Tag Archives: Medicare

The value of hospitals’ tax exemptions

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http://www.aha.org/content/17/benefit-of-tax-exemption.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=health-care

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The American Hospital Association released a report last week that said the benefits that not-for-profit hospitals provide to their local communities far outweigh foregone federal tax revenue. But Axios’ Bob Herman talked to some experts who said the AHA’s report has flaws and omissions that exaggerate hospitals’ community roles and understate the power of their tax exemptions.

  • The AHA did not account for the giant tax break hospitals get on their property, “which is just a joke,” said Craig Garthwaite, a health economist at Northwestern University.
  • “Exclusion of property taxes would be a very major problem,” added Gary Young, a health policy professor at Northeastern University who has studied tax exemptions for not-for-profit hospitals.
  • Calculating shortfalls from Medicare as a community benefit also raises a red flag. For-profit hospitals that pay taxes treat Medicare patients. The IRS doesn’t acknowledge Medicare shortfalls as a community benefit.
  • Plus, research shows hospitals often lose money from Medicare because of their high fixed costs and inefficiency, not because payments are too low. “That’s really just trying to get that (community benefits) number as high as possible,” Garthwaite said.

AHA’s response: Mindy Hatton, the AHA’s top lawyer, responded with a statement to Axios. The report did not include property tax values, she said, because the analysis only covered federal exemptions, which “Congress has jurisdiction over.”

Senate Budget Won’t Let GOP Pursue Full Obamacare Repeal

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https://www.bloomberg.com/news/articles/2017-09-29/senate-budget-allows-1-5-trillion-tax-cut-not-full-aca-repeal

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Senate Republicans unveiled a fiscal 2018 budget resolution Friday that they intend to use to push through as much as $1.5 trillion of tax cuts in the coming months, but it won’t allow the GOP to pursue a full repeal of Obamacare.

The budget proposal would still allow Republicans to pursue a much narrower attack on the Affordable Care Act, including repealing the individual mandate to purchase coverage. The resolution also would let the GOP use the fast-track process to open up drilling in the Arctic National Wildlife Refuge.

The budget, authored by Senate Budget Chairman Mike Enzi, forecasts a balance in nine years through $5 trillion in largely unspecified spending cuts. Unlike the House budget proposed in July, Enzi’s blueprint doesn’t call for cuts to Medicaid or a partial privatization of Medicare.

“A pro-growth tax plan will move the U.S. economy forward and help to produce better jobs and bigger paychecks for every American,” Enzi, of Wyoming, said in an emailed statement.

The Senate draft is to be voted on by the Budget Committee next week, with floor votes planned later in October and a conference to resolve differences with the House after that. The House plans a floor vote on its budget plan next week.

Tax Cut

Once in place, the budget resolution would allow Republicans to bring up a tax-cut bill that would increase deficits by as much as $1.5 trillion, compared with a Congressional Budget Office baseline. Under the fast-track process, the GOP-controlled Senate could pass the proposal with no Democratic votes.

The budget sets a target for the Senate Finance to report back with its draft tax bill by Nov. 13.

“The Senate budget resolution drafted by Budget Committee Chairman Mike Enzi is a critical step to advance President Trump’s agenda to provide tax relief for the middle-class and unleash economic prosperity for all Americans,” said White House budget director Mick Mulvaney in a statement. “I urge the Senate to pass this resolution and come to a swift agreement with the House so President Trump can sign America-first tax relief into law this year.”

Senate Democratic leader Chuck Schumer of New York said the GOP plan would “blow a huge hole in the deficit and stack up debt, leading to cuts in programs that middle-class Americans rely on.”

Individual Tax Rate

President Donald Trump and Republican leaders announced a tax-cut plan Wednesday that would cut the top individual rate to 35 percent from the current 39.6 percent. It would let Congress decide whether to create a higher bracket for those at the top of the income scale. The rate on corporations would be set at 20 percent, down from the current 35 percent. Under Senate rules, any tax cuts that increase the deficit would have to expire in 10 years because the budget process can’t be used for long-term deficit increases.

The provision making it easier for Congress to allow oil and gas drilling in part of the Arctic National Wildlife Refuge was sought by Alaska Republican Dan Sullivan. Under the proposal, royalties from oil and gas production in the wildlife refuge would be raise revenue that could help offset at least $1 billion in tax cuts over a decade.

The proposal’s instructions to the Finance Committee could allow a partial repeal of Obamacare, although panel Chairman Orrin Hatch has said he will keep that separate from a tax overhaul. Republican leaders have said they won’t try again on the health-care law until fiscal 2019.

Balanced Budget

When Republicans attempted to use the 2017 budget process to repeal Obamacare earlier this year, they didn’t provide a 10-year plan for reducing the deficit.

The new Senate plan proposes a balanced budget within nine years, while leaving it to other committees to figure out how to achieve that. The proposal calls for $4.8 trillion in spending cuts over 10 years and $1.635 trillion in revenue losses, including the tax cuts. Balance by 2026 is achieved by assuming $1.2 trillion in economic growth, in part due to the tax cuts. Enzi claims to achieve a $197 billion surplus in 2027.

