The Large Hidden Costs of Medicare’s Prescription Drug Program

https://theincidentaleconomist.com/wordpress/the-large-hidden-costs-of-medicares-prescription-drug-program/

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At a glance, Medicare’s prescription drug program — also called Medicare Part D — looks like the perfect example of a successful public-private partnership.

Drug benefits are entirely provided by private insurance plans, with generous government subsidies. There are lots of plans to choose from. It’s a wildly popular voluntary program, with 73 percent of Medicare beneficiaries participating. Premiums have exhibited little to no growth since the program’s inception in 2006.

But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase. It’s a surprising statistic for a program that is often praised for establishing a competitive insurance market that keeps costs low, and that is singled out as an example of the good that can come from strong competition in a private market.

Much of this increase is a result of growing enrollment — it has doubled in the past decade to 43 million — and higher drug prices. But there is also a subtle way in which the program’s structure promotes cost growth.

When enrollees’ drug costs are relatively low, plans pay a large share, typically about 75 percent. But when enrollees’ drug spending surpasses a certain catastrophic threshold — set at $5,000 in out-of-pocket spending in 2018 — 80 percent of drug costs shifts to a government program called reinsurance. This gives people in charge of private insurance plans an incentive to find ways to push enrollees into the catastrophic range, shifting the vast majority of drug costs off their books. For example, they could be less motivated to negotiate for lower drug prices for certain types of drugs if doing so would tend to keep more enrollees out of the catastrophic range.

Reinsurance spending, which is not reflected in premiums, has been rising rapidly.

“This harms the very competition that Part D was supposed to establish,” said Roger Feldman, an economist at the University of Minnesota. Consumers are naturally attracted to lower-premium plans, but choosing them increasingly shifts higher costs onto taxpayers if plans achieve those lower premiums in part by shifting more drug expenses onto the government’s books.

Documenting this is a recent study by Mr. Feldman and Jeah Jung of Penn State University that was published in Health Services Research. The study found that the disconnect between premiums and reinsurance costs has increased over time. Additionally, insurance company plans exhibiting less of an effort to manage the use of high-cost drugs had higher reinsurance costs. This is consistent with incentives to encourage enrollees into the catastrophic range of spending.

The Medicare Payment Advisory Commission has been warning about this problem for several years in its annual reports to Congress. According to MedPAC, between 2010 and 2015, the number of enrollees entering the catastrophic drug cost range grew 50 percent, from 2.4 million to 3.6 million, now accounting for 8 percent of enrollees.

“It’s ironic for a program supposedly built on market principles,” said Mark Miller, a former MedPAC director. “You wouldn’t see this kind of thing in the commercial market.” For commercial market insurance products — such as those offered by employers or in the health insurance marketplaces — only about 1 percent of policyholders reach a catastrophic level of expenditures at which reinsurance kicks in. (Mr. Miller and I are co-authors of an editorial about Ms. Jung’s and Mr. Feldman’s study, which also appears in Health Services Research.)

Reinsurance is the fastest-growing component of Medicare’s drug program, expanding at an 18 percent annual rate between 2007 and 2016. In 2007, it accounted for 17 percent of government spending for Part D. In 2016 it was 44 percent.

The Affordable Care Act hastened this growth. The law requires pharmaceutical manufacturers to pay some of the cost of the drug benefit. (The Bipartisan Budget Act of 2018 further increased how much manufacturers must contribute.) For the purposes of reaching the catastrophic threshold and triggering reinsurance, these industry contributions count as out-of-pocket payments for enrollees, even though they are not.

That means enrollees don’t have to spend as much as they otherwise would to trigger the reinsurance program. Although this is of great benefit to enrollees, it also pushes up taxpayer liability for the program.

Changing the extent to which manufacturer’s contributions count as enrollee out-of-pocket spending is one potential reform of the program. Other solutions include increasing the liability of insurance company plans in the catastrophic range and decreasing the liability of taxpayers.

This would have the effect of bringing premiums more in line with program spending. Doing so would “return Part D to the market-based program it was intended to be,” Ms. Jung said. As it stands, there is a substantial divide between what Part D was billed as and what it actually is.

 

 

Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients

https://www.npr.org/sections/health-shots/2018/06/13/619259541/medicare-takes-aim-at-boomerang-hospitalizations-of-nursing-home-patients

“Oh my God, we dropped her!” Sandra Snipes said she heard the nursing home aides yell as she fell to the floor.

She landed on her right side where her hip had recently been replaced. She cried out in pain.

A hospital clinician later discovered her hip was dislocated.

That was not the only injury Snipes, then 61, said she suffered in 2011 at Richmond Pines Healthcare & Rehabilitation Center in Hamlet, N.C. Nurses allegedly had been injecting her twice a day with a potent blood thinner despite written instructions to stop.

“She said, ‘I just feel so tired,’ ” her daughter, Laura Clark, said in an interview. “The nurses were saying she’s depressed and wasn’t doing her exercises. I said no, something is wrong.”

