objectives, states tend to take advantage of any discretion, thereby creating state to state differences based more on fiscal ability and political priority than on variations in local need. Take Medicaid as an example. In 2009, 17 states set eligibility thresholds for working parents at less than 50 percent of the federal poverty line. Another 17 states set eligibility for working parents between 50 percent and 99 percent of the federal poverty line. Lastly, 16 states set their eligibility threshold at income greater than the poverty line. What is the policy justification for these differences? Are working families in Tennessee (greater than 100 percent of poverty) significantly different from working families in North Carolina (less than 50 percent of poverty)?

The differences from state to state in Medicaid are significant, impacting who is eligible, who gets access to care, and the quality of care they receive. A recent study from the Commonwealth Fund highlights this issue. The study looked at Medicaid managed care and compared the performance of publicly traded health plans with the performance of non-publicly traded plans (mostly provider owned). It found that publicly traded plans tended to devote a higher percentage of each premium dollar to administrative expense—including profit—and receive lower scores for quality related to preventive care, treatment of chronic conditions, and members’ access to care and customer service. Again, this leads to disparities among states because for-profit plans tend to be concentrated in certain states.

The major reasons for Medicaid’s profile on cost and quality performance involve two interrelated factors: states’ political culture and fiscal capacity. States with the largest poverty populations tend to have less fiscal capacity than more affluent states. So when these poorer states are asked to match federal dollars, they simply do not have the tax base to afford more generous benefits and higher eligibility thresholds.

Secondly, Medicaid is not a popular program in most states. Legislators would rather allocate incremental tax dollars to other purposes, such as elementary and secondary education, higher education, corrections and/or tax relief. Even though two-thirds of Medicaid dollars go to pay for care for the elderly and the disabled, these dollars are generally viewed as going into the pockets of providers, who are thought to be well off and not a priority for extra tax dollars. As a result, in most states there is not an effective political constituency to advocate for the Medicaid program.

In summary, state based accountability tends to result in programs with wide, and unjustified, disparities from state to state. There are some success stories, but these tend to occur in more progressive and affluent states and represent the exception and not the rule. Yes, state accountability is better than no accountability, but it is not the way to develop an equitable and effective coverage program for all Americans. State control can be effective in cost control, but when cost control becomes the overriding policy priority, that success can come at the expense of quality, coverage, and access to care.

Healthcare consultant Kevin Seitz, MSW, is the former executive vice president for Health Care Value Enhancement at Blue Cross Blue Shield of Michigan. Seitz was a founding member of CHRT's board of directors and served on the board from 2006 to 2010.

The Schizophrenia of Health Care Spending: Cost to Some and Revenue to Others

Tue, 06 Sep 2011 09:00:00 -0400

In early August, when the debt ceiling agreement was reached, many news reports noted the agreement did nothing to address core reasons for the debt, namely: Social Security, Medicaid and Medicare. Indeed, nearly every article written about the debt ceiling talked about the need to “deal with” (aka: cut) Medicare, Medicaid, and Social Security.

But every time there is a serious proposal on the table to cut federal spending for health care, health care stocks fall—and this is considered a bad thing.

Recent reports from the Office of Chief Actuary noted the rate of increase in health care spending was at a historic low (3.9 percent) in 2010. Now you would think the media would frame this as good news, especially in light the need to reduce health care spending to address the national debt.

Instead, news reports carried headlines like: “Health-Care Use is Sluggish.” These reports cited the “fragile recovery” as the reason fewer people went to the hospital, which had a negative impact on medical suppliers’ earnings reports (though, a positive impact on for-profit health plans). Indeed, the article profiled stock problems at Johnson and Johnson, noting (among other things) the “sluggish sales of replacement hips and knees.”

We rarely talk about the business of health care in those direct terms: “sluggish sales of hips and knees.” We prefer to think of health care in more altruistic terms: care that is patient-centered, care that helps people in need, care that improves population health. Indeed, in the 1990s, there was a brief, consultant-driven movement when patients were called “customers” with the idea that that would focus practitioners more on quality and service. That movement quickly died because those receiving health care services didn’t like being viewed as “customers” or “consumers,” and those providing services didn’t like being viewed as just any other business.

