Posts Tagged Medicare

Life’s a struggle then you die!!!

Posted by Mark Brenzel in For Consumers, Healthcare Reform on December 9th, 2009

The above saying usually contains a more colorful word than struggle, but the meaning is the same. In the context of health, this statement describes the human condition well. From birth to death, even the healthiest among us deal with the health consequences of aging and the demands of living that eventually results in death. The Senate Healthcare Reform Bill appears to be written based on the premise that this reality can be substantially changed (except for the ending of course) by government action.

The major goal of this bill continues to be to extend health insurance to all people living in the US. It is accepted without debate that not having health insurance is a severe health risk. The truth is actually much more complicated, but that is another discussion for another day. This bill goes far beyond simply increasing access to health insurance, however. The bill contains an almost endless list of studies, experiments, demonstration projects, and health improvement initiatives geared to making people healthier.

The following list describes some of these initiatives:
• Establishes the Center for Quality Improvement and Patient Safety to identify best practices and healthcare delivery process improvements
• Medical Homes will be funded to provide medication management services for specific patients that includes in-home services
• Funds a program to develop patient decision aids sensitive to cultural issues to help patients make the right healthcare choices for themselves
• Establishes an Office of Women’s Health to focus on how to improve healthcare for women
• Creates a National Prevention, Health Promotion, and Public Health Council to reduce incidence of preventable illness and disability (includes reduction of tobacco use, sedentary behavior, and poor nutrition)
• Funds more School-based clinics
• Provides for funds to study ways to improve oral health care
• Allows Medicare to pay for a physician visit to put together a personalized prevention plan
• Directs Secretary of HHS to determine which preventive services should be covered by Medicare without co-pays or deductibles
• Funds a tobacco cessation program for pregnant women covered by Medicaid
• Directs the Secretary to research incentives that could be implemented to change risky behaviors in the Medicaid population
• Requires manufacturers to make sure that new healthcare technology is accessible by the handicapped
• Provides funding to increase immunizations
• Requires chain restaurants to label their food with nutritional values
• Funds community centers to develop individualized wellness plans
• Requires employers to provide reasonable break times for nursing mothers
• Creates an initiative to combat childhood obesity
And many more…

Sadly, they left out my favorite health improvement idea. Studies have shown that people with pets tend to be happier and live longer. The authors of this bill should have funded a program of buying everyone a government approved pet. The good news is that this idea and any others that are left out can be added later. The bill calls for the establishment of many new Offices, Centers, and Commissions that can add new programs and initiatives as studies indicate their value.

Clearly, there was a heavy dose of academic input into this bill. Academics love to create studies and recommend courses of action that address the problems and implement the solutions identified by their studies. Obviously, the political sponsors of this healthcare bill have bought into the above academic ideas in a big way. The question is why they have done so now? The answer is embedded in the language that accompanies almost all of the health improvement initiatives. The ultimate goal is healthcare cost reduction. These collective initiatives are one of the cost reduction strategies the sponsors hope will not only pay for the cost of this entitlement, which will be much greater than projected, but also cover the ever growing government deficits caused by the Medicare and Medicaid programs. They are gambling big that healthcare costs can be driven down by preventive and wellness care. They are gambling with their political futures and perhaps the solvency of the US government.
Unfortunately, their gamble is going to fail because of the inherent immutable truth of the lead into this piece. Whatever other benefits these initiatives will generate, cost reduction will not be one of them. A simple thought experiment and real life example demonstrate this fact. Think about what would happen to the national cost of healthcare if an inexpensive cure for cancer was found tomorrow. The academic answer would be that healthcare costs would decline significantly. All the costs associated with diagnostic tests, surgery, chemotherapy, radiation therapy, and other related treatments would disappear overnight. The real answer, however, is that healthcare costs would decline in the short term and then begin to increase again until the increase swamped any savings generated by no longer providing cancer services. The reason is that anything that extends life almost certainly causes an increase in healthcare costs over time (as well as increasing the costs of non-healthcare programs like Social Security). Only the mix of healthcare services that are utilized would change assuming overall access to healthcare remains unchanged. Because cancer would no longer end people’s life prematurely, more will have to be spent on the increased incidence of other chronic diseases associated with aging such as congestive heart failure and dementia. Perhaps the best real world example of this conundrum involves cigarette smoking. It is very clear that the significant reduction in the number of people in the US who smoke cigarettes (from 37% in 1970 to 22% in 2003; a 40% reduction in the number of smokers over that time) has had no impact on the rate of inflation in the nation’s healthcare costs. Despite this reality, the federal government still publishes reports on how much cigarette smoking is costing the nation in terms of healthcare expenditures.