Her children also discovered Snipes’ surgical wound had become infected and infested with insects. Just 11 days after she arrived at the nursing home to heal from her hip surgery, she was back in the hospital.

The fall and these other alleged lapses in care led Clark and the family to file a lawsuit against the nursing home. Richmond Pines declined to discuss the case beyond saying it disputed the allegations at the time. The home agreed in 2017 to pay Snipes’ family $1.4 million to settle their lawsuit.

While the confluence of complications in Snipes’ case was extreme, return trips from nursing homes to hospitals are far from unusual.

With hospitals pushing patients out the door earlier, nursing homes are deluged with increasingly frail patients. But many homes, with their sometimes-skeletal medical staffing, often fail to handle post-hospital complications — or create new problems by not heeding or receiving accurate hospital and physician instructions.

Patients, caught in the middle, may suffer. One in 5 Medicare patients sent from the hospital to a nursing home boomerangs back within 30 days, often for potentially preventable conditions such as dehydration, infections and medication errors, federal records show. Such rehospitalizations occur 27 percent more frequently than for the Medicare population at large.

Nursing homes have been unintentionally rewarded by decades of colliding government payment policies, which gave both hospitals and nursing homes financial incentives for the transfers. That has left the most vulnerable patients often ping-ponging between institutions, wreaking havoc with patients’ care.

“There’s this saying in nursing homes, and it’s really unfortunate: ‘When in doubt, ship them out,’ ” said David Grabowski, a professor of health care policy at Harvard Medical School. “It’s a short-run, cost-minimizing strategy, but it ends up costing the system and the individual a lot more.”

In recent years, the government has begun to tackle the problem. In 2013, Medicare began fining hospitals for high readmission rates in an attempt to curtail premature discharges and to encourage hospitals to refer patients to nursing homes with good track records.

Starting this October, the government will address the other side of the equation, giving nursing homes bonuses or assessing penalties based on their Medicare rehospitalization rates. The goal is to accelerate early signs of progress: The rate of potentially avoidable readmissions dropped to 10.8 percent in 2016 from 12.4 percent in 2011, according to Congress’ Medicare Payment Advisory Commission.

“We’re better, but not well,” Grabowski said. “There’s still a high rate of inappropriate readmissions.”

The revolving door is an unintended byproduct of long-standing payment policies. Medicare pays hospitals a set rate to care for a patient depending on the average time it takes to treat a typical patient with a given diagnosis. That means that hospitals effectively profit by earlier discharge and lose money by keeping patients longer, even though an elderly patient may require a few extra days.

But nursing homes have their own incentives to hospitalize patients. For one thing, keeping patients out of hospitals requires frequent examinations and speedy laboratory tests — all of which add costs to nursing homes.

Plus, most nursing home residents are covered by Medicaid, the state-federal program for the poor that is usually the lowest-paying form of insurance. If a nursing home sends a Medicaid resident to the hospital, she usually returns with up to 100 days covered by Medicare, which pays more. On top of all that, in some states, Medicaid pays a “bed-hold” fee when a patient is hospitalized.

None of this is good for the patients. Nursing home residents often return from the hospital more confused or with a new infection, said Dr. David Gifford, a senior vice president of quality and regulatory affairs at the American Health Care Association, a nursing home trade group.

“And they never quite get back to normal,” he said.

‘She Looked Like A Wet Washcloth’

Communication lapses between physicians and nursing homes is one recurring cause of rehospitalizations. Elaine Essa had been taking thyroid medication ever since that gland was removed when she was a teenager. Essa, 82, was living at a nursing home in Lancaster, Calif., in 2013 when a bout of pneumonia sent her to the hospital.

When she returned to the nursing home — now named Wellsprings Post-Acute Care Center — her doctor omitted a crucial instruction from her admission order: to resume the thyroid medication, according to a lawsuit filed by her family. The nursing home telephoned Essa’s doctor to order the medication, but he never called them back, the suit said.

Without the medication, Essa’s appetite diminished, her weight increased and her energy vanished — all indications of a thyroid imbalance, said the family’s attorney, Ben Yeroushalmi, discussing the lawsuit. Her doctors from Garrison Family Medical Group never visited her, sending instead their nurse practitioner. He, like the nursing home employees, did not grasp the cause of her decline, although her thyroid condition was prominently noted in her medical records, the lawsuit said.

Three months after her return from the hospital, “she looked like a wet washcloth. She had no color in her face,” said Donna Jo Duncan, a daughter, in a deposition. Duncan said she demanded the home’s nurses check her mother’s blood pressure. When they did, a supervisor ran over and said, “Call an ambulance right away,” Duncan said in the deposition.

At the hospital, a physician said tests showed “zero” thyroid hormone levels, Deborah Ann Favorite, a daughter, recalled in an interview. She testified in her deposition that the doctor told her, “I can’t believe that this woman is still alive.”

Essa died the next month. The nursing home and the medical practice settled the case for confidential amounts. Cynthia Schein, an attorney for the home, declined to discuss the case beyond saying it was “settled to everyone’s satisfaction.” The suit is still ongoing against one other doctor, who did not respond to requests for comment.

