Wednesday, July 23, 2014

Halbig Appeals Court Decision Unlikely To Sink ACA


Today’s Managing Health Care Costs Number is 4.683 million


Dueling Appeals Courts decisions on whether Affordable Care Act subsidies should be available to those in states which have not set up their own exchanges have again added uncertainty to health care finance and delivery.    This must be profoundly unsettling to the millions who have purchased plans on the federal exchange from the 36 states that don’t have their own exchange. It's also unsettling to health insurers who have decided to offer public exchange products, and to providers who are counting on increased coverage. 

The DC Appeals Court said that lack of a reference one section of the bill means that subsidies are only available to those enrolling through state-run exchanges. The Richmond court held that the legislators clearly intended subsidies to be available to those in any state.   The  Affordable Care Act was passed through the reconciliation process as opposed to the conference committee process after the Democrats lost their 60 vote supermajority in 2010. Hence,  there was no opportunity to do the proofreading that would have prevented this imbroglio. 

Sara Kliff talked to a number of the Congressional staffers who wrote the ACA .

"The evidence of Congressional intent here is overwhelming," John McDonough, who worked on the Health, Education, Labor and Pension committee during the health reform debate, wrote in an email. "There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status."

It seems highly unlikely that these subsidies will be torn away.   Even if the Supremes side with the DC Appeals Court and require subsidies be limited to state exchanges, it will be hard for the governor and legislators of even Florida  (893,655 residents with subsidies) and Texas (614,626 residents with subsidies) to take away existing subsidies for hundreds of thousands of the working class. Here’s a link to The Incidental Economist blog on this.    These states have hurt their safety net hospitals and  residents with income less than 115% of the federal poverty level by not expanding Medicaid – but taking away benefits from working follks is going to be much more politically unpalatable than not giving new benefits to poor people.  


Ezra Klein says “The Supreme Court simply isn’t going to rip insurance away from tens of millions of people in order to teach Congress a lesson about grammar.”  


This is yet another pothole in the road –but by no means the end of Obamacare.

Tuesday, July 22, 2014

Readmission penalties could shutter hospitals in poor neighborhoods


Today’s Managing Health Care Costs

Number is 15




I wrote sympathetically last week about Atlanta middle school teachers in a disadvantaged neighborhood who cheated on their students’ tests – to avoid their neighborhood school being closed down.  They felt the standardized tests were worse than useless, and the measure of success was simply out of reach.

This week’s Annals of Internal Medicine has data on St Louis area hospitals  - and makes the case that we need to do socio-demographic adjustment of quality scores if we don’t want to avoid closing down every hospital that happens to sit in an impoverished neighborhood.

The graphic above shows that in the poorer neighborhoods, 15 hospitals have closed in the last 40 years (red "G").  The hospitals that remain (blue “V”)  are generally in the less impoverished zip codes (grey).  The authors show that for the remaining hospitals the CMS penalties for readmission fall disproportionately on hospitals in zip codes with more poverty.

This is especially problematic because if we force hospitals in poor neighborhoods out of business, we not only reduce access for the community, but we also eliminate good, high-paying jobs in communities which can ill-afford this loss.  The teacher who cheated to save his school noted that when it “opened, in 1966, it was a source of pride for the community.  Now, he worried about the burden of another large abandoned building in the neighborhood.”    Empty hospitals create as much or more blight in a neighborhood as abandoned schools.

There’s no good answer here.   Perhaps we should be considering metrics for improvement instead of absolute performance for those hospitals in the lowest quartile – or those in the poorest neighborhoods.   Opponents will argue that this is accepting a lower standard of care for the poor.   But what if closing down hospitals in poor neighborhoods actually leads to even worse health in those zip codes?  

The Annals authors conclude:

Safety-net hospitals and providers will fail in increasing numbers under the financial burden of new federal laws and programs aimed at reducing costs, improving quality, and increasing access—including pay-for-performance programs that do not risk-adjust outcome measures for sociodemographic factors. If safety-net providers fail, disparities in outcomes and access will only worsen for low-income and disadvantaged patients.

Monday, July 21, 2014

Medicare and Skilled Nursing Stays: Balancing Administrative Efficiency and Common Sense


Today’s Managing Health Care Costs

Number is 72


Medicare is either an efficient machine – which provides health care coverage for over 49 million Americans with an administrative cost ratio (ACR) of under 3% - or it’s a bumbling bureaucracy, which can’t get out of its own way.   These two descriptions are both apt.