But the reality is, just as is exemplified in the Wall Street Journal article, today much of health care is developed by or delivered through the for-profit world. And, the for-profit world has different incentives than the federal government or, indeed, consumers at large. In fact, the interests of shareholders may require behaviors that are at cross purposes with the public interest as expressed during the debt ceiling debate. This is part of what makes any discussion about cutting Medicare in particular so difficult. After all, Medicare beneficiaries are among the biggest consumers of health care, based both on their demographics and their generally extensive health benefits. So, any cuts to Medicare means cuts to those whose income and returns are dependent on the use of health care services.

It is important to note that this issue is not just about for-profit health care. Though nonprofit providers do not have shareholders, they often develop a parallel goal to for-profit providers: survival of the entity itself, and not just the services they provide. And, as many of those in religious orders running hospitals came to understand, there is no mission without a margin.

So, though many in health care don’t like to view it as a medical-industrial complex with customers instead of patients, in the end, it truly is. And, until we understand the truth behind the financial structures of health care that create conflicting incentives, we really won’t be able to have a realistic conversation about the need to cut health care spending at all.

Medicaid and Block Grants: Social Justice and What the Great Welfare Experiment Can Teach Us

Mon, 22 Aug 2011 08:30:00 -0400

Recently, 29 Republican governors sent a letter to the President and Congress advocating for more flexibility in the Medicaid program and a full repeal of the Affordable Care Act. The principles endorsed by these 29 governors (which notably did not include Governor Snyder of Michigan) essentially supported the concept of a block grant for the Medicaid program.

Under a block grant, states get a fixed amount of money to spend for a defined purpose. In effect, they are at risk for achieving certain outcomes and implementing certain things within that fixed amount—but also stand to benefit if they achieve those goals more efficiently.

The block grant approach was implemented in a significant way in 1996 in the federal welfare program. The program's name change, from Aid to Families with Dependent Children (AFDC) to Temporary Assistance for Needy Families (TANF), was emblematic of the underlying philosophical shift from entitlement to temporary help for getting people from welfare to work.

There is much intuitive merit in that concept, and the theory behind it is instructive as we think about the future of all public assistance programs. The question is: has it worked as intended, and what can we learn as it relates to the Medicaid program?

In the early years of TANF, it could be viewed as a great success. The change occurred at a time when states had relatively high welfare caseloads, and shortly thereafter, the economy improved. As states were able to reduce welfare caseloads, block grant funding was a boon. Since the mid-1990s, welfare caseloads have fallen in every state, and early research indicated that more welfare recipients were working. Though recipients were working in extremely low wage jobs, it appeared they were no worse off than before the change. (However, the evidence did not show that the shift to TANF actually reduced poverty, and it is notable that policy makers today don’t seem to be asking that question.)

But the most telling question to ask about the great TANF experiment is not what happened in good economic times, but what happened in the midst of the deep recession of 2008 and beyond—how did the program perform then?

The answer: not so well. And, the evidence to date should give health care providers, health plans, and advocates serious concerns about block grants for Medicaid.

State budgets for 2012 are sorely challenged. 44 states are projecting shortfalls and governors in both parties are cutting human service programs. States all across the country (Michigan included) are cutting eligibility, tightening time limits, or reducing grants in their TANF programs in order to save money. Estimates are that 700,000 families—including 1.3 million low income children—will be affected by state cuts to TANF.

The problem with this, of course, is that these cuts are coming at the time of highest need for poor families and lowest availability of jobs in their communities—particularly for individuals with limited education and skills.

Cuts to these programs most often affect children, and that is particularly concerning as we look to the future. We know that when families have no economic safety net, children’s lives become even more disrupted. They fall even further behind in school, and are even less prepared to become productive members of society themselves.

A core problem with TANF is that block grants were never set up to be adjusted for economic conditions. The TANF block grant has been funded at the same level since its creation in 1996; there have been no adjustments for inflation or changes in caseload. This means that the actual value of the block grant in 2011 is just 72 percent of what it was in 1996. So, in effect, dollars have declined while the need has increased.

As governors and Congress talk about changes to the Medicaid program, all those who care about health care coverage should be cognizant of the real life example of the TANF program. As many have said, to be the safety net that they purport to be, public assistance programs need to be counter-cyclical. Static block grants for human services are the opposite: they provide excess funds in good times and are underfunded in lean times.

When talking about these kinds of block grants, the fundamental question we should ask is: what kind of society do we want to live in? Do we want to go back to the society we had at the turn of the century, when the poor were helped through “charity” or local government efforts? Do we want to see the poor treated differently depending on the state—or even city—in which they live? Those experiments have been tried. Do we really want to go back there?

