Sunday, March 29, 2015

Fee-for -Service or Bundled Bills: Not-An-All-Or-Nothing Or All-Size-Fits-All Proposition

The March 22 WSJ features a debate between Paul Ginsburg, director of public policy at the University of California, and Richard Amerling, MD, nephrologist and president of the Association of American Physicians and Surgeons (“Should The U.S. Move Away from Fee-Service-Medicine?”)

It is a lively debate. Ginsburg emphasizes reimbursing physicians on basis of value, prevention, outcomes, and total care. Doctor Amerling stresses FFS is not the problem. The problem is high costs caused by 3rd parties, resulting in high administrative costs, insensitivity to real costs, and greater volume of tests and hospitalizations.

The article contains a chart showing these leading cost drivers – hospital care, 34.0%, physicians and clinical services, 21.0%, and prescriptions, medical products, and personal care, 13.5%- accounting for 68,5% of all costs.

What is missing in the debate are these obvious facts:

-- Bundled bills make sense for big ticket bills for major hospital operations , procedures or illnesses - for cancer, heart disease, and common operations for which data exists. I know this because in the 1990s as chairman for a PHO, our hospital and its medical staff created bundled bills for over 100 hospital-based illnesses by giving 10% discounts for hospitals, 3% discounts for physician fees, with prepackaging the two into one bill backed by reinsurance if the bill were exceeded. These kinds of bundled bills are doable and acceptable for hospitals and physicians alike.

-- nBundled bills do not make sense for much of the population seeking care for episodic problems outside hospital settings. These are short-term situations which do not require data gathering or total patient care. They are routine episodes that do not need to be factored in or entered into some massive data base.

-- Bundled bills are already a fact-of-life in many out-of-hospital market transactions. Concierge direct-cash practices offer monthly or annual retention fees that include bundled fees covering the visits, on-line or phone consultations, and routine tests. Ambulatory surgical centers generally bundle surgeons', anesthesiology, nursing, and short-term rehab fees. Retail clinics feature bundled evaluation fees.
The Final Health Reform Four

ObamaCare has been five years in the making, and it’s come down to the final four. The final game will be in Late June in Washington, D.C. with the Supreme Court making the call.

The final four are:

-- Universal Health Care - This is the favorite among liberals, but it was out of the running early. Even its supporters knew it would not win among Americans, who had no wish to emulate the European or Canadian systems. Some thought, hope against hope, we follow the British, Switzerland, German, or even the Singapore models, but that was not to be. Our system had been in place for 70 years . It dated back to World War II when employers were giving tax deductions for covering health care for employees. When Medicare and Medicaid were introduced in 1965, it experienced budget overruns of 9 to 10 times original estimates, and when the medical industrial complex devoured 1/6 of the U.S. economy and was not to be displaced. All of these things were barriers to a winning entry in the reform sweepstakes.


-- ObamaCare - Then in 2010 came the Patient Protection and Affordability Act, renamed Obamacare by critics and embraced by the President because, he said, “It shows I c care.” It is one of the co-favorites because it under its aegis, overall health care spending has slowed and the number of uninsured Americans has declined by over 11.6 million. But it has its liabilities. Americans disapprove of it by 52% to 42%. It did not fulfill its misleading promises – to increase quality, decrease individual costs, and lower premiums for most Americans. Its launch in October 2013 was badly bungled. Among doctors, 46% gave it a D or F grade, and 25% said they would not accept healthcare.gov plan patients. It was passed secretly in the dead of night against unanimous political opposition. The majority of states choose not accept federal Medicaid funds. And it ran into an electoral buzzsaw in the 2012 and 2014 midterms and lost its majorities in the House and Senate. Its survival depends on the kindness of strangers – conservatives on the Supreme Court.


-- GOP Care - This is currently being developed by three man Republican committees in the House and Senate. It is one of the co-favorites. But it has problems. The final versions have yet to see the light of day. It is unlikely to withstand a certain Presidential veto. It promises to be patient-centric, to offer competition, to foster patient choice and freedom to select their own plans, and to lower costs while expanding service and coverage. And it may never see the light of day if the Supreme Court declares federal subsidies to be legal in the context but not the wording of the health law.



-- Free Market Care - Policy markets say this alternative is least likely to succeed. It is a return to the bad old days of unregulated care. It trusts doctors to do what is best for their patients, not their pocketbooks. It assumes patients are well-informed about what is good and bad for their health. Its advocates believe employers will do what is good for their workers. It relies on doctors and patients rather than government and management experts. It has no real base, no rooting section. According to the government, less than 5% of doctors currently participate in free market, i.e., cash-only or concierge, care. It has no structure – no overarching national strategy to guide and regulatory safeguards. But it seems to be catching on – largely because of the complexities, bureaucratic barriers, physician shortages, and high costs of ObamaCare for middle class Americans. A growing tide of consumers are going to urgent care centers, retail clinics, concierge physicians, and to self-care or home care options.


