Talking Health

The NYTimes has an op-ed today outlining discrepancies and gross abuse of Medicare Part D and Medicare. The author, a former presidential speechwriter (which means he’s a very clear writer, but not necessarily in a position of power in the health care reform movement), goes after the lack of caps on direct gov’t subsidies to insurers and the loopholes/flaws endemic to the 2003 drafting of legislation that allowed abuse.
It could serve as an intriguing and brief primer for common readers not versed on what exactly is wrong with Medicare’s current financing structure.

Big Drop in Hospital Infection Rates

Infection rates in the intensive care units of the 11 HHC hospitals are down for the third year in a row and have dramatically dropped thanks to an aggressive patient safety agenda to reduce preventable deaths and unnecessary hospital stays.
http://www.nyc.gov/html/hhc/html/newsletter/safety-200903-infection-drop.shtml

President Obama’s Budget Director, Peter Orszag, spoke to the Senate’s Committee on Finance on March 10th.  Orszag went over some of the points of the president’s proposed budget, including the reductions to Medicare Advantage funds. (Click here to take a look at Orszag’s entire testimony)

The Basics:

• Medicare is currently overpaying Medicare Advantage by 14 percent more than it’s spending on the people in the traditional plan
• Orszag gave some context: “MedPAC estimates that the Federal government pays $1.30 for each $1.00 in Medicare Advantage supplementary benefits, without any compelling evidence of better quality of care.” 
• The Obama administration is proposing a competitive system, where Medicare Advantage payments would be determined by an average of plans’ bids
• “This would allow the market, not Medicare, to set the reimbursement limits,” said Orszag. “Our proposal would save taxpayers more than $175 billion over ten years…” 

America’s Health Insurance Plans (AHIP) put out a statement back on February 26th, just after Obama initially released his proposals.  Part of the statement read: “…his proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system.  A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.” (Keep in mind that AHIP represents insurance companies)

It seems that the biggest part of this debate is: Are those enrolled in Medicare Advantage getting better care than those in the traditional Medicare plan? Orszag says there is no real evidence that they are. AHIP, obviously, disagrees.

Check out one of Trudy’s posts on Medicare Advantage Plans. Take a look at the comments, where one reader wrote “As an insurance agent and viewing this from the inside. Medicare Advantage is a great Dis-Advantage.” Yet, there are many individuals who are happy with their Advantage Plans.

The fact that healthcare has become expensive and unequal in terms of who is covered and the services that are provided is a given. With the growth of umpteen insurance plans with neverending complex terminology, healthcare is a virtual mess of options. One plan, designed for the growing aged population, is Medicare. It is designed so that all Americans 65 or older receive basic healthcare. However, the reality is, as with most healthcare is that Medicare costs are ballooning out of control and the per state bill for Medicare depends on which part of the country you live in (Medicare Spending Still Varies By Region).

Furthermore, Medicare is plagued by what seems like the mantra of modern medicine. The more doctor to patients visits and costly procedures can be performed, the more that I can bill. Unfortunately, its not all the fault of patient care providers. The medical billing system trains patient caretakers to do work that can be somehow quantified. Doctors could spend countless hours and often do spend a lot of time with patients as health counselors but that is not billable beyond an office visit. So, maybe there needs to be a paradigm shift in medicine from seeing the patient as often as possible and referring for as many tests as possible to preventative therapy.  There should be an incentive for doctors to keep their patients out of their waiting rooms, hospitals, and off prescription medication.

Obama has a universal health plan not much unlike his Democratic predecessors Hillary Rodham Clinton and John Kerry that would provide Universal Health Care. The idea of universal health care, is great in theory, but unfortunately the dollars and cents just don’t add up. There are an estimated 46 million Americans without healthcare and that number is growing by the day. Obama hopes to free up around $600 billion dollars that would go in a health reform reserve that he hopes to create off more taxation from the wealthiest Americans and unnecessary payouts to the Medicare Advantage Plan (which would lessen the profits for insurance companies, drug companies. and healthcare providers). Unfortunately, this money is still not enough to cover uninsured Americans and Obama is leaving most of the details of his health plan as well as many others to Congress to flesh out. This, of course, will leave lobbyists, special interest groups, and the lawmakers that serve them in a bitter fight which could stall progress on any sweeping changes.

