LAWS ON LAWS

Funkhouser's Law of the Media: The quality of legislation passed to deal with a problem is inversely proportional to the volume of media clamor that brought it about.

... for more, go to ... http://www.health-politics.com/humor.html#06-03-13

May 31, 2013: House GOP Inches Toward Resolving SGR "Problem"

Republican leaders of the House continue to inch toward a replacement of Medicare's notorious sustainable growth rate (SGR) formula for setting physician reimbursement, releasing draft legislation yesterday that gives organized medicine a big role in determining how its members are paid.  By repealing the SGR formula, the draft legislation would avert a 24.4% Medicare pay cut that is scheduled for January 1, 2014. Medicare reimbursement would slowly shift to a mix of fee-for-service (FFS) and pay-for-performance, with medical societies designing the yardsticks for measuring performance. In addition, physicians could choose from a menu of payment options.  (Jeanne's Note: It was a GOP-controlled Congress bent on "balancing the budget" that enacted the SGR in 1997 as part of the so-called "Balanced Budget Act.")

The draft legislation, issued by GOP leaders of the House Energy and Commerce Committee, closely hews to an SGR "doc fix" that these Republicans and their counterparts on the House Ways and Means Committee first unveiled in February. The latest version comes after extensive consultation with organized medicine, which has long lobbied for repealing the SGR formula. The health subcommittee of the Energy and Commerce Committee has scheduled a hearing on the draft legislation for June 5.

The House GOP "doc fix" taking shape for the Medicare reimbursement crisis competes with bipartisan SGR repeal legislation introduced in February by  Housecritters Allyson Schwartz (D-PA) and Joe Heck, DO (R-NV). Their bill also takes a gradual turn toward pay-for-performance, but unlike the bill from the House GOP leadership, it eventually phases out FFS reimbursement as opposed to preserving it in a modified form.

In addition, budget proposals from Senate Democrats and President Barack Obama assume the demise of the SGR formula, enacted by Congress in 1997 to control Medicare spending on physician services. Although Republicans and Democrats alike have talked about repealing the formula for years, lawmakers say 2013 could be the year when talk turns to action, given a fiscal opportunity that has fallen into their lap.

Every year since 2002, the formula has called for a cut in physician reimbursement, but with the exception of 2002, Congress has postponed each cut. "Kicking the can down the road," as Capitol Hill likes to call it, has caused the cuts to accumulate to their current level. In an age of deficit-anxiety, lawmakers have been loath to repeal the SGR formula and its massive pay cut outright on account of the price tag. In January 2012, the Congressional Budget Office (CBO) put the cost of repeal -- together with a 10-year freeze of Medicare rates -- at $316 billion. However, given a recent slowdown in Medicare spending on physician services, the CBO revised the cost downward to $139 billion a few months ago. Now a doc fix looks much more affordable.

Bonuses for Quality and Efficiency

Under the plan laid out yesterday by Republican leaders of the House Energy and Commerce Committee, 2014 would usher in several years of Medicare payment stability, created by predictable, statutorily defined FFS rates. In the next phase, Medicare would adjust FFS rates upward or downward based on quality measures and "clinical improvement activities," such as reporting clinical data to a registry that medical societies would develop and endorse.

Medicare also would take into account how physicians rank within their specialty on a risk-adjusted basis, as well as how their scores change over time, according to an overview of the plan released by House Republicans.

Physicians would be given timely access to their performance scores. That provision jumps off the page in light of long lag times in the past between performance and report cards in Medicare's Physician Quality Reporting System, a source of consternation to organized medicine. In other nods to medical societies, House Republicans say their plan will "reduce the reporting burden on physician practices" and "override the current ineffective CMS quality measurement programs."

Republicans add that they will "align Medicare payment initiatives with private payer initiatives." At the same time, physicians participating in accountable care organizations, medical homes, and other Medicare experiments in alternative reimbursement can stay where they are.

In the third phase of the new Medicare payment system, physicians who earn bonuses for their quality of care will have a chance to earn additional bonuses for being efficient. Again, all this comes on top of FFS reimbursement. Physicians retain their right to receive their Medicare dollars under alternative arrangements.

The draft legislation requires the Department of Health and Human Services to regularly assess both the modified FFS system and alternative Medicare and private payer reimbursement methods with an eye to continual improvement. The goal is to provide "reimbursement options -- instead of the current one-size-fits-all approach -- that enables physicians to select the Medicare payment system that best fits their practice."

May 31, 2013: For Profit Health Insurers, Ripping Off Ratepayers

For profit health insurers, already ripping off ratepayers for their exorbitant CEO and executive salaries, bonuses and perks spent an average of less than 1 percent of the premiums they collected from policyholders in 2011 on activities directly supporting improvement of health care quality, according to the Commonwealth Fund study released earlier this year.

The new looks at differences in medical loss ratios, consumer rebates, and quality improvement expenses, based on insurers' corporate structure and ownership. The study finds that insurance companies spent a combined $2.3 billion on direct quality improvement activities ... an average of $29 per subscriber.

 

Obamacare's medical loss ratio rule requires large insurers to spend at least 85 percent of premiums on medical claims and quality improvement activities ... those likely to improve health outcomes, prevent hospital readmissions, improve patient safety, and increase wellness and health promotion ... or else pay rebates to consumers.

May 30, 2013: For Medicare, Immigrants Offer Surplus, Study Finds

Immigrants have contributed billions of dollars more to Medicare in recent years than the program has paid out on their behalf, according to a new study, a pattern that goes against the notion that immigrants are a drain on federal health care spending. The study, led by researchers at Harvard Medical School, measured immigrants' contributions to the part of Medicare that pays for hospital care, a trust fund that accounts for nearly half of the federal program's revenue. It found that immigrants generated surpluses totaling $115 billion from 2002 to 2009. In comparison, the American-born population incurred a deficit of $28 billion over the same period.

The findings shed light on what demographers have long known: Immigrants are crucial in balancing the age structure of American society, providing an infusion of young, working-age adults who support the country’s aging population and help cover the costs of Medicare and Social Security. And with the largest generation in the United States, the baby boomers, now starting to retire, the financial help from immigrants has never been more needed, experts said.

Individual immigrant contributions were roughly the same as those of American citizens, the study found, but immigrants as a group received less than they paid in, largely because they were younger on average than the American-born population and fewer of them were old enough to be eligible for benefits. The median age of Hispanics, whose foreign-born contingent is by far the largest immigrant group, is 27, according to the Brookings Institution. The median age of non-Hispanic whites in the United States is 42.

The study drew on two nationally representative federal surveys, from the Census Bureau and the Department of Health and Human Services. Researchers included the contributions from three groups (1) legal residents who were not citizens, a group that is eligible for Medicare if certain requirements are met; (2) unauthorized (illegal) immigrants; and (3) citizens who were born abroad. It was not clear how much of the surplus was made up of earnings by immigrants in the country illegally, who are ineligible for most government programs.

The Census Bureau, whose data was used for the contributions portion of the study, says it attempts to count all immigrants, including those in the country illegally.

The finding "pokes a hole in the widespread assumption that immigrants drain U.S. health care spending dollars," said Leah Zallman, an instructor of medicine at Harvard Medical School and the lead author of the study.

The study, which was published on the Web site of the journal Health Affairs on Wednesday, comes as Congress considers legislation that would eventually give legal status to the country's 11 million unauthorized immigrants. The legislation has sparked a vigorous debate about whether immigrants ultimately contribute more than they receive from the federal budget. One of the sticking points has been whether immigrants should be eligible for government programs, including health benefits, before they qualify for citizenship, but while they are on the path to getting it.

The study was concerned only with Medicare, the federal program that accounts for about a fifth of all American health care expenditures. Experts said that the study's findings served as a useful reminder that immigrants, at least for now, are extending the life of the beleaguered program, not hastening its demise.

Similar calculations have been made for Social Security. The chief actuary of the Social Security Administration, Stephen C. Goss, estimated that immigrants in the country illegally, some of whom assume fake Social Security numbers to provide cover for employers and themselves, among other reasons, generated a surplus of about $12 billion for the Social Security Trust Fund in 2010.

Federal coffers tend to benefit from immigrants in the country illegally, with contributions to programs like Social Security and Medicare that those immigrants cannot draw on later. But state and local governments, on the other hand, have to absorb more of the costs, like education for their children and emergency room visits.

Immigrants tend to be healthier than American-born citizens, and have lower mortality rates, research has found. For example, immigrants' medical costs average 14 percent to 20 percent less than those of native-born Americans, even after controlling for other factors like emergency room visits and insurance coverage, which fewer immigrants have.

The Harvard study found that average costs to Medicare for immigrant enrollees in 2009 were $3,923, lower than the average $5,388 expenditure for the American-born.

May 29, 2013: TeaParty/Republicans Will Not Cooperate in Helping Make PPACA Work

From a report in this this morning's New York Times on implementing Obamacare: "Republicans simply want to see the entire law go away and will not take part in adjusting it. Democrats are petrified of reopening a politically charged law that threatens to derail careers as the Republicans once again seize on it before an election year. ... As a result, a landmark law that almost everyone agrees has flaws is likely to take effect unchanged."

Unlike their counterparts 48 years ago when Medicare was enacted, Republicans today are blocking all attempts to improve the Patient Protection and Affordable Care Act ... back in 1965-66 Republicans worked with Democrats to make Medicare work. Romneycare is working in Massachusetts 7 years after it started, because Republicans there have worked with Democrats to fill in the gaps and correct the errors and problematic areas ... Obamacare can and should work for ALL Americans but Tea-publicans today work only for the 1%, for the for-profit health insurance industry and for the drug company lobbyists

May 28, 2013: Paying I.T. Bonuses to Providers Who Won't (or Can't) Share Information

More than half of all doctors now get Medicare or Medicaid incentive payments for using electronic health records, according to a report federal officials released last week. But Republicans say medical professionals should not just use the records in their own offices but also should exchange them with other providers. Republican lawmakers, backed by a business and insurance company alliance known as the Health IT Now Coalition, have been pushing the Department of Health and Human Services (HHS) in recent months to end Medicare and Medicaid IT bonus payments for providers who do not share electronic medical data with other providers.

[Jeanne: WHOA! Wait a minute here, is this a really good idea from Republicans ??? Well, expanding health care I.T.  was their original idea after all. WEDi was established by George Herbert Walker Bush in 1991; HIPAA was passed by a Republican-controlled Congress in 1996; and the Office of the National Coordinator for Health Information Technology (ONC) was created under Junior Bush in 2004. Obama is a johnny-come-lately to the issue. And if its going work, providers, patients and insurers will to TALK WITH ONE ANOTHER!  It doesn't really much if all they do is talk to themselves. The key is "interoperability" ... the sharing of patient health care information and insurance data, saves paperwork, reduces overhead, avoids duplication and redundancy, increases efficiency and effectiveness, improves patient care and saves money. Or at least that is what we claimed when the whole health care I.T. movement started in 1989 with the drafting of the "Bond Bill" (named after then Missouri GOP-Senatecritter Christopher "Kit" Bond ... the forerunner of 1996's HIPAA law.  Paying "bonuses to providers who do not share their information seems wasteful, albeit I can see why HHS says the infrastructure/capability must be built first. The health care industry has been very slow in adopting I.T. capabilities, having to be coerced, dragged and kicked into at least the late 20th century (we'll worry about getting it into the 21st later) ... but as Secretary Sebelius says, we may now have reached the tipping point. Did I hear someone say "Meaningful Use?"]

The response from HHS officials has been to point to the progress that has been made since the Medicare and Medicaid incentive payments for providers that adopt electronic records was included in the 2009 stimulus law (PL 111-5).The recent report noted that HHS has exceeded its goal of having half of physicians' offices and 80 percent of eligible hospitals using electronic health records by the end of 2013.

HHS officials showed charts indicating how the use of medical records has grown: The percentage of physicians and other medical professionals using an electronic health system was 17 percent in 2008 and is currently about 55 percent. For hospitals, about 9 percent used electronic records in 2008, but more than 80 percent have established and used electronic records. As a result, more than 291,000 eligible professionals and more than 3,800 eligible hospitals have gotten incentive payments from Medicare and Medicaid. Doctors have received a total of nearly $6 billion, while hospitals have received almost $9 billion.

But Republicans say that some of that money may have been wasted or unnecessary. Six senators produced a 27-page report criticizing the program and demanding more oversight. Those senators are John Thune of South Dakota, Lamar Alexander of Tennessee, Pat Roberts of Kansas, Richard M. Burr of North Carolina, Tom Coburn of Oklahoma and Michael B. Enzi of Wyoming.

Sharing Information Changes an EMR to an EHR

DHHS News Release

                                       For immediate release:                                                                                                                                                                       Contact HHS Press Office:

                                       May 22, 2013                                                                                                                                                                                         (202) 690-6343

Since the Obama administration started encouraging providers to adopt EHRs, usage has increased dramatically. According to the Centers for Disease Control and Prevention survey in 2012, the percent of physicians using an advanced EHR system was just 17 percent in 2008. Today, more than 50 percent of eligible professionals (mostly physicians) have demonstrated meaningful use and received an incentive payment. For hospitals, just nine percent had adopted EHRs in 2008, but today, more than 80 percent have demonstrated meaningful use of EHRs.

"We have reached a tipping point in adoption of electronic health records," said Secretary Sebelius. "More than half of eligible professionals and 80 percent of eligible hospitals have adopted these systems, which are critical to modernizing our health care system. Health IT helps providers better coordinate care, which can improve patient's health and save money at the same time."

The Obama administration has encouraged the adoption of health IT starting with the passage of the Recovery Act in 2009 because it is an integral element of health care quality and efficiency improvements. Doctors, hospitals, and other eligible providers that adopt and meaningfully use certified electronic health records receive incentive payments through the Medicare and Medicaid EHR Incentive Programs. Part of the Recovery Act, these programs began in 2011 and are administered by the Centers for Medicare & Medicaid Services and the Office of the National Coordinator of Health Information Technology.

Adoption of EHRs is also critical to the broader health care improvement efforts that have started as a result of the Affordable Care Act. These efforts -- improving care coordination, reducing duplicative tests and procedures, and rewarding hospitals for keeping patients healthier -- all made possible by widespread use of EHRs. Health IT systems give doctors, hospitals, and other providers the ability to better coordinate care and reduce errors and readmissions that can cost more money and leave patients less healthy. In turn, efforts to improve care coordination and efficiency create further incentive for providers to adopt health IT.

More from Jeanne:

MEANINGFUL USE ... the KEY TO HEALTH CARE INFORMATION TECHNOLOGY'S VALUE and EFFECTIVENESS

(without it, this has all been for naught)

Meaningful Use Defined

Meaningful use is using certified electronic health record (EHR) technology to:

- Improve quality, safety, efficiency and reduce health disparities

- Engage patients and families

- Improve care coordination, and population and public health

- Maintain privacy and protection of patient health information

Ultimately, it is hoped that the meaningful use compliance will result in:

- Better clinical outcomes

- Improved population health outcomes

- Increased transparency and efficiency

- Empowered patients

- More robust research data on health systems

Meaningful use sets specific objectives that eligible professionals (EPs) and hospitals must achieve to qualify for Centers for Medicare & Medicaid Services (CM²) Incentive Programs.

Stages of Meaningful Use

These objectives will evolve in three stages over five years:

2011-2012

Stage 1

Data Capture and Sharing

2014

Stage 2

Advance Clinical Processes

2016

Stage 3

Improved Outcomes

In theory at least, the HHS "bonuses" being paid to hospitals and doctors to implement health care I.T. are ONLY supposed to be paid to those providers meeting these goals, so if they are trully not talking to one another and sharing information, they should not be getting the bonus payments. Whether or not  the Sebelius HHS is paying just to incentify the building of the infrastructure, so that providers might actually have someone to share information with in a meaningful way, it may be time to pay a bonus ONLY to those actually moving NOW from the later phasen of Stage 1 into Stage 2.  If they haven't advanced that far by now, they do not deserve the extra payments. After all, this is NOT the V.A.

Jeanne's Weakly Lawyer Jokes for the Week of May 27, 2013

LAWYER MALPRACTICE

A big shot Wall Street lawyer phoned home to his Long Island mansion one morning, and a woman with a strange voice answered.

"Are you the new maid?" he asks.

"Yes, I am," the woman replies

... for the punch line and more go to ... http://www.health-politics.com/humor.html#05-27-13

May 26, 2013: The Obamacare Shock

May 24, 2013: Lying About or Misrepresenting Obamacare is Endemic in the TeaParty/Republican DNA.

From politifact.com

Mitch McConnell says HHS put a gag order on insurers about impact of Obamacare

 

May 23, 2013: The Real IRS Scandal

Allowing so many 'social welfare' groups to enjoy tax-exempt status while participating in politics must stop. The IRS is obligated to scrutinize applicants, 'tea party' or no.   It's strange how "scandal" gets defined these days in Washington. At the moment, everyone is screaming about the "scandal" of the Internal Revenue Service scrutinizing conservative nonprofits before granting them tax-exempt status.

Here are the genuine scandals in this affair: Political organizations are being allowed to masquerade as charities to avoid taxes and keep their donors secret, and the IRS has allowed them to do this for years.

The bottom line first: The IRS hasn't done nearly enough over the years to rein in the subversion of the tax law by political groups claiming a tax exemption that is not legally permitted for campaign activity. Nor has it enforced rules requiring that donors to those groups pay gift tax on their donations.  (Aaah, there is the real "tax avoidance" issue.)

The organizations at issue are known as 501(c)4 groups (call them C4s for short) after the section of the tax code that applies to them. They're nonprofit "social welfare" organizations that by the actual statutory language must be devoted exclusively to programs broadly serving their communities, not private groups. IRS forms reveal what the agency considers to be mainstream C4s: religious groups; cultural, educational and veterans organizations, homeowners associations, volunteer fire departments. In recent years, however, overtly political groups have been claiming C4 status, which allows them to keep their donor lists secret and to avoid paying taxes on certain income.

At issue is the word "EXCLUSIVELY" ... the word used in the actual statutory law. Sometime along the line, with the date blurred by history and politics, the term "exclusively" was deemed by the IRS in its internal regulations to be met if:

"that an organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community, i.e., primarily for the purpose of bringing about civic betterment and social improvements. Whether an organization is "primarily" engaged in promoting social welfare is a 'facts and circumstances' test." IRS Reg. 1.501(c)(4)-1(a)(2)(i).  The agency (the IRS) changed the law without Congressional action.

May 15, 2013: Could U.S. Health Care Spending Really Be Going Down?   

The current health spending slowdown may persist after the U.S. economy rebounds, with a potentially dramatic impact on deficit reduction efforts, three leading policy analysts concluded in separate studies released this week. A host of fundamental changes in the health care system, such as slower-paced innovation in the pharmaceutical and medical imaging spheres, increased cost-sharing by patients, and greater provider efficiency account for most of the recent slowdown -- not the recession -- said the author of one of the studies, David Cutler. The Harvard University economist spoke at a Washington, D.C., forum sponsored by Health Affairs, which featured his study in its May issue.

The findings were released on the same day the Congressional Budget Office estimated that deficit spending is $231 billion lower so far in fiscal 2013 than in the same period in fiscal 2012.

While more analysts seem to think the slowdown doesn't just stem from people having less money to spend because of joblessness or shrinking incomes, some warn that the current wave of optimism may be overblown. Speculation that the nation's health spending problem has somehow been solved or cut down to size is unrealistic, said a Kaiser Family Foundation study released April 22, which concluded that 77 percent of the slowdown stems from the weak economy. It would be a mistake to think deficit reduction is fading as a political issue even if some recent trends and studies are creating some cautious optimism.