The Republican assumptions of robust economic benefits from the budget were called into question by a separate CBO analysis. CBO predicted that the budget would reduce economic growth in the first two years and slightly increase it in later years.

CBO estimated that annual real GDP growth in the first two years would average 1.3 percent, down from an average of 1.6 percent in CBO’s baseline. In later years, real GDP growth would be 2.0 percent, compared with 1.9 percent in the CBO baseline.

The budget, unlike the one proposed by Trump in May, would hold defense spending at the current budget cap instead of the president’s proposed $489 billion defense increase over 10 years. Non-defense discretionary appropriations — which fund domestic agencies like the Agriculture Department and National Institutes of Health — would be cut by $632 billion over 10 years compared with $1.6 trillion in Trump’s budget request.

While the Trump and House budget proposals contain a number of nonbinding policy suggestions to carry out their spending cuts, Senate Republicans — weary of policy infighting — are keeping things vague.

Medicare, Medicaid

The House budget seeks to make $203 billion in cuts in entitlements such as Medicare, Medicaid and food stamps, and it could be used to fast-track changes to the Dodd-Frank financial law. The Senate plan avoids those options.

The Senate proposal does allow adjustments to increase the defense spending caps. It also urges senators to revise the Children’s Health Insurance Program, improve management of wildfire-prevention funding, prevent private-pension bailouts and improve services to veterans.

The budget resolution doesn’t address Social Security, which will run a trillion-dollar-plus deficit in the coming 10 years. In the past, Republicans have sought to balance a “unified budget” that includes the program. This time, they are keeping it “off-budget.”

CBO says that without the Social Security accounting move, Enzi’s budget would never balance and would show a $424 billion deficit in 2027.

The nonpartisan Committee for a Responsible Federal Budget said in a statement it prefers the House budget. “We encourage the Senate to look to the House Budget Committee, which passed a budget calling for revenue-neutral tax reform and at least $200 billion of mandatory spending cuts on top of that,” it said.

Dynamic Scoring

The Senate plan renews authority for the CBO and Joint Committee on Taxation to use so-called dynamic scoring when evaluating bills — a move allowing lawmakers to assume that tax cuts will cause economic growth that would offset some of the revenue loss.

And it changes several rules to allow senators to rush a tax bill through, including abolishing the need for a CBO analysis at least 28 hours before a vote.

The Senate plan avoids other tricks, though. Enzi included provisions to keep appropriators from using phantom cuts known as “changes to mandatory programs” to offset discretionary spending increases.

The chairman also rejected pressure from some lawmakers to use a baseline number for tax revenue that would allow $450 billion in additional tax cuts. Instead, he stayed with the baseline used by the CBO.

How investing in public health could cure many health care problems

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http://theconversation.com/how-investing-in-public-health-could-cure-many-health-care-problems-84256?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%201%202017%20-%2084576980&utm_content=Latest%20from%20The%20Conversation%20for%20October%201%202017%20-%2084576980+CID_49b12b4a2a39e7f173235a40290664ab&utm_source=campaign_monitor_us&utm_term=How%20investing%20in%20public%20health%20could%20cure%20many%20health%20care%20problems

Now that the Cassidy-Graham bill has been pulled, it’s a good time to think about concrete ways to improve health and health care in our country. Despite advances in medicine, U.S. health care spending grew to US$3.2 trillion in 2015, or 17.8 percent of the nation’s gross domestic product. To contain health care costs, the U.S. needs to invest in strengthening the public health system and reconsider approaches to making all Americans healthier.

Making Americans healthier should not be a partisan issue. Conservatives and progressives alike should agree on the importance of keeping Americans healthy – both on principled and financial grounds. The sicker the American people, the more expensive their care, and much of that cost will inevitably be borne by Medicare and Medicaid. Yet major challenges loom.

As the Dean of Columbia University’s Mailman School of Public Health, I have dedicated my career to the health of populations, using science and evidence to transition to a world where health and health care are collective priorities for all. My research and that of others suggests that this situation can be improved, but it will require a major national strategy and commitment to invest in public health – one that can be highly cost-effective.

Just the facts

Take, for example, the toll of chronic disease in the U.S. As of 2012, about half of adult Americans were living with one or more chronic health conditions, according to the Centers for Disease Control and Prevention, and one in four adults had two or more. Treating people with chronic diseases accounts for most of our nation’s health care costs. Eighty-six percent of the nation’s annual health care expenditures are for people with chronic and mental health conditions.

This problem will only grow as the U.S. population increases. And the census projects that the population will increase by 98 million between 2014 and 2060.

At the same time, America’s crumbling infrastructure is putting many Americans’ health at risk. The country’s drinking water systems, which are foundational to health, received a D grade on the 2017 Infrastructure Report Card of the American Society of Civil Engineers. Hazardous waste management and wastewater treatment earned only D+ grades.

