Category Archives: Medicaid

Era of Accountable Care

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For many months I’ve been talking about the array of health transformation initiatives the Department of Health and Human Services has been deploying as both demonstrations and programmatic changes.  I’ve been characterizing this strategy to create more accountability as an evolving menu, buffet, or map – sort of like those magical Harry Potter maps where the lines keep appearing on the parchment to create a recognizable image.

As part of releasing the final rules for the Medicare Shared Savings Program, HHS also put forth a document subtitled “Menu of Options for Improving Care,” which is a list of some of the landmarks in the future map of an Era of Accountable Care. This document listed “options for healthcare providers of all sizes, types, all across the country” to work together to coordinate patient care, improve quality and lower costs. Besides the Medicare Shared Savings Program for Accountable Care Organizations (ACOs), these options include:

  • Partnership for Patients ($1B over 3 years)
  • Bundled Payments for Care Improvements (4 models proposed and 4 more planned)
  • Comprehensive Primary Care Initiative (Medicare partnering with Medicaid and private payers in 5-7 local markets to support primary care improvement)
  • FQHC Advanced Primary Care Practice Demonstration (with HRSA)
  • Advanced Payment Accountable Care Organization Model (pre-funding for physician groups wanting to form ACOs for the Shared Savings Program)
  • Pioneer Accountable Care Organization Model (demonstration program for advanced ACOs)
  • Financial Models to Support State Efforts to Integrate Care for Medicare-Medicaid Enrollees

The Menu document clearly indicates a coherent strategy for doing what the Medicare Payment Advisory Commission recently recommended: “Medicare payments should strongly encourage providers to move towards [ACOs, bundled payments, capitated models, shared savings programs] and make FFS less attractive.”

HSS’ Menu document is an initial description of the map HHS is drawing for providers about these more attractive options.  In contrast, in all the debate about health reform and Medicare there has been very little discussion about the future of Fee-for-Service payments or how to make FFS more sustainable -  except for the $300B budgetary hole and pending 30% fee reduction in  Medicare’s physician payment system’s Sustainable Growth Rate formula.  However, making “FFS less attractive” is certainly one of the transformational “sticks” Medicare has been wielding based upon provisions in the Accountable Care Act* and through other Medicare initiatives such as Value Based Purchasing, not paying for Never Events, and using Competitive Bidding for certain products and services.  And the future will see more and expanded use of these types of initiatives to “make FFS less attractive.”

CMS Has Already Been Transformed

Another significant distinction between HHS’ current actions and what they have traditionally done is that HHS is not moving forward alone by modifying Medicare and Medicaid.  Instead they are actively seeking to work in alignment – if not outright partnership – with private payers.  This is clearly stated in the CPCI and the Multi-payer Advanced Primary Care Initiative, which has already started in 8 states.

I have previously written about Accountable Care, (and how it is fundamental for successful health reform), and with the unveiling of the menu from HHS I am encouraged that we are on the way to an Era of Accountable Care – because that is what people really want and society needs, i.e. Accountability for Clinical Outcomes and Accountability for Economic Results.  It is only through those two avenues of accountability that we will achieve my version of the 3-Part Aim:

  1. Saving Lives
  2. Cutting Costs
  3. Creating Jobs

Health Reform is Essential for Creating Jobs

“Creating Jobs” doesn’t usually appear in lists about the goals for health reform, but it is really a fundamental reason for fixing our fractured healthcare system: By reducing the financial bite healthcare is putting on families and companies – as well as creating security for access to health insurance for individuals – health reform will pour capital and confidence into the economy leading to the creation of jobs.  That will be an era of healthcare that we can all count on.

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* The given name for the health reform legislation is the “Patient Protection and Affordable Care Act,” and it is often referred to as the Affordable Care Act or the ACA.  However, I believe the transformational components of the ACA are its features that will create accountability for the clinical and economic outcomes our healthcare system produces, and thus I call it the Accountable Care Act.  In the context where others are referring to this law as Obamacare, or as a government take-over of the US healthcare system, or portrayed voluntary counseling as death panels, then I am very comfortable nick-naming the ACA the Accountable Care Act.

Accountable Care Now

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If all arrows in Washington pointed to the same spot for solving the healthcare and Federal spending problems could the politicians, pundits and policy people agree?  Or would it take some new and powerful force to shine a spotlight and focus the collective vision on this solution, and what would that force be?

These are the two questions I’ve been asking myself as the battle over Federal spending has become near white-hot, and as it has become increasingly clearer that long-term Federal solvency and deficit reduction will require addressing the growth in healthcare spending – particularly Medicare.