The Changing World of Hospice Care

Mon, 08 Aug 2011 08:49:23 -0400

When I was in graduate school and early in my career, hospices were viewed as one of the most altruistic components of the health care system. With a philosophy of caring holistically for those at the end of life by controlling symptoms, supporting families, and providing a “good” death (preferably at home), hospices seemed to represent the vision of compassion that should be embodied in a caring profession. Hospice care was formalized in Great Britain in the late 1960s, and federally funded in the U.S. for the first time in a 1979 demonstration project. The hospice benefit became a part of the Medicare program in 1982 and fully incorporated in 1986.

Perhaps it was inevitable that, when formalized as an insurance benefit, the nature of hospice care would change. In every aspect of the health care system, as coverage makes it easier to make money by providing a given benefit, entrepreneurs enter the system. After all, this is the American way – with all of its pluses (creating incentives for innovation) and minuses (creating opportunities to make money in ways that don’t actually add value to patient care).

Even if it was inevitable, I find what has happened to the hospice movement to be a sad story in the journey of American health care.

In the early years, hospices saw themselves as part of a movement to give better, more compassionate care to the dying. The overwhelming majority of these organizations were non-profit, often led by charismatic leaders and community boards of directors.

In today’s environment, for-profit hospices are on the rise and non-profits on the decline. In 1990, for profit hospices cared for only 9 percent of hospice patients. By 2009, they cared for 35 percent. In 1986, Medicare reimbursement for hospice care totaled $68.3 million; by 2009, that number had grown to $12 billion. As baby boomers become senior citizens, these numbers will go nowhere but up.

While there is nothing inherently wrong with for-profit hospices, an increasing body of research says their care is less comprehensive and admission criteria more selective (to focus on more profitable patients). Indeed, in 2007, profit margins of for-profit hospices ranged from 12-14 percent while that of non-profit hospices ranged from -2.9 to -4.4 percent.

Recently, the New York Times ran an article about the changing profile of hospices and increasing concerns about the cost of hospice care. An aging population and increases in Alzheimer’s and other forms of dementia account for part of the increase in hospice spending. But the Times article also reported on abusive practices by some hospice providers, and large financial settlements resulting from whistle blower and other lawsuits. As a result of ballooning costs, Congress is now considering a change in the reimbursement methodology for hospice providers.

There is no question that hospice care can improve the end of life journey for many individuals and families—but it is still under-utilized by many who could benefit. The shift from a “movement” to an “industry,” –and publicity around industry abuses—have the potential to discourage patients from seeking the care they need.

Too many times in the history of American health care the “medical-industrial complex” has overrun patient interests. Let’s hope this is one time when Congress can reverse a dangerous trend. Returning to the values of “the movement” would be a truly beneficial “back to the future” moment.

Cost Effective Care: How Do We Get The Waste Out of the System?

Mon, 25 Jul 2011 10:26:07 -0400

In the May 18 issue of the New England Journal of Medicine, Rashi Fein and Arnold Milstein tackled the question of why evidence-based care diffuses so slowly. The article is compelling because of its fundamental conclusion: institutionalized interest group pressure against change in health care and consumer misunderstanding of health care financing make it hard to envision how health care spending could be reduced in significant ways.

Fein and Milstein note, as many have, that other countries have addressed this issue much better than we have in the United States. They conclude that if we could do as well as some of these other countries, we could save $640 billion – no small sum, especially with the focus on deficits in today’s environment. But they go on to enumerate the obstacles to getting evidence-based guidelines embraced and used on a routine basis.

Those who are steeped in health policy often focus on macro level trends and impacts. But in the U.S., unlike most developed countries, health policy decisions are not made on the macro level. Health policy in the U.S. is fragmented, with many different actors creating the environment and cost trends. State and federal governments have significant health policy roles but they are not alone in their influence. They are joined by thousands of health plans, hospitals, physicians and other provider entities, device manufacturers, pharmaceutical manufacturers, billing agencies, research entities, and other administrators, all with a stake in the current health care system. This diffuse decision making makes it harder to effect change in the U.S. than in countries where decision making structures are more centralized.

So, what can we do about the environment we are in? Well, the Affordable Care Act has a number of strategies for changing the cost trajectory of health care in the country. But most importantly, it will be essential for groups throughout the country to focus on things that can truly be changed and not get lost in those macro trends.