Friday, March 27, 2015

The Doc Fix is On - Reading Between the Partisan Lines

Lawmakers closed in on passage of a measure to permanently replace an 18-year old formula for reimbursing doctors for Medicare patients, as support in the House swelled and resistance faded among Senate Democrats.

Siobhan Hughes, “Passage of ‘Doc Fix’ Edges Closer, Wall Street Journal, March 26, 2015


The two political parties, 18 years after the 1997 Sustainable Growth Formula (SGF) was enacted, tying doctor incomes to the Gross National Product, and 17 years of annual patches, have decided to discontinue the SGF.

Why the shift to a bipartisan solution?

I suspect there are multiple reasons.

Among these are:

National surveys of doctors indicating that 62% of doctors planned to retire early and 56% said they planned to see fewer Medicare patients. Given current doctor shortages of 50,000 to 100,000 among primary care practitioners and specialists, this is unacceptable to voters, who tend to trust doctors more than government and who are reluctant to accept physician assistants, nurse practitioners, and other physician replacements as go-betweens.


Government promises that the Americans could keep their doctors, hospitals, and health plans, when these promises, coupled with narrowing of networks and cancelled health plans , were proven to be untrue, and were known when ObamaCare was enacted.


Consumer and physician disenchantment with health exchange, Medicare, and Medicaid plans. One of four doctors have said they do not plan to accept members of such plans, and further more, somewhere between 10% to 40% of doctors, depending on region of the country, have said they will not longer accept new patients on government sponsored or subsidized plans.


A growing consumer and physician movement away from government or insurer plans towards cash-only care outlets such as retail clinics, urgent care clinics, work site clinics, ambulatory surgical units, and concierge physicians.


A compromise between Democrats, who are getting what they want, health insurance for children in low-income families and to shifting costs to higher income Medicare patients and Republicans who seem to be willing to accept higher deficits in a package that would cost $214 billion over a decade and add $141 billion to the deficit without corresponding tax increases.
Physician Response to Electronic Health Records a Mixed Bag

Although the federal push for electronic health records (EHRs) is now 10 years old and although 70% to 80% of practicing physicians now have these records, physicians are of mixed mind about the effectiveness of EHRs.

This mixed reaction is best shown in a 2014 Physicians Foundation survey of 20,000 physicians. When asked how they felt about EHRs, physicians gave these responses: increased quality of care, 37.3%; decreased quality of care, 27.4%; increased efficiency, 24.3%; decreased efficiency, 45.7%; enhanced patient interaction, 4.6%; distracted from patient interaction, 47.8%.

Clearly, in many respects, EHRs have not achieved their goals of improved quality, greater efficiency, and enhanced physician-patient interaction.

In an Op-Ed piece in the New York Times ( “Why Health Care Tech Is Still So Bad,” Robert M. Wachter, MD, a professor of Medicine at the University of California in San Francisco, and author of The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age, contemplates why EHRs have such a mixed record.


“Last year I saw an ad recruiting physicians to a Phoenix-area hospital. It promoted state of the art operating rooms, dazzling radiology equipment, a a lovely suburban location. But only one line was printed in red.: “No EHR.”

“The unanticipated consequences of health information technology are of particular interest today. In the past five years about $30 billion of federal incentive payments have succeeding in rapidly raising the adoption rate of electronic health records. The computerization of health care has been like a car whose spinning wheels have finally gained traction. We are so accustomed to standing still that we were totally unprepared for that first lurch forward.”

Doctor Wachter , a pro-health information advocate, took a year’s sabbatical to write his book , In the course of that year, he interviewed, among others, Erik Brynjolfsson, a management professor at M.I.T,, Boeing’s top cockpit designers, Silicon Valley iPhone entrepreneurs, I.B.M’s Watson team, and, of course, his digital doctor brethren.

In his book and his Op-Ed piece, Dr. Wachter argues “Health, our most information-intensive industry, is plagued by demonstrably spotty quality, millions of errors and backbreaking costs.” He concludes, “Electronic records will transform medicine, eventually.” To achieve this utopian goal, he says physicians will have to focus on patients rather than demands of the computer, work together in teams, and government will have to mandate the seamless shoring of data between different systems in different settings.

In a related Wall Street Journal article (“Why Health-Care IT Systems Must Be Made to Talk to One Another" March 27, 2015), Wachter observes, “The proportion of doctors’ offices with electronic records has skyrocketed. Our health system finally has a digital backbone. But the backbone’s vertebra are mostly unconnected. What we are lacking is called interoperability.” Once that is achieved, presumably we will have a seamless, vastly improved health care system.

I am not so sanguine. I believe medicine, an intensely humanistic, interactive endeavor, will still require clinical judgment and gut reactions. Long live the gut. Keep the data, churned out day and night by computers and iphones and apps, in perspective. In the words of Dr. Wachter, computers are “Just an essential tool. Nothing more, nothing less.” They are not the end game of medicine, just one way of getting there.

