Medicare Advantage - the Value Plan
GAO just came out with a report announcing that Medicare Advantage enrollment increased 6 percent between April 2010 and April 2011 - to 8.4 million beneficiaries - and that the average premium decreased 14 percent between 2010 and 2011. The White House blog and key Senators are citing the GAO report's findings and touting the success of the program in offering value to seniors. However, I have to note that the GAO's statistics are way out of date. As of October 2011, there were 12.1 million beneficiaries enrolled in MA plans. The open enrollment season for 2012 is currently under way and MA plans are predicting a 10 percent increase in enrollment by January 1, 2012. It could be even higher since the average MA premium decreased again for the second year in a row. The GAO report includes CMS comments noting that premiums for 2012 are 4 percent lower than 2011 and 11.5 percent lower when compared to 2010.
Berwick Departs, Tavenner Ascends at CMS
Friday is Dr. Don Berwick's last day as Administrator of CMS, the victim of a recess appointment in 2010 and Congressional Republicans' obsession with keeping him from confirmation. It's a tragic result, as Berwick is a rare visionary talent for our favorite agency. His #2, Marilyn Tavenner, is preparing to take the reins of CMS at a critical moment in our politics and in implementation of health reform. She is a relative unknown, and this morning our friends at Congressional Quarterly published a terrific piece with 10 questions about her we wanted to share here.
Nov. 28, 2011 — 6:17 p.m.
Ten Questions About Marilyn Tavenner
By John Reichard, Nellie Bristol and Jane Norman, CQ
HealthBeat Staff
The announcement last week by Donald M. Berwick that he will step down Dec. 2
as administrator of the Centers for Medicare and Medicaid Services, and the
selection of Marilyn Tavenner, his principal deputy, as his successor, raises
many questions — about not just the future of Medicare and Medicaid, but also
oversight of the wider health system.
As head of CMS, Berwick has advocated innovative programs to improve the
quality and efficiency of treatment in Medicare and Medicaid. He launched
efforts to reorganize and more closely monitor the insurance industry. And he
was determined to improve patient safety. But the overriding task of his agency
since the health care overhaul passed has been to prepare for and begin
implementing the sweeping law.
Tavenner will carry on that work on an acting basis and, if she is confirmed
by the Senate, as permanent CMS administrator. Can she fill Berwick's shoes?
Does she have strengths he doesn't? How will CMS change? Here's our take on what
lies ahead at CMS as new leadership takes over next week.
1. Don Berwick is a passionate and articulate advocate for the health
care law. Marilyn Tavenner seems more reserved and has kept a lower profile.
Will there be hiccups in the implementation of the overhaul now that Berwick is
leaving?
Berwick moves audiences with his descriptions of how he thinks the health law
can change medicine for the better. He is an articulate champion of the idea
that change is not only possible but achievable — based on the work he has done
developing patient safety programs, measuring quality and setting performance
goals, and identifying promising community programs that can be implemented on a
national scale. It's unlikely Tavenner will capture crowds as Berwick does. But
those who have worked with her during her tenure as Virginia's secretary of
health and human services and as an executive with Hospital Corp. of America say
she always has shown a strong commitment to patient care.
Erik Swenssen, who led the department of surgery at Johnston-Willis hospital
outside Richmond when Tavenner rose up through the ranks of the HCA facility
from head of nursing to become its CEO, emphasizes Tavenner's skills as a
pragmatic manager. But he describes her as a visionary, too — but perhaps one
more grounded in the real world of health care.
"I may not agree with all his policies, but this guy has got big ideas," he
says of Berwick. "And personally, some of them I think would be very difficult,
if not impossible, to accomplish. Whereas Marilyn would also be a visionary. But
she's also a pragmatist. She knows doctors, and she knows nurses, and she knows
hospitals. Marilyn will know if you can get from X to Y. And sometimes, from the
outside of the Washington Beltway, I wonder whether the people know, can you get
from X to Y? This isn't a reference to anyone else, but her head is not going to
be in the clouds." The other point about Tavenner is that she is no stranger to
implementing the health care law (PL 111-148, PL 111-152). She's been doing it since she was
appointed principal deputy administrator in February 2010.