The connection between health and infrastructure is strong: Infrastructure greatly affects access to healthy lifestyles. While access to clean drinking water and waste treatment are paramount, there are other examples, too.

Sidewalks and bike lanes encourage physical activity; public parks provide space for exercise and rejuvenation; and public transit is crucial to getting people out of cars, encouraging walking and, of course, reducing pollution and congestion. Subways and buses also enable older adults to reach needed services and remain in their homes longer.

Improvements to infrastructure are typically one-time expenses with recurring benefits. For example, one new sidewalk benefits an entire generation of walkers and runners. Research shows that every $1,300 New York City invested in building bike lanes in 2015 provided benefits equivalent to one additional year of life at full health over the lifetime of all city residents.

Other studies also have shown that preventing illness is far less expensive than paying for treatment. Trust for America’s Health estimates that “an investment of $10 per person per year in proven community-based programs to increase physical activity, improve nutrition, and prevent smoking and other tobacco use could save the country more than $16 billion annually within five years. This is a return of $5.60 for every $1.” With ever-rising health care costs, how can we overlook such opportunities?

Prevention policies and cessation help

The focus of American health care and health-related research needs to be shifted to include prevention, not just treatment. The “Cancer Moonshot,” which has strong bipartisan support, is a vital step in this direction, providing $1.8 billion in funding over seven years.

Cancer prevention must be a high priority, and the success of this effort could inspire a national consensus around future commitments to tackle other diseases and conditions.

Another prevention priority should be healthy aging. Today there are more than 46 million Americans aged 65 years or older; and by 2060, the number of seniors is expected to more than double, according to the Department of Health and Human Services and the Census Bureau. Promoting healthy aging for older Americans should, therefore, be paramount.

And healthy aging begins far earlier than 65 or 70. Obesity, in particular, may be determined in early childhood, even before. According to research by my Mailman School colleague Andrew Rundle, prenatal exposure to air pollution raises risk for obesity in childhood. His research shows that children who are overweight or obese at age five are more likely to be overweight or obese by age 50. We also know that these adults, and increasingly children too, will be more likely to have diabetes, high blood pressure and high cholesterol.

Efforts at smoking cessation should also be increased. The total economic cost of smoking in the United States is more than $300 billion a year in direct medical care and lost productivity, according to the CDC.

That’s more than we’re spending on the Cancer Moonshot annually.

Thinking big

America has extraordinary research capability. The NIH invests nearly $32.3 billion annually in medical research for the American people. Targeted cancer therapies, for instance, are the focus of much anticancer drug development, according to the National Cancer Institute. Precision Medicine is a top priority at the NIH and other research agencies. Even at $32 billion, Americans are investing in the NIH only 1 percent of what we spend on health care annually. The U.S. should build its advantage by increasing research funding to enhance the potential of breakthroughs in preventing known diseases as well as future threats.

There is reason for optimism. The good news stems in large part from the fact that chronic diseases and conditions – such as heart disease, stroke, cancer, Type 2 diabetes, obesity and arthritis – are among the most preventable of all health problems. At least half of these diseases could be prevented, and we are making strides. Death rates from heart disease, the No. 1 cause of death in America, have been reduced by nearly half, for instance, since 1990, according to the American Heart Association.

The growth and aging of the U.S. population and the epidemic of chronic diseases and conditions pose major challenges for America’s health care costs, no matter how health care is constructed. But a relentless focus on public health – and disease prevention in all its dimensions – is the best way to reduce pressure on costs.

Population Health Advisors

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Click to access Translating_Data_Analytics_into_Population_Health_Insights_BSW.pdf

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Health insurers working the system to pad their profits

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https://www.publicintegrity.org/2015/08/17/17863/health-insurers-working-system-pad-their-profits

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Commentary: taking advantage of Medicare Advantage

One of the reasons the health insurance industry worked behind the scenes in 2009 and 2010 to derail Obamacare was the fear that changes mandated by the law would cut their Medicare Advantage profits. Medicare Advantage plans are federally funded but privately run alternatives to traditional fee-for-service Medicare.

Although the industry’s biggest trade group, America’s Health Insurance Plans, said repeatedly that insurers supported Obamacare, the group was secretly financing the U.S. Chamber of Commerce’s TV campaign against reform. Among the companies most concerned about the law were those benefiting from overpayments the federal government had been making to their Medicare Advantage plans since George W. Bush was in the White House.

Bush and other Republicans saw the Medicare Advantage program as a way to incrementally privatize Medicare. To entice insurers to participate in the program, the federal government devised a payment scheme that resulted in taxpayers paying far more for people enrolled in the Medicare Advantage plans than those who remained in the traditional program. The extra cash enables insurers to offer benefits traditional Medicare doesn’t, like coverage for glasses and hearing aids, and to cap enrollees’ out-of-pocket expenses.

When the Affordable Care Act became law in 2010, the payments to Medicare Advantage plans exceeded traditional Medicare payments by 14 percent. To end what they considered an unfair advantage for private insurers, and to reduce overall spending on Medicare, Democrats who wrote the reform law included language to gradually eliminate the over-payments.  So far, the 14 percent disparity has been reduced to 2 percent.  The final reductions are scheduled to be made next year.

