Among one of the more unexpected areas of support in President Obama’s health reform letter this week to Senators Max Baucus (D-MT) and Ted Kennedy (D-MA) was for a proposal that would give the Medicare Payment Advisory Commission new power as an executive-level agency to determine Medicare reimbursement of providers.
MedPAC, established in 1997 to advise Congress on Medicare payment policies, currently has no power to implement its recommendations.
If elevated to an executive level, MedPAC’s recommendations on cost reductions would be adopted by Congress unless opposed by a joint resolution of Congress. This is a process, the president wrote, that has been used effectively by a commission charged with closing military bases, and “could be a valuable tool to help achieve health care reform in a fiscally responsible way.”
The idea actually has several origins. One source is legislation (S. 1110) introduced May 20 by Sen. Jay Rockefeller (D-WV), chair of the Senate Finance Health Care Subcommittee, who calls for MedPAC to have new authority to implement Medicare payment policy. As proposed under the bill, MedPAC would be renamed the Medicare Payment and Access Commission and given new powers such as determining payment rates for physicians and hospitals. These payment rate determinations would not be subject to judicial review.
Just a year earlier, former Sen. Tom Daschle (D-SC), who co-authored a book, Critical: What We Can Do About the American Health Care Crisis, proposed developing a Federal Health Board, which would resemble the current Federal Reserve Board for the banking industry. It would set evidence based standards for benefits and quality for federal programs—with a goal towards lowering insurance costs.
“Obviously, there’s a tradeoff here,” says Robert Berenson, MD, an Institute Fellow at the Urban Institute, in Washington, D.C. Beginning this spring, Berenson began serving his three year term as a MedPAC commissioner, but before he was installed, he co-authored a paper last year suggesting that MedPAC could take on a new role as an independent agency.
Having Congress give up authority to make decisions over how Medicare could spend money “seems fairly counter to the ways we have organized our form of government,” Berenson said. “But at the same time, there are just plenty of examples of an inability of Congress to actually bite the bullet and do what needs to happen.”
Berenson, who provided advice to Rockefeller when drafting his bill, notes that Congress is influenced by many different points view—by hospital and physician lobbies, other healthcare groups, and manufacturers of devices, drugs, imaging equipment, durable medical equipment and other medical supplies. These groups are located nationwide—essentially creating lobbying groups in every congressional district.
With many of these issues, although you have legitimate points of view, “you don’t get a balanced view,” Berenson said. “You get a concerted effort by affected stakeholders presenting one point of view to Congress—and nobody essentially on the other side.”
A revamped MedPAC could “provide the countervailing research and then evidence to what Congress doesn’t get directly from lobbyists who are arguing legitimate points of view,” he said.
With a new executive-level MedPAC, Berenson suggested that full-time officials should staff it—as opposed to part-time commissioners now. Although they might have been formerly active hospital administrators or practicing physicians, they would no longer have any conflicting interests: in other words, they would be there “fully representing the public’s interest.”
Top officials for the American Medical Association and the American Hospital Association agreed yesterday that they should set aside their long adversarial history with health plans and work together, not for their own bottom lines, but to improve the health of their patients with by adhering to comparative effectiveness research.
“We need to fundamentally change the relationship between America’s health plans, physicians and hospitals,” said Thomas Priselac, chairman of the AHA board and president and CEO of Cedars Sinai Hospital in Los Angeles, who called for “a paradigm shift” in the structure of how they interact and how they share information.
Nancy Nielsen, MD, president of the AMA, agreed, saying interactions have been “wildly adversarial” between health plans and doctors “for much of recent history. We are all trying to change that.”
The health leaders made their comments in San Diego before an audience of several hundred attending the annual convention of America's Health Insurance Plans.
Nielsen added that it's the AMA’s highest priority to get health insurance coverage for every American. “The fact that we have not as a country been able to figured out how to have affordable health insurance for our citizens is a moral stain on this nation,” she said. “It is time that we fix it.”
