Posts Tagged ‘Dr Donald Berwick’

Medicare to Tie Physician Pay to Quality, Cost

Tuesday, April 24th, 2012

Approximately 20,000 physicians in four Midwest states recently had a sneak peak at their financial future. According to Kaiser Health News, they were e-mailed links to Medicare reports detailing the amount their patients cost on average as well as the quality of the care they provided.  Additionally, the reports showed how Medicare spending on each doctor’s patients compared to their peers in Kansas, Iowa, Missouri and Nebraska.

The so-called “resource use” reports, which Medicare eventually plans to distribute to doctors nationally, are one of the most visible phases of the government’s efforts to enact a complex and delicate although little-known proviso of the Patient Protection and Affordable Care Act (ACA): paying more to doctors who provide quality care at lower cost to Medicare, and cutting payments to physicians who add to Medicare’s costs without improved results.

Requiring providers to pay closer attention to cost and quality is seen as crucial if the nation is to succeed at controlling its healthcare spending — currently more than $2.5 trillion a year.  It’s also vital to Medicare’s solvency.  Efforts are already underway to transform the way Medicare pays hospitals, physicians and other providers who agree to work together in accountable care organizations.  This fall, Medicare – which covers 47 million seniors and disabled people — will fine-tune hospital reimbursements based on quality of care.  It plans to take cost into account as early as next year.

But applying these same precepts to doctors is much more difficult, experts agree. Doctors see far fewer patients than do hospitals, so making statistically accurate assessments of doctors’ care is much harder. Comparing specialists is tricky, since some focus on particular kinds of patients that tend to be more costly.  Properly assessing how a physician impacts costs must include not just the specific services provided, but also care other providers may give.

“It may be the most difficult measurement challenge in the whole world of value-based purchasing,” said Dr. Donald Berwick, the former administrator of the federal Centers for Medicare and Medicaid Services (CMS).  “We do have to be cautious in this case.  It could lead to levels of gaming and misunderstanding and incorrect signals to physicians that might not be best for everyone.”

Dr. Michael Kitchell, a neurologist and chairman of the McFarland Clinic in Ames, IA, predicted that the Medicare reports “will be a huge surprise to almost every physician.”  That’s because the calculations of how much those doctors’ patients cost Medicare not only include the services of the individual doctor but of all the physicians who provided any treatment to the patient.  Kitchell said his own patients typically saw 13 other physicians.  “You’re a victim or a beneficiary of your medical neighborhood,” Kitchell said.  “If the primary-care doctors are doing the preventative screening tests, you’ll get credit for that, but if you’re in a community where the community doctors are doing a poor job, you’re going to look bad.”

Medicare officials are attempting to improve the way they measure physicians as they follow the ACA’s directive to phase in the new payment system, called a Physician Value-Based Payment Modifier, which is scheduled to begin in 2015.  At first, it will apply solely to physician groups and some specialists selected by the government; by 2017, the payment change is intended to apply to most if not all doctors.  The assessment “is a very important change we’re putting into place, one where we’re going to need a lot of feedback and deliberation,” said Jonathan Blum, CMS’s deputy administrator. “We’re not blind to the challenges that are coming toward us.”  Although the program is still being worked out, it will become reality for many doctors in January, because CMS wants to base its 2015 bonuses or penalties on a doctor’s patients’ outcomes during 2013.

Private insurers may decide to use a formula similar to Medicare’s, said Paul Ginsburg, president of the Center for Studying Health System Change.  Medicare’s ultimate method of judging and paying physicians could become “a valuable asset for private insurers, with a tool that will be somewhat bulletproof, that physicians won’t attack because they’ve been part of the process of developing them.”

Getting physician support might not be a peace of cake, said Margaret O’Kane, president of the National Committee for Quality Assurance.  “Doctors are a very powerful political segment,” she said. Additionally, “Patients are not behind this agenda.  The public is very scared about managing costs.”

Dana Gelb Safran, who measures quality for Blue Cross Blue Shield of Massachusetts, doubts it will be possible for the government to judge individual doctors.  “There really are very few measures that we can reliably evaluate on the individual doctor level,” she said.  “When they move forward with the value-based modifier, there is going to have to be a way to allow physicians to identify other physicians with whom they say they practice and who they say they share clinical risk for performance.”