The Centers for Medicare and Medicaid Services operates on a shoestring- processing billions of claims and enrolling over 2 million new beneficiaries every year.  CMS spends over $471 billion on Medicare claims each year.   The average Medicare beneficiary costs over three times as much as a person enrolled in employer-sponsored health insurance, so the raw dollars available to CMS are bigger than that ACR would suggest.


But Medicare payment is rife with fraud – something that public release of physician payments will help address.  Medicare also has rigid rules to prevent misuse of services.  Some of this is because CMS doesn’t hire platoons of doctors and nurses to do utilization review. Medicare is also mandated to include every willing licensed physician in its network unless she has been convicted of Medicare fraud.  


Which brings us to the 72 hour rule.   Medicare pays for skilled nursing facility (SNF – a nursing home) beds for a total of 100 days per “spell of illness” when such a stay is medically necessary.   Medicare requires that a patient has spent 72 hours as an inpatient to be eligible for this coverage.  This is to be sure that Medicare isn’t paying for custodial care – without requiring a huge amount of medical review. 


But this works imperfectly.   Many elderly patients, especially those with dementia, live at home tenuously –and when things go wrong they could be safely admitted directly to a SNF without a hospitalization.  The 72 hour rule encourages an initial hospitalization, but hospitals are increasingly billing such “social” admissions as “observation status,” so the beneficiary is ineligible for Medicare coverage of their initial nursing home/SNF stay.


Simply paying for all initial nursing home stays would increase Medicare costs substantially. Medicare already spends 6% of its total budget on SNF stays.   

The Washington Post reports that CMS is piloting waivers of the 72 hour rule for provider organizations with accountable care contracts – where the providers bear financial responsibility for the cost of that SNF stay.  That’s the right initial approach It should also broaden the 72 hour rule to include hospital observation stays.   CMS should evaluate the result of these pilot efforts before scuttling the 72 hour rule entirely.


From MedPAC:

Medicare covers up to 100 days of SNF care per spell of illness after a medically necessary inpatient hospital stay of at least three days. For beneficiaries who qualify for a covered stay, Medicare pays 100 percent of the payment rate for the first 20 days of care. Beginning with day 21, beneficiaries are responsible for copayments. For 2013, the copayment is $148 per day…A spell of illness begins when a beneficiary has not had hospital care or skilled care in a SNF for 60 consecutive days.  Observation days and emergency room stays do not count toward the three-day requirement.

Friday, July 18, 2014

Can industry price setting coexist with universal comprehensive coverage?


Today’s Managing Health Care Costs

Number is $303,408


The Wall Street Journal reported on Wednesday that the state of Arkansas faces a lawsuit from three young adults with cystic fibrosis. All have the genetic mutation which means that they are highly likely to benefit from Kalydeco, an expensive biopharmaceutical that can delay worsening of lung disease.  The drug costs the state Medicaid agency over $300,000 per year.

Ironically, the actual cost of this drug to the state is far less – as the feds pay 70% of the costs of the Arkansas Medicaid program, and drug rebates to the state average 22% of drug costs – although this is across all drugs.

The cost of specialty drugs continues to represent a huge management challenge for all insurance plans.    Matt Salo, of the National Association of Medicaid Directors, sums the problem up in this quote:

"We have this public health mentality that all people have to be cured no matter what the cost, and also let the innovators charge whatever they want," said Mr. Salo. "Those are fine theories independently, but when you combine them together in a finite budget environment, it's not sustainable.

Thursday, July 17, 2014

Unintended Consequences of Quality Measurement and Rewards: Atlanta Schools


Today’s Managing Health Care Costs

Number is 178


The New Yorker this week has a long article on the debacle of high stakes standardized testing in Atlanta.  Principals whose test scores didn’t improve were fired, teachers whose test scores fell short lost bonuses, and schools that could not bring up their test scores were threatened with closure. 

