Forbes Gets it Wrong on Medicare Advantage
Forbes recently published a blog post ("Seniors: No, You Cannot Keep Your Plan Even if You Like It") that was wildly off the mark on the future of Medicare Advantage. I commented directly there (my handle on the Forbes blog is MedicareNinja), but had to call it out here.
I agree, the President overpromised to seniors when he famously said during the health reform debate "If you like your health care plan, you can keep your health care plan." You can't cut $135 Billion from plan payments and expect to have no impact on beneficiaries. But Forbes got it wrong: we are NOT about to see another exodus from the program as we did in the late 1990s.
As we've said here before, the exhortations of the death of MA are premature. We got confirmation from CMS last month: MA premiums will fall another 4% in 2012, and enrollment will grow by a brisk 10%. This after a robust 2011 where we think AEP will close with MA enrollment up over 8% vs. 2010.
The plans aren't going anywhere for several reasons -- none of which you see if all you're reading is wonky CBO and MedPAC reports.
First, government programs (Medicare and Medicaid in particular) are the only segments of the insured that are growing. As noted earlier, MA enrollment will grow over 8% this year, topping 12.5 million beneficiaries. Part D is approaching 20 million enrollees. Just this week Cigna announced it's spending over $3 Billion to acquire HealthSpring, a pure-play MA plan. Why? Because they see tremendous continued growth in the program, not because of its imminent demise.
Second, publicly-traded companies like MA leaders Humana and United are now dependent on Medicare, deriving twice their earnings from the program than they did a decade ago (average publicly-traded health plan earnings from Medicare in 1999: 13%; today, 26%, with some like HealthSpring and Universal American over 70%.) Bottom line: the big boys ain't going anywhere.
Third, over 40% of beneficiaries aging into Medicare have enrolled in MA plans the last two years, indicating the Boomers are a much more plan-friendly population than the World War II generation given managed care trends in the commercial market (HMOs, PPOs and POS plans represent more than 90% of all insured Americans).
Fourth, and most importantly, market-leading plans are adapting to the health reform cuts by focusing on Star Ratings quality bonuses and mastering the new state of the art in risk adjustment: the prospective home advanced evaluation. It's working, enabling plans to hold the line on benefits and premiums, and maintaining the attractiveness of these products vs. Medigap or traditional Medicare.
As long as the Congressional deficit Super-Committee doesn't fire another broadside at MA plan payment rates this fall, 2012 is shaping up to be a VERY good year, and I'd venture an estimate of over 15 million beneficiaries in these MA plans by the end of 2015.
The Forbes piece struck me as a wonky political hatchet job, trying to score cheap political points against Obama without any real basis in reality. They're usually above that sort of thing.
Surgery in the last year of life
Lancet recently published a fascinating study of surgery in the last year of life in Medicare members. During 2008, 1,802,029 Medicare beneficiaries over 65 years of age died; one of every three of those had a surgical procedure during his or her last year of life. The study did not sort out the reasons the procedures were done, but there is a short list of possibilities. Some are likely valid, and some are less so. Surgery in the elderly can be done to relieve pain, to improve function, or to prolong life. You might point out that prolonging life or improving function in the last year of life doesn't make much sense, but remember, no one actually knew at the time that it was the last year of life. Other reasons for doing these procedures are harder to support and include doing things just because you know how to do them (the "everything looks like a nail if you are a hammer" argument), family pressure ("You have to do everything to save her."), and money ("There is an opening in the surgery schedule and a bed in the ICU.").
There was one other interesting part of the study—geographical variation. These late life surgeries were 1/3 as common in Honolulu as in Gary, Indiana. The rates were especially high around the southern end of Lake Michigan and in the Rio Grande Valley in south Texas. Geographic variations are much more consistent with decisions made for cultural and financial reasons than with decisions based on clinical factors.
