Thursday, May 21, 2015

CMS and Health Care Innovation

Today’s May 21 New England Journal of Medicine contains 2 pro-government innovation articles.

One, R.Rajkumar, M.D, et al, “The CMS Innovation Center- A Five-Year Self-Assessment, “ from the Centers for Medicare and Medicaid Services, Baltimore, which says CMS “will continue working to contribute to U.S. achievement of the goals of better care, smarter spending, and healthier people.”’

Two, L. Casalino, M.D, and Tara F. Bishop, M.D., “Symbol of Health System Innovation? Assessing the CMS Innovation Center,” from the Department of Healthcare Policy Research, Weill Cornell Medical College, New York, which ends, “The annual $1 billion appropriated for CMMI (Center of Medicare and Medicaid Innovation) represents an infinitesimal fraction of the $3 trillion that the United States spends every year on health health care. At that price, CMMI looks like a good investment.”

As evidence of the success of CMMI, the first article cites these examples

$3.724 savings on average for a 90 day post-surgery episode of hospital orthopedic surgery in 4th quarter of 2013 for bundled payments.

2% gross savings for a comprehensive primary care initiative based on reduction in hospitalizations, ER visits, and 30-day readmissions.

$184 million in savings according to independent evaluation and $385 million in risk-adjusted savings for Accountable Care Organizations (ACOs) in Pioneer ACO Model.

Through 2013, 1.3 million “harms” were prevented and $12 billion and 50,000 lives were saved due to the synergistic model called “Partnership for Patients.”

These examples summarize CMS efforts to save costs and lives through bundled payments, primary care initiatives, ACOs, and partnerships with patients. These are said to be only 4 of the 26 models launched by the CMS innovation centers and are in their early stages of development. Not mentioned are the costs of these “innovations,” clinicians installing electronic health records and converting to ICD-10 coding. Savings may be "infinitetesmal" for government but not for clinicians.

I suppose we ought to be impressed by these articles, but I am reserving judgment. Innovations come in all forms –electronic, organizational, communicative, and technological, but most innovations stem from the private not the government sectorsl

We also ought to look at the government track record. It does not have a sterling reputation for innovation. Instead it is noted for its sprawling inefficiciencies and expanding bureaucracies. Government is poor at innovation because.

It cannot manage failure.

It seldom abandons a project.

It is not gambling with its own money.

Its success is measured in good intentions, not results.

It succeeds by growing too big to fail and too influential to stop.

It can’t go out of business, can print money to keep on going, and is propped up by taxpayer money.
Cost Consequences of Centralized Control

Centralized control of health care - ObamaCare - may have unintended consequences – premium cost increases. This may may end as the central lesson of the health law.

If you’ll recall, ACA passed on a wing and a prayer with the promise it would control costs of American health care, wh twice that of any other nation.

Instead the opposite may be the case. It costs money to comply with the raft of new regulations. To evade or minimize the cost of these regulations, hospitals and physicians are consolidaing and monopolizing many markets.

Consolidated health care organizations, as the only game in town, can negotiate and command higher prices. Federal antitrust authorities are often either too slow, too ineffective, or too powerless to counter these rising prices. Insurers raise rates to stay in business and satisfy investors, knowing that centralized government, has pledged to bail them to avoid a deal spiral in insurance markets.

Consequently, health exchange insurers in 6 states have already asked for average premium increases of 18.6%. These increases include 36% in Tennessee, 23% in Oregon, and 7.7% in Connecticut. The Congressional Business Office has estimated premiums will rise by an average of 8.5% each year for the next 3 years. if your premium were $2000 a month this year, it would be $2533 in 3 years. These increases may not directly impact those on health exchange subsidies, but it will raise premiums for those not on subsidies, and the increased costs will be passed on to American taxpayers, who will ultimately pay the price of ObamaCare’s redistribution policies.


Tuesday, May 19, 2015

ObamaCare: If You Knew Then What You Know Now

This is a series of questions for the 2016 Democratic presidential candidate regarding the 2010 passage of ObamaCare.

If you knew then what you know now, would you run the risk,

Of embittering Republicans through unilateral passage and unanimous opposition , resulting in more than 2 dozen Congressional votes for repeal?

Of incurring the disapproval of the American people whos have opposed ObamaCare in more than 95% in hundreds of national polls?

Of losing the House and the Senate in 2012 and 2014 midterm elections?

Of a disastrous October 2013 launch without adequately preparing or pre-testing before that launch?

Of setting the stage for 2 Supreme Court challenges on the Constitutionality of ObamaCare?

Of rewording the text of the health care law to make it clear the federal government rather than the states could set up health exchanges?

