Health Policy Schizophrenia

The Obama administration has told us how it intends to change Medicare many times and in many places.

It wants to replace fragmented decision making by independent doctors with coordinated care delivered by doctors working in teams, connected to a medical home. It wants Medicare to purchase quality, not quantity. It wants decisions to be evidence-based. It wants electronic records in order to standardize care and reduce errors.

So how does the administration plan to get all this done?  It plans to spend hundreds of millions of dollars on pilot programs to try all these ideas out and then ……

Wait a minute. Aren’t these ideas already being tried out somewhere? Yes. In Medicare, as a matter of fact. How well are they working? As a long-time critic of managed care, I admit the results look pretty good.

So if the Obama administration’s core ideas have already been tried and tested and they are well underway, why are we spending hundreds of millions of dollars reinventing the health delivery wheel? I thought you’d never ask. If you are practical and pragmatic, you wouldn’t — especially when the government is running out of money anyway. But if you are intensely ideological, there are three reasons:

  • First, the place where these ideas are being implemented and vetted is in Medicare Advantage plans; Barack Obama campaigned against these plans in his presidential bid, claiming that they were over-paid.
  • Second, the Medicare Advantage plans are run by private insurance companies; many legislators hate them because (a) they are private, (b) they are insurance, and (c) they represent “privatization” of Medicare.
  • Third, the ideas that are being tried and vetted are originating in a competitive marketplace instead of where the administration thinks that health delivery ideas are supposed to come from — a government bureaucracy.

I know. It’s so bizarre that not even J.K. Rowling could make up a story like this.


Crazy

 

Before going further, let me clear up an important point about the organizations that are involved in Medicare Advantage.

About one in every four seniors has enrolled in a private insurance plan, offered by such entities as Aetna, United Healthcare, Humana, Cigna, etc. Medicare pays these plans a risk-adjusted premium (reflecting the expected cost of the enrollee, based on age, sex, previous medical history, comorbidities, etc.). Sometimes these plans pay for medical care the same way the conventional Medicare program pays. But for the present discussion, a more interesting arrangement is one in which the actual delivery of care is carried out by an entirely separate entity.

At the risk of overwhelming you with acronyms, these entities are variously called Independent Practice Associations (IPAs), Medical Services Organizations (MSO) or Integrated Delivery Networks (IDNs). Let’s just settle for IDN. Under a typical arrangement, the insurer will specialize in the insurance aspects of the plan (benefit design, actuarial analysis, claim adjudication, marketing, accounting, etc.) and the IDN will specialize in health care delivery. This is important to know because it is typically not the insurance company that is experimenting and innovating with new designs in how to deliver medical care. It is a group of doctors in an IDN who are doing it.

An example of an IDN that is already doing what the Obama administration wants to try out with expensive pilot programs is IntegraNet of Houston, an organization with a network of about 1,200 doctors. Every Medicare patient has a medical home. The physicians follow evidence-based practices. Care is integrated and coordinated. Electronic records are being introduced. It appears that quality is higher and costs are lower than in conventional Medicare.

So what’s not to like? If the folks at CMS had any sense, they would camp out in Houston and try to find out how all this works. Instead, they have been spending their time and your tax dollars producing a 427-page book of rules on what Accountable Care Organizations (ACOs) have to look like….

Oops, did I forget to mention: The administration is so confident of how the pilot programs are going to turn out, that it’s not waiting for the results. It’s already decided that medical care should be delivered to all Medicare patients through ACOs and it has already decided what they should look like down to the smallest detail.

Not only is the 427-page book of rules not based on real world experience, the Mayo Clinic and most of the nation’s top level health centers have announced they don’t intend to participate.

In the meantime, there is no doubt in my mind that IntegraNet doesn’t satisfy all the government’s requirements by a long shot. For one thing, it pays its doctors fee-for-service. The Obama folks are convinced fee-for-service payment is the problem, not the solution. For another, IntegraNet intentionally pays doctors more than Medicare’s standard rates. Yet the administration’s Plan B for cost control is squeezing provider payments, not increasing them.

A third problem is that it is producing a medical loss ratio (MLR) of 70% or less for its insurance company clients. As previously reported that is 10 percentage points less than the minimum MLR the Obama administration thinks insurers should have. But that extra 10 percentage point profit (shared by the IDN and the insurer) is the whole reason IntegraNet is in business. No one is going to take risks and try new things if they can only get a regulated-utility rate of return.

IntegraNet is not alone. In many other Medicare Advantage plans practitioners are already doing what the Obama administration says it wants to do with Medicare as a whole — without any prodding or nudging from the federal government. That is, many of these plans are using coordinated/integrated/managed care systems to achieve fewer admissions, fewer readmissions and fewer hospital days than conventional Medicare. (See the latest summary of the evidence by Jeff Lemieux in a comment at the Health Affairs blog.)

Of particular interest to me is the opportunity to give money back to patients who make cost-effective choices (a subject I will consider at great length in the future). A number of IDNs are way ahead of me — rebating some or all of the senior’s Part B premium if they will cooperate and choose a medical home. As Larry Wedekind, IntegraNet CEO, explains:

It is the beauty of competition in a marketplace with several competitors all bidding for additional business from seniors. The ones that we have seen in the Houston market have ranged from a full Part B premium give-back to seniors to a 20% portion of it…I’ve seen as low as $20 per month give-back to full premium give-back of $96 per month in the past. The Part B premium this year is $110.50, but no one is giving more than $50 per month back this coming year. The give-backs are often related to a Medicare Advantage Special Needs Plan such as a diabetic plan to help defray the higher costs of drugs.

The sad irony is that many of these plans, along with their innovative ideas, may be pushed out of existence by the very administration that is touting the techniques they have pioneered.

Comments (50)

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  1. Devon Herrick says:

    The Medicare reform debate is more dysfunctional than any debate in health policy. Seniors are easily scared by any discussions of change. The unfunded liability for Medicare is around $60 trillion, which will burden future generations if not reformed. Yet the senior lobby does not really care about that — its job is to lobby for seniors not their grandkids. The senior lobby (and political parties) all use scare tactics to derail any honest discussion. The change we most often hear about is cutting provider fees and then claiming no benefits are being cut.

