Tag Archives: Medicare

Can Paying for a Health Problem as a Whole, Not Piece by Piece, Save Medicare Money?

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Can Paying for a Health Problem as a Whole, Not Piece by Piece, Save Medicare Money?

Among the standard complaints about the American health care system is that care is expensive and wasteful. These two problems are related, and to address them, Medicare has new ways to pay for care.

Until recently, Medicare paid for each health care service and reimbursed each health care organization separately. It didn’t matter if tests were duplicated or if a more efficient way of delivering care was available — as long as doctors and organizations were paid for what they did, they just kept providing care the way they always had.

But ordinary people do not think this way. We focus on solving our health problem, not which — or how many — discrete health care services might address it. New Medicare programs are devised to more closely align how care is paid for with what we want that care to achieve.

One of these programs is known as bundled payments. Instead of paying separately for every health care service associated with a medical event, you pay (or Medicare pays, in this case) one price for the entire episode. If health care providers can address the problem for less, they keep the difference, or some of it. If they spend more, they lose money. Bundled payment programs vary, but some also include penalties for poor quality or bonuses for good quality.

Medicare has several bundled payment programs for hip and knee replacements — the most common type of Medicare procedures — and associated care that takes place within 90 days. This includes the operation itself, as well as follow-up rehabilitation (also known as post-acute care). In theory, if doctors and hospitals get one payment encompassing all this, they will better coordinate their efforts to limit waste and keep costs down.

Do bundled payments work? They certainly appear promising, at least for some treatments. But it’s important to conduct rigorous evaluations.

Previous studies for Medicare by the Lewin Group and other researchers suggest that Medicare’s Bundled Payments for Care Improvement program has reduced the amount Medicare pays for each hip and knee replacement.

But that doesn’t mean the program saved money over all.

One possible issue would be if, despite saving money per procedure, health care providers wastefully increased the number of procedures — replacing hips and knees that they might not otherwise. A related concern is if hospitals try to increase profits by nudging services toward patients who may not need a procedure as much as patients with more severe and more expensive conditions. An average joint replacement costs $26,000, split almost equally between the initial procedure and post-acute care. But more expensive cases can be $75,000 to $125,000 — a costly proposition for hospitals.

A recent study published in JAMA examined whether the volume of Medicare-financed hip and knee replacements changed in the markets served by hospitals that volunteered for a bundled payments program, relative to markets with no hospitals joining the program. It found no evidence that the bundled payment program increased hip and knee replacement volume, and it found almost no evidence that hospitals skewed their services toward patients whose procedures cost less.

“These results suggest bundled payments are a win-win,” said Ezekiel Emanuel, a co-author of the study. “They save payers like Medicare money and encourage hospitals and physicians to be more efficient in the delivery of care.”

But Robert Berenson, a fellow at the Urban Institute, urges some caution. “Studying one kind of procedure doesn’t tell you much about the rest of health care,” he said. “A lot of health care is not like knee and hip replacements.”

Michael Chernew, a Harvard health economist, agreed. “Bundles can certainly be a helpful tool in fostering greater efficiency in our health care system,” he said. “But the findings for hip and knee replacements may not generalize to other types of care.”

Christine Yee, a health economist with the Partnered Evidence-Based Policy Resource Center at the Boston Veterans Affairs Healthcare System, has studied Medicare’s previous efforts and summarized studies about them. (I and several others were also involved in compiling that summary.) “Medicare has tried bundled payments in one form or another for more than three decades,” Ms. Yee said. “They tend to save money, and when post-acute care is included in the bundle, use of those kinds of services often goes down.”

One limitation shared by all of these studies is that they are voluntary: No hospital is required to participate. Nor are they randomized into the new payment system (treatment) or business as usual (control). Therefore we can’t be certain that apparent savings are real. Maybe hospitals that joined the bundled payment programs are more efficient (or can more easily become so) than the ones that didn’t.

Another new study in JAMA examines a mandatory, randomized trial of bundled payments. On April 1, 2016, Medicare randomly assigned 75 markets to be subject to bundled payments for knee and hip replacements and 121 markets to business as usual. This policy experiment, known as the Comprehensive Care for Joint Replacement program, will continue for five years. The JAMA study analyzed just the first year of data.

“In this first look at the data, we examined post-acute care because it is an area where there is concern about overuse,” said Amy Finkelstein, an M.I.T. health economist and an author of the study. “In addition, prior work suggested that it’s a type of care that hospitals can often avoid.”

The study found that bundled payments reduced the use of post-acute care by about 3 percent, which is less than what prior studies found. “Those prior studies weren’t randomized trials, so some of the savings they estimate may really be due to which hospitals chose to participate in bundled payment programs,” Ms. Finkelstein said. Despite reduced post-acute care use, the study did not find savings to Medicare once the costs of paying out bonuses were factored in. The study also found no evidence of harm to health care quality, no increase in the volume of hip and knee replacements, and no change in the types of patients treated.

“Savings could emerge in later years because it may take time for hospitals to fully change their behavior, “ Ms. Finkelstein said. In addition, the program’s financial incentives will increase over time; bonuses for saving money and penalties for failing to do so will rise.

On the other hand, Dr. Berenson said, health care providers could figure out how to work the system: “In three to five years, we may see volume go up in a way that offsets savings through reduced payments for a procedure. We’ll wait and see.”

