You are currently browsing the monthly archive for December 2011.
The Healthcare Economist is going on vacation for the next week.
In the meantime, I pose to you, my reader, a bet. Do you think the ‘doc fix’ gets passed? Before you read on, make your predictions in the comments section below.
Tags: Doc Fix, Medicare, MEI, Physicians, SGR, Sustainable Growth Rate
Frivolous lawsuits may increase medical spending in two ways: i) they increase the cost for physicians to practice medicine by raising malpractice insurance premiums, and ii) they increase utilization of unnecessary services when physicians practice ‘defensive medicine’.
Creating a ‘loser pays’ tort system may be the best way to stop frivolous lawsuits.
In a loser-pays framework, the individual who loses a lawsuit must pay the legal costs of the winning side. This framework decreases the incentive of brining cases to court where the plaintiff is unlikely to win. According to the Economist, ”‘Loser pays’ is the norm in many countries, including England, Canada and Germany. But there, “loser pays” is the rule in most torts.”
However, the ‘lower pays’ framework has appeared in the U.S. Alaska currently has a loser-pays framework, but the loser only pays a portion of the winner’s legal fees. ”…Florida imposed ‘loser-pays’ in 1980 for medical-malpractice cases. The number of claims dropped, but the average award rose, suggesting that more high-merit cases got their day in court while low-merit filings were deterred or settled for less.”
Fairly implementing a loser-pays system, however, requires regulation. Poor plaintiffs may never bring a lawsuit if they are required to pay the defendants legal costs if they lose or (as is currently the case) poor plaintiffs would have an incentive to bring the case to court if poor plaintiffs didn’t have to pay the legal costs.
One could still make poor plaintiffs pay even if they could not afford it. The plaintiff’s lawyer could be made responsible for the opposing side’s legal fees. Thus, the lawyer would have to be very sure of the merits of their case to take it to court.
Another solution to the inability to pay the opposing sides legal fees is legal insurance. ”Marie Gryphon of the Manhattan Institute…argues that loser-pays countries need legal insurance, which can be bought (for example) in England for just £100-200 ($150-300) after an alleged loss, but before a suit is filed. Lawyers can advance the premiums and add them to their bills. In other countries, such as Germany, many households carry standing legal insurance with a small monthly premium.”
Although implementing a loser pays system may improve the efficiency of the tort process, it will only have a small effect of overall medical spending. Although large jury awards grab headlines, in practice reducing medical spending simply requires patients and physicians to agree to use less services.
For instance, the CBO rated a legislative proposal [the “Help Efficient, Accessible, Low Cost, Timely Healthcare (HEALTH) Act of 2003] that would impose limits on jury awards in medical malpractice cases. The CBO concluded that this proposal would reduce federal direct spending on Medicare, Medicaid, and the Federal Employees Health Benefits program by about $1.5 billion per year. Since federal spending on Medicare and Medicaid in 2004 was about $484 billion, this amounts to a 0.3% decrease in spending.
Fixing med mal would reduce spending but certainly not be a cure for larger medical spending issues.
Tags: loser-pays, med mal, medical malpractice, Tort Reform
The California Health Care Foundation (CHCF)’s Health Care Almanac provides some unique insights on trends in health care quality in California and for the United States as a whole. Many of the national figures for the Almanac come from the CDC (BRFSS and Vital Stats) and AHRQ’s National Healthcare Quality Report. California quality figures come from the California Department of Public Health, the Office of Statewide Health Planning and Development and the California Health Interview Survey.
Although not discussed in this post, another portion of the Health Care Almanac looks at quality by site of service. Much of this data comes from Hospital Compare, CMS OASIS data, AHRQ’s National Healthcare Quality Report, and the Dartmouth Atlas.
Today I highlight 3 topics related to clinical quality:
More detail is below.
Tags: Caesarean, California, Cancer, Cesarean, CHCF, Infant Mortality, Quality
ForeSee released a study showing which kinds of healthcare-oriented websites do the best job satisfying customers. Their results show health insurance websites have dismal customer satisfaction compared to other kinds of healthcare sites (such as pharmaceutical sites, hospital websites, health information sites, etc.). A summary of the overall customer satisfaction rates are below.
Tags: Links
Many researchers use household data sources to examine a variety of hypothesis. The use of household data has many benefits including allowing for more detailed socioeconomic information (e.g., education, income) beyond what is contained in administrative claims files. One drawback of household data is that extrapolations made from household survey data may not match national estimates.
For instance, this article examines how to align the Medical Expenditure Panel Survey (MEPS) to aggregate U.S. benchmarks provided in the National Health Expenditure Accounts (NHEA). Today, I review some of these adjustments.
Tags: Medicaid, MEPS, National Health Expenditures, NHEA, PHC
A recent paper by Hai Zhong (2011) finds that health insurance that provides immediate reimbursement for health care services significantly increases the likelihood of patients seeking outpatient treatment in China compared to reimbursement beneficiaries with a delay. China isn’t the only country where insurance companies provide delayed reimbursement. In fact, in France patients pay the full cost of physician visits up front and only later are reimbursed 70 percent of the cost.
Why would the delayed reimbursement make a difference? I can think of three reasons.