One overarching concern, however, is how physicians and hospitals can refocus their efforts on what works, rather than what patients want or what happens to be covered. “It is clearly in America’s physicians’ best interest to have really good comparative effectiveness research data,” Nielsen said.
She added that next week, AMA officials will announce a major cooperative effort with a health plan to work on a comparative effectiveness research project in one state and said that is evidence that cooperation is possible.
Priselac added that there’s a wonderful opportunity for health providers to gain information from health plans about utilization. “America's health plans have great amounts of data that’s very useful and helpful,” he said. “But they don't have the complete clinical record. We have the complete clinical record.”
Magellan Health Services, Inc. will pay $110 million in cash to buy First Health Services Corp., a Coventry Health Care, Inc. subsidiary that provides pharmacy benefits administration for Medicaid programs, Magellan announced today.
Avon, CT-based Magellan also signed service agreements with Coventry to manage radiology services on a risk basis and to provide oncology management services in five Coventry markets.
Based in Glen Allen, VA, First Health Services Corp. provides pharmacy benefits administration, healthcare management, and IT services to state Medicaid programs. Magellan will pay Coventry $110 million in cash for the stock and other assets of First Health Services. The transaction is expected to close by July 31. Magellan will pay for the acquisition with cash on hand, and First Health Services will become a wholly owned subsidiary.
If the transaction closes July 31, 2009, for the five months of 2009 post acquisition, Magellan says it expects First Health Services to generate $60 million in revenues and segment profit of $7.5 million.
“The acquisition allows us to expand our capabilities into a new area, Medicaid pharmacy benefits administration, that is complementary to our existing businesses,” says René Lerer, MD, chairman and CEO of Magellan. “This constitutes an important step in furthering the company's diversification strategy.”
Lerer says Medicaid has historically given Magellan “significant growth opportunities” that now include behavioral health, radiology benefits management, and specialty pharmacy. “We intend to build on our current expertise and relationships in this area by adding the management of pharmacy costs to our current product portfolio through First Health Services,” Lerer says. “This will significantly enhance our opportunities and provide another platform for continued growth in this market segment.”
Medicaid spending is increasing faster than any other major category in state budgets due primarily to increasing enrollment and use of services, even as most states face severe recession-related budget constraints. Pharmacy spending within Medicaid, with an annual growth rate of 5% to 7%, is a particular concern for both state and managed Medicaid payers. As a result, Lerer says, state Medicaid programs and Medicaid MCOs are looking for “more comprehensive management techniques to address increasing pharmacy costs.”
Magellan’s three-year agreements with Coventry to manage radiology services on a risk basis and provide the company’s new oncology management services are contingent upon the acquisition of First Health Services.
Under the radiology agreement, Magellan will manage diagnostic imaging services, including cardiac diagnostic testing, in five Coventry markets, with a planned full implementation by early 2010. Annual revenue upon full implementation is expected to be $150 million.
The oncology service agreement is expected to be implemented in five Coventry markets by the end of this year. Magellan's oncology management program addresses the selection, cost and quality of pharmaceutical agents used to treat cancer, provides clinical care management services, and audits administrative processes, such as the accuracy of claims payments.
A recent study by the Centers for Disease Control and Prevention revealed some elderly people may have a preexisting antibody that protects them from the H1N1 virus, also known as swine flu.
Each year in the United States, approximately 36,000 people die from complications related to the seasonal flu, and more than 90% of these deaths occur in people over the age of 65. The H1N1 virus does not seem to pose as much of a threat to the elderly as the seasonal flu. So far, the majority of H1N1 cases have occurred in people between the ages of 5 and 24, and there are very few cases occurring in people over the age of 64, according to the CDC.
So, why have so few H1N1 cases occurred in the elderly? One possibility is that older people may have been exposed to H1N1 strains in the past and, therefore, have a preexisting antibody to the current strain.
"The bottom line of the study is that adults might have some degree of preexisting cross-reactive antibody to the novel H1N1 flu virus, especially older adults, over 60 or over 65," said Anne Schuchat, interim deputy director for science and public health programs at the CDC, during a press briefing on May 21.