But the idea that the spending slowdown isn't going away soon got backing in two other studies released this week.

Harvard health policy professor Michael Chernew, vice chairman of the Medicare Payment Advisory Commission, said in a study conducted with other Harvard researchers that from 2009 to 2011, per capita national health spending grew about 3 percent a year compared to an average of 5.9 percent annual growth during the previous ten years. Their study examined two factors that might account for the slowdown: job loss and benefit changes that shifted more costs to insured people. "We conclude that such benefit changes accounted for about one-fifth of the observed decrease in the rate of growth," they said.

The researchers tried to find a group that was not as affected by the recession in their study. So they looked at spending patterns among workers who did not lose their health coverage. They found that "spending growth slowed even for this population," Chernew told the forum. So the slowdown had to involve factors other than the direct effects of job loss, he said. That suggests "other factors, such as a reduction in the rate of introduction of new technology," were also at work.

Chernew said "I share David's [Cutler] sense of good news. This is a really big deal." But simply because spending growth is slow does not mean policymakers should stop efforts to make spending more efficient, he warned.

The analysts at the Urban Institute were more skeptical that changes such as medical homes and accountable care organizations are driving the slowdown. Their study instead pointed to trends over the past decade such as "declines in real incomes and a shift towards less generous insurance arrangements," that have "slowed the growth in provider revenues and forced cost-containment efforts. Some of the more recent payment and delivery system reforms may help to sustain this slow growth, but this remains to be seen.

Jeanne's End Note: Nowhere in the discussions reported from this Health Affairs conference was there mention of the longer term impact of this apparent reduction in health care utilization (note: costs per service have NOT gone down, rather fewer services are being provided).  The USA already lags most of the industrialized nations with which it is competing economically in health care outcomes, life expectancy, infant mortality, and even quality of life. Yet we continue to spend almost twice as much per capita than these other nations ... assuming less health care utilization is our goal, would not our outcomes worsen over time? And what would be the longer term impact on this country's competitiveness and economic well-being?

May 14, 2013: Will Enough "Healthy" People Enroll in the Exchanges or Will They Be Stuck With Just the Sick?  

The Congressional Budget Office (CBO) expects 7 million people to enroll in the insurance exchanges in the first year, and the administration expects that nearly 5 million will be those with pre-existing conditions or those who already buy insurance on the individual marketplace. Of the 2.7 million young people being pursued, 96 percent have no chronic conditions, 57 percent are female, and 52 percent are non-white, according to senior administration officials. In addition, one-third of the population lives in one of three states: California, Florida and Texas.

The administration's focus now is on consumer outreach and assistance, as nearly all of the guidances and rules for Obamacare's (PL 111-148, PL 111-152) marketplaces are complete, the officials said.

Speaking at a recent White House event, President Barack Obama touted the law's benefits and tried to assure people who are anxious about the law. "I am 110 percent committed to getting it done right," he said. "It's not an easy undertaking. If it were easy, it would have already been done a long time ago. Undoubtedly there will be some mistakes and hiccups as the thing gets started up, but we're learning already from them."

The administration's enrollment outreach will be tailored to each specific group, and the plan is to appeal to young people with a simple insurance application, providing new benefits, and tax credits to help buy insurance. For example, in California, 54 percent of the goal population is eligible for tax credits, and 50 percent is Hispanic.

Administration officials also said they planned on reaching out to mothers specifically, because they can encourage their children to buy insurance.

Assisting in the outreach efforts will be community health centers, which recently received $150 million from the law to help enroll the uninsured. Churches and other community organizations can also help with enrollment, the administration officials said. They noted that lessons learned from the 2012 presidential campaign have informed their outreach plan.

Open enrollment for the insurance exchanges begins October 1 and lasts for six months, with coverage beginning January 1, 2014. That gives the eligible population an extended period to sign up, so the outreach efforts can ramp up over time, the officials said. The officials noted that they recently completed the paper application for insurance in the exchanges for single adults, which is three pages long. They are now translating that into an online application.

The administration said that once people enroll in the exchanges and begin receiving insurance benefits, the politics of the law could change. The GOP message of stopping the law will mean taking away real benefits, not something abstract, they said, noting that the House plans to vote on a bill (HR 45) to repeal the law next week.

Republican leaders criticized Obama's speech and promoted the upcoming repeal vote.

Obama dismissed the "political bickering" over the law and told people to get informed about how the law would affect them personally. "Precisely because there's been so much misinformation, sometimes people might not have a sense of what the law actually does. And that misinformation will continue at least through the next Election Day," he said. "This is too important for political games. You stand to benefit, if you're not already benefiting from this thing," Obama added. "Don't let people confuse you. Don't let 'em run the okey-doke on you. Don't be bamboozled."

Jeanne's End Note: One of the aims of the for-profit health insurance lobby is assure that most of the "sick" people (i.e., those with pre-existing conditions, diabetes, who are obese, or who have other socio-economic problems that might adversely impact their health status now or in the future) don't end up enrolled under one of their policies. Why? Simply, the less they have to pay out, the more money they can make for their stockholders and to fund the 7 and 8 digit bonuses paid to their corporate executives. Since the partial privatization of Medicare in 2003 under the so-called "Medicare Modernization Act," for-profit insurers have honed their skills at minimizing the accidental enrollment of less healthy seniors, with result that companies like Humana now earn upwards of 80% of their profits, amounting to billions of dollars, from Medicare. Now, under Obamacare, these for-profit insurers are salivating at the opportunity of doing the same in "cherry-picking" only the healthiest of the 30-40 million people who will now be signing up for the first time to get health insurance. If these marketplaces under Obamacare cannot enroll a manageable mix of healthy and less healthy insured, they are doomed to failure ... something that has probably been on the GOP agenda all along.

May 13, 2013: Transparency in Hospital Charges versus Actual Hospital Payments

Following up on last week's report on the widely (and wildly) varying charges of hospitals for the same identical services, even in the same metropolitan area, it should be noted that WHAT A HOSPITAL CHARGES MEDICARE IS NOT WHAT MEDICARE PAYS THE HOSPITAL. Hospital charges are almost always discounted, in many cases, significantly.  The correlation between charges and payments has always been a mystery to me, so much so, that I used to have a presentation on my speaking circuit entitled: "Hospital Accounting is to Accounting as Military Music is to Music." They are virtually unrelated. Never has this dichotomy been made more (hopefully) understandable to the general public (who often complain bitterly about $10 aspirins) than in reading through the spread sheets from last week's CM² report.

For example, Alaska Regional, in Anchorage, charges Medicare $46,252 for a patient with heart failure and a major complication. Alaska Native Medical Center, also in Anchorage, charges $20,839. In both cases, Medicare doesn't pay anywhere close to the full charge. The government reimburses Regional $13,950 and Alaska Native, $12,935.

[Please note this kind of "discounting" from charges to payment is not limited to Medicare. Private fee-for-service insurance plans usually pay more than Medicare, but they also usually have negotiated the amount down significantly from charges. Private managed care plans (HMOs, PPOs) in many cases pay less than Medicare.]

The system doesn't make much sense, but Rick Davis, the CEO of Central Peninsula General Hospital in Soldotna, Alaska says more transparency will help: "For there to be pressure on pricing on the consumer side, the consumer has to understand what it's going to cost them. And so, I think this is a good report. I think it's going to force hospitals to address their pricing." Davis says the data show the prices at his own hospital, Central Peninsula, are fair. And he doesn't expect to make any adjustments.

But a hospital bill is only one part of the overall health care cost picture.

Jeanne's End Note: Charts like these above can be duplicated for every state and every metropolitan region.  But will patients (consumers) actually use them, or will they blindly follow their doctor's orders (even if in some cases, the physician may have a financial stake in the hospital)? For the Providence system's Karen Perdue, I have this to say, "Oh Karen, transparency was a major goal of the Bush administration too, but it was stymied at almost every turn by organized physician groups who didn't want the public to compare Dr. Smith to Dr. Jones." The AMA and other physician groups have fought tooth and nail against almost any kind of physician-to-physician comparison whether it be on prices or, heavens forbid, quality, i.e., results. The hospital industry had to finally relent as part of Obamacare's quality care initiative and future reports will compare not only hospital prices, but also hospital outcomes, with patient reviews and "consumer reports."

For the doc, on the other hand the battle continues. A few of the medical groups, associations and societies have agreed to reveal pricing and we should see new comparison reports in this area. But a word of caution, remember back to 1966 when Medicare Part B began and physicians were to be paid their "usual and customary fees" ... the net result of that LBJ give-away was that every doctor below the highest UCF in the area, quickly moved his or her fee schedule up to what was then the new standard. Physician simply leapfrogged on that scale. Of course that was remedied (somewhat) in 1983 when the UCF was replaced by "resourced-based relative value scales" (RB-RVS). Physicians now reporting their fees may simply be encouraging their medical brethren to move their prices to the highest quartile. And for the time being, reporting on quality is not in the works for docs ... BUT hospitals facing penalties and lost revenues for poor outcomes can be expected to step in and demand more and more accountability from their docs ... welcome to the brave new world of ACCOUNTABLE CARE ... being brought to you by Obamacare.

Jeanne's Weakly Lawyer Jokes for the Week of May 13, 2013

But First There is Law School

Law School Admission Form

Sue U. University

Law School for the Ethically Disadvantaged

666 Ambulance Chase

Sue Sainte Marie, Michigan

... for more law school jokes go to: http://www.health-politics.com/humor.html#05-13-13

May 10, 2013: Boehner Says NO to Any GOP Nominations to PPACA Board (What Else is New?)

Note to the Obama administration: Don't wait by the phone for those GOP nominations to the Independent Payment Advisory Board, a panel created in the health law to make recommendations to Congress on how to control Medicare costs.

[By the way, be sure to call the White House and put my name in nomination to serve on the IPAB, I'd be a great addition <smile>]

May 10, 2013: Red States Get Obamacare Jobs

Four states that have snubbed the federal health law by defaulting to the federal government to build new online insurance marketplaces and not agreeing to expand Medicaid are getting new jobs at call centers that will help consumers understand their new coverage options this fall. Up to 9,000 jobs are expected to be created at call centers to support the new federally run marketplaces. A Department of Health and Human Services spokeswoman said some of them will be added to existing Medicare call centers in Phoenix, Chester, Va., Lawrence, Kan., and Tampa -- all states with Republican leaders who oppose the law. A fifth center in Coralville, Iowa and a sixth in Corbin, Ky., will also be expanded, she said. Plans are still being finalized for other locations, she said. Of those states, only Kentucky is setting up its own online insurance marketplace that will help people shop for individual or small employer coverage. Iowa, will run its exchange in partnership with the federal government.  The other states are relying entirely on the federal government.

Of the six states getting call centers, only Kentucky has committed to expanding Medicaid in 2014, even though governors in Florida and Arizona say they support it. So far, 22 states have agreed to expand Medicaid.

The jobs are through Vangent, a General Dynamics Information Technology subsidiary, which was awarded a $530 million one-year contract  by the federal government to set up call centers to answer inquiries related to the insurance marketplaces in 34 states where they will be run in whole or part by the federal government. The government estimates that next October, when the marketplaces go live, the call centers will be open seven days of the week, 24 hours a day, handling 6.1 million phone calls and 23,000 e-mails. The contract could be renewed for up to nine more years, making it potentially worth more than $5 billion. States running their own marketplaces will have their own call centers. The marketplaces are expected to expand health coverage to about 27 million people by 2016. Under the federal contract awarded to Fairfax, Va.-based Vangent, the company will also field inquiries about Medicare, Medicare Advantage and "other relevant programs," the award announcement stated.

Jeanne's Comment: Apparently for blue states, no good deed goes unpunished by the Obama administration.

May 8, 2013: NEW GOVERNMENT REPORT: Hospital Charges Vary Dramatically, Even in the Same City

http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html

Consumers on Wednesday will finally get some answers about one of modern life's most persistent mysteries: how much medical care actually costs. For the first time, the federal government will release the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services

As part of the Obama administration's work to make our health care system more affordable and accountable through transparency, data are being released that show significant variation across the country and within communities in what hospitals charge for common inpatient services. The data provided today include hospital-specific charges for the more than 3,000 U.S. hospitals that receive Medicare Inpatient Prospective Payment System (IPPS) payments for the top 100 most frequently billed discharges, paid under Medicare based on a rate per discharge using the Medicare Severity Diagnosis Related Group (MS-DRG) for Fiscal Year (FY) 2011.

These DRGs represent almost 7 million discharges or 60 percent of total Medicare IPPS discharges. Hospitals determine what they will charge for items and services provided to patients and these charges are the amount the hospital bills for an item or service. The Total Payment amount includes the MS-DRG amount, bill total per diem, beneficiary primary payer claim payment amount, beneficiary Part A coinsurance amount, beneficiary deductible amount, beneficiary blood deducible amount and DRG outlier amount. For these DRGs, average charges and average Medicare payments are calculated at the individual hospital level. Users will be able to make comparisons between the amount charged by individual hospitals within local markets, and nationwide, for services that might be furnished in connection with a particular inpatient stay.

Inpatient Charge Data, FY2011, Microsoft Excel version
Inpatient Charge Data, FY2011, Comma Separated Values (CSV) version

The New York Times has an interactive map -- http://www.nytimes.com/interactive/2013/05/08/business/how-much-hospitals-charge.html?ref=business

May 8, 2013: NEW STUDY: Medicare Advantage Plans are Costing Far More and Saving Little

Health plans participating in Medicare Advantage (MA), the private mostly for-profit  insurance option for Medicare beneficiaries, have long been paid considerably more to provide coverage of hospital and physician services than what the government spends to deliver the same benefits to enrollees in traditional Medicare.

Unveiled as part of a Republican-driven "privatization plan" for Medicare as part of the Medicare Modernization Act of 2003 (passed without a single Democratic vote, at 3:30am in the morning after holding the House floor vote open for nearly 6 hours while GOP whips rounded up the needed votes -- the normal time limit is 15 minutes -- and signed by President George W. Bush on December 3, 2003) these private, mostly for-profit plans now enroll almost a quarter of all Medicare beneficiaries.

Republicans originally argued that competition among these plans would hold down Medicare cost growth. Instead, they have consistently cost far more than traditional Medicare. Under the Patient Protection and Affordable Care Act, affectionately known by many as "Obamacare," overpayments to these plans are gradually being pared back. But will these private Medicare plans be able to cope with the reduced payments?

Using newly available information on 2009 MA plan costs, analysts have compared  MA plans’ estimates of per capita costs for providing Parts A and B benefits to their enrollees, on a risk-adjusted basis, against what government data show to be the same costs for traditional Medicare program beneficiaries residing in the same county. In doing so, analysts have found that on average, risk-adjusted MA plan costs were 4 percent higher than traditional Medicare costs (104%). Among plan types, only HMOs had lower average costs than traditional Medicare. Among local PPOs and private fee-for service plans, over 75 percent had costs exceeding those in traditional Medicare. The wide variation seen in MA plan costs relative to traditional Medicare suggests there is room for greater efficiency in care delivery.

May 8, 2013: Tackling Medicare, The Rand Corporation Looks at Three Options.

Lawmakers are looking for ways to tackle the growth of Medicare spending, which the Congressional Budget Office estimates will account for 24 percent of the federal budget by 2037. But some strategies to cut program costs could leave millions of beneficiaries without coverage.

A study from the Rand Corporation, a nonprofit research organization, compared the impact of three proposals that have been discussed by Congress or the White House to  curb the costs of the government health care program for seniors and the disabled. The study is published in the May issue of Health Affairs.

Here are the three policy changes the study modeled:

Means-Testing Part A: Medicare Part A includes coverage of care in hospitals and nursing homes, and unlike Part B (which covers doctor visits, labs and equipment), the Part A premium is the same no matter how much a beneficiary earns. The idea of making wealthier seniors pay more for Part A has been around for a long time: It was suggested by the bipartisan Kerrey-Danforth commission back in the mid-1990s.

Premium Support: Premium support would give seniors a set amount of money to purchase a private or Medicare-like health insurance plan. It's a proposal similar to the one championed by House Budget Committee Chairman Paul Ryan (R-Wis.).

Raising the Eligibility Age: If Medicare mirrored Social Security, the eligibility age would be 67. This proposal has been floated by both parties and has stoked heated debate. Medicare's age requirement has not changed since the program's inception in 1965, though life expectancy has increased by eight years in that time.

The researchers found that premium support and raising the eligibility age were the most effective changes to curb costs. Increasing the eligibility age, for example, reduced federal spending by 7.2 percent through 2036, compared to 2.4 percent if a premium for Part A was added. And the premium support plan resulted in the most savings after 2019 of all three options.

The savings from raising the eligibility age in the RAND study was different from earlier Congressional Budget Office estimates because the Rand authors modeled the outcome with the idea of raising the age in 2014. The government office instead assumed the age would gradually be raised and not be in full effect until 2027.

But all three scenarios had downsides and the two scenarios that produced the greatest potential savings also produced the greatest possible burden for Medicare enrollees both financially and in terms of access to health care.

In the means-tested strategy, somewhere between 2 and 20 percent of eligible beneficiaries may choose not to enroll in Medicare Part A, researchers found. For the premium support plan, the authors estimate 13 percent of seniors would forgo coverage. And raising the eligibility age to 67 also would reduce enrollment by approximately 13 percent, according to the study.

Jeanne's End Note:  "Premium support," AKA the end of Medicare as we know it. doesn't reduce costs, it merely transfers costs from the Medicare system to some of the most financially challenged citizens.

May 7, 2013: Most Veterans Will Get More Under Obamacare ... But ...

Military veterans will have more health insurance options under the Patient Protection and Affordable Care Act, but some vets, like many Americans, may still struggle to find affordable, accessible care that meets their needs. Roughly 40 percent of the 22.3 million military veterans receive health-care services from the Veterans Health Administration, which operates a nationwide network of medical centers, hospitals and clinics. Many veterans are eligible for both VA health care and Medicare, Medicaid or Tricare. About half of veterans have private insurance; approximately one in 10 veterans younger than 65 are uninsured.

Veterans who were honorably discharged after being on active duty for at least two years may qualify for VA health services. Since funding for the VA health program is limited, however, priority is given to veterans who have service-related disabilities or low incomes. Although there are no premiums for VA health care, some veterans may owe co-payments for services. Veterans who return from active military duty are typically eligible for free VA health care for five years.

Under Obamacare, most people will have to have health insurance starting in January or pay a penalty. Veterans who are enrolled in VA health care won't have to buy additional coverage, although they can supplement their coverage if they want to.

Example: Mike Sage, 64, a Vietnam War combat veteran, pays $15 per visit for primary-care services and $50 for specialist care at the VA clinic near his home in Monmouth, Ill. Prescription drugs are $8 for a 30-day supply. But his wife, Kay, like many veterans' spouses, doesn't qualify for VA health care. They plan to check out the policies offered on the Illinois health insurance exchange this fall to see if there's a better option than the catastrophic-coverage plan with a $5,000 deductible that she currently carries. Sage was relieved to learn that his VA health care counts as coverage under the PPACA. "As long as I'm not subject to a penalty [for not having insurance], we'll do some comparative shopping for her," he says. Kay Sage might qualify for a premium tax credit for coverage on the exchange if the couple's household income is between 100 percent and 400 percent of the federal poverty level ($15,510 to $62,040 for a family of two in 2013), according to the Treasury Department.

The expansion of Medicaid under the Patient Protection and Affordable Care Act -- which "red" states are currently wrestling over whether to implement -- could also affect veterans' health care. The law allows the expansion of the federal-state program for low-income people to include adults with incomes up to 138 percent of the federal poverty level ($15,856 in 2013).