Despite that decrease, the fears by Republicans and insurance company executives that the reductions would lead to a steady decline in Medicare Advantage enrollees have proved to be completely unfounded. In fact, the plans have continued to grow at a fast clip.

In March 2010, the month Obamacare became law, 11.1 million people were enrolled in Medicare Advantage plans—one of every four people eligible for Medicare. That was an increase from the 10.5 million Medicare Advantage enrollees in March 2009. Since then, Medicare Advantage membership has grown by more than 8 percent annually. Now 17.3 million—one in three people eligible for Medicare—are enrolled in private plans.

As Center for Public Integrity senior reporter Fred Schulte has written over the past year, many insurers have discovered that even though the overpayments are being reduced, they can boost profits another way: by manipulating a provision of a 2003 law that allows them to get additional cash for enrollees deemed to be sicker than average.

A risk-coding program was put in place by the government primarily because insurers were targeting their marketing efforts to attract younger and healthier—and thus cheaper— beneficiaries. Under the risk-coding program, insurers are paid more to cover patients who are older and sicker; the idea was to encourage the firms to cover those folks by offering a financial incentive. They get more money, for example, to cover someone with a history of heart disease than they do for someone with no such risk.  Last week Schulte uncovered whistleblower accusations that a medical consulting firm and more than two dozen Medicare Advantage plans have been ripping taxpayers off by conducting in-home patient exams that allegedly overstated how much the plans should be paid.

The Center for Medicare and Medicaid Services has refused to provide information that would enable taxpayers to know just how widespread fraud and abuse in the Medicare Advantage program might be. But CMS announced earlier this year that it will implement plans designed to make it harder for insurers to manipulate the risk scores. As you can imagine, insurers have howled and have put on a full court press to get CMS to scuttle those plans, but so far the agency says it intends to go forward. We’ll see.

This all matters to insurers because more and more of their revenue and profits are coming from the Medicare and Medicaid programs. When Aetna announced a few weeks ago that it planned to buy Humana, which has more than three million Medicare Advantage members—second only to UnitedHealthcare—Aetna and Humana executives said 56 percent of revenues from the combined company would come from the government programs.

Indeed, some of the firms would not be growing at all if it weren’t for their government business. When Aetna announced second quarter earnings earlier this month, the company noted that its membership in Medicare and Medicaid programs was up 8 percent over the same period last year. By contrast, its commercial membership was down from last year.

Despite that dip in commercial membership, Aetna surprised Wall Street with stronger profits than financial analysts had expected.

So don’t expect the Medicare Advantage program to wither on the vine because of Obamacare. If anything, it will continue to grow—as will the profits of the private insurers that participate in the program.

OIG: Acute care hospitals owe Medicare $51.6M, CMS agrees to provider clawbacks

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http://www.fiercehealthcare.com/finance/oig-medicare-overpayment-acute-care-hospitals-audit?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWmpSaVpqZGxPREF5TlRBMiIsInQiOiJCamZSYmt6YkZzc0FcL2J1NWFyaFBTRHdtT2Rwd3BKbnI0OGQ5RW1jWXhEcklUa2RYcjVOU2JhWEJXTFBuRlJEcnJRWXVXd0ROT0drZmF5WG00dkVYNFY2QmtMWk1BTUFXRmVtcmUwWVhHdnNKejA2dlZBMmhYbGVyVW9EazZtZTUifQ%3D%3D

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A new government report finds that Medicare improperly paid acute care hospitals for outpatient services they provided to patients who were inpatients at other facilities. And now Medicare wants the money back

The Centers for Medicare and Medicaid Services has agreed to claw back the $51.6 million and require hospitals to refund patient copays and deductibles.

The Department of Health and Human Services Office of Inspector General audited (PDF) Medicare payments made between Jan. 1, 2013, and Aug. 31, 2016, and found that in that window CMS made $51.6 million in improper payments to hospitals for outpatient services provided to patients who were inpatients at long-term care facilities, critical access hospitals, inpatient rehabilitation facilities and inpatient psychiatric facilities.

Medicare typically would not pay an acute care hospital for outpatient treatments for a patient who is an inpatient at a different facility, according to the OIG, and instead the services should be rendered through an agreement between the two facilities, with payments going to the inpatient provider.

In addition, Medicare beneficiaries were responsible for $14.4 million in coinsurance and unnecessary deductibles paid to the acute care hospitals, the OIG found.

“Medicare overpaid the acute care hospitals because the system edits that should have prevented or detected the overpayments were not working properly,” the OIG concluded.

“If the system edits had been working properly since 2006, Medicare could have saved almost $100 million, and beneficiaries could have saved $28.9 million in deductibles and coinsurance that may have been incorrectly collected from them or someone on their behalf.”