The article profiles Damany Lewis, a charismatic and enthusiastic teacher – enormously committed to his school’s severely disadvantaged community. He coached football, soccer and softball – and organized the chess club, too.   The article opens in 2006 with Lewis using a razor blade to steal a copy of an upcoming test from a shrink-wrapped pile in a locked room. When his students don’t do well enough – he helps organize teachers to change the answers so that the school wouldn’t close.  The Atlanta rules gave ghetto schools just three years to achieve the test scores typical of middle class school districts.   The Superintendent who organized the high stakes testing was named “Superintendent of the Year” in 2009.

178 educators at 44 schools were implicated in cheating in Atlanta, and the Superintendent and the Principal of Lewis’ school are under indictment.   The teachers didn’t cheat because of tiny bonuses, though, and they didn’t cheat to keep their jobs.  They cheated because they felt the irrelevant measure was getting in the way of their real work – to teach children to be curious and to be real learners.

The author invokes Campbell’s Law:

a principle that describes the risks of using a single indicator to measure complex social phenomena: the greater the value placed on a quantitative measure, like test scores, the more likely it is that the people using it and the process it measures will be corrupted

This is highly relevant in medicine, as we develop measurement programs to insure that health care has improved.  Many of us in health policy want to have an index for quality – one that will identify the ‘best’ doctor and doctors who are deficient, and the “best” hospital and hospitals that need to improve.   The Atlanta school cheating can serve as an important parable for us to consider as we assess and reward quality in medical care. 

·         We must strive for genuinely important measures of quality – ones that patients and physicians can find compelling.   
·         We have to have reasonable goals. There is nothing as profoundly de-motivating than a target that is utterly unachievable.
·         We should monitor results carefully. It’s tempting to celebrate success prematurely – we should always be sure that apparent good results aren’t merely gaming.

I believe we need good measurement, and that poor quality should have consequences. But it’s easy to go off the tracks, and induce unintended consequences when we measure and reward quality.



Monday, July 14, 2014

Making it Up With Volume: Overuse of Ill-Paid Medicare Group Therapy Visits


Today’s Managing Health Care Costs

Number is $19.99


The federal government’s publishing of deidentified  Medicare claims data continues to pay off.

Propublica reports that Medicare paid for 29,000 group psychotherapy sessions in Illinois in 2012. Many of these sessions were delivered by specialists who probably have little training to be leading such groups.  The state Medicaid program refused to pay for these group therapy visits a few years ago, after discovering that nursing home residents were being transported (at state expense) for these sessions a few times a week.   The Medicaid officials apparently didn’t tip off Medicare.

The top four billing physicians were paid $730,000 for almost 38,000 visits in 2012.  They were 3 obstetricians and a thoracic surgeon. The top OB was paid $207,980 for 10,400 group therapy sessions.  This would have been over 28 sessions a day  all year if she never took a day off.

This is scandalous – and embarrassing that physicians would abuse the fee for service system this way.

But simple division shows another scandal here.   Medicaid allows $19.99 per group therapy session.   And we wonder why it’s hard to find a psychiatrist to offer these services to Medicare beneficiaries!  


h/t to @chcosts for highlighting this article


Sunday, July 13, 2014

Stop subsidizing soda in SNAP


Today’s Managing Health Care Cost

Number is 4000



June’s Health Affairs has a simulation suggesting that eliminating sugar or corn syrup sweetened beverages from the SNAP (Supplemental Nutrition Assistance Program, aka “food stamps”) could decrease the prevalence of obesity by close to a percent in the US, and prevent 8.5 new cases of diabetes per 100,000.

This is big.  Such a large change in obesity prevalence would be  evidence of a huge improvement in our health.    This could prevent almost 4000 new cases of diabetes per year.

Calculation: 46 million on SNAP and 85 prevented cases per million รจ 3910 cases of diabetes prevented annually.  

Best of all – this is a program that can improve public health and it costs nothing!  The government simply stops paying for soda – and those on SNAP are able to use some portion of the savings to purchase healthier food.

Soda taxes have been manifestly unpopular (although they certainly could work).  Prohibitions on jumbo size sodas could also be a great “choice architecture” method of improving community health.  But the outcry against attempts to implement this in New York City was enormous – and the effort to ban the ‘big gulp’ there is dead.  I suspect that eliminating subsidies for soda for those who qualify for food assistance will be an easier “sell” politically.

We need to use multiple approaches to our obesity epidemic, including making walking easier (and socially more popular) and being sure that Americans have access to healthy foods.  Getting rid of SNAP subsidies for soda is a no-brainer.