Physician Groups Go After Unnecessary Medical Tests

Tuesday, April 17th, 2012

America’s physicians are embarking on an initiative to cut healthcare costs by ordering fewer unnecessary tests and treatments for their patients.  Nine prominent physician groups released lists of 45 common procedures they say are often unnecessary and may even harm patients. According to Kaiser Health News, “The move represents a high-profile effort by physicians to help reduce the extraordinary amount of unnecessary treatment, said to account for as much as a third of the $2.6 trillion Americans spend on healthcare each year.  Each of the societies, representing both primary care doctors and specialists, picked five procedures that medical evidence shows have little or no value for certain conditions, and which they say should be questioned by patients and their doctors.  The list includes such common practices as routine electrocardiograms for patients at low risk for heart disease, and antibiotics for mild sinus infections.”

Dr. Donald Berwick, formerly the Medicare administrator, called the campaign “a game changer.  This could be a turning point if it’s approached with energy,” Berwick said.  “Here you have scientifically grounded guidance from a number of major specialty societies addressing a very important problem, which is the overuse of ineffective care.”

“We need to use this opportunity to raise awareness that sometimes overtreatment or testing can be harmful,” said Glen Stream, president of the American Academy of Family Physicians, one of the nine participating physician groups.  The Choosing Wisely campaign comes amid efforts – some called for in the Patient Protection and Affordable Care Act (ACA) – to compare the effectiveness of treatments and to change payment incentives to physicians and hospitals to reward quality and penalize inefficiency.  But efforts to slow medical spending growth tend to be political, giving rise to fears of healthcare rationing or death panels.  “Anytime you are recommending against a test or treatment, people wonder ‘is it for some economic interest?'” Stream noted.

Among the nine groups backing the initiative are the American College of Cardiology and the American Society of Clinical Oncology.  The effort is being spearheaded by the American Board of Internal Medicine Foundation (ABIM). Together, the participants represent nearly 375,000 physicians.

Writing in Time, Alice Park says that “Each of the nine professional groups has come up with five tests or procedures that it believes doctors and patients overuse routinely. The American Gastroenterological Association, for example, is recommending against repeat colonoscopies within 10 years of a normal result from a first colonoscopy for patients with no family history of colon cancer.  The American College of Physicians is advising against using MRI to image patients any time they complain of generalized low back pain, and heart experts say doctors should stop using stress echocardiograms in routine check-ups for patients who don’t have chest pain or other risk factors for heart disease or heart attack.”

One of the initiative’s goals is to make people “feel empowered to go to their doctor and say, ‘Do I really need this test?'” said Christine Cassel, president of the ABIM and the group’s foundation. John Santa, an internist and the director of the Health Ratings Center for Consumer Reports, said, “I think it’s courageous of cardiologists, internists and family physicians to suggest reducing services that they know generate income for some of their members.  I’m sure some of their members won’t be happy.”

According to Dr. Steven Weinberger, CEO of the American College of Physicians, “Most of us feel something like $750 billion or so could be eliminated from the system that we spend on healthcare.”  Weinberger said that unneeded diagnostic tests almost certainly account for $250 billion annually.  “I talk about this a fair amount around the country, and invariably physicians come up to me and recount their own anecdotes about overuse and misuse of care.”

Mitt Romney Says “No” to Medicare on His 65th Birthday

Monday, March 19th, 2012

Even though he just celebrated his 65th birthday, GOP presidential hopeful Mitt Romney isn’t signing up for Medicare or Social Security.  According to an aide, Romney plans to keep his private health insurance plan although there is no word on whether he accessed that plan through a former employer or bought it on the individual market.  Ironically, if elected, Romney wants to offer senior citizens the choice of enrolling in the traditional program or purchasing private insurance with some financial help from the government.

Romney’s decision puts him in a tiny minority. The vast majority of seniors participate in Medicare.  Nearly all seniors are automatically enrolled in Medicare Part A, which covers hospital care, although they can opt not to use it.  Another 95 percent enroll in Medicare Part B, which covers physician services, according to the Kaiser Family Foundation.

“It was personally meaningful in me to be enrolling in the program I ran.  It made me feel one step closer to the beneficiaries,” Dr. Donald Berwick, who left his post at the Centers for Medicare and Medicaid Services (CMS) at the end of 2011, said.  “It validated what I had thought — which was that it was remarkably easy [to sign up].  Any president, at any age, should be committed to these important programs,” Berwick said.

By contrast, two of Romney’s competitors — Newt Gingrich and Ron Paul — are already 65, the age at which most Americans become eligible to enroll in Medicare’s coverage of hospital treatment, physician visits and other medical care, including prescription drugs.  Gingrich has a Medicare Advantage plan, administered by Blue Cross Blue Shield, according to his campaign.  Medicare Advantage plans are run by private insurance companies, who receive a fixed monthly payment from the federal government.  Gingrich frequently plugs Medicare Advantage and wants to expand the proportion of seniors who enroll in it from the current 25 percent.  Congressman Paul has a federal government-sponsored Blue Cross Blue Shield employee health insurance plan.  He has said that he would not change any aspect of Medicare for current beneficiaries but would let younger people opt out of the program and use medical savings accounts or other ways to pay their own healthcare costs.

