Breaking: THE HOUSE TRI-COMMITTEE HEALTH REFORM DISCUSSION DRAFT SUMMARY

Now try saying that five times fast…

Yes, the House’s health reform discussion draft is out (all 900 pages of bill text and a summary, which can be found at the House Committee of Labor and Education’s website here). I have not done anything except peruse it but in that perusal, it is safe to say that it is more “reform-ish” than the outline from the Senate Finance Committee. For example, it includes both a public plan and a national health insurance exchange and I also found it interesting that for products sold through the health insurance exchange, it requires that 85% of health insurance premiums go to services (referred to as the medical loss ratio or MLR).

Here are some high points from the House summary:

I. COVERAGE AND CHOICE
The discussion draft builds on what works in today’s health care system and fixes the parts that are broken. It protects current coverage – allowing individuals to keep the insurance they have if they like it – and preserves choice of doctors, hospitals, and health plan. It achieves these reforms through creating:

• A Health Insurance Exchange. The new Health Insurance Exchange creates a transparent and functional marketplace for individuals and small employers to comparison shop among private and public insurers. It sets and enforces insurance reforms and consumer protections, facilitates enrollment, and administers affordability credits to help low‐ and middle‐income individuals and families purchase insurance. Over time, the Exchange will be opened to all employers as another
  choice for covering their employees. States may opt to operate the exchange in lieu of the national exchange provided they follow the federal rules.
• A public health insurance option. One of the many choices of health insurance within the health insurance Exchange includes a public health insurance option. It will create a new choice in many areas of our country dominated by a just one or two private insurers today. The public option will operate on a level playing field. It will be subject to the same market reforms and consumer protections as other private plans in the Exchange and it will be self‐sustaining ‐‐ financed only by
  its premiums.
• Guaranteed coverage and insurance market reforms. Insurance companies will no longer be able to engage in discriminatory practices that enable them to refuse to sell or renew policies today due to an individual’s health status. In addition, they can no longer exclude coverage of treatments for pre‐existing health conditions. The discussion draft also protects consumers by prohibiting lifetime and annual limits on benefits. The proposal also limits the ability of insurance companies to charge higher rates due to health status, gender, or other factors. Under the proposal, premiums can vary based only on age (no more than 2:1), geography and family size.

Enjoy. More to come later. ~BAA

Health Wonk Review: Reform Edition (6/11/09)

Ah, the anxiously anticipated Health Wonk Review (HWR) is finally here. For those that do not follow the HWR, it is a summary of the best health blogs in the country during the previous 2 weeks and the current health reform edition is hosted by one of the titans of the health policy blogosphere, Joeseph Paduda over at Managed Care Matters.

So, get nimble and get quick with the latest information or you might end up like our friend in the picture. ~BAA

Defending the Dartmouth Atlas

A few days ago, the NYT times wrote a quizzical piece that tried to shoot  holes through the most solid piece of health services research that exists in our country. Problem was, the piece was uninformed and out of context.

But leave it to bloggers to fill in the context and tell the entire story. The Health Wonk Review is coming out later today but I wanted to highlight two excellent posts that set the story straight. The first post is by Maggie Mahar at the Health Beat blog. I would quote some relevant portions but really, the entire post is an excellent read. The second nice post is from Joseph Padua at Managed Care Matters.

The basic point of controversy is the following NYT statement: “Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.” This would have an major impact on my home state of Florida, the poster child of high costs.

But what puzzled me is that this was honestly the first time we had ever heard speculation that Congress was contemplating this policy option, though many of us have argued for a while to “water-down” these cost differentials over time.

Ms. Mahar interviewed Dr. Elliott S. Fisher, one of Dartmouth’s authors, and he stated “If we did, that would only make things worse, not better…In order to keep their incomes steady, doctors would increase the volume of what they do.” Furthermore, MedPAC Chairman Glenn Hackbarth, testified before Congress “But a formula...that attempts to control volume through global payment changes treating all services and physicians alike will produce inequitable results.”