In states that don't expand their programs, veterans whose income falls below 100 percent of the poverty level will generally not qualify for Medicaid, nor for subsidized coverage on the exchanges. Even though a non-disabled veteran may meet the income threshold for VA health care -- nationally, about $34,000, further adjusted by geographic location -- he or she may not live near VA facilities or know that VA care is available, according to the report.

At a hearing last month before the House Committee on Veterans' Affairs, VA officials said they expect a net increase of 66,000 veterans seeking health care through VA facilities when the mandate to have health insurance kicks in next year.  Some veterans will come into the VA system but others will leave to seek coverage on the exchanges or through Medicaid, they said. Those who are eligible for more than one health program may pick and choose, using one program for cheaper prescription drugs, for example, and another for specialist care.

May 6, 2013: Spending to Promote Obamacare Exchanges Varies Dramatically in Red States versus Blue

Consumer assistance is considered key to enrolling the uninsured for several reasons. Polls show most people are unfamiliar with the law's benefits, including new government subsidies that take effect next year. For example, those subsidies will apply to a family of four with an income as high as $94,000.

The online marketplaces, which open for enrollment October 1, were envisioned to be as easy to use as travel websites like Expedia, but experts say that many people will need help figuring out which plan is best for them and what information they might need to sign up for coverage. Some have never applied for health insurance coverage before and may need assistance even to navigate the website.

The marketplaces, also known as exchanges, are the key way the law expands health coverage to about 27 million people by 2016. That's where people will shop for and enroll in private coverage and determine if they are eligible for premium discounts, or for Medicaid, the state-federal health insurance program for the poor. While many customers will be uninsured, others with coverage will use them to take advantage of government subsidies.

To be sure, consumer assistance is only one way that potential enrollees may learn of new insurance options and how to sign up for them. Additional federal dollars will go to advertising on radio, television and billboards. And insurers, hospitals and nonprofit groups may supplement public education efforts in many states.

The biggest reason for the uneven spending on consumer assistance is that when Congress passed the health law in 2010, it assumed most states would run the online marketplaces, and it authorized broad funding for that. As it turned out, only 16 states and the District of Columbia agreed to do so. The law did not set aside money for the federal government to operate the marketplaces, either alone or in partnership with the states, as it is doing in at least 34 states. To remedy that, the Obama administration recently moved $54 million from the law's prevention fund to provide money to hire and train people to assist consumers in those states, based on their number of uninsured.  That money will be awarded directly to organizations that agree to hire and train people to assist consumers. Those eligible include church groups, local health agencies, community health centers, chambers of commerce.

Laura Goodhue, executive director of Florida CHAIN, a consumer advocacy group estimates about 1.7 million people in Florida could benefit from subsidized coverage in the marketplace run by the federal government, but few know it will exist. "We are equally concerned about a lack of consumer assistance or any type of consumer advocacy at the state level to help resolve issues related to enrollment and eligibility," she said.

Texas, with the nation's highest uninsured rate of about 24 percent, will get as much as $8 million to enroll about 5 million uninsured in a federally run marketplace. That's less than $2 per uninsured resident -- compared to about $31 per person in Maryland. Virginia, with 845,000 uninsured, is getting $1.4 million for consumer assistance to help people sign up for its federally run marketplace.

Several states with high rates of uninsured are running their own marketplaces, and as a result, have more money for consumer assistance. New York, for instance, expects to spend up to $32 million on consumer assistance. Washington state has budgeted $6 million; Nevada, $2.3 million through 2014; California has budgeted $49 million through 2014.

Small states running their own marketplaces also have relatively big budgets to hire and train people to assist consumers. Rhode Island, which has 116,000 uninsured residents, plans to spend nearly $2 million over 18 months. A handful of states, including Maryland and Vermont, are also spending state taxpayer money to supplement their federal grants. Maryland has put up $8.6 million on top of $16 million it got from the federal government. Vermont, which has about 55,000 uninsured, has put up $400,000, for a total of $2 million.

While the amount of money channeled toward consumer assistance is important, other factors also will have an impact. For example, states can streamline enrollment in Medicaid and make other efforts to make the process as consumer friendly as possible.

A number of states are also counting on help from private organizations. The California Endowment, a large health foundation has offered about $29 million to help California's already well-financed outreach effort -- mostly to help find and enroll people in Medicaid.

Jeanne's Weakly Lawyer Jokes for the Week of May 6, 2013

A More Feminine Practice of Law

... for more go to http://www.health-politics.com/humor.html#05-06-13

Ever since the U.S. Supreme Court ruled last summer that expanding Medicaid to more low-income people was optional for the states, the focus has turned to what Republican governors and GOP-controlled legislatures would do.  Would they forego tens of millions of dollars in federal aid that would extend health insurance to many more people and, proponents argue, would provide a major boost to state economies? Or would these governors, many of whom vowed not to expand, stand their ground and insist the federal government will not be able to afford the expansion?

As of May 1, 16 states plus the District of Columbia have approved the expansion or are headed in that direction, 27 have rejected it or are about to and seven states could still go either way.

Some Republican governors, including Arizona's Jan Brewer and Florida's Rick Scott, have broken ranks, which in some cases has pitted them against GOP majorities in their legislatures. The other major development has been the proposal (see below) by Arkansas Democratic Gov. Mike Beebe, who received tentative permission from the Obama Administration to use federal Medicaid dollars to buy health insurance on the private market. And Republican legislators in some states, such as Texas and Louisiana, are interested in exploring similar plans, even as their GOP governors remain fiercely opposed.

With uncertainty about those plans and legislative battles still unfolding in a number of states, it's not yet known how many states will expand their Medicaid programs come January. 1, when the Patient Protection and Affordable Care Act (Obamacare) is set to take effect. Below is an up-to-date look at where each state and the District of Columbia stand at the moment.

Stay tuned. Much can happen before January.

May 2, 2013: The Arkansas Medicaid Model: What You Need To Know About The "Private Option"

The Obama administration wanted Republican states to accept the health law's Medicaid expansion pretty much as is. Republicans wanted Medicaid money in no-strings block grants. Arkansas has broached what could be a deal-making compromise, giving Washington the increased coverage for the poor it wants and Republicans something that looks less like government and more like business. Florida, Nebraska and other Republican-heavy states have taken a look. Some think the Arkansas model, passed by a Republican legislature and signed by Democratic Gov. Mike Beebe last week, could erode resistance in some 30 red states and eventually prompt similar programs elsewhere. And because the federal government has put no deadlines on Medicaid expansion, other states will be able to watch what happens in Arkansas and see if they want to adopt a similar idea.

While the plan brings what many see as advantages for patients, it also raises difficult questions of cost and implementation, not the least of which is the high overhead generally required by for-profit private insurers seeking to satisfy their investors and the stock markets. Government-run Medicare and Medicaid programs operate with much smaller margins and lower operating costs. Republicans insist that the "efficiencies" of the for-profit business model and market competition will reduce costs even more than "inefficient" government managers. Government bureaucracies are worse than private sector bureaucracies they argue. Democrats, who have long argued for a single-payer government plan point to the success of the government run Medicare program which operates at less than half the overhead expense of the for-profit alternatives under Medicare Advantage, without the 14% "kicker" these MA plans receive and without the "pressure" to increase profits that have led to so many consumer complaints in the private sector about claim denials and paperwork requirements.

How Does the Arkansas Plan Work?

In upholding the Patient Protection and Affordable Care Act last June, the Supreme Court did reject one critical element of Obama’s plan: mandatory requirements that states expand their Medicaid programs to at least 133% of the poverty level. That  Supreme Court decision making Medicaid expansion optional, combined with red-state reluctance, reduced the chances of reaching Obamacare's original coverage targets and undermining its universality. Arkansas would let newly eligible Medicaid beneficiaries shop for insurance policies along with other consumers in the online marketplaces, also known as exchanges, created by Obamacare. Arkansas House Speaker Davy Carter, a Republican, called the idea "a conservative alternative to the policy forced upon us by the federal government."

How is the Arkansas Proposal Different From Traditional Medicaid?

Medicaid is a combined federal and state program for low-income and disabled people that for many years paid health care providers for each procedure as well as each doctor and hospital visit. Recently most Medicaid treatment has shifted to managed-care plans run by private insurance companies with incentives to keep costs down. Arkansas takes the privatization idea a step further by letting many Medicaid consumers shop for the same commercial insurance available to those who aren't eligible for the program. "The menu of options is going to look the same" for eligible Medicaid consumers as for anybody else buying through the online marketplaces, said Matt Salo, executive director of the National Association of Medicaid Directors. "Access to physicians is going to look the same."

[Jeanne's Historical Memory Aside: My first job working in the health care industry, while going to law school, was as a claims examiner for a Blue Cross-Blue Shield plan. The year was 1965 when on July 2, President Lyndon B. Johnson signed the new Medicare (and Medicaid) law. While Medicare drew the most public attention and controversy, there was this Medicaid program coming along almost as an afterthought.  I remember how the argument in support of it went: "Poor people would be able to show up at a doctor's office with their heads held high, presenting their Medicaid cards and getting the same coverage (and presumably respect) as every other insured patient." Well history has shown us different as the costs of Medicaid ... and the states willingness to fund and support it ... has ebbed and flowed with the economy, the politics and the medical profession's acceptance. Now Arkansas Republicans seem to be making the same argument that LBJ made in 1965, Medicaid patients will be on a par with everyone else. Time will tell.]

What are the Advantages?

Commercial insurers' doctor networks are generally wider than Medicaid networks. Enrollment for Medicaid patients could improve access to care and prevent minor illnesses from spiraling into expensive hospitalizations. It could also reduce care disruptions for those whose incomes fluctuate, shifting them between Medicaid and the subsidized exchanges. At the same time, adding thousands of Medicaid members to the exchanges could reduce the risk that a few chronically ill patients would sharply drive up exchange premiums. With proper software, exchanges could determine people's eligibility for Medicaid and pay federal and state Medicaid dollars directly to their insurance plans.

What are the Disadvantages?

Cost might be a big one. Medicaid typically pays hospitals and doctors much less than average. A beneficiary costing the government $6,000 a year for Medicaid would cost $9,000 on a private plan on the exchange, the Congressional Budget Office has estimated. On the other hand, Arkansas officials have suggested that competition among insurers and providers for Medicaid patients could keep the cost from being prohibitive or even save money eventually. There would also be challenges to harmonizing Medicaid plan designs with those of policies sold on the exchanges. Private coverage on the exchanges is expected to come with large deductibles and co-payments for consumers, but Medicaid strictly limits such cost sharing. For a Medicaid patient, "if you're going to go to the pharmacy counter and pick up your prescription, are you going to have to come up with this 15 or 20 percent copay out of your pocket?" said MaryBeth Musumeci, a senior analyst at the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

Finally, the law would keep most of Arkansas' existing Medicaid beneficiaries -- mainly children -- in the state's regular Medicaid program. To avoid potential cost shocks to the exchanges, the very sickest of patients in the Medicaid expansion would also be placed in traditional Medicaid.

May 1, 2013: Aetna, We Aren't Sure We're Glad to Meet Ya. Slowing the Obamacare Exchange System, While Reaping Huge Profits

In a new sign that implementing the health law could take longer than expected, insurer Aetna said Tuesday it lowered the number of medical policies it expects to sell through online marketplaces that open for business in October.

He didn't give a number, and insurers rarely disclose projections for specific business lines. But Aetna offered nothing to challenge perceptions that it will approach Obamacare's  subsidized marketplaces, also known as exchanges, with great deliberation.

Without naming specific states, the company cut from 15 to 14 the number of states in which it might sell exchange plans to individuals. Aetna might even withdraw at the last minute if exchanges aren't ready or look unprofitable, Bertolini said. Under the PPACA's requirement that everybody buy health insurance or pay penalties, consumers without coverage from employers or government programs such as Medicare are supposed to start shopping for exchange plans on October 1.

The caution of No. 3 health insurer Aetna echoes that of No. 1 UnitedHealthcare, which has said it will be "very selective" in selling exchange plans.

Aetna itself is helping hold down exchange enrollment by offering to renew policies of existing customers before the end of this year, thus delaying potential price increases associated with the health law. Rating rules expected to raise premiums for younger, healthier customers kick in January 1, but only for plans starting a new policy year. Approving a one-year renewal before the calendar turns over could delay the price hike for most of 2014 and prove to be more attractive for some clients than buying an exchange policy.

Like other insurers, Aetna is attempting to compete on exchanges with narrower networks of hospitals and doctors who agree to lower prices in return for more new customers. The insurer has signed deals with two-thirds of the care providers it hopes to include, Bertolini said, adding that Aetna's exchange networks are a fourth to half the size of its regular provider organizations. The narrower the network, the closer Aetna's costs will be to lower rates paid by Medicare rather than higher commercial reimbursement, he said.

Challenges to opening the health marketplaces include building complex computer systems; persuading insurers to participate; running federally managed exchanges in hostile Republican states; relying on limited budgets to educate largely ignorant consumers; and enrolling young, healthy members to finance the expenses of those with pre-existing illness who will be first in line to join. Health and Human Services Secretary Kathleen Sebelius says the exchanges will be ready.

May 1, 2013: LAW DAY, 2013

May 1, is Law Day in the United States, and although it started out as a Eisenhower era "cold war stunt" to counter the "May Day" celebrations in many Communist and western European nations, it has taken on a force of its own, albeit if little recognized by the American public.
Law Day was originally the idea of Charles S. Rhyne, Eisenhower's legal counsel for a time, who was serving in 1957-1958 as the president of the American Bar Association. To dissuade citizens from being inspired by the populist tones of May Day, Eisenhower proclaimed May 1 to be Law Day, U.S.A. in 1958. Its observance was later codified into law by Public Law 87-20 on April 7, 1961.
On February 5, 1958, President Eisenhower recognized the first Law Day when he proclaimed that henceforth May 1 of each year would be Law Day. He stated "In a very real sense, the world no longer has a choice between force and law. If civilization is to survive it must choose the rule of law."
Law Day is not a government holiday. In fact, few outside the legal community in the United States are even aware of the existence of Law Day. To celebrate Law Day, many local bar associations hold a luncheon, featuring speakers who discuss topics such as justice or the liberties provided for by the United States Constitution.  This year the theme of Law Day, set by the American Bar Association, is "Realizing the Dream: Equality for All" ... Ten states have recognized the rights of their gay, lesbian and transgendered citizens, 40 others have not ... it remains but a dream in most of the country.

April 30, 2013: Doctors Warned About Using "Social Media"

A new social media policy urges doctors to "pause before posting" and to not "friend" patients online. The position paper, issued by the American College of Physicians (ACP) and the Federation of State Medical Boards, was released at ACP Internal Medicine 2013 in San Francisco, California, and was simultaneously published online April 11 in the Annals of Internal Medicine.

It addresses the benefits and drawbacks of a number of online interactions, and proposes safeguards. A recent survey of state medical boards showed that 92% reported at least 1 online violation of professionalism that led to a major action, such as license revocation (JAMA. 2012;307:1141-1142). Those researchers were surprised to find that problems ranged across every age group and demographic.

"We decided to work with the ACP to get this information out to all physicians," Humayun Chaudhry, DO, president and CEO of the Federation of State Medical Boards and one of the authors of the position paper, said at a news conference. The resulting position paper "is valuable to every physician across the country," Dr. Chaudhry added.

There are legitimate ways that physicians can engage in social media with patients.

"It's really the beginning of a conversation. The online media world is constantly changing. There are legitimate ways that physicians can engage in social media with patients," added Dr. Chaudhry. Email and electronic communication should be restricted to individuals with whom the physician has an established physician–patient relationship. "This has happened to me and to many of my colleagues: A patient sends an email out of the blue. It may be someone we have an established relationship, but not a healing relationship, with. They may ask very poignant questions about themselves or a loved one. We need to be very careful about the type of information that we provide. It places us at a professional and ethical risk," said David Fleming, MD, chair of ACP Ethics,

Professionalism, and Human Rights Committee.

One challenge is ensuring confidentiality. Posts on Facebook, Twitter, and other social media sites can be widely read, and even emails can be forwarded. "We have to assume that any time we send electronic communication, it's not just the patient that's going to see it.... So we have to be careful about the kind of information we provide, particularly private and confidential information that the patient may not want shared," said Dr. Fleming.

Many institutions have set up portals for confidential interactions with patients. The position paper urges physicians to use such options rather than standard social media or personal Web sites. "A post can be taken out of context and go viral...and will last in perpetuity. I don't think every physician is aware of that," Dr. Chaudhry explained.

Social media enables communication with "a larger audience than you might be able to in a practice," which can be helpful when disseminating information on issues such as public health reform or vaccines. However, "you have to realize that any comment you make...can have a life of its own and might spread in a fashion you hadn't intended.

"Our advice is to pause before posting," said Dr. Chaudhry. Posts can be objective, such as referenced health information, or subjective, such as opinions on matters of public

Professional and Personal Personas

Finally, the position paper provides specific recommendations for users of social media.

First, physicians should keep their professional and personal personas separate; they should not "friend" or contact patients through personal social media. Establishing a professional profile so that it "appears" first during a search can provide some measure of control that the information patients read is accurate. Email and other electronic communications should only be used by physicians within an established patient–physician relationship and with patient consent. When a physician is approached through electronic means for clinical advice in the absence of a patient-physician relationship, the individual should be encouraged to schedule an office visit or go to the nearest emergency department.

Text messaging should never be used for medical interactions, even with an established patient, except with extreme caution and consent from the patient. It should be remembered that trainees can inadvertently harm their future careers by not posting responsibly or actively policing their online content. Educational programs that stress a proactive approach to maintaining an online reputation are good forums to introduce potential repercussions.

April 29, 2013: Hospital "Cost-of-Living" for F/Y 2014 Negligible; Quality Bonuses and Penalties Announced

Hospitals would get a fairly skimpy net rate increase of 0.8 percent in fiscal 2014, under a rule that the Centers for Medicare and Medicaid Services (CM²) posted late last week.  In addition, that large of an increase would go only to hospitals that successfully participate in a quality reporting program developed by CM², according to documents released by the agency. Those hospitals that are not successful would get slapped with a penalty equal to a 2-percentage-point reduction in that proposed payment increase.  In addition, the proposal reveals how CM² plans to administer a new patient safety program that's part of Obamacare and will be launched in fiscal 2015.

These quality-focused provisions and others continue the Obama administration's stress on trying to more closely link hospital payments to how well institutions perform, rather than simply the number of patients they treat. "The new policies in this proposed rule support hospitals' important work and the people with Medicare who depend on them by promoting safety and care improvement," said Marilyn Tavenner, acting CM² administrator, in a statement.

Compared with fiscal 2013, total inpatient hospital payments for both operating and capital payments in fiscal 2014 are projected to increase by $27 billion. The proposal would apply to about 3,400 acute-care hospitals as well as 440 long-term-care hospitals and would be effective for discharges on or after October 1. Long-term-care hospitals would receive a payment increase of 1.1 percent under the proposal, or about $62 million in all.

The proposed 1,424-page rule will be published in the Federal Register on May 10.

CM² sets rates in advance for hospitals based on patients' diagnoses and the severity of their illnesses. Overall, the increase would be 0.8 percent. That is computed by starting with a 2.5 percent increase to account for increases in the costs of goods and services used by hospitals. But that's then decreased after CM² takes into account various adjustments, including reductions required under the health care law and for earlier overpayments due to documentation and coding changes. Those overpayments of $11 billion are to be recovered during the next three years as well.