Hopefully, there are better strategies being considered than the ones discussed here to “bend the healthcare cost curve”. If not, the light at the end of the tunnel is a train.

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From The Washington Post: A $300 Billion Deception

Posted by Hal Andrews in Healthcare Reform on November 16th, 2009

I think the November 15 Editorial Page at The Washington Post has it exactly right. In the “if you can’t beat’em, join’em” category, I quote:

 HAVING PASSED a health reform bill that is, at least theoretically, paid for, the House of Representatives is poised this week to blow a quarter-trillion-dollar hole in the federal budget involving, you guessed it, health care. This is the so-called doc fix, to prevent scheduled cuts in Medicare reimbursements to physicians from taking effect.

Say you are a member of Congress who agrees that the cuts should be rescinded — that physician payments shouldn’t be reduced, that is — but also believes that the payments should not add to the national debt? Under the rule governing the House debate, you won’t be allowed to suggest any offsetting savings. Either you go for the doc fix and add massively to the deficit, or you torpedo the fix and wreak havoc in the Medicare program, with a 21 percent cut set to take effect Jan 1. Nice choice. It puts those who believe in both fiscal responsibility and averting these draconian cuts in an impossible situation.

By the way, don’t be fooled by the incredible shrinking “cost” of the fix. The official Congressional Budget Office estimate used to be $245 billion over 10 years. Now it’s $210 billion. In fact, the real hit to the budget will be closer to $300 billion. The lower CBO numbers stem primarily from the administration’s move to change the rules about which physician payments are subject to the cuts. The administration proposed a regulation to exempt drugs administered in doctor’s offices, such as chemotherapy, from the spending ceiling. That has the effect of making the cost of the fix look smaller, but it doesn’t change the ultimate drain on the treasury: Medicare will end up paying out the same amount of money.

All of this is, to some degree, Medicare kabuki to placate the American Medical Association. The Senate doesn’t have the votes to pass a permanent fix without paying for it — though, of course, it also doesn’t have the votes actually to pay for it. So while the House might pass the unpaid-for fix, it will likely die there. The result will be another year-long, or possible two-year, patch slapped on this mess. Finding the money to pay for the fix and, more to the point, cobbling together the political coalition to support it, is difficult. Which is why Congress and the administration have joined hands in the pretense that the doc fix has nothing whatsoever to do with health reform.

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Beltway Math: How To Count Like Nancy Pelosi

Posted by Hal Andrews in Healthcare Policy, Healthcare Reform on October 30th, 2009

Around my house these days, we are working on certain math concepts that have proven irrefutable over the centuries. This week, for example, we have concentrated on multiplication facts, such as 2×3=6. At the parent-teacher conference this week, I was told how important it was to understand these concepts.

Today’s coverage of the House health reform bill makes me think that some members of Congress should take a refresher course in basic math, such as how to add. Today’s Roll Call reports on the real cost of the House bill:

“The House Democrats’ health care plan would cover 36 million more Americans at a cost of $1.055 trillion over the next decade, while slashing the federal deficit overall by $104 billion, according to a preliminary Congressional Budget Office score released late Thursday.

The cost of the bill was a concern to fiscally conservative Blue Dog Democrats, who sent a letter to the CBO asking additional questions about their estimates and what additional measures could be taken to reduce the overall spending on health care.

Speaker Nancy Pelosi (D-Calif.) had touted the bill as costing $894 billion when she released it online earlier in the day, but that number nets out $167 billion in new pay-or-play taxes on individuals and businesses. Pelosi’s office had also said the bill would cut the deficit by $30 billion, but the CBO score came in much better.

The $1.055 trillion cost is offset by $740 billion in new taxes and revenue and a net $426 billion in cuts in spending, largely in Medicare.

