Unbiased Analysis of Today's Healthcare Issues

A Medicaid ACO?

Written By: Jason Shafrin - Mar• 15•15

Medicare’s Shared Savings Program (MSSP) contracts with accountable care organizations (ACOs) to provide care for Medicare beneficiaries.  Reimbursement levels for these ACOs depends on quality and their ability to generate cost savings relative to the non-ACO national trend.  The goal is to align provider and payer incentives in improving quality and reducing cost.

Would such a model work for Medicaid?  That is what the state of Illinois is attempting with their Accountable Care Entity (ACE) program.  

ACEs are an integrated delivery system that includes primary care physicians, specialists, behavioral health, and hospitals. Like ACOs, ACEs reimbursement depends on reducing cost and improving quality.

ModernHealthcare adds more detail:

The ACE initiative started because of a 2011 Illinois law. It mandated that by Jan. 1, 2015, at least half of the state’s 3 million Medicaid beneficiaries had to be enrolled in some type of a managed-care plan. The state has created a variety of ways to accomplish this, such as traditional managed-care organizations led by private health insurers. But Illinois wanted to include hospitals and doctors as part of the solution, Hamos said.

Under the ACE model, the participating provider groups agreed to contract with Illinois for three years to care for defined Medicaid populations in a specific geography.

During the first 18 months of operation, hospitals and physicians will receive two types of payment from the state. Illinois Medicaid will still reimburse all medical claims on the usual fee-for-service basis, but the state will also give ACEs a care-coordination fee of $9 per member, per month.

In the second half of the contract and after it ends, providers will bear full financial risk under an undetermined capitated payment.

Many fear that these ACO-like organizations are just managed care by another name. The key is whether these new organizations can control costs like managed care organizations but are also able to simultaneously improve quality and patient satisfaction as well.

Friday Links

Written By: Jason Shafrin - Mar• 12•15

HWR is up

Written By: Jason Shafrin - Mar• 12•15

Health Wonk Review: Spring Forward Edition is hot off the press. Brad Wright has posted a great digest of your submissions at Wright on Health. If you are yearning for spring, his great post photos will cheer you.

The Healthcare Economist even leads off the HWR with our article on King v. Burwell.

What’s new for Medicare Advantage in 2015

Written By: Jason Shafrin - Mar• 11•15

A KFF article provides some highlights of changes to Medicare Advantage for 2015:

  • Near universal access to an MA plan.  99% of Medicare beneficiaries will have access to a Medicare Advantage plan as an alternative to traditional Medicare in 2015.  The only individuals without access to an MA plan are concentrated in a few rural areas.
  • Lots of Choice: Beneficiaries will be able to choose from 18 Medicare Advantage plans, on average, in 2015, the same number of plans as in 2014.  About 480,000 beneficiaries – less than 5 percent of all enrollees – will need to find new plans because their 2014 plan will no longer be available in 2015.
  • “Free” plans widely available: About 78 percent of MA beneficiaries will have access to zero-premium plans in 2015.
  • Out-of-pocket max rises.  All Medicare Advantage plans will include a limit on enrollees’ out-of-pocket expenses for services covered under Medicare Parts A and B, but the plans’ limits will be about $240 higher, on average, in 2015 than in 2014.
  • The decline of PFFS plans.  In 2015, 69 PFFS plans will be offered compared to 120 in 2014 and a high of 801 in 2008.
  • Plan premiums rise.  In 2015, the average premium for MA-PDs will be $53 per month – an increase of $2 from 2014. Premiums for HMOs will average $38 per month, up $3 from 2014. Similar to prior years, HMOs will continue to have lower premiums than regional PPOs ($68 per month), local PPOs ($81 per month) and PFFS plans ($88 per month).
  • Significant market concentration.  UnitedHealthcare, Humana, Blue Cross and Blue Shield (BCBS) affiliated companies (including Wellpoint BCBS plans), Kaiser Permanente, Aetna, Wellcare, and Cigna control over 60% of plan offerings.

Why doesn’t the US have an integrated EMR

Written By: Jason Shafrin - Mar• 10•15

Why doesn’t the US have a single integrated electronic medical records system for sharing patient information.

The promise from an integrated EMR is clear.  In an interview for Marketplace, Dr. Neal Weinberg says:

Not having immediate, accurate information in one chart can lead to complications for the patient, they could die, they could be pretty sick and end up back in the hospital with other problems.

So it’s clear that everyone should share data, right?  Not so fast.

What if you owned a business and one of your competitors said: “I would like a list of all your customers, as well as information on their demographics and health history.”  You would likely say, there is no way I’m giving you a list of my customers.

Well in the case of healthcare, customers = patients.

One idea is for the patient to own their EMR rather than the provider.  Dr. Ira Nash, an executive with North Shore LIJ Health System on Long Island, says:

You want the patients in the middle. They are the consumer. We exist to serve their needs. Why should we own the data.

However, patient data is valuable and providers likely won’t give it away unless either (i) patients demand it by taking their business to providers who allow them to own their data, or (ii) the government legislates that patients have a right to their data mandates what data providers must share with other providers.

Republicans likely will prefer the former solution, Democrats the latter.