Federal Outlays and Spending - Medicare - 2010 Pie Chart[Source: Kaiser Family Foundation "Medicare Spending and Financing," February 2011]

To summarize the highlights of this situation:

  • Cutting non-defense discretionary Federal spending can’t produce the reductions needed to significantly impact the deficit – contrary to the general misunderstanding about how the Federal budget is spent. (See this recent Washington Post article, and the bullet below from an associated poll.)
    • “There are widespread misperceptions about the state of the federal budget. A majority of voters incorrectly believes the federal government spends more on defense/foreign aid than it does on Medicare and Social Security (63%). Also, a similar majority (60%) incorrectly believes problems with the federal budget can be fixed by just eliminating waste, fraud and abuse. Voters do not casually agree with these untruths- at least 40% strongly agree. Further, less than half (44%) believe Medicare and Social Security costs are a major source of problems for the federal budget (49% disagree).”
  • Medicaid spending is high but counter-cyclical, so improvements in the economy and employment will reduce those costs by cutting the number of people using the program
  • Social Security is a straight numbers issue – while the Baby Boomers are increasing the program’s numbers, the per person cost growth is close to CPI
  • Medicare is not counter-cyclical, its growth is a combination of the Baby Boomer influx and the per person growth rate, which is projected to be about 7%.  The result is that since Medicare accounts for about 15% of total Federal spending, the Medicare program is the keystone to solving the Federal fiscal puzzle

Solving the Medicare Puzzle
Wouldn’t it be great if there were a way to reduce Medicare long-term spending, and one that most politicians and policy people agreed was the right solution?  Fortunately there is.  And it’s already in Federal law: It’s a concept that many Democrats and Republicans have repeatedly endorsed because it increases local control and decision-making, while shifting incentives from quantity of services to quality of care.  This new model is called Accountable Care Organizations (ACOs), and it was included in the new health reform law, (a.k.a. Patient Protection and Affordable Care Act, or “Obamacare”).  This short provision in the law adds ACOs as a fundamental change to Medicare, (i.e., not just a pilot or a demonstration), and it enables Medicare to pay ACOs in any way that both Medicare and the healthcare provider (or delivery system) agree to.  Further, it encourages Medicare to work with private payers to enhance the motivations for creating successful ACOs. [See 1899(i)(3) and 1899(j) of Title XVIII of the Social Security Act (42 U.S.C. 1395) as added by Public Laws 111-148 & 111-152.]

So why isn’t there a collective multi-partisan and multi-stakeholder rally of support for ACOs?

  • Making healthcare delivery systems and providers into effective ACOs won’t happen quickly – it will require a stepwise transition.  (However, many, many hospitals, health systems, group practices and others are gearing up for the transition – which will likely involve bundled payments and focused bonuses for achieving desired outcomes – but the roads to becoming a full ACO will be varied and lead to many different successful structures.)
  • The proposed rules for the ACO provisions of the health reform law haven’t been issued yet, so there is still significant uncertainty about how Medicare will implement their new authority.
  • Political philosophy against government programs – particularly on the national level – is now a very strong force focused on repealing “Obamacare” like college students during spring break fixated on a blinking “Free Beer” sign.
  • The ACO provisions lack the specific payment formulas or dollar amounts that fiscal forecasters desire for building models and developing multi-year estimates.  As a result, the savings projections, (a.k.a. scoring), have estimated only very modest reductions in Medicare spending since there is significant uncertainty about how ACOs will develop and evolve.

Solutions
Here’s why those savings projections are too conservative, and what can be done to swing the political tide the other way:

  • Hospitals, healthcare systems, other providers, and other organizations are already preparing to become ACOs.  That is, rapid movement towards ACOs is happening across the country, and it needs Medicare to be a positive – and maybe even aggressive – supporter.  This private sector movement is similar to the reaction health providers and payers had to the potential national health reform legislation in 1993-95 – (see chart below) – but this time the reform is actually in law, and the private sector responses are much broader and intense…. From what I am seeing, this activity is about 10 times greater in terms of resources being committed, and plans being developed and implemented.
    US National Health Expenditures 1960-2007
    [National Health Expenditure Increases: Actual and Adjusted for CPI]
  • The other “solutions” to reducing Medicare spending are the typical “cuts” in payments to hospitals and doctors, or reducing benefits to seniors…. But for either of those to significantly reduce long-term spending would require politically and socially untenable changes to Medicare. In addition, these changes would involve much greater Federal government intrusion in actual care delivery decisions than would effectively implementing the ACO provisions of the ACA.
  • For Americans to be receiving UnAccountable Care as the norm is no longer acceptable – just as driving cars without seat belts or dumping raw sewage into rivers is also not acceptable today, even though it was the norm in the past.  Just as the standards of care for medical practice change, so should the overall structure of care delivery. For example, high blood pressure in the elderly used to be accepted and not treated because the thinking was that the high pressure was a good thing and needed to push blood through hardened arteries.  That idea is no longer accepted, and not treating hypertension today would be UnAcceptable care.
  • There needs to be a public groundswell for “Accountable Care Now.” This can be true grassroots support, grass-tops advocacy from opinion leaders, and even “astro-turf” campaigns from national advocacy organizations and companies.  The end result needs to be getting public opinion and voices to be coherent and loud for change.  What matters is that the chorus for “Accountable Care Now” sound something like:

What Do We Want?

Accountable Care!

When Do We Want It?

Now!

Bottom Line
If Medicare beneficiaries, organizations paying for healthcare, (including Medicare and Medicaid programs), and everyone else – including leading healthcare professionals – start a drum-beat for “Accountable Care Now,” it will become UnAcceptable to be delivering or paying for UnAccountable Care. And elected officials across the spectrum, pundits, and policy leaders will have to – and want to – start looking under the Accountable Care spotlight and put their efforts toward making Accountable Care a reality Now – or at least ASAP.

