Posts Tagged Medicare
Maryland and Medicare started a global payment scheme for hospitals January 1, 2014, and data on the program are now being reported (NPR and NEJM). Some success is noted for reducing unnecessary procedures and blunting the rise in costs for Medicare and the 28 Maryland health insurance companies.
Maryland is a small state but has 6 million residents. They have had a cost control system for hospitals for the past 40 years — up until now all insurance companies, except Medicare, paid the same amount for any given hospital service — Medicare paid less.
The “Maryland All-Payer Model” adopted in 2014 had 2 basic elements: 1) Hospitals would be paid the same rate by all payers including Medicare and 2) Hospitals would be paid a global fee rather than the previous “fee-for-service” model. The global fee is adjusted to some degree by quality targets. There is no adjustment for number of services.
Maryland healthcare overall was ranked 17th by the Commonwealth Fund within the 50 states and District of Columbia. But, the hospitals were ranked much lower at 33rd in the category of “Avoidable Hospital Use & Costs”. The All-Payer Model was designed to target the unnecessary services by hospitals.
The Hospitals liked the plan because Medicare would be contributing more money and they could get the same revenue without driving so hard to perform services (like cardiac catheterizations). The insurance companies liked the plan because it reduced risk and potentially could reduce cost — they could make more money.
Doctors are not very happy because they make money by charging fee-for-service associated with many of the services (like cardiac catheterization) — fewer services, fewer charges. Likely, a number of hospital physicians will look for positions elsewhere as services are reduced.
The program seems to be having some effect: the growth in Medicare service continued to rise but was reduced by about 1% whereas nationally the growth increased by 1%. From a patient standpoint the rates of potentially preventable conditions in Maryland made big improvements (except for catheter-related urinary tract infections and foreign bodies left in people after surgery which both had a big increase for unknown reasons).
The obvious future direction is to gradually reduce the payments to hospitals — to mitigate a potential huge windfall profit. Hopefully, quality monitoring will be expanded to make sure the hospitals are not just “studying for the test” and ignoring other areas with less scrutiny. It seems Maryland and Medicare have taken an important step away from fee-for-service. Hopefully other states will follow suit.
It is interesting to note that Colorado will have a ballot question next year to move to a single payer for health care in that state. Similar to Maryland, but circumventing insurance companies all together. Perhaps we are seeing the start of efforts to get rid of fee-for-service which is a huge driver of excess cost in the US health care system.
The purple pill tops the list of the most expensive drugs for government health programs in 2013. No, your first reaction to blame the government is wrong — the drug is prescribed by health care providers — and, the government is prevented by law from negotiating drug prices. Why is this a problem? –there was a perfectly fine OTC generic substitute available in 2013 at only 6% of the cost.
WHAT??? Prescribers wrote prescriptions for a drug that could have been substituted by an equivalent drug and saved 94%. OK, at the margins of the argument, at the fringes of reality, at the level it makes no clinical difference, big pharma says it might not be a perfect substitute. A good example where the “perfect” is the enemy of the very good.
But, how could prescribers and patients have the wool pulled over their eyes? — fantastic marketing. And, by the way, if you take this drug, send me your name, address, social security number, and bank account number, I have a nice bridge to sell you.
The magnitude of the problem became crystal clear when CMS published prescription data. The following data is widely reported from CMS as the spending on drugs through Medicare’s Part D prescription-drug program in 2013:
|Rank||Brand Name||Generic Name||Number of Claims||Cost in Billions|
Omeprazole is a very good substitute for Nexium for heartburn and reflux. Despite the cloud of industry generated studies many pharmacists say the two drugs have equal effects. As the table above shows omeprazole was prescribed 4 times as often as Nexium but the providers who chose Nexium created a vastly larger and unnecessary cost. Why Nexium is even be on the Medicare Part-D formulary is a mystery. Who pays the bill? — taxpayers, of course, and the patients who paid a co-pay higher than the full cost of an equivalent.
In 2015 Nexium became an over the counter drug (OTC) and just as you might suspect it now costs about the same as OTC omeprazole — about $32 for 56 pills (at Costco) rather than $300.
Where is the oversight? Where is the cost control? Why is US healthcare so expensive? Need more examples? Just look at the other medications on the list.
