CHRTLines Blog

Prognosis on Electronic Medical Records: The Long Slog to Come

Mon, 26 Jul 2010 10:22:03 -0400

On July 13, 2010, HHS released final rules telling providers of care how to demonstrate the “meaningful use” of electronic medical records in order to be eligible for incentives starting in 2011. By 2015, most providers who don’t adopt electronic medical records will face penalties. The originally proposed rules were considered too rigid by many, and would have made it too difficult for hospitals and physicians to earn incentives. The final rules do give more flexibility than the initial rules published in January: the threshold to earn incentives is set somewhat lower and the bar is not an “all or nothing cliff.”

But even though the final rules are an improvement over the initial proposals, the provider community remains skeptical that the incentives – or penalties – in the rules are sufficient to entice a large number of providers to convert to electronic records. Most are predicting the dissemination will not be as fast or as deep as many would hope.

There is widespread support for the concept that electronic records can improve care. Global measures of the quality and safety of medical care show the potential impact of electronic records: countries with more extensive electronic records have better overall quality of care than the United States.

Yet, the data are also pretty clear about changing practice structure: it is hard and won’t happen overnight. Indeed, we already have data to say that the movement towards electronic records is going to be slow and somewhat painful. A new study from the Center for Studying Health System Change (CHSC) tracks the use of e-prescribing and shows the scope of the problem.

Some consider e-prescribing an entry level component of a full electronic medical record; many groups and individuals have been promoting the use of e-prescribing systems for years. Indeed, vendors have all but given away these systems to encourage their use by physicians. But despite these efforts, the CHSC study shows that only two in five physicians in office-based ambulatory practice reported that IT was available in their practice to write prescriptions in 2008. And, I think, most critically, the authors reported that physicians who had access to e-prescribing did not necessarily use it routinely. Notably, about a quarter of those physicians reported using the technology “occasionally” or “not at all.” All told, in 2008, somewhat less than one third of ambulatory physician practices both had and used IT for prescription drugs.

The CHSC study was completed prior to the advent of federal financial incentives for the use of electronic records. It is almost certain that the numbers will improve as a result of the incentives and impending penalties. Even so, the CHSC findings are instructive about the challenges the implementation of full blown EMR strategies are likely to face.

The reality is: human behavior is difficult to change. And, though business schools have spent years developing change management structures for corporations, these methods are – at best – nascent in most physician practices in this country.

It is terrific that the federal government is providing technical assistance to practices to help them with IT implementation: that will certainly help with their success. But, we must be realistic about what can be accomplished and how long it will take. I do believe we will get there. But, this is truly a long distance race, not a sprint.

Physicians: To employ or not to employ – that is the question!

Mon, 19 Jul 2010 08:00:00 -0400

While my personal thoughts frequently center around issues such as "being,” on a professional level I have probably given more thought to the issue of physician employment than any other.

I am old enough to recall when an employed physician was actually an oddity. During my many years working on the provider side of the business, I experienced the rush to employ physicians (by hospitals in the 80s) that was akin to the gold rush. Many advisers and consultants, including think tanks like the Healthcare Advisory Board, suggested the real key to success was going to be physician employment.

You may recall this also ushered in the era of "physician practice management” companies that were going to hit it rich in the physician employment/management business; some, like Phycor, made it all the way to Wall Street.

And of course, we all remember hospitals that experienced devastating losses by acquiring physician practices. Subsequently, many hospitals and health systems reversed course – like ships heading for icebergs – and dumped all or many of their employed practices.

Throughout this time, reams of literature have been written on the pros and cons of the private practice of medicine. Many articles have extolled the virtues of "The Staff Model.” In addition, numerous “physician relationship” models have been published and promoted, claiming to be the Holy Grail of physician compensation and management.

When considering the topic of physician employment, the obvious question arises: By whom? Earlier I mentioned hospitals and physician management companies, but they are only two of an array of options. Foundations, for-profit companies, physician organizations, and multi-specialty groups are just a few other possibilities.

The topic of physician employment is once again front and center, and it continues to pique my interest as an insurance executive due to the implications for provider reimbursement models and physician/provider relationship issues. It certainly has bearing on current hot topics, such as patient centered medical home (PCMH), accountable care organizations (ACOs), etc. This issue has also become personal to me now that I have children who are physicians.

At the present time, it is pretty clear that many – if not most – hospitals have once again embarked upon aggressive plans to employ physicians. Interestingly, a few never stopped, particularly those who have based their systems on the Staff Model and Foundation Model. I have also talked with some hospitals who are not ramping up their employment of physicians and who still believe strongly in a pure private practice model.

Many articles in the literature indicate that recent healthcare reform legislation is likely to fuel consolidation in the provider community. Increased physician employment by hospitals and health systems would seem to be a likely outcome.

One of the big questions I have is: What has changed since the last time hospitals employed physicians that is fueling the current drive to employ physicians? Recent articles suggest the employment model will be "different" this time, yet, as I speak to hospital executives, they inform me that the losses incurred by employed physicians are similar to what I saw/experienced in the 1980s (approximately $20-$120K per year per employed physician).

I have also seen reports in the literature that each physician has the potential to bring $1-$3 million dollars in referral revenue to a hospital. Perhaps this is a motivation for employment. Yet, this logic only holds up if one is able to move business from competitors and produce adequate margin on that business to offset total cost. This logic didn't seem to work out in the 1980s. It certainly doesn't make sense if you are already the recipient of this business, except from a defensive posture.

Then there is the issue of independence and productivity. I have heard arguments on both sides of this issue from numerous physicians. It is a tough call and probably a very individual matter whether an independent or employed physician is more productive. I have personally seen proprietary data, during my days on the provider side, which demonstrated that employed physicians definitely demonstrated a higher level of loyalty to their employer than independent physicians.

It does seem clear that current medical school graduates have less of an appetite for setting up a private practice. This could be a generational or cultural/lifestyle issue. It could also be a function of debt load upon graduation, or a variety of other factors.

My colleague Tom Simmer, M.D. and I have had a number of provocative discussions on this topic. Based upon those discussions, and my utmost respect for Dr. Simmer's opinion, I have come to believe that, in spite of the current trend to employ physicians, private practice physicians will continue to survive and thrive alongside their employed colleagues, at least during our lifetime.

I would love to hear your opinion on this evolving topic!

Bob Milewski is senior vice president of Contracting and Hospital Relations for Blue Cross Blue Shield of Michigan and a member of CHRT's board of directors.

Health Reform: The Early Days

Mon, 12 Jul 2010 08:38:10 -0400

Early reviews are in and they are favorable! Public opinion polls show support for the Affordable Care Act (ACA) creeping up to 48 percent. All of that is good news, and a well-deserved commentary on health reform: States and the U.S. Department of Health and Human Services have been moving quickly to put in place the most immediate requirements of the law, and communities, providers, and others are stepping up to participate in health reform opportunities (e.g., funding for more primary care training slots through the Prevention and Public Health Fund). In addition, states have announced the beginnings of temporary high risk pools, and the federal government has debuted a new website - www.healthcare.gov - to help consumers in every state navigate their health care options.

These achievements are quite impressive. The work produced to date has been of good quality and has moved quickly in accordance with the commitments made in the ACA. And all of this has happened without a Medicare/Medicaid director in place – which will now change given President Obama’s recess appointment of Don Berwick.

These early steps are critical: their importance cannot be over-estimated. Indeed, if one looks closely at the dialog around health reform, it seems clear that the tone and expectations around the ACA have changed in a significant way: it’s beginning to feel like the ACA (in its broadest principles at least) will survive.

While the lawsuits challenging the ACA continue (testimony was given in the first lawsuit in Virginia on July 1, and hearings will begin in Michigan and California later this month) and are likely to end up in the Supreme Court, the work of implementation goes on. The activity around the implementation of health reform is building a sense of permanency around the ACA. Even states who are suing to stop the law are simultaneously moving forward to take advantage of many of its provisions.

