A Health Wonk Concert on the virtual 'Mall' (1/22/09)

In this edition of Health Wonk Review, Dr. Jaan Sidirov at the Disease Management Care Blog lets the wonkers (sounds kind of like rockers), put on a virtual concert for the new year and the new Administration.

For those that may not know it, the Disease Management Care Blog is one of the most respected and established health policy blogs and many persons (including myself) appreciate its insights on disease management, medical homes, and health system innovation.

If anyone has a deju moment, Medicaid Front Page liked Jaan's layout so much, we used the same template for our blog. Enjoy. ~BAA

House, Senate moving on SCHIP renewal and extension

Last Wednesday, the House voted (H.R. 2) to renew the State Children's Health Insurance Program (SCHIP) and extend it to about four million additional children and their parents, including legal immigrant children and pregnant women, bringing the total number of individuals covered under SCHIP to about 11 million (see article from Washington Post and article from Wall Street Journal). A similar measure also passed through the Senate Finance Committee and is headed to the full Senate this week. If passed by the Senate as well, these two bills will be reconciled in conference, resent to both Houses, and if passed, they will move to President Obama.

It is interesting to note that a bipartisan SCHIP bill was vetoed by President Bush in 2007 because the Administration did not like the inclusion of tax increases on tobacco and felt the bill signified an expansion of government-run health care. Instead of dusting off the bipartisan bill, democratic leaders included new provisions in H.R. 2 that expanded the program to include immigrant pregnant women and children and lost the support of Republicans. Senator Charles Grassley (R-Iowa), the ranking member of the Senate Finance Committee, stated that the new provisions would violate a 100-year-old law that requires new immigrants' sponsors to pledge that for the first five years, the persons they sponsor would not be a burden to taxpayers (see report from AP/ContraCosta Times).

This departure from an already agreed-upon bipartisan bill does not bode well for health care reform, says health care leader Bob Laszewski in a post at the Healthcare Policy and Marketplace Review blog.

One important point has been missing from the discussion...cash-strapped states are going to have a difficult time paying their share to expand the program (in Florida, it is 32%). A report by Florida Health News notes that states are hoping the new Administration will waive some matching requirements for states with strained budgets.

Personally, I feel that expansion of SCHIP is good policy because we pay for the coverage of legal immigrants one way or the other (either though SCHIP or uncompensated care). The expansion allows care to come out in the open as opposed to being provided through uncompensated care, disproportionate share (DSH), and other pools that obfuscate health care financing. But regardless of the merits of the policy, this departure from bipartisanship does not bode well for the larger and more necessary health reform discussions to come. ~BAA

All Hail the simple checklist!!!

Yes, I am procrastinating on writing a post on S-CHIP but the "black belt" in me just couldn't help writing this first.

You don't to be a Six Sigma practitioner to know for any system to be improved, it has to be stabilized first...so I was delighted to see a new study where the simple checklist strikes again. If there is one place I want a checklist to be used for myself, it is while I am undergoing surgery.

In a study published online by the New England Journal of Medicine this week, a simple 19-item list was found to reduce deaths and complications by more than a third. The simple elegance of the list is that it requires members of the surgery team to coordinate and confirm their individual understandings and actions and it even includes a surgical team "time out" before incision.

On NBC news last night (see video), one of the lead authors stated that he thought the checklist would lead to maybe 10-15 percent improvement but that he was very surprised to see 38 percent improvement in reduced deaths and complications. It is also important to note that 93% of the surgeons in the study would want the checklist to be used if they were ever in surgery. Again, it seems that our health care system has focused so much on high-tech wizardry, that we have forgotten that the simple things often make the biggest difference. ~BAA

Welcome to Bizarro World (Part 2 of Little Known Medicaid Facts)

Only in Medicaid would a provider ask you to tax them and in doing so, make more money. See, when one mixes state financing and medicaid policy with a dollop of federal money, the results often defy logic. Take for example, Florida's current special session to amend their 2009 budget.

Going in to the special session, Florida's 680 nursing homes were facing a 10 percent Medicaid rate reduction, which amouts to about $220M through the next fiscal year ending 6/30/10. This is on top of significant cuts during the last two legislative sessions and an increasing focus on quality and accountability for nursing homes. Nursing homes could easily be justified by saying, "No thanks, I gave at the office."