The CBO also estimated that the deficit would continue to shrink slightly in the second decade after the bill is adopted, a key issue for many moderate Democrats, although it said that any estimates that far out have considerable uncertainty.

That $1.055 trillion figure only includes the coverage portions of the bill, down from about $1.2 trillion in the original bill.

Other pieces, including the cost of closing the “donut hole” in the bill for seniors under Medicare, come on top of those figures.

The bill also excludes an estimated $245 billion in costs for preventing a 21 percent cut to doctor’s pay under Medicare. Democrats dropped that provision from the bill and plan to move it separately so that they can say the larger bill does not add to the deficit.”

So, $1.055T – $740B – $426B + $245B + ? = $894B. Got it?

Remember, friends, this is courtesy of the same people who are sure that Medicare fraud is $60B per year that Federal agencies cannot seem to stop. What is your prediction when the Federal government adds another $1,000,000,000,000 into the pot?

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The Government We Deserve: Healthcare Edition

Posted by Hal Andrews in Data Advantage, For Consumers, Healthcare Financing, Healthcare News, Healthcare Policy, Healthcare Reform on October 17th, 2009

So, the battle is joined – the passage of the Senate Finance Bill has forced every healthcare participant whose oxen might be gored into the open, and the fighting is fierce.

I don’t have a dog in the fight from an economic standpoint, unless Washington, D.C. decides to give everyone a full indemnity policy like the New Hampshire state union employees. As a result, I have had a freedom to think and speak in a way that few of my colleagues can.

It took me a while to realize that I would be so alone in this regard. I have been very fortunate to participate for the past five years in two different groups of nationally recognized healthcare executives with very diverse experiences. Several of them are very publicly prominent in the debate, and others are quietly influential. I have hoped that these groups might coalesce, create a blueprint for reform, and lead the way forward. While I am disappointed that has not happened, I am really surprised at how resolutely the group members have retreated to their economic realities or their philosophical ideals. In short, there has been no sustained dialogue with the goal of determining how hospitals, physicians, insurance companies, device manufacturers, pharmaceutical companies and others can create a reformed system. At the same time, I have observed all of us bemoan that “healthcare reform” is really “insurance coverage reform”, and not so impressive at that.

The result is that We, the People, have turned it over to Washington, D.C. In the coming weeks, 535 people who know a lot about politics, a little about the art of compromise, and almost nothing about how approximately 20% of the economy works will decide our future. The 20% of us employed in healthcare have failed to reform ourselves through real and shared sacrifice. The 80% is angry enough not to care that they don’t know the difference between a scalpel and a saw.

In the words of Dandy Don Meredith, some people in healthcare will need to “turn out the lights, the party’s over”. The tricky part is that we won’t know until the very end who that is.

On Wednesday, The Wall Street Journal ran an opinion piece called “Paying the Health Tax in Massachusetts” by an author named Wendy Williams. In it, Ms. Williams lamented that the Commonwealth of Massachusetts changed the definition of acceptable coverage. Her family’s policy no longer meets the requirement, so she must either (a) buy a more expensive policy, which she does not think she needs, or (b) enroll in the government option.

What caught my eye was the following:

“Mr. Romney and Sen. Ted Kennedy publicly promised that the middle class – that is, people like us – would not be taxed and that our health-care costs would actually decrease if the plan became law.

My husband and I weren’t convinced. It all seemed inane, but we are neither politically or socially conservative and figured the plan wouldn’t affect us much. Besides, who could be against a plan that covers more people for less money?”

Here in the South, we might respond to that statement by saying, “I’m not sure I would have told that”, but I am afraid the subject is too serious to be that dismissive.

Ms. Williams, in four sentences, has summarized the debate.

First, in order to get elected, politicians have to tell people (us) what we want to hear. Politicians rarely make the call for sacrifice, and today’s America is not interested in that much anyway. Elections for 473 of the 535 positions will be held in 2010. For each of those 473, the calculus over the next 60 days is about how a vote on healthcare reform will play at home between now and November 4, 2010 (Note: “what will get me reelected” is sometimes phrased as “what my constituents want” but rarely as “what does my country need” or “what does courage require”).