A great example is the concept of waste in health care. Some people argue that as much as 30 percent of spending on health care is “waste” because so much care doesn’t have good evidence behind it—and that may be true. Others think of waste as process re-engineering: simplifying and streamlining functions for efficiency. These points of view may not be in conflict, but viewing this as a macro issue, encompassing both, can make it hard to tackle any part of the problem.

Looking at waste in health care on a global basis can get us mired into looking at every possible approach to reducing spending. This was the approach taken in the Affordable Care Act. Make no mistake: there are great ideas in the Affordable Care Act and they should all be tested. But, for those not in the federal government, focusing on the laundry list of ideas can actually be paralyzing. Community and even statewide groups can come to the conclusion that “solving” the cost problem is out of their hands.

Perhaps a better way to look at the question of waste in health care is to say: in a highly decentralized system, how do we influence enough individual actors to make a noticeable difference in overall health care spending? Put that way, community and state groups can focus on efforts that can be undertaken to make a difference and build from there. Think of hospitals coming together to work on Lean Engineering to make a difference in the efficiency of health care at the hospital level. Think of health plans and physician organizations sharing data about best practices in certain clinical areas to learn from each other about evidence-based guidelines and ways to do things differently. And, think of communities focused on physical fitness and nutrition in the schools and working with parents to prevent obesity before it happens.

Starting from the community and going up rather than the macro and going down can give us more hope that the promise of reducing waste—and in that process freeing up billions of dollars for other purposes—could be achievable after all.

Where the Rubber Meets the Road: Health Care Reform in Washtenaw County

Mon, 11 Jul 2011 09:00:00 -0400

Health care policy happens at many levels, but health care delivery: just one. Policy is made at the federal, state and local levels—but delivery is at the local level: in organized systems of care or with individual or teams of practitioners working with patients and families.

There must be a nexus between policy and practice in order for policy related to medical care to have any real impact on the health of individuals and populations. Though there is some recognition of the importance of the nexus (see the formation of clinical translational research entities—CTSAs—at many universities), policy makers often overlook this important step. To make true change in the way care is delivered in America, this translation of policy to local level implementation must be explicit.

The coverage provisions of the Affordable Care Act (ACA) offer great examples of the importance of this connection, and how the centrality of the local role has been overlooked. The ACA relies heavily on Medicaid and health insurance exchanges to expand health coverage. We know from Massachusetts’ experience that when coverage was expanded, many people tried to find a practitioner to treat them and could not. This meant that those with newly acquired coverage were more likely to get care in the emergency department or other facility settings: high cost and ineffective approaches to primary care.

Where is planning occurring in the rest of the country to prepare for 2014 and avoid what happened in Massachusetts? There does not seem to be a coordinated strategy in any states or with the federal government to address this important issue—but we have a great example right here in Washtenaw County.

In the early fall of 2010, the former CEO of the St. Joseph Mercy Health System in Ann Arbor, Robert Laverty, started talking to a number of community leaders about coming together to identify ways to improve care for the poor in Washtenaw County today (Medicaid recipients and the uninsured), and to begin planning for health care reform long before 2014. He got commitments from the CEOs of the two major health systems in the community to co-sponsor this effort, and enlisted other community leaders to chair and facilitate the work. Ultimately, 40 individuals got involved—on a voluntary basis—representing providers, safety net organizations, the Department of Human Services, county employees, public health, patients and their advocates, and the like. The group worked for 6 months focusing on how to improve care—here and now—as well as to plan for the future.

The first step the group took was to document the current state of affairs and what care in Washtenaw County might look like in the future. For example, the group noted that there were approximately 6,400 people currently eligible for Medicaid but not enrolled and 50,000 uninsured in Washtenaw County. By 2014, an additional 25,000 individuals were expected to be eligible with most (but not all) of the uninsured expected to enroll in private coverage with the help of subsidies.

While there are many primary care providers active today in Washtenaw County, the group estimated that the expansion of coverage would increase demand for primary care services by something like an additional 54,000 visits and more than 33,000 of the uninsured appear not to be connected to primary care at this time.

These numbers should be startling and galvanizing: and they have been in Washtenaw County. The groups are now working together on the strategies needed to fill these gaps and more (dental, mental health, and substance abuse treatment were also areas of focus for the group, along with ways to simplify and improve the Medicaid enrollment process). Working together, the health systems and safety net providers are looking at how to restructure what already exists and bring more capacity to the community to be prepared for the expected increase in demand.

