In Survey, Doctors Report Providing “Too Much Care”

According to a new survey, nearly half of primary care physicians believe that their patients are “receiving too much care;” mostly in the form of unnecessary tests and referrals to specialists. More than one-quarter of these doctors believe that they themselves are practicing too aggressively, and they tend to blame the fear of malpractice suits for their actions. Meanwhile, when asked about their colleagues; including nurse practitioners and medical sub-specialists like cardiologists, allergists, gastroenterologists, etc., the surveyed doctors indicated that financial incentives were most likely driving over-treatment.

These are just some of the intriguing findings from the survey published in this week’s Archives of Internal Medicine that involved some 600 primary care doctors who treat adults across the U.S. The authors of the report, led by Brenda E. Sirovich and colleagues at the VA Outcomes Group and Dartmouth Institute for Health Policy and Clinical Practice, consider primary care doctors “the frontline of health care delivery,” by virtue of the fact that they “both manage their own patients and are the source of most referrals to other physicians” and “are at least indirectly responsible for initiating the cascade of health care utilization (testing, therapies, and hospitalizations) for most patients.”

Utilization is at the heart of rising health care costs; any effort to “bend the cost curve” will entail reducing the estimated 30% of all care that is deemed unnecessary. Yet as defenders of this “frontline” of health care delivery, primary care doctors still seem deeply conflicted; they acknowledge that patients are receiving “too much care,” but seem confused about how best to remedy this problem.

Medicare and the President’s Deficit Reduction Plan: Shifting Costs to Seniors

How Cost-Sharing Leads to More Cost-Sharing: A Slippery Slope

President Obama’s newest proposal for reducing the federal deficit would slice Medicare reimbursements to drug-makers, nursing homes, rehabilitation facilities, home health services and teaching hospitals. As I explained in Part 1 of this post, using figures from the non-partisan and highly respected Medicare Payment Advisory Commission (MedPAC), these are groups that Medicare often overpays.  Some skilled nursing facilities turn an 18 percent profit on Medicare patients while reimbursements to home health agencies have consistently and substantially exceeded costs.

By and large, these recommendations make sense, and could help throw a spotlight on excesses in Medicare spending. But I very much doubt that either Congress or the Super Committee charged with addressing the deficit will embrace the President’s proposals in these areas. The lobbies that represent drug-makers, our most prestigious academic medical centers and three health care industries that have been taken over by for-profit companies (skilled nursing facilities, rehab centers and home health service agencies) can write the checks that help swing elections.

Proposals That Are Far More Likely to Find Support in Washington

President Obama’s plan also targets future retirees, asking them to shoulder a larger share of Medicare’s costs. Specifically, starting in 2017:

Medicare Advantage Grows; But Not Without Government Help

When the health reform bill was passed in 2009, it looked like the end of the gravy chain for Medicare Advantage plans; the privately-run health care plans that are sold to seniors as an alternative to traditional, government fee-for-service Medicare. The Affordable Care Act cuts $136 billion over 10 years from Medicare Advantage, following years of concern over the fact that the plans cost the government about 14% more (about $12 billion a year) than traditional Medicare. These overpayments allowed MA plans to offer perks like vision, dental and prescription benefits as well as lower out-of-pocket costs for some subscribers. Now about one-quarter of all seniors are covered under these plans. 

According to the Center for Medicare and Medicaid Services (CMS), the government pays Medicare Advantage insurance companies over $1,000 more per person on average than standard fee-for-service Medicare. The Obama administration targeted this as wasteful spending, and also as fundamentally unfair to the 75% of seniors who are enrolled in standard Medicare plans and have borne the cost of these overpayments in their monthly premiums. As part of the health law, overpayments to MA insurers will be gradually eliminated, and beginning in 2014, Medicare Advantage plans will also have to demonstrate to regulators that at least 85% of each dollar taken in is spent on health care, rather than administrative costs and profits.

Projections just two years ago were that without the extra premiums and facing tighter profit margins, many private insurers would leave the market, shifting seniors either back into the public-sector Medicare program, or into a smaller number of the highest quality, most efficient MA plans.

It turns out that this hasn’t really been the case. There has been some consolidation and about 13% of plans—primarily private fee-for-service (PFFS) plans—have left the MA market. But according to a recent report from the Kaiser Family Foundation, “Enrollment [in MA plans] has more than doubled since 2004, and has increased by 7 percent since 2010.”