2. When is the administration likely to formally send up her
nomination? Will just the Senate Finance Committee handle the confirmation or
will the HELP panel have a say?
Still lots of unknowns on Monday. The White House hasn't yet formally sent
the nomination to the Senate. When it does arrive, the Finance Committee would
handle the confirmation hearings. But there's no word from Chairman Max Baucus, D-Mont., or Senate leadership on
their plans or the timing. Republicans have sent the signal that they expect
confirmation through the committee process — in other words, no rerun of the
Berwick recess appointment that circumvented the Senate. As for the Health,
Education, Labor and Pensions Committee, it's doubtful it would get
involved.
3. How well will Tavenner perform in hearings? Will she be responsive
to lawmakers while still serving as an effective advocate for the health care
law?
Tavenner is still pretty much an unknown when it comes to speechifying and
testifying in Washington as well as dealing with the press.
During an appearance on C-SPAN in November 2010, she appeared to deny that
the health care law includes $500 billion in Medicare and Medicaid cuts, which
it does. Tavenner seemed to be trying to frame the question to her advantage, as
if the question had been whether the health care law would reduce Medicare
benefits, and said it wouldn't. But a viewer might have thought the health care
law doesn't cut Medicare, which it does. As Virginia's secretary for health and
human services, Tavenner wouldn't respond to questions about allegations that
she and then-Gov. Tim Kaine suppressed the findings of a state task force report
(see question below).
On the other hand, Tavenner appears to have handled herself well in hearings
and in meetings with lawmakers in the Virginia Legislature — and, before that,
in other political challenges. "When she was health and human services secretary
at the beginning point of the recession, it was really essential that all the
agencies under the Cabinet would operate as efficiently as possible," says Jill
Hanken, a staff attorney with the Virginia Poverty Law Center. "She was involved
in delicately using the scalpel to cut programs for fiscal reasons. But at the
same time, there were some important steps forward in terms of prenatal care,
protection of safety net programs for the uninsured, and improvements for foster
care children."
Terry Dickinson, executive director of the Virginia Dental Association,
credits Tavenner with helping to get a measure through the Legislature allowing
dental hygienists to take on some of the responsibilities of dentists in
delivering care in medically underserved, impoverished parts of southwestern
Virginia. Tavenner met with dentists in the Virginia Dental Association's house
of delegates to address their concerns about the measure. "She understood the
political reality of how we needed to walk that line," Dickinson recalls. "You
have to think about the big picture, and how do you get health care to these
folks," Dickinson recalls Tavenner as saying. "She just had a great way of
talking with the group."
And Tavenner managed turf wars skillfully in world of hospital politics, says
Jay Grinney, CEO of the rehabilitation chain HealthSouth. In a HealthBeat
profile of Tavenner in May, Grinney said that when he first became Tavenner's
boss at HCA she was the CEO of Chippenham hospital in the southern part of
Richmond, Va. He put her in charge of creating a merged doctor network with
HCA's nearby Johnston-Willis facility. The two facilities had different medical
staffs, cultures, and markets. Company insiders doubted she could pull it off.
But Tavenner worked through the issues and successfully brought together the two
sites, Grinney says.
4. Allegedly, when she worked for Virginia Gov. Tim Kaine, they
suppressed the findings of a Virginia state task force report saying that 800
kids in state-run psych facilities wouldn't have treatment options close to home
if the state followed through on a plan to close the facilities. Then she
wouldn't talk more about the issue with the press. Is that going to cause her
confirmation trouble? What does it say about her management style?
If Republicans want to make trouble for Tavenner in a confirmation hearing,
it's logical that they will ask about the handling of the task force report.
"What happened with the Commonwealth Center really, I think, caught people
off guard," Mira Signer, executive director of the Virginia branch of the
National Alliance for the Mentally Ill, said in the profile of Tavenner earlier
this year. Advocates scrambled to keep the facility from being shut down, and it
remained open.
Tavenner backers typically draw a blank when asked about the task force
report, which appears to be an anomaly in a career noted for concern with
promoting access to care. Does it reflect a closed way of doing business? "In my
dealings with her, she was pretty transparent," says Hanken, who describes
Tavenner as having had "an open-door policy."