Now, what does this have to do with Medicaid? The answer is…plenty. The same variations that exist in Medicare exist in Medicaid and the same policy option that just about every expert is recommending NOT to do is typically the first tool that states use to balance their budgets - ”across the board” cuts to Medicaid providers. For example, see this recent AP piece, “Doctors balk at Medicaid program,” which highlights recent cuts in Michigan. 

And finally, for those interested in health reform, it would be good to spend a bit of time looking at the actual policies and not listening to people who obviously haven’t looked at the policies (i.e. most politicians). For example, in Ezra Klein’s interview of Jim Cooper (D-TN), who is one of the few member of Congress that understand Medicare/Medicaid, he states “You remember, a few years ago, how Congress didn't know the difference between Sunni and Shi'a? Ask folks about the difference between Medicare and Medicaid, you'd be surprised.” ~BAA

Can hospitals learn a bit from the fall of the automobile industry?

I read two articles today and it is funny how the mind makes linkages. The first was from the Economist magazine, where they discussed lessons learned from the largest collapse of an industry in our nation’s history (link) and the second was an article on Virginia Mason Hospital in Seattle (link and related link).

From the Economist:

…The problem in the 1970s was not really the arrival of better, smaller, lighter Japanese cars; it was GM’s failure to respond in kind. Rather than hitting back with superior products, the company hid behind politicians who appeared to help it in the short term. Rules on fuel economy distorted the market because they had a loophole for pickups and other light trucks—a sop to farmers and tool-toting artisans. The American carmakers exploited that by producing squadrons of SUVs, while the government restricted the import of small, efficient Japanese cars. If Detroit had spent less time lobbying for government protection and more on improving its products it might have fared better. Sensible fuel taxes would have hurt for a while, but unlike market-distorting fuel-efficiency rules, they would have forced GM to evolve.

From the CBS Evening News:

Virginia Mason changed the way it practices medicine based on an unlikely model - the way Toyota builds cars. "At the end of the day, the Toyota production system is all about the customer," said Dr. Gary Kaplan, the CEO of Virginia Mason Hospital. "For us the patient."

Kaplan takes staff to Toyota's factories in Japan every year and practices what the car maker preaches. Just as the automaker's executives spend part of each day on the factory floor, Kaplan tours the hospital daily looking for problems and solutions.

Everyone is encouraged to look for changes to make work more efficient. Nurses developed ways to spend most of their time with patients instead of at the nursing station…

So at Virginia Mason's back clinic there were dramatic changes, where treatment time was cut from an average of 66 days to 12.

Just like with carmakers, hospitals have focused less on continually improving their products and more on lobbying governments for short-term protection and negotiating with other stakeholders for increases/concessions (insurers/labor). And what do we end up with?expensive cost-guzzling procedures (the SUVs of health care…though, to their credit, customers demanded SUVs until recently…let us hope the same can be said for wasteful health care).

Now, why is this? Well, first off, it is hard to blame hospitals because they are only responding to the incentives that exist in our health care system. Secondly, it is easier. Hospitals are usually the largest employer in their area and they can throw a lot of political weight around. But more importantly, looking inward and improving oneself is much more difficult than looking for someone else to solve your problems. Changing a culture, team-building, and staff empowerment, just like what they did at Virginia Mason, is a very difficult task that necessitates a significant amount of leadership.

The shame is that in today’s health care system, there is a greater financial incentive for hospitals to operate like the GMs of the world rather than the Toyotas of the world. So, rather than focusing on the “stick” and saying that we will know health reform is working when we have fewer areas like McAllen, Texas (see post and article), we should be focusing on the “carrot” and say that we will know health reform is working when we have more hospitals like Virginia Mason. ~BAA

Note: I just found it interesting that Toyota and their “lean manufacturing” techniques pushed one industry to the brink but may be the saving grace for the other.

Is Cookie Monster a Canary in the Coal Mine?

Alright, after a bunch of serious policy posts over the past few days, it is time for some lightheartedness.

