400 Additional Hospitals Face Obamacare Readmission Penalties Totaling $428 Million in Fiscal 2015

 

The Hospital Readmissions Reduction Program was created by Obamacare to penalize hospitals with excess numbers of patients readmitted within 30 days of discharge following treatment for heart attack, heart failure or pneumonia. In fiscal 2013, the penalty was up to a 1% dock in Medicare payments. That figure increased to 2% in fiscal 2014 and now sits at 3% for fiscal 2015. In addition to the increased fine, the program has added measures: Readmission rates for chronic obstructive pulmonary disease and total hip and total knee replacements.

Modern Healthcare reports that 2,610 U.S. hospitals will see their Medicare payments docked in fiscal 2015, while just 769 U.S. hospitals will avoid such fines. Over the course of fiscal 2015, Medicare estimates the fines will total $428 million. Perhaps the measures are not achieving their stated goal of improving care if fewer than one quarter of eligible hospitals can avoid the fines.

Is Medicaid-Associated Overuse of Emergency Departments Just a Temporary Surge?

 

Research from the UCLA Center for Health Policy Research suggests that increasing Medicaid dependency does not result in a secular increase in use of hospitals’ emergency departments (EDs). Rather, the jump in ED use is just pent-up demand being satisfied, which then drops off. This is the conclusion of a study that examined ED visits by California patients newly enrolled in a government program similar to Medicaid, called the Low Income Health Program (LIHP).

Rates of Emergency Room Visits per Quarter

The study suggests different consequences of Medicaid expansion than the Oregon Medicaid experiment showed:

Although our results are not directly comparable to those of the Oregon Health Insurance Experiment, they suggest that the higher costs and utilization among newly enrolled Medicaid beneficiaries is a temporary rather than permanent phenomenon. To the extent that California’s experience with the pre-ACA HCCI and LIHP programs is generalizable to other states, policymakers and service providers can expect a reduction in demand for high-cost services after the first year of Medicaid enrollment.

Australia Will Raise $5 Billion by Privatizing its Biggest Health Insurer

 

Australia’s federal government is about to raise almost $5 billion by privatizing its largest health insurer:

Australia hopes to raise up to Aus$5.51 billion (US$4.82 billion) through the sale of the country’s largest health insurer in an initial public offering, Finance Minister Mathias Cormann said Monday.

Cormann said the sale would remove the current conflict where the government is both the regulator of the private health insurance market and owner of the largest market participant. Medibank provides cover to 3.8 million people.

The government has previously said Medibank is one of 34 competing funds in the private health insurance market in Australia and that a scoping study had found no evidence that premiums would rise as a result of the sale. (AFP via Yahoo! News)

Health Spending Grew 18 Percent Faster Than GDP in Twelve Months

 

According to the Altarum Institute, health spending rose 4.9 percent in the twelve months through August 2014. In the twelve months to July, it rose 5.1 percent, 18 percent more than the 4.3 percent growth in Gross Domestic Product (GDP):

The health spending share of GDP was 17.4% in July. This is up from 16.0% at the start of the recession in December 2007. This increase is partly attributable to slow GDP growth rather than high health spending growth, as the July 2014 health spending share of potential GDP (PGDP) was 16.7%.

Price Transparency: Organizations to Watch

 

George Washington University’s Master of Public Health program has complied a nice list of fourteen “organizations to watch” because they are moving the ball on price transparency. The woman who wrote the article, Emily Newhook, sent an email to NCPA bringing it to our attention. Unfortunately, we can hardly ever make time and space to profile lists compiled by other parties, but I decided to give this one a boost for a number of reasons.

First, it is exciting to see a school of public health get interested in this issue in a positive way. It was not too long ago that any proposal that included Health Savings Accounts or similar tools that removed healthcare dollars from insurers and returned them to patients brought forth wails of anguish from the public-health community about “barriers to care” and the like. Now, according to Ms. Newhook’s description: “This kind of price transparency empowers consumers to comparison shop for health care as they would a car, house or television, forcing higher priced providers to lower their prices to stay competitive.” This is unusual language for a school of public health, and is to be congratulated.

Mars and Venus on Medicaid

 

A version of this Health Alert appeared at Forbes.

I will be participating in Medicaid Health Plans of America’s annual conference in Washington, DC from October 26 to 28. So, I thought I’d prepare for it by reviewing the research on health outcomes for patients on Medicaid. What a tangled web!