5. What about morale at CMS? People say Berwick really fired up the
troops with his vision that improving quality is a way to lower costs. Will
Tavenner have the same impact?
Tavenner has earned much staff goodwill during her tenure at the agency, CMS
insiders say. Tavenner too appears to be a motivator, although no one is likely
to match Berwick's particular brand of charisma.
Swennsen says, "The attitude and the atmosphere that I felt within the
hospital was a very functional one. The hospital and the doctors for the most
part got along, and the nurses did, and they were very attentive to what the
patients needed." There was a feeling "throughout the hospital that we had good
management, that if we had a problem we could go to Marilyn and she would take
care of it. There wasn't any ideology. There weren't any personal issues. It was
just a very clean way to do business. And it was very effective."
6. Would Tavenner bring her own people with her to fill management
slots? Should we expect other top people at CMS to leave after Berwick's
departure?
Tavenner has been in Washington now for more than 18 months, so don't expect
anything big anytime soon. Berwick devotees say they are committed to staying
and carrying on the work he has started at the agency. Some changes in the
administrator's office seem inevitable at some point. But don't expect any big
shakeup in the wider agency.
7. Tavenner oversaw a state Medicaid program, something unusual for
the top CMS official. How much difference is that going to make in running the
agency?
"It's great to have somebody in that broader role who knows Medicaid," said
Matt Salo, executive director of the National Association of Medicaid Directors.
Salo said Tavenner's state experience could help ensure Medicaid is "viewed as
just as important as Medicare when thinking about the big picture."
Among pressing issues for the program is how to move a care improvement
agenda in an era of tight budgets at both the state and federal level. That will
involve a change in culture, Salo said, to provide greater focus on innovating
and outcomes rather than process and paperwork. Movement in that direction often
is slowed by the constant tensions between state and federal administrators, he
said. Tavenner will understand the dynamic from both sides.
Former Medicare and Medicaid administrator Gail Wilensky, now a senior fellow
at Project HOPE, agrees, saying Tavenner "is likely to be especially sensitive
to the issues and sometimes frustrations that states historically have had with
the agency," including "timeliness or lack thereof" on decisions relating to
waivers and other issues. Diane Rowland, executive director of the Kaiser Family
Foundation's Commission on Medicaid and the Uninsured, said Tavenner's
experience also will help in establishing state-based aspects of the health care
overhaul. "It will help her to have a grasp on the state challenges as health
reform is implemented," Rowland said.
8. A lot has been said about Berwick's vision and ideas. What about
health care is Tavenner most passionate about?
Unlike Berwick, Tavenner doesn't have a signature set of specific issues that
she has championed. Those who have worked with her talk about her unwavering
commitment to patient care and to ensuring that patients have access to the care
they need and that providers are paid in a way that promotes that access.
"She's a pragmatic person who wants to make things work and has patients at
heart," Debbie Oswalt, executive director of the Virginia Health Care
Foundation, told HealthBeat in May. (See related story, CQ HealthBeat, May 31,
2011).
9. How are health industry stakeholders responding to the Tavenner
nomination?
So far, so good for Tavenner. In fact, some of the reaction was nearly
ecstatic.
Chip Kahn, president and CEO of the Federation of American Hospitals, said
she has served "skillfully and with distinction" as deputy administrator. "Ms.
Tavenner's successful career is characterized by her willingness to go the extra
mile and to reach across the aisle to achieve results. She is an ideal candidate
to head CMS, and we encourage the Senate to approve her nomination quickly,"
said Kahn.
Tavenner is a former hospital chief executive and president of the Virginia
Hospital Association, and she spent 10 years in executive-level positions with
the Hospital Corporation of America.
Rich Umbdenstock, president and CEO of the American Hospital Association,
where Tavenner has served as a board member, said she is a "very capable
administrator" with a varied and rich background. "We have no doubt that she
will provide strong leadership in these challenging times," he said.
The doctors like her, too. The American Medical Association issued a
statement strongly supporting her.