Medicare and The President’s Plan to Reduce the Deficit—Cuts That Make Sense

Some of the largest cuts in President Obama’s proposed package of Medicare savings target areas where Medicare does, in fact, over-spend. Unfortunately, these are the reforms that Congress is least likely to adopt. In each case a powerful lobby representing those who profit from Medicare’s largesse will howl, and many legislators may well bow to their wishes. Nevertheless, it is useful for the President to call attention to areas where Medicare can save money—without cutting benefits.

• Prescription Drugs: The President’s plan would save $135 billion over ten years, starting in 2013, by requiring that drug companies provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries enrolled in the Part D Low-Income Subsidy program. In the past, I have written about the drug industry’s double-digit profit margins. In theory, the industry needs these margins in order to innovate. In fact, the number of new and effective drugs coming out of the pharmaceutical industry has slowed in recent years. Too often, they focus on creating “me too” drugs that they know will find a large market.

Alternatively, they develop cancer drugs that can be sold for a $100,000 to a small, desperate market of people who might live another month or two if a doctor prescribes the new nostrum.  As Dr. Francis S. Collins, director of the National Institute of Health told the New York Times not long ago, “the drug industry’s research productivity has been declining for 15 years,” in large part because the industry lacks the “will” to follow up on “promising discoveries” that might lead to treatments for diseases like Parkinson’s. We cannot continue to pay exorbitant prices for prescription drugs. This is a step in the right direction.

Obama’s Plan and Medicaid: Promising Structural Changes But Worries About Cost-Shifting to States

In President Obama’s new deficit reduction plan, he makes the following promise:

“Most importantly, we can make modest adjustments to strengthen Medicare and Medicaid in a way that does not undermine the fundamental compact they represent to our Nation’s seniors, children, people with disabilities, and low-income families. The Administration’s proposals will save approximately $320 billion over the next decade. As these reforms save money, they also will strengthen these vital programs so that they are robust and healthy to serve Americans for years to come.”

Saving money through modest adjustments while strengthening vital programs—sounds like a perfect vision for the future of government health care. But will this actually be the case for the beleaguered, but extremely necessary, Medicaid program?

Obama proposes to save $66 billion from Medicaid by taking the following actions: “limit State financing practices that increase Federal spending, replace complicated matching formulas with a single matching rate specific to each State, and strengthen Medicaid program integrity.”

The Affordable Care Act: Laying Out the Details in One Place

  
       An Itemized List of Savings and Revenues

Today, over at The American Prospect, Robert Kuttner makes an important point: “in 2010 Republicans convinced a lot of seniors that the Affordable Care Act would come at the expense of Medicare. In truth, you can demonstrate that the ACA will actually save costs without cutting care,” he adds. But to do that, “you have to get so far down in the weeds of health policy that you lose most voters.”

Kuttner is right: the truth lies in the details, and this makes it difficult to explain the Affordable Care Act (ACA) to the public. If Congress had chosen to pay for health care reform by slashing doctors’ fees by 20 percent, and capping how much Medicare will spend on anyone over the age of 75, it would be far easier to sum up the ACA in a few pithy paragraphs.

Instead, legislators focused on trimming $19 billion here, saving $145 billion there, and another $20 billion over there, by; closing tax loopholes, phasing out overpayments to those private sector Advantage insurers that are not delivering  good value for Medicare dollars, and eliminating redundancies within Medicare. These are just a few of the ways that the legislation squeezes some of the waste out of Medicare spending without cutting benefits, or reducing reimbursements to doctors. In addition, reform legislation raises new revenues, including $107 billion in new fees that insurers, drug makers, and medical device companies have agreed to pay. (They can afford to contribute to reform because they know the legislation will bring them millions of new customers.)

I have written a few posts that delve into the details of how “The Affordable Care Act Pays for Itself and Cuts the Deficit.” And now I have put all the numbers together in an issue brief titled “Better Care for Less."

Granted, it takes more than a few pages to lay everything out, itemizing and explaining both savings and new revenues. This is why you won’t find a detailed breakdown of the ACA in the newspaper, or even on the blogosphere. Most bloggers believe that they must be brief. I should add that I admire tight one-page overviews of reform legislation, but I also think there is a place for clear in-depth analysis of the most important piece of legislation this nation has seen in more than 45 years.

You may not want to sit down and read “Better Care For Less” in one sitting, but I hope you’ll find it a useful resource that will answer many of your questions about the ACA. It may also help you explain reform legislation to skeptical friends. You can click here to download the brief from The Century Foundation’s website.

Poverty, Unemployment Increase…And Can We Talk About The 50 Million Uninsured?