According to evidence cited by Forbes opinion editor and Manhattan Institute Senior Fellow Avik Roy, “[P]atients on Medicaid have the worst health outcomes of any insurance program in America ― far worse that those with private insurance and, strikingly, no better than those with no insurance at all.” On March 10, 2011, the Wall Street Journal published a column by Forbes contributor and American Enterprise Institute Resident Fellow Scott Gottlieb, MD, which concluded that “Medicaid coverage is worse than no coverage at all.”

Yet, others resist these conclusions. The federal and state governments spent $460 billion on Medicaid last year. Is it really feasible that this buys nothing? Gottlieb’s article prompted two scholars affiliated with the Kaiser Family Foundation to publish a paper “setting the record straight on the evidence.” Julia Paradise and Rachel Garfield conclude that “…the Medicaid program, while not perfect, is highly effective…Furthermore, despite the poorer health and the socioeconomic disadvantages of the low-income population it serves, Medicaid has been shown to meet demanding benchmarks on important measures of access, utilization, and quality of care.”

Can these differences be reconciled? The evidence cited by Roy and Gottlieb shows poor outcomes for various cancers, major surgical procedures, coronary angioplasty and lung transplants. The evidence cited by Paradise and Garfield emphasizes preventive and primary care (including blood pressure and PAP smears), birth outcomes, heart attack, congestive heart failure, diabetes management and pneumonia.

The Case for Drugstore Clinics

 

In The Atlantic, Richard Gunderman, MD, PhD, has delivered “The Case Against Drugstore Clinics“. It is a weak case. Let’s take his strongest argument first:

A woman with a sore throat went to a retail clinic and received a prescription for antibiotics. After a few days, she hadn’t gotten better, so she went to her family physician. The physician determined that the sore throat was probably due to a viral infection. He also, however, talked to her about her overall health and life. This conversation led to a previously unsuspected diagnosis of clinical depression. The patient is now in treatment and doing much better.

A case like this illuminates three important differences between the retail clinic and the physician’s office. First, the retail clinic prescribed an antibiotic, but in the physician’s judgment the infection was not bacterial. Overusing antibiotics can promote the development of antibiotic-resistant strains of bacteria. Second, the minute clinic focused exclusively on the sore throat. And third, the physician’s more comprehensive evaluation led to a diagnosis with important implications for the patient’s overall, long-term health.

After Almost One Year, Some Medicaid Applicants Still Not Enrolled

 

man-in-wheelchairWell, there is progress. In June, we discussed the three million people who were funneled into Medicaid by Obamacare’s exchanges, but had still not been enrolled. As of October, the backlog is down to a few hundred thousand.

California and Tennessee are facing lawsuits from residents who say they have seen long delays for coverage after signing up for Medicaid, the federal-state health program for the low income and disabled. Some say they have been waiting since late 2013.

The delays stem from various technical problems and the sheer volume of Medicaid applications states must process.

A Business Group Reacts Strangely to the Rise of Private Health Exchanges

 

This blog has discussed the rise of private exchanges for health benefits, describing them as “getting ready for individual health insurance to be the standard.” A private exchange allows an employer to make a defined contribution to employees’ health benefits, which they can use to choose one of many policies within the exchange.

AON Hewitt has a thriving exchange practice, and it recently announced significant growth:

Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), today announced that it expects more than 1.2 million employees, retirees and their eligible dependents from more than 100 companies to choose individual and employer-sponsored health benefits through Aon’s suite of private health exchanges. This is up from more than 70 companies and over 750,000 employees, retirees and their eligible dependents.

Adverse Selection Got Worse as Obamacare’s Open Enrollment Progressed

 

New data from Express Scripts, a leading pharmacy-benefits manager (PBM) indicates that adverse selection in Obamacare exchanges actually got worse as open enrollment reached its hard finish in mid-April. As a PBM, Express Scripts has the best data on beneficiaries’ medical costs. Pharmacy claims are adjudicated immediately, whereas other claims can take weeks or months to adjudicate. We previously discussed Express Scripts’ study of pharmacy claims for the exchanges’ early sign-ups. These beneficiaries had specialty pharma claims 47 percent higher than the commercially insured population, which led to the conclusion that they were much, much sicker than expected.

The new release covers data for everyone who has signed up for coverage in Obamacare’s exchanges. There has been a lot of happy talk in the media that the huge sales and marketing surge in March (funded by taxpayers) likely led more healthy people to sign up at the end of open enrollment. In the most general sense, this is what happened, according to the new data. The later sign-ups were younger and in better shape when we consider only the more common conditions that are increasingly affecting our society, as shown in the graph:

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