Advocates bemoan the fact that the major coverage elements don’t go into effect until 2014, and many feel without those elements, most people won’t really see how health reform benefits them. But as health reform is unfolding, and with everything that is happening before 2014, it is now apparent that people all around the country will feel the effects of health reform long before the major coverage elements go into effect. And even if court challenges are successful, unwinding health reform will be difficult at best. Moving a bureaucracy to implement new things is tremendously difficult (especially when dealing with one sixth of the economy): reversing directions is even harder.

Those who want to see this law succeed might now see real hope for at least key elements of the law to survive. And while the individual mandate is the piece of the law with the least public support and the greatest risk in the courts, there is much more in health reform to improve the system beyond the individual mandate.

Now, if just a little more effort could be put into helping the public at the grass roots level understand just what health reform really is and how it benefits them, maybe even the individual mandate will survive…

The Berwick Confirmation and Irrationality

Sun, 04 Jul 2010 14:50:33 -0400

The confirmation process for Don Berwick as President Obama’s nominee to be director of the Center for Medicare and Medicaid Services within the Department of Health and Human Services should be a most distressing sight to anyone who has spent their careers in health policy – or who even has a passing interest in the policies and politics of health care. And, if Dr. Berwick’s critics prevail, all citizens should be concerned about the message that would send about health care in this country.

It was bad enough last summer when provisions in the health reform bill that would have supported patients, families and clinicians with help they desperately need at the end of life got characterized as “death panels.” Those debates raised unnecessary fears and ended up diluting the end of life provisions in the final law such that families are getting less help than they might have. But, those debates did not go to the underlying and sweeping issues in health care. The current critiques of Dr. Berwick do. The Congressional critics of Berwick attack fundamental issues with a particular focus on how we use resources in this country. The outcome of this debate will have an impact on all citizens that will go far beyond health care.

Dr. Berwick has been “accused” of embracing the British system of health care. Heaven forbid that he should have good things to say about a system that has better health outcomes than ours on a population basis and at significantly lower cost (see the latest Commonwealth Fund report for its seven country comparison). The critics have said that Dr. Berwick’s embrace of the British system means that he is a big fan of another dreaded concept, “rationing.”

Dr. Berwick and most health policy analysts actually don’t disagree with that point, but note that rationing goes on every day in the current health care system in America – we just don’t make it very explicit – and that in the end, some form of rationing is necessary because we have limited resources and they must be used wisely so that multiple public needs can be served.

Many analysts have pointed out that the American health care system today rations care based on ability to pay. I actually think a more comparable situation to the British approach can be found within the health plans of those who are already insured. That is, I don’t know any health plan that pays for every procedure that has ever been invented. Rather, all health plans make choices about what to cover and what not to cover. Some couch those choices in a phrase in employee plan information called “medically necessary”, i.e. plans say they will only pay for what is medically necessary leaving the details of that definition up to the health plan itself. Some give a specific list of procedures that are excluded. But, none pay for everything.

This is rationing by any definition being used in Congress today: it’s just a less transparent, private sector approach to rationing in contrast to the British system that actually has a public entity that makes explicit decisions along these lines and that allows public debate of the pros and cons of these decisions.

Taking the arguments of the opponents of Dr. Berwick to their logical extension, they are either saying we should simply pay for as much health care as anyone, anywhere in the country wants (hmm, wasn’t there an argument that the Affordable Care Act didn’t have enough cost control in it?) or that it’s better to make these kinds of decisions through the inconsistent, somewhat ad hoc process that we have in place today. It is hard to draw any other conclusions from their arguments.

Over the year, Dr. Berwick has said things such as that in America we have a “dangerous, toxic and expensive assumption that more is better.” And, he has made clear his (and most other health care analysts’) belief that we can cut health care spending without harming patients because there is so much misspending in the current system. As a result, he has urged practitioners do things such as “reduce the use of unwanted and ineffective medical procedures at the end of life.” So, if this is the kind of “rationing” the critics disagree with, well, to do anything else would be plain…irrational.

The Flap About the Dartmouth Atlas

Mon, 28 Jun 2010 08:30:00 -0400

Earlier in June, the New York Times ran an article by Adleson and Reed questioning the findings in the Dartmouth Atlas. Jack Wennberg and colleagues have been working in this field and documenting small area variation in health care since the 1970s. However, the work was not much recognized outside of academic and health care analytic circles until the start of the discussion on national health reform. In a very short period of time, the analysis went from being in the sole domain of providers and policy wonks (hmm, could that be me?) to being on the tip of the tongue of policy makers in Congress and the White House. Tracing the trajectory of this research from relative obscurity to the New York Times article provides an interesting insight into both the policy making process and the risks and opportunities inherent in trying to translate research into public policy.

The basic concept behind small area variation analysis is that health care utilization differs by community in ways that cannot be fully explained by the characteristics and medical need of the population being served in that community. Stated in this way, I think there are few who would actually disagree with that observation. On this point, the data are strong and have been consistent for the more than 40 years history of this kind of analysis. While the methodology has changed over time to look at these trends, the simple fact of unexplained variation is a robust concept. However, taking that observation and deciding what to do about it is an entirely different issue. To craft an intervention that tries to reduce unexplained variation, there must be a theory behind what causes the variation – and therein lies the rub.

There are many different theories to explain why there is so much regional variation in health care. Some believe that the variation is principally driven by the supply of providers (for those of us who went to public health school some time ago, the old Milton Roemer law: “a built bed is a filled bed is a billed bed”). Some believe that the variation is a result of practice patterns that have grown up regionally over time combined with a lack of clarity in the evidence base for treatments. Some argue that the variation has to do with true differences in patient characteristics that aren’t accounted for in the methodology. And, some contend that the way care is organized and delivered accounts for these differences.

While these explanations are not mutually exclusive (and many think there are elements of all of them at work), the explanation one believes is most important will lead to different ways to address the issue. And, beyond that, there is an underlying difference of viewpoint as to whether such variation is good or bad, i.e. whether areas with higher use rates are providing better or worse care and producing better or worse outcomes. For some discussion of this issue, it is useful to look at Dartmouth’s response to the New York Times article.

What happened with these data, however, is instructive and illustrative of the challenges inherent in translating research into policy. When Congress started paying attention to the data and seeing it as an opportunity to help with the cost savings needed to make health reform work – surprise, surprise –the “what to do about it” question became over simplified and the answers started a debate between high spending and low spending states about who should get more of the Medicare pie. That high profile debate resulted in the research itself becoming open to more and more scrutiny and critique and to the ultimate challenge posed in the New York Times article.

In the end, there probably isn’t one explanation for the variation or one set of solutions. The data included in the Dartmouth Atlas and in other analyses like this are a starting point for understanding where the opportunities are for quality and cost improvement – more analysis is really needed to get behind the numbers to understand the dynamics that lead to them. What would be most unfortunate in all of this debate, however, would be to lose sight of the fact that the degree of regional variation in how medical care services are provided in this country is enormous and much of it cannot be easily explained by differences in patient characteristics. The data in the Dartmouth Atlas are important indicators of opportunities to reduce health care spending in this country, and while there can be debate about how much and in what ways, the data must be taken seriously.

Cover Michigan 2010

Mon, 21 Jun 2010 08:40:37 -0400

Today, we are releasing our 2010 report on health care coverage in Michigan. This report includes comprehensive data on the uninsured, publicly, privately insured and the safety net. In addition, we have included a final chapter on what could be the impact of health reform on coverage in Michigan. The 2010 report principally includes data from 2007/8, the most recently available comprehensive data on health care coverage in the U.S. and Michigan.

Perhaps not surprisingly, the picture of health care coverage in our state in 2007/8 looks considerably worse than it did in 2005/6. The degree of change in a negative direction is greater than we expected and most concerning. For example:

• While still better than the national average, Michigan’s uninsured increased significantly between 2005/6 and 2007/8. Michigan now ranks 16th lowest in the country in terms of the percent of the State’s population who are uninsured compared to 10th lowest in 2005/6 – that’s a concerning change in ranking in just one year.

