Officials at Parkland Memorial Hospital signed on Tuesday an agreement with the Centers for Medicare & Medicaid Services that will allow the Dallas hospital to remain open while it attempts to correct deficiencies that threatened its closure.
Ron Anderson, the hospital system's embattled CEO, and John Dragovits, its executive vice president and CFO, signed the 11-page systems improvement agreement. The SIA, which is effective September 30th, will be in place for up to 19 months.
According to a statement posted on the Parkland website, the hospital "remains open, fully licensed and accredited during the term of the agreement."
In a letter to Anderson, CMS officials confirmed that under the terms of the SIA, a determination on Parkland's Medicare and Medicaid funding is on hold.
The systems improvement agreement requires Parkland Memorial Hospital to contract with an external, third-party, CMS-approved quality improvement consultant to perform a full-scale analysis of the hospital's operations. Those findings are to be compared with industry standards to ensure compliance with the conditions of participation for Medicare and Medicaid, as well as the Emergency Medical Treatment and Labor Act (EMTALA) requirements related to the timely provision of care and services.
The contractor is to work with the hospital to develop a written plan outlining what specific actions Parkland must take to return to full compliance with the Medicare conditions of participation.
In addition, the hospital must contract with nationally recognized experts to develop and implement a quality assessment and performance improvement program. It also must hire a full-time, independent, on-site compliance officer to provide oversight and coordination of Parkland's efforts to return to compliance.
In an e-mail to HealthLeaders Media on Wednesday night, Bob Moos, a CMS spokesperson for the Dallas region, said Parkland has 45 days to provide CMS with a list of potential consultants. He added that another full survey of the Parkland facility will be scheduled for six months to a year from now. If there are "substantial compliance findings" the term of the SIA could be shortened.
"We welcome this opportunity to work in partnership with CMS. Our goal, along with CMS, is to return Parkland to deemed status and full compliance with all of CMS' regulatory standards. That's our responsibility to our patients and to the people of Dallas County," said John Jay Shannon, MD, Parkland's executive vice president and chief medical officer in a press statement.
The Department of Health and Human Services is recruiting private payers to participate in a Medicare shared savings pilot oriented to primary care physicians.
The goal is to align physician practices and health insurers to coordinate care for Medicare patients, including managing the care of high-risk patients; promoting easy access to care, delivering preventive care engaging patients.
The four-year Comprehensive Primary Care Initiative will provide participating PCPs with an enhanced payment to deliver higher quality, more coordinated, and patient-centered care. In the first year of the pilot the payment will average $20 per month, per beneficiary. Shared savings will kick in during years two through four.
The program was announced on Wednesday by HHS Secretary Kathleen Sebelius. The initiative is the latest in a series of Affordable Care Act programs developed to achieve what is called the Triple Aim: Better care, better health, and lower costs.
Other programs promote the formation of accountable care organizations, the bundled payment initiative and the partnership for patients. There is about $10 billion in the ACA budget to finance these initiatives, but HHS said a specific budget for the new program hasn't been developed.
The pilot is an effort to create a partnership between Medicare and other payers to invest in a new primary care health delivery and payment model. "We've heard the message loud and clear that if we want to change the healthcare delivery system we need to support primary care," said Dr. Richard J. Gilfillan, M.D., acting director of the Innovation Center at the Centers for Medicaid & Medicare Services during the press call to announce the program.
Peter W. Carmel, M.D., president of the American Medical Association, in a press statement, pointed to shortcomings of the existing payment model. "Physicians want to deliver coordinated, cost-effective care that improves patient outcomes, but the current payment system often penalizes the valuable services that make these improvements possible. By providing a monthly care management fee for Medicare patients, CMMI is recognizing the full scope of work done by physician practices to improve the health of their patients. Participation by private health insurers will strengthen the reach and success of the program."
CMS is recruiting a variety of private insurers and third-party administrators as well as Medicaid managed care plans to participate in the initiative. The agency hopes to convince enough insurers to serve five to seven communities and about 350,000 Medicare beneficiaries.
The location of the communities will depend on the payers selected. Once the payers and markets have been selected, primary care practices will be recruited for each community. CMS hopes to recruit 75 practices per market for the pilot.