The Path Forward for National Health Reform

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The path forward for health reform is becoming clearer now that the dust from the Democrats losing their 60th vote in the Senate is settling.  While a freestanding, comprehensive law now seems very unlikely, achieving the core goals of health reform are possible via the regular order of a Reconciliation bill, demonstrations and pilot programs, waivers, existing authorities, and the appropriations process.

It’s the Stupid Economy
First, the President has appropriately reraised jobs and the economy to be his highest priority.  This shift may both help defuse the hyperpartisaness that has enveloped health reform, and increase action to improve the economy and create jobs since they are the source of the public’s ongoing angst and frustration.  However, the Administration and Congress should continue to pay attention to health reform since people’s concern over the economy and job-lock are partially driven by worries about the affordability of health insurance and healthcare.  In addition, location-lock for small businesses and entrepreneurs because of different state health insurance laws may be supressing job growth in those sectors… something I recently investigated in moving from Massachusetts to DC.

Reconciliation – Part 1
Second, any action related to health reform will need to embrace fiscal responsibility and deficit reduction.  This clearly points towards a Reconciliation bill that reduces the growth in Medicare spending, (and extends its solvency), along with some Medicaid changes to accommodate increasing enrollment while limiting States’ fiscal exposure in a down economy.  This type of Reconciliation bill would be similar to those that both Democratic and Republican controlled Congresses have passed in the last 20 years.  (In the current political alignment, Democrats will have to counter Republicans’ accusations that they are cutting Medicare rather than just slowing spending growth. Both characterizations are “true” depending on your political objectives.)

Strategic Demonstrations, Pilot Programs and Waivers
Just nipping and tucking at Medicare spending and increasing Medicaid’s enrollment and financial support to the States won’t meet anyone’s definition of health reform.  Therefore, to move the US health system along the path of reform to expand coverage, improve quality and control costs, there are targeted initiatives that the Administration and Congress can pursue to push forward with reforming health delivery and financing:

First the Administration can get much more aggressive with its use of Medicare demonstrations and pilots. These can build upon the HIT and CER programs included in last year’s stimulus bill as stepping stones for health reform.  The Administration already started in this direction with their “Demonstration Grants for the Development, Implementation, and Evaluation of Alternatives to the Current Medical Liability System” announced last September.  Granted this program was designed to provide some cover for Congressional moderates and to probably curry favor with some clinician groups, but the Administration also has the ability – and in some cases the legislative authority – for many other types of demonstrations and pilots.  For example, they could:

  • Proceed rapidly with the Advanced Primary Care (APC) model type of Medical Home demonstration they announced last September – and which I wrote about previously.
  • Resurrect the straightforward Medicare Medical Home demonstration that Congress authorized in 2006 for eight locations. (In 2008 authorization was expanded to as many locations as HHS wants.)  This demonstration was scuttled last fall because the evolving health reform legislation had language replacing it with two new ones.  Since the draft regulations for this program were completed in December 2008, they would just need to be updated and finalized for the program to start later this year or January 2011.  There is also no reason that this Demonstration couldn’t run in parallel with the APC Medical Home demonstration – perhaps in different geographic locations.

For these and other demonstrations and pilot programs, the key for success will be structuring them somewhat like clinical trials so that people and organizations are assessing very similar, if not identical things.  This would not be “cookbook medicine” since these demonstrations should focus on the organization of care delivery and not on individual care decisions. For example, the Medical Home demonstrations mentioned above are about the organization of services provided by primary care practices, not the specific decisions made by clinicians for individual patients.  Similarly, the use of surgical checklists is an operational process that has been shown to reduce errors, increase the quality of care, and reduce costs.  However, it does not specific what procedures the surgeon performs or how the anesthesiologist delivers medicines, etc.

One of the failings of past demonstration programs has been that they have been structured to analyze what people are already doing rather than ways of delivering care that might improve outcomes. For example, the Medicare care coordination demonstration that reported its “conclusions” last year failed to demonstrate very much since it was an evaluation of 15 different types of programs.  In addition, demonstrations are sometimes caught up in significant political and parochial interests.  This was the case for a demonstration program involving “Centers of Excellence” for cardiac care at hospitals.  This demonstration program was scuttled the first time around – and hobbled thereafter – because the hospitals in the demonstration’s geographic locations not deemed “Centers of Excellence” complained quite strongly – particularly to their Members of Congress.

Thus, evaluating what people and organizations are already doing is easy, but may not provide much useful information since care organizations tend to vary greatly in how they operate, even within local areas, so drawing specific conclusions from these types of semi-focused studies is difficult.  Conversely, evaluating specific care practices is harder because it requires changing day to day activities for clinicians and providers, but this type of more controlled experiment can actually demonstrate the value of a change.  And lastly, any of these demonstrations can be undermined by political or parochial forces so that the demonstration is stopped, delayed, or its requirements so diluted that the conclusions are of little value. Thus, to make these demonstrations valuable, career and political officials need to be diligent and have fortitude when they are developing, approving, and overseeing the creation and implementation of such demonstrations and pilots.