Obamacare leaves a big imprint on the proposal. For example, more money is being tied to how well hospitals perform on quality measures. This is part of what's called the Value Based Purchasing program. The proposal increases to $1.1 billion the pool of money from which payments are taken to pay facilities that perform well on quality scores. The proposal creates that pool by reducing Medicare inpatient hospital payments to all facilities initially by 1.25 percent. Facilities that perform well get all that back and more and would end up with a net increase of 0.8 percentage points.

Another big change relates to provisions of the overhaul that lower payments if patients in a hospital acquire an infection or the facility performs poorly on other patient safety measures. Infections and unsafe forms of care fall under the rubric of "hospital-acquired conditions." The proposal outlines a framework for starting these payment changes in fiscal 2015. "Under this program, hospitals that rank in the lowest-performing quartile of hospital acquired conditions would be paid 99 percent of what they would otherwise would be paid" in fiscal 2015, the proposed rule says.

Two sets of measurements would be applied. One consists of six patient safety measures. These include the incidence of pressure ulcers, or bed sores; the "volume of foreign objects left in the body; "the rate of "accidental puncture and laceration"; and post-operative pulmonary embolism, among others. The second set of measures relates to infections. They include catheter associated urinary tract infections and blood stream infections associated with the "central line" used to stream medications into the patient through insertion in the neck or chest.

The proposal also increases penalties in fiscal 2014 for certain preventable hospital readmissions. The maximum reduction under this program was 1 percent of payments in fiscal 2013. In fiscal 2014, the proposal increases that to 2 percent. The readmission penalties currently relate to heart attack, heart failure, and pneumonia. CM² is proposing to add two new readmission measures in fiscal 2014 that would be used to dock payments in fiscal 2015. They are readmissions for chronic obstructive pulmonary disease and for hip/knee arthroplasty.

April 29, 2013: More on Medscape's Annual Physician Income Survey

Physician Compensation by Geographical Area

Where you practice affects your income. This year, as in Medscape's previous two Compensation Reports, physicians in the North Central region earn the most ($259,000). The region comprises Iowa, Missouri, Kansas, Nebraska, South Dakota, and North Dakota. Also similar to prior years, physicians in the Northeast Region earn the least ($228,000).There's less managed care in the North Central region, fewer doctors, and a lower cost of doing business. The opposite is true in the Northeast.

This leads naturally to a couple of questions: Does this mean that "managed care" actually does hold costs down? Does having more physicians per capita (as in many other 1st world countries) lead to more competition and lower prices? Or is this simply the result of lower operating costs and thus higher profit margins? In my opinion, all three questions need more analysis, especially the number of physicians per capita as that would lead to a serious discussion as to why the USA has relatively speaking so few physicians per 10,000 and whether the medical profession is engaged in antitrust deliberately holding down the number of physicians to keep competition down and prices up.

Physician Compensation by Practice Setting

Physicians in group practices -- both single-specialty ($265,000) and multispecialty ($260,000) -- were among the top earners, which was similar to last year's survey results. Hospitals moved up as high payers; this year, physicians working in hospitals earned a mean of $260,000, compared with $225,000 in last year's report.

One change worth noting: In last year's report, physicians in solo practice earned more ($220,000) than did employed physicians ($194,000). Not so in this year's report: The income of solo practitioners ($216,000) has declined and is lower than that of employed physicians, who experienced an increase in income ($220,000).

All of this leads to some more questions: What does this sharp increase in employed physician salaries foretell for the many new Accountable Care Organizations being established as part of Obamacare? As hospitals compete for physicians, particularly in larger metropolitan areas, will these sharp salary increases continue? And finally, what might be the ultimate impact of the trend by 3rd party payers, including Medicare, to bundle payments to all the providers treating a patient for a condition, hospital, lab, physician, et al?

Participation in Various Payment Models

There's a dramatic change in the number of physicians who are becoming involved in Accountable Care Organizations (ACOs). The focus on ACOs as a care-delivery and cost-containment method is making an impact.

But whether that impact on costs is positive or negative remains to be seen.  

In Medscape's 2012 report, only 8% of physicians were either in an ACO or planned to be in an ACO within a year. However, in 2013, 24% of respondents were either in an ACO or plan to be in one in the coming year.

The percentage of physicians in a concierge or cash-only practice increased very slightly from the previous year, from 4% to 6%.  A better question Medscape needs to survey next year is how many physicians moved to concierge care and/or and cash only and whether they have continued such practice exclusively, or whether they have resumed taking  some insurances and/or have gone back to a more traditional practice to  maintain their income? For a discussion of doctor incomes and concierge medicine confronting average American family incomes go to a conversation I created between myself and Prof. Uwe Reinhardt of Princeton University.

Do Physicians Feel Fairly Compensated?

And for all of this, earning over 5 times the average American income, a slight majority of the greedy ba$$rds  think they are underpaid.

Jeanne's Weakly Lawyer Jokes for the Week of April 29, 2013

I've posted my "weakly" lawyer jokes for the week of April 29, 2013 on my humor page ... a story about the origins of LEGALESE and whether this is a separate and distinct language from English ... along with a few cartoons ... http://www.health-politics.com/humor.html#04-29-13

April 26, 2013: Medscape's Annual Physician Income Survey

Physician Compensation in 2012

By and large, physicians are still doing well and income is on the rise overall. About one third (8) of the specialties surveyed each earned a mean of over $300,000 annually. This year's 3 top-earning specialties -- orthopedics, cardiology, and radiology -- were the same as in Medscape's 2012 Compensation Report, although last year radiology and orthopedics tied for the number-one spot.

On the other side of the scale, HIV/ID dropped to bottom position this year, which was last year occupied by pediatrics.

For employed physicians, compensation includes salary, bonus, and profit-sharing contributions. For partners, compensation includes earnings after tax-deductible business expenses but before income tax. Compensation excludes non-patient-related activities (eg, expert witness fees, speaking engagements, and product sales).

Who's Up, Who's Down Since 2011?

Most specialties reported income increases ranging from modest to significant. Orthopedic surgeons showed the highest increase, while endocrinologists and oncologists noted a slight decline.

"As the economy has gotten somewhat stronger, many people who have been putting off elective procedures are now getting them," says Tommy Bohannon, a vice president at Merritt Hawkins, a physician recruiting company in Irving, Texas. "As the population ages, more knees and hips are giving out and need to be fixed." As far as the 9% increase for internists and 5% increase for family medicine, "there's an intense doctor shortage, and health care reform is giving them a bit of a boost for Medicare patients," says Bohannon.

Do Men or Women Earn More?

There's still a large gap between male and female physicians, although that gap is narrower in primary care. Overall, male physicians earn 30% more than women; in primary care that gap is 17%.

One contributing factor involves choice of specialties. There are fewer women in some of the higher-paying specialties. For example, in orthopedics, only 9% of the survey respondents were women, whereas in pediatrics, 53% of survey respondents were women.

"As more doctors start working regular set hours for large health systems, there's little variance in income based on sex," Judy Aburmishan, partner in FGMK, LLC, a Chicago firm that represents physicians and other providers

The United States Compared to Other 1st World Countries

Doing a direct comparison of remuneration across different countries is tricky because the same salary may allow for different standards of living in different places.

But here are two possible ways to think about these comparisons, taken from a 2007 Congressional Research Service report entitled "U.S. Health Care Spending: Comparison with Other OECD Countries".

One way to compare cross-country data is to adjust the salaries for purchasing-power parity -- that is, adjusting the numbers so that $1,000 of salary buys the same amount of goods and services in every country, providing a general sense of a physician's standard of living in each nation. Another way is to look at how a doctor's salary compares to the average national in that doctor's country -- that is gross domestic product per capita.

April 24, 2013: The Public Option is Dead. Long Live CO-OPs!

Everything you ever wanted to know about CO-OPs can be found in this report from Politico. What? You didn't even know there was such a thing as a CO-OP? And, BTW, what does the acronym CO-OP stand for? Well, remember way, way back to 2009 when the legislation that became Obamacare was first being introduced, advocates on the left argued strongly for a public option ... that is a program run entirely by the government -- in effect Medicare for all! Support for any such provision was not strong enough to overcome threats of GOP filibusters, especially since there were 8-10 Democratic senatecritters who weren't ready to jump on that bandwagon. In the real politik negotiations that then took place (politics being defined as the "art of the possible") the public option option was dropped, but in its place as a poor distant cousin was something called Consumer Operated and Oriented Plans ... and in the report below, Politico explains it all to you, interrupted only now and then by my own comments, a little sarcasm and a couple of cartoons.

The public option is dead. Long live CO-OPs!

That's the chant from mostly grass-roots health reformers in 24 states, backed by billions of dollars in government loans, who are gearing up to offer alternatives to commercial insurance plans on the exchanges next fall.

And those who are starting up these Consumer Operated and Oriented Plans speak earnestly about a CO-OP "movement" that's ready to break out onto the scene.

Historic but challenging. To succeed, CO-OPs will have to compete with large established insurers that are also hungry for the new exchange business under the health law. Those insurers have provider networks in place, established reputations and large marketing budgets. Most CO-OPs have had less than a year and limited resources to mount their challenge.

The liberals' dream of a government public plan to compete with private insurance under the federal health law was sacrificed during negotiations, but what was widely considered a watered-down backup option to fund these consumer-run plans has survived -- albeit bloodied and diminished.

While it's clear CO-OPs will be up and running in nearly half of the states this fall, they would have had a much broader presence save for a provision in the fiscal cliff deal that forbade the feds from contracting with any CO-OPs that hadn't already signed loan agreements with the government. The burgeoning "movement" reeled at the cliff deal, which came just one day after the Centers for Medicare & Medicaid Services' Dec. 31 application deadline. More than 40 additional applications were pending, some from organizations in major states like Florida, Texas and California.

Funded initially by $6 billion in the [Patient Protection and] Affordable Care Act, the CO-OP effort already had been cut to $3.4 billion even before the fiscal cliff deal swept most of the remaining money off the table. But CM² had already contracted with the 24 CO-OPs for about $2 billion in loans, which are unaffected, and was left with 10 percent of remaining funds to administer the program.

The fiscal cliff deal doesn't necessarily mean the program will be forever confined to 24 states, CM² has said. Some of the approved CO-OPs want to expand to other states -- and CM² can give them loans to do so. So far, 13 CO-OPs have licenses to sell insurance in 13 states, and most of the rest expect final approval in the next few weeks. They have designed health plans, most have contracted with provider networks and claims processors and are developing public outreach campaigns.

The [PP]ACA blocks CO-OPs from using loan funds for marketing but not educational efforts. The government faces challenges in explaining the exchanges and encouraging enrollment; the CO-OPs will also have to explain what these new consumer-owned insurance offerings are and how they differ from the other exchange options.

Whether they will succeed in capturing a significant piece of the new market from traditional insurers is an open question. The barriers are considerable. Ken Lalime, CEO of the Connecticut CO-OP HealthyCT, said his state hasn't licensed a new insurance company in about 30 years. Lalime has contracted with a network of 7,000 physicians in the state and plans to compete aggressively for individuals and small businesses on and off the exchanges, but he doesn't expect to have the big-ticket business with self-insured employers right away.

Martin Hickey, CEO of New Mexico Health Connections, says that 97 percent of employers in his state are small businesses that would qualify for tax credits in the health law if they provide coverage to employees. Most do not now, he said, in a state that has among the highest uninsured rates in the country -- 23 percent. "That's an opportunity," he said.

In addition to the challenge of competing with large, established insurers, CO-OPs are also still contending with skeptical lawmakers on the Hill. Some Republicans have criticized CO-OPs as Solyndra-like giveaways to Obama administration allies, in particular the Freelancers Union, headed by Sara Horowitz, which is sponsoring CO-OPs in three states.

And the House Oversight and Government Reform Committee, chaired by Housecritter Darrell Issa (T/R-Calif.), has asked 12 CO-OPs for a detailed accounting of how they have spent their federal loans so far. He cites an Obama administration estimate that taxpayers could lose up to 43 percent of money given out in loans. He has also asked CM² for documents relating to how it approved CO-OPs, saying the agency has been opaque in administering the program. Asked for comment on the investigation, a spokesperson said only that the committee had received some documents and was considering how to proceed.

Morrison, the NASHCO president, says some policymakers misunderstand the funding. The majority of the funding comes in 15-year, low-interest loans meant to ensure that the upstart insurance plans can meet the financial solvency requirements of state regulators and to guarantee they can pay any claims newly covered patients may incur. "Many policymakers and policy analysts think this money is being spent, but it isn't being spent," he said. "In order to be an insurance company, you have to keep the gas in the tank."

Congressional scrutiny and competition aside, many of the CO-OP developers are "people who have hit their head against the wall with the system for 20 or 30 years," said Richard Miltenberger, a board member of the Montana CO-OP who runs a benefits management consulting firm. And they're jumping at the opportunity to do something new, something the big insurers with legacy computer systems and contracts aren't nimble enough to do, he said. "You're going to see a lot of innovation."

April 22, 2013: Health Insurance Exchanges In Switzerland and The Netherlands Offer Five Key Lessons For The Operations Of US Exchanges

Since the 1990s some European countries have had regulated health insurance exchanges or have incorporated elements of exchange markets into their health systems. Health reforms in Switzerland and the Netherlands in 1996 and 2006, respectively, created managed competition in the countries' health insurance markets, which are somewhat analogous to the US state and federally operated health insurance exchanges scheduled to begin operations in 2013 under Obamacare. Looking at the Swiss and Dutch experience with their exchanges offers specific lessons for the US in running the Obamacare market places.

(1) Risk-Adjustment Mechanisms -- which provide premium adjustments intended to compensate health plans for enrolling people expected to have high medical costs -- need to be sophisticated and continually updated. One of the issues that led to the downfall of the "Hillarycare" initiative by the Clinton Administration in 1993-94, was effort to limit "cherry-picking" particularly by very sophisticated for-profit insurers who sought to enroll only healthy people in their plans leaving expensive care to non-profits and the government, maximizing their profits in the process. The Clintons spent about 800 pages in their 1100 page law addressing just this issue with overly complex formulas for adjustment. Obamacare's exchanges must be less complex and more manageable.

(2) Enrolling Most Eligibles -- it is important to determine why people eligible for coverage don't enroll and to craft responses that will overcome enrollment barriers. Trust me on this, I am a lawyer after all, red state governors and state legislatures are not anxious to do anything to help Obamacare get off to a good start. If roadblocks can be thrown in front of those eligible to sign-up through one of the federally-operated exchanges, they will lie down in the roadway to block passage if they can.

(3) Simplify the Process -- particularly the process for applying for subsidies must be as simple as possible for low income, under-educated people and families to understand and accept. No more governmentese ... use small, easily understood words, save paper (and trees).

(4) Balancing the Bargaining Power -- insurers will need bargaining power similar to that of providers, and vice-versa to create a level playing field for negotiating about prices and quality of services, and interim cost containment measures may be necessary.

(5) Transparency and Information -- insurers and consumers alike will need meaningful information about providers' costs and quality of care so they can become prudent purchasers of health services, since managed competition among health plans by itself will not substantially drive down health costs.

Jeanne's Weakly Lawyer Jokes for the Week of April 22, 2013

Tales of the Court ... a Few Judge Jokes

A lawyer went to Heaven after he dies, and was warmly welcomed by St. Peter. "We get so few of you around here, and each honest advocate is a pleasure." The lawyer, who had maintained a reputation for effectiveness as a plaintiff's lawyer before the Federal bar, was pleased, but still somewhat concerned.

see more at: http://www.health-politics.com/humor.html#04-22-13

April 21, 2013: Study of Massachusetts Connector Exchange Raises Issues of Obamacare's Cost to Lower Income Families

In six months, open enrollment for the Patient Protection and Affordable Care Act's health insurance marketplaces will begin around the country. Massachusetts' experience has proven to be instructive. In 2006, the state created an insurance exchange, called the Commonwealth Health Insurance Connector Authority. The Connector, which began offering unsubsidized commercial insurance products in 2007, now provides an array of options for consumers, including subsidized coverage to people with incomes below 300 percent of the poverty level.

A new study, released April 17 by Health Affairs, surveyed 393 families in unsubsidized Connector plans. It found that 38 percent of surveyed families reported financial burden associated with their health care and 45 percent reported higher-than-expected out-of-pocket costs. This study is one of the first to evaluate the prevalence of and risk factors for financial burden and unexpected costs among families in unsubsidized health insurance exchange plans.

To obtain their data, the authors conducted a cross-sectional survey of families enrolled through the Massachusetts Connector in unsubsidized Commonwealth Choice plans from Harvard Pilgrim Health Care, a large nonprofit insurer that has one of the largest market shares among commercial carriers in the Connector. Between April and October 2010 the authors conducted a survey by mail then followed up by phone, studying families both with and without children.

Although exchanges may expand access to coverage, "those with lower incomes, increased health care needs, and more children will be at particular risk after they obtain coverage through exchanges in 2014," the authors conclude. "Given the complexity of health insurance choices and consumers' limited understanding of health insurance benefits, policy makers need to reach out and simplify information to promote optimal plan choices for the people."

The study is available to Health Affairs subscribers at http://content.healthaffairs.org/content/early/2013/04/15/hlthaff.2012.0864 

The abstract of the study states: "Health insurance exchanges created under the Affordable Care Act will offer coverage to people who lack employer-sponsored insurance or have incomes too high to qualify for Medicaid. However, plans offered through an exchange may include high levels of cost sharing. We surveyed families participating in unsubsidized plans offered in the Massachusetts Commonwealth Health Insurance Connector Authority, an exchange created prior to the 2010 national health reform law, and found high levels of financial burden and higher-than-expected costs among some enrollees. The financial burden and unexpected costs were even more pronounced for families with greater numbers of children and for families with incomes below 400 percent of the federal poverty level. We conclude that those with lower incomes, increased health care needs, and more children will be at particular risk after they obtain coverage through exchanges in 2014. Policy makers should develop strategies to further mitigate the financial burden for enrollees who are most susceptible to encountering higher-than-expected out-of-pocket costs, such as providing cost calculators or price transparency tools."

April 18, 2013: Society of Actuaries "Rate Shock" Study -- Biased, Self-Serving and Error-Filled ???

Few aspects of the Patient Protection and Affordable Care Act are more critical to its success than affordability, but in recent weeks experts have predicted costs for some health plans could soar next year. Now health law supporters are pushing back, noting close ties between the actuaries making the forecasts and an insurance industry that has been complaining about taxes and other factors it says will lead to rate shock for consumers.      (I have posted numerous FAQ about this report, see: http://www.health-politics.com/issue.html#SOAFAQs.)

"Most actuaries in this country -- what percentage are employed by insurance companies?" Senatecritter Al Franken, a Minnesota Democrat, asked an actuary last week at a hearing of the Committee on Health, Education, Labor and Pensions. The committee was discussing a study published last month by the Society of Actuaries (SOA) predicting that, thanks to sicker patients joining the coverage pool, medical claims per member will rise 32 percent in the individual plans expected to dominate the Obamacare exchanges next year. In some states costs will rise as much as 80 percent, the report said.

The witness was unable to answer Franken's question, but the senatecritter made his point. Insurance is why actuaries exist. The industry and the profession are hard to separate.  Using predictive math, actuaries try to make sure insurers of all kinds don't run out of money to pay claims. Many actuaries also work for consultants whose clients include insurance companies. Undisclosed in the SOA report was the fact that about half the people who oversaw it work for the health insurance industry that is warning about rate shock. The chairman of society committee supervising the project was Kenny Kan, chief actuary at Maryland-based CareFirst BlueCross BlueShield.

Others on the committee work for firms with insurer clients. The report included committee members' names but not their affiliations.

The SOA "portray themselves as this nonpartisan think tank when in fact everything about the study is by people who have a vested interest in the outcome of the study," said Birny Birnbaum, executive director of the Center for Economic Justice, a Texas group that advocates on behalf of financial and utility consumers.