The fact that few elderly people have contracted the H1N1 virus is great news for nursing homes. However, this could change as the virus continues to spread. Nursing home staff members must continue to be on the lookout for signs and symptoms of this virus.
All right, I'll admit to hyperbole in the headline that got you reading this article, but now that you're here, hear me out.
A recent report from the McKinsey Global Institute says, among other important points, that because of the development of employer-sponsored healthcare over the past 50 years or so, healthcare's share of worker compensation among all income groups has increased dramatically. That's no big surprise. We've all known for years that ultimately, increases in our take-home pay have suffered because healthcare costs have risen much more sharply than inflation or take-home pay for many, many years. But follow their conclusions a little further into the future, and big problems crop up for the entire country.
Because employers can't keep up, they've been cutting benefits through higher co-pays, co-insurance and yes, consumer-directed healthcare initiatives. Regardless of the necessity for further consumer involvement in healthcare decision-making, which I support, these programs ultimately result in a reduction in benefits. After all, how many companies have you seen that are boosting pay by the same amount they're saving on this type of plan? Zero? Yes, me too.
So we've established that these plans ultimately reduce compensation for most employees. But not for all.
If you're reading this column, you're likely one of the lucky ones. As a (relatively) well-paid leader, you're tough to replace, therefore, it's much more difficult for your employer to cut your healthcare benefits. Not to mention the fact that most of you work for a healthcare provider anyway, which naturally has a tougher time cutting the very benefits that allow employees to access the services they're actively providing. But if they cut you, you'll go somewhere where your talents are more appreciated.
That's why rapidly rising healthcare costs are contributing to income disparities we haven't seen in this country in a long time, and it's why the government, despite fighting two wars, is so keen on reforming the healthcare system to eventually bring healthcare cost increases down to the level of inflation, at least.
Ever been to a developing country for healthcare? With few exceptions, the good care is available to the people with means. Everyone else gets far cheaper (and in many cases, worse) care, if they can get care at all. Even the sainted government plans of Europe still allow people to go outside the national system for upgraded care, if they have the cash.
Compared to developing countries, our currency is strong and good healthcare is cheap if you go to the right place. For us, that means excellent, high-quality healthcare is available relatively cheaply in foreign countries like Mexico, and several countries in the Far East. That's why medical tourism has grown so substantially, and is expected to continue to grow.
As a hospital leader in the United States, this should concern you. Not on an individual hospital basis, but do you want our healthcare system to look more like a developing country's? We're headed that way. Although we're not to the point in this country that there is a separate system of facilities for the rich and poor, continued healthcare cost increases that outpace inflation year after year will get us there.
Is that what you want? My guess is no. But without shared sacrifice, that's where we're headed.
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Wellness gets a lot of positive press, but there's often little in terms of carrots or sticks in many employer-sponsored programs to get measurable results. It's different at Carolinas Health System, says Donna Lockhart, a vice president with the system.
Hospital payroll growth continued to sputter in May, with only 300 payroll additions reported in the entire nation, Bureau of Labor Statistics data released today show. By comparison, the hospital sector added 16,800 jobs in May 2008, and 8,700 jobs in May 2007, BLS data show.
Overall, the healthcare sector—from physicians' offices, to residential mental health homes, to blood and organ banks—reported 23,500 payroll additions in May. That's a slight increase in the average monthly gain since January but well off the average gain of 30,000 payroll additions per month in 2008, BLS data show.
In the first five months of 2009, the nation's hospitals reported 11,500 payroll additions, compared with 60,600 payroll additions in the first five months of 2008, and 37,000 additions for the same period in 2007. BLS reports that there were 4.7 million hospital payroll jobs at the end of May, 2009.
If hospital payroll increases continue at this pace, fewer than 25,000 new jobs will be created in 2009, as compared with 137,100 new hospital jobs in 2008; 105,700 new jobs in 2007; and 81,400 new jobs in 2006, according to BLS data.