However, despite all of the money set aside for healthcare and Obama’s vow to keep Medicare honest by refusing to pay for medical mistakes and reducing payouts overall to cut down on unnecessary procedures and pill pushing, it appears that he glosses over one important detai. Healthcare is one of the costliest expenditures in America and it according to the New York Times article with the link “health reform reserve,” it is driving future projections of unsustainable deficits. In other words, there is no quick fix to making healthcare more efficent and cost-effective. The complexity of the healthcare system as well as the endless overhead make it virtually impossible to effectively track dollars and cents or lessen the overall cost of say, an emergency room visit, an inpatient visit, or an outpatient visit. Furthermore, the government only regulates to parts of insurance, Medicaid (for the low income) and Medicare (for the aged). Unfortunately, it seems that cutting costs cannot be selective. Either the government must regulate all of healthcare or none of it. As long as healthcare is left to private insurers on an individual basis, the urge to profit will never subside. Especially, in this economy, most things are thought of as a business. Healthcare is really a business and most of the insurance companies are run in such a way that they are sustainable even in tough times. This comes at great cost to the individual as well as the collective because a largely uninsured populous is disadvantageous to world development but, sadly, even one’s health and well-being (what seems a universal right), is reduced to whether the bottom line is black.

PRIVATIZATION OF MEDICARE 

When President Obama announced his budget plans at the end of February, you can bet that private health insurers were panicking. He said he’s going to cut overpayment to Medicare Advantage plans, run by private insurance companies, in which more than 10 million seniors are enrolled.

In order to do this, the president has proposed that insurers use a competitive bidding system to determine Medicare Advantage plan payments. The government would then determine how much to pay these plans based on the average of their bids.

Why is Obama making these cuts? Because these private Medicare plans are costing the government three times more than what they pay for the same types of services under the traditional Medicare plan. And they don’t seem to be offering anything more than regular Medicare does, either. Many research reports have determined that most Medicare Advantage plans merely mirror regular Medicare benefits, without offering much to justify their extra costs. 

The effects of Obama’s announcement were immediate–on the day of his speech, health insurance stocks took a serious dive, falling more than 8 percent by that afternoon. That’s because private health insurance companies make huge amounts of money from Medicare. United Health Group, for example, receives 23 percent of its revenue from its Medicare advantage plans. 

So why did we look towards private Medicare plans in the first place?

In an article from the Commonwealth Fund, the author states more or less how the creators of Medicare did intend to make Medicare the seed for a more universal program. But over the years, republican administrations fought against the idea of socialized health care, implementing changes to make Medicare more privatized. Their arguments were generally under the guise of consumer choice–that if private insurance companies were allowed to get involved, Medicare beneficiaries would have more options for coverage. 

How were the seeds sown to add private plans to the Medicare? In 1988, the government made overhauls to the system by setting a fee scale of Medicare payments to physicians, in the name of cutting costs, as Medicare’s budget had doubled every four years since its inception in 1965. In 1997, in another effort to curtail costs, private insurance companies were allowed in under the Balanced Budget Act during a period of Republican congressional control. In 2003, George W. Bush signed the Medicare Modernization Act, which introduced Part D, a prescription drug plan that gave beneficiaries the option to use a private insurer for their drug benefits.

Obama’s plan rescinds these attempts at privatization, working back towards what Medicare was originally intended to be. The insurance companies are not likely to take this lying down. What are the insurance industry, the AMA and the Republican Party’s responses to these proposed changes? 

