The Medicare "Doc Fix" Will Get Pegged to Quality Measures
We're hearing from friends on the Hill that Republican staff on the Energy and Commerce Committee are thinking about attaching a pay-for-performance system to any fix of the Medicare Sustainable Growth Rate. The new approach would cost less than a straight fix of the SGR, which will slash Medicare payments to doctors by 29 percent at the end of the year if Congress doesn't intervene.
It's still early in its development, but we heard that after a year or two freeze in payment rates, a new, tiered system would be implemented. Physicians in ACOs would get the highest pay rate, followed by doctors in fee-for-service Medicare who meet performance standards, followed last by docs who don't.
There's huge issues all over the concept -- but I like it. And it has an air of inevitability all over it. It will cost close to $300 billion to permanently fix the SGR. There's no way Congress is going to lay down that kind of money without some stiff expectations on quality in return. And it could finally have the effect of breaking the curse that is fee-for-service reimbursement in Medicare -- the root of all evil in the program's cost explosion.
And remember: if Congress doesn't intervene on the SGR, that 29% hit on docs' rates will translate into a 7% whack on Medicare Advantage payments in 2013. It's imperative for both sides of the program that Congress get this done. Stay tuned.
Exchange Eligibility Regs: Massive and Visionary
Just as we were speculating Friday on timing for the Exchange eligibility and enrollment regs, out it came. The NPRM is a massive and visionary document that starts a discussion about how to revolutionize the way Americans select, enroll and pay for insurance.
States and the Federal government face a daunting task of preparing for a flood of millions of new consumers into Medicaid and subsidy programs in 2014. The ACA mandated a consumer-friendly, one-stop enrollment process with simpler eligibility rules and advanced technologies — referred to by one state official as "radical simplification". Most states couldn't be farther from the ACA's goals, having onerous cultures, manual paper-driven processes, and antiquated and disconnected systems. The Administration has released extensive guidance and unprecedented funding for states to revamp these processes and systems, and the timetable for planning and implementation is brutally tight.
Fact sheets from HHS are here. Tim Jost offered a nice overview at Health Affairs here. The GHG Public Policy team is reviewing the NPRMs and will have more perspectives this week on this page.
The Individual Mandate Will Get Settled by the Supremes
On Friday the 11th Circuit Court of Appeals in Atlanta found the ACA's individual mandate unconstitutional, ensuring the matter will be decided by the US Supreme Court in 2012. The only question among the DC chattering class is if the ruling will come in time to have an impact on the election, not whether the Court will uphold the law. Case law around the Federal government's right to tax interstate commerce -- and even inactivity like not buying health insurance -- is well-established, giving an edge to the Obama Administration that it will be upheld. Stay tuned.
Exchange Operations Regs Due Next
Recently at a Bipartisan Policy Center forum, CMS said the health insurance exchange regulations from HHS will cover enrollment and eligibility requirements. As we saw firsthand with the messy launch of Medicare Part D in 2006 -- one plagued by enrollment and eligibility SNAFUs for the first 6 months of the program, which kept thousands of beneficiaries from their needed medications -- the guidance can't come soon enough to ensure states and health plans have sufficient time and resources to get ready.
CMS said the forthcoming rule has a number of guiding principles:
- While it will be difficult given the intricacies of coordinating dozens of databases of healthcare consumer eligibility information, HHS is committed to flexibility for the states in figuring it out. The ACA requires the exchange to be a one-stop shop for determining eligibility in either the exchange, Medicaid, the Children's Health Insurance Program, or employer subsidies.
- There are wildly different eligibility rules for Medicaid, CHIP and the exchange subsidies, so streamlining those rules and procedures — such as for income verification — is key.
- ACA put emphasis on a simple enrollment process, for a simple reason: the vast majority of US citizens have never actually bought health insurance on their own. Most is provided through your employer, with the help of a friendly local broker. Exchanges need to be able to take a relatively small amount information from a consumer and be able to determine their eligibility for a range of healthcare subsidies, in near-real time. Simple for the consumer -- a monster for states and health plans to figure out. This is building the healthcare equivalent of Orbitz or Travelocity from a green field, to be presented to consumers who for the most part will have no idea what they're doing.
CMS said the eligibility and enrollment guidance will be coming "soon" but as is customary, wouldn't specify, though the draft reg has been submitted to OMB for approval, which means we can expect it in the next 60-90 days. And once that happens, the sluggish exchange planning process occurring in the states will get shot out of a cannon.