Tags: China, coinsurance, Delay, EOB, France, Health Care
Nine million individuals qualify for both Medicare and Medicaid health insurance. These individuals, known as dual-eligibles, rank among the most expensive Medicare and Medicaid beneficiaries. Duals are frequently hospitalized and often need long-term care. In fact, most state spending for dual eligibles focuses on long-term care supports and services.
The federal government pays the bulk of care costs for dual eligibles. Of the $319.5 billion estimated as spent on duals in 2011, 80 percent ($256.6 billion) are federal dollars, more than two-thirds of which flowed through Medicare.
Unnecessary hospital use is one of the main drivers of inflated Medicare spending on duals. One reason for this is that Medicare pays for all hospitalizations. Thus, State Medicaid Agencies have less of an incentive to prevent costly hospitalizations. Further, nursing homes also have an incentive to hospitalize duals. Nursing home who care for an individual after they are hospitalized receive a higher Medicare skilled nursing facility (SNF) rates rather than the lower Medicaid long-term care rates. Thus, nursing homes can increase their rates just by admitting their residents to teh hospital periodically.
Additionally: Dual eligibles experience far higher rates of “potentially preventable hospital admissions” than other Medicare beneficiaries: more than twice as high for pressure ulcers, asthma and diabetes; 52 percent higher for urinary tract infection; and over 30 percent higher for chronic obstructive pulmonary disease and bacterial pneumonia.
Many dual eligible individuals are enrolled in Medicare Special Needs Plans (SNP). [Dual eligibles constitute about a million of the 1.3 million people enrolled in SNPs.] Medicare pays these pays a capitated rate in exchange for providing a host of services to these beneficiaries.
The Affordable Care Act established of the Medicare-Medicaid Coordinated Care Office (known internally at CMS as the Office of the Duals), which has launched a number of initiatives to better align the programs. A paper by Feder et al. makes the following recommendations:
Source:
Tags: Dual, Dual eligible, Duals, Medicaid, Medicare
Russell Hutchinson hosts a delightful and eclectic edition of the Cavalcade of Risk at moneyblog.
Plus, here’s some more vital reading:
Bring Market Prices to Medicare
December 16, 2011 in Books, Health Insurance, Managed Care, Medicare, Medicare Advantage | 5 comments
Medicare is a government-run insurance program. Can policy changes be made to add competition to Medicare, maintain quality and reduce cost? A book titled Bring Market Prices to Medicare argues that it can through a competitive bidding process. This book makes a number of sensible arguments which I review today.
The main proposal of the book is a competitive bidding process for all Medicare plans. Currently, there is a form of competitive bidding only for Medicare Advantage (MA) managed care plans. The authors also argues for competitive bidding for fee-for-service (FFS) Medicare (i.e., Parts A and B). There is already a competitive bidding process for Medicare’s prescription drug program (Part D) which has worked well.
One of the main advantages of Medicare FFS is that beneficiaries do not need a referral for any services and are not limited to certain provider networks. However, Medicare beneficiaries do not pay for these added benefits. In addition, even if HMOs are more efficient than Medicare FFS, Medicare FFS beneficiaries still pay the same Part B premiums.
The authors want beneficiaries to face the true price differentials between the lowest cost plans and less efficient plans., regardless if the plan is Medicare FFS or an MA plan. Thus, beneficiaries would be responsible for any premium differences due to choosing a more expensive plan.
Currently, MA plans receive a variant of the average bid in their service area. The authors propose that Medicare would only pay for the lowest cost plan. This proposal would in essence be a transfer from plans and beneficiaries (who would have to pay the cost differential between the plan they choose and the lowest cost plan) to the government. Given the fiscal hole the federal government is facing, this is a good idea.
Authors also propose to eliminate the 25% tax on premiums. According to MedPAC, “Plans that bid below the benchmark also receive payment from Medicare in the form of a “rebate.” The law defines the rebate as 75 percent of the difference between the plan’s actual bid (not standardized) and its case mix-adjusted benchmark. The plan must then return the rebate to its enrollees in the form of supplemental benefits or lower premiums” The rebate structure gives plans a disincentive from lowering their bids since they only recover a share of the cost decreases.
Another issue focuses on regional adjustments. Living in New York is expensive and health care is more expensive in New York than in rural Mississippi. However, should Medicare subsidize New Yorkers because their health care is more expensive. The authors argue no, but poor individuals in high cost areas will be adversely affected by this policy choice.
A major issue is controlling quality. Plans could create low cost plans by providing low-quality care or failing to provide mandated services. Thus, CMS will need to regulate the plans. Plans with quality levels below a specific level would be barred from enrolling individuals or the government could force beneficiaries to pay additional premiums to enroll in these low quality plans. Public reporting of plan quality is also needed.
Strategic bidding is also a problem. Plans could collude to raise the bid price. However, by having Medicare FFS as an option will cap the amount colluding firms could increase prices. Further, a small firm could bid a very low amount and set the market. Medicare could set the benchmark at the lowest cost plan which meets a minimum size requirement.
Source:
Another Review of the Book:
Tags: AEI, Auction, Books, Competitive Bidding, HMO, Managed Care, Medicare