  2. Elizabeth C. says:

    The more I find out the more discouraged I get about where our health options are going. I’m all for innovation but the government-created, untested programs that are being forced upon us defeat the entire concept of innovation.

  3. Guinevere says:

    Spot on once again.

  4. KG says:

    Wow. With so many top health care centers saying they won’t participate, and so many tough regulations, it seems like ACOs will find it difficult to provide very effective or efficient care.

  5. Brant Mittler says:

    John, “privatization” of Medicare means that the rules and processes of rationing care become “proprietary” or “trade secrets” and not subject to public scrutiny. Medicare HMOs – no matter what they have been called – have never saved money. They just make money for the insurance executives that promote them. They ALL feature loss of freedom of choice for doctors and patients. How does that fit in to your “free market” model? And as for Larry Wedekind’s great experiment, ask him publish his outcomes risk adjusted and give us a chance to evaluate how his rationing programs work out for sick people with multiple chronic diseases.

  6. Virginia says:

    I spent my summer researching ACO pilot programs and discovered one thing that should interest all policy wonks: Most organizations that serve as models for the new ACO structure are not actually applying for ACO status. Why aren’t they? I suspect that they’re happy operating the way that they do and that they don’t want to put their operations under regulatory oversight.

  7. Al says:

    John G.:

    How do you know Medicare Advantage is working well? If things are so good why does Medicare advantage require extra funding? What would happen if that extra funding were to disappear? What happens to those expensive patients on Medicare Advantage when things aren’t working out so well? Who then foots the bill?

    Some of the Medicare Advantage programs are HMO’s. Ware’s MOS took 10 years for the study to be published. The results just 2 years earlier did not demonstrate the severe problems seen with HMO’s. Those problems require time to reveal themselves. I believe MA has been in existence for less then 10 years.

    Do you really believe that Medicare Advantage is real competition when the rules are carefully set by a government agency and the two basic elements, patients and physicians (the buyer and the seller), are forced to participate in one of several closely regulated programs offered by government? Adam Smith must be rolling over in his grave. Maybe government should return to the auto business and let people buy autos only from those companies owned and run by the federal government where the government pays the managing companies a supplement to keep them in business.

    That IntegraNet might be functioning in a favorable way with innovative ideas that I might agree with doesn’t mean that one should applaud Medicare Advantage promoting it as if MA represents the free market. It doesn’t. What it might mean is that a company given a tad of freedom and working under a federal bureaucracy can innovate and perhaps produce new ideas that can lead to some improvement in a very bad system. All that suggests is that market ideas are better then the bureaucratic ideas provided by the federal government.

  8. Carolyn Needham says:

    “reinventing the health delivery wheel” — what a great, succinct, way to put it!

  9. Don McCanne says:

    With health care costs for a family now averaging over $18,000, not including insurer administrative costs (Milliman Medical Index), how can one justify adding another 43 percent to those costs (the administration and profit add-on for 70 percent MLR plans)?

    The Affordable Care Act isn’t a whole lot better since it allows 18 to 25 percent add-on for qualified private plans.

    We now have a new report from the IG of HHS that shows an important difference between private and public health care purchasing. When quality is controlled, government administered pricing is much lower than private sector pricing. Specifically, the government Medicaid program was able to obtain a 45 percent price reduction in brand-name drugs whereas the private Medicare Part D intermediaries were able to negotiate only a 19 percent reduction for those same drugs of identical quality.

    Health care costs are now an issue for 80 percent of Americans. We can no longer afford to waste our funds catering to superfluous, intrusive, outrageously expensive, private sector insurance bureaucracies.

    Since risk pooling remains an imperative, we do need some form of insurance, but without these wasteful private bureaucracies. It is no wonder that so many conservatives warn that we’ll end up with a single payer system. It seems inevitable.

  10. Dennis Byron says:

    The CBO Baseline document of March 2011 says Part C represents 25% of the enrollees this year but only 23% of the expense. Anyone know what that’s about? Since no one uses it as a defense for Part C I assume it is a statistical fluke or ????

  11. Patrick Skinner says:

    I’d like to see John debate Obama on healthcare. Of course Obama would run like a scared cat before he’d debate anyone intelligent on healthcare – he’s no good without a script and a monitor.

  12. Frank Timmins says:

    John, I am surprised that you have concluded that managed care program results “have looked pretty good”. While Medicare Advantage programs have certainly given seniors more choice, and whether or not the government has saved dollars relative to traditional Medicare, the glaring weakness is the reduction of choice for the beneficiaries. The numbers of “network physicians” available on these plans are pretty pathetic (especially in the North Texas area).

    It seems to me the HMO model which has been tried and supported by the federal government for more than 40 years in the commercial market has been a spectacular failure. Why then should it be the model for Medicare reform? It seems that third party management is a bad idea regardless even if it is being done by the private sector.

  13. Larry Wedekind says:

    John, well said..thanks for the recognition of our efforts at IntegraNet.

    To Dr. Mittler,

    The nature and benefit of competition is that private companies develop unique and better methodologies or products and in our free market they can become proprietary for awhile – this aspect of our society has produced many lasting benefits that would never have existed without the ability to patent or service mark unique ideas and products. I can tell you though that IntegraNet has not been able to keep our proprietary methodologies private very long due to the fact that physicians, Health Plan partners and our patients all experience our methods quickly and so they become public quickly. Its also very difficult to service mark our methods for the same reason.

    Note also that insurance companies and IDN’s do not make any extra money in our Shared Risk/Savings Model unless the physicians make a lot of extra money. This is a unique feature of the Medicare Advantage Model that is easily forgotten. Why would you loath insurance company executives receiving more money for their wisdom in promoting the Shared Risk Model when physicians are paid the extra money first for their efforts?

  14. Don McCanne says:

    To Larry Wedekind,

    Let’s see. The formula for success at IntegraNet is to use secret methods to reduce spending on actual health care (70% MLR) and keep more of the premiums so that “physicians make a lot of extra money”? With our outrageously expensive health care system, unique to the United States, can we really afford to perpetuate that kind of thinking, celebrating it as free market competition of private companies?