Dangers In Discouraging Hospitalization

Out of the nation’s 15,630 nursing homes, one-fifth send 25 percent or more of their patients back to the hospital, according to a Kaiser Health News analysis of data on Medicare’s Nursing Home Compare website. On the other end of the spectrum, the fifth of homes with the lowest readmission rates return fewer than 17 percent of residents to the hospital.

Many health policy experts say that spread shows how much improvement is possible. But patient advocates fear the campaign against hospitalizing nursing home patients may backfire, especially when Medicare begins linking readmission rates to its payments.

“We’re always worried the bad nursing homes are going to get the message ‘Don’t send anyone to the hospital,’ ” said Tony Chicotel, a staff attorney at California Advocates for Nursing Home Reform, a nonprofit based in San Francisco.

Richmond Pines, where Sandra Snipes stayed, has a higher than average rehospitalization rate of 25 percent, according to federal records. But the family’s lawyer, Kyle Nutt, said the lawsuit claimed the nurses initially resisted sending Snipes back, insisting she was “just drowsy.”

After Snipes was rehospitalized, her blood thinner was discontinued, her hip was reset, and she was discharged to a different nursing home, according to the family’s lawsuit. But her hospital trips were not over: When she showed signs of recurrent infection, the second home sent her to yet another hospital, the lawsuit alleged.

Ultimately, the lawsuit claimed that doctors removed her prosthetic hip and more than a liter of infected blood clots and tissues. Nutt said if Richmond Pines’ nurses had “caught the over-administration of the blood thinner right off the bat, we don’t think any of this would have happened.”

Snipes returned home but was never able to walk again, according to the lawsuit. Her husband, William, cared for her until she died in 2015, her daughter, Clark, said.

“She didn’t want to go back into the nursing home,” Clark said. “She was terrified.”

 

 

 

Providers argue against Medicaid rate cuts without oversight

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States with at least 85% of their Medicaid population in managed care could implement nominal payment cuts without assuring care.

Hospitals, particularly rural providers, would be hurt by a Centers for Medicare and Medicaid Services proposed rule that would force them to take lower Medicaid rates without a review of the impact of the cuts, according to comments made to CMS asking for a reconsideration of the plan.

Provider organizations, hospitals, the Medicaid and CHIP Payment and Access Commission, are among those asking the Centers for Medicare and Medicaid Services to rethink its proposed rule.

Comments were due this week.

CMS proposed the rule in March to allow states that have a comprehensive, risk-based Medicaid managed care enrollment that is above 85 percent of their total Medicaid population to get around network adequacy rules when implementing “nominal” rate changes.

States had raised concern over the administrative burden associated with the current requirements, particularly for states with high rates of Medicaid managed care enrollment.

For states proposing nominal cuts below 4 percent a year or 6 percent over two years, the rule amends the process for them to document whether Medicaid payments in fee-for-service systems are sufficient to enlist providers to assure access to covered care and services.

These states would be exempt from access monitoring requirements and they would not need to seek public input on the rate reductions.

America’s Essential Hospitals said, “Requiring states to ensure, through monitoring, that rate reductions do not diminish access to needed services is particularly important now, as access monitoring reviews are the only vehicle left for providers to challenge state payment rate decisions.”

The Federation of American Hospitals contends that the rule would allow for more than nominal rate changes. If finalized, FAH said, the rule would allow for an estimated 18 states to implement a rate reduction of up to 12 percent over a period of four years or 16 percent over five years, without going through requirements for ongoing monitoring of the impact of the rate changes.

This would disproportionately impact vulnerable Medicaid beneficiaries and subject providers with unsustainable rate reductions, FAH said.

Most states, even those with very high rates of managed care enrollment, often exclude certain categories of particularly vulnerable groups from managed care plans, the organization said. People with physical, mental or intellectual disabilities or who are elderly, largely get services through fee-for-service, FAH told CMS Administrator Seema Verma.

The Medicaid and CHIP Payment and Access Commission said it did not find the states’ argument of administrative burden compelling enough given the federal government’s obligations to oversee state performance and assurances related to access.

“Moreover, exceptions to reporting may introduce gaps in oversight,” MACPAC Chair Penny Thompson said. “In short, the need for states to maintain resources and tools to monitor access as an ongoing element of state program administration and decision making outweighs the limited savings states would achieve as a result of these changes.”

 

Congress Urged To Cut Medicare Payments To Many Stand-Alone ERs

Congress Urged To Cut Medicare Payments To Many Stand-Alone ERs

The woman arrived at the emergency department gasping for air, her severe emphysema causing such shortness of breath that the physician who examined her put her on a ventilator immediately to help her breathe.

The patient lived across the street from the emergency department in suburban Denver, said Dr. David Friedenson, who cared for her that day a few years ago. The facility wasn’t physically located at a hospital but was affiliated with North Suburban Medical Center several miles away.

