Tag: "Medicare"

High U.S. Health Prices From “Market Power”?

The National Academy of Social Insurance (NASI) recently published a consensus report on provider consolidation. Basically, we have a growing problem in that hospitals are buying each other up and also physician practices, which leads to reduced competition and higher prices.

The report was promoted with an op-ed in The Hill by the esteemed Robert A. Berenson (Urban Institute) and G. William Hoagland (Bipartisan Policy Center):

The use of market power—or the ability to raise and keep prices higher than would prevail in a competitive market – is the key reason the United States spends so much more on healthcare than other countries.
For policymakers, tackling the lack of competition is like climbing a mountain. Even the initial steps — creating more competition – may be difficult, but they must be explored before more regulatory action further down the path is considered.

These are remarkable statements; and difficult to accept uncritically.

Medicare Fraud: Moratoria Miss the Mark

(A version of this Health Alert has been published by Forbes. A longer version of this Health Alert has been submitted to the U.S. House of Representatives Committee on Ways & Means, Subcommittee on Health, for the May 19, 2015 hearing titled, “Improving Competition in Medicare: Removing Moratoria and Expanding Access.)

Senior Man ThinkingMedicare fraud is a serious problem. The Medicare bureaucracy has the power to impose moratoria on new providers in geographic or program areas it deems susceptible to fraud. However, preventing new competitors from providing Medicare benefits reduces competition and cannot reduce fraud by incumbent providers. A better way would be to give Medicare beneficiaries a financial interest in combatting fraud.

Last February, the Government Accountability Office issued its annual report on federal programs that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement.  Medicare is a longstanding member of the list: “We designated Medicare as a high-risk program in 1990 due to its size, complexity, and susceptibility to mismanagement and improper payments”. A quarter of a century has gone by and Medicare is still on the list.

Medicare’s Pioneer ACOs Ending with a Whimper?

UntitledThis blog has covered the mediocre and inconclusive results of Medicare’s Pioneer Accountable Care Organization (ACO) model for a couple of years now. A new research paper in JAMA, the Journal of the American Medical Association furthers the narrative that the much ballyhooed program has very slim results:




Results  Total spending for beneficiaries aligned with Pioneer ACOs in 2012 or 2013 increased from baseline to a lesser degree relative to comparison populations. Differential changes in spending were approximately −$35.62 (95% CI, −$40.12 to −$31.12) per-beneficiary-per-month (PBPM) in 2012 and -$11.18 (95% CI, −$15.84 to −$6.51) PBPM in 2013, which amounted to aggregate reductions in increases of approximately −$280 (95% CI, −$315 to −$244) million in 2012 and −$105 (95% CI, −$148 to −$61) million in 2013. Inpatient spending showed the largest differential change of any spending category (−$14.40 [95% CI, −$17.31 to −$11.49] PBPM in 2012; −$6.46 [95% CI, −$9.26 to −$3.66] PBPM in 2013). Changes in utilization of physician services, emergency department, and postacute care followed a similar pattern. Compared with other Medicare beneficiaries, ACO-aligned beneficiaries reported higher mean scores for timely care (77.2 [ACO] vs 71.2 [FFS] vs 72.7 [MA]) and for clinician communication (91.9 [ACO] vs 88.3 [FFS] vs 88.7 [MA]).

Let’s leave the quality measurements aside for now, and focus on the fiscal effects. There appears to be a small positive effect. However, it appears extremely slim and likely even illusory for a number of reasons:

House & Senate Agree on Balanced Budget Resolution

The House and Senate Budget Committees have announced that their conference committee has agreed on a balanced budget resolution. The conference report is 106 pages, so it will take me a few days to complete an analysis.

Nevertheless, it is important to recognize that this is an important achievement and the result of a lot of hard work by Dr. Price, Senator Enzi, their colleagues and staff. For many years, the Senate ignored its legal obligation to pass a budget.

With respect to health care, the resolution repeals and replaces Obamacare in full. It also continues to increase Medicare premiums for high-income households, and transitions to Paul Ryan’s “premium support” model for future beneficiaries.

One of the items I had been hoping for is offsets to pay for the bungled Medicare “doc fix” of last month. The resolution states that it accounts for the full cost of that “doc fix” (page 45). Okay, but the current president will not sign this budget. Are we meant to expect that the next President will take responsibility for the unfunded spending authority this Congress gave President Obama?

Banned from Medicare; Still Billing Medicaid

Yahoo! News has a special report about physicians who have been banned from billing Medicare or some state Medicaid programs because of fraud, but are still billing other states’ Medicaid programs:

 A doctor who took kickbacks from a Pennsylvania hospice involved in a multimillion-dollar fraud. An Ohio psychiatrist who billed for treating no-show patients. A Georgia optometrist who claimed he conducted 177 eye exams in one day.

Their transgressions vary. What these doctors have in common is that each was paid by a state Medicaid health insurance program after being kicked out of another state’s Medicaid system or the federal Medicare program.

More broadly, 32 states and the District of Columbia supplied data showing they paid at least $79 million to 269 of the 1,800 providers after their terminations elsewhere. But the data was incomplete. Extrapolating from what could be verified, Medicaid payments to banned providers could easily reach into the hundreds of millions of dollars.

Mind boggling incompetence? Or government business as usual?

Churn: Data Lacking on Critical Question

The media and most health policy wonks focus only on the number of insured versus uninsured people. They don’t really care if people are enrolled in Medicaid, Medicare, Obamacare plans, employer-based benefits, or whatever. As long as the percentage insured goes up, they are satisfied.