But then something happened...instead of waiting for the much-needed federal financial assistance in the stimulus bill working its way through the U.S. Congress, the State of Florida decided to take a short-cut to meet its immediate needs. As the Orlando Sentinel observed, "House and Senate negotiators Saturday agreed to let the nursing homes use some federal budgetary alchemy to offset that cut as well as previous reductions imposed in 2008."

The basics are this, for every $45 the state of Florida puts up, the Federal government matches it with $55. Thus, if a state cuts $45M from their Medicaid budget, the state also loses the $55M federal match for a total hit of $100M to the economy. But if the state can have someone else put up its share of $45M through locality or provider "contributions" (aka taxes, fees, and assesments), the state can reduce its liability to $0 and still receive the federal match. Although sometimes complicated in practice, this method of reducing state liability is practiced in 32 states across the country and is most commonly used for hospitals.

In this case, Florida's nursing homes proposed levying a 5.3 percent "quality assessment" fee on their own revenue. Whereas before the state proposed to cut 10 percent (state share of 4.5 percent and federal share of 5.5 percent), now the state will still cut its 4.5 percent but will replace it with the 5.3 percent "tax" on nursing homes and based on simple ratios, the federal match on 5.3 percent would be 6.5 percent for a total of about 11.8 percent. So, the state plugged a 10 percent hole with a 1.8 percent increase...everyone ends up a winner...except for the Federal taxpayer.

These machinations are necessary and even helpful for states given the current financing arrangement between the states and the Federal Government (give me a 120 percent immediate return on investment any day) but the long-term concern is that they add more complexity to an already complex system and they lead states to focus more on creative accounting than they do on improving the performance of their health systems.

Hurry Up...And Wait

Another week in Washington, DC and discussion over the economic stimulus package has taken a back seat to other events. State legislatures, however, don't have the luxury of postponing budget decisions and already are trying to figure out how to balance their budgets. Ultimately the federal government will send funding to states to support their Medicaid programs, but every delay encroaches on state budget timetables, and also results in additional terms and conditions placed on the new federal funding. It will be a very busy winter trying to coordinate developments in the federal government wth realities in the statehouse.

Procedural Reality

After much discussion and deliberation about the size, scope, and details of the $800 Billion economic stimulus package - including how to get it passed before the Inauguration on January 20 - reality set in that the package was too big, too important, and touched too many government programs to be pushed through the political process in such a short time. Not to mention the legislative process, which needs time to physically research the appropriate laws to amend and write the legislative language. Deliberation is still underway on the size and details of the Medicaid relief package (anywhere from $20 Billion to $100 Billion, depending on whom you ask).

Congress This Week

Occupying Congress this week is "Round 2" of the financial system rescue package (aka, bank bailout, or Troubled Asset Relief Program, PL 110-343). The Bush Administration has been asking Congress for the second half of the $700 Billion TARP funding. Now that the President-Elect and his economic team see the same data and agree the economy is still in trouble, they are working with Congress to get the funding released as soon as possible and Congress could vote to release the second half of TARP funding by the middle of this week.

Next week is the Inauguration, when everyone (Democrat, Repubican, and Independent) settles in for a week of partying and bipartisan showmanship. Look for the Inaugural speech by President Obama to address challenges we face, including health care.

So it will not be until the following week of January 26 that Congress will get down to business. By then much of the staff-level deliberation on the size and details of the Medicaid relief package will take shape. Sources tell us the amount for Medicaid is anywhere from $60 Billion to $100 Billion, but these are just the amounts "on the table" without firm commitments. Nevertheless, it is a substantial increase from the $20 Billion first set forth at the start of discussions (especially if the SCHIP program will be funded separately, under a quick reauthorization).

How Much Medicaid FMAP Relief?

How much of the $775 Billion stimulus package goes to healthcare is still being debated, with some suggesting $80 Billion for a Medicaid FMAP increase, and $20 Billion for infrastructure improvements such as health information technology. It remains to be seen whether Congress and the Administration can support $100 Billion in new healthcare funding, but I think that is the upper limit and an outlier given the political realities of the situation. The final tally will depend both on how Congress is influenced in the coming weeks, and what the Administration wishes to hold back for a later health care reform proposal. My hunch is that the Administration will only want to provide funds to replace immediate state Medicaid budget shortfalls, and leave broader issues of health information technology infrastructure to a health reform proposal being assembled for later this year. (see November 17 entry in this blog). Stay tuned, this will get really interesting.