CMS has set an aggressive timeline for pilot implementation. Insurers must file a nonbinding letter of intent by Nov. 15 and a final application by mid-January 2012. Insurers will be selected during the first quarter. Primary care physicians will apply and be selected during spring 2012 and the program will be implemented by that summer.
The program is modeled after successful programs developed by Michelin North America Inc. and WellPoint. Dick Wilkerson, chairman and president of Michelin spoke at the press conference announcing the HHS initiative.
He noted that a program Michelin implemented to coordinate the care for the company's diabetic employees had reduced the cost of that care by $300 per employee.
The American College of Physicians was quick to lend its support to the comprehensive primary care initiative. "The initiative offers enormous potential to promote the kind of personalized and coordinated care that patients seek and that physicians want to deliver," said Steven Weinberger, M.D. and CEO of the ACP in a press statement. "We are particularly pleased that this initiative invites other payers to join with Medicare to support comprehensive, coordinated, and patient-centered primary care. Aligning support from multiple payers will provide a more realistic evaluation of these innovative payment and delivery reforms."
It was widely reported that during a presidential primary debate a few weeks ago, the audience cheered at the idea that a young, uninsured patient should die if he didn't have the means to pay for needed healthcare. In truth, it seems the noise was limited to a few yahoo hecklers, but I think it's pretty shocking that anyone would react that way.
In 2010, 49.9 million Americans, or 16.3% of the total population, were uninsured. Some, like the so-called young invincibles — those healthy twenty-somethings — may eschew health insurance as unnecessary. Others simply can't afford or don't have the option to buy health insurance.
The uninsured have become a catch-all for almost everything wrong in healthcare today. The uninsured are said to lack any "skin in the game" — meaning they don't pay premiums or copays — so they use healthcare services without consideration for cost. Bad hospital bottom line? Blame the uninsured for using services they can't afford. Crowded ER? That's the uninsured using the ER as their doctor's office — and for free, too. Health insurance premiums increase? Providers are demanding higher reimbursements for services for the insured to cover medical care for the uninsured.
And how about this one: Dissatisfied with your private health insurance? Blame the uninsured. Yep, according to a recent study, there are what researchers call "spillover effects" of community uninsurance on the healthcare received by the insured.
Two RAND researchers analyzing data from 86,900 privately insured adults and Medicare enrollees living in 200 large metropolitan areas found that the more uninsured people in an area, the more likely everyone will have trouble receiving needed care.
The researchers found that privately insured residents in communities with high uninsurance rates reported difficulty getting needed care and were less satisfied with that care. They also were more likely to have unmet medical needs than residents of communities where the percentage of uninsured residents was lower.
The findings extended to seniors with Medicare coverage: those living in areas with a high rate of uninsured were more than likely than their counterparts in areas with a low uninsured rate to report problems getting needed care and prescription drugs.
It would be easier to shrug off this study if the focus was rural medicine. Of course patients in a rural area might not have access to certain specialties, and their physicians might not be well versed in the latest technologies. But this study looks at patients in major healthcare centers like New York City, Philadelphia, Los Angeles, San Diego, and Akron, OH.
The bottom line is that access to care is limited in communities with a lot of uninsured people, explains Carole Roan Gresenz, PhD, a senior economist at the RAND Corporation and co-author of the study.
The link between the insured and uninsured can work in a couple of ways. Specialist services might not be available, or physicians might be rushed. According to the report, which appears in the latest issue of Medical Care, physicians who practice in areas with a large number of uninsured may find it difficult to "provide different levels of care to their insured and uninsured patients, and instead may tend to provide a similar level of care to all patients." That is, a lower level of care to all patients, says Gresenz.
Say you're insured and you see your doctor for a condition that could be quickly resolved with an expensive surgery…but a less expensive medication exists that might slowly resolve the problem. The doctor's recommendation for your insured care could be influenced by the number of uninsured patients in his or her practice and in the community. Instead of that quick, expensive surgery, you could be on a slower road to recovery.
