Posts Tagged ‘HMO’

Federal Government Bets $2 Billion on Oregon Medicaid Program

Thursday, June 14th, 2012

Oregon Governor John Kitzhaber, a former emergency room physician, has convinced the Center for Medicare and Medicaid Services (CMS) that he can significantly improve Medicaid treatment and do it cheaper by altering the way the sickest people in his state get healthcare.  If Kitzhaber’s experiment works, it could have repercussions for the entire nation.  According to Kaiser Health News, Oregon’s major cities — Portland, Salem and Eugene — will have their own umbrella groups for treating the Medicaid population, in effect, a “coordinated care organization.” (CCOs)  Under these umbrellas will be a majority of the heavy hitters in the health sector including hospitals, doctors, mental health providers and dentists.

Kitzhaber wants to switch Oregon’s 600,000 Medicaid patients into CCOs, which will accept a flat fee for delivering each patient’s care while remaining within that budget, with bonuses for quality metrics.  If patient care costs more than the flat fee, healthcare providers must eat the difference.

Kitzhaber’s idea is that healthcare businesses will stop competing for patients and instead link to each other electronically so that it’s easier for providers to share information.  Patients can see whichever provider they need to get maximal care.  The sickest people will have a $20-an-hour outreach worker to assist them in navigating the system and avoiding pricey hospitalizations.  Each outreach worker will manage a caseload of approximately 30 patients – with the goal of saving Medicaid hundreds of thousands of dollars.

I think this is really a defining moment for health care in the State of Oregon and, I think that if we’re successful, probably for healthcare beyond our borders,” Kitzhaber said.  The plan is supported by both Republicans and Democrats, with the state’s leaders putting their political reputations on the line for this deal.  The legislature passed its entire budget in the belief that the federal government was going to fund the program.  Unions and businesses in Oregon also support the program.  Malia Wasson, the president of US Bank in Oregon, celebrated the news.  “Governor, I know that you’re not prone to being overly demonstrative,” she said.  “But would you indulge me with a high five?”

Naturally, there are skeptics.  State Representative Jim Weidner voted against the Medicaid bill.  “It doesn’t really drive down the cost of healthcare.  It’s just shifting costs into different spots,” Weidner said.  He believes that the program ultimately will cost the state money.  Kitzhaber disagrees, noting that the coordinated care organization will be paid with a lump sum to manage Medicaid patients.

Under Oregon’s present system, hospitals and doctors don’t have a financial incentive to make people better.  To the contrary, if a patient keeps coming back, the provider keeps getting paid.  Under the new system, the faster a patient recovers, the coordinated care organization can keep more money.  Kitzhaber believes that over the next five years, Oregon will be able to save Medicaid every cent of the $2 billion the state’s been promised.

“We estimated that if every state Medicaid program in the country were to adopt this model, the net savings would be about $1.5 trillion dollars over 10 years,” Kitzhaber said.  Congress is looking at $1.2 trillion in cuts over the next 10 years after the super committee failed to come up with budget cuts.  Despite the fact that Oregon is pleased with itself, the federal government has said that if the state doesn’t show cuts to Medicaid spending by two percent next year, the new money could dry up.

Oregon is the only state to attempt to rethink Medicaid backed by federal tax dollars, said Dr. Roger Stark, a physician and healthcare policy analyst with the Washington Policy Center.  “The Oregon program is based on an HMO model which ties into quality controls to hold costs down.  But Oregon is broke, and they didn’t have the seed money to start the program because like all the states, they’re broke.  Oregon really stood on its head, and the CMS gave in.  Oregon’s program lines up with President Barack Obama’s law, and they probably sold it to the administration as a sort of pilot program,” Stark said.

According to Stark, the CCO approach resembles the HMO model, which was reviled by doctors and patients.  “The physicians hated it because they couldn’t control treatment decisions and had to focus on cutting costs, and the patients hated it because they couldn’t get complete treatment — they had no trouble seeing a primary care physician, but it was extremely difficult seeing a specialist,” Stark said, noting that rationing is inevitable under this approach.  “Oregon told CMS they could save money, which is pie in the sky.  Instead, there will be some form of rationing because they’re dealing with a fixed amount of money.  The rationing will be subtle and insidious.  Say you’re 60 years old and need a hip or knee replacement; they will tell that patient, ‘Oh, you don’t need that operation.’  Or they will tell him, ‘Take these pills, not those,’” Stark said.

“Medical Home” – Closest Care to a House Call

Wednesday, December 30th, 2009

Medical home approach to healthcare can cut hospitalizations and ER visits.  It’s almost – but not quite – a house call.