According to NPR’s Julie Rovner, “Romney is clearly making a political point.  Wealthy people like him ought to pay more for their Medicare benefits (if they get them at all) and that perhaps 65 is a little young to qualify, too.  ‘Wealthier seniors will receive less support,’ under the changes Romney has proposed for Medicare, according to his website. At the same time, he is proposing to ‘gradually raise the retirement age to reflect increases in longevity.’  But could his political point cost him more down the road if he changes his mind?  Maybe.  Medicare charges penalties for those who wait to sign up.  It’s the program’s way of ensuring that people don’t wait until they get sick to enroll.”

Beneficiaries currently have a seven-month window to sign up for Medicare: three months before their birth month, the month of their birthday, and three months after their birthday.  That means that Romney has through June to enroll if he changes his mind.  The majority of adults use the Social Security Administration website to enroll for their benefits, while others go to local district offices.

Writing for the Huffington Post, Ethan Rome, Executive Director of Health Care for America Now, says that “I’m not sure what Romney’s trying to prove, but what his action says is clear: I’m not like the Americans who enroll in Medicare.  I’m special.  I’m rich.  I’m better than you.  Ask yourself: If Romney doesn’t need or want Medicare for himself, will he protect it for the rest of us who do?  Of course not.  Instead, he’ll continue to support the Republican plan to eliminate Medicare as we know it.  He’ll work to turn Medicare into a voucher program that will saddle seniors with thousands of dollars in out-of-pocket health care costs.  Because, after all, what senior can’t afford to spend an extra $6,400 a year on doctors and hospitals?  Before Medicare, seniors were left at the mercy of the private market and therefore virtually uninsurable.  Without insurance, even brief hospital stays could impoverish them.  The result was that the elderly went without the care they needed — unless their families were rich.  Most seniors were one illness away from bankruptcy.”

ACA Is Fixing U.S. Healthcare Delivery: Donald Berwick

Wednesday, January 4th, 2012

Dr. Donald Berwick, who oversaw Medicare and Medicaid until recently said the programs are trapped in a health system that promotes wasteful spending and inefficient care. “Healthcare is broken,” Berwick, who headed the Centers for Medicare and Medicaid Services (CMS), said.  “We have set up a delivery system that is fragmented, unsafe, not patient-centered, full of waste and unreliable.  Despite the best efforts of the workforce, we built it wrong. It isn’t built for modern times.”  Berwick said the Patient Protection and Affordable Care Act (ACA) is changing how physicians and hospitals are paid and deliver care through such innovative arrangements as accountable care organizations (ACOs), which improve coordination and lower costs.”

According to Berwick, it is not clear whether these efforts will produce results quickly enough to silence the critics who want to make more radical changes that would shift the majority of the burden onto beneficiaries.  “That is the central question, the nub…whether that will happen fast enough, I just don’t know.”

To read the full transcript of Berwick’s remarks, click this link:

Berwick defended his tenure as CMS administrator. Even though he failed to win Senate confirmation, that did not impact his ability to get things done, though he would have preferred a longer term.  “An agency of this size will do better with longer-term leadership commitment,” he said.  With the knowledge that his tenure was likely to be short, Berwick felt a greater sense of urgency to achieve things.  Berwick’s most challenging decisions involved state requests to cut Medicaid benefits and writing regulations to encourage doctors and hospitals to form ACOs, while not making the requirements overly burdensome.

Berwick took exception to state’s efforts to limit hospital coverage for Medicaid recipients, which is presently under review by federal regulators.  Hawaii has proposed a 10-day limit on some enrollees; Arizona has proposed a 25 day limit.  “It’s a nonsensical idea.  If a patient needs 20 days, the patient should get 20 days,” he said.

According to the Bangor Daily News, Berwick’s departure from CMS is “an unnecessary loss.” Berwick’s parting words should help Americans understand how their health system is in the process of being improved.  The article notes that “Waste is a broad term, including needless medical procedures, failure of adequate preventive measures, duplication and inefficiency, as well as outright fraud.  Hospital-acquired infections have caused the deaths of almost 100,000 Americans each year and the illness of millions more, according to the U.S. Centers for Disease Control and Prevention.  Dr. Berwick has reported that these complications have added as much as $45 billion a year to hospital costs borne by taxpayers, insurers and customers.  He said that some hospitals have virtually eliminated some infections that other hospitals still consider inevitable.  Under the Affordable Care Act, sometimes called Obamacare, financial incentives will go to hospitals that excel in fighting these infections starting in 2015.