Medicare put its best foot forward by using a randomized design. Not only were the markets selected in a randomized fashion, but providers in those markets were also required to participate. Though common in medical studies, randomization is rare in health care policy, as is mandatory participation. Nearly 80 percent of medical studies are randomized trials, but less than 20 percent of studies testing health system change are. Organizations that would be subject to the experiments often strongly resist randomizing health system changes and forcing providers to participate.

Unfortunately, the randomization of the Comprehensive Care for Joint Replacement program will be partly compromised in coming years. The Centers for Medicare and Medicaid Services announced last year that hospitals in only half of markets under the program would have to stay in it. Participation is voluntary in the other half, and only one-quarter of hospitals opted in.

Going to a partly voluntary program will make it harder to learn about longer-term effects, Ms. Finkelstein said, and to get at the answers we’re seeking.

Bundled Payment Program Does Not Drive Hospitals to Increase Volume

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https://www.commonwealthfund.org/publications/journal-article/2018/sep/bundled-payment-program-does-not-drive-hospitals-increase?omnicid=EALERT1467649&mid=henrykotula@yahoo.com

Lower extremity joint replacement

The Issue

In 2013, the Centers for Medicare and Medicaid Services (CMS) introduced a voluntary program for hospitals called Bundled Payments for Care Improvement (BPCI). Under this alternative payment model, CMS makes a single, preset payment for an episode, or “bundle,” of care, which may include a hospitalization, postacute care, and other services. Evaluations of the program for lower extremity joint replacement surgery (e.g., a hip or knee replacement) have found that it reduced spending. But experts wonder if bundled payments could encourage hospitals to perform more surgeries than they would otherwise or to cherry-pick lower-risk patients. Commonwealth Fund–supported researchers explore these issues of volume and case mix in the Journal of the American Medical Association.The authors used Medicare claims data from before and after the launch of BPCI, comparing markets that did and did not participate in the program.

What the Study Found

3.8%

increase in mean quarterly market volume in non-BPCI markets after the program was launched

4.4%

increase in mean quarterly market volume in BPCI markets after the program was launched

  • Participation in the BPCI program was not significantly associated with an overall change in the volume of surgeries performed.
  • The mean quarterly market volume in non-BPCI markets increased 3.8 percent after the program was launched. For BPCI markets, the increase was 4.4 percent.
  • The analysis found only one change in case mix: patients who had previously used skilled nursing facilities were slightly less likely to undergo a lower extremity joint replacement surgery at a hospital participating in BPCI.

The Big Picture

Results from this study alleviate concerns that hospitals’ participation in voluntary bundles may increase the overall number of joint replacement surgeries paid for by Medicare. In particular, the savings per episode observed in prior BPCI evaluations are not diminished or eliminated by an increase in procedure volume. The findings do raise concerns: if patients with prior use of skilled nursing facilities are less likely to undergo procedures at BPCI-participating hospitals, perhaps it is because hospitals avoid them based on perceived risk. On the other hand, the authors note, these decisions could have been based on clinically appropriate factors, like risk of complications.

The Bottom Line

Hospital participation in a bundled care program did not change overall volume, thereby alleviating the risk of eliminating savings related to the program. In addition, participation was generally not associated with changes in case mix.

 

 

 

The health of 44M seniors is jeopardized by cuts to Medicare lab services

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PAMA

Image result for medicare lab cuts

The Protecting Access to Medicare Act (PAMA)

Congress passed the Protecting Access to Medicare Act (PAMA) in 2014 to help safeguard Medicare beneficiaries’ access to needed health services, including laboratory tests. Unfortunately, the U.S. Department of Health and Human Services (HHS) has taken a flawed and misguided approach to PAMA implementation. As a result of the Department’s actions, seniors will face an estimated $670 million in cuts to critical lab services this year alone, leaving the health of 57 million Medicare beneficiaries hanging in the balance.

PAMA cuts will be particularly burdensome to the most vulnerable seniors, such as those in skilled nursing facilities, those managing chronic conditions, and seniors living in medically underserved communities. The American Clinical Laboratory Association has raised significant concerns about the impact of Medicare lab cuts on seniors and their access to lifesaving diagnostics and lab services.

Learn more about the harm posed by these cuts on seniors here. Read the lawsuit ACLA has filed against HHS here.

WHAT’S AT STAKE

In 2016, seniors enrolled in Medicare received an average of

16 individual lab tests per year

Test tubes
People

80% of seniors

have at least one chronic disease and 77% have at least two—successful disease monitoring and management requires reliable access to routine testing

House

1 million

seniors are living in assisted living or skilled nursing homes

Hands

3.5 million

homebound seniors
rely on skilled home health care services

Map pin

An estimated

10 million

seniors live in rural areas

LACK OF ACCESS TO LAB TESTS

can result in undiagnosed conditions, lack of treatment for sick patients, and the failure to monitor and treat chronic conditions before they become worse—
resulting in a decline in overall health and longevity.

The PAMA cuts will also have a broad impact on laboratories across the country. Those that will face the brunt of the cuts are the very labs and providers that are uniquely positioned to provide services—like house-calls, 24-hour emergency STAT testing, and in-facility services at skilled nursing facilities—that are particularly important to seniors who are more likely to be homebound, managing multiple chronic conditions, or living in rural areas that are medically underserved.