Thursday, March 26, 2015

ObamaCare Decline and Fall?

Self-Evident Issues

1. Cultural – America is a vast middleclass center-right culture that believes the majority, not the minority, rules and in equal opportunity, not equal results, for all. One size does not fit all. When this equation changes, decline and fall of health reform law may follow.



2. Economic Growth - In retrospect, as a nation, perhaps President Obama should have focused more on economic growth and prosperity, rather than on regulations and social justice. At 2% growth over last 6 years, recovery from recession is slowest since World War II.



3. Politics - In a bipartisan nation, one does not pass social legislation affecting every American without a single vote from opposition party. Unilateral power breed intense bitterness, lingering partisanship, and gridlock.



4. Constitution - Our governing document, the Constitution, was designed to give checks and balances and equity to three branches of government – executive, legislative, and judicial. When that balance is altered, or the Constitution is thought to be violated, rules for governing may descend into chaos.



5. Consumers - America is a consumer-driven nation, and any health law should be consumer-friendly and consumer-centered, rather than bureaucratic and government-controlled.



6. Doctors – For any health reform system to be effective, practical, and workable, it must have enough doctors to care for patients generated by that reform. If the system causes doctor shortages and relies on foreign-trained physicians to fill gap, it presages reform decline.



7. Simplicity - Health reform that remains unpopular, that incomprehensibly raises premiums and deductibles and leads to loss of health plans, and whose mandates produce uncertainties, confusions, and penalties is in trouble.

8. Computers - In a humanistic enterprise like health care, overreliance on online technologies to judge providers, to measure outcomes, and to improve quality has its pitfalls.

9. Costs - Present costs of healthcare.gov ($2 billion) and projected 10 year costs of ACA ($1.7 trillion), long-term costs of $6 trillion, and unsustainable costs of Medicare and Medicaid and other entitlements make reform of health reform and alternative approaches inevitable.


What's to become of ObamaCare? Will it be repealed in the next session of Congress? Will it prevail and be irreplaceable? Will it be like Prohibition, repealed after 14 years because of unworkability and public rejection? Or will we behave as Pogo said, " We have met the enemy, and he is us."?

Wednesday, March 25, 2015

Among Millenials, Penalties for Not Having Health Plan Discourages ObamaCare Enrollment

One of the ObamaCare incentives for getting people to sign up for healthcare.gov exchange plans was to tell uninsured people to have a plan – or pay a penalty. Surely, the reasoning went, people with take the lesser of two evils - a plan, particularly if it were subsidized, but not a penalty. But the young and healthy are saying no thank you, I’ll just go without.

According to a McKinsey and C. survey of 3,007 uninsured and individual adults ages 18-34, most uninsured prefer to pay the penalty rather than enroll. Part of the reason may be because 41% of uninsured do not even know a penalty exists, or because the millenials are having a tough time finding gainful employment.

When informed of the penalty, which was $95 or 1% of income in 2014m only 12% changed their mind and decided to enroll.


31% said they didn’t need health insurance and the penalty was less than coverage.



26% said they believed in health insurance but the penalty was less than than coverage.



15% indicated they didn’t believe in the law.

There may be other factors as well. The young may believe they invincible and will remain in good health. In millennial minds, these plans are not a good deal, when you can’t afford them, when ERs will have to accept you, when you can get your plan after you fall ill, and when the IRS isn’t going to be able to enforce the $95 penalty anyway.

More of the young are part of the boomerang generation. They are returning home to live with their parents. Across population groups, they have the highest rate of unemployment, often over 15%. Jobs are in short supply, and more and more jobs are part-time, partly due to ObamaCare policies that encourage discourage full-time employment. Many of the young have staggering credit card and education debts. Tuition costs are high. Financial aid is dwindling. As a result of all of these things, many of the young are going back home to live with their parents or never leave.

In the words of one millennial, Evan Feinberg of Nevada,

“We’re young but we’re not stupid...only 22% of Nevadans signing up are between ages 18 and 34, a far cry from the 40% the White House wanted…Blame the ObamaCare marketing team. The team’s efforts to persuade us to sign up have been inappropriate, incoherent, and simply insulting.”

Because of economic headwinds, a high rate of unemployment, Obama is losing support among white millenials. According to Gallup, approval has dropped from 58% in 2008 to 34% through November 2014. In the midterms, the millenials favored a GOP-led Congress.

Over all, of those signing up for ObamaCare through the exchanges , only 28% were between 18 and 34%, far short of the Obama target of 40%. This is distressing because the young and healthy were expected to be a main source of revenue and were expected to keep premiums down for older and sicker persons. Among the young, the main deterrents for not enrolling were high costs, lack of value of benefits, and irrelevance to their health needs.