• Medicaid expenditures continued to grow representing 22.2 percent of the total state budget in 2008, a considerable increase from the 18.9 percent it represented in 1999. Michigan ranked 16th highest in terms of state expenditures for Medicaid – a big change from 2007 when Michigan ranked 27th highest.

• The rise in the uninsured and publicly insured has been a direct result of the continued decline in private coverage in the state, going from 77.5 percent of the state’s population in 2003/4 to 74 percent in 2007/8. And for those with coverage, there has been a significant increase over the past several years in the share of premiums individuals are paying.

The report also notes the strain on the safety net these changes are taking – with more than $2 billion in uncompensated care now being provided by hospitals and safety net providers being challenged to care for all those in need.

We do project a very positive impact on these trends due to health reform. Indeed, if everyone who becomes eligible for Medicaid enrolls and everyone who is mandated to have private coverage, purchases that coverage, the number of uninsured in the state could go from more than 1 million in 2007/8 to less than 150,000 in 2014, mostly undocumented immigrants. And many will likely benefit from the subsidies and tax credits included in health reform. But, the most significant health reform changes won’t take effect until 2014 – 4 years from now. And, when we look at these data again for what has happened in 2009/2010, the trends are likely to be worse.

But given that the most significant changes from health reform won’t take effect until 2014 (and 2009/10 is likely to look worse than 2007/8), should we all just hunker down until then? Well, no. There are two charts in the report that I think are very significant and give us both hope and a challenge. If you look at nothing else in the report, take a look at the charts on pages 47 and 115 (ok, not a test to see if you read it!). On page 47, we noted that the state peaked in terms of enrollment in Medicaid in 2005 – a time when Michigan had a very robust outreach effort designed to get kids enrolled. At that time we had more than 55,000 kids enrolled in MiChild. The number has now dropped to less than 44,000 – not because the need or eligibility have changed but because there is no longer the outreach program as a result of state budget challenges.

Similarly, our data on page 115 show that almost 16 percent of those who are currently uninsured – more than 165,000 people are Medicaid eligible today under the current eligibility rules. So, these are our opportunities and our challenge: we can get many more people enrolled in coverage if we want right now – we don’t have to wait until 2014.

And, lest we get too overwhelmed with the negative, there is one piece of really good news in the report: again this year, Michigan health insurance premiums are less than the US average. In 2008, Michigan family premiums averaged $11,300, $1,000 per person less than the U.S. average of $12,300. Now, that is something to build on!

Smorgasbord Anyone?

Tue, 15 Jun 2010 11:07:00 -0400

The recently passed “Patient Protection and Affordable Care Act” a/k/a “health care reform” is a monumental piece of legislation, both literally and figuratively. Despite its supposed intent to “reform” the health care system, however, it is quite tepid on reform and very aggressive on enhancing coverage.

The legislation contains a virtual smorgasbord of programs, directives, initiatives, instructions, orders, regulations, requirements, recommendations, exchanges, options, incentives, rewards, pilots, demonstration projects, commissions, task forces, centers, institutes, fees, grants, taxes, tax credits, and mandates. Unfortunately, very few of these components address, in any serious manner, what many clearly feel is the most critical problem of our current health care “non-system”: the ability to constrain the unrelenting and unsustainable increase in the cost of care.

For example, the chance to implement meaningful tort reform, substantially revise the provider reimbursement structure to reward value (quality) instead of productivity (quantity), improve end-of-life care, or link cost-effective analysis with coverage decisions was either relegated to small pilot programs (malpractice and reimbursement) or ultimately dismissed because of a lack of political courage (cost-effective coverage decisions and end-of-life care). The end result is that the legislation largely addresses coverage expansion and essentially ignores the underlying structural cost drivers. To put it more succinctly, the bill “dumps’ over 30 million newly insured members into a highly dysfunctional, inefficient, fragmented, and extremely costly health care non-system.

Notwithstanding the rhetoric of the bill’s partisan supporters that it will reduce health care costs (by “eliminating waste, fraud and abuse”!) and the federal deficit (by “bending the cost curve”!), the final result will inevitably be an acceleration and heightening of an already out-of-control cost issue. I would suggest that anyone who thinks otherwise probably needs an urgent head CT scan, immediate detoxification or an emergency psychiatric referral (or perhaps all three!). All of these services by the way will be readily available, at little or no cost and with little or no scrutiny, under a poorly designed, heavily regulated, quasi-government run, plan.

What is unfortunate about this situation is that our “leaders” had a real opportunity to truly “reform” (revolutionize?) the health care system but that chance is probably now lost. It is highly unlikely that any substantial or meaningful efforts or revisions along with these lines will be forthcoming in the near future. Instead, the focus will be on establishing the detailed rules and regulations that will govern the existing legislation. Attention will therefore be on the trees instead of the forest.

Smorgasbord sandwiches often taste good initially but when completely digested, the full effects become readily apparent. Under the circumstances, consulting your local gastroenterologist would seem to be a prudent next step.

Guest blogger Douglas R. Woll, M.D. recently retired from his position as senior vice president and chief medical officer for Blue Care Network of Michigan, the HMO subsidiary of Blue Cross Blue Shield of Michigan. Prior to joining the Blues in 1998, Woll spent almost a decade at SelectCare, where he served as senior vice president and chief medical officer. He served as a senior staff physician at Henry Ford Hospital from 1980 through 1989. Woll is certified by the American Board of Internal Medicine, and was elected a fellow of the American College of Physicians in 1998. He is involved with several professional organizations, including the Quality Committee of America's Health Insurance Plans.

What I wish she had said...The challenge of really communicating about health reform

Mon, 07 Jun 2010 09:03:00 -0400

The Detroit Regional Chamber of Commerce held its annual policy conference on Mackinac Island this past week. Health care reform was a topic of great interest to many of the attendees. In general, this group of 1,100 or so business leaders was either agnostic about the Patient Protection and Affordable Care Act or negative on it. Few had much knowledge of the details or clarity on what to expect – there was much confusion and an overarching view that there was just “too much government” in it.

Kathleen Sibelius, Secretary of U.S. Department of Health and Human Services, was the keynote speaker on Friday morning, June 4. This was a golden opportunity to really connect on the value of the Act to this largely skeptical but very influential audience.

So, did she? Unfortunately, no. What she did at the Mackinac conference is representative of what has been happening since health reform was passed into law earlier this year and why there has been no positive “bounce” for that passage. The problem with how communication has gone on health reform isn’t just the fact that there have been a lot of other critical issues since its passage – everything from the Gulf oil spill to the employment numbers – it’s really about a lack of a cohesive message that connects with consumers, business leaders, providers, and state policy makers about what health reform really is and what it can do for them.

Secretary Sibelius is clearly very competent and extremely knowledgeable. She demonstrated all of that on Mackinac Island. But, what she did in her speech was to describe the Act in its parts. By 15 minutes into her 45 minute talk (she took no questions), the audience had checked out – with most on their Blackberrys or reading the newspaper. She gave a list of some of the things in the Act and tried to say that it was important because otherwise, businesses in this country would not be competitive. But, she gave no overarching vision of the Act – no emotional punch about why it’s important and what will look different after it is fully implemented. And, she relied on a statement that everyone in Washington seems to think resonates outside the beltway: she talked about her latest trip to the Mayo clinic – something that actually doesn’t help many people relate to the promise of this law.

Why is it so hard to communicate the positives that are in this Act? Is it because it is 1,000 pages long? Is it because since it is dealing with one sixth of the economy, there are many different sections and aspects to it? Is it because there are so many details that the focus becomes on those rather than the whole?

It’s probably all of those things and also the fact that those in Washington have been so immersed in the ins and outs of the specifics, that they have lost sight of the fact that most of the country still just doesn’t get the over-arching premise of the Act.