Further Evidence that Part D is Working
New data shows that seniors enrolled in Medicare Part D will pay about $30 in monthly premiums in 2012, 76 cents less than they do now and about 44 percent lower than originally projected in 2003. Indeed, since 2007, premium costs in Medicare's Part D program have increased by about $8, according to CMS.
The program continues to be a shining example of how the Federal government can create a new market for insurance from a green field, imbue it with fierce competition among private companies, and regulate the hell out of it to achieve a major public good. Part D has come in well over $100 billion cheaper than anyone thought it would on the Hill in 2003, and the vast majority of beneficiaries are happy with their choice of plan. The program has also been shown to reduce the incidence of unnecessary hospitalizations among those enrolled.
Sounds like a blueprint for health reform. Our government hasn't exactly demonstrated lately that it can learn from its mistakes; maybe we'll have more luck learning from our successes.
What Happened to the Crack-berry?
This amazing letter was written to RIM leadership by a ranking exec about the woes of their flagship product line, which you know and love as BlackBerry.
It's not often that a company* can appropriate a 1000-year-old word and completely change its meaning in the culture. It's a testament to the way RIM changed--one could say created--the smartphone category with its product. You always remember your first: mine was in 2003: the 6200, the last greenscreen model, which I promptly traded for the 7200 (color!) a year later. RIM's woes since then have been well documented and are fascinating. They go something like this: guessed wrong, got lazy, became out of touch with the market it created.
It's the last point I find most interesting. RIM defined the smartphone market by convincing businesspeople that responding to emails while on the toilet at 11pm was completely acceptable behavior. But they swiftly lost touch with this category by missing the implication of what they had created: that email and phone use were precursors to the real game, which was putting a computer in everyone's pocket. That was where the category was always headed--- it's easy to see now. But at the time, just the addition of a phone was so radical that when Blackberry first added it to its handheld--which was an overgrown two-way pager, they didn't even include a numbered keyboard.
Medicare Advantage is in a similar moment. While CMS gets credit for creating the category, seniors are now comfortable with managed Medicare. This coming generation even more so. But will the product be left behind by ACOs or other forms of integrated care? By MSAs? By something really cool that we don't even know about? Will MA learn how to integrate a phone? And will we forget to put the numbers on it?
*A CANADIAN company, at that!
A Way Out of the Healthcare Cost Explosion? Look North
According to a study by the University of Toronto in Health Affairs, US health care spending could be cut by billions a year if doctors spent the same amount of time and money dealing with insurance plans as their Canadian counterparts. Because Canada has a single-payer system -- essentially Medicare for all -- and because of our patchwork quilt of financing healthcare here, US doctors spend nearly $83,000 per physician per year dealing with insurance companies, compared to around $22,000 for doctors in Ontario, the study found. Staff in US doctors' offices also spend around 10 times longer per physician per week dealing with health plans than their Canadian counterparts.
The findings are similar to those found by a US Government Accountability Office study commissioned by my old boss, US Rep. John Conyers, back in 1991:
"If the universal coverage and single-payer features of the Canadian system were applied in the United States, the savings in administrative costs alone would be more than enough to finance insurance coverage for the millions of Americans who are currently uninsured."
I acknowledge the political impossibility of enacting a single-payer system here in the US. But in our tough economic times, the financial death spiral we are in on healthcare costs, and watching the ongoing sumo match around the ACA, I do wish President Obama had stepped in front of the cameras a couple years ago and said "It's time all Americans had Medicare, with a choice of high-quality health plans."
This is also a family issue for me: my younger brother, one of the most brilliant physicians I have ever seen, actually fled to Canada 12 years ago in a fit of pique about the administrative burdens of medicine in the US, our litigious culture and the epidemic of drug-seeking patients. Today as an intensivist running the biggest ICU in Quebec, he's never been happier. Sure, there are plenty of affluent Canadians coming across the border for elective procedures they were stuck in a queue for back home, but at the end of the day, Canada kicks our ass in coverage, most major health indicators, and notably, physician satisfaction.
It's getting harder for the US to continue its jingoistic tune that we have the best healthcare in the world. We do -- but only if you can pay for it, and can find doctors who will see you.
Medicaid Came This Close to Deep Cuts in the Debt Battle
Keeping Medicaid from automatic cuts was a priority of the Obama administration in the final, ugly days of the debt ceiling fight. It was the one major concession the President and the Democrats won in the whole nasty sausage-making exercise.
