Category: Medicare

Honor Roll: 37 Voted Against the Budget Busting Medicare Doc Fix

“While I support an SGR replacement, I cannot vote in favor of a bill that costs more than $200 billion, while Congress only pays for $70 billion, leaving more than $130 billion to our children and grandchildren. We cannot continue to solve every problem by adding to the deficit,” Rep. Jim Bridenstine (R-Okla.) said in a statement.

The 37 Congressmen who voted against include high-ranking Republicans Darrell Issa and Jim Jordan.

Cristina Marcos of The Hill reports the entire list.

How Conservatives Rationalize the Budget Busting Medicare Doc Fix

Opposition to the outrageous so-called Medicare doc fix bill, which will increase the deficit by $141 billion, is growing. Michael Cannon of the Cato Institute explains how this will “bust the budget.” My Forbes editor, Avik Roy, pleads that the Senate stop this monstrosity (which passed the House by a huge majority).

On the other hand, there are those unfortunate conservatives who endorsed the bill before the Congressional Budget Office (CBO) had announced what a budget buster it was. My friend Ryan Ellis of Americans for Tax Reform appreciates that the CBO score could give us a feeling of “whiplash”.

97 Percent of Medicare Doc Fix Deficit Funded

Today’s Health Alert warned against the so-called Medicare doc fix that is being jammed through the Congress this week. The Health Alert was written and published before the Congressional Budget Office issued its estimate of the bill’s effect on the deficit.

Here it is:

Over the 2015–2025 period, CBO estimates, enacting H.R. 2 would increase both direct spending (by about $145 billion) and revenues (by about $4 billion), resulting in a $141 billion increase in federal budget deficits (see table on page 2). Although the legislation would affect direct spending and revenues, it would waive the pay-as-you-go procedures that otherwise apply.

Less than three percent of this spending binge is paid for. Over 97 percent is deficit financed. This is how Republicans are showing how they can govern, especially on health reform?

Not in my worst nightmare did I think the bill would be this outrageous. As they say in America: “You gotta be kidding me!”

Any politician who votes for this will surely not be considered a credible voice in the debate over post-Obamacare health reform.

Here is the Heritage Foundation’s take. And AEI’s James Capretta and Scott Gottlieb.

Milliman Explains Why Medicare Advantage Has Not Collapsed

Milliman, the actuarial consulting firm, has published a new report on the impact of the government’s cuts to Medicare Advantage. The report was sponsored by the Better Medicare Alliance, which announced that “seniors now face soaring maximum annual out-of-pocket costs” due to the cuts.

And yet, the purported cuts have not really bitten health insurers. Medicare Advantage enrollment is at an all-time highNCPA has favored Medicare Advantage over the traditional Medicare Parts A and B, but we have noted that insurers seem to capture more of the value than beneficiaries do.

The Milliman report explains this quite well. Looking only at Medicare’s physician and hospital benefits (and ignoring the Part D drug benefit), Milliman reports that Medicare Advantage plans reduced the average beneficiary’s share of Medicare’s costs (coinsurance, deductibles, and Part B premium) by $67.65 in September 2012 (or $811.80 annually) and gave him $11.65 worth of non-Medicare benefits ($139.80 annually). The latter include enticements such as fitness-club memberships.

“Site-Neutral” Medicare Payments: A Good Idea from President Obama’s Budget

Imagine that there are two providers of the same service. Their quality and timeliness are comparable. However, one provider charges significantly more than the other. In a normally functioning market, you would expect that the more expensive provider would have to significantly change its cost structure to stay in business.

What if the more expensive provider argued that it had higher overhead, and therefore needed and deserved to be paid more? He would be laughed out of the marketplace. Yet, this is exactly what happens in Medicare. Because of different fee schedules, doctors in independent practice are paid less for the same procedure than hospital-based outpatient facilities. Unsurprisingly, this has resulted in hospitals buying up physician practices, in order to profit from this arbitrage:

For example, Medicare pays more than twice as much for a level II echocardiogram in an outpatient facility ($453) as it does in a freestanding physician office ($189). This payment difference creates a financial incentive for hospitals to purchase freestanding physicians’ offices and convert them to HOPDs without changing their location or patient mix. For example, from 2010 to 2012, echocardiograms provided in HOPDs increased 33 percent, while those in physician offices declined 10 percent. (Medicare Payment Advisory Commission, March 2014, p. 53)

Medicare Part D Responsible For 60 Percent of Medicare’s Spending Slowdown

When Medicare added Part D, the prescription-drug benefit, via the Medicare Modernization Act (2003), its framers decided that every beneficiary would receive the benefit from a private plan, not from the government directly.

The benefits of this design continue to show themselves. In Health Affairs, Loren Adler and Alex Rosenberg conclude that the Part D benefit is responsible for 60 percent of the reduction in the rate of Medicare spending since 2011.

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Medicare Advantage: Telemonitoring Cuts Hospital Readmissions 44 Percent, ROI $3.30 per Dollar

Geisinger Health Plan has conducted a study of elderly patients enrolled in Medicare Advantage who were treated for congestive health failure. It is reported by Mobihealthnews‘ Jonah Comstock:

A new study from Pennsylvania hospital system Geisinger Health Plan shows that remote monitoring of congestive heart failure patients can reduce readmissions by 38 to 44 percent and produce a return on investment of $3.30 on the dollar.

Medicare Goes Concierge – Sorta

Medicine Bag and StethoscopeOne of the great things about concierge medicine (also called direct practice) is the ability to contact your doctor at any time. Also, that your doctor will work with other caregivers and advocate on your behalf.

Yes, it costs you extra for the extra service, but that is how the doctors can reduce their case loads and free up the time to provide you with additional attention. Not everybody thinks the additional fee is worth it, but many do. Plus an argument can be made that the customized care saves money by reducing duplicative tests and hospitalization.

Medicare Fees: The RUC is Bad, But There’s No Point Regulating It

Politico recently ran an interesting story on the Relative Value Scale Update Committee — the “RUC”, a body convened by the American Medical Association that fixe the fees that Medicare pays physicians. It describes the absurdity of a committee of physicians fixing fees that the government pays physicians, and demonstrates how the RUC pays primary-care practitioners much less than specialists. Our blog has covered this thoroughly:

StethoscopeWilliam Hsiao, the economist who designed the Medicare Prospective Payment System, determined Medicare’s fees as follows: “He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from 45 minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer. They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do.” (Rick Mayes and Robert A. Berenson, Medicare Prospective Payment and the Shaping of U.S. Health Care, Baltimore: Johns Hopkins University Press, 2006, p. 86.)

Explaining Medicare’s Slowing Spending Rate

The slowing rate of growth of Medicare spending per beneficiary is the root cause of the rose-colored glasses through which the Administration views the latest Medicare Trustees’ report, which predicts insolvency four years later than the previous report did. So, what explains this slowing rate of growth?

Analysts at the U.S. Department of Health & Human Services have just released an analysis explaining what has happened. Figure 1 shows that national health expenditures have been growing at 3 percent per capita from 2009 through 2013. Medicare spending per beneficiary has grown slower than this since 2009, effectively flattening in 2013.

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