Unnecessary hospital readmissions add another $12 billion a year, estimates the Medicare Payment Advisory Commission.  It says half or more of these readmissions could be prevented through better coordination and patient education, permitting them to recover at home rather than re-entering the hospital with complications.  ‘Integrated care’ will also reduce costs, said Dr. Berwick, by protecting patients from having to tell their stories over and over to different providers and letting a doctor know what medication they had already been given.  No figure is available for the savings from automated record keeping, but it is becoming substantial.  Preventive medicine is already reducing waste, for example by detecting diseases at early stages for prompt treatment.  The Affordable Care Act makes preventive benefits like cholesterol tests, mammograms and screening for colon and rectal cancer free for everyone with Medicare.”

Berwick Laments Washington, D.C., Cynicism About ACA

Tuesday, December 20th, 2011

Dr. Donald Berwick, who recently left his job as administrator of the Centers for Medicare and Medicaid Services (CMS) because the Senate refused to confirm his nomination, struck back at his critics who had accused the pediatrician of advocating healthcare rationing.

“The true rationers are those who impede improvement, who stand in the way of change, and who thereby force choices that we can avoid through better care,” Berwick said.  “It boggles my mind that the same people who cry ‘foul’ about rationing an instant later argue to reduce healthcare benefits for the needy, to defund crucial programs of care and prevention, and to shift thousands of dollars of annual costs to people — elders, the poor, the disabled – who are least able to bear them.”

Although Berwick didn’t specifically accuse Senate Republicans, it was clear that he was referring to proposals to drastically slash the nation’s budget deficit by capping federal funding to states for Medicaid.  That proposal could cut billions of dollars that critics have said would lead to cuts in benefits.

During his 16-month tenure at CMS, Berwick studiously avoided using the term “rationing”.  Now, the gloves have come off.  “When the 17 million American children who live in poverty cannot get the immunizations and blood tests they need, that is rationing.  When disabled Americans lack the help to keep them out of institutions and in their homes and living independently, that is rationing.  When tens of thousands of Medicaid beneficiaries are thrown out of coverage, and when millions of seniors are threatened with the withdrawal of preventive care or cannot afford their medications, and when every single one of us lives under the sword of Damocles that, if we get sick, we lose health insurance, that is rationing.”

Berwick also jabbed at those who inaccurately said the Patient Protection and Affordable Care Act (ACA) included so-called “death panels.”  According to Berwick, “If you really want to talk about ‘death panels,’ let’s think about what happens if we cut back programs of needed, life-saving care for Medicaid beneficiaries and other poor people in America.  Maybe a real death panel is a group of people who tell healthcare insurers that is it OK to take insurance away from people because they are sick or are at risk for becoming sick.”

Going even further, Berwick said that the ACA needs more advocates supporting the law. “The law is just a framework,” Berwick said.  “Healthcare in America can improve and it can become sustainable without a tremendous amount of community involvement.”  President Obama has an important role in this, as do healthcare consumers who must push healthcare leaders to rethink the way they work.  “Increasingly, though, that advocacy role is falling to physicians, nurses, and hospital executives.  We need their voices, because they know the system can’t go on the way it is,” he said.

“I think that a lot of the public concern about that law and a lot of the congressional criticism is ill-founded and based on myths,’’ Berwick said.  “I think any chance to air publicly, with conversation and even debate, matters of such concern is healthy.’’

While contemplating what to do next in his career, Berwick said “I’m excited by how much is in motion in healthcare right now.  It’s an incredibly interesting and promising time with many risks, and I want to stay thoroughly engaged in reshaping American healthcare into the high-performance, sustainable system I know it can be.”

Obama to Sign Executive Order Releasing $1 Billion to Cut Medical Fraud

Wednesday, November 23rd, 2011

President Barack Obama will once again sidestep a fractious Congress and sign an executive order designed to cut fraud from Medicare and Medicaid.  The Department of Health and Human Services (HHS) will administer the changes, such as testing changes to obsolete hospital billing systems to prevent overbilling, administration officials said.