Second, We, the People, know better. What is wrong with us? We aren’t that stupid, and we don’t even like Congress. On the other hand, we do seem to like something for nothing. The members of the Greatest Generation have given way to individuals who are more interested in their personal good than the common good. Most of us just listen for what we want to believe and ignore the rest; some of us listen to talk radio and shout at the rest. The Greatest Generation gave way to the Baby Boomers, who seem to be the majority of those in power. The generation of Timothy Leary and “Turn on, tune in, drop out” seems to have taken the “drop out” part to heart, except that Leary’s hope for self-reliance has morphed into singular self-interest.

*********

It is time for We, the People, to wake up:

  • As we proved spectacularly in Tennessee, you cannot cover more people for less money. No one in Washington, D.C. should know that better than Nancy-Ann Deparle.
  • The results of the Massachusetts experiment are that costs have increased, while quality and access have decreased. These results should be terrifying since Massachusetts had one of the lowest uninsured rates in the nation at the start of the Massachusetts Connector program. Up next, “global payments”, aka capitation – good luck with that at Partners.
  • In The Washington Post, Alec MacGillis reports that maybe the Mayo Clinic is not a model for reform since they restrict access to Medicare and Medicaid patients. As we continue to report, the Mayo Clinic does not deliver high healthcare value.
  • The Senate Finance Bill pretends that physicians will take a 25% cut in pay in 2011 to achieve the $900B cost; it appears that AMA has convinced Senator Reid otherwise.

Sir Winston Churchill famously stated that:
“Democracy is the worst form of government, except for all those other forms that have been tried from time to time.” He also said, “The best argument against democracy is a five-minute conversation with the average voter.” Let’s hope that we do not allow Washington, D.C. to test the former, and let’s see if America can prove Sir Winston wrong on the latter.

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Health Reform on September 30, 2009

Posted by Hal Andrews in For Consumers, Healthcare Policy, Healthcare Reform on September 30th, 2009

A few thoughts on today’s news:

  • As widely reported, the Senate Finance Committee rejected two amendments to Senator Baucus’s America’s Healthy Future Act of 2009 to establish a “public option”. The New York Times reported that Mr. Baucus voted against the amendments even though he thinks the public option is a good idea. Senator Baucus, perhaps taking the mantle of Senator Kennedy’s legacy, said, “My job is to put together a bill that will become law. In the Senate that means my job is to put together a bill that gets 60 votes.” It is a pity that more members of Congress fail to remember that is the reason we elected them.
  • In today’s edition of The New York Times, David Leonhardt’s column “’Cadillac Tax’ Offers Opportunity” (at least that is what the title was in the print edition) calls out special interests for subjugating the national interest to their personal interest. As stated previously, I am convinced that shared sacrifice on the part of all Americans is an essential component of comprehensive reform of the healthcare (insurance, delivery, and wellness) system. In particular, Mr. Leonhardt points out that the unions, whose members would likely be disproportionately affected by the “Cadillac Tax”, are vigorously fighting the concept. Calling out the A.F.L.-C.I.O. is serious business at the Old Grey Lady, so credit Mr. Leonhardt with speaking the truth. Mr. Leonhardt points out correctly that limiting the growth in the cost of healthcare is a key goal of reform – I say “correctly” because some folks in Washington have forgotten that is the real issue. Mr. Leonhardt also cites research from RAND Corporation and others that conclude that there is not a difference in health status between those with “Cadillac” plans and “Chevy Malibu” plans. Mr. Leonhardt also quotes Jonathan Gruber, a health economist at M.I.T., as saying, “Taking someone who’s uninsured and giving them insurance unambiguously improves their health”. I am not sure the evidence supports that, which I will discuss in more detail soon.
  • Today’s USA Today headline is “Millions in waste clogging Medicaid” (their capitalization, not mine). I am neither the first nor almost certainly the last to suggest that, if the White House really believes that health reform can be funded by eliminating fraud, abuse and waste, then time’s-a-wasting. Why do we need new legislation if we can address our cost issue with rooting out fraud, abuse and waste? Isn’t that the role the Office of the Inspector General? If the government is certain of the fraud, abuse, and waste and cannot end it, then why do we want the government taking more responsibility in healthcare? Perhaps We, the People, should require the Government to be faithful in the small things before granting them authority over the large things.
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A Call for Sacrifice by the People, for the People

Posted by Hal Andrews in For Consumers, Healthcare Policy, Healthcare Reform on August 30th, 2009

I had the opportunity to spend a few minutes with a United States Congressman yesterday and discuss healthcare reform. From that discussion, as well as numerous media accounts, I think it is clear that the American people are frustrated in a deeply authentic way with what is happening, or not, in Washington D.C.