Ambulatory healthcare continued to see the fastest payroll additions in the overall healthcare sector, with 17,600 payroll additions in May, and 72,000 payroll additions since Jan. 1.
Even with the slowing payroll additions, the hospital and healthcare sectors are still outperforming the overall economy. BLS reports that nonfarm payroll employment fell by 345,000 as the nation's unemployment rate rose from 8.9% to 9.4%.
The number of unemployed people increased by 787,000 to 14.5 million in May. Since the start of the recession in December 2007, the number of unemployed persons has risen by 7 million, and the unemployment rate has grown by 4.5 percentage points.
Hundreds of health plan representatives heard three former governors—two of them physicians—argue over what role federal money should play in health reform as the America's Health Insurance Plans convention began its annual convention in San Diego on Thursday.
Former governors Howard Dean, MD (Vermont), Jeb Bush (Florida), and John Kitzhaber, MD (Oregon), agreed that the current system is functionally flawed. And they agreed that health plans, employers, and consumers need to take more responsibility for their own healthcare.
But they disagreed on how much of a role the government should play, and whether any level of its regulatory presence would stifle innovation to improve the delivery of medicine.
For many in the room, listening to Dean might have resembled hearing the enemy speak. Health insurance companies are vehemently opposed to a public plan.
But Dean considers public health insurance a necessity. "I think it is absolutely essential. And I don't think health reform is worth doing without a public option."
"What the president is proposing to do is say, if you like what you have, you can keep it. If you're comfortable with the private insurance market, you can keep it. Not only that, but we'll help you buy it. There will be a government subsidy based on your income, particularly helpful to small businesses, that you will receive to buy healthcare in the private market," Dean said. "But you will also have a choice of buying into a public plans such as Medicare or some other public plan. And I'm one of the few defenders of that in this room."
"Now I know people in this room, in this industry, are very, very fearful," he said. "This is the center of opposition."
He looked at the rows of representatives of Aetna, Blue Cross, and dozens of other companies assembled and said, "Your living is at stake here. But I don't think it's going to be as tough as you think it is."
The reason, he said, is that most of the nation's CEOs, despite "incredible inflation," prefer to have employer based health insurance. He emphasized that there is still a role for private health insurance, but one that would be shared by public plans.
Bush, however, argued for government to step back. "Beware of too much intrusion by the federal government in all of this," he said. "I'd be very, very cautious of ever expanding federal government."
Bush said too much of the debate centers on access, and not responsibility, saying patients should be given more incentive to more take responsibility for lifestyle decisions that affect their healthcare.
"In almost every other aspect of our lives we ask people to be responsible for their own decisions. But in healthcare, by and large today, individuals are not responsible for their healthcare decisions," he says.
Bush urged for more emphasis on disease management, which he said "should be allowed to happen more often than it is."
"Gov Dean," Bush said turning to face his fellow speaker, "my concern about the federal government is based on my experience as governor. Every time we tried to do something innovative, there were always all sorts of burdens in place and rules imposed" that prohibited efforts to help those treating Medicaid beneficiaries "make sure they were given proper training, education and medication, and giving them the prescriptions so they could live a healthy lifestyle."
"Prevention really matters" he said. "Our whole system is geared toward sickness. We have to find a way, culturally, economically, and through government regulation, every means, to change this so there are rewards for prevention."
Bush also urged health plans and health policy officials to create a system that does a better job in rewarding, by paying providers more, for better healthcare outcomes.
Kitzhaber, now director of the Center for Evidence Based Policy at Oregon Health and Science University, tried to refocus the debate to one about quality.
"The purpose of the U.S. healthcare system is not to finance universal healthcare. The purpose is to produce health. Healthcare is a means to an end. It has no intrinsic value outside of the relationship to health outcomes," Kitzhaber said.
"The problem is not how we pay for healthcare. The problem is what we're buying," he said.
