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Fixing Medicare

November 30, 2011
inConsumer Driven Health Care, Medicare
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Stanley Feld M.D.,FACP, MACE

As we have seen, Dr. Ezekiel Emanuel’s misconceptions of the true drivers of medical costs are not fact based. President Obama and his administration do not have a clue about how to fix Medicare.

 

Dr. Emanuel and Dr. Berwick have created a system that Americans did not want and do not like. Dr. Berwick’s replacement was his assistant. She, in all probability, thinks the same way he does. It is likely there will be no improvement in fixing Medicare.

Accountable Care Organizations are a long way from being organized effectively and efficiently. Organizations which would be most likely to develop ACO’s are not signing on. The reasons are obvious. Obamacare provides inadequate incentives to join with great risks.

 I believe the only way to fix Medicare is by developing a healthcare system that permits consumers, not the government, to drive their own medical care choices. Consumers must be responsible for their health and choice of medical care. They must also have control of their healthcare dollars and be educated and incentivized to use those healthcare dollars wisely.  

 To quote Milton Friedman, “There ain't not such thing as a free lunch.”

It will take educated, motivated and incentivized consumers to reduce the costs of Medicare in order for the program to be sustainable in the future.

It is likely that central government control over individual healthcare and medical care choices will create a bigger mess. It will also impinge on individual freedoms.

 Ensuring that Medicare provides quality health care coverage to millions of older and disabled Americans is essential in a compassionate society. How this can be accomplished is the question.

Seniors have been deceived into believing that they have prepaid their retirement healthcare insurance during their working years. They are realizing that they have been deceived by many administrations.

  “Medicare is nothing less than a lifeline for 49 million older and disabled Americans.”

 “It is also hugely costly. The federal government spent about $477 billion in net Medicare outlays in fiscal year 2011 — 13 percent of its total federal  spending. By 2021, it is projected to spend $864 billion — or 16 percent of the total budget — according to figures derived by the Kaiser Family Foundation. That rate of growth is not sustainable indefinitely.”

 Where did the Social Security and Medicare taxes paid by Americans disappear to? The government collected those taxes and then lent them to the government treasury to maintain U.S. solvency. Now the government is insolvent. It cannot pay back the trust funds as Social Security and Medicare payments decrease and the number of eligible Social Security and Medicare recipients increase.

 President Obama’s administration and its bureaucrats are ignoring the real problems in Medicare.

 They think consumers are too stupid to look after themselves and their own money. It is essential to President Obama’s ideology that the central government control consumers’ choice, consumers’ medical decisions and the money consumers paid into the Medicare system.

The federal government has not done a very good job of managing the money consumers, now seniors, have paid into Social Security and Medicare all these years.

Politicians refuse to understand the sources of waste in the healthcare system. This was made painfully obvious as expressed by Dr. Emanuel. All the stakeholders (patients, physicians, hospital systems, healthcare insurance companies, pharmaceutical companies and the government) have contributed to the waste in the healthcare system.

The biggest villain has been the healthcare insurance industry. The next biggest villain has been the federal and state governments for letting the healthcare insurance industry get away with what they are getting away with.

 Healthcare policy experts refuse to understand that the government is not the administrative services provider for the Medicare program. The government outsources all the administrative services to the healthcare insurance industry.

 The government pays over 20% of each healthcare dollar plus a bid price to the healthcare insurance industry’s regional vendor.

 Most of the vendors that administer Medicare and Medicaid are subsidiaries of the major healthcare insurers. They change their name to the disguised subsidiaries because some of the state government exposed the major companies for the abuses the healthcare insurance companies imposed on patients and physicians.

The politicians’ and bureaucrats’ goal is to maintain power. Their decisions are based on maintaining their power or leveraging their ideology to maintain or obtain that power through the next election cycle.

 They are not concerned with the health and welfare of citizens.

  President Obama proves this daily by running for reelection rather than running the country

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Please send the blog to a friend 

 

 

 

  • Medicare America • March 19, 2012

    Thanks for this article. Quite sensible.

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Paul Ryan on Medicare

October 26, 2011
inConsumer Driven Health Care, Medicine: Healthcare System, Quality medical care measures, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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 Stanley Feld M.D.,FACP,MACE

 Paul Ryan and the Republican House passed the 2012 budget that has been ignored by Harry Reid and the Senate.  Harry Reid gets his orders from President Obama. He chose not to consider the Republican House budget. Instead Democrat chose to demonize Paul Ryan.