Most of the rhetoric surrounding the Medicare financial crisis has concentrated on cutting plan profits and decreasing provider reimbursements. There has also been a push for preventive care with the tacit (and unproven) assumption that prevention will improve health and decrease expense in the elderly. There has been some discussion (albeit hesitant) of increasing the contribution from beneficiaries or increasing the age of eligibility. What has not been emphasized is spending what is in the system more effectively. The high rate of surgery in the last year of life is one of several examples of spending a great deal of money with questionable impact of either quality or length of life. Until we have the political and societal will to have those discussions, Medicare's financial dilemma will remain unsolved.
New ACO Reg has some zingers
The newly minted ACO regulation from Medicare has some zingers hidden in its 696 pages. Okay, to be fair, the actual regulation is only 70 pages long, double spaced. The rest is all preamble, where CMS describes the 1200 comments on the proposed rule, and how they have responded (or not) in the final rule.
The first zinger has to do with the Physician Quality Reporting System, known to its friends as PQRS. Since 2007, CMS has paid a bonus to physicians who report quality data. Under current rules, CMS will pay physicians ½% of allowed charges from 2012 through 2014. BUT, docs in an ACO will only be able to participate in the PQRS through the ACO. The ACO will report as if it were a group practice. If the ACO fails to report in compliance with the PQRS rules, its docs won't get the PQRS bonus. This could be an issue in recruiting doctors who may not see a clear advantage to the ACO to begin with, given all the other requirements.
A second zinger is the approach to risk adjustment. CMS has agreed to use the Medicare Advantage HCC risk adjuster for newly assigned beneficiaries. They won't use HCCs for continuing beneficiaries — people who were assigned to the ACO last year. HCCs are based on diagnosis codes on last year's claims. CMS reasons that an ACO would improve coding accuracy in year one, to get the best risk adjustment they could for continuing beneficiaries in year 2. So only new-to-the-ACO beneficiaries will get risk adjusted for higher HCC scores. BUT, if the average HCC score for continuing beneficiaries goes down in year two, then CMS will risk adjust and reduce the benchmark accordingly. The inference is that reduced scores could only reflect reduced average risk. So ACOs that are not diligent in keeping their risk scores up could be docked a chunk of money for apparent losses resulting from poor coding, not from poor care management.
To read GHG's summary on the CMS Final Rule for the Medicare Shared Savings Program, click here.
Medicare ACO Regs Out While Private Sector Surges
CMS released the final Medicare ACO Shared Savings Program regulations yesterday after taking a beating in over 1,200 industry comments on the draft. Let's hope they made some big changes, as Medicare is in danger of being left in the dust as ACOs surge forward in the commercial sector.
Aetna has created a company-wide organization whose entire focus is on integrating ACOs into all products and services . The HealthPartners Total Cost of Care system is now applied to two-thirds of its members, Wellpoint's multi-payer Medical Home model is expanding beyond California and New York with emerging evidence of its success, and Blues plans in Massachusetts, New Jersey and Maryland are moving forward with their own commercial ACO initiatives. Ten large national and regional health plans gave an update on how fast the ACO concept is exploding.
By contrast, the Medicare ACO program has been quiet as CMS toiled away on a rewrite of the regs, with the final rules out yesterday but relatively little interest emerging beyond the Pioneer ACO Demonstration finalists -- and many of them are still tentative pending review of the new final rule. All 7 of Gorman Health Group's applicants for Pioneer were selected -- but they're not necessarily in yet. CMS's recalcitrance on considering partial and global capitation models for Pioneers is tamping down our clients' enthusiasm as we're told capitation isn't operationally feasible for CMS until Year 3 of the demo. If the final reg isn't a dramatic improvement over the "fart in church" draft regulation in March, I worry that CMS will be left at the altar as payers and providers seek less burdensome opportunities in the commercial and Medicaid markets.
Watch this page for our take on the final regs.