To perform the research, the society hired Optum, sister company of UnitedHealthcare, the country's biggest private health insurer, and an insurer that has a long history of "troubles" when it comes to how it has maximized its profits, paid its executives enormous bonuses, and abused the public trust in covering or not-covering health insurance claims and reimbursing providers. Society spokeswoman Kim McKeown said the project was overseen by credentialed actuaries "from a cross-section of industry organizations" and was "exposed for review and comment to the broad health care actuarial community."

Even supporters of the health act worry about premium increases next year, when many of its provisions take effect. But the debate fits into a larger discussion about actuaries' public role. Actuaries are self-regulated, which some say makes them unaccountable. Their associations set conduct standards and investigate malpractice in confidential proceedings. During the previous two decades the Actuarial Board for Counseling and Discipline, which works with the Society of Actuaries, has recommended public disciplinary measures for fewer than two people a year, according to its annual report. Other professions, including those for health professionals, lawyers, and even beauticians and morticians are subject to much more publicly scrutinized reviews and, on a percentage basis, report far more disciplinary actions than do actuaries. One either has to assume that actuaries are intrinsically more honest than other professionals, or that their profession looks the other way in an effort to protect itself and its members from criticism or question.

Yet actuaries play many public roles. By calculating the adequacy of employer pension contributions they affect the retirement of millions. And they'll act as virtual referees for important aspects of implementing the health act.  "I have a great deal of respect for actuaries," said Timothy Jost, a law professor at Washington and Lee University and health law expert. "But I do think they often end up in ... situations where the interests of the public and of their employers might be in conflict."

While the Obama administration has developed a calculator plans must use for determining whether insurance plans meet the health act's standards for benefits and value, recently finalized regulations give insurer-employed actuaries the power to override it by substituting one benefit for another.

Insurance company actuaries calculate rates when plans file with states, which act as the industry's primary regulators. Charged with making sure the prices are justified, state insurance departments often have far less actuarial expertise at their disposal than the insurers. For example, the Vermont Department of Financial regulation "does not have actuaries on staff," a spokeswoman said. "We outsource our review of rate filings." The situation in 2011 was the same in a dozen other states, according to information compiled by the National Association of Insurance Commissioners.

Health-act supporters complained that that the actuary society's study predicting a 32 percent increase in claims didn't account for key factors, including the potential for competition to lower prices, the subsidies people will receive to buy the coverage and the fact that next year’s plans will be more generous than this year's.

Often actuaries' predictions are not significantly better than, say, those of the Weather Channel. Recent premium increases of 50 percent and higher for nursing home insurance reflect a previous under-calculation of costs by actuaries. Actuarial models didn't work especially well at calculating subprime mortgage risk a few years ago, either.  A settlement in New York last month revealed cases in which actuaries overestimated liabilities and a mortgage insurer paid out as little as 20 percent of collected premiums in claims.

Jost and Birnbaum want representatives of consumers and state insurance departments to be included on the actuaries' discipline board. In proceedings at the insurance commissioners' group, consumer advocates also want the board to state that actuaries' first duty is to the public whenever they furnish calculations to state or federal regulators and to tighten conflict-of-interest standards for firms producing work relied on by both insurers and regulators.

"There is always room for improvement in everything," said Karen Terry, an actuary for State Farm and the vice president of professionalism at the American Academy of Actuaries, an umbrella group that works with the discipline board and groups such as the SOA that represent professional subspecialties such as health or pension actuaries. "We're open to that dialogue."

April 15, 2013: Red States and TeaParty Republicans Block Obamacare Implementation and Funding

Frustrated by red state governors and legislatures refusing to implement major parts of the new health care reform legislation and with Tea Party House Republicans and filibuster-loving Tea Party Senators continuing to block the funding for the program, federal officials have been forced to scramble to cobble together necessary monies to continue preparing for next January’s roll-out of major provisions in the law. Last week the Obama administration revealed long-withheld details about how they are funding the creation of the insurance marketplace "exchanges" so critical to the success of the health care law and its coverage expansion provisions. Health and Human Services (HHS) Department officials said they expect to spend some $1.5 billion in fiscal 2013 on the federal exchange.

They are piecing together funding from sources such as a Public Health and Prevention Fund created under the law (PL 111-148, PL 111-152), a "non-recurring expenditures" account and other sources. These newly revealed details about where HHS is finding the money could spark attempts by Republicans to shut off those financing sources in fiscal 2014, which starts October 1, just as the operations of the exchange are scheduled to start. Tea Party Republicans including Senatecritters Orrin G. Hatch of Utah have repeatedly asked for such details. Hatch criticized Marilyn Tavenner, the acting administrator of the Centers for Medicare and Medicaid Services, for not providing the information at her confirmation hearing last week.

HHS hopes that Congress will give it the $1.5 billion for fiscal 2014 and that it won't have to keep cobbling together money from other sources. Both are extremely iffy propositions given the continued obstinacy and procrastination of the Tea Party Republicans who vowed to use every tool at their disposal to stop Obamacare in its tracks. HHS officials said at a recent budget briefing that they need a total of $2 billion next year to operate the federal marketplace -- to be called the "federally facilitated exchange" -- including the $1.5 billion from Congress. HHS will receive an estimated $450 million in fees on insurers that already have been promulgated under the law.

"We need to get that $1.5 [billion] in budget authority from the Congress," said Ellen Murray, assistant HHS secretary for financial resources, at a press briefing on the administration's fiscal 2014 HHS budget proposal. Asked about the chances of getting such implementation funding from lawmakers, HHS Secretary Kathleen Sebelius said: "This is an ongoing conversation with Congress. ... As this act is fully implemented and Americans begin to take advantage of the benefits, I'm hopeful that Congress will see that this is the law of the land, the Supreme Court has ruled, we intend to implement the law, and millions and millions of Americans are looking forward to full implementation," she said.

Murray said the $1.5 billion this fiscal year has come from these sources: what remains from $1 billion that was allotted under the law for its implementation; "frugal" use of the CM² administrative budget; the "non-recurring expenses fund, which is authority we have to use past-year dollars for IT investments"; and "the secretary's authority to transfer limited sums of money." Specifically, Murray said, $235 million is coming from the original $1 billion in implementation money, $450 million from the non-recurring expense fund and $116 million from the secretary's authority to transfer funds. "We're still finalizing the final dollars," she said. Asked to elaborate on the nature of the non-recurring expenses fund, Murray said it is "a fund which was set up by the appropriators in 2008. Social Security, many other agencies have such a fund, which enables an agency to use dollars from prior years that are no longer available for obligation, for one-time IT and real estate investments." Asked whether HHS would have access to that fund in fiscal 2014, Murray said: "We are using the fund for the first time because authority began in 2008, and as many of you may know, funds are available often for five years, so most of the money that we know is definitely available [will] come, we don't have projections yet for what might be available next year."

Murray also said that an undisclosed amount is coming this fiscal year from the Public Health and Prevention Fund. Senatecritter Tom Harkin, D-Iowa, who secured that funding in the health care law, recently was adamant in saying that money for the fund would not be used for exchanges in fiscal 2014. However, Murray served for many years as an aide to Harkin in his capacity as chairman of the Senate Labor-HHS-Education Appropriations Subcommittee. The federal exchange is the mechanism established by the law to expand coverage of the uninsured in states that refuse to create their own such marketplaces -- and there are many. Twenty-six states have declined to play any role in creating their own exchanges, which means their uninsured residents must rely on the federal exchange. An additional seven states will rely at least partially on the federally operated marketplace under agreements with HHS to open "partnership" exchanges.

The upshot is that in much of the country, make-or-break functions of the health law will have to be performed by the federal exchange -- assuming it will have the money to do them. These include determining eligibility for coverage, establishing individual income levels for purposes of setting subsidy amounts, steering the uninsured to Medicaid coverage and enrolling people in plans.

April 15, 2013: Five Things the Obama-Proposed Budget Would Do to Medicare

(1) Higher Cost Sharing for New Medicare Beneficiaries: In 2017, 2019 and again in 2021, new Medicare beneficiaries would have to pay an additional $25 for their Part B deductible, for a three-year total of $75 to be added on to the cost of the Part B premium, which in 2013 is $147. The administration says the change would "strengthen program financing and encourage beneficiaries to seek high-value health care services." Seniors advocates say it's an additional cost to people already struggling on fixed incomes. In 2012, nearly half of Medicare beneficiaries had annual incomes of below $22,500.

Also starting in 2017, Obama's plan would require new Medicare beneficiaries to pay $100 for five or more home health care visits that are not preceded by a stay in the hospital or another medical facility, such as a nursing home or a rehabilitation hospital. Home health care is one of the few areas in Medicare that does not have cost sharing, and its rapid growth in recent years has led panels like the Medicare Payment Advisory Commission (MedPAC) to recommend beneficiary cost sharing. 

Beginning in 2017, new beneficiaries who purchase supplemental insurance, known as Medigap, with particularly low cost-sharing requirements -- such as "first-dollar" coverage -- will face a surcharge equivalent to approximately 15 percent of the average Medigap premium. The thought is that more generous Medigap plans encourage overuse of services, but seniors rely on these generous plans to shield them from unanticipated costs.

Joe Baker, president of the Medicare Rights Center, said that Medicare proposals that "increase deductibles and co-pays, and tax Medigap plans that ensure financial security, must be rejected."

(2) Wealthier Beneficiaries Pay More: Current law (enacted by Republicans as part of the Medicare Modernization Act of 2003) already requires individual beneficiaries whose incomes are $85,000 and above ($170,000 and above for couples) to pay a larger share of Medicare Part B (outpatient services like doctor visits and laboratory services) and Part D (prescription drugs) premiums. While most beneficiaries pay 25 percent of their Part B premiums, higher-income beneficiaries pay between 35 to 80 percent, depending on their income.

Obama's plan would increase the lowest income-related premium to 40 percent and cap it at 90 percent.  His plan would also maintain the current income thresholds until a quarter of Part B and Part D beneficiaries are paying the higher income-related premiums. 

In a 2012 analysis, the Kaiser Family Foundation found that if the proposal to have a quarter of all beneficiaries pay the higher premiums were implemented last year, beneficiaries with incomes at or above $47,000 for individuals and $94,000 for couples would be paying higher income-related Medicare premiums.

The Obama administration says the proposal would help improve Medicare's financial stability by reducing how much the government spends on Medicare for beneficiaries who can afford to pay more. But the Center for Medicare Advocacy fears asking higher income people to pay a greater share of premiums "might lead to more people choosing not to participate in Medicare. Fewer participants in [Medicare] B and D would result in increased costs for the remaining participants."

(3) Doughnut Hole Closing Faster, Higher Drug Rebates for Low-Income Beneficiaries: Obama's budget plan would close by 2015 --  instead of 2020 as mandated by the health law --  the "doughnut hole," that gap in Medicare prescription drug coverage where seniors pay the full cost of prescriptions until they hit a catastrophic cap. This acceleration would be financed by increasing the current 50 percent discount that the drug makers give to beneficiaries in the "doughnut hole" to 75 percent starting in 2015. Beneficiaries would be responsible for the remaining 25 percent of drug costs. Drug makers oppose raising the discount amount.

The president's proposal also alters drug costs for the nine million low-income Medicare beneficiaries who qualify for both Medicare and Medicaid. These people, known as "dual eligibles," used to get their drug coverage from Medicaid, the shared federal-state health insurance program for the poor and disabled. And drug makers returned back to Medicaid in the form of rebates part of the cost of drugs for those beneficiaries, just they do now for current Medicaid beneficiaries.

As part of the creation of the unfunded Medicare Part D prescription drug program (established under a Republican-controlled Congress in 2003), the drug coverage for "duals" shifted to Medicare. But the rebates that Medicare Part D plans negotiate are not as generous as those that drug makers previously paid to Medicaid, the administration says. Part D plans also pay higher prices for drugs than Medicaid does. The administration's proposal would require drug makers to pay the difference between rebate levels they now provide to Part D plans and the Medicaid rebate levels.

In a statement the Pharmaceutical Research and Manufacturers of America, said the rebate proposal would increase beneficiary premiums and copays. 

(4) Provider Cuts: Hospitals are none too happy about Obama's plans to cut their Medicare payments for bad debt and graduate medical education over the next decade. Medicare now pays hospitals 65 percent of debts resulting from beneficiaries' non-payment of deductibles and co-insurance after providers have made reasonable efforts to collect the money. Starting in 2014, the president's plan would decrease that amount to 25 percent over three years, which the administration says would be closer to private payers that typically pay nothing on bad debt. The reductions would be in addition to those hospitals and other providers face as part of the 2010 health law.

Beginning in 2014, the Obama plan also would cut by 10 percent "add-on" payments to teaching hospitals for graduate medical education. In its budget document, the Department of Health and Human Services cites a MedPAC finding that these additional payments "significantly exceed the actual added patient care costs these hospitals incur."

Hospital groups, however, maintain that the cuts to bad debt reimbursement and medical education payments would weaken hospitals' ability to provide care and to train physicians, nurses and other health professionals.

Concerning payments to physicians, Obama's budget assumes that Congress will once again pass a "doc fix" to avert a scheduled 25 percent payment cut in 2014. Administration officials say they want to work with Congress to find a long-range solution to avert the annual crisis over Medicare physician payments.

(5) What Obama Left Out: The president did not propose an increase in the Medicare eligibility age from 65 to 67, a savings mechanism favored by the GOP but assailed by some key Democrats.

Nor did Obama propose combining the premiums beneficiaries pay for hospital care (Part A) and outpatient services (Part B). Taking that step, which has the support of Republican leaders like House Majority Leader Eric Cantor, T/R-Va., would reduce Medicare expenditures and lower beneficiaries' costs for hospital care. But seniors who mostly use Part B and don't go to the hospital often would pay more.

Some analysts wonder if these and other Medicare overhaul ideas could resurface as part of a larger discussion that includes overhauling the tax code and entitlements.  "This is the first time in this presidency that I have seen a chance at a bipartisan budget agreement, so I am cautiously optimistic about that," House Budget Committee Chairman Paul Ryan, T/R-Wis., told National Public Radio.

House Ways and Means Committee Chairman Dave Camp, T/R-Mich., has said his panel will hold a series of hearings to evaluate ideas including those advanced by Obama and by his fiscal overhaul commission. "Given the bipartisan support for various reforms to these programs, there is no reason we cannot roll up our sleeves and get this done," Camp said in a statement.

But the GOP and Obama have widely different views. House Republicans' fiscal 2014 budget plan, for instance, would eventually turn Medicare into a "premium support" plan that would give beneficiaries a set amount for their coverage, which Democrats oppose. Meanwhile, Obama has said he'll agree to entitlement changes only if Republicans agreed to higher revenues, which they steadfastly oppose.

Jeanne's Weakly Lawyer Jokes for the Week of of April 15, 2013

... a few Tax Lawyer Jokes

In the men's room, a tax lawyer, a corporate bond lawyer and a legal aid lawyer were standing side by side using the urinal. ... for the rest ... http://www.health-politics.com/humor.html#04-15-13

April 13, 2013: Obama Budget Would End SGR ... But Hospitals Would Pay the Piper

President Barack Obama today released a proposed $3.8 trillion budget for fiscal 2014 that would shrink the federal deficit by $1.8 trillion over the course of 10 years, but not on the backs of physicians. Instead, they are on the receiving end of some federal largesse.

For starters, Obama's deficit reduction, similar to that in the budget plan approved on March 23 by the Democratic-controlled Senate, (see below) would replace the automatic, across-the-board cuts called sequestration that include a 2% decrease in Medicare reimbursement for physicians. In addition, as in previous budget plans, Obama would perform a "doc fix" on the sustainable growth rate (SGR) formula for setting Medicare pay rates. That formula, hated by organized medicine, will trigger a 24.4% cut in physician pay on January 1, 2014, unless Congress steps in to prevent a collapse of the federal program. Under the Obama plan, physician pay rates would be frozen at their current level. The administration supports several years of fee-for-service "payment stability" that would give the Centers for Medicare & Medicaid Services more time to develop various pay-for-performance models from which physicians eventually could choose. The goal is to "provide predictable payments that incentivize [sic] quality and efficiency in a fiscally responsible way," the budget plan states.

Hospitals Foot the Doc Bonus Pay: As expected, Medicare spending gets trimmed substantially -- $370 billion worth over the course of 10 years -- but the cuts come mostly at the expense of hospitals, drug companies, nursing homes, and wealthy seniors, who will be asked to pay higher premiums. Obama refrained from raising the eligibility age for Medicare, an idea toyed with in Washington, DC.

In addition to these and other spending cuts, the Obama budget would trim the deficit by raising an additional $580 billion in revenue over the course of 10 years, mostly by eliminating tax loopholes and benefits for America's super-affluent.

Increased Funding for Mental Health, HIV/AIDS Prevention and Treatment

The Obama budget proposal -- which, like any other, requires Congressional action for any money to be spent -- allocates $80.1 billion in discretionary funds to the Department of Health and Human Services (DHHS), or almost $4 billion more than what was enacted in fiscal 2013. Here is where some of that money would go:

- The Centers for Disease Control and Prevention (CDC) would receive more than $30 million for a nationwide violent-death surveillance system as well as research on the causes and prevention of gun violence.

- DHHS would use $130 million for a new initiative to teach teachers and other adults to recognize signs of mental illness in young people, train 5,000 more mental health professionals to serve students and young adults, and otherwise improve mental health services for this group.

- Funding for the US Food and Drug Administration would increase by $821 million to improve food and medical-product safety.  (FDA funding has been down for years, especially for food safety, since 2001, contributing to the increased number of food recalls, "packing house" disasters and food poisonings in recent years ... Congress hates to bite the food lobby that feeds it ...)

- The CDC and the Health Resources and Services Administration would receive an extra $30 million for HIV/AIDS prevention and treatment activities.

Winners and losers in the president's plan made their feelings known.

"We are pleased that President Obama's 2014 budget recognizes the need to eliminate the broken Medicare physician payment formula known as the SGR and move toward new ways of delivering and paying for care that reward quality and reduce costs," said Jeremy Lazarus, MD, president of the American Medical Association (AMA), in a press release. "The president's proposals align with many of the principles developed by the AMA and 110 other physician organizations on transitioning Medicare to include an array of accountable payment models."

Rich Umbdenstock, president and chief executive officer of the American Hospital Association, was not pleased.

"Today's proposal contains troubling reductions to assistance to hospitals that help defray some of the costs of caring for low-income seniors known as bad debt," Umbdenstock said in a press release. "In addition, the budget would jeopardize the ability of hospitals to train the next generation of physicians by cutting funding for graduate medical education, and hinder care for people in rural communities by reducing funding for critical access hospitals. ... The solution to what ails our nation’s fiscal health is not further cuts to providers that care for millions of America's seniors, but creative solutions to modernize the Medicare program."

April 12, 2013: Obamacare, Delay After Delay

Way back in 1965, July 30th of that year to be exact ... LBJ signed the original Medicare law .... just 5 months later ... all the contracts were let, rules written and published and on January 1, 1966 the first benefits were paid ... Here we are more than 3 years AFTER Obama signed the new health care reform law in March 2010 ... half the regulations haven't even been approved, delays in enforcement have been announced and the first real benefits to the public aren't set to begin for another 8+months ... now I know that red state governors have thrown roadblock after roadblock in the way, and unlike 1965 when Congressional Republicans did not try to block Medicare, today's TeaParty/GOP is doing everything it can to thwart Obamacare ... BUT come on Obama, why no regulations in critical areas? Why delay parts of the law? It's as if you have been sitting on your hands for the past three-plus years ... get crackin'

April 11, 2013: Americans May Really Just Be That Stupid!