 President Obama seems to be ignoring America’s debt and deficit spending crisis. The Senate has not produced a budget in over 900 days. President Obama has presented numbers to the CBO that would result in decreasing the budget deficit. The numbers presented to the CBO are phony. The Healthcare Reform Act will result in a huge increase in our deficit. It will result in higher taxes.

The traditional media has been very effective in demonizing Paul Ryan’s budget proposal.. The TV ad implying that Paul Ryan is pushing grandma off the cliff is a total lie. The media should fact check before accepting an inaccurate advertisement .

If anything, President Obama’s Healthcare Reform Act will push grandma off the cliff.

Paul Ryan’s explanation of our debt crisis and deficit spending is clear. His budget proposal is also clear.

  

 

Paul Ryan questions the reasons President Obama and the Democratic Senate are ignoring the coming disaster.

  

The healthcare system is inundated with waste, fraud, abuse, a lack of competition and well-directed incentives for the healthcare system to function efficiently.

 President Obama’s healthcare reform law is awash with penalties, punishment and rationing as well as waste in the form of more bureaucracy, committees, studies and pilots. Medicare is unsustainable.

  

The healthcare insurance industry has figured out how to profit from the proposed ACO (Accountable Care Organizations). It means more bureaucracy resulting in higher fees to charge the government for providing administrative services. The result will be higher unsustainable costs for both the government and seniors.

  

 

 

  

 

Hospital systems know are not prepared for ACOs. ACO’s are too costly to set up. Most hospital systems information systems are not good enough to provide the data the government wants to evaluation the care given. Administrators managing hospital systems intuitively know that the government will make decisions that will be counter to hospital systems’ vested interests.

  

 

Physicians know that hospital systems are going to try to capture as much of their intellectual property as possible and restrict their freedom to make medical judgments. It will be very difficult to create physician hospital alignment under an ACO.

  

This is a must watch You Tube

Patients know ACO’s are going to restrict access to care, increase their out of pocket expenses, ration care and result in higher taxes and higher deductible. Partial implementation of President Obama’s healthcare act already has resulted in all of the above.

Hospital systems and physicians have not signed up for ACO’s. That resulted in Dr. Don Berwick and CMS revising their ACO final rules. Dr. Berwick is trying to entice hospital systems and physician groups to sign up and form ACO’s.

Dr. Berwick says he is for patients, hospital systems and physicians delivering better care to patients. I believe him. However, he is doing it the wrong way.

 The only thing the new rules accomplish is to make forming an ACO more affordable at the front end. Medicare ACO’s continue to be a government controlled system with penalties and punishments to providers. 

Patients’ treatments will be determined by a non-elected committee and not their physicians.  The committee might make the wrong decision by examining the wrong data.

The most recent example was the United States Preventive Services Task Force (USPSTF) on prostatic specific antigen (PSA).  

There was not one urologist on the committee. Another example was the USPSTF task force studying osteoporosis and the use of bone mineral density in men over 70. There was not one Clinical Endocrinologist on the committee.

All anyone has to do is go into any Wal-Mart on a Monday morning.  At least 50% of males over 70 years old look like they have lost several inches of height.  Each of these men has osteoporosis. They are at risk for hip fractures. Hip fractures at the least with decrease quality of life. At most, long hospitalization and death. Hip fractures can be prevented if treated properly.

Medicare will not pay for these men to have a bone density for the diagnosis of osteoporosis.  This leads me to the definition of quality medical care.

  The next step would be to study the number of hip fractures in men over 70 years old and the cost of treatment of these fractures. An evaluation of the quality  of life  after fracture must be evaluated to get an accurate assessment of the cost effectiveness of doing bone mineral density testing.

Medical care systems must be a patient centered and controlled. It must not be a government centered and controlled system. This is the only way to develop a cost efficient system. Dr. Berwick’s way will only increase the cost to the government. He will spend money the government does not have.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

 

 

 

 

 

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“ICE” (In Case Of Emergency).

October 19, 2011
inConsumer Driven Health Care, Medicine: Healthcare System
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Stanley Feld M.D.,FACE,MACE

 

  A good friend and fellow physician sent me this notice. This is a important public service announcement.

 An individual citizen not the government initiated the program.  If adoption of the program becomes a national standard, it will demonstrate people power and individual responsibility.

 The key to Repairing the Healthcare System is individual responsibility. This program represents an opportunity for every individual to assume responsibility for themselves and alert everyone they know to be responsible for themselves.

 

A paramedic conceived ICE.  At the scene of accidents he found cell phones on an unconscious victim but he could not find whom to notify. 