Is healthcare reform central to the long-term fiscal and economic health of the United States? I am sure it is – $37T (present value) of unfunded Medicare liabilities is simply unfathomable. Yet today’s healthcare debate in Washington, D.C. is focused on “just” $1T.

Maybe the American people don’t understand the intricacies of healthcare reform, and maybe they don’t even care. However, I believe that they are smart enough to know that fixing a problem as big as healthcare will require that everyone make sacrifices.

Maybe the American people do know in their hearts and in their expanding guts that they are to blame, and maybe they want to be inspired by someone who can help them to remedy their mistakes. Maybe the American people know there is no free lunch on healthcare reform, and maybe they know that they could skip a meal or two anyway. Maybe they are really angry because the Government of the People is not being candid with the People.

Maybe the anger and anguish of August is that the American people know that the medicine of healthcare reform does not come in grape or bubblegum flavors or in a tablet that dissolves on the tongue. Maybe they know the medicine will be very hard to swallow, and maybe it will make some people sick. Maybe they simply want leaders in the White House and Congress to tell the truth, the whole truth, and nothing but the truth.

What if they are prepared for that? What if, as citizens of the greatest nation in the world, they just need to be asked?

Have we had the discussion of whether healthcare is an unalienable right? No. Should we? Probably. Will we? Probably not.

Even so, in the history of this great nation, when called to sacrifice for the greater good, the American people have proven to be without peer. Do we still have it in us? Do we possess the character of the “Greatest Generation”?

I am not certain, but I won’t ever know unless someone calls the question. Where are the leaders? When will they call for sacrifice by the People, for the People, and for this great nation?

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Healthcare reformers are focusing on value; are you?

Posted by Hal Andrews in Findings, For Consumers, Healthcare Financing, Healthcare Reform, Value-Based Purchasing on August 5th, 2009

by Hal Andrews and Gunter Wessels

 Many hospitals face the prospect of losing millions of dollars of Medicare revenue if they fail to perform above the 75th percentile among all U.S. hospitals based on performance measures proposed for value-based purchasing…………

 pdf     Healthcare reformers are focusing on value; are you?

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The Focus of Comparative Effectiveness is Key to the Effectiveness of the Program

Posted by Gunter Wessels in For Consumers, Healthcare Financing, Healthcare Policy, Healthcare Reform on July 27th, 2009

by Gunter Wessels and Pam Shearman

The Focus of Comparative Effectiveness is Key to the Effectiveness of the Program

This blog is about Hospital Value and in this post we want to take a short step back from what could be, to what is already enacted: funding for Comparative Effectiveness (CE) research for the NIH under ARRA 09 at $1.1 Billion. This CE program, a small part of the >$100 billion slice of ARRA related to healthcare, was described as a cost saving measure. That’s a big order for a small check. In the end CE will affect hospitals through reimbursement changes.

The promise of CE is to inform and update Federal guidelines to support cost-effective options. Federal treatment guidelines turn into payment policy, and the market responds by implementing those guidelines to get paid.

The problem with CE as a score-able cost savings measure is CE will adjust Federal guidelines for treatment. Federal guidelines update very slowly; they are already years in the making and sometimes take decades to be adopted (for an example of a fast update to Federal guidelines see http://waysandmeans.house.gov/hearings.asp?formmode=printfriendly&id=2197 part of MMA03 and the K/DOQI guidelines from the National Kidney Foundation circa 1997; detail on the guidelines at http://www.kidney.org/professionals/KDOQI/). This situation will not be remedied by CE, because research is slow. The upside is that CE findings will hopefully help make better guidelines, so the glacial pace of Federal guideline development will eventually result in better medicine.

Focusing the program on the right diseases/treatments would generate a substantial ROI for healthcare policy makers, while freeing up some capacity and reducing costs for Hospitals. There is a Win-Win.