This is where the nexus between policy and practice happen. Washtenaw County is off to a great start in preparing for 2014. How many other communities can say the same?

ACOs: What Will They Really Be?

Mon, 27 Jun 2011 08:30:00 -0400

Sixty-five quality indicators? Retrospectively attributed patient populations? Risk after the fact? Significant management and financial investment required with uncertain payback?

This may not sound like a strategy to win the hearts and minds of providers who are on the fence about whether or not to participate in CMS’ new approach to care: accountable care organizations (ACOs). So, what is going on?

Well, first a little background. Several events coincided to encourage CMS (and some private insurers) to embrace the ACO concept.

To begin with, years of research done in connection with the Dartmouth Health Care Atlas led some researchers to advocate for a model similar to ACOs. For many years, Dartmouth noted the tremendous variation in use of health care services in the country. In this context, they also looked in more detail at the use of services by types of institutions and noted that some systems (generally, academic medical centers) were better at managing care than others – especially when looking at the experience of the entire case and not just the cost per day of care. These institutions had lower rates of complications and readmissions – making the episode of care lower cost than those at other institutions where the quality indicators did not look as good. The idea of rewarding hospitals and physicians who work together in an integrated manner and encouraging others to create such structures became formalized in the ACO framework.

The concept was also attractive to those who had observed that the fee for service structure was not effective at managing the cost of care, but knew that managed care systems – popular with employers in the mid-1990s – were not popular with patients. The ACO concept was designed as a mid-point – a system that attributes patients to provider entities, holds providers accountable for the care of the attributed population, but doesn’t make the patients choose anything. From a patient’s perspective, they get care as they always have – with perfect freedom to choose the provider they want – and all of the “management” occurs behind the scenes.

Finally, the concept also coincided with Don Berwick’s move to head the Centers for Medicare and Medicaid (CMS), bringing a concept he championed at IHI: Triple Aim. In Triple Aim, an entity (a provider, or payer, or government) takes responsibility for population health and tries simultaneously to improve population health and patient experience while lowering health care spending. The ACO concept would seem to be a good model for testing whether or not these goals can be achieved – with the right incentives. And, the already-extant CMS Physician Group Demonstration project would seem to be a good project to build upon.

The challenge of ACOs, however, is that they are an entirely unproven concept and it is completely unclear whether or not they could really be structured in an environment that includes community hospitals and independent physician groups – not just academic medical centers.

There is no question that integrating care across practice settings (hospitals, offices, nursing homes) has the potential to improve both the quality and the efficiency of care. The question is, however, in an environment as fragmented as the one we have today, will a strategy like ACOs (as articulated to date by CMS) really get us there? And, if tightly managed care networks that required patients to select and stick with a primary care physician didn’t work, how likely is it that a loose structure like ACOs can really improve care such that the “juice is worth the squeeze”?

All of this is, of course, unknown. And, perhaps that is why CMS chose a route in its interim regulations that wasn’t very popular with providers. Maybe, in the end, CMS doesn’t really want too many participants as they move down this uncharted path.

But, the optics are important here. Since every provider and their brother announced that they are, in fact, ACOs – long before the term was defined by CMS – having significant providers saying they won’t be (e.g. Mayo), could be a serious setback for the future of this concept.

Only time will tell, of course, and Paul Ginsberg has given an elegant defense of the CMS rules here. But, if I were a betting person, I would say the odds are long that the ACO model articulated to date will have the kind of broad sweeping impact that early proponents hoped it would.

Cover Michigan Survey 2011

Mon, 20 Jun 2011 08:30:00 -0400

Today we are releasing our Cover Michigan Survey, 2011. Like last year’s survey, this report looks at what Michigan residents say about their access to health care. Different from last year, this survey was designed to look more in-depth at access, along with health status.

Our findings confirm last year’s major finding: Having health insurance coverage is important but not sufficient to assure access to health care.

Those who were uninsured reported that they were less connected to primary and specialty care than those who were insured, and the uninsured were much more likely than the insured to identify the emergency department as their usual source of care. This year, we also noted that those who were uninsured reported significantly poorer health status than those who were insured – 16 percent of those who were uninsured said their health status was “poor” compared to only 5 percent of those who were insured. Notably, almost one-third of the uninsured reported having been diagnosed with depression – more than twice the rate of any insured category and much higher than the national average rate of 10 percent.