OIG made three recommendations to CMS to resolve this issue:

  1. Recover the $51.6 million in inappropriate payments.
  2. Have the acute care hospitals refund the patients’ $14.4 million in coinsurance and deductibles.
  3. Identify improper payments outside of the audit window, and recover those as well.

CMS has agreed to these recommendations, OIG said.

OIG conducted the audit as previous investigations showed Medicare made inappropriate payments for outpatient services for people who were inpatients at acute care hospitals, and the organization wanted to see whether the trend extended to other types of facilities.

Healthcare: It’s complicated

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http://www.theactuary.com/features/2017/07/its-complicated/

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It has been a little over seven years since the US began implementing healthcare reform at the national level, following the passage of the Patient Protection and Affordable Care Act (ACA), also known as Obamacare. However, the future of the law’s programmes has never seemed more uncertain now that the United States House of Representatives has passed legislation repealing and replacing many of the ACA’s key provisions.

While the ACA and the proposed replacement legislation are fundamentally different in their approaches to financing and regulating healthcare, they do have one thing in common: both are extraordinarily complicated.

Actuaries have had a front-row seat as healthcare reform has unfolded, and they are in a unique position to help address the challenges our complex system presents – whether that involves setting premium rates, calculating reserves, or just trying to explain healthcare policy to their Facebook friends. After all, actuaries were working to promote the financial stability of our complex healthcare system long before the ACA came along.

Even so, one might ask: Why is the American healthcare system so complicated? Does it have to be that way? Most stakeholders acknowledge that our current system has room for improvement, although opinions vary widely on what to do about that. In part, the complexity of our system is rooted in our history.

The healthcare system that we have today wasn’t formed in one fell swoop. Instead, it has been stitched together gradually over the past century by policymakers working to meet the challenges of their times. For example, the prevalence of employer-sponsored insurance was at least partly driven by price-wage controls implemented by the federal government in the 1940s during the Second World War, together with very favourable tax treatment. When the employer-sponsored market began to flourish, healthcare coverage became unaffordable for the non-working population – in particular, low-income workers, seniors, and disabled individuals – and the Medicare and Medicaid programmes were born. Currently, healthcare in the US is provided and funded through a variety of sources:

  • Employer-sponsored insurance – either self-funded by the employer or insured through a carrier
  • Individual major medical insurance – currently subsidised by the federal government for many individuals under the ACA
  • Medicare, Medicaid, and military health coverage – subsidised by federal and state governments and increasingly administered by privately managed care organisations
  • Other – for instance, the Indian Health Service, care provided to correctional populations, and uncompensated care provided to the uninsured.

 

It’s therefore not surprising that the policies being proposed today are an attempt to fix the problems we currently face, such as expanding access to affordable healthcare, reducing the cost of healthcare, or improving the quality of care received by patients.

However, our system has evolved in such a way that trying to implement a solution is like trying to solve a Rubik’s Cube – it is hard to make progress on one side without introducing new problems into other parts of the puzzle. For a Rubik’s Cube, successful solvers focus on both the local and global picture, and sometimes must make short-term trade-offs to achieve a longer-term solution. Unfortunately, the short-term nature of political pressures make it difficult to implement longer-term strategies for healthcare. Yet, we see many areas where actuaries can be instrumental in addressing the challenges presented by our complex healthcare system.

Complex times call for complex models

The ACA made sweeping changes that impacted almost every source of coverage listed above. The most profound changes, besides the expansion of Medicaid coverage, were the changes made to the individual and small employer health insurance markets. These already small markets were fractured into several separate pieces (grandfathered business from before the ACA became law, ‘transitional’ business issued before 2014, and ‘ACA-compliant’ business issued in 2014 and beyond). The only constant has been change, with many regulatory changes occurring each year (often after premium rates were set by insurers) and with the stabilisation programmes intended to mitigate risk during this time of change often paradoxically increasing uncertainty. This led some to question whether these markets were inherently too unpredictable to be viable, whereas others felt that the markets were finally starting to stabilise before the election changed everything.

Besides predictability problems caused by regulatory or political factors, two challenges facing health actuaries during these transitional years have been (1) the lag between when market changes are implemented and when data on policies subject to the new rules becomes available, and (2) the difficulty in predicting consumer behaviour in reaction to major changes in market rules such as guaranteed issue and community rating. How many of the uninsured would sign up? How price-sensitive would members be when they renewed their coverage each year? How will changes in other sources of coverage (such as Medicaid expansion) impact the individual market? How will potential actions by competitors affect an insurer’s risk?

Despite the daunting nature of these challenges, actuaries have, out of necessity, found ways to try to address them. For example, faced with the data lag problem, they explored ways to augment traditional claim and enrollment data with new data sources such as marketing databases or pharmacy history data available for purchase. Such sources can be used to develop estimates of the health status of new populations not previously covered by an insurer. Many actuaries also developed agent-based stochastic simulation models that attempted to model the behaviour of consumers, insurers and other stakeholders in these new markets. Such models continue to be used to evaluate the potential outcomes of future changes to the healthcare system, and will probably be essential should efforts to repeal and replace the ACA prove successful.