In 2008, Rick Shenkman, the Editor-in-Chief of the History News Network, published a book entitled Just How Stupid Are We? Facing the Truth about the American Voter. In it he demonstrated, among other things, that most Americans were: (1) ignorant about major international events, (2) knew little about how their own government runs and who runs it, (3) were nonetheless willing to accept government positions and policies even though a moderate amount of critical thought suggested they were bad for the country, and (4) were readily swayed by stereotyping, simplistic solutions, irrational fears and public relations babble. Shenkman spent 256 pages documenting these claims, using a great number of polls and surveys from very reputable sources. In the end it is hard to argue with his data.

The majority of any population will pay little or no attention to news stories or government actions that do not appear to impact their lives or the lives of close associates. If something non-local happens that is brought to their attention by the media, they will passively accept government explanations and simplistic solutions. The primary issue is "does it impact my life?" If it does, people will pay attention. If it appears not to, they won't pay attention. For instance, in Shenkman's book unfavorable comparisons are sometimes made between Americans and Europeans. Americans often are said to be much more ignorant about world geography than are Europeans.

This might be, but it is, ironically, due to an accident of geography. Americans occupy a large subcontinent isolated by two oceans. Europeans are crowded into small contiguous countries that, until recently, repeatedly invaded each other as well as possessed overseas colonies. Under these circumstances, a knowledge of geography, as well as paying attention to what is happening on the other side of the border, has more immediate relevance to the lives of those in Toulouse or Amsterdam than is the case for someone in Pittsburgh or Topeka. If conditions were reversed, Europeans would know less geography and Americans more.

Ideology and Bureaucracy

That American ignorance is explainable does not make it any less distressing. At the very least it often leads to embarrassment for the minority who are not ignorant. Take for example the facts that polls show over half of American adults don't know which country dropped the atomic bomb on Hiroshima, or that 30 percent don't know what the Holocaust was.

We might explain this as the result of faulty education; however, there are other, just as embarrassing, moments involving the well educated. Take, for instance, the employees of Fox News. Lou Dobbs (who graduated from Harvard University) is host of the Fox Business Network talk show Lou Dobbs Tonight. Speaking on March 23 about gun control, he and Fox political analyst Angela McGlowan (a graduate of the University of Mississippi) had the following exchange:

McGlowan: "What scares the hell out of me is that we have a president ... that wants to take our guns, but yet he wants to attack Iran and Syria. So if they come and attack us here, we don't have the right to bear arms under this Obama administration."

Dobbs: "We're told by Homeland Security that there are already agents of Al Qaeda here working in this country. Why in the world would you not want to make certain that all American citizens were armed and prepared?"

Despite education, (harder to understand from Harvard-educated Dobbs, who I  believe knows better but who also recognizes which side his bread is buttered and is simply pandering to his right-wing audience for the cash it earns him; as for Ole Miss-educated McGlowan, well, she is just that stupid) ignorance plus ideology leading to stupidity doesn't come in any starker form than this. Suffice it to say that nothing the President has proposed in the way of gun control takes away the vast majority of weapons owned by Americans, that the President's actions point to the fact that he does not want to attack Syria or Iran, and that neither country has the capacity to "come and attack us here."

Did the fact that Dobbs and McGlowan were speaking nonsense make any difference to the majority of those listening to them? Probably not. Their regular listeners may well be too ignorant to know that this surreal episode has no basis in reality. Their ignorance will cause them not to fact-check Dobbs's and McGlowan's remarks. They might very well rationalize away countervailing facts if they happen to come across them. And, by doing so, keep everything comfortably simple, which counts for more than the messy, often complicated truth.

Unfortunately, one can multiply this scenario many times. There are millions of Americans, most of whom are quite literate, who believe the United Nations is an evil organization bent on destroying U.S. sovereignty. Indeed, in 2005, George W. Bush actually appointed one of them, John Bolton (a graduate of Yale University ... nuf' said), as U.S. ambassador to the United Nations. Likewise, so paranoid are gun enthusiasts (whose level of education varies widely) that any really effective government supervision of the U.S. gun trade would be seen as a giant step toward dictatorship. Therefore, the National Rifle Association, working its influence on Congress, has for years successfully restricted the Bureau of Alcohol, Tobacco, Firearms and Explosives from using computers to create a central database of gun transactions.

And, last but certainly not least, there is the unending war against teaching evolution in U.S. schools. This Christian fundamentalist effort often enjoys temporary success in large sections of the country and is ultimately held at bay only by court decisions reflecting (to date) a solid sense of reality on this subject. By the way, evolution is a scientific theory that has as much evidence to back it up as does gravity.

The truth is that people who are consistently active as critical thinkers are not going to be popular, either with the government or their neighbors. They are called boat-rockers. You know, people like Socrates, who is probably the best-known critical thinker in Western history. And, at least the well educated among us know what happened to him.

April 10, 2013: Obama's Budget Proposal Offends BOTH the Right AND the Left

President Barack Obama weighed into Washington's budget wars today with a third entry that offers Republicans a modest concession on entitlement programs but demands that the wealthy pay more in taxes. His fiscal 2014 budget request is closer in most respects to the modest budget savings passed by Senate Democrats last month than to the deep cuts passed by the Republican-controlled House of Representatives aimed at achieving a surplus by 2023.

Here's how the three budget plans compare in key areas:

DEFICITS

Obama: Projected deficits are slightly higher than the Senate plan in the early years of the next decade and never dip below $475 billion. But they are lower than the Senate plan in later years and average 2.5 percent of gross domestic product over 10 years. Cumulative deficit is $5.27 trillion.  [Jeanne's Note: the 2.5% of GDP average compares favorably to the period 1982-1994 (the Reagan, G.W. Bush budget years) when the "debt to GDP ratio" exceeded 4% for most of the years. In a growing economy debt ratios like this are actually preferred to keep the economy stimulated. The current cumulative overall 107% U.S. debt-to-GDP ratio would decline substantially under this proposal.]

House: Deficits fall below $100 billion by 2016 and reach a small surplus in 2023. As a share of GDP, they average 0.6 percent over 10 years. Cumulative deficit is $1.23 trillion. [Jeanne's Comment: Of course, in a depressed economy, running a budget surplus is not necessarily a good thing, remember Vice President Dick Cheney's infamous remark when looking at the "off-budget" expenses of the Bush Afghan and Iraq wars, "deficits don't matter" ... not mattering to the tune of about $3.5 TRILLION in debt by 2023, wars for which Republicans still seemingly don't want to pay and for which they do defiantly not want to take the blame.]

Obama: Claims to reduce deficits by $1.8 trillion over 10 years but this includes replacing automatic spending cuts known as the sequester. Obama resurrects previous offer of $930 billion in spending cuts coupled with $580 billion in new tax revenue. Also proposes $166 billion in new spending on surface transportation improvements financed by $167 billion in savings from drawdown of foreign war spending. Proposes moving to a "more accurate" measure of inflation for cost of living adjustments to most programs and tax brackets, for a 10-year savings of $230 billion. [Jeanne's Aside: OK Barack, this means the "chained CPI" right ??? That’s a pretty big gift to the Tea Party ... costing future Social Security recipients thousands in annual benefits. Is it worth that price in order to get a concession from the GOP?  ... Oh wait, I see, they will never concede on tax cuts for the rich and this is just a ploy to get them committed on the record.  That's tough love, a strategy that could backfire if the GOP's Tea Party-wing actually used reason and came to the table accepting that revenues must be increased as well as spending cut. Will they be so reasoned? Not likely, but still a gamble.]

House: Claims to slash deficits by $4.6 trillion over 10 years, on top of savings from the automatic sequester spending cuts which are left in place. No new revenues are sought, all reductions come from spending cuts, largely cuts to social safety net programs. [Jeanne: And the economy heads straight into the toilet with the rich getting even richer, jobs continuing to flow overseas, and the USA looking more and more like a backward 3rd world country.]

Obama: Revives past proposals for raising $580 billion over 10 years from the wealthy, including the "Buffet tax" that phases in a new minimum 30-percent tax rate on income above $1 million and caps on itemized deductions for income starting at $250,000. It also proposes a new $77 billion cigarette-tax increase to fund an early childhood education program and would limit tax-deferred individual retirement accounts to $3 million, exposing more income to taxation. [Jeanne Responds: Seriously Obama ??? Republicans would raise taxes this much. Mitt Romney's $20 million "IRA contribution" would be disallowed? I wouldn't hold my breath, not with the likes of the Koch brothers and Sheldon Adelson spending billions to protect their personal tax shelters and accumulated untaxed wealth.]

House: Seeks no new tax revenue, but leaves in place the $620 billion "fiscal cliff" tax hike on the wealthy. Proposes to eliminate wasteful tax deductions, credits and loopholes in order to lower personal and corporate income tax rates dramatically, with just two tax brackets for individuals - 10 and 25 percent. [Jeanne's Comment: Oh sure, a massive more than 40% cut in the tax rate on  those making more than $250,000 a year ... from 38.6% to 25%, while suggesting what effectively would be a tax increase on most incomes below $80,000 a year. They know that most Americans do not have the good math skills to figure this out.]

House: Keeps the post-sequester caps on discretionary spending in place, resulting in sharp reductions for programs ranging from education to the military to national parks - to $966 billion for 2014 and $995 billion for 2015. [Jeanne: Oh crap, there goes a college education for most Americans ... but with cuts to elementary and secondary education spending, most wouldn't be able to get in anyway. And the poor, well they can get by on one meal a day, after all there won't be any jobs left for them after tax incentives to corporations send more jobs overseas. And seniors, with vouchers covering a smaller and smaller proportion of their medical expenses will die sooner thus adding to the savings for both Medicare and Social Security. See, win-win. The military? The proposed cuts in the GOP budget are for show only, as soon as defense contractor lobbyists get through with them, Congress will be spending even more.]

April 7, 2013: Maxine on Fishing

April 5, 2013: New Guidance: Federal Regulators Allow "Collaborative Arrangements" for Enforcement

As of October 2012, only 11 states and the District of Columbia had moved forward to implement at least one of the Patient Protection and Affordable Care Act's (Obamacare's) 2014 private insurance market reforms. The other 39 states had not yet taken action, potentially limiting their ability to fully enforce the reforms. Without new legislation, regulators in at least 22 states reported that they would be limited in their ability to use all of the tools they need to protect consumers under Obamacare.

On March 15, 2013, federal regulators at the Center for Consumer Information and Insurance Oversight released guidance on how the Patient Protection and Affordable Care Act's new market reforms will be enforced. In this blog post, I am trying to describe this enforcement framework of the Obamacare, how the new guidance fits into that framework, and what the new guidance means for enforcement of the law's most significant reforms, particularly in light of the continued obstinacy and outright opposition most "red states" have regarding any cooperation with the Obama Administration in implementing and enforcing the new health care reform law..

Who enforces Obamacare? 

States are the primary regulators of health insurance in the individual and small-group markets and can require insurance companies in their state to meet federal standards. If, however, a state fails to substantially enforce all or parts of Obamacare or notifies the federal government that the state does not have the authority to enforce it or is not enforcing the law, federal regulators at the Centers for Medicare and Medicaid Services (CM²) will step in to enforce. In doing so, federal regulators have the authority to assess significant fines of $100 a day for each individual that is affected by an insurer's noncompliance.

What does the new guidance say? 

The new guidance states that "the vast majority of states are enforcing the Patient Protection and Affordable Care Act health insurance market reforms." The guidance also recognizes that CM² has the responsibility for enforcing the reforms in states that lack the authority or ability to do so. In those states, insurers will be required to submit policy forms to CM². According to the guidance, CM² will notify issuers of any concerns, conduct targeted market-conduct examinations, and respond to consumer inquiries and complaints. CM² will "work cooperatively with the state" to address any concerns about compliance and transition enforcement responsibilities back to the state when it is willing and able to assume enforcement authority.

States that are willing and able to perform regulatory functions but lack enforcement authority can enter into a collaborative arrangement with CM², which would allow the state to enforce Obamacare using the same regulatory tools used to ensure compliance with state law. In addition, consumers would continue to contact the state with inquiries and complaints about their coverage. In the face of a potential violation of federal law, states would refer the issue to CM² for possible enforcement action if unable to obtain voluntary compliance from insurers. But will they? Will red states actually "collaborate" even this much?

As of March 1, 2013, four states -- Oklahoma, Missouri, Texas, and Wyoming -- had notified CM² that they do not have the authority to or are not otherwise enforcing Obamacare. An additional two states, Alabama and Arizona (for group PPO plans), made the same notification as of March 29, 2013.

What does it all mean? 

Federal regulators have recognized the need to ensure that there is adequate enforcement of the insurance market reforms that come into effect in 2014. The guidance offers a "middle ground" through the newly announced collaborative arrangements. These arrangements allow CM² to leverage the expertise of the states in monitoring their marketplaces and avoid dual regulation of insurers at the state and federal levels. This approach also may minimize consumers' confusion and duplication of efforts by the states and CM². Again, befuddled red state governors and state legislators would rather throw mud on Obamacare than take even a baby step in implementing it. Protecting all the lobby money they are receiving from the for-profit insurance industry trumps the idea of offering protection to their own citizens.

It is unclear, though, how the new arrangements align with existing federal regulations that require CM² to make a formal determination that a state has not substantially enforced federal law before stepping in to do so. Further clarification will be needed to address questions about:

1) Whether CM² can bring an enforcement action against an insurer without first making a formal determination that the state is not substantially enforcing; and

2) Whether federal law allows insurers to be subject to penalties at both the federal and state levels for the same violation.

Because questions remain about the coordination that might be required between state and federal regulators, states should consider whether new legislation or regulations -- either to amend existing state law or give their insurance department more authority -- are more appropriate to address enforcement gaps, continue meaningful regulatory oversight, and promote consumer protections at the state level. While the guidance shows that CM² is willing to work with and support states in their enforcement efforts, states continue to have the opportunity to enforce the new reforms and ensure that consumers receive the full protections of the law ... and there is barely a snowball's chance in hell that very many of the red states will doing anything along these lines.

April 4, 2013: The Public's Misperceptions of Benefits Make Trimming Them Harder

President Obama is quoted as saying: "For each dollar that Americans pay for Medicare, they ultimately draw about $3 in benefits." What's more, he added, most people do not understand this truth. In making this statement, the president was referring to the widespread and incorrect view, especially among older Americans, that Medicare recipients get only what they have paid for through taxes, premiums and medical co-payments. Now that misperception is making it all the harder for politicians to consider trimming those benefits or raising out-of-pocket expenses as they seek to restrain Medicare spending that is rising unsustainably while baby boomers age and medical prices increase.

One of the problems for President Obama, and for progressives who want to support his programs and agenda, is that this basic fact is getting in the way of any actual efforts to reform Medicare. Admitting the problem as in any 10-Step program, is the first and sometimes most important step. And while the problem has existed from almost the very first day of Medicare, when then President Lyndon Johnson, wanting the program to succeed, basically "sold the farm," offering hospitals and doctors top pay ("usual and customary" fees to the docs, "costs-plus" to hospitals, with almost no limitations)  for servicing the new plus age 65 Medicare beneficiaries.  Johnson's largesse went especially to Medicare Part B, the outpatient and physician component. If the actual costs of that part of Medicare were passed directly on to the beneficiary --  (Medicare Part B "premiums" are deducted from beneficiary Social Security) -- the deductions would have made the program too expensive for most seniors, albeit it was still a "good deal" when compared to private insurance coverages. Johnson and the Great Society Congress of the time, set the Part B premium at roughly one-quarter the real costs, with general revenues and taxes covering the shortfall. Every president and every Congress since then has pretty much maintained this same ratio. The problem is most Americans do not understand this "giveaway" and more or less deliberately are relishing in their ignorance.

Late in 2012, for a sixth straight year, Medicare trustees issued a warning required by law whenever more than 45 percent of the health program's costs must be covered by general revenues from all taxpayers. To date, Mr. Obama has mostly proposed cuts to payments for health care providers, like hospitals. He has supported reducing benefits or raising costs for higher-income beneficiaries, but has made any broader benefit changes contingent on Republicans' agreeing to additional tax revenues from wealthy individuals and corporations.

Administration officials said that Mr. Obama, in speaking of a 3-to-1 ratio of Medicare benefits to taxes, was referring just to Medicare's Part B coverage for doctor and outpatient services. Older Americans pay about 25 percent of Part B costs through premiums, deductibles and coinsurance (high-income beneficiaries pay 35 percent to 80 percent). The rest comes from general revenues -- income taxes and other levies. The ratio is similar for Medicare's newer prescription drug benefit: While beneficiaries' premiums cover about a quarter of costs, the rest comes from general revenues and borrowed money.

"They are heavily subsidized by the federal government, and the trend is getting worse," said Robert D. Reischauer, a former director of the Congressional Budget Office and now one of two public trustees for Medicare and Social Security. Medicare payroll taxes finance only the program's Part A coverage for hospital costs.  And while Mr. Obama apparently was speaking only about Part B, analysts say that it is roughly true for all of Medicare that beneficiaries on average pay about $1 for every $3 in benefits.

"That was sort of a foundation argument that F.D.R. popularized when the Social Security Act was passed -- that this was a fiscally responsible program because people were going to pay in and, as a result of their payments, be entitled to benefits," said Mr. Reischauer, the public trustee. Yet Social Security has always been a pay-as-you-go system, with workers' taxes going not to some actual trust fund for them but directly toward benefits for retirees. Initial beneficiaries paid little or nothing into the system, but "all of the first generations got windfalls," Mr. Steuerle said.

"The policies announced today further the agency's goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice," Jonathan Blum, PhD, CM²' acting principal deputy administrator, said in a press release.  Blum is "acting" because TeaParty/Republicans in Congress continue to block most Obama appointees with filibusters in the Senate.

"By being responsive to the more than 160 members of Congress from both parties who raised concerns about the impact of the proposed payment rate on seniors, CM² has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges," AHIP President Karen Ignagni said in a statement.

Jeanne's Latest Additions to Her Canonical List of Lawyer Jokes

Week of April 1, 2013

March 29, 2013: How Will Obamacare Hit Premiums? Let's Break Down The Numbers.

It may be one of the most hard, most important questions to answer in health policy right now: What will happen to premiums in 2014, when millions of Americans flood into the insurance markets?  It's a question hugely important to the Patient Protection and Affordable Care Act's (Obamacare) success. If Americans balk at the price of insurance, they may opt-out of the program, reducing the size of the insurance expansion.  Some argue that premiums will spike. Others think they won't. The Obama administration, for its part, thinks there will be a bit of a mix; some will see their costs rise and others will not.

"Women are going to see some lower costs, some men are going to see some higher costs," Health and Human Services Secretary Kathleen Sebelius told reporters Tuesday. "It's sort of a one to one shift ... some of the older customers may see a slight decline, and some of the younger ones are going to see a slight increase."

We don't, unfortunately, have a health policy crystal ball to gaze into on this issue. We do, however, have the next-best thing: An actuarial analysis of health premiums in the California individual market! Exciting, right?

Consulting firm Milliman on Thursday issued a really in depth report on how Obamacare will likely change the cost of health insurance in California. It's a great way to break down how the cost of coverage will change next year -- and also why it's difficult to make any broad statements about the future of health insurance costs.  Milliman starts by walking through all the factors that will make insurance more expensive in 2014. One has nothing to do with the health-care law at all: The firm expects premiums to rise 9 percent next year, due to rising health-care prices. This increase would be in line with the premium hikes seen in recent years, prices of which have risen near or above double digits almost every year since the late 1980's.