We all have some "skin in the game" when it comes to providing for the uninsured. The crowded ER is more than an inconvenience; the problem of uninsurance reaches to the very soul of medical care — access and quality for everyone.
Health insurance premiums for employer-sponsored health insurance posted an unexpected increase in 2011 according to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey released Tuesday.
The average annual premium for family coverage increased by 9% to $15,073 in 2011. The growth rate was 3% in 2010. Premiums increased significantly faster than workers' wages (2.1%) and general inflation (3.2%). Since 2001, family premiums have increased 113%, compared with 34% for workers' wages and 27% for inflation.
Expect finger pointing to begin in earnest among the usual cost drivers: hospitals, health plans, and physicians.
Helen Darling, president and CEO of the National Business Group on Health, a nonprofit that represents large employers on healthcare issues, cautioned against assigning responsibility for the premium increases to any single component of the healthcare industry. "Everything contributes," she said noting that Americans pay about $20 billion annually for unnecessary services.
"At NBGH we talk to stakeholders all the time and everyone has their own ideas about what drives healthcare costs," Darling stated.
Darling said hospitals often point to labor and imaging as cost drivers while physicians say the insurance payment system itself drives up their costs of doing business. "They say they can't make a living talking to their patients or taking their histories because health insurers won't pay for that. They are paid by insurers to order and run tests."
Some employers said they increased their costs to prepare for increased utilization. Beth Ward, CFO of Wellmont Health System in Kingsport, Tenn. reported that her company, which self-insures, raised its expected costs by 5% "given expected increases in utilization -- particularly associated with drugs and chronic conditions -- even with our management of diabetes and coronary disease efforts."
She noted that because there are more non-paying patients, the reimbursement increases that hospitals receive from the insurers are going toward covering the costs of the uninsured. "It's a hidden tax on all of those that still have coverage."
The 13th annual Kaiser survey included 3,184 randomly selected public and private firms with three or more employees. The survey was conducted from January to May 2011.
This year some survey questions were specific to the Affordable Care Act. Writing for the White House blog, Nancy DeParle touted survey findings that she says demonstrate that health reform is already working.
The assistant to the president and deputy chief of staff pointed to the 2.3 million young adults under age 26 who were added to their parents' health insurance plans. DeParle also noted that 23% of workers were in plans that decreased their preventive care cost-sharing due to the ACA while 31% of workers are in plans that changed the list of preventive services due to health reform.
Other findings from the 2011 study include:
Premiums for worker-only health insurance coverage increased 8 percent to $5,429 annually with workers paying an average $921 toward the coverage.
The share of companies offering health insurance to their employees remained steady at 60%.
Some 31% of covered workers are in high-deductible health plans with deductibles of at least $1,000; another 12% face annual deductibles of at least $2,000.
Average copayments for in-network physician office visits are $22 for primary care and $32 for specialty care.
Average pharmacy copayments for three- and four-tier drug plans are $10 for generic drugs, $29 for preferred brand-name drugs, $49 for non-preferred brand-name drugs, and $91 for specialty drugs.
The share of companies with more than 200 workers offering retirees health benefits to their employees remains steady is 26%. That's unchanged from last year and down significantly from 32% in 2007.
Three years ago the Kansas City Collaborative began as a pilot program to help employers work with their health insurers to improve the health of their employees. Using value-based benefit design, employers identified health benefits and wellness programs with track records of delivering high quality, evidence-based, cost-effective care.
KC2, as it is known locally, recruited 15 employers with 400,000 employees to participate, including H&R Black, Sprint, the American Academy of Family Physicians and the City of Kansas City. The collaborative is led by the Mid-American Coalition on Health Care. The effort is supported by the National Business Coalition on Health and Pfizer Inc.
The pilot program is winding down and so far KC2 companies have saved about $11 million in direct healthcare costs, according to the reports from nine employers representing 56,000 workers. The remaining employers will report their data at a later date.
