Category: Medicare

Medicare Accountable Care Organizations Continue to Underwhelm

Confident DoctorsMedicare’s Accountable Care Organizations (ACOs), which launched in 2012, were supposed to introduce a significant shift away from paying for “volume” to paying for “value.” Critics of Fee-For-Service medicine claim this system causes physicians to do more to patients so they get paid more, notwithstanding benefits to patients. Those critics seldom identify the moral hazard associated with third-party payment (by insurers or governments) as a cause of too many medical tests or procedures.

So, they introduced ACOs, which would increase quality and cut costs by getting rid of straight Fee-For-Services and putting more financial risk on physician groups. If the physician groups pass certain thresholds of cost and quality, they can pocket some of the savings. The 2015 results for Medicare’s ACOs have been reported, and the results are underwhelming:

Incentives Matter: Medicare’s Hospital Readmissions Penalties Are Having An Impact

cmsIn 2012, Medicare began to penalize hospitals which had too many readmissions. For a small number of targeted conditions, the program compares actual readmissions within 30 days to what an acceptable readmission rate should be. This is an important part of the drive to “pay for value, not volume.”

For example, if a patient who had a knee replacement is readmitted within 30 days because the implant was poorly implanted, the hospital used to profit from that readmission because the extra costs would just be submitted to Medicare for reimbursement.

Evidence so far suggests reducing readmission was low-hanging fruit. In the program’s fourth year, Medicare will penalize over half the nation’s hospitals a total of $528 million, an increase of $108 million over last year. It is a significant increase, but not a money-maker for taxpayers, amounting to just 0.18 percent of Medicare’s expected hospital spending of $287.1 billion in 2016.

Medical Marijuana Saves Taxpayers Money

ReeferIn a fascinating article in Health Affairs, Ashley Bradford and David Bradford of the University of Georgia have estimated that medical marijuana has benefited taxpayers:

Using data on all prescriptions filled by Medicare Part D enrollees from 2010 to 2013, we found that the use of prescription drugs for which marijuana could serve as a clinical alternative fell significantly, once a medical marijuana law was implemented. National overall reductions in Medicare program and enrollee spending when states implemented medical marijuana laws were estimated to be $165.2 million per year in 2013. The availability of medical marijuana has a significant effect on prescribing patterns and spending in Medicare Part D.

(Ashley C. Bradford and W. David Bradford, “Medical Marijuana Laws Reduce Prescription Medication Use in Medicare Part D,” Health Affairs, 35 (7) July 2016, pp. 1230-1236.)

Let’s not get carried away, here. The Medicare Part D prescription drug program spent $69 billion on benefits in 2013, of which $59 was funded by taxpayers (not premiums). So, medical marijuana is making an insignificant dent in the burden of this entitlement.

Chemotherapy Payment Reform: Medicare Is Missing the Elephant in the Room

cigarettes-2Last May I wrote about the uproar over Medicare’s proposed changes to how it will pay doctors who inject drugs in their offices. This largely concerns chemotherapy. Currently, physicians buy the drugs and Medicare reimburses them the Average Sales Price (ASP) plus 6 percent. The proposed reform would cut the mark-up to 2.5 percent and add a flat fee of $16.80 per injection.

I did not think the reform would have a positive impact, but I also thought criticism was overblown. Well, Medicare has managed to irritate all the affected interest groups to such a degree that it is likely to toss the proposal and go back to the drawing board.

Medicare Pays for Prevention – Finally!

man-in-wheelchairThe Centers for Medicare & Medicare Services has announced Medicare (that is, taxpayers) will pay for lifestyle-intervention program that prevents type 2 diabetes:

In 2011, through funding provided by the Affordable Care Act, CMS awarded the National Council of Young Men’s Christian Associations of the United States of America (Y-USA) more than $11.8 million to enroll eligible Medicare beneficiaries at high risk for diabetes in a program that could decrease their risk for developing serious diabetes-related illnesses. Beneficiaries in the program attended weekly meetings with a lifestyle coach who trained participants in strategies for long-term dietary change, increased physical activity, and behavior changes to control their weight and decrease their risk of type 2 diabetes. After the initial weekly training sessions, participants could attend monthly follow-up meetings to help maintain healthy behaviors. The main goal of the program was to improve participants’ health through improved nutrition and physical activity, targeting at least a five percent weight loss for each individual.

