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Monthly Archives: October 2017
Cartoon – The Dangers of Looking at Things a Different Way
Cartoon – Drawing the Line on Unethical Behavior
What’s Causing America’s Rural Health Insurance Crisis?
Over recent years, numerous rural health insurance markets have teetered on the brink of collapse. Rural areas have long posed a special challenge to health care policymakers, but a poorly-designed system of subsidies for rural hospital care has turned this into a crisis. It has fostered a rural hospital market structure that has crippled the ability of private insurers to negotiate reasonable payment rates, without fully securing the provision of essential care. By refocusing federal assistance on emergency care, it should be possible to restore rural insurance markets to health, while improving the affordability and access to care available to residents.
Warren Buffett once famously observed that “you only find out who is swimming naked when the tide goes out.” As the Affordable Care Act’s reforms have placed the nongroup market for health insurance under acute strain, it is rural areas that have been most exposed. Of 650 counties that have only a single insurer offering plans on their exchange, 70 percent are rural. For Medicare Advantage, despite total revenues roughly twice as large as the individual market, the situation is even worse—with 140 (mostly rural) counties lacking private insurance coverage options altogether.
It is more challenging to deliver healthcare services in sparsely populated areas. Small communities are unable to support full-time physicians for many medical specialties, and the fixed costs of multi-million-dollar hospital equipment cannot be spread across so many patients. As only 24 percent of rural residents can reach a top trauma center within an hour, rural areas suffer 60 percent of America’s trauma deaths, despite having only 20 percent of the nation’s population.
During the 1990s, economic pressures forced 208 rural hospitals to close. As a result, Congress established the Flex program to boost Medicare payments to isolated rural hospitals. Facilities designated as Critical Access Hospitals under the Flex program were intended to be more than 35 miles by major road from other facilities, but states were allowed to waive that requirement. As a result, the number of such hospitals grew from 41 in 1999 to more than 1,300 in 2011 – covering a quarter of U.S. hospitals, before Congress eliminated the states’ waiver power. By that time, 800 facilities exceeding the 35-mile requirement had been designated as CAHs, and these were grandfathered in.
What makes CAH status so attractive to hospitals? Instead of being paid standard Medicare rates for services, CAHs are allowed to claim reimbursement for whatever costs they incur in the delivery of covered inpatient, outpatient, post-acute and laboratory services to Medicare beneficiaries. Medicare pays more to facilities with the most expensive cost structures and eliminates incentives to control expenses – encouraging all to increase spending on new infrastructure and equipment.
Eighty-one percent of CAHs now have MRI scanners, for which they bill Medicare an average of $633 per scan—double the normal fee schedule rates. From 1998 to 2003, payments per discharge for acute care at CAHs rose by 21 percent, while post-acute care costs per day almost quadrupled. This upward pressure on costs has compounded over time: The longer a hospital has been a CAH, the more its costs have grown.
To check the capacity of CAHs to inflate their overheads, Medicare rules limit them to 25 beds. This has transformed the rural hospital landscape. In 1997, 85 percent of rural hospitals had more than 25 beds; by 2004 only 55 percent did. This makes it very difficult for the best-managed and most cost-effective facilities to win market share and has eliminated whatever competitive forces may have constrained costs. Nonetheless, excess capacity remains enormous: occupancy rates were only 37 percent in small rural hospital in 2014, compared with 64 percent in urban hospitals. Insurers covering care at such facilities must pay for equipment that is often unused and skilled physicians who spend much of their time idle.
Medicare Advantage (MA) plans have been hit hardest by this arrangement. MA plans usually attract enrollees by providing supplemental benefits and reduced out-of-pocket costs, funded by preventing unnecessarily costly hospitalizations. But, as CAHs are able to claim unconstrained reimbursement for Medicare beneficiaries directly from the government, they have little reason to agree to reasonable fees with MA plans, who may constrain their claims or steer enrollees to cheaper sites of care. Even under relatively loose network adequacy requirements, MA plans can, therefore, be effectively locked out of states dominated by CAHs. While 56 percent of Medicare beneficiaries in Minnesota are enrolled in MA plans, only 3 percent of those in Wyoming and 1 percent in Alaska are covered.