Expanded Use of Existing Authority
Once research projects have demonstrated and validated improved ways of delivering care, Medicare, (and possibly Medicaid and other Federal programs), could use their existing authority to pay more for the adoption of these changes – or pay less or not at all when they are not adopted.  For example, Medicare and private payers have stopped paying for so-called “never events,” i.e. clinical events that are completely avoidable and thus should never happen.  Similarly, it is probably within Medicare’s existing authority to not pay – or pay less – for surgeries or the insertion of central intravenous lines when a validated checklist is not used.  These checklists are process steps that have been proven to work and yet have not been universally adopted, which raises the question as to why Medicare is paying for clinical situations where these improvements are not used.

Medicare and Medicaid Waivers
Beyond demonstrations and pilots, and the use of existing authorities, Medicare and Medicaid waivers are other tools that can be used to implement significant changes. Waivers for Medicaid are much more common, and the entire Medicaid program could be viewed as a 50+ bags with 1,000+ waivers.  Technically these waivers are intended to “demonstrate” better ways of running Medicaid programs that would provide information for changing all Medicaid programs across the country.  In practice, these waivers have proliferated like Tribbles in a storage bin of triticale grain, with most States using many waivers for different aspects of their Medicaid programs.  (For example, Arizona didn’t have a Medicaid program until 1982 when it created its program under a statewide waiver. And Massachusetts’ health reform expansion law was only possible because of a revised/renewed Medicaid waiver.)

Medicare waivers are less common than Medicaid waivers, but can be more powerful.  For example,  Maryland’s Medicare waiver has enabled the state to run an all-payer rate setting system for hospitals for many years. And in the near future Massachusetts may be seeking a Medicare waiver to implement an all-payer bundled payment system that their Special Commission recommended last July.  Such a state-wide payment reform system would be an even more dramatic health reform step than the state’s insurance coverage expansion and coverage mandates. But it remains to be seen if the Massachusetts legislature will proceed with this important cost containment and quality improvement step – and if they can get a Medicare waiver when they are ready to ask for it since the Federal Government’s attitude toward such waivers may be different in 2012 or 2014 than it might be today, or was last summer.

Reconciliation – Part 2
It is clear that cost containment for Medicare, expansion of Medicaid, a flurry of demonstrations, pilots, waivers and the use of existing authorities would not constitute significantly health reform since even all together those initiatives would not significantly advance progress towards universal insurance coverage – a fundamental goal of health reform. And one of the criticisms of using the Reconciliation process in the Senate has been that the insurance expansion provisions and coverage mandates in the House and Senate bills would be stripped out under the Reconciliation rules.

However, having successfully included provisions in a Reconciliation bill when I was told that they would definitely be stripped out, I know that under the peculiar rules of Reconciliation all numbers that are the same are are not equal, and there are ways to configure provisions and their implementation to effectively achieve the following:

  • Implement significant and strong regulations/requirements/standards to prevent insurance and coverage denials, and pricing problems that are currently permitted under various loose state laws;
  • Create strong incentives for insurance coverage for most, if not all Americans;
  • Provide subsidies for low income people and small businesses to make health insurance affordable; and
  • Reduce the so-called “donut hole” in the Medicare drug benefit.

The first three of these are really the fundamental parts of health reform, and improving Medicare’s Part D benefit is a widely agreed upon goal. The other aspects of the legislation that was moving through Congress are important, but not really essential – and the public plan option has always been redundant and politically explosive pair of suspenders alongside the belt of strong insurance regulations.  In addition, these provisions are also supported by two of the major industries that could have opposed health reform – insurers and biopharmaceutical companies.

There may be some who would criticize the first three of these changes as causing prices to go up, etc. as they transform the health insurance marketplace in most states, but the reality is that this would replicate what has happened in Massachusetts – first with their insurance reforms in the early 1990s, and more recently with their coverage mandates and expanded low-income subsidies.  And despite some public rhetoric, it is working very well, people like it, and it provides stability and security for insurance coverage.  What it hasn’t done is address costs – which is why the state is looking at an all-payer bundled payment system which would give clinicians, provider organizations, and others  incentives to control spending without being intrusive into their care practices.

Paying for these legislative changes will of course be a challenge, but with a renewed focus on fiscal and social responsibility for the Federal Government and financial institutions, there are innovative ways to have all these health reform changes not result in an increase in the Federal deficit.

Conclusions:

  • The Administration and Congress should be making the economy and jobs their #1 priority, but should continue to work on health reform since health costs and the vagaries of the health insurance system continue to fuel people’s angst about job security and the overall economy.
  • Significant health reform can be done without massive restructuring in one sweeping bill.  Rather coverage can be expanded and costs controlled by constantly pushing and shoving, and massaging and tweaking. Many successful government programs have been built and improved over many decades using such an “incremental” approach – so it is a valid avenue for improving such a complex, multipronged, pervasive, and sinewy “industry” as healthcare.
  • Important and significant provisions were included in last year’s stimulus law, and additional government actions should be viewed as building on those initial steps.
  • Change is hard, but explaining the immediate and long-term benefits for individuals and society will be important for deflecting politically driven mischaracterizations.  In addition, pointing to Massachusetts’ success with insurance regulation and coverage expansion should demonstrate that such changes work in the real world.  And while many other parts of the country point to Massachusetts as a liberal, “Taxachusetts,” socialist enclave, the state’s recent election of Republican Scott Brown to serve the remainder of Ted Kennedy’s Senate seat should fully refute that mischaracterization.  If a state can elect Scott Brown, then they can’t be all that knee-jerk, socialist-liberal.