The results of the Diabetes Prevention Program model are striking:

  • Medicare beneficiaries enrolled in the program lost about five percent of their body weight, which is enough to substantially reduce the risk of future diabetes. Average weight loss was 4.73 percent of body weight for participants attending at least four weekly sessions.  Participants who attended at least nine weekly sessions lost an average of 5.17 percent of their body weight.
  • Over 80 percent of participants recruited attended at least four weekly sessions.
  • When compared with similar beneficiaries not it the program, Medicare estimated savings of $2,650 for each enrollee in the Diabetes Prevention Program over a 15-month period, more than enough to cover the cost of the program.

After years and years of jawboning about preventing disease and reducing health spending by catching health problems early, the federal government has finally approved one intervention that actually appears to achieve this goal!

Medicare Experimenting with Bundled Payments for Hip Replacement

According to a Wall Street Journal article, Medicare is experimenting with how it pays some 800 hospitals.  The bundled payment initiative will hold hospitals accountable for the cost of hip replacements for 90 days after surgery. Complications or inefficient care will eat into hospitals’ bottom line.

Whither Obamacare’s Death Panel?

elderly-man-worriedPresident Obama’s nomination of Merrick Garland to the U.S. Supreme Court has not shaken Senate Republicans from their commitment not to hold confirmation hearings for any candidate President Obama might nominate to the Supreme Court in the last eleven months of his second term.

Given the high drama and politics surrounding presidential appointments that require Senate confirmation, it might be a good time to ask why another 15-member “court,” which President Obama himself established in 2010, and which was supposed to deliver its first decision in January 2014, has not yet seen its first member nominated!

This “court” is the almost forgotten “death panel,” officially named the Independent Payment Advisory Board (IPAB). Based on a target rate of Medicare spending per capita, the IPAB was supposed to start cutting Medicare payments to providers in 2015.

One In Five Doctors Say: “No New Medicare Patients”

Happy Older Couple in Beach ChairsIf you learned that 93 percent of non-pediatric primary care physicians took Medicare patients and 94 percent took patients with private insurance, you would likely conclude that Medicare is doing just fine.

Unfortunately, such data do not describe physicians’ behavior at the margin, which is what will determine future access to Medicare. The Kaiser Family Foundation/Commonwealth Fund 2015 National Survey of Primary Care Providers also asks which physicians are not accepting new patients: 21 percent are not taking new Medicare patients and 14 percent are not taking new privately insured patients. That is, the proportion not taking new Medicare patients is 1.5 times greater than the proportion not taking new privately insured patients.

Improper Payments Up 18 Percent, Mostly Medicare & Medicaid

The Government Accountability Office (GAO) has just reported that “improper payments” (that is fraud and abuse) are up to $124. 7 billion in 2014 from $105.8 billion in 2013. Most of this is Medicare and Medicaid:

The almost $19 billion increase was primarily due to the Medicare, Medicaid, and Earned Income Tax Credit programs, which account for over 75 percent of the government-wide improper payment estimate. Federal spending in Medicare and Medicaid is expected to significantly increase, so it is critical that actions are taken to reduce improper payments in these programs.

GAO

Are Medicare ACOs Gaining A Foothold?

man-in-wheelchairThis blog has never gotten very excited by Medicare’s Accountable Care Organizations (ACOs). ACOs are risk-sharing arrangements between Medicare and providers, which are supposed to save money through efficiency. As a concept, they are fine – certainly an improvement over the incumbent, Soviet-style fee schedule. However, it is unlikely that the government has the incentives to get the risk-sharing incentives right.

I had anticipated that ACOs might end “with a whimper.” The Centers for Medicare & Medicare Services (CMS) have released results of Pioneer ACO’s third year of operation and 2014 results for Medicare Shared Savings Program (MSSP) ACOs which launched in 2012 through 2014. While ACOs are hardly taking off like the administration hoped, they seem to have gained a foothold.