Information problems: what is a rational actor to do?

Most goods and services in the US have a price tag that consumers can use to ‘shop’ for the option that they feel gives them the best value for their dollar. Healthcare is different. If you ask how much a healthcare service will cost in the US, the answer is “it depends”. List prices such as billed charges for hospitals and physicians and average wholesale prices for pharmaceuticals are increasingly meaningless, given the enormous contractual discounts and rebates that typically apply. The same service may have wildly different prices depending on who is paying for it, and prices may not correlate well with either the clinical value the service provides to the patient or the actual cost to the healthcare provider who renders it. Layered on top of this complex foundation are the often arcane policy provisions that determine a member’s ultimate cost for a claim.

Moreover, even if a patient can determine the cost of treatment at different healthcare providers, making an informed choice often requires clinical knowledge the average person is unlikely to possess. Also, many of the most costly services are non-discretionary and often emergent in nature. In other words, even if a consumer wanted to shop they would be hard-pressed to do so.

All of this means that it is exceedingly hard for various stakeholders – patients, doctors, even insurers – to know the true cost of a service at the point of care, much less manage it. Yet a lot of effort has been spent in trying to better align cost incentives for providers and patients. Past efforts have often used crude methods, such as high deductibles paired with health savings accounts, to create incentives. Current efforts such as value-based insurance designs, which vary cost sharing based on a patient’s clinical profile, use more nuanced approaches to encourage patients to use high-value care. Moving from fee-for-service to value-based payment models for reimbursing healthcare providers has been a focus of both private and public payers in the US.

While such initiatives show promise, they come at the price of even more complexity – and it isn’t always clear that this price is worth paying. The proliferation of more complex benefit designs and provider contracting arrangements can exacerbate the price transparency problems that existed even in the relatively simple fee-for-service world.

Actuaries are well equipped to help insurers, providers and consumers navigate these waters. For example, repricing healthcare claims in an equitable way using actuarial techniques, such as comparing reimbursement rates with a standard fee schedule, is

an efficient way for providers and payers to evaluate cost levels consistently across contracts that may use very different reimbursement methodologies.

Actuaries also have a role to play in developing tools to support clinicians and consumers in understanding the financial dimensions of their healthcare decisions.

Technology: the cause of, and solution to, all our cost problems?

For better or worse, Americans seem determined to seek technological solutions to our health problems, even when lifestyle changes in diet and exercise habits might be just as effective.

Technological advances drive a significant portion of healthcare cost increases, and while many do result in profoundly valuable new therapies, some provide only marginal benefit over existing options at a significantly higher cost. Finding ways to leverage our love of technology to achieve health outcomes more cheaply would be a worthy goal, and one where an actuary could make a difference. Work to use machine learning (for example, in radiology), smarter medical devices, and other data-intensive methods to improve healthcare are still in their infancy, but show promise. From a policy perspective, actuaries could assist in designing novel approaches toward rethinking the incentives for clinical innovation, such as linking payment for new therapies to their clinical value relative to alternatives.

Will the US ever change its relationship status with healthcare from “it’s complicated” to something less ambiguous? In the near term, the answer seems to be “no.” But perhaps we can hope that – with a little help from actuaries – even a complicated relationship can be a good one.

Forgotten Heroes: Remembering Dr. Alvin Blount, Who Helped Integrate America’s Hospitals

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http://healthaffairs.org/blog/2017/09/01/forgotten-heroes-remembering-dr-alvin-blount-who-helped-integrate-americas-hospitals/

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Mortar rounds shook the bunker. The 8225th Mobile Army Surgical Hospital (MASH) was crammed with casualties—civilians, Americans, and KATUSAs (Korean Augmentation to US Army). The four surgical tables under the direction of its acting chief surgeon, Alvin G. Blount, often operated around the clock, doing as many as 90 surgeries during sleepless protracted engagements. Blount could shut out the mayhem and focus only on his patient’s needs, as if everything else in the world had stopped. His calm, gentle demeanor commanded respect. His was the first racially integrated MASH unit, and he was its first black chief surgeon. Blount received the Korean War Service Medal for these efforts and would later become part of a group of doctors that helped radically reform US health care. He died earlier this year, the last surviving member of the group that initiated that effort.

The stories of the Korean MASH units would become popularized in a book, a movie, and a popular television series called M*A*S*H that ran from 1972 to 1983 and still appears in syndicated reruns. Yet, in an apparent attempt to assure “historical accuracy,” the television series chose to eliminate the black surgeon that appeared in the book and movie version.

After the war, Blount returned to private practice in racially segregated Greensboro, North Carolina. His Howard University medical school mentor, Charles Drew had warned him, “you boys going south will have to sweat it out, but victory will come.” Despite the US Supreme Court’s 1954 ruling in Brown v. Board of Education of Topeka that separate was inherently unequal in education, “separate but equal” remained the law of the land for hospitals. The Hill-Burton Act of 1946 specifically permitted federal funding for the construction of the two white-only hospitals in Greensboro and made similar provisions for other Southern cities. Black physicians in Greensboro were excluded from medical staff privileges at these white hospitals, one of which was the Moses H. Cone Memorial Hospital, the most well-endowed hospital in the region. Segregation in hospitals remained for another decade as Blount and a few courageous colleagues engaged in a polite and seemingly fruitless struggle against a powerful, entrenched white establishment.