 

 

 

 

 

How to Tame Health Care Spending? Look for One-Percent Solutions

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The health care system in the United States costs nearly double that of its peer countries, without much better outcomes. Many scholars and policymakers have looked at this state of affairs and dreamed big. Maybe there’s some broad fix — high deductibles, improvements in end-of-life care, a single-payer system — that can make United States health care less expensive.

But what if the most workable answer isn’t something big, but hosts of small tweaks? A group of about a dozen health economists has begun trying to identify policy adjustments, sometimes in tiny slices of the health care system, that could produce savings worth around 1 percent of the country’s $3.3 trillion annual health spending. If you put together enough such fixes, the group points out, they could add up to something more substantial.

This is a shift from the kind of research that is typically rewarded by big journal editors and tenure committees, but it could turn out to have a crucial role in understanding why our health care system is so expensive, and so unusual.

“I think focusing on the forest misses the fact that there are trees encroaching out of the forest,” said Fiona Scott Morton, a health economist at the Yale School of Management. “And we need to start cutting them down.”

A working paper published Monday proposes one possible fix. In the 1980s, Congress carved out a small group of hospitals from its normal rules for payment. These “long-term care hospitals,” which treated patients with tuberculosis and chronic diseases, could earn far more money than traditional hospitals and nursing homes if they cared for patients who stayed with them for an average of 25 days. Since then, the number of these hospitals has mushroomed, from a few dozen to more than 400, most run by two for-profit chains.

For years, analysts and policymakers have wondered about the value of these hospitals, which tend to treat very sick patients who need a lot of care, such as mechanical ventilation or dialysis. Several analyses have suggested that Medicare may be overpaying for their services. And Congress has made some small changes to limit the number of patients who are eligible for such care.

The new paper, from researchers at the Massachusetts Institute of Technology, Stanford University, and the University of Chicago, took a close look at what happened to patients as new long-term care hospitals opened around the country in places that had none.

The study, covering 1990 to 2014, found that when such a hospital opened, the odds increased that very sick patients leaving a normal hospital would end up going next to a long-term care hospital, generating a growing bill for both Medicare and the patients themselves. But the researchers found no benefit when it came to patients’ chances of dying or going home within 90 days.

The researchers concluded that the health care system could probably save a lot of money — around $5 billion a year — by paying the long-term care hospitals the same prices that are paid to skilled nursing facilities, the places that most long-term patients end up in when there is no long-term care hospital nearby.

The hospital industry disagrees with the paper’s conclusion and disputes the notion that the extra money they get is wasteful. The American Hospital Association noted that since the study ended, Congress has changed the rules for long-term care hospitals so that fewer of their patients qualify for the highest payment rates. That means that the study results might be different if they looked at long-term hospital care in more recent years.

Select Medical, one of the large chains of long-term care hospitals, said in a statement that measuring only whether the long-term care patients died or went home did not capture other, more subtle health benefits that the hospitals provided compared with other options. But the industry does not collect such measures of quality in a standardized way, making that theory hard to test.

The National Association of Long Term Hospitals, a trade group, also noted that the paper’s policy proposals were more extreme than those from other critics, who had suggested more minor changes to how the hospitals should be paid.

Neale Mahoney, a health economist at the University of Chicago Booth School of Business, who was one of the working paper’s co-authors, said the history of long-term care hospitals fit together with the economic analysis to suggest that the special hospital payment probably wasn’t appropriate.

“What’s convinced me that these institutions are a source of waste is a constellation of evidence rather than one piece of evidence,” he said.

Dr. Jeremy Kahn, a critical care physician and professor of health policy at the University of Pittsburgh, who has studied long-term care hospitals extensively, said there are some patients with particular ailments who benefit from the setting, but agreed with the economists that the hospitals are a historical accident, defined more by payment rules than patient needs.

“Long-term care hospitals aren’t to blame here,” he said. “If you see a dollar on the ground, you will pick it up, and that’s what’s going on here.”

Mr. Mahoney said the economics profession is fond of broad conclusions. The typical paper takes a narrow case and tries to draw a broader conclusion about how the world works. But he increasingly thinks that there may be value in thinking small, doing more of what he calls “forensic economics.”

One of his co-authors, Amy Finkelstein, says she has been inspired by a colleague who works in development economics, Esther Duflo, who recently delivered a speech titled “The Economist as Plumber,” arguing that her colleagues should not look down on tinkering as unworthy of the profession.

“We may need to do more health care plumbing rather than health care big theories,” said Ms. Finkelstein, a health economist at M.I.T. “The history of long-term care hospitals suggests the industry will always innovate ahead of you, and you may actually have to roll up your sleeves and find these pockets of waste.”

The researchers have begun to chat during coffee breaks at conferences and in long phone conversations. Small possible sources of inefficiency, like drug co-payment coupons for generic drugs or high out-of-network payments for emergency room care, could start to add up.

The scholars involved in the project know that they are not the first group to think small. The sort of deep and narrow investigations they are undertaking have long been the focus of groups like the Medicare Payment Advisory Commission, a group that recommends changes to Congress and that had even flagged long-term care hospitals for overhaul years ago. Washington policymakers and think tanks have long assembled briefing books of options to help them nip and tuck dollars out of government health programs.

But the new effort by academics may expand the impact of such suggestions. New data about not just government spending but also private insurance has enabled researchers to examine spending and inefficiency in the health care system more broadly than ever before. After all, the health care system is much bigger than just Medicare.