One of the problems this disguises is “churn” – people moving between different types of coverage, which leads to disrupted care. It is something that Obamacare surely makes worse, by introducing a new type of coverage for people within a certain range of income.

However, the people in charge of the new system are almost completely ignoring this problem, according to Modern Healthcare:

Experts say churn can be disruptive to people’s continuity of benefits and healthcare, particularly if they have medical conditions for which they are receiving treatment. In addition, it can be harder for people to access healthcare providers, particularly specialists, if they switch to Medicaid, which often pays lower rates.

“For a patient under a physician’s care for a condition like cancer or renal failure, changing providers in the midst of chemotherapy or dialysis can be incredibly disruptive,” said Chris Stenrud, executive director of government relations at Kaiser Permanente.

A CMS spokesman said no data on churning between private plans and Medicaid were available for the nearly three dozen states using the federal marketplace. But a committee of health plans selling products on the federal exchange that has been tracking the trend has noted a small but steady exodus from exchange plans. The committee, however, could not determine whether the people exiting the exchange plans were transitioned to Medicaid or employer coverage or became uninsured.

The solution to churn is a refundable, universal tax credit that allows people to buy health insurance of their own choosing, and getting rid of the artificially fragmented market that Obamacare has made worse.

Republicans Reach for Redemption on Medicare “Doc Fix”

Politico reports that Congressional Republicans might be having second thoughts about the extremely flawed, so-called Medicare “doc fix” legislation that they sent to President Obama a few days ago. One of those flaws was that the spending in the bill was not offset by cuts to other federal spending – which is why almost every Democrat in Congress voted for it too.

Well, they appear to be getting the message that NCPA has been sending them since March 25:

…… one GOP source said negotiators had resolved a sticking point over how to offset a recently enacted bipartisan Medicare overhaul that was not entirely paid for. The source said the agreement is likely to offset the overhaul, often called the “doc fix,” starting next year.

Better late than never. How they will get President Obama to sign any bill that offsets spending that was already committed by his signature on March 15 is unclear. (All they had to do in the original bill was remove two short sentences that exempted the spending from the so-called PAYGO scorecards. Had they done so, they would not have to worry about it today.)

Barack Obama Has the Last Word on the Medicare “Doc Fix”

I thought that I had given the last word on the flawed Medicare “doc fix” last Monday. Nope: That honor goes to President Obama. During the three week period the secretly negotiated “doc fix” legislation was being rushed through Congress (“rushed” because the Senate was in recess for most of it), I wrote an article suggesting Republicans who voted for it might be casting their first vote for Obamacare. Well, don’t take my word for it. Now that he’s signed the bill, President Obama has hosted a fabulous garden party for the politicians who voted for it. Yahoo has the whole story, including a photo of Speaker Boehner planting a bipartisan kiss on the cheek of Minority Leader Pelosi. One of my charges was that the law increased federal control of the practice of medicine.

Here’s what the President had to say about that:

“I shouldn’t say this with John Boehner here, but that’s one way that this legislation builds on the Affordable Care Act,” Obama said, adding, “But let’s put that aside for a second.”

Bipartisan Medicare Reform: Debt and Deficits, All the Way Down

The extremely flawed so-called Medicare “doc fix” has passed. Its direct consequences include increasing federal government control of the practice of medicine and increasing deficits by at least $141 billion through 2025. However, it also has implications far beyond Medicare’s physician fee schedule, to post-Obamacare reform and general governance. Let’s tackle the fee schedule first. This “doc fix” was promoted as solving the problem that Congress has to increase Medicare’s physician fees at least once a year beyond the rate of growth originally legislated in 1997. If this did not happen, physicians’ fees would drop by about 20 percent, and they would reduce Medicare beneficiaries’ access. This “doc fix” abolishes the 1997 formula in favor of fixed, nominal rates of growth. As a consequence, the fee schedule is not “fixed” in the sense that it is “solved”. It is “fixed” in the sense that Congress has dictated the total amount that will be paid to physicians in future years. It will go up 0.5 percent per year from 2016 through 2019. Then, the amount freezes, and doctors enter a war of all against all, competing against each other for shares of an amount that will inexorably shrink in inflation-adjusted terms. It gets even more bureaucratized after 2025, but there is no point thinking about that because the whole thing is almost certain to unravel before then.

Hospitals “Turbocharge” Medicare Claims

Today’s Consumer Price Index release shows a big jump in prices for hospital services. The Wall Street Journal has an exemplary piece of investigative journalism discussing one way hospitals gouge Medicare:

A Wall Street Journal analysis of Medicare claims data and financial filings from medical facilities shows that many hospitals increased prices faster than costs rose, affecting outlier payments. The Journal identified $2.6 billion in overpayments Medicare made to general hospitals between 2010 and 2013 because of overestimates of hospitals’ costs—about one-sixth of outlier payments in the analysis.

At Christ Hospital, more than 40% of outlier payments between July 2012, when the hospital was acquired by an investor group during bankruptcy proceedings, and the end of 2013 were due solely to an increase in prices, the Journal analysis shows.

The Medicare agency took steps in 2003 to deter hospitals from raising prices to increase outlier payments, sometimes referred to as “turbocharging.”

(Christopher Weaver, Anna Wilde Mathews, & Tom McGinty, “Medicare Pays as Hospital Prices Rise,” Wall Street Journal, April 15, 2015)

Well, that’s 12 years ago, and it obviously hasn’t worked. The only way to get hospitals to quite manipulating chargemaster prices is to get the government out of fixing hospital charges.