Free-standing emergency departments have been cropping up in recent years and now number more than 500, according to the Medicare Payment Advisory Commission (MedPAC), which reports to Congress. Often touted as more convenient, less crowded alternatives to hospitals, they often attract suburban walk-in patients with good insurance whose medical problems are less acute than those who visit an emergency room located in a hospital.

If a recent MedPAC proposal is adopted, however, some providers predict that these free-standing facilities could become scarcer. Propelling the effort are concerns that MedPAC’s payment for services at these facilities is higher than it should be since the patients who visit them are sometimes not as severely injured or ill as those at on-campus facilities.

The proposal would reduce Medicare payment rates by 30 percent for some services at hospital-affiliated free-standing emergency departments that are located within 6 miles of an on-campus hospital emergency department.

“There has been a growth in free-standing emergency departments in urban areas that does not seem to be addressing any particular access need for emergency care,” said James Mathews, executive director of MedPAC. The convenience of a neighborhood emergency department may even induce demand, he said, calling it an “if you build it, they will come” effect.

Emergency care is more expensive than a visit to a primary care doctor or urgent care center, in part because emergency departments have to be on standby 24/7, with expensive equipment and personnel ready to handle serious car accidents, gunshot wounds and other trauma cases. Even though free-standing emergency departments have lower standby costs than hospital-based facilities, they typically receive the same Medicare rate for emergency services. The Medicare “facility fee” payments, which include some ancillary lab and imaging services but not reimbursement to physicians, are designed to help defray hospitals’ overhead costs.

The proposal would affect only payments for Medicare beneficiaries. But private insurers often consider Medicare payment policies when setting their rules.

According to a MedPAC analysis of five markets — Charlotte, N.C.; Cincinnati; Dallas; Denver; and Jacksonville, Fla. — 75 percent of the free-standing facilities were located within 6 miles of a hospital with an emergency department. The average drive time to the nearest hospital was 10 minutes.

Overall, the number of outpatient emergency department visits by Medicare beneficiaries increased 13.6 percent per capita from 2010 to 2015, compared with a 3.5 percent growth in physician visits, according to MedPAC. (The reported data doesn’t distinguish between conventional and free-standing emergency facility visits.)

“I think [the MedPAC proposal] is a move in the right direction,” said Dr. Renee Hsia, a professor of emergency medicine and health policy at the University of California-San Francisco who has written about free-standing emergency departments. “We have to understand there are limited resources, and the fixed costs for stand-alone EDs are lower.”

Hospital representatives say the proposal could cause some free-standing emergency departments to close their doors.

“We are deeply concerned that MedPAC’s recommendation has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections,” Joanna Hiatt Kim, vice president for payment policy at the American Hospital Association, said in a statement.

Independent free-standing emergency departments that are not affiliated with a hospital would not be affected by the MedPAC proposal. These facilities,which make up about a third of all free-standing emergency facilities, aren’t clinically integrated with a hospital and can’t participate in the Medicare program.

The MedPAC proposal will be included in the group’s report to Congress in June.

Even though stand-alone emergency facilities might not routinely treat patients with serious trauma, they can provide lifesaving care, proponents say.

Friedenson said that for his emphysema patient, avoiding the 15- to 20-minute drive to the main hospital made a critical difference.

“By stopping at our emergency department, I truly think her life was saved,” he said.

 

 

Paying more and getting less: As hospital chains grow, local services shrink

https://www.statnews.com/2018/01/24/hospital-chains-services-consolidation/

When most hospitals close, it’s plain to see. Equipment and fixtures are hauled out and carted away. Doctors and nurses leave and buildings are shuttered, maybe demolished.

But another fate befalling U.S. hospitals is almost invisible. Across the country, conglomerates that control an increasing share of the market are changing their business models, consolidating services in one regional “hub” hospital and cutting them from others.

In recent years, hospitals across the country have seen their entire inpatient departments closed — no patients staying the night, no nursery, no place for the sickest of the sick to recover. These facilities become, in essence, outpatient clinics.

Hospital executives see these cuts as sound business decisions, and say they are the inevitable consequence of changes in how people are using medical services. But to patients and local leaders who joined forces with these larger health networks just years ago, they feel more like broken promises: Not only are they losing convenient access to care, their local hospitals are also getting drained of revenue and jobs that sustain their communities.

“It’s not even just betrayal. It’s disgust, frankly,” said Mariah Lynne, a resident of Albert Lea, Minn., where Mayo Clinic is removing most inpatient care and the birthing unit from one of its hospitals. “Never would I have expected a brand of this caliber to be so callous.”

In 2015, the most recent year of data, these service reductions accounted for nearly half of the hospital closures recorded around the country, according to the Medicare Payment Advisory Commission. (By MedPac’s definition, the loss of inpatient wards is equivalent to closure.) These data do not capture more discreet closures of surgical and maternity units that are also happening at local hospitals.

And the trend doesn’t just affect nearby residents. It represents a slow-moving but seismic shift in the idea of the community hospital — the place down the street where you could go at any hour, and for any need. Does the need for that hospital still exist, or is it a nostalgic holdover? And if it is still needed, is it economically viable?