But even for those who had insurance, access varied depending on the type of coverage. Last week, the New England Journal of Medicine reported on a study that showed, through a “secret shopper”-type program, that those with Medicaid coverage had a harder time getting appointments with specialists than those with other coverage—further supporting the findings in our survey.

Medicaid recipients reported a significantly harder time getting access to care than those with other coverage—and not just for specialty care. In our survey, 42 percent of those with Medicaid coverage reported having been told their primary care physician would not accept their insurance coverage, compared to only 15 percent or less for those with Medicare, employer, or individual coverage. Twenty-two percent of those with Medicaid coverage reported having been told their specialist wasn’t accepting their coverage compared to 11 percent or less for those with Medicare, employer or individual coverage. And, getting appointments with either primary care physicians or specialists was much harder for those with Medicaid than those with any other kind of health coverage. One quarter of Medicaid recipients reported that they had a very difficult time getting appointments with specialists compared to 10 percent or less for those with Medicaid, employer, or individual coverage.

The Affordable Care Act relies heavily on the Medicaid program to expand coverage to the uninsured. The findings in our survey suggest that the Medicaid program, as structured today, will be sorely challenged as several hundred thousand more people are added to its rolls in Michigan in 2014. While the federal government anticipated this challenge in part, and included a provision to pay primary care physicians at Medicare rates in 2013 and 2014, that provision will go only so far in dealing with the bigger issues in Medicaid. If we want to provide real access to care for Medicaid recipients, we’re going to need some new thinking about how to structure provider networks to care for those newly eligible—and provide better access for those currently enrolled.

Given the breadth of medical needs we found among the uninsured, all programs—public health and Medicaid alike—will have to think about ways to meet the needs of this population, with particular attention to providing better mental health care to Medicaid recipients. Today, mental health care is somewhat fragmented and significantly under-resourced. Given that one-third of the uninsured population noted that they have been diagnosed with depression—many of which will be coming into the Medicaid program—re-thinking how care is structured in this regard is paramount.

While 2014 still seems somewhat far off, the scale and significance of these changes are such that planning must begin now. And even if the Affordable Care Act were never to go into effect, our 2011 survey tells us that there are already significant access issues today for those who are on Medicaid.

We sincerely hope the data in our Cover Michigan Survey can help policy makers with the tough decisions and challenges that lie ahead.

Congratulations to Governor Snyder

Fri, 17 Jun 2011 11:03:51 -0400

Michigan Governor Rick Snyder deserves special notice and acknowledgement for the courage and focus he displayed in his decision not to sign on to the letter signed by all other Republican governors, asking for changes to the Medicaid program and advocating for the repeal of the Affordable Care Act.

I am sure Governor Snyder disagrees with some provisions of the Affordable Care Act—and it may not reflect his preferred approach to dealing with health care reform in this country.

But his rationale for not signing the letter is admirable. He sees the debate as a distraction from the very real importance of focusing on how to improve health care for Michigan citizens.

His focus is rightly where it should be: on how to make things work. He wants Michigan to be seen as a role model for effective implementation, and for doing what needs to be done to reduce the number of uninsured and improve the operation of Medicaid.

Next week, our Center will be releasing a report on the state of health care access in our state. The survey underlines the importance of Governor Snyder’s focus: the need to improve access to care for the uninsured and strengthen the Medicaid program. Those without health coverage are suffering, and the data show that.

Governor Snyder’s courage—in moving forward to help expand coverage, and in taking this position against considerable pressure—is a great thing for our state, and as citizens, we should all be grateful.

What it will take: Case in point - Cancer Care

Mon, 13 Jun 2011 08:30:00 -0400

In the New England Journal of Medicine on May 26, 2011, Thomas Smith and Bruce Hillner describe a series of strategies to reduce the cost of spending on cancer care in the United States. The article is compelling, and highlights the reasons health care spending is so difficult to talk about—much less do something about: all five strategies involve changes to attitudes and practice that are both fundamental to making a difference—and extremely difficult to accomplish.

Cancer care is an important area to examine, not only for its impact on health care spending but also because of its human dimension. Despite progress on many fronts clinically, cancer continues to be a disease that strikes fear into most. Individuals and families face difficult choices balancing the risks and benefits of treatments, many of which have toxic side effects that can interfere with the quality of life. Oncologists and other treating practitioners must take into account the very human desire to have hope, along with the reality of the prognosis and availability of effective treatments.