“I think people say that’s too small — it’s not going to change the trajectory — therefore we shouldn’t spend time on it,” said Ms. Morton, the Yale economist. “And they are forgetting how many dollars there are.”

 

 

What Have We Learned About Bundling Medical Conditions?

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https://www.healthaffairs.org/do/10.1377/hblog20180828.844613/full/?utm_term=Read%20More%20%2526gt%3B%2526gt%3B&utm_campaign=Health%20Affairs%20Sunday%20Update&utm_content=email&utm_source=Act-On_2018-08-05&utm_medium=Email&cm_mmc=Act-On%20Software-_-email-_-Individual%20Mandate%20Litigation%3B%20Housing%20And%20Equitable%20Health%20Outcomes%3B%20Simplifying%20The%20Medicare%20Plan%20Finder%20Tool-_-Read%20More%20%2526gt%3B%2526gt%3B

Image result for bundled payments

As an alternative payment model, bundled payments hold the potential to improve the value of care by holding clinicians and organizations accountable for episode-specific quality and costs. Medicare has scaled bundled payments nationwide via several programs that define episodes based on hospitalization and up to 90 days of post-acute care.

However, the impact of bundled payments appears to differ between surgical and medical episodes. On one hand, Medicare has achieved promising results from bundling surgical care for lower extremity joint replacement. Medicare’s evaluation of its largest national bundled payment program, the Bundled Payments for Care Improvement (BPCI) initiative, has demonstrated that participation in joint replacement bundles is associated with a 3.8 percent decrease in per-episode spending with stable-to-improved quality. Other work evaluating the experience of high performers in BPCI demonstrates that bundled payments may reduce the costs of joint replacement episodes by up to 20 percent, with sizeable bonuses to physicians and hospitals and small improvements in quality – outcomes that, if scalable, would represent a win for patients, clinicians, organizations, and Medicare alike. On the other hand, recent evidence corroborates analyses conducted by Medicare and its contractor, suggesting that as designed, bundles for medical conditions such as congestive heart failure (CHF) and chronic obstructive pulmonary disease (COPD) are not associated with significant changes in quality or Medicare spending.

Therefore, one critical aspect of understanding the impact of bundled payments is evaluating how and why it differs for surgical versus medical care. This insight is particularly important given that surgical and medical episodes will be further expanded at a national scale in the forthcoming Bundled Payments for Care Improvement Advanced (BPCI-Advanced) program. In this post, we describe why the lack of episode savings in Medicare’s medical bundles may not be unexpected, why policymakers should not abandon medical bundles, and why existing evidence poses three important policy implications for the future of medical bundles.

Why Results May Differ For Surgical Versus Medical Bundles

By designing bundles that span hospitalization and post-acute care, Medicare has emphasized reductions in post-acute utilization and spending as major financial savings opportunities. While this approach suits surgical care in which a procedure triggers a cascade of acute and post-acute care, it may pose several challenges for episodes related to medical conditions. First, spending patterns for surgical versus medical care differ, more predictably spiking after surgical procedures but adopting a more cyclical pattern for chronic medical conditions. Accordingly, hospitalization may be more appropriate as an episode trigger for surgical episodes than for medical ones.

In surgical care such as joint replacement, hospitalization is a clear, distinct trigger before which there would be no expected episode-related utilization (e.g., little to no joint replacement-associated services prior to the surgery) and after which there is a distinct cascade of related utilization (e.g., physical rehabilitation, wound care, and post-surgical follow-up). In contrast, hospitalization only represents one aspect and phase of management for medical conditions such as CHF and COPD, which span outpatient, inpatient, emergency department, and post-acute settings over longer periods.

Second, physicians’ and hospitals’ ability to impact post-acute care utilization and spending may differ between surgical and medical episodes. This difference is not simply a reflection of the proportion of total episode spending paid to institutional post-acute care providers. For example, spending on skilled nursing facilities and inpatient rehabilitation facilities was only marginally higher for joint replacement compared with five medical conditions (26 versus 24 percent, respectively).

Rather, differences in the ability to impact post-acute care utilization may relate to the types of services provided in institutional post-acute settings for surgical versus medical patients. For surgical episodes, care at skilled nursing facilities often involves discrete, time-limited activities such as physical rehabilitation to achieve post-surgical recovery (e.g., strengthening, functional improvement). In contrast, given the natural history of diseases such as CHF and COPD, institutional post-acute care services for medical patients generally involve complex tasks such as medication management(e.g., diuretics) and multifaceted occupational therapy to promote self-care and activities of daily living. Consequently, hospitals in surgical bundles have achieved savings without compromising quality by shifting discharges from skilled nursing facilities and inpatient rehabilitation facilities towards home, with either home health or self-care. However, it remains unclear if similar efforts are possible or appropriate for the types of post-acute care that are often required as part of medical bundles. In turn, discharge patterns in medical bundles may reflect the less predictably defined roles of institutional post-acute care providers.

Another reason that shifting discharges away from institutional post-acute care providers may prove challenging under medical bundles is that they involve different types of patients than those often involved in surgical bundles. As noted recently, patients in medical bundles tend to be older and at higher risk for poverty and disability than patients in joint replacement bundles. In turn, patients receiving care for medical conditions may have greater clinical needs during and after hospitalization than patients undergoing surgical procedures.