Doctors have long complained they don’t get paid to solve problems over the phone. Now primary care providers (not specialists) can charge $40 per month for something called “Chronic Care Management.” (CCM)
If you have several long term and serious conditions like diabetes, congestive heart failure and chronic obstructive pulmonary disease then Medicare will pay $32 per month and you or your supplemental insurance will pay the rest for this service. Many supplemental insurance plans have deductibles and co-payments — so many, if not most patients will be paying an extra $8 per month.
Who actually does all the work? The office nurse. The doctor supervises the decision making.
You will have to sign a consent for CCM in order for the doctor to bill you each month, so it is important to know what to expect. Some doctor’s offices will make the service helpful but in other offices you may never know where the money is going.
If you can’t tell you are getting CCM then simply stop the service — revoke the consent with a letter “Dear Doctor, effective at the end of this month please stop “Chronic Care Management”. I will continue visits as usual.”
In general, CCM is a good thing. Here are some of the problems it solves: Without CCM many doctors just don’t take the time to coordinate services except as part of an office visit — if you go to the emergency room the primary care provider would not act on recommendations until you actually go for an office visit. If your visiting nurse suggests some course of action then you go for an office visit. If you want to see a specialist you first go for an office visit. If you get discharged from the hospital and need physical therapy you go for an office visit before it will be ordered. With CCM the doctor gets $40 per month to coordinate care without always going for a face-to-face visit.
The minimum requirement for the provider is to spend at least 20 minutes per month working on your case without seeing you in person. Here is a list of things providers of CCM are required to do (at no extra charge) and thus things you should expect:
- Transitional care management: meaning admission or discharge from some medical service or facility (like giving orders for physical therapy after hospital discharge or providing full medical records to a rehab facility)
- Supervision of home healthcare. The provider gives orders for home care with lists of medications, duration of treatment and goals of treatment.
- Hospice care supervision.
- Provide a limited number of end-stage renal disease services.
The provider must have 5 capabilities and use those capabilities as needed:
- Keep your records in a computer
- Create a care-plan — an outline of goals and actions the provider will follow to meet those goals. Like “keep blood sugars in control — by weekly phone contact”. The provider should give you a copy of the plan — it should be specific to you and not a standard form applicable to anyone.
- Provide phone access to talk to a someone associated with the office 24 hours per day (they should be able to look at your computer record). Provide office visits as needed (presumably same day for urgent problems and within a week for non-urgent problems)
- Facilitate transitions in care. Like provide prescriptions and orders for therapy after discharge from a hospital or providing medical information to specialists for each visit. Or, keeping orders for home oxygen up to date. Or, immediately sending outpatient medical records to the hospital where you are admitted.
- Coordinate care. This does not mean providing all care, it is not a wall around you. If you need to see a specialist the provider makes sure all your medical data is transmitted to that specialist and makes appointments for you. And, follows the instructions of the specialist (as medically reasonable). Engages therapy such as home visits by nurses, physical therapy, occupational therapy or social service. And, makes efforts to meet the care needs outlined by those therapy services (as medically reasonable).
CCM does not eliminate office visits but it makes sure loose ends are dealt with and it obligates the provider charging CCM fees to provide access to someone that can look at your chart 24 hours per day. It also means the ER can call the primary care provider office and get up-to-date medical information about you in an urgent situation.
Disclaimer: the rules and fees for this program are in a state of flux. What is true today may not be accurate tomorrow. So, discuss the meaning of CCM with your primary care provider. Give them a copy of this article as a place to start a discussion. Here are some additional helpful links:
Physicians scoff at rules requiring them to use electronic records and now they must pay the penalty.
Melinda Beck reported in the Wall Street Journal 12/18/14 “Medicare to Cut Payments to Some Doctors, Hospitals”. Of the 893,851 physicians in the US, Ms. Beck reports 257,000 will be fined 1% of their Medicare fees for failure to adequately use an electronic medical record.
For example, the technically challenged doctors have failed to use electronic prescriptions, favoring instead marginally-legible hand-written prescriptions. And, they undoubtedly harmed patients by not taking advantage of allergy and interaction checks that are part of electronic prescribing.
AMA president-elect Steven J. Stack is reported as saying he was “appalled” by the government action. Every physician, obviously excluding Mr. Stack, was informed 5 years ago that fines would be imposed in 2014 by Medicare if physicians that bill Medicare fail to use electronic records in a meaningful way.