To Save Medicare, Talk to Patients and Stop Spending on Things That Don't Work
Just about every discussion on the Hill about "saving Medicare" these days is talk about decreasing reimbursements to providers and health plans. There's also a lot of talk about preventive care -- and yes, I'll say it -- prevention has little potential of saving money in Medicare. You can't prevent away heart disease or diabetes in elderly patients; you might postpone it but you will eventually pay. Medicare is still, fundamentally, an end of life program -- 1 out of 4 Medicare dollars are spent in the last 6 months of life. And it's unsustainable in its current form. So there's only two real solutions: to talk to beneficiaries about their wishes for their end of life care; and to stop spending money on things that don't work.
Last week in The Lancet Harvard researchers found that among 1.8 million Medicare beneficiaries who died in 2008:
- nearly 1 out of 3 had surgery in the last year of life;
- nearly 1 out of 5 had surgery in the last month of life;
- nearly 1 out of 10 had surgery in the last week of life.
Those are astounding numbers, and controversial. Of course many of those procedures were performed to relieve suffering or to prolong life. But the researchers said they know from experience -- as all of us do in eldercare -- that doctors often operate to fix something but that will not save a dying patient -- to avoid the difficult conversations with patients and caregivers about their prognosis and what they want. So often it's "cut to cure" fix-it docs and adult children, with too much drama and way too little information, driving these decisions -- not the patient, long in advance of the care episode.
The New York Times noted that In the last year alone, what researchers have found both useless and harmful, according to leading medical journals:
• Feeding tubes, which can cause infections, nausea and vomiting, rarely prolong life. People with dementia often react with agitation, including pulling out the tubes, and then are either sedated or restrained.
• Abdominal and gall bladder surgery and joint replacements, for those who rank poorly on a scale that measures frailty, lead to complications, repeat hospital stays and placement in nursing homes.
• Tight glycemic control for Type 2 diabetes, present in 1 of 4 people over 65, often requires 8 to 10 years before it helps prevent blindness, kidney disease or amputations. Most don't live long enough to reap the benefits, and so endure needle sticks and diet guilt in their last days.
We all have our own experiences and anecdotes. Medicare routinely pays for hip replacements for Alzheimer's patients, even though most couldn't complete physical therapy for rehab and resume activities of daily living. Last year my 96-year-old grandfather suffered through a $120,000 back fusion surgery he didn't want or need (he hasn't been out of his motorized scooter in 5 years) but his doctor and local community hospital insisted he have. What did he want? "A lethal dose paid for by Medicare Part D." Last month he failed his second suicide attempt. We just want him to find some peace -- and he'll never find it at the end of a surgeon's blade.
We don't talk enough about how we want to die in this country. I think we honor one's life by allowing them to die with dignity, the way they want to go. These are not conversations most doctors like to have, but they must occur if we're to bring any sense to Medicare expenditures. We no longer have the luxury of a wide-open entitlement program.
Since the Terri Schiavo circus we have lived in an age of distortions like "Death Panels," where open dialogue on end of life is politicized and limits on what Medicare will cover are demogogued as rationing. But Medicare Advantage plans are uniquely positioned to advance the cause of professional counseling for beneficiaries on their last wishes, preventing unnecessary surgeries based on the patient's preferences and likely clinical outcomes, and promoting the enthusiastic use of palliative care. A number of plans are leading quietly in this area, like UPMC in Pittsburgh, Excellus Blue Cross/Blue Shield in upstate New York (which actually has dedicated medical directors for end of life and palliative care), and any PACE site like On Lok in San Francisco. We have much to learn from them -- they should be applauded and emulated for their courage in the face of the politics of end of life care.
There are few more personal issues than end of life counseling and care. These are thoughts ... I'd love to hear yours.
Regulations, Duals and Stars
GHG recently posted our summary of the October 3 proposed rule on changes to the MA and Part D programs for FY 2013. Most of the provisions in this rule are codifying current policies or implementing ACA provisions without interpretation. However there are two provisions of special interest. The first is a proposal to allow fully integrated dual eligible SNPs (FIDE) to offer supplemental benefits that are targeted to the needs of their enrollees such as personal care services, custodial care or in-home meal delivery. This is an exciting opportunity for dual SNPs to provide even more meaningful integration of Medicare and Medicaid services and is consistent with the movement in CMS, Congress and the health policy community to find better solutions to providing more coordinated care for dual eligibles. AHIP has joined the bandwagon and recently released its proposal to "Achieve Medicare/Medicaid Integration for Dually Eligible Beneficiaries" through managed care solutions.