You get what you pay for…sort of.
Beyond the following we’re going to skip the discussion about “rationing.” In virtually every healthcare system on the globe, individuals are still able to purchase the level of care they desire, no matter how extreme or experimental. Those who cannot afford to purchase more than the standard of care are not subject to rationing, even if they believe so. Ask a Canadian if you disagree (after all we are being pelted with breathless praise for Canadian healthcare outcomes, which are objectively good). You’ll find that wait-times in the Canadian health system are despised up to the point where an immediate appointment costs money. Pay out of pocket or not. There is always choice. Furthermore, if you’ve scheduled an appointment with a specialist in the US, you’ve likely experienced a few weeks “wait time.” Is that rationing? No way.

Getting what you pay for is the real dilemma; enter CE. The theory behind CE research is solid.  Other countries with good healthcare outcomes as well as premier healthcare systems in the US dedicate resources to investigating how to deliver the best outcomes cost effectively. In the UK for example, the National Institute for Health and Clinical Excellence (www.nice.org.uk/aboutnice/) supports this goal.

Any purchaser of healthcare services should not have to pay the same rate for therapeutic interventions that have different outcomes. It makes less sense to pay more for poor outcomes, a sadly frequent situation (see www.hospitalvalueindex.com for analysis on this topic). The inability to determine which providers deliver more or less quality in healthcare has created the move toward transparency, quality measures, and public reporting; all good things.

But, quality measures only illuminate some pretty basic activities; did the provider do X, to people who need X; when the provider performed Y procedure to patients who need Y, did they have to come back because the outcome was poor? With the benefit of quality measures we still don’t know whether providers are implementing Evidence-Based medicine and/or standard of care for X and Y. Worse, the standard of care may not be cost effective; standards are consensus based, and not necessarily on the healthcare economics of care delivery.

Current market-based activities that support Comparative Effectiveness
Giving Americans access to good affordable care should be within our reach as a nation. CE studies would support this goal, but because there is a current crying need for a focused application of comparative effectiveness the marketplace has already responded.

For the last decade at least, a variety of treatment guides known as Clinical Decision Support Systems (CDSS) have been employed by larger, more integrated and sophisticated healthcare providers. These systems are built to enhance the ability to correctly diagnose disease and then identify the most effective therapy choices. As with any comparative effectiveness determination attempt, however, these systems are best able to update Evidence-Based Medicine treatment algorithms within their own “sand-box”, i.e. within the integrated systems. We wonder how ARRA’s NIH funding will build upon these already available resources and accelerate the adoption of what the best providers already know and use.

Focus Comparative Effectiveness Studies on Big Chunks of Spending
Focus in CE research is of utmost importance, because determining the relative benefits of different healthcare interventions is difficult and time-consuming. Making comparative effectiveness pay-off for payers like Medicare–within a meaningful time frame–requires attention to those disease states that could, if improved, give return for the investment.

There are basically three chronic disease states that consume the majority of Medicare and by association Medicaid spending–all three are related to lifestyle and patient compliance. They are Diabetes, Heart Failure, and Kidney Disease; According to the United States Renal Disease Statistics, in 2008 these diseases consumed over $200 billion of Medicare spend. Private payers spent over $15 billion on the same disease states (http://www.usrds.org/2008/slides/htm/vol1_05_costCKD_ESRD_08.swf.).

These three chronic disease states are the outcome of a long progression of disease, and consequently the problem gets worse with age. Sadly the proportion of patients being diagnosed early enough to slow or reverse progression is too low. Treatment is subject to the use of multiple drugs and interventions and patient monitoring is inadequate (adequate monitoring rates of less than 50% at best–e.g. Diabetes monitoring).

The ability to deliver a more effective care pathway in these diseases is a huge opportunity; simple laboratory tests coordinate care, but according to the USRDS these tests are under-utilized. Furthermore, the use of expensive anemia-controlling drugs costs billions of dollars each year, but the outcome of over-use of these drugs is death. The net result, as reported by the USRDS in kidney disease for example, is that huge costs result from common, preventable, under diagnosed, and under-treated conditions. (See www.usrds.org for more.)  

Establishing more comparative effectiveness standards in these three disease states alone would deliver substantial savings–in cost and quality of life.