A new healthcare concept called “medical home” is emerging across the country, especially in Illinois.  It is primary care devoted to prevention and to helping people with chronic conditions such as diabetes or arthritis manage their illness.  In a medical home, a physician oversees a team of nurses, physicians’ assistants and health coaches who make certain that their patients get the care, support and education they need.  Another benefit is that the plan frees up the doctor’s time to focus on the more serious medical issues.

Medicare recently announced a similar initiative, and healthcare reform legislation could champion medical homes.  One pioneer in the field is Group Health Cooperative, a Seattle-based HMO that plans to convert 26 clinics in Washington and Idaho to medical homes.  The pilot program, established two years ago, reduced ER visits by 29 percent and hospitalizations by 11 percent while improving the quality of care, according to a report in the September issue of the American Journal of Managed Care.

For medical homes to function properly, physician compensation will have to change, says Dr. David Swieskowski, chief executive of the Des Moines-based Mercy Clinics, Inc.  The model works optimally when physicians are full-time, salaried employees.  This payment arrangement is fairly rare, and insurance companies don’t reimburse physicians for taking extra time to talk to patients.

Medicaid introduced a version of medical homes in Illinois through Medicaid in 2006 and 2007.  During that time, Medicaid assigned 1.9 million people to physicians who agreed to coordinate care for an extra monthly fee.  As a result, immunizations, vision screenings and other types of basic care have improved, state officials say.

Healthcare Cooperatives Worth a Look

Wednesday, November 11th, 2009

The Obama administration floated the idea of healthcare cooperatives as one solution to fix the nation’s broken delivery system – a proposal that was rejected out of hand by the opponents of reform.  Co-ops thrive in environments where people with mutual economic interests share resources to maximize their market power.  Because co-ops don’t pay dividends to stockholders, they reinvest profits and have a strong track record of providing innovative, cost-effective healthcare.Healthcare Cooperatives Worth a Look

There are downsides to healthcare co-ops, though.  They are often too small to compete with the insurance companies and so lack the ability to negotiate effectively with large hospitals or physician groups.  Most can’t afford computer systems for electronic billing or the technologies to deliver physician services.

Yet there are stories of extremely successful healthcare co-ops.  The major players – in Seattle and Minneapolis/St. Paul – have more than 500,000 members and each runs their own hospitals, clinics, physician groups and insurance plans.  Bloomington, MN-based Health Partners compensates physicians based on productivity.  Between 1998 and 2002, the co-op saw physician productivity soar by 38 percent and costs fall by 20 percent.  In 2007 Health Partners paid $27 million in incentives to caregivers who met productivity and patient satisfaction objectives.

The 62,000-member Group Health Cooperative of South Central Wisconsin, based in Madison, is another success story.  The co-op has used electronic records for seven years, according to executive director Larry Zanoni, and a prominent industry group ranks it eighth nationwide among HMOs for the quality of healthcare it provides.

Switzerland-Style Healthcare System Could be the Solution

Monday, September 28th, 2009

One instructive lesson in reforming American healthcare may be to adopt the Swiss model, which is regulated by the Federal Health Insurance Act of 1994,  and made health insurance compulsory for all residents.  Previously, Switzerland had an American-style system, which became a national outrage when studies revealed that five percent of the population lacked any coverage.

165298519_12e65e294bToday, 99.5 percent of the Swiss people are insured with coverage funded by the individual who generally pays the full cost of premiums. Government subsidies are provided for the poor, with approximately one-third of all Swiss citizens receiving the subsidy.  “These subsidies are designed to prevent any individual from having to pay more than 10 percent of income on insurance.”  All insurance is private and physician compensation is negotiated between the insurance companies and doctors on a canton-by-canton basis.

The down side is that Swiss healthcare is expensive, with costs rising 10 to 20 percent every year.  Monthly health insurance costs for a family with one child can amount to CHF 1,000 ($944).  Deductibles can be adjusted, though, from CHF 300 ($283) to CHF 2,500 ($2,360).  The state will help with the costs if income (married/without children) is around CHF 30,000 ($28,920) or (married/with children) around CHF 60,000 ($56,581).  In those circumstances, the government pays half the cost of insurance.  Options are available that will lower the monthly costs, similar to the American HMO model.  In these plans, the person must consult with their physician prior to seeing a specialist.

“The mix that Switzerland represents between private enterprise and general state regulations that make healthcare accessible to everyone is really an interesting example for the United States,” said Felix Gutzwiller, a Radical Party senator and head of Zurich University’s department of public health.  In Switzerland, administrative costs consume on average five percent of health insurance revenue.  In the United States, it’s closer to 20 percent.

In terms of satisfaction, the World Health Organization puts Switzerland in 20th place in its rankings of healthcare systems around the world.  The United States ranks 37th, sandwiched between Costa Rica and Slovenia.