Implications For The Design Of Medical Bundles

Collectively, these dynamics offer insight into why clinicians bundling care for medical conditions have not achieved savings in BPCI. They also have implications for the design of medical bundles going forward.

First, Medicare could consider modifying when and how medical episodes begin. Rather than being a necessary pre-condition for an episode, hospitalization itself may be a modifiable element of variation in medical conditions. Consequently, unlike in surgical procedures, using hospitalization as a medical episode trigger may miss the opportunity to include cost and utilization variation across the care continuum. As an alternative, if medical episodes were triggered in the outpatient setting – for example, after two specialty office visits within one month — provides might be better able to coordinate medical bundles with other efforts to improve value (e.g., payment models such as accountable care organizations and policies such as the Hospital Readmissions Reduction Program).

Second, Medicare could design medical bundles so that the emphasis on improvement is not restricted to care delivered in the post-discharge period. While variation reduction is not an absolute requisite for performance in bundled payments, care standardization remains an important organizational strategy for improving episode-based care. Creating incentives to focus on outpatient and pre-discharge elements may be particularly fruitful for medical bundles given the complexities of ongoing (in the ambulatory setting) and acute (in the hospital setting) management, and the possibility that practice redesign may require more time and greater effort than in surgical episodes.

Third, more data are needed to understand the impact of medical bundles and how best to design them in the future. To date, we have only early evidence about the impact of medical bundles in BPCI (the mean number of months of BPCI participation was 7 months for these hospitals). Given that other alternative payment models such as accountable care organizations have required three or more years before participants achieved savings, medical bundled payment policy should be guided by longer-term evaluations. Such evaluations should also closely monitor the programs for unintended effects: while it may be reassuring that medical bundles have not appeared to inadvertently lead to more readmissions or emergency department visits, vigilance is nonetheless required given the history of racial disparities in access that stem from quality- and value-based policies. Finally, future work can speed progress towards improvement by providing more detailed descriptions of the utilization and spending patterns of patients involved in medical bundles, as well as highlighting the experiences of high-performing providers.

Looking Ahead

While existing evidence suggests that medical bundles may not improve the value of care, these findings are not necessarily unexpected, and policymakers should not abandon the effort to bundle the care of medical conditions. Instead, in addition to more long-term evaluations, the design of medical bundles may be improved in the future by modifying how they are triggered and which phases of care they capture.

 

Hospital profits in Massachusetts shriveling due to financial pressure

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https://www.healthcarefinancenews.com/news/hospital-profits-massachusetts-shriveling-due-financial-pressure?mkt_tok=eyJpIjoiWWpFek9EVm1ZbU5tT0RWaSIsInQiOiI2YVwvTFhvMGpzWkpHSkttMFgrS253RWU5RlNJRE51ZzF0Zkdadjd4MmRKVVwvTUpYZW5qTjF2OU1LQnJcL3hDN1l4aGRnRmo0cWxGZk9CcXBRdm9Ga21iUkNhVG9XVTQ5UFZUbGZpbHRXTUgwcng4M081S3hpQ1dQMCt2N2lCQU5VTyJ9

Image result for hospital profits

 

Hit especially hard were Massachusetts’ community hospitals, with median operating margins plunging to 0.9 percent.

Acute care hospitals in Massachusetts are turning a profit for the most part, but in many cases those profits are less than robust. The state’s Center for Health Care Information and Analysis found that many are in a financially precarious position.

According to the report, about 65 percent of the commonwealth’s hospitals have operating margins below three percent. Overall, hospitals’ operating margins hovered around 1.6 percent. That’s down from 2.8 percent during the previous fiscal year.

While 49 of 62 hospitals were profitable in the fiscal year ending Sept. 30, many low margins low enough not to be considered financially healthy.

Hit especially hard were Massachusetts’ community hospitals, with median operating margins plunging to 0.9 percent — down two full percentage points from the previous year.

The northeastern part of the state saw the lowest margins geographically, at 1.6 percent, with some facilities operating on negative margins and hemorrhaging cash. North Shore Medical Center in Salem was among the hardest hit, seeing $57.7 million evaporate in fiscal year 2017.

Not all Massachusetts hospitals are feeling those kinds of pressures. Northeast Hospital enjoyed a 9 percent operating margin during the past fiscal year, translating into a $33.1 million surplus.

That the state’s rural hospitals are struggling isn’t surprising, given the national trend. A recent report found that nearly half are operating at negative margins, fueled largely by a high rate of uninsured patients. Eighty rural hospitals closed from 2010 to 2016, and more have shut their doors since.

Aside from the high uninsured rate, a payer mix heavy on Medicare and Medicaid with lower claims reimbursement rates is a contributing factor. More patients are seeking care outside rural areas, which isn’t helping, and many areas see a dearth of employer-sponsored health coverage due to lower employment rates. Many markets are also besieged by a shortage of primary care providers, and tighter payer-negotiated reimbursement rates.

 

 

 

How Medicare Was Won

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https://www.thenation.com/article/how-medicare-was-won/

senior citizens supporting Medicare at the 1964 Democratic National Convention

 

The history of the fight for single-payer health care for the elderly and poor should inform today’s movement to win for Medicare for All.