"We have worked extensively with her in her role as deputy administrator, and
she has been fair, knowledgeable and open to dialogue," said Peter W. Carmel,
AMA president. "With all the changes and challenges facing the Medicare and
Medicaid programs, CMS needs stable leadership, and Marilyn Tavenner has the
skills and experience to provide it."
Those representing skilled-nursing facilities (SNFs) praised Tavenner's
understanding of the connections between Medicare and Medicaid when it comes to
delivering quality care to residents of nursing homes. That came when she was
health secretary in Virginia, they said.
"Marilyn Tavenner is a strong choice to lead CMS because of her reputation as
a smart, competent administrator, and because she has a strong working knowledge
of how Medicare and Medicaid funding adequacy are both integral to the ongoing
ability of SNFs to provide high quality long term and post-acute care to U.S.
seniors," said Alan G. Rosenbloom, president of the Alliance for Quality Nursing
Home Care.
10. What about Berwick's future?
Right now, no one seems to know what his plans are. Or at least they're not
saying. When he announced his resignation last week, Berwick did not address his
future. Those close to him at the agency said he was expected to return to his
home in Boston and spend time with his family before deciding his next move.
Rumors are rampant that Berwick ultimately may stay at HHS in a
non-political, technical position, either in the secretary's office or at the
Center for Medicare and Medicaid Innovation. The Institute for Healthcare
Improvement, where Berwick was CEO and president before moving to CMS last year,
is referring press calls back to CMS, at least until after he leaves office
Friday.
IHI's CEO and president, Maureen Bisognano, said in an email that she is
confident Berwick will continue to contribute to the national agenda of
redesigning health care delivery and financing. "That is his life's work,
mission and passion," she added.
Kaiser's Rowland expects Berwick will be very much in demand. Many places
respect him, she said, and would want him, and he's "very committed to seeing
things through." Rowland is sure he will "continue to be an advocate for these
reforms."
Corporate Greed Puts Profits over Safety: Pfizer Inc. is Moving into Retail
In an effort to hold onto sales of cholesterol fighter Lipitor after the drug loses patent protection at the end of this month, Pfizer is planning to sell the pills at generic prices directly to patients, breaking a longstanding triad between the patient, prescriber, and pharmacist, which provides a system of checks and balances for delivering medication therapy, The Wall Street Journal recently reported.
Lipitor, the top-selling drug of all time, has made Pfizer more than $81 billion in sales since launching in 1997, according to IMS Health. At its peak, more than 11 million Americans took it, says Wolters Kluwer Pharma Solutions, another health-care data firm.
Because most patients see multiple prescribers, when a patient uses a single pharmacy the risk of drug errors is reduced substantially. By interjecting a Pfizer Pharmacy for a single drug, at least one leg of the triad is undermined creating the risk of duplicative therapy since neither the plan's nor the pharmacy's records would be complete for the patient.
In letters to pharmacists last week, PBMs instructed pharmacies to continue dispensing brand Lipitor for the next 6 months. This reversal of business as usual reflects new tactics by Pfizer to keep sales afloat as generic competition threatens its blockbuster drug. Pfizer has agreed to large discounts for benefit managers that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public.
Earlier this year, Pfizer, Inc attempted to circumvent Medicare Part D formulary regulations by offering generous rebates to PBMs to block the addition of generic Lipitor, atorvastatin, and place the brand name on a preferred tier. Part D Plans are prohibited from making formulary decisions based on financial incentives to the Plan or its delegated entity, the PBM.
Dave Marley, RPh, founding member of the group and author of a Pharmacy Times blog about bringing accountability to the PBM industry, told NYT that employers and taxpayers will bear the brunt of excess costs under the new arrangement—even as PBMs pocket Pfizer's rebate dollars.
To offset the expense of dispensing Lipitor instead of its generic equivalent, which would cost payers roughly $35 less, Pfizer is offering benefit managers a point-of-sale discount that undercuts the generic price. As a result, most patients taking Lipitor will see their co-pays drop to about $10 per prescription, the New York Times reported. The block on generic Lipitor is scheduled to lift on May 31, 2012, when several other generic drug makers are expected to launch their versions of the drug.