The Health Wonk Review is up!!! (1/9/09)

The Health Wonk Review (HWR) is a hosted summary of the best health blogs in the country during the previous 2 weeks and the first review for the new year is posted at the Health Care Blog by Brian Klepper.

For those that may not know it, the Health Care Blog has earned a reputation as one of the most respected independent voices in the healthcare industry and has been in operation since 2003 (even before blogs were cool). Some of the best policy dscussions I have ever read are posted there and it gets about 80,000 visitors a day and is often quoted by major news outlets. It is a valuable resource and platform for anyone interested in health policy. ~BAA

Are the days of open-ended Federal match coming to an end?

In today's Wall Street Journal, there is an excellent opinion piece by Dr. Scott Gottlieb that should be required reading for Medicaid policymakers. Dr. Gottlieb is a former senior advisor at FDA and CMS and then in an unconventional move, he left CMS to continue his medical education. He now serves as a practicing internist and a resident fellow at the American Enterprise Institute.

Medicaid is a wonderful foundation on which to build on but Dr. Gottlieb points out that the house built on that foundation is not structurally sound. He points out many recent studies showing the appalling quality provided by the Medicaid program and then rightly asks that if we are entering an era where we expect greater value from our health care system, why would we want to further expand a program that has the incentives all wrong? He states:

The federal and state governments are equally culpable for the program's troubles. The federal government matches state Medicaid spending, paying an average of 57% of costs. States expand enrollment in order to qualify for more federal aid. Insurance coverage has become the end itself, with states spreading resources widely but thinly -- without enough attention to the quality of care, accessibility, or whether coverage was actually improving health. States have no obligation to rigorously measure health outcomes in order to qualify for more federal money.

The paragraph is spot-on, especially as states continue to cut Medicaid in this difficult budget period. Yes, Medicaid has a generous set of benefits (more generous than commercial insurance) but if often pays 50-70% of Medicare and as they say, 'you get what you pay for.' If there is one thing we have learned in health care, it is if you squeeze the balloon on one side (price), it will only bulge on the others (quantity or quality). We have to squeeze the balloon on ALL sides.

Policymaker and stakeholder solutions typically involve across-the-board cuts, trying to find creative ways to draw down more federal match dollars, or adding additional layers of complexity (if you want to see complex, look at the graphic below) rather than focusing on the real issues of how to improve the effectiveness and efficiency of their delivery systems.


He adds that:

Reimbursement rates are so low, and billing the program so complicated, that it is hard for internists like me to get beneficiaries access to specialized care or timely interventions. For my patients as well, many of whom are uneducated or don't speak English, Medicaid is replete with paperwork, regulations and rejections that make the program hard to navigate.

And finally, Dr. Gottlieb highlights some states (see my post yesterday that mentions the North Carolina Community Care model, this earlier post on Louisiana's Health First model, and I plan a future post on the Healthy Indiana Plan) that are improving both quality and efficiency by more appropriately managing networks, increasing accountability, and coordinating care.

The federal government and individual states are partners in Medicaid (kind of like a marriage) and while CMS has provided most of the money they have let states run the household finances. This has not been a recipe for success as CMS has not paid enough attention to where the money is going or what it is buying and I expect this will change. With this influx of money from the federal government, I expect federal expectations will increase as well (call it P4P for states, if you will).

Dr. Gottlieb summarizes that Medicaid should become a purchaser of high-value care before we count on it in the furure health care landscape and I could not agree more. We all should expect better...both for our money and our lives. ~BAA

Is the ‘Socialist’ solution of health centers the Bush Administration’s greatest health care legacy?

The Bush Administration’s health care legacy will be mixed, with some significant breakthroughs and missed opportunities, but one initiative that stands out as receiving unanimous approval is also one of the earliest and least characteristic of Administration policy – Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs). Back in 2001, President Bush pledged to open or expand 1,200 community health centers and to reach this goal, he doubled annual federal funding to $2B. Subsequently, the nation reached the goal in late 2007 (see press release).

These not-for-profit health centers are located in underserved areas, governed by a local community board represented by at least 51% patients, and deliver primary and preventive care as well as other support services like transportation and translation. In addition, an increasing number of health centers are expanding their scope to include dental, mental health, and on-site pharmacy services.

Centers provide care to patients regardless of their ability to pay and patient out-of-pocket expenses are typically based on a sliding-scale according to income. Additionally, they are subsidized by Medicare and Medicaid programs, which typically pay centers ‘retail’ for their beneficiaries (i.e. a global average of allowable costs referred to as the All-Inclusive Rate).