It’s time for a reality check: According to the latest U.S. Census Bureau survey, the number of uninsured Americans rose from 16.1% to 16.3 % of the population in 2010, representing 49.9 million people who have no health coverage. Many of these folks lost their jobs as a result of the persistent weak economy and along with those jobs went employer-provided health benefits.

To make matters worse, as the economy shows no sign of recovering anytime soon, two key federal stimulus programs—one that subsidized COBRA benefits for laid-off workers and another that temporarily increased the federal matching rate for Medicaid—have ended in recent months.

The new Census survey finds that the percentage of people covered by employment-based health insurance decreased to 55.3 percent in 2010 from 56.1 percent in 2009. Meanwhile, the percentage of Americans covered by private insurance has been decreasing each year since 2001, with little accompanying rise in the number of adults covered by Medicaid.

The options for coverage have decreased further—even for those families or individuals who try to purchase private insurance. Earlier this year, a Government Accountability Office study of 459 insurers found that an average 19% of applicants nationally were denied health care coverage when they applied for plans.

Increasing Out-of-Pocket Medicare Costs Is a Misguided Strategy for Deficit Reduction

When it comes to Medicare, a fundamental question still begs an answer: If seniors are forced to use more of their own money to pay for their care, will they scale back on unnecessary doctor visits and other medical services that needlessly increase Medicare spending? In other words, with more “skin in the game” would Medicare spending really go down?

As Congress works on coming up with ways to cut the federal budget deficit, Medicare is clearly in the crosshairs. Proposals are circulating that would introduce more cost-sharing for seniors—including having wealthier seniors chip in more for their care and reducing coverage for specific services like home health care or expensive cancer drugs. Cost sharing is used in most Medicare Advantage plans in the form of tiering; by giving patients an incentive to use preferred providers in a particular network.

But the most recent proposals are geared toward increasing cost-sharing in fee-for-service Medicare Part B, which covers out-patient care—i.e. doctor visits and other services received outside of the hospital. The rationale is that if seniors have to pay more out of pocket in terms of deductibles and co-payments, they will be less likely to seek out “inappropriate” or unnecessary care.

The problem is that there is scant evidence that having more “skin in the game” would cause seniors to suddenly become active “consumers” of health care—using the same skills they deploy when hunting for bargains in grocery stores to avoid useless doctor visits and medical services. There is some evidence that cost-sharing can reduce inappropriate care for relatively healthy, non-poor, younger individuals, but the data is out-of-date and can not be extrapolated to the Medicare population. According to advocates for seniors, when researchers looked at how cost-sharing affected the most vulnerable in these studies—those who were poor and chronically ill and, therefore, most similar to the highest utilizers of Medicare—increased cost had a negative effect, reducing access to needed care.

Medicare Spending Slows: Proof that Providers Can Trim Fat -- Part 3

While no one was looking, Medicare spending quietly began to slow early in 2010. As I explained in Part 1 and Part 2 of this post, from 2000 through 2009, Medicare reimbursements snowballed by an average of 9.7 percent a year. Then, in 2010 Medicare payments rose by just over 4 percent. So far this year, Medicare inflation is running a little under 4 percent. Yet Medicare has not sliced benefits for seniors, nor has it trimmed payments to providers in any significant way.

Why, then, are Medicare payouts no longer spiraling? Both Zeke Emanuel, a White House health care adviser during the first part of the Obama administration, and his boss at the time, Peter Orszag, former director of the Office of Management and Budget (OMB), agree that many health care providers are trying to rein in costs as they prepare for full implementation of the Affordable Care Act in 2014. Today, hospitals and most doctors are rewarded for “volume”: those who “do more” (more tests, more surgeries, more hospitalizations) earn more. Inevitably, perverse financial incentives lead to unnecessary care.

By contrast, under the ACA, Medicare will begin paying for “value” (better care at a lower cost”), not volume.  Hospitals are keenly aware of the changes that are coming. “My conversations with various hospital executives . . .  suggest they anticipate less generous reimbursement and more focus on value in the future,” Orszag told me while I was writing the second segment of this post. “Therefore they are trying to become more efficient now.”  Emanuel also has been traveling the country:  “Everywhere I go,” he reported in Part 1, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’ Hospitals know that “either [they] get volume under control, or prices paid both by private insurers and Medicare will drop.” Medicare won’t pay top dollar for unnecessary tests, and private sector insurers have told the Medicare Payment Advisory Commission (MedPAC) that if Medicare takes the lead, they will follow.