Steps taken by employers to achieve the savings include:
60% offered preventive care treatments that required no copayments
60% waived copays for medication for employees enrolled in chronic disease management programs offered by their health plans
50% charged lower employee insurance premiums for employees who completed a health risk assessment, received an annual physical, stopped smoking, or reduced their body weight by 5%
30% implemented new benefit programs to help employees quit smoking
100% of the employers added healthy cafeteria and vending machine options
89% offered onsite fitness facilities or other options to help employees increase their level of physical activity
Melissa Campbell, benefits manager at American Century Investments, explained that KC2 empowered employers to analyze health and claims data and to refocus healthcare benefits to meet the particular needs of their employees.
Most of American Century's employees are in their mid-40s so the company wanted to create a suite of prevention services to "catch problems early and treat them cheaply," said Campbell The company was able to convince its health plan to remove the age barriers for preventive services such as mammograms and colonoscopies. "We believe it is up to our employees and their doctors to decide when they need a mammogram or colonoscopy."
She added that utilization of services has increased—63% of employees used preventive services in 2001. "Our employees know we want them to have a doctor, get their annual check-ups, and know their biometric numbers like blood pressure."
Data assessment includes more than 100 metrics such as blood pressure and cholesterol rates, explained Sara Poage, vice president for the Mid-America Coalition on Health Care. The goal is to find out where the costs really are. Obesity, for instance, wouldn't necessarily show up in claims data, but would become more obvious through a review of biometric data.
While there was some initial pushback from health plans in providing the data companies needed to implement value-based benefit design, those issues were eventually resolved. "Providing better information directly to employees, enables them to make better health decisions, resulting in better health overall," said Tony Sun, M.D., medical director for United Healthcare Heartland States.
Campbell said that over the course of the pilot her relationship changed with CIGNA, American Century's health insurer. "It became a very open relationship. Before the collaborative I just thought of them as a vendor who provided contract services. Now I see that they want to work with us. It's a real mindset change for me."
With a successful pilot behind them, all of the KC2 employers are expected to continue in the collaborative. The pilot focused on prevention and improving healthcare, next the employers want to tackle obesity and pre-diabetes conditions.
The Independent Payment Advisory Board received a presidential vote of confidence on Monday when the Obama administration released its deficit reduction plan. Instead of eliminating the board altogether or trimming back its powers, the plan calls for IPAB to be strengthened.
Its authority will kick-in at a lower threshold – the GDP plus .05% and it will have additional tools at its disposal such as the ability to consider value-based benefit design in making its recommendations.
In his budget proposal, President Obama has included $320 billion in cuts to Medicare and Medicaid. IPAB is considered key to helping achieve those cuts in a way that minimizes the immediate effect on beneficiaries.
A creation of the Affordable Care Act, IPAB is empowered to analyze the drivers of Medicare cost growth and then recommend to Congress policies to control Medicare costs if spending exceeds a targeted growth rate. The 15-member board will be comprised of doctors, nurses, medical experts, and consumers who recommend ways to reduce healthcare spending. Board members will be appointed by the president and must be confirmed by the Senate.
Supporters see IPAB as similar to Medicare Payment Advisory Commission or MedPac but with the power to actually implement what it thinks needs to be done. IPAB recommendations to reduce Medicare costs will be put in place unless Congress votes to block them and comes up with an equivalent cost-cutting measure.
Strengthening IPAB was among the stakeholder proposals reviewed by the American Academy of Actuaries in a recent policy brief. It noted that the board was somewhat restricted in the recommendations it could make and that with more authority IPAB could help move Medicare toward a more sustainable financial model.
Value-based benefit design may enable IPAB to more effectively target cost sharing for those services that are most likely produce positive patient outcomes while reducing payments for services with less effective outcomes, explained Cori Uccello, the senior health fellow for the American Academy of Actuaries.
Timothy Jost, a law school professor at Washington & Lee University, and a self-described "IPAB skeptic" noted that the president's September IPAB proposals are identical to the one's he made in April. Jost, who is also the a consumer representative to the National Association of Insurance Commissioners, said that while many of the president's budget proposals seemed like reasonable ideas, he didn't want to rely on IPAB to do all of the heavy lifting for Medicare. "It's impractical. There's not much it can do from year to year other than cut provider payments." By law IPAB can't increase Medicare premiums or reduce its benefits.