    Value is what we should be striving for. In this model, the supposedly free market is being used to destroy value. When free markets fail in providing value for essential needs, it’s time for the government to step in. That might not appeal to those ideologically opposed, but one thing we can say: single payer systems do provide much better value in health care.

  15. Larry Wedekind says:

    To Al:

    Your questions are:
    1. “How do you know Medicare Advantage is working well?
    2. If things are so good why does Medicare advantage require extra funding?
    3. What would happen if that extra funding were to disappear?
    4. What happens to those expensive patients on Medicare Advantage when things aren’t working out so well? Who then foots the bill?”

    1. As documented in Goodman’s Blog, there are many sources of proof that Medicare Advantage is working well. Take a look at Jeff Lemieux’s Comment in the Health Affairs Blog by Marsha Post that is highlighted in Goodman’s blog. You’ll notice that Marsha Post even admits in her response to Jeff’s Comment that Medicare Advantage seems to be working. Jeff’s Comment clearly documents many studies that prove that Medicare Advantage Plans improve outcomes and save money. Furthermore, my company has 6 years of history to prove that our Medical Home, Care Coordination/Improvement and Member Outreach strategies save money and improve our Member’s Health. The fact that Health Plans now beg us to manage their Medicare members is proof in itself of our effectiveness. The Health Plan’s have recognized that IDN’s have the ability to control costs without rationing and price fixing.

    The very fact that CMS has adopted the Medicare Advantage IDN partnering strategy in their ACO initiative is further proof that even CMS understands the benefits of our HMO/IDN Shared Risk Model. Fact: The ACO initiative in PPACA is patterned after the Medicare Advantage IDN Risk Sharing/Savings model. The overriding problem with the ACO initiative is that the government, true to form, believes that it should be the boss in designing Care Coordination and Management.

    2. The extra funding in Medicare Advantage does not accrue to the benefit of the insurance companies. In fact, it cannot by law! The extra funding pays for extra benefits that are mandated in the enabling legislation for Medicare Advantage Plans. Extra benefits like vision, dental, hearing aids, health club memberships, transportation, money vouchers for health products like glucose sticks and monitors, blood pressure monitors, toothpaste, etc. You never hear Pres Obama and h is cronies talk about this fact do you? These benefits actually help the Medicare beneficiaries improve their health and welfare. These benefits are a part of the solution.

    3. Therefore, taking the extra money away is a foolish answer to the problem. It can be done and actually will done over a seven year period through PPACA. However, I believe that the most appropriate answer to our Medicare deficit challenge is to set up a system whereby a portion of the savings generated by Medicare Advantage Plans each year is given back to the government (taxpayers) through the lowering of the subsequent year premiums paid to these efficient Health Plans by a small percentage each year. The quid pro quo for these efficient Health Plans is to allow them to sell their Medicare Advantage policies all year long instead of limiting them to only six weeks a year as is under current policy. What the Health Plans and IDN’s lose in profit margins through this give-back program is made up in volume of members served.

    4. We handle expensive patients through reinsurance programs and through our management processes. We DO NOT ration at all. We simply pool the expensive patients with the healthy patients and we work intensively on the expensive patients to get them better. This often means helping them change bad habits and/or doctors and medications. Patient compliance is a huge issue for us on a daily basis. Physician compliance in maintaining a true Medical Home is also a daily issue for us. It is not easy, but the rewards are potentially large.

  16. Larry Wedekind says:

    To Frank: The commercial HMO model is far different than the Medicare Advantage (MA) HMO model. I agree with you that the commercial model has failed to establish the value that was expected. Note that it has brought value to the marketplace though… another discussion for another day. The MA model involves a total transfer of financial risk and reward to the HMO’s in return for much better healthcare benefits offered to the beneficiaries at much lower out of pocket cost to the beneficiaries. The IntegraNet IDN model also is different in that we pay fee-for-service to our Providers and we reward them for compliance with our evidence- based medical home and clinical criteria.

    I admit that there is a reduction in choice for beneficiaries in certain types of IDN’s. However, with IntegraNet there typically is not a reduction in choice because we target all willing and competent specialists in each area that we serve. We also assist our HMO partners in contracting with the respected hospitals in each area. I am trying very hard to eliminate IDN network limitations since this is dysfunctional in many ways. Our methods do not depend on limitation of choice.

  17. Larry Wedekind says:

    To Don: I’m sorry, but you are very confused about the MA system. The fact that IntegraNet and other IDN’s consistently reduce the MLR to below 70% means that great value has accrued to the Medicare beneficiaries! To suggest otherwise is simply ignorant. Why? When a Health Plan experiences a 70% or less MLR because of the Care Coordination efforts of their IDN partner, this nearly always means that the beneficiaries are healthier and need the hospital less frequently. I submit to you that it is impossible to have a 70% or lower MLR without healthier patients.

    This extra profit derived from the low MLR that is shared with the doctors in the IDN empowers the doctors to then spend even more time with their beneficiaries; this empowering the beneficiaries even more.

    Remember that, due to the transfer of complete financial risk to the HMO and IDN, we have almost complete freedom to care for our beneficiaries under the MA Program the way we deem best. There is very little interference from CMS in our methods for caring for our beneficiaries under the MA Program.

    The MA/IDN Risk Sharing model is actually the best example of free market competition within the healthcare market yet.

  18. Al says:

    Larry W.

    1) Proof is far more rigorous then what you seem to believe. If physicians lumped all the proofs together the way you have they would be sued all the time. There are different levels of proof and so far from what I have seen the proof of efficacy of Medicare Advantage as a whole and your company as a part is very tenuous. Proofs regarding lack of efficacy are greater.

    Your company might be better than most in Medicare Advantage, but the only way one can actually draw conclusions is to know what you desire to keep secret.

    People flock to new ideas especially when they believe they can make a buck and then later game the system. I don’t know how much management of care your company is involved with in the spectrum from pure FFS… PPO…HMO, but that has a lot to do with the incentives. Most companies are hybrids.

    You say “The very fact that CMS has adopted the Medicare Advantage IDN partnering strategy in their ACO initiative is further proof that even CMS understands the benefits of our HMO/IDN Shared Risk Model. ”

    Based upon the record of CMS and its predecessor one would have to conclude that your solution is as bad as the rest. Sometimes CMS scr-ws up and gets things right. Perhaps that is true in your case. Perhaps not.