Low volumes and the absence of competition have also resulted in a lower quality of care. CAHs are more poorly-equipped than other hospitals, fall short on standard processes of care and have higher 30-day mortality rates for critical conditions. As a result, patients are increasingly willing to travel longer distance for treatments, with rural residents receiving 48 percent of elective care beyond their local providers. This bypass of rural provider networks is particularly common for surgeries on eye, musculoskeletal and digestive systems and for complex procedures more generally.
Although CAH status gives each hospital an average additional $500,000 of revenues, falling volumes of inpatient procedures and the increased costs entailed by this arrangement nonetheless leaves many facilities struggling. According to the National Rural Health Association, 55 rural hospitals closed between 2010 and 2015, while 283 were on brink of closure.
Can the $2 billion total annual cost of additional hospital subsidies provided by the Medicare Flex program not be better spent to support essential care in rural areas?
MedPAC, the agency established by Congress to advise it on Medicare payment policy, has argued that CAHs are “not the best solution”, as “many small towns do not have the population to support efficient, high-quality inpatient services.” MedPAC has proposed that Congress provide lump-sum payments to cover the overheads needed to provide 24/7 emergency care at geographically isolated outpatient-only facilities and suggested that Medicare reimbursement be extended to care provided by standalone emergency departments.
This would focus subsidies to secure emergency services, which must be delivered locally, while leaving elective care to be located efficiently according to market demand. Such a reform would give emergency rural hospital care a firmer financial foundation while restoring payment rules for elective care that would make it possible for insurers to re-enter the rural marketplace.
Gallup: Uninsured rate climbs to 12.3% in Q3
http://www.healthcaredive.com/news/gallup-uninsured-rate-climbs-to-123-in-q3/507951/
Dive Brief:
- The share of U.S. adults who lack health insurance inched up 0.6 percentage points to 12.3% in the third quarter of 2017 over the previous quarter, a new Gallup poll shows.
- The uninsured rate — 1.4 points higher than at the end of last year (3.5 million more Americans) — is now the largest since the 2014 fourth quarter when it was 12.9%.
- The biggest decline is among individuals with self-paid plans, which fell 1.3 points to 21.3% since the end of 2016. The poll — part of the Gallup-Sharecare Well-Being Index — draws on interviews with 45,000 U.S. adults between July 1 and Sept. 30.
Dive Insight:
The numbers are somewhat alarming given the record low 10.9% uninsured rate in the second half of last year. Still, the current rate is well below the 18% high seen in Q3 2013, before the Affordable Care Act’s (ACA) insurance exchanges and individual mandate took effect.
After adults with self-paid plans, the biggest change is among Americans with Medicare coverage, down 0.5 percentage points to 7.1%.
Factors contributing to the recent rise in uninsured, according to Gallup, include the lack of competition and rising premiums as payers exit the exchanges, and uncertainty about the ACA’s future.
With President Donald Trump and Republican lawmakers attempting to sabotage the ACA, the number of uninsured is likely to continue to rise. Earlier this month, Trump signed an executive order loosening health plan benefit requirements and said he would discontinue cost-sharing paymentsto insurers. The combined moves will undermine the exchanges and allow payers to offer skimpier plans with more out-of-pocket costs.
Congress also let pass it Sept. 30 deadline for reauthorizing the Children’s Health Insurance Program (CHIP), which provides coverage for nearly 9 million children. While Congress has vowed to pursue legislation, states are concerned a delay in reauthorization could cause federal funds, which pay for most of the program, to run dry.
The Gallup findings are somewhat in line with a recently released National Center for Health Statistics survey, which found the percentage of all uninsured Americans dropped to 8.8% in the first quarter of this year versus a year ago. Among adults between 18 and 64, the uninsured rate was 12.1%, 5.3% of children were uninsured.
Hospitals, many of them already struggling, are bracing for more uncompensated care as Trump and Republicans angle to roll back Medicaid expansion. A new formula for calculating uncompensated care payments is also fueling industry concerns. The formula, part of the Medicare Inpatient Prospective Payment System, would increase disproportionate share hospital payments to $6.8 billion, or about $800 million more than in fiscal year 2017, but the American Hospital Association has called the worksheet used to calculate the payments confusing and not always accurate.