Next Steps
The next steps in the annual Federal legislative dance will be the release of the President’s budget proposal tomorrow, followed by the start of the Congressional budget process. The two things to remember about the President’s budget proposal are that it was written and locked up before the Massachusetts Senate election, and this document is generally as much about making political points and sending specific messages as it is about the numbers for specific programs and initiatives. That is, within the Administration’s overall 3 year freeze on non-security discretionary spending there will certainly be proposals for program increases and decreases, but it is Congress that actually makes these determinations. Thus many of the numbers and programmatic initiatives in the President’s budget proposal may be designed to score points with specific groups and to force Congress to make the hard decisions about where to get additional funding for its favorite programs that the President’s budget proposes cutting. For those who thought that President Obama would somehow transform or transcend the Washington political process this may come as a bit of a shock, but the reality is that the framework of the Constitution and the evolving nature of the US government and society promote the separation of powers and a balancing act among them, which at times can look something like an uncivil war.

High Costs of Cancer Treatments for Patients Not on Medicare

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Last week I wrote about the challenges of people with Medicare getting the best treatments for cancer.  Today, the Kaiser Family Foundation released a report examining the challenges people who get insurance through the private system, (i.e. employer based or individually purchased),  have affording their cancer treatments. And how the public insurance programs, (i.e. Medicare and Medicaid), have waiting periods or other enrollment requirements that delay or prevent patients from being covered immediately – something which is of particular concern for patients with cancer.

The Kaiser Family Foundation’s report presents an excellent mix of data analysis and individual patient examples.  The report’s conclusions are that our health system has a significant number of holes (or cracks) that people can slip into causing them to suffer clinicall and/or financially.  This situation clearly exists not only for patients with cancer, but also for other serious and costly diseases, which is why it should be one of the priority foci for health care reform in the coming years.

The specific aspects of our healthcare financing system that the Kaiser Family Foundation’s report identified as potentially causing problems for cancer patients are: [empahsis added]

  1. High cost-sharing, caps on benefits and lifetime maximums leave cancer patients vulnerable to high out-of-pocket health care costs.
  2. People who depend on their employer for health insurance may not be protected from catastrophically high health care costs if they become too sick to work.
  3. Cancer patients and survivors are often unable to find adequate and affordable coverage in the individual market.
  4. While high-risk pools are designed to help cancer patients and others who are uninsurable, they are not available to all cancer patients and some find the premiums difficult to afford.
  5. Waiting periods, strict restrictions on eligibility, or delayed application for public programs can leave cancer patients who are too ill to work without an affordable insurance option.

These features of our “crazy quilt” health financing system are not new discoveries, nor are they unique to patients with cancer.  But the report highlights the importance of understanding them, and if these issues are not addressed in our nation’s ongoing “health reform” efforts, then the specific proposals produced by those efforts are unlikely to gather enough public (and political) support to actually become law and improve people’s lives.

Groups Seeking Funds in Health Reform

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With all the anticipation about health reform happening soon, many groups are expecting increased Federal funding for different things, e.g. electronic medical records, expansion of SCHIP and Medicaid (or at least great funding assistance to States), more emphasis on personalized medicine, more resources for FDA to help them with their expanding domestic and international responsibilities, closing the donut hole in the Medicare outpatient prescription drug benefit, fixing Medicare’s physician payment formula, etc.

Another area looking for increased emphasis and funding – both as part of health reform and economic/jobs stimulus – are biomedical researchers.  The Boston Globe and Mass High Tech had articles last week describing how the Massachusetts Life Sciences Collaborative is lobbying for more NIH grant money.  The reason for this being particularly important for Massachusetts is the state’s leadership in receiving NIH funding, receiving NIH funding of $344 per resident in 2007.  The Boston Globe’s on-line article contains these numbers, but the print edition also had a great graphic – the data from which is in the chart below:

NIH State Funding 2007 Source: Boston Globe/National Institutes of Health.  “Note: Data is preliminary and excludes some research contracts.”

NIH supporters were successful in doubling the NIH budget over 5 years, (from ~$13B to ~$27B from FY1998-2003), and this resulted in a significant increase in the number of researcher grants and the likelihood of grants proposals being funded. However, since then, the increases have not been as significant – See chart below:

NIH Funding 1993-2008
Source: National Institutes of Health (Years are Federal Fiscal Years)

The challenge of the new Congress and Administration will be to allocate dollars for both the stimulus package and health reform to have the greatest effect in the shortest amount of time.  Fortunately, the last Congress deferred many funding decisions e.g., the SCHIP program authorization expires in March, and the Continuing Appropriations law (PL 110-329) funds large parts of the government – including the NIH – until March 6, 2009.  Therefore, this Congress will need to – and have the “opportunity” – to address many funding issues sooner rather than later.