Becoming a health economist

Written By: Jason Shafrin - Mar• 08•15

2010 American Society of Health Economists (ASHE) newsletter provides some interesting perspectives on becoming a health economist.  There are a number of interesting perspectives on non-academic careers for health economists.  Some excerpts are below:

  • On working for the American Medical Association: “…if freedom is desired to choose one’s research independently,then this would not be a good match…[however] there is no need to obtain external funds to pay one’s salary, and there is no “publish or perish” phenomena. In fact, publishing is neither encouraged nor discouraged. However, if the AMA is interested in a question that is amenable to research, then I can conduct it subject to other demands for my time.
  • On working in litigation consulting: “The projects that economic consultants like myself work upon are often very high profile, and very high stakes. This means that our work rarely involves the application of off-the-shelf models or theories. Rather, each model or theory is typically modified or refined to fit the particular facts of the case…In academics, the audience is principally your students and, through your participation in conferences and your publications, your academic colleagues. My audience consists of business people and lawyers, as well as government officials, courts and juries.”
  • On working at the CDC: “Public health economics…addresses the economic impacts of disease, injury, and disability, the economics of providing public health services, and the economic evaluation of health programs and policies….Unlike academia, there are no teaching obligations, no grant proposals to write, and no tenure review. On the other hand, flexibility and responsiveness are a must because analysts have to address agency priorities….The opportunity to contribute to analyses that can affect public health policies and programs is one of the major motivators for researchers at the CDC.”
  • On working in a think tank.  “The work environment at a think tank is very much like an academic research center without the students and the teaching…In this predominently soft-money environment, senior researchers are responsible for fund-raising for themselves and junior members of the research staff…Individual projects may be researcher initiated or come out of a response to a request for proposals (RFPs).  As a health economist at a think tank, you can expect to present papers at national conferences and submit articles based on your research to peer-reviewed journals.”
  • On working for Pharma. “If you love research, the policy division or market analytics teams conduct data analyses that support products, account managers (for health plans or employers) or lobbying activities and may be the most directly similar to what you know. But they lack independence (topics are limited and ultimately you are expected to support the arguments senior management want to make), and they’re also several steps removed from the core business function. The best learning opportunities are in the business units supporting products (especially pipeline if you want to understand R&D decision-making)– Pfizer’s Market Access teams are a great starting point in that respect.”

End of week links

Written By: Jason Shafrin - Mar• 05•15

The cause of drug violence

Written By: Jason Shafrin - Mar• 04•15

According to one former police officer, the effect of drugs themselves are not the main cause of violence:

…drug users aren’t responsible for violence–high people just want to enjoy their high.  Drug violence is business violence….the largest causes of drug murders are territorial disputes over market share.  If no one will help you defend your property–you can’t trademark the winning name that you’ve given your drugs; you can’t take a competing drug dealer to court when he tries to take over your corner; you can’t sue for libel if someone says your product is defective…

This comes from the book  Cop in the Hood, by Peter Moskos.  It is interesting throughout.

 

 

 

Billionaires List

Written By: Jason Shafrin - Mar• 03•15

Forbes came out with its list of richest people in the world.  Bill Gates tops the list, but we don’t care about that here at the Healthcare Economist.  Which people in the healthcare industry are the richest?  The top 5 include:

  • 44. Dilip Shanghvi (India): $20 billion
  • 96. Patrick Soon-Shiong (US): $12.2 billion
  • 99. Stefano Pessina (Italy): $12.1 billion
  • 149. Ernesto Bertarelli (Switzerland): $8.8 billion
  • 174. Thomas Frist, Jr. (US): $7.6 billion

The full list is available here.

King v. Burwell

Written By: Jason Shafrin - Mar• 02•15

On Wednesday, the Supreme Court will begin hearing arguments in King v. Burwell.  The plaintiffs argue that the Affordable Care Act (i.e., Obamacare) does not permit subsidies to individuals if they receive health insurance from a federally-run health insurance exchange.

  • Why would they argue this?  Well, Section 1401(a)(2)of the law says that subsidies would go only to those who purchased coverage on “an exchange established by the state.” As Vox reports, there was no similar provision, or call out, for people who got their coverage on a marketplace that the federal government set up.
  • Will it affect a lot of people?  Yes.  Currently, there are only 14 state-run exchanges and 7 state partnership exchanges.  People living in the remaining 30 states with federally administered or federally supported exchanges  (including large states like Texas, Florida, Pennsylvania, Ohio, Georgia, North Carolina) would not be eligible for subsidies.
  • How much would premiums increase?  Overall, the affect on premiums is unclear.  However, the share of premiums for which consumers are responsible would rise “an average …of 255 percent…if the Court ultimately rules in favor of the plaintiffs in King v. Burwell.”
  • Did Congress really mean to may enrollees on federal exchanges ineligible for subsidies?  That is the crux of the issue that the supreme court will decide.
  • How did we get here? Vox has a nice overview of the history of King v. Burwell.  An excerpt is below.

“He had been talking about how states shouldn’t cooperate. And I responded to him with something like, ‘If they don’t create an exchange, they can’t get the tax credits,'” Adler recalls. “He said, ‘What?’ And I told him, ‘Read the statute.'”

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