Jost suggested that the Center for Medicare and Medicaid Innovation would be a better place to work on Medicare costs. "It could take a long view, experiment and find out things that actually effect healthcare over the long term."
To say that IPAB is unpopular in some circles is an understatement. Almost all Congressional Republicans and some Democrats would like nothing more than to see IPAB disappear. Objections concerning the board focus on its power, its potential to cut provider payments, and the possibility that patient access to medical care could be limited if fewer providers participate in Medicare.
Earlier this summer more than 270 groups, including the American Association of Neurological Surgeons, the California Medical Association and the U.S. Chamber of Commerce sent a letter to Congress expressing, among other concerns, that IPAB's charge to "achieve scoreable savings in a one-year time period is not conducive to generating savings through long-term delivery system reforms.
Rep. Phil Roe (R-TN) has filed legislation, H.R. 452, to repeal IPAB. He has also written to the Joint Select Committee on Deficit Reduction requesting that it eliminate funding for IPAB as part of its work.
Following the president's budget announcement, Robert Zirkelbach, press secretary for America's Health Insurance Plans, expressed a common concern by health plans that hospital costs will continue to be exempt from IPAB recommendations until 2019. "Exempting the largest drivers of healthcare spending from any cost savings recommendations ensures that healthcare costs will continue to rise at an unsustainable rate," he said in an e-mail statement.
Trauma patients have a better chance of survival if they receive care at a trauma center in a hospital that treats primarily non-minority patients versus being treated in a hospital that provides care to primarily minority patients.
That's among the findings of study released in a paper (Association Between Hospitals Caring for a Disproportionately High Percentage of Minority Trauma Patients and Increased Mortality) published online Monday in the Archives of Surgery.
For the study, Adil H. Haider, MD , and a team of researchers looked at the medical records of 311,568 patients included in the National Trauma Data Bank in 2007 and 2008. The patients were from 434 hospitals with recognized trauma centers. More than 82% of the trauma centers were identified as level one or two centers.
The hospitals were placed into three categories depending on their patient mix: Primarily white--less than 25% minority (black and Hispanic) patients, mixed--25% to 50% minority patients, and primarily minority-- more than 50% minority patients.
What the team discovered is that a compared to treatment at a primarily white hospital, trauma patients of all races were 37% more likely to die if they were treated at a primarily minority hospital and 16% more likely to die when treated at a mixed hospital. In analyzing only patients with blunt trauma injuries, such as from a car crash, patients at predominantly minority hospitals were 45% more likely to die while at a mixed hospital the odds of death were 18% higher.
Haider noted that minority patients did not have worse outcomes at predominantly white hospitals.
Patients were adjusted for age, sex, insurance status, the presence of severe head and/or extremity injury, and hypotension on arrival at the ER. The patients had an injury severity of at least 9, which means the patient could die from the trauma injuries.
The paper is the latest in a series of studies about race and trauma survival conducted by Dr. Haider and the trauma outcomes research group at Johns Hopkins University School of Medicine in Baltimore.
In a telephone interview Haider said the results of the team's trauma studies have dispelled the long–held notion that trauma care has no disparities in treatment. "There always been this idea that any trauma victim could come to an ER and receive equal treatment without regard to race or insurance status. We've believed that the best outcome were at large trauma centers. That that makes sense because that's where there are 24-hour staffs with operating rooms always ready to go."
What Haider and his team discovered is that outcomes for both adult and children trauma victims were related to race and insurance status. "Minorities and the uninsured were more likely to die of trauma injury," stated Haider.
The next step was to look at the underlying causes of the outcome. Haider said that while they looked at a number of possible pre-hospital influencers such as primary care treatment and the health of the patient, it seemed more likely that systemic issues with the hospitals were at play.
In conversations with physicians and others, Haider learned that hospitals that underperform in terms of chronic disease outcomes are often underfunded and have a patient base that is largely uninsured. "We began to wonder if the same phenomena could be applied to trauma patients."
The study notes that the underachieving hospitals tend to serve a patient population that is largely uninsured. For primarily white hospitals 75% of the patient mix had private or government sponsored health insurance. At primarily minority hospitals the insured accounted for 55% of the patient mix. That mix is critical when taking into account the cost of treating trauma patients and the possibility that the hospital will need to absorb some portion of the costs.