Spending on cancer care is no small issue. In 2006, direct cancer costs were $104 billion and are continuing to rise. With genetic breakthroughs, new therapies continue to be developed and the costs associated with many of these new therapies are astronomical. Some treatments have scant evidence of positive impacts on quality of life or longevity but nevertheless are promoted as offering hope—sometimes the only hope left for survival.

What do Smith and Hillner recommend? They hit all the big points: different approaches to screening, more judicious approaches to treatment choices, changes in compensation, and a greater willingness to confront the realities and speak honestly with patients about prognosis and treatment choices.

For example, they note that surveillance testing or imaging does not change outcomes for most cancers—including pancreas, ovary, lung and breast—yet these approaches are commonly used. In a 20-year old study of breast cancer, scheduled imaging (not symptom related) was not shown to detect curable recurrences or alter survival rates—yet more a $1 billion per year was spent on these tests.

Smith and Hillner also suggest limiting treatment strategies, both to better comport with the evidence of what works to impact survival or quality of life, and based on the functional status of the patient. They advocate for more data on comparative effectiveness and a willingness to make treatments choices by weighing cost with the potential for benefit—a position that has been demagogued by some as a plan to kill off patients.

As part of these changes, the authors also recommend that palliative care be provided earlier and more extensively than happens today. They understand that choices must be made regarding which (and whether) treatment is to be provided, and that sometimes, it may be better to focus on comfort and quality of life rather than extending life. Being able to make these kinds of choices is fundamental to our ability to make changes in the quality of life in a patient’s last days, as well as the cost picture for cancer (and all other medical care).

These are difficult conversations for both physicians and patients. Smith and Hillner cite a study that indicates that most patients with lung cancer expect to live two years, when the actual average life expectancy with this diagnosis is six months.

Having these kinds of conversations requires not only oncologists willing to be clearer about prognosis and patients open to hearing it, but also a change in our reimbursement systems to compensate providers for these kinds of discussions. Today, our reimbursement system for all practitioners focuses heavily on providing more compensation for doing things—procedures, drugs and the like—and not enough for the talking and coordinating aspects of care that are essential to the transformation of the health system.

The Smith and Hillner’s recommendations focus on patients with incurable solid tumors. In these cases, it would seem that some limits on care might be easier to accept. But it is precisely because many Americans—patients and doctors alike—are unwilling to accept the concept of “incurable” that these changes are so difficult to make.

Honest conversations about the limits of medicine will be crucial if we are really going to change the trajectory of spending and interventions in which we are so enmeshed today.

Let’s just start over?

Tue, 31 May 2011 09:00:00 -0400

I get asked to speak about health reform on a fairly frequent basis. It is actually quite fun, because health reform is so topical and there is always something new going on. I also enjoy the subject because there is always a range of viewpoints in any given audience: from those who strongly advocate for a single payer system to those who think the whole thing should be scrapped. It is interesting to hear the foundations for the various points of view.

At a recent talk to a group of physicians, one individual—clearly an opponent of the Affordable Care Act—raised the idea of just repealing the law and starting over. He was reacting to polls that say many Americans think the Act should be repealed entirely or in part.

The problem with this conclusion is if you go deeper into the polls, you actually find that most Americans like the core elements of the law. The two pieces people don’t like are (1) the individual mandate, (2) and the excise tax on high cost (“Cadillac”) health plans.

The problem with repealing just these two pieces is it is hard to get the “good things” in health reform without some form of these two relatively unpopular ideas.

Two individuals who understand this point very well are on the Republican side of the aisle: Newt Gingrich and Mitt Romney. Both have come out in support of the individual mandate in recent days—though they both also criticized key elements of the Affordable Care Act.

It was most interesting to hear the terms that Gingrich and Romney used in this discussion because both are actually quite knowledgeable about health insurance related issues. Both used the term “free rider” in their defense of the individual mandate, a term for the concept that people without health insurance still have to be treated and stabilized in a hospital. The cost of care for those individuals ends up being paid by all the rest of us who have health insurance. Thus, the uninsured become “free riders” in the health care system and the only way to deal with that problem is to make sure that everyone is insured one way or the other. The individual mandate is one among several alternatives for accomplishing that goal.

The individual mandate is in fact a truly conservative idea. Oh…eons ago, in the '90s, the idea was most strongly advocated by those with strong Republican and conservative credentials and criticized by those on the left.

Indeed, Newt Gingrich first endorsed the concept in 1993, during the Clinton health reform years when a very different structure for funding of health insurance was on the table. At the time, Newt likened requiring individuals to purchase health insurance to the requirement to purchase automobile insurance.