    2) “The extra funding in Medicare Advantage does not accrue to the benefit of the insurance companies. ”

    You are repeating the same argument that HMO’s provided when similar objections were raised years ago. I believe you to be disingenuous in saying what you do because at the very least you benefit from quantity. The more toys you give to your patients the more they are likely to sign up. That is the obvious, but there are other ways that money is funneled away from patient care. Once again you have secrets and closed books that prevent one from following the money trail.

    If the patient controlled the dollar and was not given more money to make you more attractive I wouldn’t really care as much about these things. But you are given more money and that money is taken away from the type of care necessary for seniors to survive.

    3) ” taking the extra money away is a foolish answer to the problem.” Foolish you say? That is coming from the same money stream that is denying care to seniors and making the providers refuse to see seniors with particular needs.

    You equate a cheap pair of eyeglasses with a needed procedure that provides life or comfort to one in need. I admit we do not have enough money to pay for everything felt necessary, but provision of toys instead of care is a disgrace.

    4) “We DO NOT ration at all. ” I say bull. Tell me how you determine who gets a regular pacemaker and who gets one with a defibrilator. Of course you ration. We all do. We even ration our time.

    If you want to prove you are better then the others in the Medicare Advantage program (that should not exist except if the per capita payment is the same and traditional Medicare is not a dumping ground for expensive or difficult patients) then tell us where you fit on the FFS… PPO… HMO scale and tell us forthrightly how you ration care. Please understand I am not squeamish about rationing as long as it is done in a transparent manner where patients have choice. John G. indicated that you are a good company even though he has been unable and unwilling to defend his position on Medicare Advantage. Other then a few items I trust John G’s understanding (he is one of the good guys) so based upon his word I look at your company more favorably then most. Now prove it to me.

  19. Brant Mittler says:

    @ Larry
    Larry, if you guys have figured out the right way to practice medicine you all deserve a Nobel Prize in medicine. Because no one else on the planet has figured it out yet. And if you really do know the right way to practice, then you don’t need federal subsidies to stay in business. If it weren’t for the extra federal dollars, you wouldn’t be in business. Is that the “free market?” Or is it just our tax dollars at work subsidizing your hype and freebies to support your marketing? Pardon my skepticism.

  20. Ida says:

    “When a Health Plan experiences a 70% or less MLR…., this nearly always means that the beneficiaries are healthier and need the hospital less frequently. I submit to you that it is impossible to have a 70% or lower MLR without healthier patients.”

    Research shows that private insurers profit by enrolling healthier (low cost) Medicare beneficiaries and disenrolling (expensive) sicker ones. While this practice makes for a profitably low MLR, it doesn’t make patients any healthier and adds no value to the health system.

  21. Larry Wedekind says:

    @Ida, what research? We currently have two transplant patients and many train wrecks (patients who are not compliant and/or who are really sick) …there is absolutely no proof or even an indication in real life experience that HMO’s only take the healthy patients. Furthermore, physicians would have to participate in such a system to make it work since most patients ask their physician which Plan they should join. I don’t believe, based on my own experience, that this happens very often.

  22. Al says:

    Larry W.

    Cherry picking by Medicare HMO’s was proven many years ago by the federal government (and others). When risk was taken into account it was found that the benefits that should have been paid were around 65 cents on the dollar while the HMO’s were being paid 95 cents on the dollar.

  23. JOSEPH EUSTERMAN MD says:

    As a Mayo trained internist whose family medical professional associations at Mayo go back to 1908, I, and many other alumni are deeply offended by Mayo’s current leadership’s political position choice to support private profit-based insurance’s, pay or die, immoral “system” which prevents access to medically necessary care for millions of Americans, resulting in needless illness and death. They have dishonored the Drs Mayo maxim, “The interest of the patient shall be our only concern.” and, “It is a poor government that does not realize that the prolonged life, health and happiness of its people are its greatest asset.”

  24. Larry Wedekind says:

    @Brant, thanks, but I have no respect left for an organization that awards the Nobel Prize to a new sitting president who has done literally nothing to deserve it. Talk about deceipt – think about all of the deserving people who have promoted peace and good will who were overlooked. I digress though.

    Please understand that we are simply working within the construct of the Medicare Advantage Program and we are experiencing success in lowering the cost of healthcare without rationing or price fixing beyond what CMS already has put in place. We are a physician organization and we will continue to improve our methods of care coordination and management as the MA premium is reduced each year under the PPACA. I am not very worried about the reduction of premium because I have confidence that we will continue to improve our delivery of care.

  25. Larry Wedekind says:

    @Al: “many years ago” has nothing to do with “now”. The industry is learning from past mistakes. Why not listen and open your mind to what I am saying? Cynicism isn’t helpful to a discussion of what is actually working…vision and creativity is helpful -I am determined to be a part of the solution to our country’s healthcare delivery and cost challenges.

  26. Brant Mittler says:

    @Larry:
    Larry, today’s Health Affairs email alert was about an article in the September 2011 issue claiming that cognitive impairment keeps seniors from enrolling in Medicare Advantage plans. So if they don’t enroll, they must be nuts. It’s too complex for them to understand according to the article. The primary sources for the cognitive data are suspect – obtained by telephone interview – but the premise is interesting. All we need to do is get rid of the patients who are too old or impaired to understand this stuff and also get rid of the doctors who are too old or set in their ways to understand this stuff, and you all will be home free. BTW, cognitive impairment is the method du jour for peer review committees to oust older physicians who are political dissidents.

  27. Larry Wedekind says:

    @Brant:

    Growing old is not for the weak! A favorite saying of my mother….tis very true indeed. However, I am happy to say that our Credentialing Committee has never used that feeble excuse for decredentialing a doctor. Pardon my puns..its getting late and I’m getting old.