The eye of the storm

The effort to scale back inpatient care is occurring within some of the nation’s most prestigious nonprofit hospitals.

Mayo Clinic announced last summer that it would cease almost all inpatient care at its hospital in Albert Lea. The health network said it would keep the emergency department open, but send most other patients to Austin, 23 miles east.

In Massachusetts, sprawling Partners HealthCare said it will shut the only hospitalin Lynn, a city of 92,000 people near Boston, and instead direct patients to its hospital in neighboring Salem. Only urgent care and outpatient services will remain in Lynn.

And in Ohio, Cleveland Clinic has made similar moves. In 2016, it closed its hospital in Lakewood, a densely packed Cleveland suburb. It is replacing the hospital with a family health center and emergency department.

The cuts follow a period of rapid consolidation in the health care industry. Of the 1,412 hospital mergers in the U.S. between 1998 and 2015, nearly 40 percent occurred after 2009, according to data published recently in the journal Health Affairs.

As large providers have expanded their networks, they have also gained inpatient beds that are no longer in demand — thanks to improved surgical techniques and other improvements that are shortening hospital stays. Hence the closures.

But the hollowing-out of historic community hospitals has surfaced fundamental tensions between providers and the cities and towns they serve. Residents are voicing frustration with large health networks that build expensive downtown campuses, charge the highest prices, and then cut services in outlying communities they deem unprofitable.

Health scholars also note a growing dissonance between the nonprofit status of these hospitals and their increasing market power. While the nonprofits continue to claim tens of millions of dollars a year in tax breaks to serve the sick and vulnerable, some are functioning more like monopolies with the clout to shift prices and services however they wish.

“These providers say they are worth the high price and that in the American system, if you have a reputation for excellence, you deserve higher fees,” said Dr. Robert Berenson, a senior fellow at the Urban Institute. “My response to that would be, if we had a well-functioning market, that might make some sense. But we don’t.”

Changing demand among patients

The financial upheaval in community hospitals is driven by sweeping changes in the delivery of care. Procedures and conditions that once required lengthy hospitalizations now require only outpatient visits.

At Mayo Clinic, Dr. Annie Sadosty knows this evolution well because it roughly traces her career. She uses appendectomies as an example. Twenty-five years ago, when she was in medical school, the procedure was performed through a 5-inch incision and resulted in a weeklong hospitalization.

Today, the same procedure is done laparoscopically, through a much smaller incision, resulting in a recovery time of about 24 hours. “Some people don’t even stay in the hospital,” Sadosty said.

Something similar could be said for a wide range of medical procedures and services — from knee replacements to the removal of prostate glands in cancer patients. Hospital stays are either being eliminated or reduced to one or two days. And patients who were once routinely admitted for conditions like pneumonia are now sent home and managed remotely.

“Hospitals that used to be full of patients with common problems are no longer as full,” said Sadosty, an emergency medicine physician at Mayo and regional vice president of operations. “It’s been a breakneck pace of innovation and change that has led to a necessary evolution in the way that we care for people.”

That evolution has cratered demand for inpatient beds. In 2017, the Medicare Payment Advisory Commission noted that hospital occupancy is hovering around 62 percent, though the number of empty beds varies from region to region.

In Albert Lea, Mayo administrators said the changes at the hospital will only impact about seven inpatients a day. Currently, caring for those patients requires nursing staff, hospitalists, and other caregivers, not to mention overhead associated with operating a hospital around the clock. The financial result is predictable: Hospital executives reported that jointly Albert Lea and Austin hospitals have racked up $13 million in losses over the last two years.

With inpatient demand declining, hospital administrators decided to consolidate operations in Austin. The decision meant the removal of Albert Lea’s intensive care unit, inpatient surgeries, and the labor and delivery unit. Behavioral health services will be consolidated in Albert Lea.

Cleveland Clinic described similar pressures. Dr. J. Stephen Jones, president of the clinic’s regional hospital and family health centers, said use of inpatient beds has declined rapidly in Lakewood, dropping between 5 and 8 percent a year over the last decade. By 2015, 94 percent of visits were for outpatient services — a change that was undermining financial performance. The hospital lost about $46.5 million on operations that year, according to the clinic’s financial statements, and its aging infrastructure was in need of repair.

“Hospitals are very expensive places to run,” Jones said. “Lakewood was losing money on an operating basis for at least five years” before this decision was made.

Closures spark fierce protests

But the service cuts in Albert Lea, Lynn, and Lakewood — backed by nearly identical narratives from hospital executives — provoked the same reaction from the communities surrounding them.

Outrage.

Residents accused the hospital chains of putting their bottom lines above the needs of patients. Even if these individual hospitals were losing money, they said, nonprofits have an overriding mission to serve their communities.

“Why is profit such a priority, and more of a priority than the Hippocratic oath?” said Kevin Young, a spokesman for Save Lakewood Hospital, a group formed to oppose Cleveland Clinic’s removal of inpatient services. “Why are we allowing this to happen?”

The fight over Lakewood Hospital has persisted for more than three years, spawning lawsuits, an unsuccessful ballot referendum to keep the hospital open, and even a complaint filed by a former congressman to the Federal Trade Commission. None has caused Cleveland Clinic to reverse course.