Small Chunks; Individual Differences and Personalized Medicine Targeted Wisely
“Personalized-medicine” diagnostic tests are emerging with the ability to detect variations in a person’s DNA that control the speed and efficiency that the individual’s body “uses” the drug. It’s a very hot area in diagnostics, and it can benefit cancer patients, people with depression, as well as heart failure, kidney disease, and diabetes.

If enacted, CE will challenge regulators to see through the so-called “genetic flaw” in comparative effectiveness in more genetically variable disease states. The natural variation in people’s genetic makeup in certain areas–like glycemic response–causes certain therapies to fail because of individual genetic make up, rather than whether they are effective in the specific populations represented in randomized controlled trials.  Therefore, to aim CE studies and monies at less prevalent diseases, the “smaller chunks” of our healthcare spend, will require more genetic testing in a larger percentage of the population. These tests continue to evolve, are challenging to interpret, and are expensive, so they do not represent our most cost effective focus option.

A Pragmatic Solution
Fortunately, to contain the biggest costs, we don’t need elaborate genetic testing; we can rely on simple, inexpensive, and readily available laboratory tests for the most common and most costly diseases.

Policy makers should focus CE studies on the “Big Chunks”–Heart Failure, Kidney Disease, and Diabetes. Applying the best current knowledge of diagnostic testing, intervention, and monitoring standards for these diseases will pay back the $1.1 billion more quickly, and improve the lives of thousands of Americans.

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Lost in D.C. with The Dartmouth Atlas

Posted by Hal Andrews in Healthcare Financing, Healthcare Policy, Healthcare Reform on July 22nd, 2009

by Hal Andrews & John Morrow

We know some of the people involved in the Dartmouth Atlas Project, and we think their analysis is important. Even so, using 2005 Medicare data to inform comprehensive payment reform is inadequate.

As such, we are surprised and dismayed at how policymakers are using the findings as the map for healthcare reform in Washington, D.C. We are also frankly appalled at how The New Yorker article by Dr. Atul Gawande has seemingly become the guidepost of reform for policymakers. The reason is that the conclusions that The White House and much of Congress have drawn from The New Yorker article are, at best, suspect and, at worst, completely wrong. Reengineering 20% of the economy is a large task, in our view, and getting the facts straight is important.

So, what have we done? Instead of using an “Atlas” to analyze McAllen and El Paso, we suggest using a “GPS” to triangulate the position that hospitals played in overall excess cost and utilization. Doing so provides some critical facts that The New Yorker failed to report.

At first blush, McAllen and El Paso are quite similar:

  • 2008 populations are within 1% (752,020 for McAllen vs. 759,868 for El Paso).
  • Median age of the population is similar, at 28.2 years for McAllen compared to 30.6 years for El Paso.
  • Per capita income for each market is depressingly low, with $12,276 for McAllen and $16,838 for El Paso (making El Paso 37% wealthier, as suggested by the physicians in McAllen).
  • Medicare hospital utilization rates are similar, with 28% Medicare utilization in McAllen and 30% Medicare utilization in El Paso.
  • Total hospital utilization (i.e., all-payer data) when compared to the population were similar in calendar year 2007 (the most current year that all payer data are available), with 12% hospital utilization in McAllen versus 10% hospital utilization in El Paso.
  • Each market has 2% workers’ compensation hospital utilization.
  • Per capita hospital utilization is similar, with a rate of .48 patient days per capita in El Paso compared to .53 patient days per capita for McAllen.
  • McAllen cost per case is 5.4% lower than El Paso, and McAllen’s average length of stay is 9.6% lower than El Paso.

Based on these similarities, McAllen is in many ways a more desirable option for hospital care.

So, what about the real differences between McAllen and El Paso?

Overall, and not just for the Medicare and Medicaid population data (which were central to the Atlas and The New Yorker perspective), McAllen’s average cost per case is $315.00 less than in El Paso, representing in total $23.6 million in incremental costs that could be saved if all of the El Paso cases had been treated in McAllen hospitals. For policymakers who are concerned about the price paid by the uninsured, the average charge per case is $7,841 more in El Paso than in McAllen.