In August of 1964, 14,000 retirees arrived by the busload in Atlantic City. Representing the National Council of Senior Citizens (NCSC), the former railroad workers, dressmakers, and auto assemblers marched 10 blocks up the fabled New Jersey boardwalk to the Democratic National Convention at the Convention Hall. The group, which was organized and bankrolled by the AFL-CIO, moved en masse in floral housecoats and sandwich boards with slogans like “Our Illnesses Burden Our Families” and “Senior Citizens Vote, Remember Medicare.” They intended to push President Johnson to extend public health insurance to millions of Americans.

Astonishingly, less than a year later, they won. Medicare was signed into law in July of 1965 in Independence, Missouri, at a ceremony attended by former president Harry S. Truman, whose push for national health insurance (NHI) had collapsed nearly two decades before. The landmark law created a public-sector insurance pool for Americans 65 and over, which remains today the closest thing to a robust universal entitlement in the US health-care system. Its successful passage (which also passed Medicaid, to insure the very poor) stands in sharp contrast to multiple failed efforts to install a universal single-payer system.

A half-century later, we’re witnessing the early stages of yet another popular thrust toward single payer, increasingly billed as “Medicare for All.” The nomenclature intends to evoke associations with the popular, trusted program, and is perhaps easier for Americans to latch onto than a phraseology that threatens to trigger a tedious lesson in comparative health policy. But if the conceptual jump from Medicare to Medicare for All can serve as a rough model for achieving universal health care in the United States, we should also look to the history of the social movements that achieved something that then, too, seemed impossible.

No one imagines expanding Medicare to all Americans will be easy. Nothing quite like this has ever been accomplished in the United States. Yes, dozens of peer countries have built coherent, humane, universal health-care systems out of entrenched private ones. Yes, mass movements have won major leftist reforms. Yes, advanced private industries of various nations have been nationalized. But human history offers no examples of these things happening in combination, which is what winning Medicare for All will require.

The most viable push toward NHI in American history crumbled in the late 1940s, ruthlessly crushed by not only insurers and pharmaceutical companies but also the American Medical Association. (Physicians, whose already handsome salaries began to rise in the postwar era, feared the blow that NHI could strike to their paychecks, professional prestige, and autonomy, since a government payer would also reduce their control over prices.) As such, the AMA famously shook down its membership for $25 apiece to fund the multimillion-dollar campaign that injected the phrase “socialized medicine” into mainstream American culture.

In this context, it’s perhaps tempting to view Medicare as a capitulation to industry pressure and political challenges, rather than as evidence they can be flouted. After all, Medicare (and, for that matter, Medicaid) targeted the most vulnerable patients. Many single-payer skeptics insist that Medicare managed to pass because it covered the people private insurance left behind. In his book Harry S. Truman Versus the Medical Lobby: The Genesis of Medicare, historian Monte Poen presents Medicare as a sort of compromise between the unfettered free market and the dashed dreams of the 1940s.

While it’s true that the enactment of Medicare didn’t pose nearly the threat to certain health-care-industry stakeholders that the NHI did or that Medicare for All would, it would be a mistake to fully dismiss its applicability to the current political fight. For one thing, the common talking point that Medicare extended insurance to a population who didn’t have it, rather than squashing existing private infrastructure, doesn’t bear out. A full half of elderly Americans did have private insurance plans when Medicare was signed into law. Commercial health insurers initially opposed the program, and began to support it only when it became clear a large administrative role would be preserved for for-profit insurers.

More importantly, while insurance companies certainly fought against health-care-financing reforms, physicians associations and hospitals are typically considered to have been the more significant opponents—they believed Medicare to be a likely conduit for eventual full-scale single payer (and all the government interference they assumed would come with it), and struck back with more or less the same zeal that they mustered decades earlier. As historian Jill Quadagno puts it, the AMA fought Medicare with “every propaganda tactic it had employed during the Truman era.” Such tactics included a widespread media blitz, advertising in doctors’ offices, and visits to congressmen from physicians in their districts. One tactic, called “Operation Coffee Cup,” deputized physicians’ wives to host ladies’ gatherings, at which they’d play their guests an anti-Medicare PSA starring actor Ronald Reagan.

This time, the AMA and its allies failed, but not for lack of trying. So it’s unfair to ascribe Medicare’s triumph to a lack of industry resistance, which was actually quite strong. The more crucial variable distinguishing Medicare from the NHI battles that fizzled before and since was a mass movement of people demanding it, having coalesced at a moment when powerful liberatory struggles against white supremacy and poverty had transformed what could be deemed politically possible.

Organized labor went all-in for Medicare, which took substantial pressure off unions for their retirees’ mounting health-care costs. Their enthusiasm contrasted with their relationship with universal initiatives before and since, despite their largely supporting most on paper. The reasons for labor’s tepid support for single payer have been debated by historians: For one thing, the unions’ success at collectively bargaining for employer-provided health benefits during the Truman-era reform battles perhaps reduced their motivation to prioritize national health-care solutions, the ongoing absence of which almost certainly highlighted the advantage of union membership. Since the 1970s, ever-rising health-care costs strengthened the case that labor’s interests would be served by removing health-care benefits from tense contract negotiations, but declining labor power during America’s rightward political shift tied them to a Democratic Party establishment unwilling to back single payer during the health-care debates of the 1970s and ’90s.