The audience in Mackinac needed to hear this: the Act will reduce the number of uninsured – significantly. And, that’s important because the health of our citizens and productivity of our country is affected by not having insurance. The Act will provide financial support for millions of businesses in the country (small businesses – the engine of growth in this economy) to provide health insurance to their workers – thus, helping them attract and retain good employees, and immediately helping them to reduce their costs. Groups (employers and labor unions) that provide coverage to early retirees will get financial support to do so. The Act will help fix the broken individual market – making sure those who are sick are not excluded from coverage and helping to even out the risks and costs of coverage. Both individuals and businesses will be able to make more informed health insurance purchasing decisions because of this Act. And, the government role in all of these areas is essential to make them work. There are only limited ways to get to essentially universal coverage and there are problems and benefits associated with all of them. The approach embedded in PL 111-148 is actually one that was previously favored most by conservatives and is, in important ways the one that includes the least intrusive role for government. The Act includes a significant amount of state and local control and leaves many crucial decisions to providers of care, community groups, and state policy makers. And, the Act lays the ground work towards improving our health status, our health care work force, and the quality and efficiency of our medical care system in fundamental ways.

Many of those points were there in Secretary Sibelius’ speech – but they were there as trees and not the forest. She needed to give that big picture – and then fill it in some to help people see more concretely how the Act will benefit each segment represented in the room – business, consumers, state leaders and Michigan overall. And, then, she needed to take questions.

Creating Focus and Building on the Opportunity of Health Reform

Tue, 01 Jun 2010 08:28:00 -0400

As I’ve said in past posts, health care reform is much more about insurance reform of the health insurance system than it is about real and fundamental change to the health care delivery or public health systems (see “The Case of the Missing $115 Billion"). The bulk of the dollars included in the Patient Protection and Affordable Care Act (PPACA) go toward expanding coverage rather than improving the delivery system.

But the PPACA includes many good concepts that would – if funded – strengthen clinical and public health outcomes. To capitalize on these opportunities, however, it will be essential for those who care about these issues to be actively engaged at the federal, state and local levels.

On May 25, 2010, our organization released a policy brief to help guide advocates, consumers and others to take advantage of those opportunities. Those opportunities for state and local action fall into two broad categories:

Appropriations. At the federal level, it is essential to address the issue of funding for provisions in the Act that are authorized but not appropriated. Our Congressional delegation and others in Congress need to hear that these ideas are important and have strong local support.
State and local approaches to implementation. At the state and local levels, there are many choices to make as the Act is implemented, and many opportunities for providers, advocates and others to come together to improve the quality, efficiency, and safety of the health care system. Citizens’ voices will be important to define the best way to set up things like insurance exchanges, select approaches to Medicaid expansion, and pursue demonstration projects at the state and local level.

What is important to understand about these opportunities, however, is that they will only be available to the extent that groups and individuals come together to develop a collective view on what should be done. Groups are so much more effective in Washington or Lansing when they speak with a common voice rather than advocate for their own individual ideas or agendas.

Michigan has both a special challenge and opportunity in that regard. Over the next several months, the executive branch in state government will go through wholesale change as the Granholm administration leaves office and a new administration comes in. All of the decisions being made now could be fundamentally changed by a new administration. In addition, virtually the entire Michigan Senate will be changing in January. This inevitable change in leadership makes it even more important in Michigan than in most other states for voluntary groups to come together to help lay the ground work for health reform.

For years in Michigan, we were told that we did not get more funding for federally qualified health centers (FQHCs) because we had no common vision and too many groups competing against each other. FQHCs are now coming together with a shared voice: are other groups ready to do the same?

The Health Care Industry in Michigan: Staying on the Open Road

Mon, 24 May 2010 09:09:00 -0400

When I first came to Michigan from Indiana a year ago, I knew I was coming to a special state for health care.

Impressively, hospitals across Michigan have topped the national charts for years when it comes to providing high-quality health care. And compared with most states, Michigan has a long history of innovative pharmaceutical and medical research, excellent private insurance coverage for workers and a strong medical safety net for the poor.

Now, as we face known and unknown implications of federal health care reform, an increasingly competitive statewide environment and ongoing economic challenges, we also stand at an important fork in the road, where the path we choose will determine the future of our health care institutions, as well as the health of our citizens and of our broader state economy.

One direction will take us down an open road, wide enough for healthy industry competition to co-exist with collaboration and partnerships that leverage the extraordinary knowledge and expertise of Michigan’s health care community. This direction has the potential to lead to cost containment while preserving our ability to serve Michiganders with the excellent care they deserve.

Another direction could force our hospitals and other providers down a road toward intense competition that would move us away from why most of us entered health care in the first place – to discover and implement the science and practices that make people and communities healthier. That path could also compromise our ability to reinvent and reinvigorate Michigan.

In many important ways, we’ve already started down the open road.

Hospitals and doctors’ groups across the state are working together to improve the efficiency, quality and safety of the care they provide, while containing the growth of health care costs. In addition, they are finding ways to make sure patients have access to as much care as possible closer to home so they only need to travel to receive the most specialized care.

For instance, dozens of hospitals across the state have united in the shared interest of improving the care of patients with clogged arteries through the Blue Cross Blue Shield of Michigan Cardiovascular Consortium. By sharing data and best practices – together – we’ve prevented needless complications in thousands of patients and saved millions of dollars. We’re engaged in the same type of statewide collaborative work with initiatives that focus on everything from stroke to cancer to surgery.

Similar collaborations and sharing of best practices are happening in doctors’ offices statewide. Thousands of physicians are taking part in the Physician Group Incentive Program, a cooperative effort to improve the quality of the care they provide through their group practices. One example of the power of these partnerships is the savings of $29 million realized through specific steps to increase the use of generic drugs.

In support of this effort, University of Michigan teams have been training participating physicians in the “lean thinking” approach that many industries have used to streamline their manufacturing processes. We’re using a “lean” approach at the U-M Health System with great results and are excited to share this methodology with our partners across the state so that they can implement systematic changes that benefit their practices and organization.

We have to work hard to stay on a course of partnerships and overall improvement of health care delivery in Michigan. We cannot lose site of the benefits of collaboration and cooperation, especially as the forces of health care shift and especially as our citizens continue to need and deserve the best care.

Hospitals, health systems and physician groups have a choice to make about which path we take. Let’s make the right one.

Ora Hirsch Pescovitz, M.D., is the Executive Vice President for Medical Affairs at the University of Michigan and CEO of the U-M Health System.

The Case of the Missing $115 billion

Mon, 17 May 2010 12:08:00 -0400

The printed version of the final health reform Act (PL 111-148) comes in at 907 pages (yes, lots of white space and pretty small pages – and yes, including an detour into student loans – but still, a very big Act any way you look at it). Many have noted the sweeping nature of the Act and how it touches everything related to health care – from public and private health coverage to how public health and medical care is delivered and financed.

The Act – in 10 titles and numerous sections – includes a broad array of initiatives and strategies to improve the quality, accessibility and cost of health care in the country. Indeed, just about every idea health care policy wonks have had over the years about how to improve health care in the US is included in the Act.

What is less well understood is that many of those ideas are still a glimmer in someone’s eye.

This past week, Doug Elmendorf, the director of the Congressional Budget Office, came out with an important (and completely under-reported) analysis about the cost of provisions in the Patient Protection and Affordable Care Act (PPACA) for which funds were authorized – but not appropriated. In a letter to House Appropriations Committee ranking member Jerry Lewis, Elmendorf said the price tag for those provisions exceeded $115 billion.

In the end, authorized but not appropriated items are advisory in nature: they represent things Congress would like to see done, but were not ready to set aside funding. A high proportion of those provisions are workforce-related proposals: everything from more education for primary care practitioners to training for geriatric providers. Many of the provisions with no funding attached also relate to some core public health elements in the Act: funding for the National Health Service Corps, operations of federally qualified health centers, and many of the prevention and wellness programs described in the Act, for example.