  28. Deborah says:

    I for one support the idea of private, free market healthcare be it HMO, PPO, MCO, MA or otherwise. I am against the US government attempting to take over any other area of our lives. They are not doing so well with the postal service or anything else they attempt to “take over”. Where in our Constitution does it say anything about healthcare being a Constitutional “right” granted by the government and given freely (NOT!) to everyone? So what if a private company uses already spent government money to make a program like Medicare even better? Wow that’s innovative and sounds like a SOLUTION (although sadly not a SOCIALIST ONE). If you give it a chance (and don’t just focus on: “it’s a PRIVATE company actually making MONEY, darn those capitalists!), it also sounds like it’s better for doctors, patients and insurance companies! Everyone, please listen, I understand that the patients are HEALTHIER. THAT SAVES US ALL MONEY when people who have been sick are better, and people don’t keep getting sicker and sicker, etc….. And better for us TAXPAYERS too- I bet with better supervision of physician quality of CARE standards (notice I didn’t mention COST control standards), and much greater physician rewards, there’s probably much less FRAUD then traditional government run Medicare (where there is about 30-35% flat out fraud, and unnecessary procedures, and patient churning, etc.). Comments?

  29. Don McCormick says:

    I work for an IDN in Houston that competes with Larry and we have been representing Physicians in their contracts with HMOs and Medicare Advantage Plans for sixteen years, the same time as Larry. We have no idea how you would go about limiting care or avoiding sick people since there has been no screening of people going into any of these HMO plans and we don’t do the enrolling. We have no political agenda and we have seen the care delivered by our physicians supported by liberals and conservatives from every party. There is a big gap between talking about health care delivery and actually doing it. We don’t do it either. We just arrange for it to be done and try to make it easy to do. That’s what Larry does. There are no real trade secrets involved in any of this as it is not a trade, but mostly just an attempt to see medical care as it actually is in practice and to fix what’s wrong when problems are discovered. Larry’s association and our association talk to and see patients and physicians all of time to try to get in front of the health problems and make sure that patients have care and that physicians are paid as well as they would be under any other kind of system. When they don’t think about being cheated on claims they focus on health care advice and treatment. It works when you do it. Putting it on paper and talking about it are usually just a form of playing “ain’t it awful.” It has not been awful for us, Larry, the patients or the physicians for many years and it never will be regardless of the policies of the money handlers because we just do it within whatever budget we have. Since the budgets are being set by systems that are less concerned with real health care and health outcomes there is a surplus. In the last four years we have contributed our surplus to making electronic medical records available to every physician in the world by paying programmers to perfect OpenEMR and get it certified for Meaningful Use by the government and it is now certified and it is free open source software. That act alone will result in more health care saving than any of the health care wonks can dream. And it was created by doing what Larry does in a system that is primarily just patients and physicians who know each other.

  30. Al says:

    Larry “The industry is learning from past mistakes. Why not listen and open your mind to what I am saying? ”

    My mind is open to any ideas, but you are making a claim without being completely transparent. One has to be a fool not to rely upon history unless it is proven that history doesn’t apply. (If the patient was in direct control of the dollars my opinion would be quite different.)

    Re rationing: I can only know what you are willing to tell me. How do you determine who gets the defibrillator and who gets the regular pacemaker? At what point will you operate on an asymptomatic patient that has mitral regurgitation?

    Re toys and eyeglasses/hearing aids: Forget about the fact that likely they are junk. Every dollar spent on items such as these are simply sales gimmicks that reduce the money available for care or reduce the amount of money that can be returned to the tax payer.

    Cynicism: Cynicism is absolutely necessary when we see trillions of dollars taken from the taxpayer and misspent. Cynicism increases when one hears you saying that your company does not ration health care when the whole idea behind your company is to ration health care otherwise you would be replaced by an ATM machine. The issue is how you ration health care and how you spend my dollars. Tell us.

    Re HMO’s in general: “4-Year Outcomes for Elderly, Poor, Chronically ILL Patients Treated in HMO and Fee-for-Service Systems” John Ware Conclusion: “During the study period, elderly and poor chronically ill patients had worse physical health outcomes in HMOs than in FFS systems” Prove how this does not pertain to you.

    Lastly, tell us why patients in your program should be permitted to utilize more taxpayer resources then patients in traditional Medicare. Also explain why your dissatisfied patient, that feels additional expensive care is needed, can transfer their care back to Medicare draining the traditional Medicare funds when those treatments are then provided. Why shouldn’t your company be forced to pay for that care? In other words why should the taxpayer pay extra to open the door to cherry picking?

  31. Al says:

    Don McCormick: “We have no idea how you would go about limiting care or avoiding sick people since there has been no screening of people going into any of these HMO plans and we don’t do the enrolling.”

    That too was said before, but it was discovered there are ways of screening people without it being noted. One doesn’t have to screen too many in order to create a profit, just a tiny percentage that is very difficult to detect.

    Once patients are in the program incentives can lead to the patient not getting care. In FFS there is a profit made from making a written notation of need and then performing a service. There is a paper trail and for the more difficult items there are many people involved. In managed care profit is made from doing nothing. Therefore, nothing may be in a medical record and since nothing was done there is no paper trail or trail of people involved. This can lead to poor care in vulnerable populations as described in Ware.

    We have the government, the insurer and the providers on one side. Who is taking care of the patient? Why don’t you tell us how you ration care.

  32. Dennis Byron says:

    I don’t follow the logic of those above that think Part C is some kind of immoral scam when Part C is highly regulated by the Centers of Medicare and Medicaid Services (as “Al” says in his first comment, I think saying the opposite of his subsequent comments?). But on the other hand, the same commenters seem to think it’s OK for CMS to ration care itself (IF it is happening under Part C).

    And there’s no “loss of freedom” and no one was being “forced to participate” pre PPACA; until now, no one has to join a Part C plan.

  33. John Goodman says:

    This had been a great exchange of ideas, folks. Thanks to all of you for joining in.

  34. Frank Timmins says:

    @Dennis Byron

    I don’t think “immoral scam” is a proper definition for the Medicare Advantage programs. They are in fact a step in the right direction away from the traditional Medicare model (which although one could debate the “immoral” part could certainly pass muster as a “scam”).

    If there were to ever be a true “competition” between the MA programs we could see some better results in cost and quality. But IMO the problem still persists because the pressure on both quality and cost comes from a third party (other than the direct provider of service and the person receiving the service). I have never seen a good explanation as to “why” we have to “budget” healthcare as a society. It seems to me that should be answered before we worry about “how” to do it.