I was looking at policymatters.net today, which is a website run by the school of Public Policy at UC-Berkley, and I noticed the following video that brings together two of my favorite things – NPR and Cookie Monster.

In the interview, we learn that Cookie Monster loves broccoli and other vegetables but draws the line at sardine ice cream. Some may think this is taking it too far but others feel that it is a sign that our culture is changing for the better…kind of like a reverse canary in the coal mine where instead of dying from diabetes and heart disease, Cookie Monster lives a long and happy life. Think about it, there has to be something to explain why he hasn’t aged a bit in 30 years. Enjoy. ~BAA

“Around the Horn” with Medicaid Reform (06/03/2009)

For those of us who just can’t get enough health policy, why don’t we work off our seven-course meal from yesterday with a little baseball?

The first two positions below are not Medicaid-specific but right now,  they are doing all the pitching and catching and the rest of us (including Medicaid) are just waiting for the ball to go into play.

Pitcher – President Obama. Numerous media reports via the new Kaiser Health News service suggest that the Administration is not opposed to taxing at least some portion of health benefits in order to pay for health reform. Also, at Time.com, Karen Tumulty reports on a letter released by the White House to Congressional leaders that provides some additional clarity to the President’s position.  

Catcher – Congress. Ezra Klein of the Washington Post notes that the notion of a public plan is going from bargaining chip to integral piece of reform. Interesting, see earlier MFP post on public plans here.

In the infield, we have a new package of resources from Kaiser Commission on Medicaid and the Uninsured.

• 1st base - Medicaid as a Platform for Broader Health Reform: Supporting High-Need and Low-Income Populations. This paper summarizes the problems that low-income individuals face in today's health care system, describes the structure and coverage of Medicaid and explores how the program could be expanded to cover more people as part of health reform.
• 2nd base - The Coverage and Cost Impacts of Expanding Medicaid. This paper quantifies the impacts on coverage and cost of expanding Medicaid to cover more of the low-income uninsured, including adults, at various income levels and with improved participation rates.
• 3rd base - Expanding Health Coverage for Low-Income Adults: Filling the Gaps in Medicaid Eligibility. This policy brief reviews health coverage and key characteristics of non-elderly low-income adults and discusses the implications for national health reform of broadening Medicaid coverage for this population.
• Shortstop - Community Care of North Carolina: Putting Health Reform Ideas into Practice in Medicaid. This brief examines the structure and experience of Community Care of North Carolina, an enhanced medical home model of care that the state adopted in its Medicaid program to improve care coordination and reduce costs for chronically ill beneficiaries.

In the outfield, we have more resources from KCMU:

• Leftfield – CHIP Tips. A provision in the Children's Health Insurance Program Reauthorization Act of 2009 provides for a “bonus” to states that do an especially good job of signing up eligible children for Medicaid. Also, KMCU has updated data on CHIP expenditures (here).
• Centerfield – Medicaid Physician Payment. From Kaiser’s website: “This study, published in a Health Affairs Web exclusive, provides the first national and state-by-state update of Medicaid physician fees since 2003.
  Medicaid has historically reimbursed physicians under fee-for-service at levels below what Medicare and private health insurers would pay for the same services. The study finds that Medicaid fees grew by more than 15 percent from 2003 to 2008, but fell in real terms because the gains did not keep pace with inflation. Medicaid fees did grow faster than Medicare fees during that period, however, rising from 69 percent of Medicare in 2003 to 72 percent by 2008.  Increases were greatest in Medicaid fees for primary care and obstetrical services.” For those that are interested, Kaiser has interactive tables that compare individual states to national averages (here) and individual states to Medicare (here). For example, here in the State of Florida, Medicaid basically pays physicians about 63% of Medicare and about 89% of the national Medicaid average.
• Right Field – updated Federal Medical Assistance Percentage (FMAP). KMCU has also an updated interactive table for FMAP (here), which includes the additional assistance included in the “recovery act” (ARRA 2009). 