Of course, it’s easier to put something in a bill without funding than it is to actually appropriate funds*, but the choices Congress made in this regard – what to appropriate and what to essentially identify as “good idea” – provide an interesting insight into legislative process and thinking. Looking at the appropriations included in the Act, one can clearly see how heavily weighted they are to coverage issues and how light they are on care delivery and public health issues.

While there are some exceptions (such as maternal and infant home visitation programs and certain public health initiatives), the vast majority of funding in the Act goes for Medicaid expansion, subsidies for premiums and cost sharing for health insurance, transitional reinsurance, small employer tax credits, reinsurance for early retirees, and the Medicare coverage gap discount program.

On the theory that money talks louder than speeches, unpacking what’s real in the funding of PL 111-148 makes clear how much more this Act is about health insurance than health care delivery. Yet, the opportunity for health care reform to be about more than health insurance remains. As I have said before, the PPACA is a foundation upon which to build. It will be up to those who believe reform should be about more than just health insurance to understand how much more work needs to be done to put the house on that foundation.

* As a side note, this makes the issue I addressed in last week’s post – the Medicare method of adjusting physician payments – more notable for the fact that Congress couldn’t address that problem in health reform at all.

The Wrong Policy: Physicians, Medicare Payment, and What Congress Could Learn from Private Sector Experience

Mon, 10 May 2010 07:30:00 -0400

Bruce Vladeck has a terrific piece in this week’s New England Journal of Medicine describing the problems with how physician fees are currently adjusted under Medicare.

The Sustainable Growth Rate (SGR) formula, put in place in by Congress in 1997 – was designed to use physician fees as a tool to control health care spending. That is, total physician payments per beneficiary were to grow no faster than growth in the gross domestic product (GDP), and if they did, physician fees would have to be reduced.

This policy has not worked to slow health care spending, and every year, when Congress gets to the point of having to cut physician payments (since health care costs have grown more than GDP), they suspend the policy without fundamentally altering it.

Today, this has become a $20 billion problem (and, Congress is again suspending the 21 percent fee reduction that was to have gone into effect on April 1). This issue was “supposed” to have been fixed in health care reform, but a desire to limit projected cost increases in the bill kept this issue out of the Patient Protection and Affordable Care Act.

Oh, if only Congress had talked to Michigan back in 1997: we could have told them what a bad idea the SGR was because we tried it – two decades earlier – with the same effect.

In the late 1970s, Blue Cross and Blue Shield of Michigan noticed that health care spending in one part of the state (the I-75 corridor, Detroit to Flint) was much higher than in the rest of the state. So, the Blues decided not to increase physician fees in that region until spending was on par with spending in the rest of the state.

What a disaster! Not only did spending not go down in that region, it actually went up!

On reflection, it makes sense that spending increased as a result of the I-75 corridor policy, right? Start with the fact that physicians are rational economic actors. Even if they aren’t consciously thinking about their incomes when determining appropriate referrals and the like, they are (as are we all) influenced by incentives. The I-75 corridor policy, like the SGR, relied on the collective actions of individual actors – physicians – to make any difference in future payments. And, physicians did not believe that the collective would change. Therefore, the rational economic incentive of this policy for any one physician was to spend, prescribe, and provide as many services as possible in the short run, because in the long run, payments would likely decline. That is exactly what happened in Michigan, and it’s exactly what happened nationally in the Medicare program. The only difference is those trends became clear at BCBSM by the early 1980s, and BCBSM decided to abandon the policy in favor of different approaches to addressing health care spending – something Congress has not yet been able to do, even after more than 10 years of clarity that the SGR is a failed strategy.

So it’s all well and good for us here in Michigan to look at Washington and say, “I told you so.” But, that doesn’t really help the country get on a different path.

This is a policy that clearly requires the political courage to say, as we did in Michigan years ago, OK, we made a mistake, and then move on. Bruce Vladeck provides an elegant analysis of why this is so hard to do politically – the projected impact of this change does have a considerable effect on the projected national deficit. Nevertheless, it must be done – and every year’s delay makes the problem worse since “costs” accumulate and compound over time.

Beyond fixing this particular problem, it is essential for us to take steps to avoid falling into this same trap again. As we say to our children, the issue isn’t to fix blame for the mess we’re in, but to learn from it so it doesn’t happen again.

So, what is the learning here? The learning is that there are lots of us out in the field – beyond the beltway – trying a lot of different approaches to addressing health care spending. And, it would be good if policy makers in D.C. were interested in and open to learning about our experiences, because we can teach them about things that didn’t work as well as those that did.

There is a world beyond Washington D.C., and while Congress sometimes recognizes that and looks for models (like the Mayo Clinic, Geisinger, and a few others), it should be casting a wider net. Health reform provides a great opportunity for experimentation. How about taking full advantage of what the private sector has already learned at the state and local level, and building on that?

The Paradox of Accountable Care Organizations

Mon, 03 May 2010 15:27:00 -0400

In the run up to health care reform, there was considerable discussion and advocacy for the idea of encouraging the implementation of something called accountable care organization (ACOs). Count me as a hope-to-be proved-wrong skeptic of this idea.

The definition of an ACO is somewhat vague. Essentially the idea is to have groups of providers (group practices, individual providers, hospitals) take responsibility (and thus, “accountability”) for the care of a defined set of patients, i.e. to be fully responsible for all care, including the cost and quality of that care, and share in any savings that might accrue if that care is delivered more cost effectively than it would be in the standard environment.

Sound familiar? Yes, it shares the same overarching philosophy of health maintenance organizations (HMOs) but without the concomitant structure. As defined in the health reform Act, ACOs would continue within the fee-for-service system, but with a sharing of savings. There is no risk arrangement per se; and it is a direct contract with groups of providers rather than a health plan. Sound too good to be true? I am afraid it may be, and perhaps worse, may have an unanticipated negative effect on health care spending.

Here’s the too-good-to-be true part: after health care reform failed under President Clinton, the country shifted wholesale into managed care-heavy ( i.e. risk based), capitated HMOs. These HMOs did slow the cost of health care; national health care spending trends were flat for several years after this shift. But many consumers hated conforming to the requirements and limitations of those HMOs. Most HMOs achieve cost savings by aggressive oversight of hospital stays and expensive referrals, using both financial incentives/disincentives for providers and administrative mechanisms for approvals of certain types of care. Consumers not used to these kinds of processes rebelled against them and the “managed care backlash” was born in the late 1990s. Because health plans do in fact respond to the market (and also to legislators, who began enacting laws to prohibit limits on hospital stays in certain cases), they began to loosen the constraints in their plans and shifted instead to a preferred provider organization (PPO) model – a less tightly controlled version of managed care (managed care “lite,” to many).

So, what happened to health care spending? Well, it did indeed go up – in some cases, a lot.

And now, along comes the latest “rage” in health care (as noted by the Healthcare Economist): the ACO – an even “lighter” version of managed care. Can such an organization really slow national health care spending? Color me doubtful.

And, here’s the unintended potential negative effect: In all the furor around the 39 percent rate increase requested by Anthem Blue Cross earlier this year, one important aspect of the issue didn’t get enough attention: what drove the need for that rate increase? Anthem argued it was the result of demands by certain providers for higher fees, and the negotiating leverage of “marquee” providers that were essential to include in the network in order to serve Anthem customers.

This is an issue that has been well documented elsewhere (see the Massachusetts Attorney General’s report). Having negotiated contracts with providers on behalf of a health plan for many years myself, I can tell you it is a lot easier to negotiate in an environment of plenty than when a provider controls a significant portion of the market.

ACOs have the positive effect of encouraging providers to get organized and structure themselves to deliver and coordinate quality of care. But they also will have the unintended effect of creating bigger geographic blocks of providers – with more negotiating leverage – within regions. Hospitals have been trying to do this for years through physician-hospital organizations (PHOs) and other strategies. ACOs may finally give this idea such a boost that markets become dominated by a small set of “must-have” providers that will shift negotiating leverage with health plans. Color me worried.