Importantly, the “excessive” costs attributed to McAllen do not occur in McAllen, or even in Hidalgo County. A full 6% of McAllen residents left McAllen for care to other markets such as Brownsville, Houston, San Antonio, Corpus Christi and Dallas! A total of $283 million in charges migrated away from McAllen, yet those costs are attributed to the population and demographics of the beneficiaries living there.  As a result, the Dartmouth Atlas analysis overestimates the costs attributed to McAllen. As a comparison, $63 million of charges out-migrated from El Paso to other Texas hospitals during the same period (the all-payer analysis does not reveal out-migration to any other states; El Paso is closer to Phoenix than Dallas).

What about the important things, like quality? The March 2009 release of the Hospital Value Index™ reports McAllen’s average index score at 42.76 with El Paso’s being 43.83, just over one basis point difference. This indicates that the markets are nominally different on quality, core process measures, mortality, patient safety and patient satisfaction and experience. Shorter lengths of stay, lower costs, and lower mark-ups for charges on patient bills make for a more desirable profile of McAllen hospitals than El Paso.

In summary, the most current all-payer data (2007) simply do not support The New Yorker piece, which was partially based on 2005 Medicare data from The Dartmouth Atlas. For both McAllen and El Paso, the cost per beneficiary would decrease if the beneficiaries did not leave the market.

These markets have a great deal in common, but critical differences are not discussed in The New Yorker. We are reminded how important it is to “follow the money”, yet without the anecdotes about what is going on in McAllen, the empirical data report that the hospitals in McAllen aren’t the problem.

We think that there are several important questions that arise:

  • Could an entire industry be led astray by the miscalculations of Medicare spending delivered by a half dozen hospitals in McAllen and El Paso?
  • Should policymakers draft legislation to reform the provision and coverage of healthcare based solely on (old) Medicare data?
  • Is the nation going to allow a handful of well-meaning, but uninformed, policy-makers to reform healthcare based on the view of an article in The New Yorker?

Heaven help us if we do…

Hospital Inpatient Care        
McAllen Residents

Cases

Patient Days

Patient Charges

Hospital Costs
Stayed In County for Care

85,417

349,215

$2,315,742,163

$467,429,802
Left County For Care

6,069

53,153

$282,687,694

$101,905,182

Total

91,486

402,368

$2,598,429,858

$569,334,984
 

 

 

 

 
McAllen Residents

Avg. Charge/Case

Avg. Charge/Day

Avg. Cost/Case

Avg. Cost/Day
Stayed In County for Care

$27,111

$6,631

$5,472

$1,339
Left County For Care

$46,579

$5,318

$16,791

$1,917

All

$28,402

$6,458

$6,223

$1,415
 

 

 

 

 
El Paso Residents

Cases

Patient Days

Patient Charges

Hospital Costs
Stayed In County for Care

74,895

351,704

$2,617,700,997

$433,484,831
Left County For Care

888

13,748

$63,441,348

$20,851,930

Total

75,783

365,452

$2,681,142,346

$454,336,761
         
El Paso Residents

Avg. Charge/Case

Avg. Charge/Day

Avg. Cost/Case

Avg. Cost/Day
Stayed In County for Care

$34,952

$7,443

$5,788

$1,233
Left County For Care

$71,443

$4,615

$23,482

$1,517

All

$35,379

$7,337

$5,995

$1,243

(Source: Texas Health Care Information Collection, TX Public Use Data File, State Hospital Data, Calendar Year 2007)

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Viewpoints on Reform – July 10

Posted by Hal Andrews in Healthcare Reform on July 10th, 2009

As pressure continues to build in Washington this week, several prominent voices are beginning to raise crucial questions:

Meanwhile, many healthcare executives on the provider and payer side wonder when Congress or the White House plan to think about changes to the delivery system itself, as opposed to rearranging the deck chairs on the Titanic. Many with whom I have spoken are especially puzzled given the prominent role of Nancy-Ann DeParle in the reform discussions. Ms. DeParle is very familiar with the provider side of healthcare generally, and one of the first real “medical home” delivery systems was built in her  hometown of Rockwood, Tennessee in 1996.

Real reform will only occur with changes to coverage, payment and delivery systems. Any “reform” that does not address all three legs of the stool will not be reform at all.

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