Why would a rational physician choose not to use an electronic record…?
- Because North Korea might hack the system
- Because the government told them to use an EMR (they give orders, not take them)
- Because they will be retiring soon and won’t need to learn about computers (the real reason)
- Because they will need to pay for a system to help patients
- Because young physicians want the systems, older physicians say no to all this newfangled stuff.
- Because a an electronic record might be used in court against them.
There you have it — a detailed explanation. Appalling, don’t you agree?
Payment of health care providers by volume of service (fee-for service) rather than quality of service is blamed by many as the cause of high cost and low quality in the US health care system.
A possible solution was proposed in 2006 as the Accountable Care Organization (ACO). The concept is modeled after other advanced countries which have lower cost and higher quality health care than the US. The idea is to pay a large organization (the ACO) to provide all the care needed for a large group of people. In other words, a per capita system, with payments not related to volume of services.
Medicare and the Affordable Care Act are betting on ACOs. The private sector is moving that way as well. The following graph shows the number of ACOs in the United States (CMS data)
The following graph shows the increase in the number of ACOs starting in 2009 and ending the first quarter of 2012.
The insurance industry is so entrenched it is hard to think outside of terms like deductible, out of pocket cost, and premiums. And, current ACOs indeed use those terms. But, under the hood, the ACO is run with a budget based on the cost to take care of a person for a year.
So, perhaps sometime in the near future you will just purchase health care by the year — something based on your age and ranging between $100 and $400 per person per month. Undoubtedly, there will still be some co-payments in order to avoid over use of services by some people.
A well formed ACO has a strong focus on a medical home and should include pharmacy service (not Walmart,Target or Walgreens etc.), hospital service (not every hospital), doctors, nurses, physician assistants, x-ray services, medical equipment, and devices. Not every hospital in the ACO would duplicate services — some would have specialty expertise, like brain surgery or heart surgery.
The materials to run the ACO would be purchased in bulk. The providers would be predominantly on salary and the hospitals under a strict budget with mandatory quality levels for all.
The rise of ACOs is encouraging but the actual number of covered patients is not large and the internal payment for ACO providers is still rooted in volume of services. But, with time and pressure (mostly from the business community) ACOs should begin to lower costs to levels enjoyed by other countries.
Congress could speed the process to be ready for the aging baby-boomers. But, action in Washington seems nearly impossible. It seems hard to argue against lower cost and higher quality, but they will.
The IOM is a government organization that studies medical care and issues reports. The reports are scholarly and well regarded. Below is an excerpt from a recent 380 page report.
The full report is available online and worth reading.
What is the bottom line?
There are numerous areas where US health care wastes money and delivers poor care. The wasted money is estimated at over $750 billion dollars each year. The IOM opines an environment where everybody has the attitude of gladly improving health care so each problem could be addressed and by an evolutionary process the US would end up with a great health care system.
Frankly, it ignores working health care systems in other countries and fails to outline a structure for management of US health care. All great quality improvement ideas fail without a structure . From a political standpoint the question will be “what am I buying”? The answer “the cost will evolve” is just not adequate.
So, in the absence of structural suggestions here is a place to start:
This system replaces all existing government health care agencies with an insurance system covering “basic care benefits”. All private insurance would offer the basic care benefit with insurance add-on products as desired.
Top level: Administrator
Department: United States Health Care (USHC)
Funded by: Congress (has a budget each year)
- Office of budget compliance with regional offices (comptroller)
- State divisions of quality improvement
- National drug and equipment evaluation and approval (formulary)
- Office of hospital, specialist, device and prosthetic payments
- Office of primary care and drug payments
- National patient registry
- Office of basic care benefits
- Office of national health records (System wide EMR)
- Office of health research integration
- Office of manpower training (free training in exchange for service)
Now we are getting somewhere. An administrative structure and a payment structure. There is huge efficiency by consolidating current US agencies like Medicare, Medicaid, Veterans Health System, Indian Health Service and all others. Private insurance is encouraged for those items not covered by basic care benefits (e.g. heart transplants, cosmetic surgery, fertility services, extremely expensive chemotherapy etc).
You may say the forgoing is just not possible for the US. But, consider the idea as restructuring, a management technique used by large companies all the time. The IOM says change is needed but we need that change NOW — we need to think like a large company and get the job done.