    The only thing that needs to be budgeted in a nationally funded program in the risk (insurance) element. That is to say the government “buys” whatever level of insurance it can afford, and the market makes the adjustment below that level. If it were structured that way everything would take care of itself economically.

  35. Deborah says:

    @ Al, Etc.: My understanding is that these MA plans and their enrollment by independent agents contacting the patients who must meet Medicare requirements and WHO MUST FIRST ASK TO BE CONTACTED, is so tightly regulated by CMS that there is little if any “wiggle room” for “patient screening”. This process is very similar to enrolling in Medicare: Medicare enrollees must also meet the age criteria, pick up the phone and call Medicare/enroll in Medicare (which really does away with all the mentally-challenged age-related discrimination baloney mentioned above). If the above neigh-sayers really knew the system, they wouldn’t be making such ignorant statements and accusations, sorry, but that’s just the way it is.

    Granted, this Medicare Advantage stuff is highly complex and sophisticated, and not for the faint of heart to really be able to fully grasp (Surprise! No secret-society “hidden” stuff here after all, no fun, sorry). They are all HIGHLY regulated by CMS, the Plans, and the physicians. If our world healthcare crisis was EASY to solve, then it already would have been! And, you are right, not all MA plans are created equally, some are just plain better for patients and doctors than others (just like in the real world-there is competition!), so if the patient is unhappy (or the doc), then switch plans! (BTW- MA offers lots more choice than just plain govt. run Medicare-you don’t like Medicare? “Too bad, no other government plan available, sorry, NEXT”).

    To my knowledge, there are at least 10-15 MA Plans in the Houston and surrounding areas alone (and more coming yearly), PLUS traditional Medicare, so that puts all this whining about “no competition” to rest as well. Plus it’s my understanding that just as in traditional Medicare, physicians get more money to treat the sicker patients with multiple co-morbidity illnesses…these are the same patients that are now getting healthier due to higher standards of care and more physician visits, (not less care than Medicare but MORE! under these MA models); and here’s the clincher-FOR THE SAME MONEY AS TRADITIONAL MEDICARE AND WITHOUT MOST of the associated Medicare FRAUD.

    I really do fail to see the lose/lose proposition some responders keep clinging to with all their might here. Are you guys even Americans? And/or are you bitter docs that (sadly) got somehow taken by Medicare or past HMO’s? (it can happen, but MA is not the same as a Third Party Insurer HMO, lots more regs with Medicare to keep this from happening). We can talk about the “what if” scenarios until the cows come mooing their way home, but that’s not the case here. However, these are PROVEN results that Larry, Don and others have mentioned-positive outcomes they are seeing and making happen daily. Now that’s making real “hope and change” making a good difference in people’s lives!

    Talk about REAL economic “stimulus”, not bogus “job’s saved-stimulus”: taking government entitlement program money that is already spent on those same people anyways, and boosting our health and economy, while earning profits for working people and doctors. Oh, and saving taxpayer money by cutting waste and fraud! I kinda thought America was a capitalist society, so since when is it a really bad thing for honest, innovative, highly-educated, hard workers to make money? Who says just because it’s healthcare, no one should make any money and we should all suffer under government tyranny? Good doctors are leaving Canada, England and India by the drove, because they can’t make a decent wage on government- run programs and their hands are so tied with all the rules and regs…not to mention out-of-date training, treatments and procedures due to lack of money. Time for a reality check, many doctors here in the US no longer accept traditional Medicare patients due to poor government re-imbursements, and this trend is getting worse. This seems like a win-win solution for EVERYONE, even you, Al. So quit trying to bludgeon/accuse/smear those who are stepping out and making real inroads into solving our nation’s healthcare crisis! Accept that there ARE folks who might be doing some good because they are good people with good hearts and ideas, who want to help others and help our country.

  36. Frank Timmins says:

    Deborah writes,

    “…MA is not the same as a Third Party Insurer HMO, lots more regs with Medicare to keep this from happening)”

    Deborah, while it is easy to appreciate your passion for market based solutions, I disagree that an MA plan is basically different from a “third party insurer HMO” – if you view it from the standpoint of the consumer (patient). The fact that it takes funding from the government to “manage” the healthcare needs of the public places it squarely in the same conceptual realm as any “top down” solution.

    Much of the opinion here is not about the superiority of the MA concept generally or IntegraNet specifically relative to Medicare. Rather it is about the perpetuation of the “managed care” approach to the exclusion of everything else.

  37. Al says:

    Deborah writes: “My understanding is that these MA plans and their enrollment by independent agents contacting the patients who must meet Medicare requirements and WHO MUST FIRST ASK TO BE CONTACTED, is so tightly regulated by CMS that there is little if any “wiggle room” for “patient screening”"

    Deborah, that was what was said as well about the original Medicare HMO’s that proved to be false. There were solicitations made with free lunches on the second floor of walk up buildings (keeping the sick away). Physicians were used to put their patients into HMO’s. The physician earned extra money multiple ways. 1) He encouraged his healthy patients to join the HMO. They had little need for care so his capitated fee was higher based upon risk then it would have been if the patients were truly random. 2) Because his patients didn’t cost the HMO so much money he got a large bonus. 3) The other patients that were on Medicare were the profitable one’s that needed all sorts of expensive testing. 4) If the patient was uncomfortable in the HMO because his treatment was delayed he could switch back to the same doctor under Medicare. That preserved the doctors bonus and gave him an additional profit on the Medicare side of his practice. This is known as gaming the system and took the government over a decade or so to figure out though it was obvious from the beginning.

    It is disingenuous for anyone in the know to state that this type of activity cannot happen. Laws change so the gaming mechanisms might change as well, but do not be deceived, gaming will permeate the system as time progresses and that costs patients quality and the taxpayer money.

    You mention choice. The problem is that choice is regulated in such a way that such choice can cause a death spiral to good companies or can further negatively impact the finances of traditional Medicare. You make comments about quality and fraud which are not born out in the literature at least with regard to quality. Cherry picking amounted to around 30% of the “costs” in former HMO’s and that exceeds the calculated fraud in Medicare today.

    You say: “However, these are PROVEN results that Larry, Don and others have mentioned-positive outcomes” Why don’t you show the proof. Note how many things that tell us where the incentives lie are proprietary. I don’t blame Larry. He is doing what the law tells him to do. I blame the law and will bet that Larry is doing better then most.