In addition, the CMS has said FY2018 uncompensated care payments for all hospitals will be $2 billion below the current level. Between 2018 and 2025, uncompensated care payments are expected to decline by $43 billion.
AMA: Nearly 70% of payer markets ‘highly concentrated’
http://www.healthcaredive.com/news/ama-nearly-70-of-payer-markets-highly-concentrated/507916/
Dive Brief:
- A new American Medical Association (AMA) report found that one health insurer has at least a 50% market share in 43% of metropolitan areas. Nearly 90% of markets have at least one insurer with a 30% or greater market share.
- Anthem, a major Blues payer and one of the largest insurers in the country, had the largest geographic footprint. The payer had the highest market share in 82 metropolitan areas.
- The report found that 69% of markets are “highly-concentrated.”
Dive Insight:
The AMA study looked at where payer consolidation “may cause anti-competitive harm to consumers and providers of care.”
The authors said market concentration is a “useful indicator of competition and market power” and is an area the U.S. Department of Justice and Federal Trade Commission analyze when evaluating proposed mergers.
The annual report found a further consolidation of markets. The percentage of markets with one dominant insurer increased by 8% over the past two years.
Consolidation of insurers can affect premiums and reimbursements. A recent Health Affairs report found mergers involving hospitals, providers and payers resulted in insurers achieving more bargaining power to reduce provider prices in highly concentrated markets. That report said hospital admission prices were 5% lower in highly consolidated provider and insurer markets compared to those that are not as dense.
The AMA report warned along a similar theme. “We find that the majority of U.S. commercial health insurance markets are highly concentrated. These markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care,” according to the report.
The AMA said major mergers like Anthem-Cigna and Aetna-Humana are reasons why the organization conducts the annual report. Neither merger ultimately happened, but they would have further consolidated the payer market.
The AMA warned about further consolidation. “Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers between health insurers. Given the uncertainty in predicting the competitive effects of consolidation, some mergers that are allowed cause competitive harm,” according to the report.
Anthem’s growing market share comes as the payer is creating policies that attempt to bring down health costs by pushing services away from hospital inpatient settings. Anthem announced this year that it won’t reimburse for emergency department visits deemed unnecessary and will no longer pay for MRIs and CT scans at hospitals in 13 states unless the tests are an emergency.
Given Anthem’s footprint, the payer’s new policies may mean other payers competing in the same markets will follow suit.
EHRs Play Role in More Malpractice Claims
There was a continuous increase over the past decade in malpractice claims in which the use of EHRs contributed to patient injury, says a new study.
As EHR usage grows more widespread, so too does the technology’s role in malpractice claims, finds a new study.
The Doctors Company, a physician-owned medical malpractice insurer, found a continuous increase over the past decade in malpractice claims in which the use of EHRs contributed to patient injury.
From 2007 through 2010, there were just two claims in which EHRs were a factor. From 2011 through December 2016, however, that number skyrocketed to 161.
David B. Troxel, MD, study author and medical director at The Doctors Company, noted in a statement that the EHR is typically a contributing factor in a claim, rather than the primary cause.
The Doctors Company says this is its second study of EHR-related claims.
Its latest research compares 66 claims made from July 2014 through December 2016 with the results of the first study of 97 claims from 2007 through June 2014.
Compared with the earlier research, the new study shows that system factors that contributed to claims increased 8%. These factors include things like technology and design issues, lack of integration of hospital EHR systems, and failure or lack of alerts and alarms.
On the other hand, user factors, such as copy-and-paste errors, data entry errors, and alert fatigue, decreased 6%.
Internal medicine, hospital medicine, and cardiology showed marked decreases among specialties involved in claims, while orthopedics, emergency medicine, and obstetrics/gynecology showed increases, the study found.
The study also notes that hospital clinics/doctors’ offices remain the top location for EHR-related claim events.
Adoption of EHRs has been relatively fast. Data released last summer showed that only 4% of U.S. hospitals didn’t use EHRs. The Doctors Company study notes that the technology “has great potential to advance both the practice of good medicine and patient safety.”