Health Reform – Achieving Universal Coverage

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During the holidays the Obama Health Transition Team urged people to organize discussions about health care in their homes and communities – and then to report back. Reading about these discussions – including the one that Secretary Designee Tom Daschle attended in Indiana – made me think about what things are going to be needed to make health reform actually work.

My end-of-year reflections and ruminations led me to conclude that one of the most challenging parts of health reform will be to actually get more people enrolled in whatever expanded coverage plans are developed and implemented.  Enrollment barriers are not new, but they are frequently not highlighted because they may present great political and fiscal risks.

Eligible But Not Enrolled
Medicaid experts have long known that a significant number of people who are eligible for Medicaid but are not enrolled. According to a 2006 Report from the Commonwealth Fund, 62% of “uninsured children and two-thirds of uninsured, poor parents qualify for publicly funded health coverage programs but are not enrolled.”  And enrollment barriers have been seen in Massachusetts as it has implemented its health insurance coverage expansion program.  For example, Bill Walczak, the CEO of the Codman Square Health Center in Roxbury, (a low-income section of Boston), has stated that they have 1400 patients who are eligible for free health insurance, but they can’t get them enrolled because of paperwork barriers.

For several years, Washington DC has also had a health insurance expansion program called the Health Alliance.  Unlike the Massachusetts program, there are no mandates or penalties for not enrolling.  But, Bread for the City, which runs two free clinics in DC, has seen the same enrollment problems as Codman in Boston.  Both Codman and Bread have staff dedicated to helping people collect and submit all the necessary paperwork, but they still have significant enrollment barriers because of clients moving, not following up on mail, chaotic lives and trouble finding the right proofs.  I also suspect that literacy may be a problem for some people – since how can people respond to mail or find the right documents if they cannot read them?

Cost of Enrollment Barriers
Although the uninsured clients at Codman and Bread receive care when they show up, not having insurance makes it much more difficult for them to get needed medicines and specialty care.  And of course, not having health insurance hurts people in the form of poorer health.  This situation also hurts the clinics financially since they would be getting paid for this care if the patients were insured.  Codman’s CEO wrote that if their 1400 uninsured patients had insurance, they would receive an additional $250,000 per year – An amount that would make a significant difference in their ability to provide care to patients.  They face the quandary of whether or not to hire more people to help clients apply for free insurance, since this only makes sense if it brings in more money than it costs to hire someone.

In Massachusetts, Codman is not the only healthcare organization suffering financially from this problem.  The Cambridge Health Alliance recently noted that they may have to scale back services or close one of their hospitals because of shortfalls they are seeing under the new health program – some of which is due to their not getting paid for care they provide to patients eligible for insurance.

Uninsured in Massachusetts
The paperwork barriers to enrollment in Medicaid, (and other free or very low cost insurance programs), also raises questions about the number of uninsured in Massachusetts.  The number of people without insurance has certainly declined, with the latest report indicating that 2.6% of people don’t have insurance – a very significant decline from 7.4% in 2004 before the State’s new program began.

However, I’m curious about how well the surveys that generate these numbers are actually capturing the lack of insurance in vulnerable low-income populations – both because of the paperwork barriers and their higher rate of churning – even though the report indicates that rate of uninsurance for people below 300% of the Federal Poverty Level is more than 5% [See Chart below, and also see page 9 of Kaiser Family Foundation’s Medicaid Primer for discussion of the effects of “churning” on Medicaid enrollment.]

Uninsured in Massachusetts in 2008 Source: “Health Insurance Coverage in Massachusetts: Estimates from the 2008 Massachusetts Health Insurance Survey,” December 18, 2008

Solutions and Challenges
Certainly one solution would be easy and automatic enrollment.  Basically, this could be as simple as the patient signing a form stating that they meet the eligibility requirements for the health insurance program.  [Click here to see the Massachusetts Medicaid application]

The problem with a simple form is that it could lead to fraud – either by people who are not eligible so they can get free health insurance, or clinicians enrolling people so that they can just get bill Medicaid for services they aren’t providing.  One possible solution to this fraud problem would be to require that the form be signed by both the patient (or their guardian) and the clinician (or someone in their office that they designate), BUT only clinicians that the State has pre-authorized could sign and submit the auto-enrollment forms.  That way the State could limit the authorization to clinicians who already are providing care to large numbers of Medicaid patients, and thus reduce the number of organizations it would need to examine for fraud.  And of course these clinicians would be responsible for attesting that these patients are believed to be eligible for the Medicaid program.

Such a system could work by having the enrollment counselor at an authorized clinic go over the eligibility criteria with the patient, and if they meet the requirements, then together they would fill out a one page form.  Such a form could have the patient sign a single line which reads something like: “I believe my income is below the level required to be in the Medicaid program, as it has been explained to me by _________________ [Name of person signing below].”