The other regulatory provision of interest is proposed authority for CMS to terminate or non-renew MA and Part D plans that do not achieve at least an overall 3 star rating for 3 consecutive years, beginning with contract year 2013 ratings. This would be a discretionary authority and low performing plans would not automatically be terminated from the program. CMS just released the 2012 plan ratings. The good news is that 9 MA plans received 5 star ratings for 2012 and overall plan ratings increased to 3.44 from 3.18. However there are almost 70 MA plans and almost 150 Part D plans that had overall scores under 3 stars for 2012.
Costs Too High?
Well, more news and comments out lately about the cost of health insurance, or actually the premium trend being too high. Additionally, articles on the cost of healthcare and it being too high. So, let's give this some quick thought: What's the difference between "price" and how "cost" is often referred to?
To me, the price of a product or service is what you have to pay to get it. For example the price of a gallon of gas two weeks ago in Mendocino CA (there is only one station in this small and charming community on the northern coast) was$5.79 per gallon. No competition for gas up there so they seem to price accordingly. In healthcare the "cost of care" is commonly referred to when talking about a population such as "Medicare lives." Cost of care for a population is not driven by the price of a unit of service alone, but by the combination of the number or services (utilization rate) and the price per unit produced for that service. Well, then is the problem the price per unit or the number of units purchased, or a combination of both?
After years ihealthcare, my view is this: the price per unit is rarely the issue anymore, at least where major payment sources such as Medicare and Medicaid have either driven price reduction or prevented any meaningful price increase trend, as they control the payment amount. Certainly there are exceptions in both of those payment categories and in the private insurer marketplace, but generally the issue is not the price paid per unit of service. More significantly, the issue is the number of units of service incurred by individuals within these payment categories.
The issues driving this increase in utilization are fourfold:
- First an increase in need for services due to population aging and population health status;
- Second the drive of services on the supplier side. Providers operating at the margin of necessity of care often provide more services because they are financially encouraged to do so (aka income), and they want to avoid the risk of malpractice litigation for overlooking necessary care;
- The lack of price sensitivity to the person who receives those services. Most insured individuals don't pay out of pocket costs, and most care providers don't provide pricing information, so even if the individual were to seek competitor pricing information, it is nearly impossible to find the best combination of price and quality.
- And finally the improvement of technology, where today we are able to provide services and care unheard of even 10 years ago, with resultant impacts on both lives and healthcare cost.
So what is the solution to these challenges? My thoughts on that coming next time.
The Difficulty in Making A Thousand Flowers Bloom
Politico included a recent article on "Why Moving on Delivery Reform is so Difficult" that described the dilemma facing Henry Ford Health System, which resulted in a decision to withdraw their application for the Medicare ACO program. They would rather focus on participating in private sector initiatives, which offer more predictability and flexibility than demonstrations designed by CMS.
It has been hard to follow the many starts and stops from the Center for Innovation as they are rolling out ACA funding for delivery reform demonstrations. CMS has many more hurdles in initiating demonstration programs than private payers. For example, the process needs to be competitive and give all parties a chance to be considered. The demonstration design needs to address the policy questions, but also produce data for an objective evaluation. There is a large bureaucracy involved in clearing politically sensitive projects and it always takes longer than expected. And another complexity is that operational support depends on offices and staff outside the Innovation Center.
Two recommendations would improve the process for potential applicants who have limited resources and leadership time to make a commitment to a new way of doing Medicare business:
First a master schedule and work plan would be helpful so that applicants would know the range and timing of funding opportunities. For example, the recently released Primary Care Demonstration was unexpected and seemed to be a revival of the medical home demonstration that CMS put on the back burner last year. The bundled payment demonstration was of interest to many of the ACO applicants but the application process partially overlapped the Pioneer ACO demonstration process.