The 9 percent increase would happen regardless of Obamacare, so it's hard to count those as a result of the law. There is, however, one part of the health law that will be expensive: The requirement that insurance companies cover a whole bunch of health benefits. This is known as the "essential health benefits" and it can include some health services that plans previously skimped on. Californians (and the rest of the country, for that matter) will have to pay more to get more coverage, essentially. Milliman estimates this will increase premiums by 22.2 percent for most Californians.

So we have health care costs and quality of coverage going up, which are components that would raise premium rates for everyone. But there's one other change, the influx of new customers, that could either raise or lower your premiums, depending on whether you already have coverage. For those who already have insurance, the Patient Protection and Affordable Care Act is expected to increase premiums by 14 percent, mostly to cover the costs of the expanded benefits -- you're getting more, therefore you are paying more. That makes sense when you think about some of the people likely to enter the market: Those who previously found coverage too expensive to buy a health plan, perhaps due to a health condition.

If you're one of those uninsured Californians, by the way, PPACA will actually lower the cost of insurance (compared to life without Obamacare) by 14 percent.

Those are the elements that will increase the cost of health insurance, but it's important to remember that there's another big part of the law meant to reduce premiums. These are the tax subsidies, available to Americans earning less than 400 percent of the poverty line (about $45,000 for an individual). These, Milliman expects, will make insurance 83 percent less expensive for someone earning less than 250 percent of the poverty line.

Here's what all those elements look like in chart-form, for those who already have insurance coverage in California:

And a separate chart showing how the cost of coverage will change for the uninsured:

These figures are the pretty basic ones. They don't take into account what will be different for older or younger Americans, or how different states will face different issues. They are, however, a good guidepost for thinking about why premiums will (or won't) go up in 2014. At least, until we track down a health policy crystal ball.

March 26, 2013: FAQs About the "Infamous" Society of Actuaries Report on the Health Premiums Under Obamacare

It's too early to know how much individual health insurance policies will cost once the online marketplaces created under the [Patient Protection and] Affordable Care Act launch Jan. 1. But that hasn't stopped experts and interest groups from making predictions. The latest analysis comes from the Society of Actuaries. It's attracting attention because of the group's [presumed] expertise and nonpartisanship. What actuaries do for a living -- predicting future expense based on multiple squishy factors -- is at the core of figuring out what will happen under Obamacare

Thanks to subsidies and the requirement that everybody get insurance or pay penalties, the society forecasts that the number of people covered by individual polices will double to 25.6 million by 2017. Getting the headlines was the forecast that insurer costs -- medical claims per policyholder -- will soar, on average, 32 percent for the individual market in 2017, with wide variations among states. That's not the same thing as saying prices consumers pay for policies will rise 32 percent. But if claims are higher, insurers generally charge more.  [Jeanne: Also left out is the fact that while overall medical plan outlays may or may not increase by an average of 32%, total premium income being paid into these for-profit insurers from 30 or so million newly insured Americans will also rise. Whether this premium income will offset the higher outlays or fall short is not reported in the Society of Actuaries report. The Society itself admits that it was asked by the for-profit health insurance industry to look ONLY at the increase in medical payments (not premium income) in preparing its report. Comparing apples, oranges and kumquats aside, the report is clearly a propaganda piece commissioned by the for-profit insurance industry in its battle to be allowed to increase premiums for people with pre-existing conditions by 5 times or more.]

Opponents of the health overhaul seized on the figure to suggest the law could really be called the Unaffordable Care Act. The Obama administration says the study leaves out factors that will restrain what plan members actually pay, including more competition among insurance companies.

Kaiser Health News talked to experts to learn what it means for the consumers the health law was meant to help.

Q: What's predicted to drive up costs?

A: Many of those seeking coverage in online marketplaces -- known as exchanges -- are expected to be older and sicker. They'll have more incentive to buy policies, and they'll tend to increase claims paid by insurers. On the other hand, "young and healthy people are less likely to be interested in insurance, because they’re less likely to find value," said Kristi Bohn, a consultant for the Society of Actuaries who worked on the report. The penalty for not having insurance is likely to be far less than the cost of coverage. The fewer young or healthy people who sign up, the higher the costs per plan member. The authors also made assumptions about how many employers will cancel their plans. Companies with sicker workforces are predicted to be more likely to end employer-based coverage and steer people toward exchanges.

Q: I get insurance at work, were they talking about my insurance claim costs?

A: No. This report was just about people who buy on the individual insurance market, currently under 10 percent of the country, though that's expected to go up as the law kicks in. The vast majority of Americans get insurance through work or through government programs (Medicare, Medicaid, the military).

Q: Does the study predict health insurance premiums will go up 32 percent by 2017?

A. No. First, it's only forecasting the individual insurance market. That's where millions of Americans newly covered under [PP]ACA are expected to find policies. The report says nothing about costs for employer-based health insurance. Equally important, the 32 percent forecast is for medical expenses paid by insurers, not what insurers will charge in premiums, and not what consumers will pay.  

Q: But if medical claims go up, shouldn't insurance prices also go up? How much difference could there be?

A: In the individual market designed under the health law, quite a bit, say supporters. [PP]ACA limits insurer profits and also gives government regulators oversight of rate increases, both of which could hold premiums down. Even if sticker prices rise, an important feature of the health law is subsidies for people to buy insurance, through tax credits for those with lower incomes. So what many newly-insured people actually end up paying themselves won't be the same as what the insurance company bills.

Thanks partly to subsidies, "many people buying individual coverage today will see decreases in costs," said Larry Levitt, senior vice president at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.) Insurers who end up signing lots of sicker members will also be partly reimbursed for several years by a reinsurance pool designed to lower their risk. That will lower their expenses, and it wasn't accounted for by the SOA study.  [Jeanne: Of course they weren't accounted for. The whole purpose of a propaganda hit piece like this is to distort facts, plant misrepresentations, and "buy" public opinion. Risk adjustments, like increased premium income, were deliberately left out ... especially in the accompanying press releases and media reports such as on Fox News and in the Wall Street Journal.]

Q: Does it matter where I live?

A: Yes. The report found huge variability, based on geography. While the estimated increase would be 62 percent for California by 2017, in New York state, the report estimates claim costs to drop by almost 14 percent. 

Q: Will health plans offer the same coverage in 2017 that they do now?

A: That's another reason the 32-percent headline could be misleading. Thanks to [PP]ACA minimum coverage requirements, benefits will be more generous starting next year. So what insurers pay in claims can expected to be higher, too. "The number of people who are underinsured has grown dramatically over the last decade," said Sara Collins, a vice president at the Commonwealth Fund. "One reason claims might be a lot lower now is the benefit package is so crummy."  The health law was intended to shift spending into the commercial insurance system that is now outside it: high out-of-pocket costs for those in low-benefit plans; uncompensated emergency-room care; patients paying in cash, and so forth. Moving those costs under the insurance umbrella increases insurance-based spending.

[Jeanne: The problem of the "underinsured" in America has been one of the least reported and least understood problems befuddling the nation's health care system and costing providers (and the fully insured) billions in additional costs. Advocates of "health/medical savings accounts" and employers such as Wal-Mart have championed "high deductible" health plans as a way to save costs in health care. They actually do seem to work great for some, especially for higher income healthier people who have enjoyed the tax breaks MSAs/HSAs give them ... but for lower income American, for whom the tax break is virtually non-existent, and to which a sudden illness or accident might mean having to come up with the $5,000 deductible before any insurance kicks in, the safety net supposedly provided by such coverage is non-existent. $5,000 dollars might as well be $5 million, the bills cannot be paid, the provider is stuck with a uncollectible debt, and those with coverage pay higher premiums to help alleviate the losses.  At Wal-Mart for example, the company touts its health plan with varying $2k to $5k deductibles, costing its minimum wage employees upwards of $120 to purchase ($300 for a family) as a "solution." When you are making less than $10/hour a sudden $2,000-5,000 bill will be devastating.  As a practical matter for these people -- thinking they are "covered" -- almost any hospital visit would be impossible to pay.]

Q: The idea of the insurance exchanges is to create competition, isn't that supposed to lower costs? 

A: Yes. The idea behind state health exchanges is that insurers will compete for business by pressing providers for discounts and passing part of the savings to members. The actuary study didn't account for that kind of competition. "Every insurer I've talked to says they're building lower-cost networks that they plan to use for their exchange plans," said Levitt.

Q: Does this mean costs in the health exchanges aren't a concern?

A: No. Many consumers will pay more in premiums to get more in benefits. The high cost of medicine could mean that, even for those getting big subsidies, affordability will be an issue. Many consumers "will be moving into a really fully insured product for the first time, so there may be a higher cost associated with getting into that market," Health and Human Services Secretary Kathleen Sebelius said this week. 

March 23, 2013: NYT Editorial: Report Card on Health Care Reform

The New York Times editorial board decided to celebrate the 3^rd anniversary of Obamacare by giving the new law a "report card." I have reproduced the NYT editorial below.

Republican leaders in Congress regularly denounce the 2010 [Patient Protection and] Affordable Care Act and vow to block money to carry it out or even to repeal it. Those political attacks ignore the considerable benefits delivered to millions of people since the law's enactment three years ago Saturday. The main elements of the law do not kick in until Jan. 1, 2014, when many millions of uninsured people will gain coverage. Yet it has already thrown a lifeline to people at high risk of losing insurance or being uninsured, including young adults and people with chronic health problems, and it has made a start toward reforming the costly, dysfunctional American health care system.

EXPANDING COVERAGE Starting in 2010, all insurers and employers that offer dependent coverage were required to offer coverage to dependent children up to age 26. An estimated 6.6 million people ages 19 through 25 have been able to stay on or join their parents' plans as result, with more than 3 million previously uninsured young adults getting health insurance. The law requires private health insurers to provide free preventive care, without co-pays or deductibles. Some 71 million Americans have received at least one free preventive service, like a mammogram or a flu shot, and an additional 34 million older Americans got free preventive services in 2012 under Medicare.

Private insurers are now required to cover children with pre-existing conditions, which means that an estimated 17 million such children have been protected against being uninsured. And more than 107,000 adults have enrolled in a federally run insurance plan for people with pre-existing conditions. The law also bars insurers from canceling policies on sick people; previously, 10,000 people a year had their policies rescinded.

The law appropriated $11 billion over five years to build and operate community health centers, a major factor in increasing the annual number of patients served to 21 million, a rise of 3 million from previous levels. Some $5 billion has been put into a reinsurance program that has encouraged employers to retain coverage for retirees and their families; 19 million people benefited with reduced premiums or cost-sharing. SAVING CONSUMERS MONEY Private insurers are required by the law to spend at least 80 to 85 percent of their premium revenues on medical claims or quality improvements, or they must pay a rebate to consumers. In 2012, insurers had to pay $1.1 billion in rebates, an average of $151 per family. Although Republicans contend the law will drive up insurance premiums, thus far it seems to have reduced them. Any insurer that wants to increase its premiums by 10 percent or more for people who buy their own policies must justify the increase to state or federal officials. As a result, the proportion of rate filings that sought increases of 10 percent or more fell from 75 percent in 2010 to 34 percent in 2012, and it is expected to be even lower this year. The average premium increase in 2012 was 30 percent lower than in 2010.

The law also provides for prescription drug discounts to Medicare beneficiaries. More than 6.3 million older or disabled people have already saved more than $6.1 billion on prescription drugs since 2010 and will save even more as a gap in coverage, known as the doughnut hole, is filled in by 2020. And the law ended lifetime dollar limits on services covered by private plans, a matter of great importance to people with very high medical costs. Annual limits on what plans will pay are being phased out.

REINING IN HEALTH CARE COSTS Sharp declines in the annual growth rate in overall health care spending and in Medicare's cost per beneficiary have eased the pressure on federal budgets and on private insurance premiums. The main factor was presumably the recession, which made people reluctant to spend on health care, but it is possible that the focus on reform has led many providers to act more frugally. The law has reduced unjustified overpayments to private Medicare Advantage plans, which enroll more than a fifth of all beneficiaries, and despite fears to the contrary, Medicare Advantage premiums have fallen by 10 percent and enrollment has risen by 28 percent since the law was passed.

BETTER QUALITY OF CARE One of the most promising aspects of the health reform act is its focus on improving quality. The percentage of Medicare patients requiring readmission to the hospital within 30 days of discharge dropped from an average of 19 percent over the past five years to 17.8 percent in the last half of 2012, an improvement due in large part to penalties imposed by Medicare for poor performance and financial incentives paid by Medicare to providers to encourage better coordination of care after a patient leaves the hospital. A number of pilot programs in Medicare and Medicaid have been started to reward quality, to encourage doctors and hospitals to coordinate care, and to lower costs. If enough of these experiments pan out, they could transform not only Medicare but the entire health care system.

March 19, 2013: The USA's Long History of Unsustainable Growth in Health Care Spending

The United States has by far the most expensive health care system of any country in the world. Health spending constitutes more than 18 percent of the U.S. economy, compared with less than 10 percent in the average industrialized country. And not only is health spending high, it is projected to rise faster than gross domestic product over the next 10 years.

This growing commitment of resources inevitably means less money is available for other purposes. For families, it means more expensive insurance premiums, higher taxes, and lower wages. For federal and state governments, it means less funding for other public priorities like education and infrastructure. Looking to the future, projected federal budget deficits are primarily driven by rising health spending.

Other countries' experiences can help us assess the opportunity cost of funneling such a large proportion of our resources to health care. Switzerland offers an instructive parallel, as its health system resembles our own in many ways. Swiss patients are usually able to choose any doctor, and have rapid access to specialist care. The Swiss buy private health plans through regional exchanges offered by competing insurers.  . The federal government provides sliding-scale subsidies for those with low incomes, much like the Patient Protection and Affordable Care Act's state insurance marketplaces that will be operating by 2014. Switzerland also resembles the U.S. in that, over the past 30 years, we have had the two most expensive health care systems in the world.

However, we have by now left even Switzerland far behind. In 1980, per capita spending in both countries was roughly equal; in 2010, U.S. spending surpassed Swiss spending by nearly $3,000 per person. The difference in spending between the two countries allows us to put a price tag on how much our health care spending has exceeded that of every other country in the world. If we had spent only as much per person as Switzerland did over the past 30 years, we would have saved about $15.5 trillion.* What could that $15.5 trillion buy if we had it today? It would be enough to transform our $11.6 trillion federal debt into a $3.9 trillion surplus. At current tuition levels, it would send over 175 million students to a four-year college. We could use it to cover an area the size of South Carolina with solar panels, generating more carbon-free electricity than the U.S. even uses. (Which come to think about it is probably a very good use for the state of South Carolina, apologies to Stephen Colbert.) We could buy everyone in the world four iPads. (Which as I think about it, is probably NOT a very good idea since they are mostly made in China).

Why do we spend so much on health care? Contrary to what one might expect, the U.S. has one of the youngest populations among industrialized countries, and we go to the doctor and hospital relatively infrequently. Instead, research suggests that the difference in health spending between the U.S. and other countries largely comes down to higher prices. We spend more because our physician visits, hospital stays, pharmaceuticals, and procedures are more expensive. The high cost of American health care would perhaps be justified if we received the highest-quality care and achieved the best health outcomes. Unfortunately, evidence suggests that the U.S. health system does not deliver notably superior care, and in fact lags other countries in important areas such as access, care coordination, and patient safety. Furthermore, people in the U.S. have significantly worse health outcomes than in most developed countries. Couple these failures with the fact that the U.S. is the only wealthy country that does not yet ensure universal insurance coverage, and the inefficiency of the U.S. health system comes into focus.

The Patient Protection and Affordable Care Act, in addition to expanding and strengthening insurance coverage, contains a number of provisions to slow the growth of health care spending. These include new ways to pay for care that incentivize quality instead of quantity; the creation of transparent health insurance marketplaces to increase competition; incentivizing primary care and prevention; and the creation of an independent panel of experts to propose Medicare savings if spending increases faster than GDP plus 1 percent. In addition, the Commonwealth Fund Commission on a High Performance Health System has released a report proposing further payment and delivery system reforms and consumer incentives, which together could improve health system performance while generating $2 trillion in savings by 2023. The success of these and future reforms will be essential in ensuring we do not spend another 30 years moving further along our path of unsustainable health care spending. 

_{* This figure is in 2012 dollars adjusted for Consumer Price Index inflation. When not adjusted for inflation, the figure is $11.8 trillion.} 

March 18, 2013: Too Many Americans Still Believe the Lies About Obamacare

And whose fault is this? Well, I do fault President Obama, who failed to take the initiative and the high ground immediately after the passage of the Act in March 2010. By his keeping a low profile and not getting out to explain what was really in the law, the right wing media echo chamber was able to flood the airwaves with lies, distortions, gross misrepresentations and out-and-out slanderous statements about the new law. Repeated over and over again by the likes of Sean Hannity, Rush Limbaugh and Glenn Beck, the lies took on an aura of right-wing "truthiness," to quote Stephen Colbert.  The fact that the lies are still believed and repeated endlessly even today by the likes of Congresscritters Michelle Bachmann and Steve King, half-term governor  and conservative media princess Sarah Palin, and by tens of thousands of Tea-Party activists fueled by Koch brothers billions is proof of the failures of the American education system.

Jeanne's Weakly Lawyer Jokes for the Week of March 18, 2013

How we are told our laws are made ...

There Oughta-Be a Law

It seems that we have laws for everything but the stuff that can really get on our nerves. For instance, "there oughta be a law" to protect citizens from the airline passenger who maintains his seat in a fully reclined position while an in-flight meal is being served. So I propose that we start passing some much- needed legislation to crack down on the following offenses:

For the rest, go to ... http://www.health-politics.com/humor.html#03-18-13

A group of coordinated health care providers forms an ACO, which then provides care to a group of patients. The ACO is accountable to the patients and the third party payer (Medicare is only the originator, but all payers may participate) for the quality, appropriateness and efficiency of the health care provided. CM² describes an ACO as "an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it." 

In recent years, consumers have increasingly been encouraged by employers and insurers to help control rising health care costs by avoiding unnecessary tests, buying generic drugs and reducing visits to the emergency room, among other things. The hope is that a patient better educated and more engaged in health decisions will choose options that will promote better health and decrease costs.  Such "patient engagement" efforts assume that patients welcome the opportunity -- or at least are willing -- to get more involved in their own care. But as a study published last month in the journal Health Affairs found, a majority of patients didn’t want to factor costs into their medical decisions, nor did they want their doctors to do so.

The study investigated the attitudes of focus group participants in Washington, D.C., and Santa Monica, Calif., toward weighing their own out-of-pocket costs as well as the costs borne by their insurer in medical decisions. The participants, researchers said, did not generally understand how insurance works and felt little personal responsibility for helping to solve the problem of rising health care costs. They were unlikely to accept a less expensive treatment option, even if it was nearly as effective as a more expensive choice.

Add Sen. Marco Rubio, R/T-Fla., to the list of lawmakers who wants to cut funding for the 2010 health care law as part of the debate over government funding for the remainder of the fiscal year. In an interview with radio show host Hugh Hewitt, Rubio said he'll support legislation to fund the government through September 30 only if it contains language to defund the health law. "This is going to be an implementation disaster. It's going to hurt our economy severely, and we aren't spending enough time talking about that," Rubio said.

Largely left out of previous trends that swept patients into managed health care with a single insurance company overseeing their needs, "dual eligibles" are often subjected to duplicated tests and unnecessary medical care, and must divine for themselves which services are paid by which program. That's not the case in Arizona where state health officials have aggressively applied managed care strictures for more than two decades. While Arizona was the last state to join Medicaid in 1982, it was an early adopter of paying private health plans to manage care for public beneficiaries. That was in part because Arizona's system of providing basic medical service to its most impoverished residents was in disarray. Arizona had long required county governments to provide basic health care to impoverished residents -- the first territorial legislature addressed the issue during the Civil War. But each county "had different eligibility, different packages and no Medicaid money," said Dr. Len Kirschner, a former state Medicaid director.