Utility infielder - we have a dated but applicable article from the NYT via Kaiser that states continue to “cut off their nose to spite their face” due to budget pressures. The original NYT article included this telling quote from Linda Blessing, interim chief of the Arizona Department of Economic Security, "There's no question that we're getting short-term savings that will result in greater long-term human and financial costs," adding, "There are no good options, just less bad options."

Designated Hitter – also from Health Affairs we have the article “Beyond Parity: Primary Care Physicians' Perspectives on Access to Mental Health Care” by Peter Cunningham, which found that primary care doctors have a difficult time getting mental health services for their patients.

Closer – and finally, from The McKinsey Quarterly, we have the report “How health care costs contribute to income disparity in the United States.” I would expound on this but all you need to do is look at courses 3 through 5 from our seven course meal yesterday. Enjoy. ~BAA

Seven Course Meal of Links (06/02/2009)

In order to remain timely and to clear the decks, so to speak, I present a veritable feast of recent health policy developments.

First, in a web exclusive, Health Affairs published an article “Cost Sharing In Medicaid And CHIP: How Does It Affect Out-Of-Pocket Spending?” which is further evidence that cost sharing is a delicate balancing act for Medicaid, especially given new flexibility from the Deficit Reduction Act of 2005. The notion of “skin in the game” sounds great but often has counter-intuitive effects in Medicaid/CHIP.

Next, the story “Florida has no data 3 years into Medicaid trial” from the Florida AP via Kaiser Health News notes that almost three years after beginning its Medicaid Reform effort, the state still does not have complete and accurate encounter data. Additionally, a new HHS/OIG report “Medicaid Managed Care Encounter Data: Collection and Use” states that Florida has no sanctions or incentives for the submission of complete and accurate encounter data. 

Third course, another excellent Health Affairs article “Trends In Underinsurance And The Affordability Of Employer Coverage, 2004–2007,” which basically argues that the shield of employer-sponsored health insurance is eroding under an increasing burden.

The authors summarize with:

If history repeats itself, as the most recent recession plays out, employees are likely to experience further and more serious deterioration in financial protection from their health plans. Hence, it is imperative that the health care reform debate of 2009 address the underlying rise in health spending. Failure to do so will not only render health insurance and health care unaffordable to low- and middle-income Americans in the near future, but it will also leave health reform itself unaffordable.

Fourth course (related to the third), Ezra Klein’s post “Why Workers Aren’t Angrier About Health Care.” Mr. Klein accurately points out that most employees see health care as a “freebie” but in health care, there are no free lunches (especially now with the FDA cracking down – I guess I just made a funny).

Remember the old saying, “**** runs downhill?” Well, the same thing happens in the business world. Businesses pay taxes but they don’t really pay taxes, they pass them on to employees and customers. So, what may appear to be a freebie to employees is actually higher cost-sharing (see third course) and lower wages (see graphic). Someone has to pay the bill.

Fifth course (related to the third and fourth), the Business Roundtable’s report “Health Care Value Comparability Study” which headlines with “Health Care Costs Put U.S. Workers and Employers at a Significant Disadvantage Compared With Global Competitors.”

Sixth course, related to my earlier post “Medicaid Agencies are Public Health Agencies,” the new leaders at the Food and Drug Administration (FDA) wrote a perspective piece for the New England Journal of Medicine titled “The FDA as a Public Health Agency” where they reaffirm the Agency’s commitment to public health. In it, they write:

The Institute of Medicine has defined the mission of public health as “fulfilling society’s interest in assuring the conditions
in which people can be healthy.” To be healthy, people need access to a safe and nutritious food supply and to innovative, safe, and effective medical products. The FDA’s job is to  support this access and, in doing so, to promote health, prevent illness, and prolong life. The ultimate measures of the FDA’s success should reflect its fundamental goals and go beyond such intermediate measures as the number of facilities inspected or drugs approved.

And finally, for dessert, we have one of my favorite blogs, Health Populi. Jane Sarasohn-Kahn does a wonderful job making complex policy attainable to everyday persons. If you haven’t read it before, take a look.