Meanwhile, in Albert Lea, opponents to the service cuts have taken matters into their own hands: With Mayo refusing to back down, they are hunting to bring in a competitor.

A market analysis commissioned by Albert Lea’s Save Our Hospital group concluded that a full-service hospital could thrive in the community. The report included several caveats: A new provider would need to attract new physicians and capture market share from Mayo, a tall order in a region where Mayo is the dominant provider.

But members of the group said the findings directly contradict Mayo’s explanations to the community. They argue that, far from financially strained, the health system is simply trying to increase margins by shifting more money and services away from poorer rural communities.

“They don’t care what happens in Albert Lea,” said Jerry Collins, a member of the group. “Mayo cares what happens with its destination medical center.” He was referring to Mayo’s $6 billion project — funded with $585 million in taxpayer dollars — to expand its downtown Rochester campus and redevelop much of the property around it.

Sensitivity to Mayo’s service reductions is heightened by its control of the market in Southeastern Minnesota. It is by far the largest provider in the region and charges higher prices than facilities in other parts of the state. A colonoscopy at Mayo’s hospital in Albert Lea costs $1,595, compared to $409 at Hennepin County Medical Center in Minneapolis, according to Minnesota HealthScores, a nonprofit that tracks prices. The gap is even bigger for a back MRI: $3,000 in Albert Lea versus $589 at Allina Health Clinics in Minneapolis.

“All of Southeast Minnesota is feeling the domination of one large corporation,” said Al Arends, who chairs fundraising for Save Our Hospital. “They are ignoring the economic impact on the community and on the health care for patients.”

The community’s loud resistance has drawn the attention of the state’s attorney general and governor, as well as U.S. Rep. Tim Walz, who has begun a series of “facilitated dialogues” between Mayo and its opponents in Albert Lea.

So far, the dialogue has failed to forge a compromise. Mayo is proceeding with its plans. It has relocated the hospital’s intensive care unit to Austin, and inpatient surgeries and labor and delivery services are planned to follow.

Mayo executives reject the notion that they are abandoning Albert Lea or compromising services. The hospital plans to renovate the Albert Lea cancer wing and beef up outpatient care, improvements executives say have gotten lost amid the criticism.

As for inpatient care, they say, Mayo must consider quality and safety issues. With the hospital in Albert Lea only admitting a handful of patients a day, caregivers’ skills are likely to diminish, potentially undermining quality. They also cited recruiting challenges.

“It’s difficult to outfit both [Albert Lea and Austin] hospitals with all the incumbent equipment, expertise, multidisciplinary teams, and nursing staff,” vice president Sadosty said. “This is one way we can preserve and elevate care, and do it in an affordable way so our patients have access to high-quality care as close to their homes as possible.”

A strained system

Efforts to regionalize medical services also pose a new challenge: Can hospitals transport patients fast enough — and coordinate their care well enough — to ensure that no one falls through the cracks?

It is a question that will face stroke victims and expectant mothers who now must drive greater distances, sometimes in treacherous conditions, to make it to the hospital on time.

In Massachusetts, Partners HealthCare will face that test as it moves inpatient and emergency care from Union Hospital in Lynn to North Shore Medical Center in Salem. The hospitals are less than 6 miles apart. However, the short distance belies the difficulty of coordinating service across it.

Ambulances will have fewer options in emergencies. And if residents drive themselves to the wrong place in a panic, precious time gets wasted.

Dr. David Roberts, president of North Shore Medical Center, said the health system is working to educate patients to ensure that they go to the correct facility. He added that Partners already conducts risk assessments of patients with severe medical problems, and transfers them to hospitals with higher-level care when necessary.

In cases of suspected stroke, Roberts said, Partners employs a telemedicine program in which patients who arrive in its emergency rooms are examined by physicians at Massachusetts General Hospital in Boston. “They instantly, based on imaging, can decide which patient might benefit from having a clot pulled out of an artery in their head,” Roberts said. “They can say, ‘Yeah, this patient needs to be in our radiology suite in the next 30 minutes, and they make that happen.”

Still, opponents of the closure say it raises a broader concern about whether Partners’s actions are driven by a financial strategy to shift care away from low-income communities with higher concentrations of uninsured patients and those on Medicaid, which pays less for hospital services than commercial insurers. Union Hospital serves a largely low-income population.

“Why don’t we see these cuts across the Partners system? Why are we only seeing it in Lynn?” said Dianne Hills, a member of the Lynn Health Task Force. “Are we moving into a world where you have two systems of care — one for the poor and the old, and another for the affluent?”

Roberts said the consolidation at North Shore Medical Center in Salem has nothing to do with the income level of population in Lynn. He said the hospitals serve “identical” mixes of patients with government and commercial insurances.

“Our payer mix at both hospitals is adverse,” he said. “And despite that, Partners invested $208 million” to support the expansion of North Shore Medical Center.