Today, with a slim majority of congressional Democrats vocally warming up to Medicare for All, and the ACA’s so-called “Cadillac Tax” poised to hit hard-won union-bargained health plans, the pro-labor case for single payer has never been more obvious. Indeed, each of the high-profile wildcat teachers’ strikes widely cited health-care benefits as a central demand. While the AFL-CIO has endorsed single payer, the question of whether workers will rally around Medicare for All they way they did for its namesake could well depend on how the movement’s stakeholders deal with those who stand to be displaced by the streamlining effect of large-scale reform.

But beyond institutional heft or the weight of its endorsements, the most impactful contribution organized labor made to the Medicare fight was a committed army of thousands of boots on the ground, many of them seniors who stood to benefit from the legislation or the family members who worried about how they’d care for them. Even the most precursory survey of 20th-century universal-health-care movements makes their most egregious failure stunningly obvious: They were nearly all top-down operations practically devoid of participation of ordinary people intent on changing the status quo.

By the time the NCSC marched in Atlantic City, this movement was already years in the making. It had been building momentum for the idea that would become Medicare in the 1950s, under a Republican president who, in is 1954 State of the Union address, had affirmed he was “flatly opposed to the socialization of medicine.” Rather than standing by waiting for better electoral luck, the Medicare movement fought to make theirs a winning campaign issue that would help to elect Democrats, not the other way around.

For years, the NCSC spearheaded letter-writing campaigns targeting media outlets and elected officials, and did any media outreach it could. It churned out brochures to counter the messaging of the powerful medical lobby, printing and distributing millions of pamphlets and fliers. As Blue Carstenson, then head of the NCSC, recounted later, “We had to make it a cause and we made it a cause…. We charged the atmosphere like a campaign…. We were always jammed in there and there was a hustle and bustle atmosphere. And when reporters came over they were always impressed by telephones ringing and the wild confusion and this little bitty outfit here that was tackling the whole AMA in a little apartment on Capitol Hill…. This was news. It used to make every reporter chuckle or smile.”

So too did the NCSC learn to push the buttons of electoral politics: It organized groups to testify before Congress about insurance premiums, which rose as much as 35 percent some years, like some ACA marketplace plans. And of course, Carstenson’s formidable elderly army turned out to campaign events. When Democrat George Smathers declined to support Medicare before the 1964 election, NCSC members organized town-hall meetings throughout the state—including one in Fort Lauderdale that was allegedly so successful that the organizers had to upgrade to a bigger venue three different times. Their message made appeals to all ages: Relief for seniors’ medical costs, they argued, will also reduce financial pressure on their working-age children, who’d in turn have more room in the budget to raise their own kids.

If the participants in today’s movement for Medicare for All intend to succeed, they must preempt the imminent counterattack of a health-care industry with far more fortunes at stake than the one their counterparts vanquished in 1965. This will require a mass mobilization of people making themselves seen and heard, whose demands for universal public insurance must reach a fever pitch to force candidates and current officials to capitulate. Doing so will demand a broad variety of tactics, including direct action, canvassing, printed materials, and public events, geared toward not only  persuading regular voters but also inspiring new ones.

Finally, this vision of justice must extend beyond the realm of health care alone. It is nearly impossible to imagine Medicare passing outside the political context set forth by the civil-rights movement, and the so-called War on Poverty. These years-long mobilizations of oppressed people had forced the political reckoning that fostered large-scale reform. It is no coincidence that the New Deal and the Great Society—however short they may have fallen—came about in large bursts rather than undetectable spurts.

Paradigm-shifting reforms have been delivered by broad coalitions confronting a common enemy. It’s up to advocates to compel people living under the US health-care system to see themselves and one another as part of a single constituency, from the poorest uninsured to those saddled with punishing paperwork, office staff chained to bad jobs for benefits, providers-turned-pawns of corporate conglomerates, and expectant mothers bracing themselves for exorbitant out-of-pocket costs atop weeks of unpaid maternity leave. And it must be done in solidarity with struggles on behalf of all oppressed Americans—people of color, the unhoused, the disabled, and others—whose subjugation benefits the very moneyed interests who’d prefer to keep things as they are.

All the evidence tells us that robust universal programs build solidarity, and create an impassioned base that enthusiastically defends them. Once Medicare for All is in place we can expect the same. Until then, it’s up to advocates to compel as many people as possible to envision the radically different society that stands to inherit it—and to accept nothing less.

Welcome to the New Health-Care Debate

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https://www.bloomberg.com/view/articles/2018-08-03/health-care-debate-helps-republicans-hurts-conservatives

America’s health-care debate is entering a new phase. Liberals, inspired by self-described socialists such as Senator Bernie Sanders and Representative-to-be Alexandria Ocasio-Cortez, are excited about the possibility of “Medicare for All.” Republicans have at the same time largely abandoned efforts to enact major reforms of health care.

This new phase of the debate is full of opportunity for Republicans, and peril for conservatives.

But perhaps it would be better to say that the debate is reverting to an older pattern. For roughly four decades, liberals have highlighted the flaws of the existing health-care system, chiefly high costs and unequal access, and proposed increased governmental involvement as the solution. Conservatives talked up the dangers of bigger government, chiefly even higher costs and the disruption of existing arrangements, and reminded voters of the virtues of the status quo.

Most of the time, health care has been a back-burner issue, and discontent with the system has been a modest source of political strength for liberals. When health care has become a dominant issue, however, public fear of disruption has helped conservatives. From 2009 through 2016, Republicans were able to exploit public unhappiness with the changes that Obamacare first threatened to make and then did make.