 He thought it would be a good idea if there was a nationally recognized symbol to find a victims contact person In Case of an Emergency in the victims cell phone directory.

 The ICE cell phone number could be found quickly. Emergency service and hospital personal could simply dial the phone number stored under "ICE."

 

We all carry our mobile phones with many names & numbers stored in its memory. Nobody would know which of these numbers belong to our closest family or friends.
 

 If "ICE" (In Case of Emergency) was a national icon close family or a friend could be notified immediately.

ICE is a great idea that can make a difference. Everyone reading this is on their computer, tablet or mobile phone. Go to your phone directory, get a number you want contacted in case of emergency and enter it as ICE. Then forward this to your email list.

It you have more than one contact name file the names in the telephone directory as ICE1, ICE2 and ICE3.

 

The ICE concept demands personal responsibility. Everyone should have an ICE listing in their mobile phone in case of emergency. 

The power of the individual combined with the power of the internet can make ICE an instant national symbol.

 ICE can speak for you when you are not able to!

 Do it now!

 Then e-mail the notice to your friends

Stanley Feld M.D.,FACP,MACE

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.   
 

 

 

  • Chirag Patel • October 28, 2011

    I really liked this concept — it is an exceptional medium to help someone in their critical time of need. Paramedics refer to it as the golden hour though they may not even have an hour in some cases.
    Thinking through, I found few glitches in its practicality; for instance, the value of ICE reference is lost if your phone is destroyed by the impact, like an accident, that caused the emergency. Read more in my blog post at: http://icecare.info/blog/2009/09/01/ice-debunked/
    I still liked the idea and felt we could improvise with a little extra effort for prevalent life style; and have created a solution called ICEcare.
    I am open to feedback and cooperative efforts.

  • Kevin Barnes • December 7, 2011

    Kevin Barnes

    Thanks a lot for the post.Thanks Again. Keep writing.

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The Healthcare Insurance Industry Is Not Interested in Being Price Transparent.

October 16, 2011
inConsumer Driven Health Care, Healthcare Insurance Industry, Medicine: Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

Truthful information (Price Transparency) is a huge issue in the healthcare system. Hospital systems, physicians, drug companies, pharmacies, the healthcare insurance industry and the government hide behind the opacity of information.

There is a mutual distrust among stakeholders.

This mutual distrust must be overcome and price transparency achieved before any progress can occur in Repairing The Healthcare System.

In order to achieve Pareto efficiency in the healthcare system all the stakeholders must agree to price transparency. The advantage of Pareto efficiency is that all the stakeholders will be better off in the long term while some might have to yield to some issues in the short term.

Lodi Hurwicz introduced the idea of incentive compatibility. His point is the way to get as close to the most efficient economic outcomes is to design mechanism in which everyone does best for himself or herself. He says this can be achieved by sharing information truthfully (Price Transparency). It is easy to understand that some people can do better than others by not sharing information or lying.

 The lack of interest in price transparency by the healthcare insurance industry was demonstrated in New York State in the last few weeks.

Major health insurance companies seeking steep premium increases in New York have submitted memos to state officials to justify the higher rates. Now they are fighting to keep the memos from the public, saying they include trade secrets that competitors could use against them.

 Benjamin M. Lawsky, the state superintendent of financial services, whose new agency oversees the state insurance division said,

 “How these companies are setting these rates is vital for the public to know, and should not be treated like a state secret,” “Transparency will promote healthy competition and enable the public to rigorously comment on proposed rates, two goals that all of us should favor.”

 The state insurance division issues permits to healthcare insurance companies to sell insurance in the state. If a healthcare insurance company does not want the state to publish the reasons for its insurance premium increases they should not be issued a permit to sell healthcare insurance in that state.

Mr. Lawsky has ordered that the memos be made public. His decision will go into effect by the end of November unless the companies obtain a court injunction.

The healthcare insurance industry has held the advantage over consumers in the past under the long-standing “trade secret” exemption.  The state legislature should have the courage to eliminate that exemption.

The decision followed a battle by a consumer advocacy coalition, Health Care for All New York, which had first sought information for a policyholder in Queens who faced a 76 percent increase in his family’s Emblem Healthpremium. (The fee was later raised by 270 percent.)

State Insurance Department has received hundreds of consumer protests over proposed premium increases, many of them double-digit percentages without justification except that it must be done. The State Insurance Department now has the power to reject proposed rate increases. The question remains as to whether they have the courage to reject the increases.

Aetna and others are making outrageous profits selling healthcare insurance and paying its executives many millions of dollars a year in salary.