Still, in order to overcome Republican hostility to the federal insurance program for the poor -- and the federal dollars that would flow for the first time into the state -- lawmakers "didn't want anything that sounded like Medicaid," said Kirschner. "So they came up with this name." The Arizona Health Care Cost Containment System, in local parlance AHCCCS or "access," is such a pervasive brand in the state some beneficiaries and even lawmakers don't realize it is Medicaid. And since its beginning, a long line of the state's conservative lawmakers and governors have lent strong support to Arizona's novel public-private model in which health plans are paid a set monthly fee and are expected to care for all of a patient's needs.

Ford's house is busy today. Dave Oxford, the case manager from his health plan Mercy Care is here, too, peppering Ford with questions about the nagging wound on his foot and whether he needs to change any of his many medications. Oxford visits the homes of all of his clients in the Phoenix area who are old or disabled enough to qualify for Medicare and poor enough to qualify for Medicaid. Oxford's visits every three months are part of a coordinated and concerted effort to keep patients like Ford out of pricey nursing homes and emergency rooms. Mercy Care is a contractor of the insurance giant Aetna, and like all health plans that compete for Arizona's combined Medicare-Medicaid patients, it receives a monthly fee per person that it must use to cover all of a patient's needs.

Critics of managed care say the incentives for companies to keep the cash and withhold care are too great, the potential profits too tempting. They point to the scandal-filled 1990s when some HMOs in the private insurance market nationally kept costs down by denying treatment. But today, in Arizona, advocates for the elderly and disabled and the patients themselves say the case managers from their health plans are less like Grim Reapers and more like guardian angels. "Dave is cool. He's in my cell phone," said Ford. He appreciates that someone is looking out for him "and not just looking at me as a number on a paper."

This generosity toward the poor can seem at odds with Arizona's cultivated reputation for self-reliance, until, that is, the actuaries get involved: an Arizonan in a nursing home costs the state $5,400 a month for custodial care alone. If, like Ford, a patient can live at home, the cost is only $1,400. This cold arithmetic has led to noble gains, advocates say, in keeping people out of nursing homes and a reasonable profit for insurance companies, who say they typically make two to four-percent profit in Arizona.

The state's fervent belief that private companies are best suited to deliver public services doesn't mean Arizona is the Wild West. Health plan executives, hospital and provider groups, and case managers in Phoenix and Tucson said in interviews that state regulators are strict, vigilant and quick to rebuke health plans that don’t meet their standards.

"We have 75 staff whose job it is to oversee the health plans and make sure they are meeting all of our requirements," said Tom Betlach, director of Arizona's Medicaid agency, AHCCCS. "We sit down on a quarterly basis. We bring the plans in. We look at their performance." Those requirements include quarterly reports on access to medical care, quality measures and proof that patients are getting needed services, like attendant care.

"If there is some speculation that the health plans can't be trusted," said James Stover, head of the University of Arizona Health Plan in Tucson, "I think in Arizona, we've demonstrated the health plans have been ... models for improved health."

There's widespread consensus here that Arizona's model works because the state is what's known as a "good payer": physicians and health plans are paid much higher rates than nearly every other state. Even with a recent rate reduction, most physicians and hospitals in the Grand Canyon State accept Medicaid patients, a mark of access not found in many states. Still, Stover cautions other states looking to replicate the Arizona model that the system is fragile: managed care companies here can provide rich services and wide access, he said, so long as state budget makers keep rates healthy.

March 5, 2013: Your Health Insurance Premiums at Work: Drastic Changes in CEO Pay Structure Needed

Humana Inc. (NYSE: HUM) spent about $323,000 last year to fly new CEO Bruce Broussard between Louisville and Houston, where his family resides. Humana's agreement with Broussard allows him to use the company aircraft to commute from his residence to corporate headquarters, according to the proxy filing.

Humana said the expense was part of its employment agreement with Broussard, according to an annual proxy statement filed Monday with regulators. The 50-year-old executive joined Humana as president in late 2011 and became CEO on January 1, 2013, replacing long-standing chief executive Michael McCallister.

Companies routinely spend about $200,000 on travel for top executives aboard company aircraft, said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. But he said that figure normally includes trips to meetings, events or hard-to-reach company locations. He called the total spent on Broussard's commute a big number. "Part of becoming a CEO means you move to the place where the company's located," he said. "They pay you enough to do that." Elson said Broussard and Humana may have a good reason for the expense. But it also could send the wrong message to people coming to work for the company. "If the CEO's compensation scheme becomes too divorced from the rest of the organization, you create all kinds of incentive problems," he said.

Last year as president, Broussard received total compensation valued at nearly $2.9 million. That included a $900,000 salary, a performance-related bonus of $1.3 million, and $631,154 in other compensation. The commuting expense was included in the "other" category. In contrast, McCallister, who still serves as company chairman, received total compensation valued at $8.4 million.

Humana is the nation's fifth largest health insurer but the biggest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled. The company's earnings fell 14 percent last year to $1.22 billion, or $7.47 per share, compared with 2011. Revenue climbed more than 6 percent to $39.13 billion. Humana shares also sank 22 percent last year to close at $68.63, while the Standard and Poor's 500 index climbed more than 13 percent. Humana shares fell $1.03 in Monday trading to close at $66.85. That's down about 2.5 percent since the start of the year.

And for this, Broussard was paid a $1.3 million "performance bonus?" It looks like he should have been fired. All of this portends a future when the private for-profit health insurance runs the entire U.S. health care system and continues to bring such efficiencies to the nation as a whole. <sigh> Do you know where your health insurance premiums are?

For pictures of other jets owned by for profit insurance companies ... http://www.democraticunderground.com/1002498796

March 4, 2013: Drastic Changes in Physician Pay Structure Recommended

Medicare needs $138 billion over the next decade to avoid steep cuts in physician pay, says a panel convened by a major medical group. Avoiding those cuts has become an annual scramble in Congress known as the "doc fix." In a report released Monday, the panel ... mainly composed of doctors ... concludes that there are enough "marginal, harmful, ineffective, or unnecessary" services already being paid for in Medicare that outside funding is unnecessary. Better pay for doctors who care and manage those with complicated medical problems could also come from money already in the health care system, according to the National Commission on Physician Payment Reform. The commission was put together by the Society of General Internal Medicine, which is made up of about 3,000 physicians on faculties at medical schools and teaching hospitals.

The panel also said Medicare could save money by targeting payments that vary based on where they are performed. As an example, the panel noted that Medicare pays $450 for an echocardiogram in a hospital, but only $180 when the procedure is performed in a doctor's office. "There's no reason for that whatsoever," said Kavita Patel, a doctor and researcher at the Engelberg Center for Health Reform at the Brookings Institution who was on the panel. The panel also took on the powerful Relative Value Scale Update Committee, (RUC) which is managed by the American Medical Association. The RUC influences how physicians are reimbursed through its recommendations to Medicare, which sets reimbursement rates and often follows its advice.  The panel joined a chorus of criticism that expensive, technology-heavy procedures such as surgery and imaging are overly encouraged by high payment rates. The report said the RUC's dominance by specialists and the secretive way it operates are "seriously flawed."

Overall, the panel called for speedy changes in Medicare's fee-for-service payment system so that within five years doctors are paid in a way that rewards value, not volume. "Over time, payers should largely eliminate stand-alone fee-for-service payment to medical practices because of its inherent inefficiencies and problematic financial incentives," the panel wrote. Medicare is already experimenting with several new methods of payments, including accountable care organizations and bundled payments, and Obamacare orders Medicare to  make quality part of the calculation in reimbursing physicians by 2017.  Jonathan Blum, director of the Center for Medicare, told the Senate Finance Committee last week that this was the most challenging task in the law's changes in health care financing.

See also: http://www.politico.com/story/2013/03/to-contain-health-care-costs-eliminate-fee-for-service-88339.html?hp=r13

March 4, 2013: Actually, a Lot of Physicians, More Than You Might Expect, Support Obamacare ... Enthusiastically!

  http://www.pnhp.org/

March 2, 2013: Health Affairs: Everything You Ever Needed to Know About Health CO-OPs Under Obamacare

http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=87

Background: Starting in October 2013, people without access to coverage through an employer, Medicaid, or the Children's Health Insurance Program will be able to purchase health plans through health insurance exchanges for coverage taking effect in 2014. These new marketplaces are one of Obamacare's key mechanisms for expanding affordable coverage.

Recognizing that in some states only a small number of insurance companies offer coverage for individuals and small businesses, the health care law also established a Consumer Operated and Oriented Plan (CO-OP) program to increase competition among plans and improve consumer choice. The federal government has now awarded nearly $2 billion in loans to help create 24 new CO-OPs in 24 states. The CO-OP sponsors ... consumer-run groups, membership associations, and other nonprofit organizations--are now moving forward to offer health coverage in competition with established commercial and nonprofit insurance companies.

Many analysts are enthusiastic about the potential for CO-OPs to bring competition and choice to the market. Others question whether the federal loan initiative has been a wise use of taxpayer dollars, since many CO-OPs will be at a disadvantage competing against well-established insurance companies and may fail. This policy brief describes the CO-OP program and examines issues related to its implementation and likelihood of success.

February 28, 2013: Finding Solutions to the SGR "Problem" Remain Elusive

The chaircritter of the House Ways and Means Committee made clear this past week that finding a solution to the vexing issue of setting Medicare physician payment rates is on his to-do list this year, and he got some tepid support from a key Democrat.

Housecitter Dave Camp, R-Mich., said that the effort could be helped by a recent reassessment of how much it would cost. Earlier this month, the Congressional Budget Office lowered its cost estimate for fixing Medicare's physician payment formula over the next decade to $138 billion due to lower Medicare spending on physician services during the past three years. In January 2012, the CBO estimated the cost of the fix at $316 billion, which it reduced to $245 billion last August.

Camp did not say where he would find the money to pay for the SGR overhaul, but he has promised it "will not add a dime to the deficit." He said he is working on the proposal with a fellow Michigan Republican -- House Energy and Commerce Committee Chaircritter Fred Upton.  It might be part of a larger piece of legislation or it might move on its own.

But in 2002, doctors reacted with fury when they came in for a 4.8 percent pay cut. Every year since, Congress has staved off scheduled cuts. But each deferral just increased the size -- and price tag -- of the fix needed the next time.

Camp and Upton, along with their panels' respective health subcommittee chairs, have unveiled an SGR repeal plan that would freeze physician payment rates at their current levels for the next 10 years, with future increases based on individual physicians' quality of care and efficiency.

Camp said Tuesday he has not discussed the draft with either the White House or the Centers for Medicare and Medicaid Services.

Housecritter Jim McDermott of Washington, the ranking Democrat on the Ways and Means health subcommittee, said the GOP outline "leaves plenty of room for agreement if people want to find it." But he warned that making beneficiaries finance the fix wouldn't fly.

Bipartisan groups of lawmakers have proposed fixing the SGR formula in the past, but have been unable to agree on how to pay for it.

February 25, 2013: Commonwealth Fund Commission on a High Performance Health System ... Change the Way Docs are Paid

The growth in overall health spending, as well as Medicare spending, has slowed over the past few years, and that trend is beginning to affect long-term projections. As a result, the Congressional Budget Office (CBO) estimated last week that it would cost $138 billion to replace the formula used to determine Medicare physician fees, which is just about half their previous estimate from June 2012.

The new, lower estimate provides an opportunity to replace the existing payment formula with an approach that promotes high-quality and efficient health care. A Republican-controlled Congress enacted the Medicare provider payment formula, known as the sustainable growth rate (SGR), in 1997 to control spending growth. Under this formula, a target is set for provider (physician, hospital, nursing home, home health and DME)  spending in each year (based on annual increases in the gross domestic product), and automatic, across-the-board cuts in payment rates are triggered if those targets are exceeded. The formula has produced cuts in every year since 2002. Concerns about potential disruptions in Medicare beneficiaries' access to care if physician fees were reduced, has led Congress has override those cuts annually since 2003 (for physicians, but not for hospitals and other institutional providers ... without changing the formula or addressing the underlying causes of spending growth. 

As a result, the scheduled cuts have accumulated and Medicare physician fees are now scheduled to be reduced by about 25 percent in January 2014. The high CBO "score" ...  the estimated increase in federal spending resulting from legislative action ... has deterred Congress from repealing the SGR altogether. CBO's reduction in the estimated impact of repealing the SGR offers a chance to pursue a new value-based approach to Medicare payment for physicians and other providers. A move away from the traditional fee-for-service payment model could produce savings that offset the net cost of repealing the SGR, while better aligning provider incentives with Medicare's goals of high-quality, efficient care.

The set of policies recently proposed by The Commonwealth Fund Commission on a High Performance Health System would replace the SGR formula with a broad-based policy that would:

-- Maintain Medicare physician fees at their current level (including the current 10 percent payment increase for primary care) through 2023;

-- Devote any new payments to supporting innovative payment and delivery system arrangements, such as accountable care organizations and patient-centered medical homes that offer coordinated, around-the-clock care;

-- Recalibrate relative values for overpriced and underpriced services;

-- Revise payments for other providers to better align payment and value;

-- Enhance payment for primary care providers in patient-centered medical homes and for high-cost care management teams;

-- Offer lower out-of-pocket costs for people with Medicare who designate and use primary care providers or, as appropriate, high-cost care management teams;

-- Provide higher compensation for providers who participate in innovative, high-value health systems and perform well; and

-- Make a single "bundled payment" for hospital episodes, including all physician services provided in the inpatient setting and related readmissions within 30 days, with postacute care also included in the bundled payment for selected conditions and procedures.

These proposals could produce estimated Medicare savings of $587 billion and federal savings of $788 billion over the next 10 years, more than offsetting the cost of repealing the SGR. They are part of a broader three-pronged systemwide strategy that would reform provider payment to support delivery system innovation, engage consumers by providing and encouraging high-value health care choices, and help health care markets reduce administrative costs by simplifying their policies and making them more consistent.

These policies would involve all stakeholders in taking action to improve health and lower costs. The Commission's recommendations would address the factors driving health care costs rather than cutting payments, reducing benefits, or restricting access to care for vulnerable populations. Although those strategies might achieve short-term savings, they will not solve the health system's long-term problems. Repealing the SGR and implementing payment reforms like those outlined here would be an important step in the right direction. The new CBO estimates should increase Congress' willingness to finally take on these important issues, and it should, indeed, strike while the iron is hot.

February 22, 2013: States Capitulate on Obamacare ... But Raise New Fears

Almost overnight, Florida has gone from being an ardent opponent of the federal health care law to a laboratory for an ambitious experiment under the law. If state lawmakers back Gov. Rick Scott's plan to expand Medicaid, it will be an experiment with a determinedly free-market twist. Scott's turnabout on the Medicaid expansion came a few hours after the federal government tentatively approved his application to fully privatize the federal- state program for the poor. That development has put health providers and consumers in a quandary: Most are elated that more than 1 million Floridians are in line to gain health coverage starting next year and that hundreds of millions in federal dollars will flow into the state to cover their medical services. But they're also concerned that that coverage will be delivered through managed care plans with a mixed record of providing quality care in Florida.

Consumer groups worry about whether the health plans will have enough providers, especially in rural areas, and whether they'll approve services in a timely way. Nursing home operators fear that for-profit insurers may try to move residents into lower-cost settings even when that may be unsafe. And doctors and hospitals say they're concerned about getting paid on time and about having trouble getting services approved for their patients. "Hospitals' experience with managed care varies plan to plan in the ability to get patients into the right level of care ... and plans paying claims efficiently and in a timely manner," said Bruce Rueben, president of the Florida Hospital Association.

Scott is not the first Republican governor to support the Medicaid expansion, which the Supreme Court made optional for states when it upheld the health care law last June. The governors of Ohio, Arizona, Michigan, Nevada, North Dakota and New Mexico preceded him. But Scott's decision is arguably more significant due to his state's size (19 million people), its large number of uninsured (4 million) -- and his outspoken opposition (he refused to acknowledge the law until the Supreme Court upheld its constitutionality.)

Florida's Past Experiments With Managed Care

If the Republican-controlled Legislature approves his plan when it meets next month, Florida would also become one of the largest to require virtually all recipients of Medicaid to enroll in private managed care plans which can limit which health providers patients can see. Other states that have put nearly all their Medicaid recipients in managed care include Arizona, Tennessee, Kentucky and Pennsylvania, according to Joe Moser, interim executive director of Medicaid Health Plans of America, a trade group. "It's a proven model and not a new concept," he said. About two-thirds of states already use managed care companies as a part of their Medicaid programs. Florida has done so for nearly two decades, with more than a third of its 3 million Medicaid recipients in the private health plans. These HMO-style plans get paid a set amount of money by the state to provide coverage, and the enrollees generally get care only from doctors, hospitals and other providers who have contracts with the plans. 

And in five counties, including those in Fort Lauderdale and Jacksonville, it has run a pilot program mandating most recipients be in managed care. Originally there were a number of problems, including patients having trouble getting access and patient confusion about the plans. In addition a number of plans dropped out because of fears about losing money.

A 2009 University of Florida study, however, showed the pilot, which did not include those needing long-term-care, helped save the state about $100 million a year without increasing consumer complaints. But the study could not determine whether the savings came from the plans providing less care or being more efficient. Under the tentative deal approved last week by the administration, virtually all Medicaid recipients would have to enroll in such a plan, including more than 100,000 living in nursing homes and those receiving long-term-care services at home and in community-based settings. "People have a right to be concerned about quality of managed care because it does not have a strong track record in Florida," said Joan Alker, co-executive director of the Georgetown University Center for Children and Families.

Another example that critics cite is Wellcare Health Plans, Florida's largest Medicaid plan, which last year agreed to pay more than $137.5 million to the federal government and nine states, including Florida, to settle accusations that it bilked government health programs and systematically dumped patients with expensive health needs. The Tampa-based company never lost its state Medicaid contracts. But Republican lawmakers who control the legislature say they have addressed past shortcomings with better oversight of managed care companies, increased reimbursement for doctors and more stringent penalties, including fining plans up to $500,000 if they drop out.

Scott, a former hospital executive who ran hospital giant HCA, [Jeanne's Note: HCA later settled Medicare fraud claims brought against it by the federal government, paying over $1 billion in restitution and penalties.  The HCA fraud was committed during Scott's tenure as CEO, but he left the company without being charged before the final settlement, taking with him more than $200 million in a "golden parachute." Somehow the people of Florida, in the 2010 hysteria about government spending and budget deficits, decided he should still be their governor and he was giving the keys to the state treasury. His current approval and popularity ratings in Florida show that the state's electorate is beginning to figure out that they elected a crook.] ... said paying managed care companies fixed fees helps the state budget by making costs more predictable and also can improve care because the state can hold companies accountable. Florida's Medicaid program costs the state $21 billion a year.

The managed care industry says it can improve care and lower costs by making sure patients get preventive services and have care overseen by a primary care doctor. "We will bring the benefits of coordinated care to all low-income Floridians and give them access to a primary care medical home, comprehensive care management, and disease management programs," Moser said. But when all is said and done, Floridians (and the rest of America watching) should remember that just four companies dominate Florida's Medicaid managed care market -- Wellcare, Wellpoint, Centene and UnitedHealthcare -- which have 75 percent of enrolled recipients. All stand to gain thousands of new customers and millions in additional revenue. O