The billion-dollar initiative will reward the “most compelling new ideas” for cutting costs and improving care of Medicare and Medicaid patients with rewarding federal grants.  Called the Health Care Innovation Challenge, the initiative will provide between $1 million and $30 million over three years to individual organizations or coalitions that develop sustainable, new approaches to improving healthcare quality and efficiency.  “We’ve taken incredible steps to reduce healthcare costs and improve care, but we can’t wait to do more,” said HHS Secretary Kathleen Sebelius.  “Both public and private community organizations around the country are finding innovative solutions to improve our healthcare system, and the Health Care Innovation Challenge will help jump-start these efforts.”

Centers for Medicare and Medicaid Services (CMS) administrator Dr. Donald M. Berwick, M.D. said, “When I visit communities across the country, I continually see innovative solutions at the very ground.  By putting more programs like this in place and more ‘boots on the ground,’ these types of programs can truly transform our healthcare system.”

This program is part of the Obama Administration’s “We Can’t Wait” initiative, which is a series of legal Executive Branch steps designed to move America forward while Congressional Republicans block critical and necessary legislation.

To demonstrate that its campaign to cut government waste is working, the White House said the administration cut improper payments by nearly $18 billion in 2011, largely in such programs as Medicare, Medicaid, Pell Grants and food stamps.  Budget chief Jack Lew ordered federal agencies to tighten their oversight of contractors and grant recipients to reduce the potential for taxpayer waste.

Not surprisingly, there was some immediate opposition to the initiative, with Republican critics calling it a “$1 billion experiment.”  “On the day the Supreme Court decided to review the constitutionality of ‘Obamacare,’ the president is asking for another $1 billion in taxpayer dollars to pay for another healthcare experiment that will continue taking us in the wrong direction,” said RNC spokeswoman Kirsten Kukowski.  “We already spent $2.6 trillion on his job-killing health care bill.  Another $1 billion Executive Order is just more words for a president more interested in campaign talking points than creating jobs.”

With the Supreme Court preparing to hear arguments for and against the Patient Protection and Affordable Care Act (ACA) next March, it is important to note that even the 26 states suing to have the law overturned are hedging their bets.  Only four states have refused all federal money to plan for the changes that are scheduled to take place.

Several healthcare industry leaders expressed their support for the ACA. “The system is transforming itself,” said Charles N. Kahn III, president of the Federation of American Hospitals.  “But the success of these changes depends a lot on whether there is sufficient funding.”  Nationally, hospital systems are anticipating an influx of federal funds and patients as the law goes into full effect.  “If the law is struck down, healthcare reform will have to continue one way or another,” said Patricia Brown, president of Johns Hopkins HealthCare.

ACO Rules Revised to Attract Providers

Thursday, October 27th, 2011

The Obama administration has issued revised regulations to encourage doctors, clinics and hospitals to take greater responsibility for improving patients’ care.  The rules will reward healthcare providers who enter into partnerships to cut the cost of caring for Americans while also boosting quality — two goals of the Patient Protection and Affordable Care Act (ACA).  Known as Accountable Care Organizations, or ACOs, these partnerships have been promoted by many experts as the most promising remedy for the high costs that typify the American healthcare system.

Supporters believe that ACOs could save taxpayers billions of dollars by better coordinating patient care and replacing the current fragmented system in which patients bounce between doctors and hospitals with minimal communication between providers.  “ACOs can represent a very big step forward in helping to transform Medicare, Medicaid and the Children’s Health Insurance Programs so they can help assure high quality, seamless and less costly healthcare,” said Dr. Donald Berwick, who runs the Medicare and Medicaid programs and helped to write the new rules.

“We have made changes in response to what we heard,” Berwick said. “I think they make the program more attractive.”  During the early days, between 50 and 270 ACOs may enroll in the program and save the Medicare program as much as $950 million over four years, according to independent estimates.

Among the changes are increased flexibility in eligibility to participate in the Shared Savings Program; a choice of start dates in 2012; a longer agreement period for those starting in 2012; more flexibility in the governance and legal structure; more streamlined quality performance standards; changes to the financial model to enhance financial incentives to participate; increased sharing caps; no downside risk and first-dollar sharing in Track 1; removal of the 25 percent withholding of shared savings; increased flexibility in timing for the evaluation of sharing savings (claims run-out reduced to three months); more flexibility in antitrust review; enhanced flexibility in timing for repayment of losses; and more options for participation of Federally Qualified Health Centers and Rural Health Clinics.

ACOs are a key provision in the ACA to decelerate rising health costs while delivering high-quality care to Medicare patients.  They are designed to change the incentives that influence how doctors and hospitals operate.  Today, most hospitals and doctors get paid more by delivering more, not necessarily better, care.  ACOs will reward healthcare providers for keeping costs down and meeting certain quality measures, including cutting hospital readmissions or emergency room visits.  ACO’s goal is to replicate the highly respected models of care at the Mayo Clinic in Rochester, MN, and the Geisinger Health System in Pennsylvania where hospitals and doctors coordinate their efforts within the same organization.