Also, people without insurance tend to visit doctors less often and may arrive at the hospital with more preexisting health problems that complicate their serious traumas, problems that could impact recovery, Haider explained.
Among the indications that mixed and primarily minority hospitals may less money to devote to patient care— the median numbers of core trauma surgeons, orthopedic surgeons and neurosurgeons was the same across all hospital categories.
That despite the fact that only 30% of the primarily white hospitals housed level 1 trauma centers, that primarily minority hospitals tend to be teaching hospitals and that mixed and primarily minority hospitals tend to be larger hospitals than primarily white facilities.
Haider said the policy implications of the study are that "we need to strengthen and bolster the minority hospitals." He noted that improvements at mixed and minority hospitals have the potential to "provide more bang for the buck in terms of improved outcomes."
Enrollment will increase and premium prices will drop as health plans prepare for the upcoming open enrollment period for Medicare Advantage, officials at the Department of Health and Human Services have announced.
Look for a 10% increase in enrollment to about 13.1 million beneficiaries while premiums shrink by 4% to an average $32 per month. Medicare Advantage, private health insurance available to Medicare beneficiaries, accounts for about 25% of total Medicare enrollment.
Government officials made the obligatory nod to the Affordable Care Act as the driving force behind the news but there are a lot factors at play here, including a bigger baby boomer population that’s comfortable with managed care and the move by businesses to shift their 65 year-old and older retirees off of expensive employee -sponsored plans and onto more cost-effective Medicare Advantage plans.
“Health plans see Medicare Advantage as a stable product where they can make money,” said Dan Mendelson, CEO of Avalere Health, a Washington, D.C.-based research firm. He noted that members are using less medical care, and reduced utilization has enabled plans to drop premium prices for the Medicare Advantage products.
He explained that health plans also are “learning to work with CMS (the Centers for Medicaid & Medicare Services) as customers, which is something we don’t often see in a Democratic administration.”
In addition, health insurers are looking at Medicare Advantage as a way to increase their overall market presence especially as they look to attract a share of the important individual market.
“If an insurer has a commercial plan in an area and wants to have a stronger presence in a market then having a Medicare Advantage product can help,” said Mendelson. That visibility will be critical as insurers compete for individual business through health insurance exchanges.
Time will tell if consolidation in the Medicare Advantage market will eventually mean higher premiums for beneficiaries. With the program expected to absorb more than $130 billion in cuts between 2010 and 2020, smaller players are already finding it more difficult to remain in the market.
In addition to the enrollment and premium news, HHS officials announced that in 2012 CMS will provide financial rewards to Medicare Advantage plans with high quality scores, under its five-star rating program. An estimated $6.7 billion is earmarked for the program. CMS will allow five-star Medicare Advantage and Part D plans to continuously market and enroll beneficiaries throughout the year, as an extra incentive for high quality performance.
“Plans that do a better job serving the needs of their Medicare members should be rewarded and all plans should be encouraged to improve their performance,” said Jonathan Blum, CMS deputy administrator and director of the Center for Medicare in a press statement.
Open enrollment begins on October 15th and ends seven weeks later on December 7th.
The Joint Select Committee on Deficit Reduction has begun holding hearings to identify $1.2 billion in budget cuts. Everything is supposedly on the table, including Medicare, which along with Medicaid accounts for about 23% of the U.S. budget.
Medicare has been on the express train to insolvency for years. According to the latest Medicare trustee's report, the Medicare's Hospital Insurance Trust Fund – better known as Medicare Part A ? is projected to remain solvent until only 2024.
Congress has been kicking around this political hot potato for years without enacting meaningful changes that will put the program, which serves more than 47 million Americans, on firm financial footing.
Now the buck has been passed to this so-called “super committee” a bi-partisan panel of six senators and six House members.
The American Academy of Actuaries put together in May 2011 a policy brief that takes a look at the various proposals that have been developed by Congress and policy wonks to improve Medicare's finances. While there's no silver bullet in the seven-page report, the debit committee still might want to take a look at it.