    Where is the “win-win” you mention for the taxpayer who pays extra for MA? I take exception to your comment regarding “bludgeon/accuse/smear” along with some other comments that you should have withheld. I have provided proof of what I have said and I ask for proof of what others say. You seem to become offended if someone wants proof before subjecting the taxpayer to more taxes and the Medicare patient to potentially inferior care. Did you bother to read the Ware article I mentioned? If you did you would at least see some of the things that have to be looked out for. His discussion is excellent.

  38. Kent Lyon says:

    Dear Dr. Goodman:
    Actually, you are completely wrong. The Medicare advantage plans, particularly ones like Humana, completely hamstring physicians, particularly in my specialty of endocrinology, which mostly means diabetes management. Humana, along with other insurers, exploits federal rules to deny the medications for the optimal management of diabetes. Victoza is such a medicine. It is the most effective medication extant for most patients with type 2 DM, often a godsend for patients because it frequently works better than insulin, is dosed conveniently, aids weight loss, and doesn’t cause hypoglycemia but potently controls blood sugars. It improves post-prandial blood sugars, often the most difficult thing to do in diabetes. But Medicare Advantage plans refuse to cover it or cover it at such a high co-pay that patients won’t take it. Initially, these plans, following the posting on Medicare’s federal website, called it a type of insulin, so egregiously ignorant or mendacious they were. When that problem was corrected, they refused it in favor of Byetta, which is the gila monster analog of Victoza (victoza is the human analog of Glucagon-like peptide 1). The Human analog works better and is better tolerated. The FDA actually delayed the approval of Victoza because it caused medullary cancer of the thyroid in lab rats while Byetta, the gila monster analogue, had been approved even though it did the same thing! The Medicare intermediaries and the Medicare Advantage plans simply game the system and obstruct care of my patients. It’s not as bad as what would happen under centralized control, but I for one am no fan at all of Medicare Advantage plans. I’ve spent 30 years battling insurers in order to get patients treated. I’ve had had patients die becaus Medicare would not approve simple devices for blood sugar monitoring (CGM systems for home use for Medicare patients). There is nothing on this planet that would induce me to favor any sort of control, private, public, local, national, except what a patient is willing to do for themselves. Hence, I am a proponent of a universal first party payor system (e.g., payment out of pocket by the patient, as was done before physicians and hospitals started setting up Blue Cross, then Blue Shield, organizations to pay themselves out of a pot of cash starting in 1929, or a universal system of medical savings accounts). How many people are aware that physicians and hospitals initiated our third party payor system that has metastasized so enormously, particularly since the federal government got involved in a big was with Medicare?
    Kent Lyon

  39. Will Clark says:

    Dear Dr. Lyon:
    I also am a physician practicing for decades in Texas with a large number of diabetic patients. For the past year I have been fortunate to serve on the P&T committee of a large national insurance company and have gained some knowledge of how formularies are established. Our 2011 formulary was submitted for approval in March, 2010. After its approval in September, 2010, and become effective January 1, 2011, no changes except those mandated by the government were permitted. Prior to our submission in March, 2010, there was little published data on Victoza, except for the registration studies, compared to the number of Byetta studies available to us. In March, 2011, again, there was much more Byetta data. Like you, I do feel that Victoza has a place in the treatment of diabetes and there is now more published data to support that feeling. I think the 2013 formulary will reflect this. All of us wish for faster approval and incorporation of new treatments for our medicare patients and for physicians to have more input in making these vital decisions. I think that only by banding together into organizations such as Integranet will be acheive the critical mass necessary to effect changes to benefit our patients.

  40. Brant Mittler says:

    @Will Clark:
    I, too, am a physician practicing for decades in Texas. Your description of the managed care P&T process is a perfect example of the inefficiency and lack of responsiveness of managed care. A practicing physician like Dr. Lyon can make a decision about the best medicine for his diabetic patients without having to wait months or years for the managed care committees – full of people who are selected because they pledge allegiance to the concept that the insurance company knows best – to make decisions about individual patient care on a real time basis when the patient needs the care.
    Why not trust doctors to make the right decisions? Why even give them licenses if you can’t trust them? The license to practice has become the license to practice the way the insurance company wants you to practice – the New Golden Rule – He who has the gold rules. I’m sure that makes sense to economists and other non-physician pundits who owe their livelihoods to grants or payments from insurance companies. I’ll await the flood of responses on the wisdom of managed care vs. the venality, stupidy and greed of practicing physicians. And for all the doctor critics: when you get sick, call your insurance company and let the telephone nurse treat you.

  41. Larry Wedekind says:

    @Brant, you are making an erroneous assumption about how IDN’s work with Health Plans today. I agree that Health Plans who do not partner properly with IDN’s do interfere in the practice of Medicine in certain ways; i.e., preauthorization of specilaty referrals and expensive procedures is an example of this.

    However, we at IntegraNet do not tell physcians how to practice medicine, nor do our Health Plan partners. We do however require preauthorization of certain high risk or expensive procedures, but this is designed to eliminate fraud and abuse as well as churning and defensive medicine, which as you know is rampant in traditional Medicare. Our physicians are relatively happy with our Health Plans and our Coordination of Care programs.

  42. Brant Mittler says:

    @Larry:
    And in your contract language, who has the final determination of medically necessary care? The physician? The Health Plan? The IDN?

  43. Larry Wedekind says:

    @ Kent:

    As you stated, this brand new drug (Vyctosin) – which is on patent and costs $350+ per month and is about one hundred dollars more per month than Byetta, accomplishes the same thing as Byetta but at higher cost, although some patients seem to tolerate Vctosin better than Byetta. As Dr. Clark has explained, Byetta is in formulary on most Health Plans and Vytosin is not yet, but probably will be in a year or less. Why? It is more costly and so new that it was unproven last year and Health Plans have to submit their formularies once per year by no later than March 15th for the following year due to government regs which do not allow any formulary changes during the year. Therefore, Health Plans are always over a year behind due to government rules and regs. This is another example of typical government interference that stifles competition and keeps good drugs off the market for awhile.