It would also be helpful to know all of the requirements in advance of submitting an application. As others have suggested, streamlining the number of quality reporting measures and making them more consistent with core measures used by the private sector would make the Medicare demonstrations more attractive.
The Continuing State vs. Federal Struggle to Manage Dual Eligibiles
I was just beginning to believe that the states, CMS and the health policy community were finally recognizing a larger scale opportunity for managed care to integrate Medicare and Medicaid funding and care for the most expensive and vulnerable beneficiaries, thus reducing costs and improving quality.
After decades of demonstration projects and waivers, a discussion at the Alliance for Health Reform yesterday revealed that only 250,000 dual beneficiaries are enrolled in integrated delivery systems where the services and funding streams are coordinated around the patient and not the payer. Even Medicare Advantage plans including Special Needs Plans have had difficulty working with state Medicaid agencies to get full funding for services under both programs. Now the light bulb has gone off as states are seeing managed long term care services and supports and shifting duals into managed care as a significant solution to Medicaid budget woes.
I remember discussions at CMS where the difficulties of integrating the funding streams was stymied by political issues with state vs. federal control. And yesterday the Robert Wood Johnson Foundation and the Urban Institute recommended that Medicare should take the lead for dual eligibles in recognition that the federal government already finances most of the care costs and has the most to gain with improved integration of care and care coordination.
Part B versus Part D Drug Benefit Reform is Long Overdue
Injectable drug therapy administration is generally covered as a medical expense under Medicare Advantage Plans. The member typically goes to an outpatient facility or hospital to receive the drug treatment and pays the associated medical visit copayment or deductible as required by the member's plan, until he or she reaches the policy's out-of-pocket maximum. Once the individual has paid the maximum amount, the policy pays in full.
For those who take their drug therapy orally, either in tablet or liquid form, treatment is covered as a Part D prescription drug, not as a medical expense. The beneficiary must pay the related prescription drug copayment or deductible. Depending on the plan's terms, the amount an individual has to pay out of pocket for the oral chemotherapy can be higher than if it were treated as a medical expense.
However, there is a very grey middle ground for crossover drug therapies that have multiple uses such as methotrexate, which can be used to treat cancer or arthritis, or prednisone, which can be used to treat a wide range of dermatological issues, asthma, or be used as an anti-rejection drug in transplant patients. In the world of Medicare Advantage, these drugs are known as Part D versus Part B Drugs.
B vs. D Drugs have been problematic since the beginning of Part D in 2006. Generally, the patient must take the prescription for a B vs. D drug to the pharmacy where the pharmacist transmits an electronic claims to the PBM who denies payment for the drug because a B vs. D Determination. Coverage under Part D or Part B must be made determined by the plan sponsor or its delegated PBM based on the prescriber's intended use, the patient's treatment location (home, LTC, hospital, etc.), route of administration , and who administers the drug. CMS expects Plan Sponsors to do the due diligence in making such determinations. CMS Compliance Audits focus on the methodology and accuracy of the Part B versus Part D Coverage Determination process.
CMS has the opportunity to make a meaningful reform of a clumsy and costly regulation by eliminating the B vs. D Coverage Determination requirement. Drugs falling in this grey area should be moved into Part D or Part B. This would eliminate member confusion on cost-sharing, source of obtaining the drug, and the delay at the point of service caused by the due diligence process the Plan is required to make.
In 2010, Milliman, Inc, a health care actuarial firm, completed an analysis sponsored by GlaxoSmithKline on the cost of creating parity between injectable and oral therapies and leveling the cost-share playing field between paying as a medical or as a pharmacy benefit. The result indicated that for most plans, the cost would be well below $1 PMPM whereas the drug claims alone added as much a $300 PMPM to cost.
The inconvenience to the member, the added cost to the provider, and the decreased cost to the plan through eliminating the due diligence process of a Coverage Determination makes logical sense to reform the B versus D Policy. CMS could eliminate one complexity to an extremely complex benefit while improving member satisfaction and reducing overall cost. This is truly a win-win opportunity for Medicare.