And the person assisting them from the clinic would sign below stating, “I attest that, to the best of my ability and in good faith, I believe that __________________ [Name of person filling out top part of form] meets the requirements to be eligible for Medicaid.  I also understand that signing this form without having discussed the actual requirements with this person or reviewing any documents they have provided or are otherwise available to me which may indicate whether or not they meet the eligibility requirements, constitutes fraud and may subject me and _________________ [Name of organization] to financial and  criminal penalties – including imprisonment.  In addition, if the person signing the top of this form is found to be fraudulently enrolled in Medicaid, they could also be subject to financial and criminal penalties.  Thank you for assisting with this process.  Your contribution to improving our healthcare system is greatly appreciated. Have a great day!”

I’m sure there are problems with such a simple form, and that other people could improve on that language.  And I invite comments, edits and criticisms to this suggestion because unless we figure out how to actually enroll eligible people in free health insurance programs, then universal coverage will remain a vision outside our grasp. [Also see the Commonwealth Fund Report on how auto-enrollment might work and what Federal policies would facilitate auto-enrollment.]

Closing Observation
Anticipating that someone will suggest that other countries – like England – have figured out how to do universal enrollment and don’t seem to have the fraud I’m concerned about, I would like to note that a major operational difference between our system and England’s National Health Service is that the NHS employs the physicians and owns the hospitals, whereas Medicaid reimburses for specific clinical services.  What this means in terms of financial fraud, is that the NHS has a fixed amount of money to spend each year, (like the Veterans Health System here in the US), and if they run short of money at the end of the year they have to cut back on the care they provide.  Conversely, Medicaid just keeps paying the bills.  So in England, if people are fraudulently enrolled in their system, they are just “stealing” resources from others in the form of preventing or delaying other people from getting the care they need.  Conversely, Medicaid fraud results in Medicaid spending more money, but access to care for those who are legitimately enrolled isn’t significantly compromised because Medicaid doesn’t “run out of money” the way the NHS or the VA can.

3 Months Late – Massachusetts Waiver Extended

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Just a quick FYI – Today’s Boston Globe reports that the Federal Government has approved a new 3 year Medicaid demonstration waiver for Massachusetts – with $10.6 billion to enable the continuation and growth of the state’s health insurance coverage expansion program.  The original 3 year waiver expired at the end of June, and the state and Federal officials had been discussing a new 3 year waiver for many months before that deadline.  Since the end of June, the state’s program has been running on a series of several week extensions to the old waiver granted by the Federal Government.

The Face of Free Government Health Care

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A couple of months ago I wrote about how one percent of adults in the US get free government health care.  While the statistics in the February Pew study were very interesting (and somewhat shocking), I saw a report in a local Connecticut newspaper (The Day, June 26th) that put a face on these statistics.

The Day’s story was about Jihad Abdulshaheed, a 36-year-old man who had been incarcerated since November 2007.  The judge was prepared to sentence to a one year sentence, and since he had already served at least 50% of his time, under the Department of Corrections guidelines for nonviolent prisoners he could have been released the next day.

However, this is where the story gets very interesting.  The man asked the Judge to hold off his sentencing “because he is waiting for the Department of Correction to schedule his surgery for a groin hernia.”  The newspaper also noted that the DOC’s health care budget for its 23,000 prisoners was $99.3 million.  This works out to a little more than $4,300 per prison.  It seems that finding a way to release this man, and still pay for his hernia surgery would make more sense than keeping him locked up until the DOC can pay for the surgery……. I also wonder about his follow-up care? Where will he get it – in prison or outside?  And how will that be paid for?

This man’s situation and the Pew study illustrates how communicating the essence of a healthcare story can involve statistics, analyses, and anecdotes.  The first two provides a framework if the issue, and the anecdote puts a face on that skeleton.  Each one can be powerful, but together they create a remarkable picture that can change policies, attitudes and actions.

1 of 100 Adults Gets Free Government Health Care

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A recent report from the Pew Foundation indicated that 1 out of 100 adults in the US get free government health care with no premiums, deductibles or co-payments. The reason this report didn’t get more media attention was because the 1% of Americans getting free government health care are behind bars – as in prison or jail.

The Pew report indicates that for the first time, more than 1 in 100 adults in America are in prison or jail. That’s over 2.3 million in state or federal prisons or local jails, and the numbers and percentages have been growing. (See the Department of Justice chart below)

Rise in Prison Population in the US

This data is an interesting launching point into other aspects of our current health care system’s problems:

First, health care costs for people behind bars represent about 10% of the costs of incarceration. (In 2004 this was about $3.7 billion.) And as the Pew report notes, “Under the 1976 U.S. Supreme Court ruling Estelle v. Gamble, states are compelled to provide a constitutionally adequate level of medical care, or care that generally meets a “community standard.” (I assume that Federal prisons are required to meet a similar standard.)

This was the basis for Harris Wofford’s 1991 successful campaign message, (in a special election for the US Senate), that Americans in jail have a guaranteed right to health care, but nobody else does. He was quoted in the New York Times in 1994 as saying about health insurance: “The wealthy have it. The poor have it. If you go to jail, you have it. Only the middle class doesn’t have it, and I don’t think that makes much sense.” (It will be interesting to see how the health care issues of costs and access play out in this year’s elections.)