In a recent New York Times article, it noted the probability that further expansion of health centers will play in an economic recovery package and a little further down the road, efforts to reform the health system:

President-elect Barack Obama has said little about how the centers may fit into his plans to remake American health care. But he was a sponsor of a Senate bill in August that would quadruple federal spending on the program — to $8 billion from $2.1 billion — and increase incentives for medical students to choose primary care. His wife, Michelle, worked closely with health centers in Chicago as vice president for community and external relations at the University of Chicago Medical Center.

And Mr. Obama’s choice to become secretary of health and human services, former Senator Tom Daschle of South Dakota, argues in his recent book on health care that financing should be increased, describing the health centers as “a godsend...”

...Studies have generally shown that the health centers…are effective at reducing racial and ethnic disparities in medical treatment and save substantial sums by keeping patients out of hospitals. Their trade association estimates that they save the health care system $17.6 billion a year, and that an equivalent amount could be saved if avoidable emergency room visits were diverted to clinics.

Interestingly, in Florida, a group of health centers recently partnered with other health care entities to create Prestige Health Choice, a new form of a managed care organization referred to as a capitated Provider Service Network (PSN). Thus, the stage is setting for health centers to play an increasingly important role in helping improve the performance of our health care system. ~BAA

Advice for Medicaid policymakers and the new administration: “Simplify, simplify, simplify”

Back when I worked for a regional health plan that covered Medicaid back in the cap-happy 90s, I learned an interesting thing. Only 1 of 10 of the capitated integrated delivery systems made money on Medicaid. When I asked the Medical Director ‘how?’ he stated it was because they served a large enough portion of Medicaid that they had to specialize in the unique needs of Medicaid beneficiaries or lose their shirts. That lesson has never left me and brings a healthy amount of skepticism when I hear the terms ‘choice,’ ‘market,’ and ‘expansion.’

Many Medicaid waivers that focus on opening up Medicaid and integrating it with the ‘mainstream’ through managed care may look good on paper but often have less than desirable results because these health plans often carve-up the network of Medicaid-specific providers and leave beneficiaries with increased access to providers who are unable (due to reimbursement or awareness) to focus on the unique needs of Medicaid beneficiaries.

As a self-styled economist, I believe in transparency, accountability, and free-market tenets but those tenets fall somewhere in the middle of Maslow’s hierarchy of needs (see graphic) when it comes to personal choices. Many Medicaid beneficiaries struggle with immediate day to day issues and do not have the time or tools to focus on the delayed benefits of their health.

It important for policymakers to simplify the system without sacrificing efforts to increase transparency, accountability, specialization, and coordination. We do not necessarily need more but we do need better. For example, in Broward County Florida, there are 11 nearly indistinguishable Medicaid health plans in terms of benefits and price to beneficiaries. Do we need that many? Does this choice justify the increased burden on providers who specialize in treating Medicaid beneficiaries?

This is why the North Carolina Community Care model, which is basically an open medical home model (i.e. enhanced Primary Care Case Management), recently won the prestigious Ash Award for Innovations in American Government (if you can call the 30+ year medical home or Enhanced-PCCMs an innovation) and is gaining traction in other state Medicaid programs. To this point, this particular model has shown significant savings and improvements in care over the traditional fee-for-service program but the reason why many states do not favor it is that it does not guarantee savings, which is important to 'budgeteers.' Health plans can provide that guarantee, hence managed care's growth in Medicaid.

Thus, above a certain point, more choice is not better – especially in Medicaid. Carving up the network of Medicaid-specific providers among health plans that do not compete on price or quality just fragments the existing system and rarely improves the value of care provided to Medicaid beneficiaries. If states use managed care as a tool, they should do so in a way that balances the extra burden and fragmentation imposed by managed care plans with their ability to create value (i.e. savings and improvements in quality). ~BAA

MedicaidFrontPage recognized as a leading health policy blog

I am back at the keyboard after a few weeks of holiday stress and find that MedicaidFrontPage has been selected as the only Medicaid blog to make the Health Policy 100, a listing by the Health Tech’s Blog website of the 100 most influential health policy blogs.

It has been a stressful few months since we started, but your comments and suggestions have helped us continually improve the value of this site for persons interested in Medicaid, S-CHIP, and the uninsured. ~BAA