        Imagine this: Mrs. G has been prescribed various medications for her arthritis, cholesterol, and diabetes through her Medicare Advantage Part D Drug Coverage.  Her plan through United Health covers approximately two-thirds of the costs of her drugs.  By mid-year, she has already paid $900 for her prescriptions.   The total costs of her drugs at this point has reached $2,700, which means she has to now pay 100% of the costs.  The drug company will not provide any more coverage until the total drug costs reach $5,100, at which point the plan’s catastrophic coverage kicks in covering 95% of her costs.  This gap in coverage is known as the “doughnut hole.” 

            “It exists to save money,” said Peter Precht, Director of Policy and Communications at the Medicare Rights Center.  The government and private insurers devised the system to limit their costs in covering prescription drugs for senior citizens.  The catastrophic insurance kicks in as a safety net for seniors who have exorbitant expenses. 

            United Health’s Medicare Advantage plan also consists of an assortment of copayments, deductibles, and premiums.  By the end of the year, the total cost of Mrs. G’s prescription drugs will have amounted to $5,400, and she will have paid $4,024. 

            Confused? Millions of Medicare beneficiaries surely are, compounded by the fact that Medicare Advantage plans don’t provide coverage for the same drugs and have different deductibles and premiums. As a consumer hotline representative at the Medicare Rights Center stated, “Medicare covers only 80% of the costs.  Added costs add up for many senior citizens.” Moreover, switching to another plan with lower premiums and more comprehensive drug coverage is difficult to do: enrollment is available on a yearly basis, and special enrollment is only granted for extenuating circumstances, which do not include a plan’s discontinuation of coverage for a particular drug.

            While much press has been given to President Obama’s $634 billion dollar reserve fund that will promote health care reform over a span of 10 years, including a $20 billion expenditure on Electronic Medical Records (EMRs), very little attention has been given to any time of reform for Part D Drug Coverage.  Wealthy beneficiaries of Medicare who make more than $85,000 annually would be expected to pay more for premiums for their drug coverage starting in 2011, while cutbacks in government spending on Medicare Advantage Plans will be enacted. Such changes seem rather abstract and superfluous at best, and what would they accomplish? Drug costs would still be through the roof for most senior and disabled citizens, who pay inordinate amounts out of pocket and are not even covered for mental calamities such as anxiety or depression under Medicare. Until private insurance companies such as Medicare Advantage plans are out of the picture, and drug coverage plans become an integral part of Original Medicare, will there truly be respite for beneficiaries of Medicare. 

Further questions we would like answered as the semester progresses include:

1)    Shouldn’t the stimulus plan be targeting drug companies for over-priced drugs?

2)    How is taxing a small minority of wealthy Medicare beneficiaries going to lower the costs of premiums, deductibles, and the costs of drugs not covered by Medicare for the majority of senior citizens and disabled persons?

3)    Why are there such stringent eligibility requirements enacted for Extra/Partial Help coverage for Medicare beneficiaries who can’t afford the coverage gap or “donut hole” provided through Social Security? Why are senior citizens being disqualified for their assets?

4)    Why is so much emphasis being placed on Electronic Medical Records (EMRs) when citizens cannot afford their medications or insurance plans?

With the release of an easy-to-read outline for the Fiscal Year 2010 budget, President Obama’s new administration seems to be making good on campaign promises of transparency and accountability.

The Department of Health and Human Services tackles health insurance – the question that has been looming larger as the ranks of unemployed swell daily.

The $634 billion 10-year reserve fund apportioned by the FY2101 budget follows on the heels of the American Recovery and Reinvestment Act of 2009, where $20 billion was apportioned for a mandatory adoption of health  information technology, or Electronic Health Records. Health information technology is expected to make it more difficult for fraud to be perpetrated with unnecessary treatments. EHR also target medical errors – another source of wasteful spending.