George Roman, senior director of health policy at the American Medical Group Association, which represents approximately 400 large provider organizations, described the changes as “music to my ears.  We asked for almost all of these things.”

“We are very pleased at the number of significant changes in rules.  They have made the program look more attractive,” said Linda Fishman, senior vice president of the American Hospital Association.  “But it remains to be seen how many hospitals will find these changes to be motivation enough to enter the program.”

The 696-page document includes more generous shared savings incentives, leaves out 32 of the 65 original quality measures, and gives potential ACO participants extra time to formulate their plans.  One vital change is that the rule no longer mandates that 50 percent of participating physicians be approved under meaningful use requirements for electronic health record use. The revisions provide more opportunities for new ACOs to participate without absorbing risk in the earlier years, as well as major changes in at least 10 other critical areas.  Thanks to the revisions, many in the healthcare industry think more providers will be encouraged to sign up.

Writing in the Washington Post, Sarah Kliff notes that “It’s a big moment in health policy wonk land right now: the Obama administration has just published the final Accountable Care Organization rule.  Sound dull?  Let’s rephrase: The Obama administration has just released a regulation that could decide whether the American healthcare system moves past the broken, expensive fee-for-service model.  The idea is to encourage groups of providers to band together into ‘accountable care organizations’ and accept a flat fee for all care related to a particular patient or condition.  If they could deliver high-quality care in a cost-effective way, they could keep the money they saved.  The hope is to do nothing less than change the basic business model of American medicine from making money by getting patients to spend more money to making money by saving patients money.  There.  That’s better.  This is not the administration’s first crack at encouraging ACOs.  A proposed rule in April, which detailed the requirements to become an ACO, was greeted with howls of protest by the provider community.  In hundreds of comment letters, hospital and doctor groups blasted the program as unattractive, with too much risk and not enough reward.  The American Medical Group Association warned CMS that virtually none of its members would participate.  The group called the rule ‘overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive.’

“There are two things that really irked healthcare systems here. First, if an ACO ended up spending more money than the target set by Center for Medicare and Medicaid Services (CMS), it would have to pay back some funds. Second, any ACO would have to show savings above two percent before they could reap any of the financial rewards.  The rule eliminates both of those barriers to entry.  It creates an ACO track with no ‘downside risk.’  The two percent gap gets cut, too: under the final rule, ACOs share in any savings from the very first penny.  CMS made a lot of other adjustments too that make the program easier to participate in, like lowering the quality reporting requirements and eliminating requirements that ACOs show significant use of electronic medical records.  As one CMS official put it this morning, the agency wanted to ‘smooth the on-ramp’ into the program.”

Medicare Bundling Payments to Save Money

Wednesday, September 21st, 2011

The Centers for Medicare and Medicaid Services (CMS) has a new program that would bundle insurance payments for multiple procedures with the goal of improving patient care while saving money.  CMS invited providers to help develop four models to bundle payments.  The program encourages hospitals, doctors and other specialists to coordinate in treating a patient’s specific condition during a single hospital stay and recovery.  “Today Medicare pays for care in the wrong way,” Health and Human Services Secretary Kathleen Sebelius said.  “Payments are based on the quantity of care, and not on the quality of that care.  There is little financial incentive for the kind of care coordination that can help patients from returning to the hospital.” 

The models give providers flexibility regarding how they get paid and for which services, and provides financial incentives to avoid needless or duplicate procedures.  “Hospitals and other providers recognize that they have to accommodate the current (fiscal) environment,” said Nancy Foster, vice president for quality at the American Hospital Association. 

“From a patient perspective…you want your doctors to collaborate more closely with your physical therapist, your pharmacist and your family caregivers,” CMS Administrator Donald Berwick said.  “But that sort of common sense practice is hard to achieve without a payment system that supports coordination over fragmentation.  We’re taking steps that will save Medicare, seniors and taxpayers $28 billion over 10 years. Medicare is paying much more than the private sector for equipment like wheelchairs and walkers.  By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods.”

According to CMS, the initial round of competitive bidding has added up to savings of 35 percent compared to the fee schedule.  Questions in the 1st quarter of 2011 totaled less than 0.9 percent of calls to Medicare’s call center; Medicare received just 45 complaints during that time.  CMS will conduct the second phase of the program for a similar set of products in 91 major cities.  Competition begins this fall; the new prices go into effect on July 1, 2013.  “The success we’ve had in the first phase tells us that we can achieve these savings with no disruption for patients’ access and no negative effect on patients’ health,” said Jonathan Blum, deputy CMS administrator and director of the Center for Medicare. “We remain confident in our bidding methodologies that will produce tangible savings while ensuring adequate choice of qualified suppliers.”