"Unfortunately," he said, "most of the debate today – including the debate on Capital Hill—is not about how to improve the system to improve the health of the American people, but how to finance the system we already have. And I think that's a fundamental misdiagnosis of the problem."
As an example, Kitzhaber said, the healthcare system won't always pay for prenatal care, "but it's happy to resuscitate a 400-gram infant in a neonatal unit."
And, he added, "the most common admitting diagnosis for people on Medicare is congestive heart failure, but there's no incentive to keep people out of the hospital by managing those conditions on a day-to-day basis once they get out of the hospital."
An estimated 1,200 officials from dozens of health insurance companies are attending the conference, which ends today.
In light of a federal proposal to shine light on hidden payments to doctors, a Boston-based research group says South Florida medical sales reps are doing a "crummy" job of complying with a county regulation regarding their relationship with Miami-based Jackson Memorial Hospital. The sales reps—and anyone else attempting to sell to the Jackson system—are required to register as lobbyists and detail how much they spend on Jackson employees.
Republicans on Capitol Hill are saying a bipartisan agreement over health reform will be tougher with the release Wednesday of a letter sent from President Obama to Senate Democratic leaders that outlined what his vision for healthcare reform should look like—including addressing the idea of "moving towards a principle of shared responsibility—making every American responsible for having health insurance coverage and asking that employers share in the cost."
Obama for the first time also said that Americans should have the choice of a public health insurance option operating alongside private plans.
Senate Minority Leader Mitch McConnell (R-KY), in remarks from the Senate floor Thursday, contrasted Obama's comments on the public plan option with recent government involvement with the major American car manufacturers. "This is how the government subsidizes failure and undercuts private companies. And this is how a government plan could undercut private health plans," he said.
Sen. Mike Enzi (R-WY), ranking member of the Senate Health, Education, Labor and Pensions Committee, predicted the letter will hurt chances later for a bipartisan agreement.
Members of the conservative "Blue Dog" Coalition said they supported a healthcare bill that would not "disrupt families' attempts to keep their own insurance." However, they said they had concerns with the "Medicare-like" public option. "Medicare pays too much for medical procedures in some places and too little in others," said Rep. Earl Pomeroy (D-ND), a member of the coalition.
In his letter, Obama said, "I share the goal of ending lapses and gaps in coverage that make us less healthy and drive up everyone's costs, and I am open to your ideas on shared responsibility." The letter was sent to Senators Edward Kennedy (D-MA) and Max Baucus (D-MT) who chair the two Senate panels overseeing healthcare reform. However, he requested that they provide a hardship waiver "to exempt Americans who cannot afford it"—especially small businesses.
Obama, writing the letter one day after meeting with two dozen Democratic senators in the White House, told the leaders that the "plans you are discussing embody my core belief that Americans should have better choices for health insurance—building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold."
For those who don't have such options, "I agree that we should create a health insurance exchange—a market where Americans can one stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can."
While covering the uninsured could cost upwards of $1.5 trillion over the next decade, Obama did not propose how that entire cost would be covered. However, he did suggest that to "fulfill this promise," he would set aside $635 billion in a health reserve fund as a down payment on reform.
This reserve fund, he said, would include several proposals to cut spending by $309 billion over 10 years, which would include: reducing overpayments to Medicare Advantage private insurers; cutting Medicare and Medicaid waste, fraud and abuse; improving care for Medicare patients after hospitalizations; and encouraging physicians to form "accountable care organizations" to improve the quality of care for Medicare patients.
He also said he was "committed to working with the Congress to offset the cost of healthcare reform by reducing Medicare and Medicaid spending by another $200 to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues."
Obama said these savings will come by adopting new technologies plus going after the "key drivers of skyrocketing healthcare costs," including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions. These steps, he said, could close loopholes, would raise $326 billion over 10 years.
Baucus, who is aiming to have the Senate Finance Committee mark-up reform legislation by mid-month, said in a statement that he and the president "are in lockstep in our view that we must act quickly to drive down the growth of healthcare costs."