The Impact of the Sequester on Private Plans
Medicare Advantage (MA) plans and Part D plans are slated for a 2 percent cut beginning in FY 2013 now that the Super Committee has failed to recommend any changes that cut the deficit. This is probably a better deal than private plans would have faced if $1.2 trillion in cuts were recommended and adopted. The Part D cuts will affect the direct subsidy and not low income subsidies or reinsurance. We would expect plans to submit higher bids next year to make up the difference. MA plans that include drugs will have a double hit. Even though the Budget Control Act specified that beneficiary cost sharing would not be impacted by a sequester, the reality is that plans will increase premiums and out of pocket costs paid by enrollees. If fee for service providers increase volume to offset their 2 percent cut, then Medigap plans will pay more and their costs will also increase.
Why it's gonna get worse
Not since the Edsel has anything been so perfectly designed to fail as the Supercommittee. So now what? The doc fix, for one, is in big trouble. In Washington accounting, it will cost an arm and a leg to do a permanent doc fix, since the savings it is supposed to generate go on forever, or at least as long as we have Medicare. A permanent solution might have been possible under cover of a Supercommittee deal -- just one more adjustment among the trillions. Now it's out on its own. At least the final accounting is a little better than was projected: only a cut of 27.4%, not 29%. Not much comfort if you are a doctor with a big Medicare practice.
But the Affordable Care Act created another version of the sustainable growth rate, the formula that makes the doc fix necessary. It's the much maligned IPAB -- the Independent Payment Advisory Board. Here's how IPAB works. It will make recommendations to reduce Medicare cost. Congress can adopt or ignore the recommendations. But if medicare grows faster than a preset target, either the recommendations will take effect anyway, or Congress has to come up with equivalent savings. It's another autopilot, just like the sustainable growth rate.
IPAB is prohibited from doing most of the things that would really reduce costs. It can't change eligibility, benefits, or beneficiary cost sharing or premiums. So all it can do is cut provider payments, and promote soft-savings initiatives like ACOs. But we already have ACOs, so what can it do? Cut payments.
It can't touch hospital payment rates until 2020. So who is left? Doctors, that's who. Back to the sustainable growth rate problem.
The IPAB is supposed to work like the Base Realignment and Closing Commission. The commission proposes which military bases to close, and Congress gets an up-or-down vote. It provides cover for members whose districts are going to be hurt by the closings. For any given round, that's only a few districts. But the IPAB recommendations will affect every doctor that sees Medicare patients, in every Congressional district. And every hospital after 2020. Every member of Congress is going to hear local howls, every round. That's a very different scenario compared to the base closing approach.
So with the Supercommittee failure, Congress has placed itself in a box where it is facing drastic defense cuts, expiration of the Bush tax cuts for all income brackets, and an election with a polarized electorate. And now, they have created another insoluable problem with the creation of the IPAB, and the restrictions they have subjected it to. They have reinvented the Edsel.
Deficit Supercommittee: Epic FAIL. Brief Relief for Medicare/caid.
It appeared at the market open Monday that after much hand-wringing this weekend there is no clear path to a compromise for the Congressional Deficit Supercommittee in time for its Thanksgiving deadline. Epic FAIL. The markets responded, down 300 points as of this post. As an American, I'm pissed: now here comes again the credit rating agencies, who will reward this latest political failure with another downgrade and make credit for all Americans harder to obtain. As a healthcare executive, I'm breathing a sigh of relief, however momentary it may be. Sequestration is coming, and it's a better scenario for Medicare and Medicaid than anything this kangaroo court might have come up with.
In terms of the impact on health plans, we fully anticipated that the Super-Committee would not reach a deal, and that sequestration's 2 percent cut to Medicare in 2013 was a given. It won't be without its pain: that's another 2% hit on Medicare Advantage on top of those that helped fund the ACA, and will hurt MA margins in 2013 and 2014. This will make smaller MA players even more vulnerable to assault from large publicly-traded plans and drive a steady drumbeat of consolidation in the program. But we expect that the impact will be manageable for most through mastery of risk adjustment and Star ratings bonuses, with some passthrough to providers and beneficiaries.
The biggest question in the collapse of the Supercommittee is what now happens to the "doc fix" -- the looming 29% cut to Medicare fee-for-service reimbursement rates for physicians that goes into effect in January. The Supercommittee may have been the last bus out of town for the fix.