The CMS Innovation Center, created under President Barack Obama’s Patient Protection and Affordable Care Act (ACA), has been investigating bundling payments as part of a larger effort to both improve patient care and reduce costs.

There is some disagreement over whether the CMS bidding program is successful.  Economists, consumer groups and some in Congress are on record opposing the program.  They cite reduced access to care, flaws in the program design and impact on local jobs.  “There’s a reason why more than 30 patient advocacy groups, 244 economists and auction experts and 145 members of Congress oppose this program: it undermines quality of care and it increases costs,” said Tyler J. Wilson, president of the American Association for Homecare.  “Because of this bidding program, beneficiaries will spend more time in expensive institutions, rather than in the far more cost-effective setting for care – their own homes.” 

Tim Size, executive director of the Rural Wisconsin Health Cooperative, is concerned about the impact on rural hospitals.  “Washington has created a new ‘super committee’ to find more cuts.  Some call it a super Congress to remind us this is a small group given powers usually kept by Congress.  Most economists say Washington needs a coherent policy for both additional cuts and additional revenue.  But politics seems to have taken new revenue off the table.  Most people believe the super committee will deadlock.  If Congress fails to act, cuts will be implemented across the board.  Most federal programs will be cut.  Across-the-board cuts harm efficient programs along with the inefficient.  Across-the-board cuts harm necessary along with the less necessary. The country deserves better than bulldozers driven by blindfolded drivers.  Most rural hospitals are financially just holding their heads above water.  Under-payment by government programs has left them vulnerable.  A sluggish economy and an increasingly competitive healthcare marketplace are taking their toll.  Medicare and Medicaid are rural hospitals’ largest payers. Additional cuts are likely to tip many rural hospitals into the red and eventual closure.”

HHS Moves Forward to Create Healthcare Insurance Exchanges

Tuesday, August 30th, 2011

The Department of Health and Human Services (HHS)  has given $185 million to 13 states and Washington, D.C. to help them build Affordable Insurance Exchanges –one stop shopping that lets consumers choose a private health insurance plan that is virtually identical to insurance choices offered to members of Congress.  Since President Barack Obama signed the Affordable Care Act (ACA), more than half of the states have moved forward on building insurance exchanges.  The ACA creates Affordable Insurance Exchanges that will allow eligible individuals, families, and small businesses to shop for coverage beginning in 2014.  HHS plans to make more grant awards over the next several months.

According to HHS Secretary Kathleen Sebelius, “Too many American families have been priced out or locked out of the health insurance market.  Exchanges will give them control and could save them thousands of dollars a year.  I am encouraged by the progress states have made to date and am excited to give them more resources to continue their work.”

One state that is seeking guidance on how to set up its healthcare exchange is Nebraska,  which has questions about implementing this provision of the ACA.  According to state health insurance analyst Michael Sciullo, officials still haven’t learned the precise details of how the health insurance exchange could be established.  Sciullo is uncertain about whether a Nebraska-run program would carry over to other states, which option is the most cost-effective and how many participants would meet income requirements to join an exchange.  “There seems to be a lot of challenges with the concept,” Sciullo said.  “I think initially it was a concept that sounded great, particularly when we talk about the pooling aspect.  But with all the other challenges facing states as they prepare for the exchange process…it’s been one of those things that sounded a lot better in theory than has worked out practically.” 

Nebraska officials face the challenge of deciding whether the state will join the federal exchange, participate in a regional exchange with other states or create its own exchange.  A regional exchange In Nebraska is not likely because each state has different regulations governing healthcare insurance.  

HHS is encouraging states to set up their own exchanges because a peculiarity in the ACA is that while it gives HHS the authority to create a federal exchange for states that don’t set up their own, it doesn’t have the authority to provide any funding to achieve this goal.  The irony is that the law appropriates virtually unlimited dollars to help states create their own exchanges.  The federal exchange will have the same authority as the states to impose fees on insurance sold through the exchange once it is open for business.  No money is coming in until people start purchasing insurance, and there is significant work to be done in preparing to create federal exchanges.  “It’s very clear that (the HHS) secretary should ‘use such sums as may be necessary’” for supporting states in setting up exchanges, but it’s “sort of silent” on the federal fallback exchange, said Jon Kingsdale, founding director of the Massachusetts Connector, who advises HHS on setting up the federal exchange. 

