Unbiased Analysis of Today's Healthcare Issues

Fixing the “doc fix”

Written By: Jason Shafrin - Mar• 29•15

The sustainable growth rate (SGR) was implemented by Congress in1998.  The SGR’s aim was to slowly bring down or at least decellerate Medicare compensation for physicians compensation.  However, each year, it gets reversed by Congress. Now, instead of a gradual decline, the implementation of SGR would  result in about at 25%pay cut for Medicare docs.

I have written many previous posts about how at the end of each year, Congress passes a temporary law which reverses the SGR for a single year.  Fixing the SGR for a single year kicks the can down the road, but for lawmakers, they don’t have to deal with the budgetary implications on a bill’s CBO scorecard.

However, the annual write of passage of temporary fixes may be over.  The New York Times reports:

The House overwhelmingly approved sweeping changes to the Medicare system on Thursday, in the most significant bipartisan policy legislation to pass through that chamber since the Republicans regained a majority in 2011.

The measure, which would establish a new formula for paying doctors and end a problem that has bedeviled the nation’s health care system for more than a decade, has already been blessed by President Obama, and awaits a vote in the Senate. The bill would also increase premiums for some higher income beneficiaries and extend a popular health insurance program for children.

The legislation, which passed on a 392-to-37 vote, embodies a rare and significant agreement negotiated by Speaker John A. Boehner and the House Democratic leader, Representative Nancy Pelosi of California, two leaders who are so often at odds with each other.

This bill still needs to pass the Senate, but this is good news for sensible budgeting. There has been some criticism that SGR will bust the federal budget, but the issue was that the decreases in physician compensation would never have really come to pass. Thus, a permanent doc fix will simply make the cost of Medicare more transparent, rather than increasing federal outlays.

Friday Links

Written By: Jason Shafrin - Mar• 26•15

HWR is up

Written By: Jason Shafrin - Mar• 26•15

Jennifer Salopek has posted the latest Health Wonk Review, Spring Break Edition at Wing of Zock.  This week’s topics are diverse and far ranging – Jennifer does a great job dishing them up.

A Neurosurgeon and A Patient

Written By: Jason Shafrin - Mar• 25•15

The moving story of Paul Kalanithi.

That message is simple: When you come to one of the many moments in life when you must give an account of yourself, provide a ledger of what you have been, and done, and meant to the world, do not, I pray, discount that you filled a dying man’s days with a sated joy, a joy unknown to me in all my prior years, a joy that does not hunger for more and more, but rests, satisfied. In this time, right now, that is an enormous thing.

Paul Kalanithi.

Insurance expansions reduce ER Use

Written By: Jason Shafrin - Mar• 24•15

One promise of the Affordable Care Act (ACA) was that by giving more people access to health insurance, patients would be more likely to have a regular source of care and would be less likely to use the emergency room. Rick Kronick–the Director of the Agency for Healthcare Research and Quality (AHRQ) and a member of my dissertation committee–cites new research from the Annals of Emergency Medicine that finds that emergeny room visits have fallen. Kronick writes:

A new study, published today in the Annals of Emergency Medicine, shows that, following the implementation of the Affordable Care Act, the annual rate of emergency department visits by young adults age 19 to 25 decreased by 1.4 percent in 2011.

This represents 191,000 fewer emergency department visits among young people in this age group than would have occurred if the rate of emergency department use had not decreased. The data show decreases in weekday visits, non-urgent conditions, and conditions that could be treated in places other than the emergency departme

Of note, the authors find the ACA had no effect on weekend ER visits, likely because even insured patients have limited access to primary care physicians on the weekend. The authors conclude that “The Patient Protection and Affordable Care Act dependent coverage expansion was associated with a statistically significant yet modest decrease in ED use, concentrated in the types of ED visits that were likely to be responsive to changes to insurance status.”