The reserve fund grapples with several leaks in the system, mostly via Medicare managed-care insurers. Use of the National Correct Coding Initiative edits aim to align Medicaid payments. Physician-owned specialty hospitals, imaging services and Medicare home health payments will be monitored more carefully, saving about $40 billion.

Private health insurers will be subjected to a competitive system to determine Medicare Advantage plan payments, with a projected savings of nearly $180 billion.

The NYT’s New Old Age blog often mentions Medicare. This post talks about the “comparative effectiveness research” proposed by the Obama administration.  The comments by readers are interesting – recent stories about elderly relatives and their experiences with Medicare, tied in with (possibly) unnecessary tests and procedures.

President Obama’s announcements regarding his budget plans and goals for health care reform over the next several years upended existing norms and attitudes towards the long term role of the health insurance industry in the United States.

Although Obama’s budget plan for fiscal year 2010 won’t go into effect until October 1st of this year, its stated cutbacks and other changes are already having an effect on the stock market. According to the Wall Street Journal’s health blog, health insurers’ stocks are being devalued today, with Humana, United and Coventry seeing the biggest losses.

As long as Medicare has been around, cost containment has been a
concern.  Since 1965, policy makers have tried to increase benefits
while decreasing regulation – a tricky juggling act.

Medicare spending has increased, but not as much as private health
care, which has seen double-digit increases over the last few years.
Medicare spending per capita increased 5.4% annually between 1975 and
2002, but 3.2% of that growth can be tied to a growing elderly
population and increased wages across the working population. The
remaining 2.3% is excess growth that’s primed for cost containment
measures.

Since 2002, Congress has voted every year to override a 21% cut to
Medicare physician payment rates. If 2010 is no different, projected
Medicare spending growth in 2010 is 6.4%.

Costs can be controlled administratively or legislatively. Both
avenues translate into changing governmental regulatory mechanisms,
which seem to have had limited success in the United States, but have
been particularly effective in other nations.

A consistent bugbear named by both opponents and proponents of
Medicare is administrative waste. This waste can be generated by
attempts to increase transparency or provide better benefits. Attempts
to innovate can puff up administrative costs. Two examples of
resource-heavy innovations are the bundling of fee-for-service
payments and competitive bidding for durable medical equipment.

Pharmaceutical prices have been escalating over the last few years,
but the parallel rise of generic options may provide an avenue for
reducing waste. Cutting the prices of other services—like ambulance
service—may also be a viable option. Unnecessary medical interventions
are another leak of health care dollars.

Past HMO cost-containment strategies—such as cutting back on services
and increasing generic pharmaceutical use—have had negative
consequences such as increased hospitalization rates. Hospitalization
issues are often considered to be a prime target for abuse and fraud.

The False Claims Act and the Medicare Integrity Program have tackled
fraud prevention and detection.

Medicare fraud is based around billing Medicare for services that were
not given or were unnecessary and/or for products that were not
received or were unnecessary.  The Department of Health and Human
Services offers extensive information about how to detect and report
Medicare fraud.  Medicare fraud causes Medicare premiums to rise.
Medicare is a $466 billion program, and it is estimated that Medicare
fraud totals $60 billion annually.

A prominent Medicare fraud story focused on unnecessary infusion
treatments for AIDS patients in southern Florida.  In 2007 Department
of Justice prosecutors issued indictments for 65 individuals and
health care entities that had fraudulently billed Medicare for $345
million.  Southern Florida received special attention because although
the state had fewer reported AIDS cases than California its Medicare
charges for AIDs patients were three times higher.  A big clue leading
to the detection of fraud was a spike in billing for infusion services
from 4.3% to 15% within one year.

In 2006 Medicare officials released a report that said they had
reduced fraud, but 2008 a confidential draft of a federal inspector
general’s report revealed that to be incorrect.  Medicare officials
instructed outside auditors to ignore government procedures in
matching bills from salespeople to the actual doctor’s records which
would have helped to reveal if patients had actually received the
products that Medicaid was being charged for.