Roberts acknowledged that the closure of the hospital in Lynn will have a negative impact on the city’s economy. But he said construction of a $24 million outpatient complex will mitigate some of that damage. The facility is expected to open in 2019. “It doesn’t take away the sting of losing a hospital,” Roberts said. “I’m hoping the [new] building goes a long way. We’re going to grow it as a vibrant medical village.”

Meanwhile, Mayo is proceeding with its changes in Albert Lea. Executives have assured Albert Lea residents that they will receive the same level of care for emergency services and upgraded facilities for outpatient care.

But some community members said they are already noticing problems with Mayo’s regionalization. One local pharmacist, Curt Clarambeau, said he can’t get timely responses to reports of adverse drug reactions. A call to the hospital in Albert Lea results in several phone transfers and no immediate response.

“It’s just impossible. It takes days,” Clarambeau said. “They’re trying to create efficiencies by not having everyone calling the doctors, but there are certain things we need to talk to them about.”

Don Sorensen, 79, said he’s also had trouble getting access to doctors at the hospital in Albert Lea. He said began to suffer from severe knee pain in November, but couldn’t get an appointment. His wife was put on hold for 40 minutes before learning the earliest appointment was still several days away.

At the suggestion of his RV repairman, Sorensen called a clinic in Minneapolis and got an appointment the same day. His wife, Eleanor, drove him, and he ended up with a brace, a prescription, and another follow up appointment.

But the couple is worried about continuing to make the drive if the logjam persists in Albert Lea. “We used to feel secure because we had Mayo here,” Eleanor Sorensen said. “We could get the care we needed. But now everybody our age feels very very vulnerable.”

 

 

MedPAC votes 14-2 to junk MIPS, providers angered

http://www.modernhealthcare.com/article/20180111/NEWS/180119963

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The Medicare Payment Advisory Commission voted 14-2 to repeal and replace a Medicare payment system that aims to improve the quality of patient care. Providers immediately slammed the move.

To avoid penalties under MACRA, physicians must follow one of two payment tracks: the Merit-based Incentive Payment System, or MIPS, or advanced alternative payment models like accountable care organizations.

On Thursday, the Commission voted to asks Congress to eliminate MIPS and establish a new voluntary value program in which clinicians join a group and are compared to each other on the quality of care for patients. Physicians who perform well would receive an incentive payment. The suggestion will be published in the advisory group’s annual March report to Congress.

MedPAC wants to junk MIPS because it believes the system is too burdensomefor physicians and won’t push them to improve care. Members have criticized the program’s design for primarily measuring how doctors perform, including whether they ordered appropriate tests or followed general clinical guidelines, rather than if patient care was ultimately improved by that provider’s actions.

The CMS estimates that up to 418,000 physicians will be submitting 2017 MIPS data.

Prior to the vote, the majority of the debate centered on whether or not MedPac had developed an adequate replacement for MIPS.

David Nerenz, one of the no votes, said he was against the replacement because he worried that only providers with healthy patients would ban together, while those with high risk patients would face difficulty finding anyone to partner with.

He also said evidence was lacking that the group reporting approach would be an effective way to hold providers accountable for quality.

Dr. Alice Coombs, a commissioner and critical-care specialist at Milton Hospital and South Shore Hospital in Weymouth, Mass., was the other no vote. She said she was against getting rid of MIPS as providers are just now getting used to it. Those concerns increased when MedPac staff noted that MIPS repeal likely wouldn’t take place until 2019 or 2020 depending when or if Congress accepted its recommendation.

Warner Thomas, a commissioner and CEO of the Ochsner Health System in New Orleans, LA voted yes, but said he did so with some trepidation as MedPac had not received comments from industry that they were supportive of what the Commission was doing in terms of repealing and replacing MIPS.

“There hasn’t been any support from the physician community around this, and we should be cautioned by that fact,” Thomas said.

Clinicians and providers criticized MedPac following the vote.

“I think they’re wrong,” Dr. Stephen Epstein, an emergency physician at Beth Israel Deaconess Medical Center in Boston said in a tweet. “MIPS could change practice patterns by aligning incentives with performance measures.”

The Medical Group Management Association said it did not support the Commission’s suggestion for a replacement to MIPS.

“It would conscript physician groups into virtual groups and evaluate them on broad claims-based measures which is inconsistent with the congressional intent in MACRA to put physicians in the driver seat of Medicare’s transition from volume to value,” Anders Gilberg, senior vice president of government affairs at MGMA said in a statement.

 

Uwe Reinhardt: Giant, mensch, knife twister

https://theincidentaleconomist.com/wordpress/uwe-reinhardt-giant-mensch-knife-twister/

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The renowned Princeton University health economist Uwe Reinhardt died today. The email from his Dean at the Woodrow Wilson school said he passed peacefully and surrounded by family.

Reactions on Twitter resonate with my own. They reflect Uwe’s contributions to and presence in health care policy and education — “insightful, “a treasure,” focused on the “moral underpinnings of policy,” “one of the nicest and funniest people in the field of health econ,” “a godfather of health policy and economics,” “a unique and disarmingly powerful voice in health policy,” a “world-class mensch,” “a gifted teacher and inspiring leader,” one of the “most acerbic speakers in Health Care over the last 20+ years. Never afraid to speak truth to power,” “engaging and understandable,” “a giant.”