George Simkins, Jr., a dentist and aggressive activist, took charge of the Greensboro chapter of the National Association for the Advancement of Colored People (NAACP) in the early 1950s and sought the help of the NAACP Legal Defense and Educational Fund (LDF) to challenge the city’s segregated hospital system. But recruiting black physicians to join as plaintiffs proved difficult. Some were comfortable with the status quo, and most were concerned about damaging ties with white colleagues, who they relied on for help with their patients. Blount himself was reluctant, but he was close friends with Simkins and knew that the segregated system resulted in lower-quality care for his patients. Blount joined the lawsuit and helped Simkins recruit five other physicians to do the same. These five physicians, in addition to two black dentists, two black patients, Blount, and Simkins, made up the final list of 11 plaintiffs. Michael Meltsner, a young, white protégé of Thurgood Marshall, served as lead attorney.

The suit, filed in US District Court in 1962, argued that Greensboro’s two white hospitals, the Moses H. Cone Memorial Hospital and the Wesley Long Hospital, functioned as an “arm of the state,” having received a total of $2.8 million in federal Hill-Burton program funds. By remaining segregated, the hospitals violated the due process and equal protection clauses of the Fifth and Fourteenth Amendments of the US Constitution. Accordingly, the plaintiffs argued, the Hill-Burton law was unconstitutional because it provided federal funding for the construction of racially segregated institutions. As is customary with any case challenging federal law, the US attorney general was given the opportunity to defend the federal government. Surprisingly, however, Attorney General Robert Kennedy joined the plaintiffs, seizing the opportunity to push the administration’s stalemated civil rights agenda. Despite this unexpected support, the District Court dismissed the suit. The “victory” that Charles Drew had promised seemed increasingly distant.

Blount and his fellow plaintiffs, however, now found themselves at the beginning of a long and unpredictable journey to transform US health care. In a 3:2 decision in 1963, the US Court of Appeals of the Fourth Circuit ruled in favor of the plaintiffs. The hospital defendants appealed to the US Supreme Court, but in a rushed ruling, just days before the Senate began its longest debate on the Civil Rights Act of 1964, the Court chose to not review the lower court decision and let it stand. Title VI of the Civil Rights Act, the most likely provision to be eliminated to assure the bill’s passage, prohibited the provision of any federal funding to organizations that discriminated on the basis of race. By letting the Fourth Circuit decision stand, the Supreme Court effectively made Title VI the law of the land before it had even passed through the legislative branch.

Resistant to any federal interference in their organization, the executive committee of the board of the Moses H. Cone Memorial Hospital recommended to the full board that the hospital return its Hill-Burton funds to the federal government to relieve it of any obligation to desegregate. That recommendation was rejected. Nothing in the Court’s decision, of course, prevented other hospitals from choosing not to apply for Hill-Burton construction funds or from returning funds they had already received. There was also no provision in the law for federal enforcement for those hospitals that had already received federal money. The NAACP LDF or other parties could mount challenges against individual hospitals, but it would be a slow and costly process.

The Medicare legislation enacted less than a year later, however, changed the game. Hospitals could survive without Hill-Burton funds, but they could not “choose” not to be Medicare and Medicaid providers. No hospital would be certified as a Medicare provider without being fully compliant with concrete nondiscrimination requirements. Local civil rights groups whose members included hospital workers served as the final arbiters. Any lapses in enforcement by federal volunteer inspectors or subterfuge by the hospitals would not escape notice.

In less than six months, 6,000 hospitals became fully compliant. Thanks to Medicare, America’s hospitals went from being our country’s most racially and economically segregated institution to our most integrated. Almost all of the separate wooden bench waiting rooms and welfare wards disappeared. Patterns of use of services that had always been shaped by racial and economic privilege began, for the first time, to reflect actual medical need. Over the next 20 years, racial and economic disparities in infant mortality and life expectancy narrowed. In Greensboro, Blount became the first black surgeon to operate at Moses H. Cone Memorial Hospital. Yet, the events that propelled all of these changes have been almost forgotten. Only current political events in North Carolina and nationally have stirred some local reflection about that past.

A statue of Simkins was unveiled on the lawn of the Guilford County Courthouse in October 2016, near where he was jailed for trespassing in 1955 after trying to play golf with friends on the city-owned golf course. Only after his death was he honored as the city’s “Moses.”