    One more thing; when a physician prescribes an expensive patented drug to a traditional Medicare patient, the patient has to satisfy their annual Part D deductible ($310) and their 20% coinsurance or buy an expensive supplemental policy to cover these expenses. Traditional Medicare patients also have to pay a monthly premium to the government for their Part D drug coverage – it averages $40 per month! MA Plan members do not have a Part D premium at all! Therefore, MA members ennjoy a savings of $480 per year on average for the premium plus $310 per year for deductible, and thousands on the copays or supplemental insurance if they are sick.

    Therefore, on a $350+ drug like Vyctosin, this means that the patient often has to pay for the entire cost of the drug due to the $310 deductible and at the very least, the 20% copay always has to be paid, which is $70. The only alternative is for the traditional Medicare patient to carry a Medicare supplemental policy that costs a minimum of $300 per month. Note that a MA Health Plan which carries Byetta in their Tier 3 formulary (all of ours do) cost our MA members exactly $45-$65 per month, depending on the Health Plan. SO do the math; an MA Plan member pays less than any traditional Medicare member, but may have to wait a year or two on a new drug due to government regs that prohibit any changes to a Formulary after initial submission of their Formulary each March. Vyctosin is only a year old so there is no way that our Health Plan partners could have carried it in their Formulary this year. This is a government problem, not a Health Plan problem!

  44. Larry Wedekind says:

    @Brant,

    Great question! All three of these parties plus the specialty colleges of medicine (like ACOG for OB/GYN specialty) have and continue to come up with the medical algorithms that are provided by Interqual and M&R to determine medical necessity. More specifically, the Health Plans and their IDN partners use these objective criteria to determine medical necessity, however these criteria included and continue to include highly regarded physicians in each specialty during development. So…the answer is that neither the Health Plans or the IDN’s have come up with the medical necessity criteria used today – they simply utilize this criteria to judge medical necessity. Our participating physicians also have an appeal mechanism that is timely for appealing a negative medical necessity decision. We find that medical necessity determinations are rare though in general since most physicians follow the established critical pathways in delivering care.

  45. Al says:

    Larry W.: You are defining the rationing performed by your company as only including the elimination of fraud, abuse and churning. In that way you are sidestepping the issue.

    I provided you with two expensive medical procedures. One, defibrillator use, which to my understanding is rationed by everyone and the other mitral insufficiency which can be dependent upon two endpoints, one being a physiological endpoint and the other a symptomatic endpoint.

    Your preauthorization has to have some criteria for rationing these procedures, but advocacy towards doing either is not fraud, abuse or churning.

    Thus in one fashion or another I do not believe this statement made to Brandt “However, we at IntegraNet do not tell physcians how to practice medicine, nor do our Health Plan partners.” is possible.

  46. Larry Wedekind says:

    @Al; As I stated in my response to Brant, if physicians step outside of established and accepted medical protocols or pathways, then yes, we may get involved, but we have a well established protocol for doing this and the physicians voice is loud in the process.

  47. Al says:

    Larry, I understand what you are saying. Are you able to let us know what the fundamental basis is for your criteria of rationing? It should be pretty uniform, easy, and not variable. We know that the criteria of many different insurers varies considerably which causes quality problems as one that has a premium fixed from the outside not infrequently has to sacrifice quality to meet budgetary needs.

    The second problem is economic credentialing and incentives which can cause physicians to act contrary to their patient’s needs. We have seen this happen in so many HMO’s. Economic credentialing along with incentive payments can easily be hidden. We have seen physicians let go for other reasons, but the physicians that remained knew that the physician that left did so because he caused the expenditure of too much money. Thus without anyone saying that there were too many expensive procedures the remaining physicians got the point and curtailed their expenses. No one has to know because the only one that hears the dangerous cardiac murmur is the physician and if it is not recorded as significant, no one can ever find out. FFS, however, is quite transparent.

    How are your physicians paid for the Medicare HMO component of your plan? Do you share profits among the physician group like Kaiser Permanente? How do you determine incentives, bonus’s or patient load?

  48. Brant Mittler says:

    @Larry:
    Not to be argumentative, but most contracts between physicians and IPAs and IDNs and IPAs and IDNs or whatever you want to call them have clauses that make it very clear that the Health Plan is the ultimate judge of medical necessity. All this talk about prestigous organizations and respected physicians setting guidelines is just justification for the reality that the Health Plans make the final calls on medical necessity. Maybe your organization is different. If so, that’s good. If not, I hope your patients know who is ultimately calling the shots in your “free market.”

  49. Stan Feld, MD says:

    The Medicare Advantage carriers are extremely slow in responding to new data. Everyone believes it is on purpose. They also have a convoluted way of reimbursing for drugs.

    Dr. Lyons is dead on right about Victoza.

    Insurance carriers fight each other for Medicare Advantage contracts. Their net profit is greater than net profit for ordinary Medicare coverage partly because they receive a premium subsidy from the government.

    Medicare Advantage carriers also have networks of physicians and hospital systems that are weaker than the major hospital systems and physicians in some town.

    The reimbursement schedule of many of the Medicare Advantage carriers is poor. The premiums collected from the patients are a little lower than ordinary Medicare. Their revenue is because of the excessive subsidy. Humana probably got stuck taking Dr. Lyon into the network at a higher reimbursement. He was probably the only endocrinologist around and they needed one to attract patient enrollment.

    His rant about patients owning the healthcare dollar is correct in my view. He is telling it like it is in the pits and not viewing the healthcare system at 30,000 feet.

    If patients owned their healthcare dollar they would be in a position to decide for themselves whether to use their money for Victoza. If they choose not to use it they are responsible for their own decision.

    Both patients and physicians are captives to Medicare Advantage carriers’ decisions. The government does not do a thing to help patients or physician out.

    It is like Regina Herzlinger’s Kaiser story about kidney disease.

    I am always in favor of a cheaper drug if I think it is as effective as the new drug. This time I think Novo scooped the Byetta people with Victoza. Victoza is a better drug. The government should be negotiating with the drug companies directly. The Medicare Advantage carriers negotiate with the drug companies and add a profit to each RX. You probably know there are about 4 prices for drugs from retail thru average wholesale down to wholesale. The government does not know which price they are paying the carrier.

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