The failure of the Supercommittee is also a short-term positive for Medicaid, as it was exempted from sequestration. The states' steady march toward managed care for the remainder of the "moms and kids" (TANF) and the dual eligibles and institutionalized will continue unabated, opening up a new market opportunity for health plans in excess of $300 billion per year by 2015.
The focus in Washington will now shift to how to mitigate some of the draconian cuts to the defense budget that are now scheduled to go into effect in 2013 and that will cause Republicans to foam at the mouth. The frenzy to avoid them will accelerate the discussion around more desperate measures for Medicare and Medicaid. The previously unthinkable will become fixtures of the debate in this next year. Raising the eligibility age to 67. Passive enrollment for the duals into health plans. An opt-out only for Medicare beneficiaries -- you're in a plan unless you choose otherwise and pay more. "Death panels."
This will harden partisan battle lines around the future of our two most essential healthcare programs as we head into the elections. In the end, the elected class will duck and cover, demagogue the issues and scare the crap out of seniors, and then take it to the voters in 2012. Election Day can't get here soon enough.
Member Retention has an Exponential Effect on Revenue
The typical MA health plan, on average, loses eight percent of its members annually through voluntary disenrollment, and another four percent involuntarily. Let's assume that same health plan has a membership of 50,000 lives, and from a revenue perspective, typically realizes $1000 per member per month in premiums and Medicare payments to the health plan. That means that just a single percentage point improvement in member retention — going from an eight percent (4000 member loss) to a seven percent voluntary disenrollment rate (3500 member loss) — would result in a $6 million increase in plan revenue. Do the math. That's a 500 member difference, times $1000 PMPM… here are the results as the disenrollment rate improves by one, and even two percentage points.
| Disenrollment Rate: | 8% | 7% | 6% |
| Members lost | 4000 | 3500 | 3000 |
| Resulting Revenue Increase (improving from 8% industry average) | N/A | $6 million | $12 million |
*These figures are based on a health plan with 50,000 members, and $1000PMPM in payments to the plan
At the same time, today's sales & marketing budgets are getting smaller and smaller. If we move beyond a cursory assessment and look at the acquisition costs to replace that one percent (500 members) through sales, we can then see the additional impact that member retention can have on an organization's performance. Depending on your market, the acquisition costs to find a new member can be somewhere around $1,200, on average. This cost includes advertising & marketing costs, sales & marketing operations costs, salaries & benefits of those employees, and can even include software costs and services through other vendors. So assuming a $1,200 cost of acquisition, that one percent improvement in member retention (500 members) just saved your sales and marketing department $600,000 in what it would have cost to replace them. Furthermore, we can assume that $600,000 will still net the health plan another 500 members…and we just showed what that one percentage point was worth.
So let's look at this in perspective. Even if our hypothetical organization is able to immediately replace every single one of the 500 members - representing the difference between an eight percent and a seven percent voluntary disenrollment rate - through new sales, recouping that $6 million in would-be lost revenue, that organization still had to go out and spend $600,000 of their own sales and marketing dollars to make it happen. Thus, if you're looking at this problem objectively, to get the most "bang for your buck", it makes sense to take a hard look at your member retention strategy before moving on to sales and marketing. Remember, retention's impact is two-fold; not only will it impact the bottom line on the payment side, but it will put sales & marketing dollars to more efficient use — where they should be — adding members, not replacing them. Retention doesn't always have to be a cause & effect of benefit design. There are other dynamics in play that beneficiaries take into consideration when choosing a plan. Knowing what those factors are - and ultimately what value your beneficiaries attach to them - can help keep the initial impact of aspects such as benefit structure or premium increases from sending existing members out in search of a new plan.
The Secret Sauce of Risk Adjustment: Implementation, Implementation, Implementation
As we are coming close to year end, we have all learned a great deal. The number one thing we hear from health plans: "I thought they could implement."
Risk adjustment is successful only if you couple speed with quality. The three most constant stumbling points for member evaluations programs are
1) compilation of data
2) suspect list generation
3) provider recruitment
As you talk with your health plan and medical group peers, their references and experience should help you navigate this treacherous path.