In 2016, Blount, at age 94, was the only surviving plaintiff in the Simkins v. Moses Cone Hospital suit. He was still seeing a limited number of patients under the watchful eye of his loyal long-time practice manager, Martha Reid. His office on East Market Street was filled with memorabilia and memories of more than a half century of practice. In October, he was invited to a meeting at the regional nonprofit integrated health system that Moses H. Cone Memorial Hospital became. About 250 health care professionals and community leaders attended, along with Blount’s children. Dr. James Wyatt, a black surgeon and president of the Cone Health medical and dental staff, thanked Blount “for opening doors for me.” Cone CEO, Terry Akin, addressed Dr. Blount: “It seems to me, and to our medical and dental staff, that we needed to take the opportunity to apologize for our role in this chapter of our history and to honor these individuals for challenging us to be our best selves, and for their foresight and courage in changing America.” Cone donated $250,000 to a scholarship fund honoring Blount and the other plaintiffs that will provide support for minority students pursuing careers in health care. It will be administered by the Greensboro Medical Society, one of many local black medical societies across the country that played a key role in the hospital desegregation struggle. A month later, a historical highway marker was unveiled on North Elm Street adjacent to the Moses H. Cone Memorial Hospital, acknowledging the plaintiffs and their role in changing the nation’s hospitals.

Dr. Blount passed away on January 6, 2017, at Moses H. Cone Memorial Hospital after a brief illness. His family marked his passing with a quiet event at the small Episcopal church adjoining the North Carolina A&T State University campus, which served as an early organizing center for the lunch counter sit-in movement. “My life is my memorial,” he had told his practice manager. “No big casket or cemetery plot either—cremation. … Just be sure I’m dead before you burn me.”

His life was indeed his memorial. From caring for wounded soldiers in Korea to feeding arrested Dudley High School students after a lunch counter sit-in, Blount was an endless source of compassion and integrity. He and his wife lovingly raised seven children, and his youngest daughter, Gwen Blount Adolph, now a lawyer in New York, recently reflected on her father’s life: “My daddy was a gentle soul who wanted to do right by everyone.” She recalled the night the arm fell off her brother Alvin’s teddy bear, and he was inconsolable. “We all had this vivid memory of my dad taking needle and thread and operating on Teddy…. We all gathered around, as if it was an operating room. He was so patient, and it was so important to my brother. It was as if everything else in the world had stopped—that was Daddy.”

In these divisive times, it is too easy to be dismissive of the past and despairing about the future. The lives of Dr. Blount and the other Moses Cone plaintiffs tell us something different. They tell us that landmark pieces of social policy such as Medicare, when implemented fairly and compassionately, can promote justice and equality. And they tell us that the power to remedy injustices lies with individuals who are willing to challenge the status quo and further the cause of universal health care for all Americans.

What is a SNP?

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http://bettermedicarealliance.org/snps?utm_source=rollcallheadlines&utm_medium=email&utm_campaign=newsletters

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SNPs are a type of Medicare Advantage plan that are paid and regulated in the same way as other Medicare Advantage plans, but have the authority to provide specialized care to serve beneficiaries who are dually-eligible for Medicare and Medicaid, have certain chronic conditions, or receive long-term care in an institutional setting such as a Skilled Nursing Facility. In addition to providing all Medicare Part A and Part B benefits, SNPs must also exceed these core benefits by providing reduced cost sharing, individualized care plans, and other tailored benefits related to mental health, social services, and wellness.

Appeals court overturns ruling requiring HHS to clear Medicare appeals backlog by 2021

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http://www.beckershospitalreview.com/finance/appeals-court-overturns-ruling-requiring-hhs-to-clear-medicare-appeals-backlog-by-2021.html

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The U.S. Appeals Court for the District of Columbia on Friday overturned an order requiring HHS to clear its backlog of Medicare reimbursement appeals by the end of 2020.

On Dec. 5, 2016, U.S. District Judge James Boasberg granted a motion for summary judgment filed by the American Hospital Association in AHA v. Burwell — a lawsuit that centers on the Recovery Audit Contractor Program.

He ordered HHS to incrementally reduce the backlog of 657,955 appeals pending before the agency’s Office of Medicare Hearings and Appeals over the next four years, reducing the backlog by 30 percent by the end of 2017; 60 percent by the end of 2018; 90 percent by the end of 2019; and to completely eliminate the backlog by Dec. 31, 2020.

HHS filed a motion Dec. 15, 2016, asking the judge to reconsider his decision. HHS argued it would be impossible to reduce the appeals backlog on the schedule provided by the court without improperly paying claims, regardless of merit. In January, Judge Boasberg denied HHS’ motion for reconsideration.

In late January, HHS filed an appeal in the case, seeking to avoid the district court’s order enforcing the plan to clear the appeals backlog by the end of 2020.

On Friday, the appellate court sided with HHS.

Since HHS said it was impossible to lawfully comply with the district court’s order, the appellate court ruled it was “an error of law” and “an abuse of discretion” for the district court judge to order HHS to abide by the schedule to clear the Medicare appeals backlog.

“In sum, it was an abuse of discretion to tailor the mandamus relief without tackling the Secretary’s claims that lawful compliance would be impossible,” states the appellate court’s opinion.

The appellate court held that on remand the lower court should determine if compliance with the timetable to reduce the Medicare appeals backlog is impossible.