Second, upon leaving prison (or jail) these individuals are not automatically enrolled in any type of health insurance. Given that they are likely making a difficult transition back into unincarcerated society, health insurance paperwork is probably not their highest priority. A study done by the American Public Health Association of parolees in Los Angles County described these challenges:

Many of the parolees’ illnesses go undiagnosed and untreated by prison physicians. To exacerbate the problem, California’s prison-based health care system does not prepare parolees to use public and private health clinics in the counties where they will reside. There is no coordination between counties and prisons in planning for the continued care of inmates after they are released.

Most parolees do not have medical insurance or stable sources of medical services. Eligible parolees may sign up for various programs but few do, often because they are unable to complete required application forms, do not possess appropriate personal identification documents, and/or have no permanent address. If parolees do succeed in applying for public health insurance programs, they often experience long delays while their enrollments are finalized.

Third, these individuals have more health care needs than average. As the APHA report found, parolees in LA County had:

  • 4 times higher rate of active tuberculosis
  • 9-10 times higher rate of hepatitis C
  • 5 times higher rate of AIDS
  • 1.5 -5 times higher rate of mental illness

Fourth, about 25% of children get health insurance through Medicaid or the State Children’s Health Insurance Program (~34 million), about another 24 million adults have insurance through Medicaid, about 3 million Americans get health care from the Veterans Affairs (VA) health system, and over 8 million have health insurance benefits through the Federal Employees Health Benefits Program.

Together this all paints a picture where multiple government health systems lack coordination. One of the most likely pairs for coordination would be the government run Department of Defense and Veterans Administration health programs, but they have had significant coordination problems that they continue to work on today. Conversely, one of the best examples of coordination may be in the private sector, where people can transition from one private insurer to another if they maintain insurance coverage. However, this ability is not an innate result of the market, but was a provision in the Health Insurance Portability and Accountability Act (HIPAA) of 1996, and illustrates the managed-market reality of the US health care system.

Some would argue that this all just means we should have a single-payer health care system. However, while that may look good in theory, the challenges of getting from our current system to a single payer program are beyond huge. And even if that is our ultimate goal, getting better coordination between programs would make lots of sense – as would making it easier (or routine) for people being released from behind bars to get health insurance. After all, we do this for people leaving their jobs by enabling them to continue their employee coverage (this was in the 1986 COBRA law), and then transition to another private insurance plan under HIPAA. So we should be able to do something similar for people being released from jail, shouldn’t we?

What do you think?

A Perfect Stormy Mess for Health Reform

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A year ago the hype in healthcare was about state-based reform initiatives. Massachusetts was implementing its law, and several other states – including California – were considering their own proposals for increasing insurance coverage as a first step towards universal coverage and cost containment.

How things have changed in a year. Not only has California’s initiative crumbled under the expected costs to employers, but the economic downturn has undercut states’ healthcare expansion ideas, and may force them to cut back Medicaid enrollment and/or services. This week’s National Journal has an article titled “State’s Rapidly Shifting Gears,” that discusses these and other issues, including how a few years ago states cut their Medicaid payments to providers, so that on average Medicaid pays physicians 69% of Medicare levels, and how pending Federal Medicaid rules and proposals would reduce funding for State Medicaid programs making it difficult for states to reverse these payment reductions.

The importance of our current economic uncertainty for health reform initiatives is tremendous. Consider the following facts:

  • Massachusetts’ Medicaid waiver is up for renewal this summer. If this isn’t successfully negotiated and renewed, it could mean the collapse of the state’s insurance expansion program – which is already running well over budget because of underestimates of the number of uninsured who would enroll.
  • As the economy falters, not only do more people end up out of work, but they also end up uninsured – with about 40% of them enrolling in Medicaid or SCHIP.
  • Medicaid costs represent about 20-24% of state budgets, and 49 states have requirements for balanced budgets.
  • National Journal’s poll of political insiders (April 12th issue) showed that 83% of Democrats and 79% of Republicans believe that the economy is much more important issue national security for the 2008 presidential election. AND, these percentages are WAAAAY up from November 2007, when they were only 35% (D) and 34% (R), and national security were deemed more important at 56%(D) and 59%(R).
  • The Kaiser Family Foundation’s analysis of public opinion polls found a similar dramatic rise in voters’ interest in the economy as an issue for the 2008 campaign:

Health Care Polling and the 2008 Elections

The key factors that I believe will determine the fate of health reform intiatives over the next several years are:

  • How deep the economic downturn goes
  • How long it lasts
  • What actions the states and the Federal government take to preserve or dismantle the healthcare delivery, financing and public health systems
  • When the economy rebounds, how well prepared the states and the Federal government are to pursue health reform initiatives, and what resources are available for these initiatives

The economic drain imposed by the ongoing conflicts in Iraq and Afghanistan, and the inflationary ripple rising energy costs are sending through the world economy are also factors that may very well undermine anyones ability to expand coverage, while at the same time, increasing incentives and efforts to control healthcare costs.

As Homer Simpson might paraphrase James Carville from the 1992 Presidential campaign, “It’s the Stupid Economy.”