Don’t get me wrong: I do hope ACOs work, and I do believe that the underlying philosophy is a good one: care should be managed by providers and not insurers; quality should be the responsibility of providers; care must be better coordinated between and among providers, and shared savings is a great idea. But, as with any big idea, we must go into this with our eyes open – watching for and protecting against those unintended consequences and making sure not to over promise what can really be achieved.

A Challenge and an Opportunity: Health Reform at the State and Local Level

Mon, 26 Apr 2010 08:37:00 -0400

Many commentators have noted that the success or failure of health reform will be determined by how well it is implemented by the Department of Health and Human Services – in particular, the Centers for Medicare and Medicaid (CMS).

There is no question this issue is critical, and it is precisely why HHS is quickly issuing regulations for the elements of health reform that must go into effect in the near term. But implementation is not just a federal issue. As I noted in last week’s blog post, many of the provisions of health reform rely on administration at the state level.

For health reform to be a success, implementation by the states must be effective as well. And, implementation at the state level is arguably an even bigger challenge than implementation at the federal level.

Michigan offers just one example of the complexity that implementation of health reform faces. Governor Jennifer M. Granholm has established a coordinating council and a team determine how best to implement health reform in the state. But, at the same time that that effort is proceeding, the state’s attorney general (representing himself, not the state) has joined other attorneys general in filing a brief opposing the Act. And, Michigan’s attorney general is running for governor of the state.

Governor Granholm is term-limited and will be leaving office after this year’s election, as will many in the legislature. Indeed, almost all members of the state Senate – 30 of 38 – are term-limited and cannot be re-elected. Thirty-four of 110 members in the House are also term-limited. So, with a new governor, 64 new legislators, and all the other leadership and staff changes that will ensue, it is quite possible everything that is done in Michigan this year to prepare for health reform could be undone.

Other states face similar situations of expected instability in state leadership and have many challenging issues to focus on besides implementation of federal health care reform.

The Patient Protection and Affordable Care Act is complex – with a tremendous number of moving parts – and is designed to expand coverage and make improvements in the cost and quality of care. There is little doubt that some things will go wrong in the implementation of health reform – and the Act itself has several known shortcomings.

For example, the Act relies on an individual mandate to increase health care coverage, but the sanction for lack of coverage was a politically negotiated number that was relatively low: $695 per year in 2016, up to a maximum of three times that amount per family or 2.5 percent of household income (the penalty is phased in starting in 2014 and indexed after 2016). As the New York Times pointed out, for those who are working but not high income, even the subsidies may not be enough to offset the cost of coverage. Every individual will make a calculation of whether they are better off – financially and otherwise – by paying for the coverage or the fine. Many may choose to go “bare,” which would undermine the fundamentals upon which the Act is based.

Other challenges involve assumptions and speculations about whether or not the initiatives in the Act will result in savings. Some, like Atul Gawande, are truly optimistic about what they see as exciting experiments about to begin in states and the private sector; others have more doubts. And, reports like the April 22 memo from the Chief Actuary at CMS projecting cost increases from the Act, which conflicts with the previous CBO analysis, exemplify the complexities in health reform. If these policy flaws and complexities are compounded by implementation problems at the state level, they will be magnified many fold.

Implementation success is thus fundamental to policy success. For all who want this round of health reform to work, becoming involved in what is happening at the state level and in local health care systems to implement health reform will be important.

As Atul Gawande said so well: “…the one truly scary thing about health reform: far from being a government takeover, it counts on local communities and clinicians for success. We are the ones to determine whether costs are controlled and health care improves—which is to say, whether reform survives and resistance is defeated.”

So, it’s time for all of us to turn our attention to the states and local health care communities and do what we can there. A key to the success – or failure – of health reform may be closer to home than we think.

Advancing Social Justice and Equity: The Federal/State Balance in Health Care Reform

Mon, 19 Apr 2010 09:54:00 -0400

One of the most interesting stories in the new health reform Act – and vastly under-reported – is the significance of the roles established for state and federal governments. These roles represent a historic shift in the philosophy of health care policy-making in this country: a shift I think is all to the good.

Because we live in the moment, we have a tendency to see current events as slow to unfold and a radical shift from the past. But when we look at health care reform throughout history, in particular the history of Medicaid and Medicare, it is easy to see the parallels and the philosophical foundations for today’s events.

Both pieces of legislation (despite our often fuzzy recollection of history), like health reform today, were years in the making and survived to become laws of the land despite many attacks on their formation. Both were built on years of prior policies. And, today’s health reform moves us further down the path laid by both Medicare and Medicaid and brings the philosophy of both programs closer together.

When Medicaid came into being 45 years ago, it was founded on a historical relationship to cash welfare benefits. So, Medicaid in 1965 was never intended to cover all of the poor – it was intended to cover those who were poor because they were not expected to work (i.e., the aged, disabled, blind, and single mothers with children).

Medicaid of 1965, like reform today, was built upon past policy. Medicaid extended and modified the Kerr-Mills Act of 1960, which provided a program of state payments to medical vendors for the indigent elderly. Because the Kerr-Mills Act was intended to help the states, the idea of federal matching funds for states was fundamental to Medicaid as well (and the idea of distributing funds based on the relative wealth of states was a concept that was politically attractive in Congress at the time). Because Medicaid was established within the structure of welfare programs, the administrative approaches of welfare came along, too: that is, it was administered at the state level and many policy determinations were left to the states.

Whereas Medicaid’s structure and financing were based on welfare policy, Medicare was founded based on the principles of Social Security. Indeed, Medicare was designed to fix many of the flaws in the Kerr-Mills Act and provide coverage for all the elderly – not just the indigent elderly. So, while Medicaid evolved from welfare policy, enhanced federal state financing, and left intact a state administrative structure; Medicare was a federally-financed, and essentially, federally-administered program from its start.

Fast forward to today and you can see that the evolution in state/federal roles continues in the Patient Protection and Affordable Care Act. The changes envisioned for the Medicaid program move the state/federal partnership more heavily into the federal column: for the first few years, full federal funding is provided for the expansion of coverage up to 133 percent of poverty for those not currently eligible for Medicaid. And, even when full federal payment is ended, the federal matching levels are higher than most matching levels today, and standard for all states for the expanded population (rather than varying upon the resources of a particular state).

Beyond Medicaid, states are afforded significant roles within health reform – the implementation of state insurance exchanges being the most visible but not the only – but many of those roles are structured at the federal level. State roles under health reform are principally administrative: state policy making is significantly limited.

P.L. 111-148 moves this country considerably closer to the vision of Medicare: uniform funding and benefits regardless of where one resides, limited state variability in the delivery of benefits, and a heavier reliance on federal rather than state funding for those enrolled in public programs. Medicaid provider rates, with a brief exception related to primary care, continue to be set at the state level. (I have previously commented on the problem that that issue creates: access to care will be limited for current and new Medicaid recipients as long as that care is so significantly underfunded. The fact that this particular issue wasn’t addressed more broadly in PL 111-148 is a flaw that needs to be fixed over time.)

The changes embodied in health reform are an important step forward for social justice and equity. Health coverage in this country should not vary just by virtue of where you live. While administration based on local circumstances can make sense, the scope of health coverage for those who must rely on public financing should not. In this regard, the current health reform Act is a beginning, not an end.

A New Theory of Health Insurance: Preventive Care and Health Care Reform

Mon, 12 Apr 2010 08:45:00 -0400

In all of the commentary about The Patient Protection and Affordable Health Care Act, little has been said about the dramatic change in the theory of health insurance that was embedded in the Act.

While there are many changes to health insurance in the bill, most of them affirm the original foundations of health insurance in America: community rating, guaranteed issue, and the like. These provisions return health insurance to the structure it was founded upon in the late 1920s – a structure that was eroded as the health insurance industry became increasingly dominated by for-profit, commercial insurers.

One set of provisions, however, substantially shifts away from that original foundation: the scope of coverage requirements.