“However, there are always unanticipated consequences when new technologies are rapidly adopted—and the EHR is no exception,” the study concludes.
Sometimes, when you’re responsible for others, it’s your job to let them be unfair to you
Sometimes, when you’re responsible for others, it’s your job to let them be unfair to you
When I was an intern, in one of the first months of my residency, I walked into a patient room to see a child who was being admitted to the hospital. I had barely closed the door before the child’s mother started yelling at me. She was angry that they’d been waiting so long. She was angry because she felt like her child had been mishandled before admission. She was angry that he was in pain, and that no one had given him anything for it.
I was stunned. I had literally only learned about this patient five minutes before I had walked in the room. It had taken me only that amount of time to cross the hospital to see them. I started to defend myself, saying that it was unfair that she was angry at me. None of this was my fault.
This… did not defuse the situation. She lost it on me, screaming that we’d screwed up, that she was tired of being jerked around, and she wasn’t going to listen to excuses. I, being an idiot, tried to argue further. After all, she was blaming me for things I couldn’t control. Meanwhile, her child was in pain and crying in the bed.
I took a patient history as best I could, did a cursory exam, and left to place orders. Then I went to talk to my senior resident. I relayed to him about how ridiculous I thought it was that this mother treated me this way. I went on and on about how unfair it was. I said, “I try so hard to be a good doctor. I don’t understand why she was so unhappy with me.”
He said something which stuck with me, many years later. “She’s got a kid in the hospital, and you’re worried that she doesn’t like you?”
This poor woman was probably panicked out of her mind. She didn’t know what was wrong with her son. She felt like doctors had been screwing up left and right. Her child was crying, in pain, and she couldn’t make it go away. Of course she was angry; of course, she had to take it out on someone.
It was my job to be the receptacle for that anger. Over the course of my (limited) clinical practice, I have let countless parents yell at me. Almost every single time, I thought they were wrong on the facts, but I didn’t care. The only way I could help them was to let them get out their frustration. I’m a big boy. I’m a doctor. I can handle it.
This lesson has served me well as a parent, too. Many times, my children have been frustrated by school, by friends, or even by me or my wife. They snap. I could choose to fight with them, to prove to them that they’re wrong and I’m right. I could “win”. But I know I’ll lose in the end. Because sometimes people are just angry or upset, and they need to vent. I’m their dad. It’s my job. We’ll settle the facts at a later time. The world won’t end in the meantime because I “lost” an argument.
I’ve been watching a lot of news recently where people feel the need to fight. To respond. To be “right”. I don’t know who coined the phrase, “Do you want to be right, or do you want to be happy?” but it’s a mantra in our house. I try very, very hard in my personal life to make it the latter.
When you hold the power, sometimes you have to let others unload on you. It’s the only way to help some people; it’s all they have left. If you can’t handle that, don’t ever put yourself in the position of being responsible for other people’s lives. This applies to more than just medicine, of course.
How Well Does Insurance Coverage Protect Consumers from Health Care Costs?
Abstract
- Issue: The United States has made historic progress on insurance coverage since the Affordable Care Act became law in 2010, with 20 million fewer people uninsured. However, we must also measure progress by assessing how well people who have insurance from all coverage sources are protected from high health care costs.
- Goals: To estimate the number and share of U.S. insured adults who are “underinsured” or have out-of-pocket costs and deductibles that are high relative to their incomes.
- Method: Analysis of the Commonwealth Fund Biennial Health Insurance Surveys, 2003–2016.
- Findings: As of late 2016, 28 percent of U.S. adults ages 19 to 64 who were insured all year were underinsured — or an estimated 41 million people. This is more than double the rate in 2003 when the measure was first introduced in the survey, and is up significantly from 23 percent, or 31 million people, in 2014. Rates climbed across most coverage sources, and, among privately insured, were highest among people with individual market coverage, most of whom have plans through the marketplaces. Half (52%) of underinsured adults reported problems with medical bills or debt and more than two of five (45%) reported not getting needed care because of cost.
Background
HENRY KOTULA 