Tuesday Links

Written By: Jason Shafrin - Mar• 23•15

5 Trends 5 years after by ACA

Written By: Jason Shafrin - Mar• 22•15

From a PwC report on “Five trends to watch as the Affordable Care Act turns five“:

  1. Risk Shift: Raising the stakes for all healthcare players. The ACA added force to new payment models that reward outcomes and penalize poor performance such as high rates of readmission and hospital-acquired conditions.
  1. Primary care: Back to basics. Experimentation in new payment models and expansion of insurance coverage are making primary care once again the critical touch point.
  1. New entrants: Innovators in the New Health Economy. New entrants are rushing into the market to meet the demand for lower-cost, consumer-oriented care options in the post-ACA era. More than 90 new companies have been created since 2010, according to HRI analysis.
  1. Health insurance: From wholesale to retail. Rapid enrollment in the ACA’s public exchanges has demonstrated the potential of retail-style health insurance and spawned renewed interest in private exchanges.
  1. States: Reform’s pivotal stage. States have emerged as key players in the reconfigured healthcare landscape, as the ACA gave states notable discretion in how the law could be implemented.


Insurers: Non-profit or For-profit?

Written By: Jason Shafrin - Mar• 19•15

The answer is “no” according to the California Franchise Tax Board.

California tax authorities have stripped Blue Shield of California, the state’s third largest insurer, of its tax-exempt status in California and ordered the firm to file returns dating to 2013, potentially costing the company tens of millions of dollars.

Why did California claim that Blue Shield was a for-profit? The L.A. Times reports:

The move by the California Franchise Tax Board comes as the state’s third-largest health insurer faces fresh criticism over its rate hikes, executive pay and $4.2 billion in financial reserves.

Has a non-profit insurer ever changed into a for-profit? The answer is “yes”.

…in the 1990s, Blue Cross of California, at the time a nonprofit insurer, converted to a for-profit company. Some of the assets held by the nonprofit were used to create large foundations in the state, including the California Endowment and the California HealthCare Foundation.

Will this move affect consumers? Likely not. Blue Shield rates were already in line with competitors and due to the competitive California market, increasing rates faster than their competitors may be difficult.

The Next Generation ACO

Written By: Jason Shafrin - Mar• 18•15

Medicare currently has two Accountable Care Organizations (ACOs)–the more popular Medicare Shared Savings Program (MSSP) and the Pioneer ACO program. However, these ACOs have generated only limited cost savings. Only 11 of 23 Pioneer ACOs and 58 of 220 MSSP participants generated cost savings.

To address some provider concerns and due to the limited cost savings generated, CMS last week announced what they are calling the Next Generation ACO.  CMS only expects 15 to 20 organizations to apply for this program.

The Next Generation ACOs will differ from the current models as they rely on fixed benchmarks (known by providers before the start of the year) rather than rolling benchmarks based on an ACO’s historical expenditures.  More importantly, Next Generation ACOs will be able to select from a variety of payment mechanisms “…to enable a graduation from fee-for-service (FFS) reimbursements to capitation [emphasis added].”  By year 2 of the program (2017), these new ACOs will have the option to accept capitated payment. Other differences include:

  • Greater access to home visits, telehealth services, and skilled nursing facilities;
  • (2) opportunities to receive a reward payment for receiving care from the ACO;
  • (3) a process that allows beneficiaries to confirm their care relationship with ACO providers; and
  • (4) greater collaboration between CMS and ACOs to improve communication with beneficiaries about the characteristics and potential benefits of ACOs in relation to their care.

CMS claims that “Beneficiaries may receive a reward for receiving the majority of their care from ACO providers, but are not penalized in any way for seeing non-ACO providers.” However, not receiving a reward is in essence a penalty. Additionally, if these Next Generation ACOs become popular, setting a capitated rate administratively becomes more difficult as fewer and fewer people will be using traditional fee-for-service Medicare.

Applications for Next Generation ACOs are due January 1, 2016. Interested?

Parents and Vaccinations

Written By: Jason Shafrin - Mar• 17•15

No, this story is not about parents who don’t vaccinate their kids.  It’s about parents who have vaccinated their kids (or plan to), but want to keep their children away from unvaccinated children.  From the LA Times:

A Bay Area mother formed a Facebook page where parents could arrange play dates for their children with other vaccinated youngsters. Another mom advocates socially isolating the unvaccinated by asking parents if their child is inoculated before accepting a birthday invitation, or even using the swings at the playground. And an Eagle Rock mom says she now asks about vaccine records when she buys used baby clothing.

The CDC vaccine schedule recommends getting the measles, mumps and rubella (MMR) shot at age 12-15 months for the first injection and age 4-6 for the second one. Thus, children under one will not be immune from measles and children 1-4 may not be 100% immune.

Will unvaccinated children and their parents by stigmatized for their decision? Perhaps so.