Similarly, when discussion about health reform began in earnest in Massachusetts in 2004, all proposals that were put on the table included the idea of an individual mandate. In 2006, then-Governor Romney signed the bill into effect while vetoing a number of its specific provisions. The individual mandate was not one of the provisions he either vetoed or criticized. And, most recently in Ann Arbor, Mich., Governor Romney again noted his support for the individual mandate in Massachusetts, though he argued that the Massachusetts approach should not necessarily extend to other states.

Despite the fact that both Newt Gingrich and Mitt Romney are criticizing the Affordable Care Act as an overreach by the federal government, the law’s core issue– the issue under attack in the courts and by the public – is one that both men fundamentally support.

And, both men also understand this truth: there are truly only a few ways to get to universal coverage (or anywhere close to it), and the other ways are even more repugnant to a conservative world view than the individual mandate.

So as long as there is agreement that the goal of universal coverage is a good thing—if for no other reason than to deal with the free rider issue—the individual mandate has to end up in the discussion, and “starting over” to produce something else is unlikely to satisfy the critics.

Part of what makes health care so interesting is how opinions shift over time. Who knew, 20 years ago, that Democrats would be relatively united in support of the individual mandate while Republicans would be divided?

Hmmm – this is going to be a most interesting political season.

Health Care Reform and the Balancing Act

Mon, 23 May 2011 09:18:31 -0400

With the announcement of Rep. Ryan’s proposal to convert Medicare into a voucher program and Medicaid into a block grant, contrasting visions of health care reform became very clear.

The Ryan/Republican House approach embraces a market strategy and would effectively cap federal government payments for health care. A Medicare voucher program would leave seniors to purchase health insurance with government financial help. This concept has been used by many employers with regard to pension benefits: it’s called a defined contribution approach because it sets a capped limit on what the employer (or government) pays.

The Affordable Care Act, in contrast, retains and in fact strengthens what is known as a defined benefit approach. In a defined benefit approach, there is a commitment to fund a certain set of benefits (the Affordable Care Act calls those “essential benefits”). Even if individuals contribute financially through copayments, deductibles, or premium sharing, a promise is made: within certain parameters, a known set of benefits will be covered.

For Medicaid, while Ryan’s proposal does not use a voucher approach, it ends the entitlement foundation. That is, the federal government would cap the payments to states and allow states considerable flexibility in program design. Some states would certainly continue offering programs close to those offered today, while others would likely cut eligibility categories, reduce benefits, place more restrictions on where and how care is delivered, etc. And, in times of financial challenge for states, the safety net would likely be eroded.

Rep. Ryan’s approach is relatively simple to design and implement from the sponsor’s perspective (the federal government in this case). On the other end of the spectrum, the Affordable Care Act is much more complicated – and in some eyes, more intrusive – in the way it structures benefits and delivers care.

In fact, recent articles have described hospitals as having “buyer’s remorse” when it comes to health care reform because so many regulations are now coming out that affect what they do – either by reducing/holding back and redistributing payments, or otherwise telling hospitals in a very direct way what to focus on (such as patient satisfaction along with certain quality measures).

States, too, are increasingly challenged by some of the strictures placed on them by the Affordable Care Act. A new rule from HHS is designed to make it more difficult for states to cut payments to providers of care. In recent years, many states have tried to reduce their Medicaid cost trends by cutting provider reimbursement. And as a result, fewer and fewer providers (especially specialists) have been accepting Medicaid patients. The imposition of “maintenance of effort” requirements, which limits the ability of states to reduce benefits or cut categories of existing Medicaid enrollees, have more states looking to balance their budgets by cutting payments to providers. The new rule would curtail many of those efforts.

The structure of the Affordable Care Act is as much as anything else, a balancing act. It attempts to balance the often competing goals of access to health care and health care security, and at the same time, reduce health care cost trends. While the Ryan approach represents a true market place vision of health care benefits and the government’s role in that regard, the ACA reflects the messy, sweeping approach to health care that has been an American tradition for the past 40 years –ever since the advent of Medicare and Medicaid.

Whether this sweeping and more complicated approach can work in the long run is still an open question. But, what is not a question is that the ACA builds on where America has been whereas the Ryan approach would take us in a sharply different direction – and, if recent polls are to be believed, a direction even less popular than the Affordable Care Act.