When the first Blue Cross plan was established in Baylor, Texas in 1929, it was designed to protect individuals from catastrophic financial losses that could occur as a result of sickness (and at least equally important, to protect hospitals from unpaid bills). The theory behind health insurance then followed the traditional concept of other kinds of insurance; i.e. insurance should be provided for things that cannot be anticipated and would result in a significant financial burden. In fact, one definition of insurance is “a means of indemnity against a future occurrence of an uncertain event."

In its early days, and in conformance with this definition, the health insurance provided by Blue Cross plans covered hospitalizations – events that clearly met the traditional definition of insurance. Somewhat later, Blue Shield plans were developed to provide coverage for physician services, but in those early days of health insurance Blue Shield generally limited coverage to costly physician care associated with hospitalizations. Over time – often as a result of collective bargaining – the scope of health insurance changed to include more predictable and optional services: elective surgery, office visits, and the like. And consumers began to expect that such services should be part of health insurance.

The Patient Protection and Affordable Health Care Act embeds and extends this concept in statute. Indeed, the Act goes further than private health insurance has generally gone before, mandating coverage for certain preventive services – with no cost sharing – for all new health plans and all Medicare enrollees (existing private plans are grandfathered from this provision). This is one item that many consumers will experience in the near term, since the provision goes into effect in September of this year for new health insurance plans and in January 2011 for Medicare enrollees.

This change is one part of the bill that is, in fact, quite radical: it contradicts decades of theory on health insurance and bows to the practical reality of what health insurance has become over time. Its advocates argue that coverage for preventive services is one of the cost saving measures in the Act – that it will save money because illnesses will be identified and treated earlier or prevented all together. Indeed, the New York Times describes this change –without equivocation – as based on the idea is that healthy Americans will be less costly Americans, and it quotes Helen Darling, president of the National Business Group on Health, as saying: “This is transformative. We’re moving from an insurance model that was based on treating illness and injury, to a model that’s focused on improving an individual’s health and identifying risk factors.”

There is no question that this change is transformative and that health reform significantly expands the focus on wellness and preventive services. The question, however, is, will this change do what many of its proponents claim? Will it save money? In fact, on that point, the evidence is not nearly as positive as many politicians would like. It sounds great to say that we are expanding coverage and saving money at the same time. Sounds great; but probably not true. Most researchers agree that though preventive care can be cost effective care, most is not cost saving.

Does this mean covering preventive care broadly, as required by health reform, is a bad thing? Absolutely not.

There is no question that this provision of the Act will benefit many consumers and may – if done right – improve the health of the population. But, it is also essential to understand just how radical this change is and not expect it to have an equally positive impact on the cost of health care. A clear reality about what can and can’t be accomplished by the various parts of health reform will be essential to the evaluation of their success (or failure): it would be a shame for all of us to put a burden of proof on preventive care services for cost savings that are unlikely to be achieved.

And Now for a Message about Public Health

Mon, 05 Apr 2010 11:04:00 -0400

With all the focus this past week on health care reform with a capital “H” (and a really boring official name, The Patient Protection and Affordable Care Act), a very important development relating to the public’s health could easily have been missed: a seminal ruling by New York federal court judge Robert Sweet. Judge Sweet’s March 29, 2010 ruling invalidates gene patents held by Myriad Genetics on the BRAC1 and BRAC2 genes. While the front pages of newspapers (and whole sections, in fact) were focused on the details of health reform, the gene patent story was, for the most part, found in the business pages or buried somewhere in the middle (except, of course, for journals catering to the biotech industry where headlines like “Pigs Can Fly” abounded). And, yet, this ruling is one the public should really pay attention to because it could have a profound impact on our health: now and into the future.

U.S. law prohibits patents from being issued for “products of nature.” Whether human genes and gene sequencing fit that definition or not has been an ongoing legal and public policy controversy. There is much legal debate about how to deal with the evolving field of genomics (indeed, health reform seems to give a nod to the biotech industry by giving 12 years of patent protection to new biologics). There is no question that Judge Sweet’s ruling will be appealed and that this issue could even go to the Supreme Court. Nevertheless, the biotech blogosphere is full of articles on the short and long term impact this ruling will have on the field and the industry – whether it is upheld or not.

I wouldn’t presume to comment on the legal merits or industry impacts of the case but I do want to take a moment to look at related public health issues. Myriad licensed the genes from the University of Utah. An important question to understand is why the University of Utah licensed the genes to Myriad in the first place. The general issues involved here are of great interest to all universities today – especially public universities – as they deal with struggling state budgets and cuts in funding to public universities as a way to help balance those budgets.

The issue of patenting genes is a good case example of the kind of dilemma universities face. Universities have to balance issues related to their scholarship, teaching, and public mission with fiscal realities. I don’t know the thinking of those at the University of Utah on this issue, but I do know that these issues are being debated around the country. The University of Michigan (U-M) has brilliant researchers who work in genetics and gene mapping. Researchers I have heard speak on this issue here are committed to having their work be open source to help advance the science. While that doesn’t mean some application of their work couldn’t be commercialized down the road, they are scientists first and foremost, most interested in expanding public knowledge, and clearly hoping that patients will have cheap and easy access to a full interpretation of their genetic code – without clinicians or labs having to run a gauntlet of approvals from patent holders, which would surely increase cost and lengthen the time it would take to get this information to patients.

Dean Warner of the U-M School of Public Health speaks eloquently to the importance of schools of public health engaging in teaching, research and service that ultimately benefits the public. And, he notes, commercialization of products is not necessarily inconsistent with that mission: indeed, there are times when using the force of the market can significantly enhance the speed and reach of products to the benefit of the public. The development of vaccines is a case in point: there would have been little value in the basic research to develop vaccines had the vaccine developers not partnered with business entities that could produce and distribute the vaccine – and who had sufficient incentives to do so. Millions of lives have been saved as a result.

But there is a difference between the ideas of commercializing/patenting a product as a means to benefit people and limiting/ patenting findings that are building blocks of basic science. While the definition of “building block of science” is increasingly blurred and legal eagles will have lots of time for debate (not to mention, careers) around this issue, Judge Sweet’s ruling invalidating the patents on the BRAC1 and BRAC2 genes is a stand for public health – and for that, we should all be grateful.

(Read the NEJM article, which comes to the same conclusion from a different perspective: http://content.nejm.org/cgi/content/full/NEJMp1004026v1)

Health Reform and its Aftermath: Time for a Civil and Truthful Dialog

Sun, 28 Mar 2010 21:59:00 -0400

Last week was a powerful and exciting week for anyone who cares about health care in this country. Whether you agreed or disagreed with the specifics of this legislation, there was common agreement that the Patient Protection and Affordable Care Act of 2010 was momentous legislation. I do support the legislation, not because I think it is a perfect bill but because I think it is an important foundation to work from.

Despite the claims of critics, this is not radical legislation. Indeed, it is a uniquely American piece of legislation: it works within the current structure of health care rather than replacing it. Setting aside the rhetoric, this bill respects American traditions while making health care part of the social compact. The legislation is a mix of market approaches and public approaches: it is by no means a government takeover of health care (was Medicare a government takeover of health care? oops, I digress). The legislation keeps in place provider choice, insurance choice, and the private delivery system of health care. It doesn’t fundamentally change our drug development system, our medical education system, or our public health system; it does build on and modify all of those systems. Indeed, the criticism of many policy analysts is that the legislation actually doesn’t change enough about the current health system. But even the most ardent advocates for radical changes to the system came to realize that simply wasn’t going be politically possible.

There were incredibly moving moments over the past week– especially the bill signing. But, it was also a discouraging week as untruths about what was in the bills continued to fester in so many places. Reporters asked me why so many people seemed so worried and upset by the bills. Unfortunately, I think the answer to that question has more to do with the politics of the legislation than the policy. While there are certainly many who have legitimate disagreements about policy issues, there are also many who oppose the bill because they a have fundamental philosophical disagreement with the idea that health care should be part of the social compact. Rather than simply owning that view (a view that is certainly at odds with that of most Americans), some resorted to hyperbolic claims and false statements about what was in the bill, using language designed to breed fear. And, those falsehoods come with a cost: they destabilize the public and de-legitimatize discourse.