The takeaway message is that “achieving long-term sustainability for Medicare will require slowing the growth in overall healthcare spending, not simply shifting costs from one payer to another,” explained Cori Uccello, the senior health fellow for the American Academy of Actuaries.
Here's a look at how some proposals could affect Medicare costs and access to quality care for beneficiaries:
1.Limit the Growth in Medicare Spending
The Obama administration's proposed budget and the budget plan developed by Rep. Paul Ryan (R-WI) set spending targets, either for Medicare in particular, or for overall federal health spending. Exceeding those targets could trigger specific actions, such as automatically reducing benefits or increasing revenues.
Medicare savings would depend on how aggressively the spending targets are set. Uccello cautions that “unless system wide spending is addressed, implementing options to control Medicare spending will have limited long-term effectiveness.”
The worry with this approach is that reducing benefits could limit access to care.
2.Transition to a Premium Support or Voucher Program
The government would limit the amount it contributes toward Medicare coverage with beneficiaries picking up the difference. Shifting Medicare from a defined benefit to a defined contribution plan would mean beneficiaries would have some skin in the game and that could be an incentive for them to be more cost conscious in making their healthcare decisions.
Premium support would be indexed by inflation or other factors. The voucher would be adjusted by beneficiary characteristics such as age, health status, geographic location, and/or income, would be indexed by inflation or some other factor. Depending on how the government contribution is set, federal Medicare spending could be lower than currently projected.
The concern with this approach, explained Uccello is that it will amount to nothing more than a cost shift from the government to beneficiaries and will do little to address why healthcare costs are increasing.
3.Expand the Authority of the Independent Payment Advisory Board
IPAB is the controversial board created as part of the Affordable Care Act and charged with recommending ways to control Medicare costs if spending exceeds a targeted growth rate. The targets are based on inflation until 2019, and then on the GDP plus 1%. Its recommendations will be implemented automatically unless Congress passes legislation that produces comparable reductions.
Opinions about IPAB are divided more or less along party lines. Republicans believe the board will ration healthcare, leave seniors out in the cold, and needs to be repealed. Democrats see the IPAB as a backstop or fail safe for controlling Medicare costs and preserving the program for generations to come.
Supporters would like to see IPAB given more power. As it stands right now the board is somewhat restricted in its recommendations—it can't propose to ration health care, raise revenues, increase beneficiary premiums or in any way restrict benefits or modify eligibility criteria. In addition, until 2020 most hospital services are excluded from the scope of payment changes that can be recommended.
Provisions included in various fiscal proposals would expand the scope of the IPAB by eliminating the temporary carve-outs for hospital services, allowing options for cost sharing and benefit design, and giving it authority over all federal healthcare spending. The expansion of scope could be tied to directing IPAB to meet more ambitious spending growth targets.
The added authority could allow IPAB to really explore the healthcare delivery system and help move Medicare toward a more sustainable financial model.
4.Reform the Sustainable Growth Rate System
The SGR system was enacted as part of the Balanced Budget Act of 1997 to limit the growth in spending for Medicare physician services. The system compares actual cumulative spending for Medicare physician services to a specified spending target. In theory if actual spending exceeds the target, then physician payments are reduced. The reality is that Congress usually overrides any cuts. As a result of the cumulative shortfall, physician payment rates are scheduled to be reduced by about 30% in 2012, barring another override from Congress.
One approach would eliminate the SGR, temporarily freeze physician payments, and develop a new physician payment system. The proposal would pay for the elimination of the SGR by other reductions in Medicare and Medicaid spending.
Uccello said that while eliminating the SGR would make providers more willing to see Medicare patients, it would also increase Medicare provider spending, which would need to be offset by other spending reductions. Still, going back to the drawing board would mean a new physician payment system that better aligns payments with the provision of high value care could be developed.
5.Reduce Spending for Prescription Drugs
There are several ways this could be accomplished. Medicare could be required to use its bargaining power to negotiate drug prices under the Part D program or drug rebates could extended to Medicare and Medicaid beneficiaries.