There have been two brief exceptions to this pattern. In 1995-96 and 2017-18, Republicans advanced their own sweeping changes to health policy. Led by Newt Gingrich 20 years ago, they tried to reform Medicare and Medicaid. Over the last two years, they tried to replace Obamacare and reform Medicaid. 1

Both times the public’s fear of change was turned against Republican politicians, who did not like the pressure one bit. Most of them are relieved to have dropped their party’s Obamacare and Medicaid proposals. They are eager to settle into the familiar role of criticizing liberal health-care proposals.

There’s plenty to criticize. In polls, most people say they like their existing insurance policies — which may be a way for them to signal to politicians that they fear their meddling with those policies. The single-payer plans that are ascending among Democrats would by definition threaten most existing coverage.

These plans pose much bigger political risks than Obamacare did. Obamacare was carefully designed to insulate Democrats from charges that they were turning people’s coverage upside down.

In selling the legislation, President Barack Obama spent much of his time reassuring people that they could keep their doctors and their insurance plans if they liked them. The law mostly avoided changes to the employer-provided coverage through which most Americans get health care.

Yet Obamacare still provoked a backlash. That backlash was especially intense when, in the fall of 2013, it resulted in a significant number of plan cancellations. But many voters have also resented the narrower networks and higher premiums and deductibles that Obamacare has foisted on them.

As even more sweeping left-wing proposals move to the center of the debate, Republicans can reclaim the advantage of opposing disruption. But they may also again be saddled with the disadvantage of being associated with an unsatisfactory status quo.

They are in charge of Congress and the White House; they have been talking about reworking the health-care system for years; and they have succeeded in making significant changes, albeit much less ambitious ones than they sought. They have, for example, ended the fines on people without health insurance that were a major part of Obamacare. In addition, the Trump administration is in the process of liberalizing the rules for short-term insurance plans that do not have to comply with the regulations Obamacare imposes on most other plans.

The Republicans therefore have some, and growing, political ownership of the health-care system. The more they argue against left-wing proposals to change the system, the more ownership they will have.

For Republican politicians, defending even a flawed status quo is probably preferable to trying to impose disruptive changes to it. But if they adopt that position, it will mean that the only solutions on offer to popular concerns about health care will be left-wing ones.

It will mean, as well, that occasionally liberals will have enough political power to enact some, and maybe a lot, of their preferred changes to the system. We will move, that is, toward a health-care system with a larger and larger degree of governmental control even as Republicans make political gains by resisting that trend.

The new shape of the debate may be good news for Republican politicians, then, but it’s bad news for conservatives who favor limited government and free markets.

  1. Arguably there was a third exception: In 2011 and 2012, Paul Ryan led congressional Republicans to endorse increasing competition within Medicare as part of their budget proposals. They did not, however, attempt to advance legislation that would actually change Medicare.

 

 

 

 

CMS’ proposed outpatient payment rule for 2019: 10 things to know

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https://www.beckershospitalreview.com/finance/cms-proposed-outpatient-payment-rule-for-2019-10-things-to-know.html

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CMS released its 2019 Medicare Outpatient Prospective Payment System proposed rule July 25, which calls for site-neutral payments and would make changes to the 340B program.

Here are 10 things to know about the 2019 proposed rule:

Payment update

1. CMS proposed increasing the OPPS rates by 1.25 percent in 2019. The agency arrived at its proposed rate increase through the following updates: a positive 2.8 percent market basket update, a negative 0.8 percentage point update for a productivity adjustment and a negative 0.75 percentage point adjustment for cuts under the ACA.

Site-neutral payment proposal

2. Under the proposed rule, CMS would make payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments to 40 percent of the OPPS rate. The clinic visit is the most common service billed under the OPPS, and CMS estimates the payment proposal would save the Medicare program and Medicare recipients a combined $760 million in 2019.

3. This change is projected to reduce OPPS payments by 1.2 percent, which would largely offset the 1.25 percent payment rate increase under the proposed rule.

Proposed 340B program changes

4. CMS scaled back the 340B drug discount program in 2018, and the agency proposed additional cuts for next year.

5. On Jan. 1, 2018, CMS began paying hospitals 22.5 percent less than the average sales price for drugs purchased through the 340B program. That’s compared to the previous payment rate of average sales price plus 6 percent.

6. Under the proposed rule, CMS would extend the average sales price minus 22.5 percent payment rate to 340B drugs provided at nonexcepted off-campus provider-based departments.

7. CMS also proposed to pay for separately payable biosimilars acquired under the 340B program at the average sales price minus 22.5 percent of the biosimilar’s own ASP, rather than ASP minus 22.5 percent of the reference product’s ASP.

Hospital Outpatient Quality Reporting Program changes

8. For 2019, CMS proposed removing one measure from the Hospital Quality Reporting Program beginning with the 2020 payment determination and removing nine other measures beginning with the 2021 payment determination.

9. “The proposals to remove these measures are consistent with the CMS’ commitment to using a smaller set of more meaningful measures and focusing on patient-centered outcomes measures, while taking into account opportunities to reduce paperwork and reporting burden on providers,” CMS said in the fact sheet for the proposed rule.

Comment period

10. CMS will accept comments on the proposed rule until 5 p.m. EST Sept. 24.