The questions you may need to ask:
1. How long does it take you to compile and refresh data? Best in class answer: 10 days to compile a health plan or medical group's data and 1-2 days to refresh it monthly.
2. How long should it take to generate a member suspect list? Best in class answer: 5-10 business days
3. How long does it take you to recruit or train or allocate member evaluation providers? Best in class answer: Within 20 days of contract execution, your assessment vendor needs to have their evaluators recruited, trained, and in the field with your members.
Make sure you ask the right questions and pick the right partners. If you selected a turtle this year, you better start looking for a rabbit for 2012. Slow and stumbling does not win the race and you have to win the risk adjustment race to stay alive.
CMS Insights
At a November 16 forum on Clinician Leadership sponsored by Brookings, Dr. Richard Baron, Group Director of Seamless Care Models at the CMS Innovation Center provided several insights into CMS thinking. Most notably, Dr. Baron said that CMS is running as fast as possible away from the FFS payment system, which is not considered a viable model. Medicare is moving away from a producer model to a patient centered model. The demonstrations that the Innovation Center are rolling out are the direction that CMS would like to see, possibly in five years (e.g. bundled payment, accountable care organizations and models that reward value and quality rather than volume). CMS is aware that hospital and physician consolidation poses a risk of price increases in some markets, but Dr. Baron is hopeful that the provider community is ready to move to a more sustainable model of health care financing and delivery.
Dr. Baron also said there has been an important change in a ruling from their General Counsel. In the past, the lawyers felt that the Innovation Center did not have grant making authority but only authority to run programs. A recent decision reversed this ruling. I am surmising that the recent $1 billion Innovation Challenge opportunity that the Center just released is a result of this new legal interpretation. It is hard to imagine that since the Congress approved $10 billion to fund delivery and payment system innovation that the lawyers would put handcuffs on how it could be spent. Fortunately the cuffs have been removed and the Innovation Center will be able to fund smaller and more projects that are developed by stakeholders in the field.
Dr Baron noted that CMS has been told that many providers are already building in a 10 -20 percent cut in Medicare revenue into their plans with the expectation that budget cuts will be necessary to assure the sustainability of the Medicare program.
The Air of Inevitability Around Romney
I can't remember the last time I had more fun watching electoral politics. Obama suffers an open-mic gaffe and is losing White House staff like he's losing his hair. Herman Cain's sexual harassment fiasco deepened in its second week. Rick Perry suffered an excruciating 45-second brain-fart in a GOP debate where he couldn't remember one of 3 Federal agencies he wants to abolish. Which was the worst primary-ending gaffe: Cain's ongoing trouble with the ladies, Perry's "oops", or Howard Dean's primal scream?
As fun as watching all this is (and it's DC's only spectator sport worth watching these days as our Redskins flush another season down the toilet) its result is an air of inevitability that Mitt Romney will emerge as the GOP nominee for President. Pawlenty, Trump, Bachmann, Christie, Perry, Cain...all surged and flamed out in the face of Romney's rock-steady support at about one-quarter of likely GOP primary voters.
Next to surge as "anyone but Romney" is former House Speaker Newt Gingrich...and he's sure to wither under media scrutiny of the many unpalatable items in his personal and professional lives. As smart as he is, his arrogance is legendary and he is just not a likeable guy. You need to be likeable or at least inspiring to win a nomination, and Gingrich is neither. My guess is he runs out of money right after the Iowa caucuses.
So it still looks like Romney v. Obama next year. The futures markets -- great predictors of uncertain outcomes -- agree, showing Romney futures spiked folllowing Perry's "oops" and Obama holding steady with about 52% of investors saying he'll win reelection. Lack of enthusiasm will likely be the defining characteristic of the 2012 campaign -- the GOP will be only "in like" with Romney and many Democrats will be feeling the same for Obama -- which lends itself to "Advantage -- Incumbent".
I am LOVING this primary season! So much great comedy fodder! I can't wait to see what Saturday Night Live does this weekend.
I still think we're looking at a narrow Obama reelection, and implementation of the ACA in 2014 right on schedule.