I once called him “the narrator of U.S. health care policy.” Any journalist who could get hold of him for a health care story was sure to get pure gold. His wit and precision were evident in his spoken and written word. His command of English was tremendous. His ability to explain to lay audiences, legendary. If you’re unfamiliar, go read anything he wrote for The New York Times Economix blog, where he posted regularly for years. He can teach. You will learn.

Born and raised in Germany, he did it all in a second language. Of this, he reminded audiences regularly. The title of one of his presentations was, “Still Confused, After 40 Years in America!” Don’t believe it. Uwe was always the least confused person in the room.

He opened many speeches with, “I’m just an immigrant so maybe I am missing something about the curious American health care system” (or similar). I heard it many times. It never got old, particularly because I knew what was coming next. Just after such an opening, he would reveal some peculiarity of the health system I had never noticed in the same way. And then he proceeded to show how it was illogical, in violation of basic concepts of economics, immoral, or hypocritical.

He was a knife twister of the first class. Should you hold dearly an idea he targeted for systematic dismantling, you would squirm. If only I could write half as well or think one-third as clearly.

He touched so many lives and careers, including my own.

My first engagement with Uwe was in 2009, over one of his Economix posts. In the comments to that post, I asked him for an economics argument in favor of a public option. He was kind enough to respond at length directly to my inquiry in a follow-up Economix post. I was thrilled, even as I took a beating. I documented the encounter on this blog.

Perhaps due to my repeated blog-based engagement with him — like a fly that just won’t go away — Uwe took some interest in what I was doing on TIE. He noticed my many posts on hospital cost shifting and suggested that an updated literature review should be published. I counter-offered that we do it together, and he accepted.

I knew exactly what this meant. I was to write the first draft and he would serve as senior author and tell me how much more work it needed. Here’s where Uwe surprised me and earned my deepest respect. His response to my first draft was that it was so good he did not think it right that his name appear on it. Instead, I should publish it solo, with his support. This is good mentorship. It was my first solo-authored paper and is my most cited publication.

I met Uwe in person only once, in Princeton in 2010. I was there to visit my parents and give a talk at the Woodrow Wilson School. Learning I’d be in town, he invited me to lunch. I thought it was just going to be the two of us, but he insisted I bring my parents too — his treat. (In advance of the lunch, with some help from YouTube, I practiced how to pronounce his name. It’s “oo-va” not “you-ee.”)

Though I never saw him again in person, for years I encountered him over email. Usually our threads began with me asking a question or him sharing one of his lengthy emails to some other scholar or policymaker. (Oh, what a shame it is he didn’t post those emails for all to see. They were gems.) But frequently he would email out of the blue to inquire about my family. He took an interest in hearing what my children were up to and used that as an opportunity to remind me how different parenting or childhood was in his day.

“Child rearing is so different nowadays,” he wrote me once. “When we were little, we left the house after lunch and came home for supper, roaming the country side in the meantime (and playing with live ammunition [left over from WW II]).” I have very few folders of saved emails, but this one and others of his I filed away, not to be deleted.

Frequently, in the email back-and-forth that ensued he would type out some amazing story of past hijinks. Here’s one:

Once, at a Duke University private sector conference, the entire brass of the AMA happened to be there. It was my turn at the podium and I could not resist the following stunt.

The late James Sammons, then head of the AMA, had given interview in which he said Congress had carved Medicare to death like a turkey. I showed a slide of that quote which happened to have his picture next to it. I then showed data according to which between 1980 and 1988 constant-dollar Medicare spending on physician services per beneficiary rose 83%. Apologizing for this low number on behalf of taxpayers (the growth of 83% real allegedly did not permit physicians to give the elderly adequate care), I asked the AMA people: “What increase would have been adequate in your view?” So I counted out numbers (on a slide) like an auctioneer – 100%, 120% , …– but never got any takers. After +160% I left a blank spot and said: “Evidently 160% would not do it, so you give me the number. Is it 300%?” Icy silence. I then had a slide quoting country-music singer Conway Twitty or whoever it was from his song: “I need more of you (moolah) – more, anything less would not do.”

I then I ended saying that Karen Davis and I, both then serving on the PPRC (now Medpac) would propose a budget for Medicare physician payment (the VPS), because the docs would not come to the table with a reasonable number.

For a while I literally was banned at the AMA; but later I ended up on the JAMA board.

With tales like this, I thought of him as the Richard Feynman of health policy — brilliant in his field but with an appetite for adventure and practical jokes. I encouraged him many times to write up stories like these in a book, interwoven with health policy analysis or history. Sadly, he never did. Though he took pride in his past escapades, perhaps he saw himself differently late in his career.

“When I was younger I was more brash,” Uwe wrote me. “Now I’ve mellowed.”

There are many giants in academia, and many in health care. But there are none I know like Uwe.