Another approach would establish a government-run Part D option that would be offered alongside Part D private plans. The Centers for Medicare & Medicaid Services would negotiate prices with prescription drug companies. The concern is that this could lead to CMS setting prescription drug prices. Also, introducing a government-run Part D option could mean some current Part D providers might leave the market and reduce the choices available for enrollees.
Still, reducing drug prices would lower Part D spending and reduce its growth rate. Lowering Part D spending would also reduce beneficiary premiums for Part D plans and some copayments.
6.Raise the Medicare Eligibility Age
A study by the nonpartisan Kaiser Family Foundation found that raising the Medicare eligibility age from 65 to 67 in 2014 would generate about $7.6 billion in net savings to the federal government, but it would add $5.6 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs
But some of that savings would be at the expense of employers, states, and beneficiaries. People between age 65 and 67 would need to find another source of health insurance. They might stay on employer-sponsored insurance plans, qualify for other public coverage such as Medicaid or seek coverage in the individual market or through health insurance exchanges.
As everyone knows, there are no simple options and difficult decisions will need to be made to preserve Medicare. But the focus shouldn't just be improving Medicare's immediate financial woes but rather improving the long-term sustainability of the program.
Statistics released Tuesday by the U.S. Census Bureau present an unsettling picture of health insurance coverage in the United States.
In 2010, 49.9 million Americans or 16.3% of the total population was uninsured. That's only a slight increase from 2009 when 49 million people or 16.1% were uninsured, according to the report on Income, Poverty and Health Insurance Coverage in the United States: 2010.
But the increase in the number of uninsured reflects a continued decline in the availability of employer-sponsored health insurance, explained Elise Gould, director of health policy research for the Economic Policy Institute, a Washington, D.C.-based non-partisan research institute.
Long the mainstay of health insurance benefits, with only one or two exceptions, the percentage of employment-based coverage has dropped each year since 2000, from 64% to 55.3% in 2010.
While Gould cited rising healthcare costs, unemployment, and economic conditions among the reasons for the decline in employer-sponsored healthcare, she also noted that with high unemployment rates, employers might no longer feel the need to offer cost-effective healthcare benefits to attract or retain employees.
The decline in employer-based healthcare benefits was felt across all groups with those under 18 years of age and between ages 25 and 34 feeling the biggest impact. The percent of children with employer-sponsored healthcare dropped from 66.7% to 59.8% from 2009 to 2010 while it declined from 69.1% to 55.8% for the 25 to 34 year olds, according to an analysis by Gould.
Gould said the uninsured rate might be higher but for government coverage (Medicaid, Medicare, TRICARE and Children's Health Care Program), which has picked up some of the slack. The percent of people covered by government health insurance has steadily increased from 24% in 2000 to 31% in 2010.
According to Census Bureau figures, Medicare and Medicare enrolled a record number of beneficiaries in 2010, 48.6 million and 44.3 million, respectively.
The Affordable Care Act, which requires health plans to allow adult dependents up to age 26 to remain on their parent's health insurance policies, may have contributed to a 2% decline in the number of uninsured 18 to 24 year olds.
The White House and the Department of Health and Human Services were quick to tout that statistic in this blog: "The report showed that the percentage of young adults with insurance increased from 70.7% in 2009 to 72.8% in 2010. That translates into 500,000 more young people with insurance. We expect even more will gain coverage in 2011 when the policy is fully phased in."
As might be expected, household income influenced the uninsured rate with incomes of less than $25,000 accounting for highest rate of uninsured ?? 27% while households with more than $75,000 in income accounting for only 8% of the uninsured.
Other Census Bureau findings on the uninsured in 2010:
Some 14.3 million or 15% of full-time employees were uninsured.
Some 13.7 million or 28.5% of part-time employees were uninsured.
Asians account for 2.6 million or 18.1% of the uninsured
Non-Hispanic whites account for 23.1 million or 11.7% of the uninsured.
Blacks account for 8.1 million or 20.8% of the uninsured.
Hispanics account for 15.3 million or 30.7% of the uninsured.
The 2010 numbers for blacks, Hispanics and non-Hispanic whites were statistically unchanged from 2009. The uninsured rate for Asians increased from 16.5% (2.3 million) in 2009.