Politico did a great job telling how the deal was done, and the tense moment when Obama staffers threw down the gauntlet:
[T]he atmosphere was tense as the hours slipped toward the deadline. By Saturday night, discussions over the trigger had bogged down, and a call between [Senate Minority Leader Mitch] McConnell's staff and senior White House aides turned heated when GOP negotiators demanded that Medicaid be added to the mix of programs that could face cuts.
Gene Sperling, chairman of Obama's National Economic Council, was in mid-sentence, trying to calmly explain why the White House wouldn't allow that, when Office of Management and Budget Director Jack Lew interrupted.
"No!" the typically mild-mannered Lew yelled. "The answer is simply no! No, no!"
In earlier plans passed by House Republicans, Medicaid had been subject to automatic cuts. At least the Dems won one for the little guy.
Debt "Deal": Not As Bad for Medicare as Expected, Medicaid Spared
So we have a deal on the debt ceiling. The President is now authorized to raise the debt ceiling by at least $2.1 Trillion. The roughly $2.5 Trillion in cuts over 10 years represents 5% of expected Federal spending over that time period. $917 Billion in cuts are made up-front. A joint bipartisan committee will then decide on an additional $1.5 Trillion in cuts by November 2011 for a December vote.
If the evenly divided committee failed to agree to the required amount of cuts, Congress would either have to approve a balanced budget amendment to the Constitution (which doesn't stand a chance of being ratified), or accept an across-the-board cut in spending, with 50% coming from defense programs beginning in 2013 (military pay and veterans' benefits are exempt). Medicare would also sustain cuts, but only up to a point. Medicaid and Social Security were exempted.
Putting "sacred cows" on the chopping block, like national security for Republicans and Medicare for Democrats, was to provide a strong incentive for the joint committee to avoid gridlock and deliver a plan that could pass Congress. I could see these "incentives" working on Democrats, who just folded AGAIN to the demands of the far-right House GOP. The Tea Partiers just showed they're willing to flirt with global economic ruin -- what's a few billion to the Pentagon or the Department of Homeland Security to them? Expect another budgetary "High Noon" right around the holidays.
Physicians and other providers could see an additional 2 percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the "deal". The now-29% pay cut for physicians is scheduled to go into effect this year unless there's a fix to Medicare's Sustainable Growth Rate formula, as well as an 11 percent regulatory hit to home health agencies.
The White House said last night the Medicare cuts would hit providers but would not directly affect beneficiaries, but of course they do -- mainly in providers' willingness to continue to accept Medicare patients. There wasn't specific mention of Medicare Advantage or Part D plans -- but if the "doc fix" doesn't happen, that 29% cut in traditional Medicare could translate into a 7% hit to Medicare Advantage rates in 2013.
What to expect in the coming months? Two of the proposals in the Bowles-Simpson bipartisan deficit reduction committee's December 2010 report will get more attention: increasing the Medicare eligibility age from 65 to 67, and moving dually-eligible beneficiaries into health plans, which would curry huge state support. As a general proposition, the Administration will likely bend over backwards to provide states with greater flexibility in how Medicaid dollars are spent through the state waiver process.
It's hard to call this anything but a political rout for Obama and the Democrats. A few weeks ago they had the Republicans over a barrel on the Ryan Medicare reform plan. Now they've handed the Tea Party several opportunities where they can create a global financial crisis unless the President caves, and he's now shown for a third time that he will.
My favorite wonk, WaPo's Ezra Klein, called this a "terrible, horrible, no good, very bad deal" and I couldn't agree more. He went on to say that "Today, the markets are breathing a sigh of relief because Washington managed to agree before it sparked an unnecessary financial crisis. But we could be celebrating an agreement that actually did what was necessary to speed the recovery now and reduce the deficits that matter. Congress may be patting itself on the back because it didn't needlessly wreck the global financial system, but that's not evidence of success. It's evidence of how terribly they have failed us. And the fact that so many are celebrating this deal only goes to show how used to their failures we have become."
Poll: Cut the Deficit, but Not Medicare
Half of all Americans say the deficit should be reduced by cutting spending on government programs and services, but there is strong opposition to cutting entitlements, according to a poll released Thursday by the Kaiser Family Foundation.
Kaiser's July Health Tracking Poll found that 62 percent of people don't want Social Security cut, 59 percent don't want Medicare cut and 48 feel the same way about Medicaid.
There was majority support for "closing tax loopholes for large businesses," "closing tax loopholes for wealthy Americans" and "increasing taxes for wealthy Americans." Only 23 percent of poll respondents supported increasing taxes for all Americans.