The recent announcement that HHS, The Department of Labor, and the Treasury  proposed new rules that will help consumers easily understand their health coverage and determine the best options for themselves and their families.  Additionally, these proposed rules will help employers find the best coverage for their business and their employees.  Under the proposed rule alterations, health insurers and group health plans will give consumers clear, consistent and comparable information about their health plan benefits and coverage.  The new forms, scheduled to be available next year, will be a vital resource for more than 180 million health insurance consumers with private coverage.  “Today, many consumers don’t have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by different health plans,” Sebelius said.  “Thanks to the Affordable Care Act, that will change.”  According to Sebelius, the simplified options have been sent to the nation’s governors for their input and approval. 

“Workers and their families need clear and understandable information regarding their health coverage,” said Secretary of Labor Hilda L. Solis.  “Today’s proposal is a common-sense step that will help workers quickly and easily compare different coverage options, in order to make more informed decisions.”  

Writing on the White House blog, Dr. Donald Berwick, administrator of the Centers for Medicare and Medicaid Services, says that “Having affordable, quality health insurance is incredibly important.  But how can you pick the plan that is best for you and your family if insurance plans are written in words you cannot understand or in type so small you can barely read it?  And how can you take advantage of the health benefits you have if you don’t know what your plan covers?  You’re not alone in your confusion.  Too many Americans don’t have access to information in plain language to help them understand the health coverage they have.  Now, thanks to the Affordable Care Act, every American consumer will receive an important new tool to understand their coverage.  Under proposed rules, health insurers and employers who offer coverage to their workers must provide you with clear and consistent information about your health plan.”

Medicare Part D Costs Expected to Fall in 2012

Monday, August 22nd, 2011

Medicare Increased competition between Medicare Part D plans, greater generic drug use and more transparency for consumers are why the Center for Medicare and Medicaid Services (CMS) expects lower Medicare prescription drug premiums next year.  Next year, the average Medicare prescription drug plan premium will cost approximately $30, compared with an average of $30.76 in 2011, according to the Department of Health and Human Services (HHS).  CMS Administrator Dr. Donald Berwick said that the average premium is about 44 percent lower than what was estimated in 2003.

The Part D drug benefit,  enacted when George W. Bush was president, lets seniors and others on Medicare sign up for a privately administered, government-subsidized health plan to purchase their prescriptions.  The program enjoys high popularity with beneficiaries and has proven to be far less costly than budget analysts originally expected, partly because of competition among private plans and the growing use of less costly generic drugs.

HHS also announced that nearly 900,000 Americans in the Medicare Part D “doughnut hole” have benefited from a 50 percent discount in brand-name drugs in 2012.  HHS estimates that out-of-pocket savings on drug costs for Medicare beneficiaries to be about $461 million from January through June of this year.  The Obama administration has worked to strengthen the Medicare drug benefit with the help of the Patient Protection and Affordable Care Act (ACA).  The law phases out the coverage gap, long seen as one of the program’s weaknesses.  Last year, approximately four million seniors received $250 rebates because they fell into the gap in coverage.  This year, the law will provide 50 percent discounts on prescriptions for those who hit the doughnut hole.

Seniors can chose from a variety of Part D plans,  and Dr. Donald Berwick, administrator of the Center for Medicare and Medicaid Services, said competition “clearly helps” keep premiums from rising.  At the same time, he warned against overextending Part D.  HHS said 17 million seniors have received at least one preventive healthcare service without a co-pay.  The ACA eliminated co-pays for many preventive services under Medicare and will ultimately do the same for private insurance.

“This decline in the average creates more risk for plans like ‘Humana’ and ‘United Health’ that have a significant portion of the Part D members,” said Peter Costa, a Wells Fargo analyst.  Costa said one reason for the lower bids could be last year’s joint venture between Humana and Wal-Mart stores to offer Medicare drug coverage with the lowest premiums in the country.

“The Affordable Care Act is delivering on its promise of better health care for people with Medicare,” said HHS Secretary Kathleen Sebelius.  “People with Medicare who hit the doughnut hole are paying less for their prescription drugs, 17 million Americans have received free preventive services and prescription drug premiums will remain low.  These are important steps that are making a difference in the lives of millions of Americans right now.”

“Medicare beneficiaries will have more affordable prescription drug coverage next year as a result of vigorous competition in the Part D program and Medicare drug plans’ efforts to encourage seniors to choose the most affordable medicines,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans.  Ignagni noted that “taxpayers are also saving billions of dollars as the total cost of the program continues to be far below original projections.”