Of not recognizing that 37 states would opt not to set up health exchanges and 27 states would choose not to expand Medicaid?

Or would you say the fact that some 16 million uninsured Americans, 5% of America’s 320 million citizens, are now insured , was worth the cost of billions of dollars in new taxes, thousands of pages of new regulations, increased premiums and deductible averaging over 40% in individual markets, cancelled health care policies for millions , more part-time than full-time work, and narrowing of access to government-compliant physicians and hospitals, politically unpopular individual and employer mandates and penalties?
On Three Principles of American Government

I’m reading Alistar Cooke’s America (Knopf, 1974). Cooke (1908-1984) was an English journalist who became an American citizen. He tells the story of America dating from the Spanish conquistadors, to the French fur traders, to the English founding fathers.

In setting up our government’s structure, Cooke says the founding fathers focused on 3 basic principles – Compromise, Compromise, Compromise.

These 3 principles manifested themselves as checks and balances, the 3 branches of government , the Articles of Confederation, the Bill of Rights, and offsets between federal and state governments and between individuals and centralized government.

The 3 principles are useful to reflect upon as we bear witness to the ObamaCare related standoffs between states and Washington –sponsored Medicaid programs, state and federal health exchanges, the role of the Supreme Court, and other ObamaCare-related issues.

Compromise is not President Obama’s strength. He prefers to go his own way and to live and act in his own ideological bubble. Obama’s 3 principles seem to be to Personalize, Demonize, andMarginalize his political opponents, many of whom are his fellow Democrats, and those in the Supreme Court, who disagree with him. He does this through mandates and executive actions which may skirt the Constitution.

If one views politics as partisan warfare, these tactics make sense and may even work. If one sees politics as the art of compromise to achieve bipartisan goals, these tactics may backfire.


There’s a new word in the vocabulary,

Known inside the health care constabulary.

That word goes by the shorthand name of ‘“quants,”

It’s familiar to all data savants

“Quants” are above all else numbers nerds,

who believe you can’t measure things in words.

Quants think of themselves as value visionaries,

as evidence-based, leverage-lifting emissaries.

Among those versed in computers,

they are the only square shooters.

To quants anything vaguely mathematical

Beats anything verbal or alphabetical.

Sunday, May 17, 2015

Political Malpractice – A Matter of Opinion

In a crisply written 11 page working paper “A Physician’s Opinion Regarding Political Malpractice: The Origin of Medical Cost Inflation, HMO Rationing, and ObamaCare Cartel Controls,” Robert Geist, MD, a St. Paul, Minnesota, retired urologist and medical political activist, describes the evolution of modern health care “cartels”, which are replacing medical professionals as arbiters of health care.

Geist separates the transition from a professional to a commercial medical market place into 2 time periods.

One, 1973 -2010, when HMOs and other managed care entities took hold, matured, and sought to control the unrelenting cost inflation ushered in after Medicare was enacted in 1965.

Two, 2010 and thereafter when the federal government under ObamaCare and CMS transformed the health system into a series of cartels led by the managed care industry, insurers, hospitals, and Accountable Care Organizations.

A cartel is defined at an international combine to regulated and prices and output.

According to Geist, cartels were formed for three “evidence-free” reasons.

To remedy “poor quality care” (too much, too little, too varied”) brought on by greedy providers driven by the lure of lucrative fees-for-services.

To contain rising costs through corporate gatekeeping and through capitation and other payment reforms.

To reward physicians through cost sharing of savings and other rewards in the name of conserving society’s scarce resources.

From Geist’s perspective, this process, though well-intended by managed care executives and federal policymakers, has led to system failures , incessant reforms, higher costs, poorer quality, lesser access, and public turmoil, physician servitude, and power and merger mania among institutional leaders.

One Way Out

Geist concludes one way out of this government and managed care-induced turmoil is a decentralized medical market place though such mechanisms as health savings accounts, patients empowered choice, and free market health care.

Geist’s conclusion reads.

“It was political malpractice to ignore ordinary economic principles of supply and demand when the U.S. government wrote prescriptions for the nation’s medical sector that caused the abrupt onset of tax-subsidized demand inflation after 1965 and created the futile managed care rationing-of supply panaceas to control it.”

“Resolving public-corporate threats to patient care, clinic viability, and professional integrity would require political action to write a prescription for a new medical market place, where the consumer is king and money (instead of politics) is used to distribute goods and services.”

“Chances are that this new prescription would make medical care and its catastrophic care affordable to all Americans.”

A nice throught, but unfortunately, the chances of removing politics from the medical care cost equation, approach zero.

If you would like to read Doctor Geist’s paper in its entirety, contact me at Doctor., and I will forward it to you.