Oops, it looks like we have a digestif because I also want to add that HHS issued a press release today that Cindy Mann, J.D. has been appointed to lead CMS’ Center for Medicaid and State Operations (CMSO). ~BAA

A Balanced-Scorecard Approach to Health Reform

Value-Based Purchasing (VBP) is one of the major proposed tenets of health reform and even though it makes intuitive sense (who can argue with paying more to a provider who demonstrates that they do a better job), it will probably end up as just another overly prescriptive government solution. For example, for Medicare’s FY2010 payment update, hospitals will need to report 42 performance measures in order to receive full payment.

Maybe we should shift our Program to move providers away from volume and toward quality by shifting the Program itself away from volume and toward quality. [That gave me a headache but you get the point] Maybe a better approach is to set expectations using a balanced scorecard approach just like the GAO and OMB recommend for government operations. From wikipedia:

The Balanced Scorecard (BSC) is a performance management tool for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy.

By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.

Organizations were encouraged to measure, in addition to financial outputs, those factors which influenced the financial outputs. For example, process performance, market share / penetration, long term learning and skills development, and so on.

The underlying rationale is that organizations cannot directly influence financial outcomes, as these are "lag" measures, and that the use of financial measures alone to inform the strategic control of the firm is unwise. Organizations should instead also measure those areas where direct management intervention is possible.

Think about it this way. Many people who work in a corporate environment have about 30% of their pay tied to tiered performance bonuses. And although Wall Street firms misused bonuses to focus on short-term gains, their use as a tool to encourage long-term growth is still solid. These tiered bonuses are often structured as such: one-third for their company’s performance (tier 1), one-third for their division’s performance (tier 2), and one-third for their personal performance (tier 3). The interesting thing about the tiered approach is that is builds a sense of community where one division is rooting for their peers and helping them reach their shared goals. Why can't health care do the same thing?

Current VBP efforts really only focus on tier three and a few tier two objectives: process and intermediate outcomes. This makes it easier to implement but less effective at achieving real change that makes a difference in patient outcomes and our country's finances.
From my post last week, I mused:

For example, Medicare makes various adjustments to hospital and other provider payments that account for local cost differentials. These differentials largely support a continuation of the wide variation that exists today in costs and their inverse relationship to quality (see excellent New Yorker article by Atul Gawande). But imagine what a difference it would make if Medicare watered-down these local cost differentials over time and phased-in local health improvement differentials. That means all Medicare payments to a hospital would be partly tied to their ability to improve the health of their local community. Now we're talking real change and alignment of incentives.

The more I think it about the more I like some variation of this approach. Let's call it Community-Based Purchasing (CBP). [Even though CBP would add one more acronym to the mix, it would definitely be better than the Medicare’s horrid RHQDAPU]

Just like in a balanced scorecard, CBP would fill the first tier of the bonus structure. Then a small set of summary measures covering the normal domains (financial, internal process, customer focus, and training and education) could be applied to individual providers in tier 2). And so forth and so on as the measures cascade down the chain.

[Graphic above is courtesy of the Balanced Scorecard Institute and their helpful presentation can be found at this link]

What would this do? Well, first of all it help would align incentives and build necessary relationships between providers. It would also balance the “art” and “science” of improvement efforts. The Federal Government could assume its role setting expectations with a small set of global measures and provider-based measures, and leave these providers and their local collaboratives to figure out the best way to achieve those expectations. It would also assist with CBO scoring of reform efforts as Tier 1 measures that focus on public health are available in actuarial tables (e.g. incidence of smoking, access to care, mortality and morbidity, etc.).

In summary, we have often heard that our reform efforts need to result in a system that is uniquely American and in that regard, why not build a uniquely American solution using uniquely American tools – like the balanced scorecard. ~BAA

“Faith” in the Patient-Centered Medical Home

Jaan Sidorov, over at the Disease Management Care Blog, has two excellent posts on the Patient-Centered Medical Home (PCMH).