Leaders have a responsibility to speak from truth and facts, not to frighten people with hyperbole. The level of uncivil discourse has done a terrible disservice to the American people. At a time of dislocation and insecurity, public officials should take pains to be thoughtful, honest and clear in their communications: to encourage meaningful and informed debate. Instead, what we have seen has been inflammatory, confusing and playing to people’s basest fears. This is the kind of discourse that led to the repeal of the Medicare Catastrophic bill of 1988 after Representative Dan Rostenkowski’s car was stoned by angry senior citizens. While some who practice this type of rhetoric might hope for the same outcome in this case, they are misguided. Most health policy analysts believe the Medicare Catastrophic bill was actually a far better bill than the Medicare Prescription Drug, Improvement, and Modernization Act that passed in 2003, which took more than 10 years and an enormously complex approach to achieve less for millions of seniors. Unbridled rhetoric has consequences: some, catastrophic.

The truth is, the bill signed by President Obama is neither perfect nor radical. It embeds the principle that health security should be a basic American right, while still embracing a market based system. These two goals have often been in conflict, resulting in the defeat of many previous efforts at health reform. This bill is big and complex and makes many compromises to balance those goals.

The truth is, this bill will help millions of Americans, and while it may not go as far as many would have liked on improving the cost and quality of the system, it goes further than ever before, further than the status quo was ever going to get us, and further than many predicted it could. So yes, there will be changes and fixes down the road.

But the truth is, we finally have a health policy in America to build upon. And that, in and of itself, is a good thing.

Thank Anthem Blue Cross for Health Care Reform

Mon, 22 Mar 2010 01:08:00 -0400

When the history of the 2010 health reform bill is written, it should include a shout out to Anthem Blue Cross of California for all of its help. What a lot of changes in a short period of time! Remember the ancient history of January 19, 2010? That was the day that Scott Brown of Massachusetts was elected to fill the late Senator Edward Kennedy’s seat. Here’s a sample of what the news reports said after the election:

“I think you can make a pretty good argument that healthcare might be dead,” said New York Democrat Anthony Weiner, a fierce advocate of the public option. Another New York liberal, Democrat Chuck Schumer, thinks discontent among Independents will force Democrats to de-emphasize healthcare to focus on what matters to voters — jobs. "Our focus must be on jobs, the economy and delivering for the middle class," he said. (January 20 LA Times)

Newspapers around the country echoed those views, and in the weeks after the Brown election those views deepened: the voters had spoken, health reforms were deeply unpopular, and the House would never pass the Senate version of health reform (the only viable way to get health reform without a filibuster-proof majority in the Senate).

Well, lo and behold, it is just over two months later, and guess what? The House has passed the Senate bill and health reform writ large is now about to become the law of the land!

So, what happened to change the story? Was it that the President became more engaged, or the public more supportive * (or, at least, less negative)? Did the bi-partisan summit held in late February accomplish its desired end?

Well, yes, all of that is true. But even with all of that, I don’t think we would have seen the passage of this historic health care bill Sunday had it not been for Anthem’s announcement in early February that it was raising individual rates by 39 percent.

Assuming that Anthem was not adopting Machiavelli’s approach (i.e., actually trying to get health reform passed — which did cross my mind), then one has to wonder what they were thinking to announce those rate increases in the midst of this great debate about health reform. Until Anthem announced its rate increases, advocates were having a hard time explaining reform in ways that resonated with the public. The President and Congress spent a lot of time talking about health reform in a very technical way, focusing on the details of policy changes and broader systemic impacts. How many people are sick of hearing “bending the cost curve,” as I am? (And who even knows what that means??) Opponents of reform, on the other hand, had much simpler sound bites about “death panels,” Medicare cuts, and the like.

But Anthem’s proposed rate increase gave advocates a clear message to rally around. The message was important — not just to change public opinion, but to help wavering law makers and give them something they could use in their districts to run on. It is no coincidence that after Anthem’s rate increase announcement, the President really seemed to find his voice on health reform. This was a message that the public could understand: rates are going up, people can’t afford care, and health reform would help with that.

So, on this historic day and on behalf of all the advocates of health reform: thank you Anthem Blue Cross. It wouldn’t have happened without you.

* With regard to the polling data: the polls have moved slightly in a favorable direction since January. On January 20, the day after Scott Brown got elected, the Rasmussen poll had 40 percent favoring health reform and 58 percent opposed; on March 14, 43 percent were in favor with 53 percent opposed.

What to do about “Lemon Drops”

Mon, 15 Mar 2010 10:00:00 -0400

The White House is saying that we will have health reform enacted by next Sunday. While health reform is the term often used to describe the House and Senate passed bills, in fact a large part of what is called health reform is really focused on health insurance reform. And, a big piece of that reform is designed to deal with the fact that today many Americans cannot get health coverage because of their health status. Leave it to the British to coin the artful phrase in describing this problem: “lemon drops.” Lemon drops is their term for what we call, much less elegantly, those with “pre-existing conditions.” And, what an appropriate term it is: those who are sick are the “lemons” that no health plan wants to cover. As an effort to avoid “lemon drops,” insurers spend a tremendous amount of time and money on trying to “pick cherries” — that is, applying medical underwriting to try and avoid covering those who are most in need and covering instead those who are healthy and likely to stay so.

The health reform bills in Congress are as complex as they are, in part, because of the goal to reform the insurance market and eliminate pre-existing condition exclusions and medical underwriting in the individual market. For that to occur, mandating coverage has been described as a pre-requisite. Linking guaranteed issue and mandatory coverage in the individual market makes sense because unless everyone is required to purchase coverage, it is likely that people will do a rational calculation: only buying coverage if they think the cost of that coverage will be less than the cost they would otherwise spend on care. That means that only those who are sick or expect to get sick will likely spend the money for coverage, breaking down the fundamental insurance principle of pooling of risk and sharing of cost. Over time, an adverse risk spiral can develop with those at the lowest risk dropping coverage leaving behind a sicker and sicker population in the insurance pool. We have seen this occur in Michigan where only Blue Cross and Blue Shield of Michigan is required on a continuous basis to take all comers regardless of health status.

Some economists, however, have argued for a different structure for getting to universal coverage in the individual market. Rather than mandating consumers to purchase coverage and requiring insurers to guarantee issue, they suggest an incentive based system. They rightly note that the penalties for failure to purchase coverage are politically vulnerable and likely to be too low (as they are in both the current versions of the Senate and House bills) and that over time, the same adverse risk spiral will develop nationwide as exists now in Michigan (indeed, if you listen closely to what the insurance industry is saying, this is what they are really arguing when they say the bills aren’t strong enough). Mark Pauly has been the most elegant proponent of this concept. In his approach, rather than mandating coverage and requiring guarantee issue, there would be financial incentives for individuals to purchase coverage while young and healthy. That is, cost would increase later in life. This approach is taken in the long term care market. Though that market is small, there is some indication that this approach does work to encourage people to buy and keep coverage — without the added complexity and political volatility of mandating such coverage

Americans hate being told they have to do something. Much of the turmoil around health reform has really been about Americans’ dislike of being mandated to participate and feeling that they are subsidizing the costs of others. Of course, that is what insurance is all about, but that concept when applied to social insurance is in serious tension with apparent American values. Mark Pauly’s idea may not be perfect but it may, in fact, be the better method to approaching universal coverage consistent with what most Americans seem to want. If health reform does pass this week and maintains the current mandates coupled with insufficient sanctions to really make community rating work, then we will have a great experiment to look forward to. If this method of dealing with the “lemon drops” doesn’t work, however, then it will be well to consider the ideas Pauly has put forward in the next round of health care reforms.