• "Medical Homes Do Not Save Money" says Al Lewis at the National Medicaid Congress
• Red Flags on the Patient Centered Medical Home

In the first post, Dr. Sidorov notes that while at the National Medicaid Congress currently underway in DC, Al Lewis (Disease Management Purchasing Consortium), dissected North Carolina’s Community Care (CCNC) Model. The CCNC has been highlighted at MFP (here and here), by other blogs (here), the media (here), and the Commonwealth Fund (slide below).

Mr. Lewis believes these types of systemic interventions should be more thoroughly tested (drugs require numerous studies, why not changes to the health care system) and after kicking the tires, he states that he does not believe the CCNC saves money after accounting for administration costs. This is in stark contrast to the state’s analysis by Mercer but is consistent with other major recent findings for systemic interventions (see Medicare’s evaluation of its Health Support Program).

Truth is, who knows? Even though state budgets are driven by hard data, the interplay between various budget line-items and policies are so complex (drug discounts, waivers, categories of aid, recipient churn, CHIP, uninsured funds, DSH, UPL, etc), that evaluating Medicaid policy changes is often a best-guess scenario. Also, remember that CCNC is a “weak” PCMH model in that it pays $3 PMPM to local physician for management services and $3 PMPM to local organization for additional case management services and these amounts are much less than what most experts believe is necessary to achieve real PCMH transformation.

In the second post, Dr. Sidorov highlights a recent paper from the Annals of Family Medicine that should be required reading for anyone interested in “medical homes.” The authors’ initial "lessons learned" were that:

• Becoming a PCMH requires transformation (no small thing)
• Technology needed for PCMH is not plug-and-play (especially with current systems)
• Transformation to the PCMH requires personal
  transformation of physicians (again, no small thing)
• Change fatigue Is a serious concern even within capable and highly motivated practices
• Transformation to a PCMH is a developmental process (it takes time)
• Transformation is local

And some of their “hopeful warnings” were that:

Part of the PCMH’s strong appeal, and also what creates confusion, is that it potentially unites 4 compelling areas of health care reform activity. These areas include research on primary care’s value, improved approaches to chronic care, consumerism, and new health care–related information and communication technology. There is mounting evidence showing
primary medical care’s value in assuring a health care system of higher quality at lower cost and with more equity.

The primary care and practice characteristics associated with this evidence are first-contact care with easy access, comprehensive care (degree to which primary care clinician provides a broad range of services), sustained partnerships or longitudinal care, coordinated care, and personal or patient-focused care with family and community orientation.

In addition, there is growing support for the use of the chronic care model in health systems and primary care practices. These core primary care features and the chronic care model constitute core elements of the medical home concept…

The PCMH represents a pivotal turning point for the restoration of a healthy primary care foundation and better health for our nation. Everyone should have a PCMH, and it should be developed primarily to improve health care; payment reform should remain an important secondary goal. In the spirit of seizing this historical moment, we close with some reminders
and hopeful warnings.

The PCMH will need adequate capital funding from a combination of federal, state, local, insurance industry, and health systems’ participation. Having practices front the cost of transformation with the hope of more appropriate reimbursement in the future is unlikely to succeed. We will need more transparency and negotiation of the many hidden agendas, especially among insurers and physicians.

We should be wary of industrial-like schemes and excessive use of the language of productivity and efficiency. Primary care, like healthy food, works best at a local and personal level. What is waste on an assembly line is not necessarily waste in a healing relationship; allow for appropriate variability. Stewarding patients toward healthier lives is a deliberate process—stewarding practices toward health and toward becoming a PCMH is also.

What does all this mean? Well, one of the big dynamics in national health reform is to what extent the reform will rely on “faith” or “science”. By faith, I mean doing what we believe to be good (like PCMH) and by science, I mean what is “scorable” by the Congressional Budget Office. Let’s hope that whatever comes out of the mosh-pit of legislation will have strong doses of both.

The important thing is that we are getting our bearings straight by refocusing on primary care. But as the articles (and the graphic) accurately point out, even though we are pointed in the right direction, it will take some time to get where we want to go. ~BAA