Aetna, like other carriers, has said premium increases are driven by the actual cost of health care. But consumer advocates dispute such assertions, while complaining that it is hard to challenge the increases without access to the company filings.

United Health/Oxford wrote, “This matter is of critical importance to us.” It called the information “proprietary.”

 Aetna wrote,  “Public disclosure in this format will provide ready and easy access to comprehensive pricing, product and marketing strategies,” and warned of “substantial and irreparable injury to Aetna.”

Independent Health said, “It had spent “well over $700,000 developing the trade secret documents” and estimated that the value of keeping them confidential was much higher.

It sounds as if both Aetna and Independent Health are threating the state with legal action. If they do not like the state rule they should move on and not sell insurance in that state.  

The state’s obligation is to protect its consumers from abuse. The state should simply deny permits to the healthcare insurance company to sell healthcare insurance in the state.

Moreover, other companies argued, the filings are too technical to be understood by consumers.

“Several of the exhibits to the rate application as well as the actuarial memorandum contain not only trade secrets as noted above, but esoteric actuarial pricing precepts best understood by fellow actuaries and health plan competitors,” Sean M. Doolan, a lawyer representing Excellus, Empire, Connecticut General, and Capital District Physicians’ Health Plan wrote to state officials.

 “These documents, often speaking of concepts such as morbidity and anti-selection, could cause not only confusion, but also unnecessary alarm to the layman policyholder.”

These are excuses. They are lame and patronizing. Consumers are not as dumb as the insurance industry thinks.

 Elisabeth Benjamin is vice president for health initiatives at the Community Service Society of New York and a founder of Health Care for All New York, a coalition of 100 groups working for more affordable medical care. She said the group has hired its own actuaries.

“The only way the public will find out whether these outlandish price hikes are justified is if we can see the underpinnings,” she said. “They would like to have us ignorant. What they are saying to us, by opposing the disclosure of why they think their rate increases are justified, is that they want to keep us uninformed consumers.”

They sure do want to keep consumers ignorant. I hope the state officials are not intimidated by the healthcare insurance companies. I hope the state officials are supported by New York’s governor. Consumers are starting to understand their power. They need to drive the healthcare system. This issue is a good place to start.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.  

 

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How To Manage Complexity?

September 25, 2011
inChronic Disese Management, Consumer Driven Health Care, Information Technology in Healthcare, Medicine: Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D., FACP, MACE

 Complex systems are the result of interactions of experiential learning system and complicated learning systems. Complicated learning systems are created by scientific innovation. Managing the interaction effectively results in efficiencies and success.

On November 11,2007 I wrote about Mechanism Design and the Healthcare System. This Economic Theory won the Noble Prize that year. Few people have ever heard of the theory of Mechanism Design.  

Many of the stakeholders in the healthcare system have some excellent ideas. I would include Dr. Donald Berwick and President Obama on that list.  Problems usually arise from conflicting ideology and method of managing the complexity of competing ideologies.

The key is to align all the stakeholders’ vested interests in a fair and equitable way. It is important for all the stakeholders to agree with the method of managing the complexity created.

It is important to start a sensible discussion on how to Repair the Healthcare System. President Obama has a very difficult time the forcing adaption of his plan to Repair the Healthcare System because of conflicting ideologies.    

The managing of the healthcare system and it many complicated parts have to be approached in a different way.

 The key question should be who is the healthcare systems customer?

The people are the customer. President Obama’s believes the central government is the customer.

Consumers and physicians believe President Obama’s Healthcare Reform Plan is punitive. President Obama has disregarded their views.

I wrote in 2007,

“Last month the Nobel Prize in economics was awarded to Leoid Hurwicz, Roger Meyerson and Eric Maskin . They were awarded the Nobel Prize for developing the economic theory of “Mechanism Design.” My first reaction was “what is that?”

After some research I realized the power of Mechanism Design. It is a brilliant economic theory that could solve many of our economic problems. Mechanism Design applied to our healthcare system could solve most of the dysfunction.

What is it? “ In economics, mechanism design is the art and science of designing rules of a game to achieve a specific outcome, even though each participant may be self-interested.

Everyone in a free country tries to defend his/her vested interest. It is noble to defend the vested interest of others. Unfortunately, it does not work in reality. Rules can be constructed to serve all the stakeholders vested interest with consumers being the key stakeholder.

 Setting up a structure in which each player has an incentive to behave as the designer intends does this. The game is then said to implement the desired outcome. The strength of such a result depends on the solution concept used in the game. It is related to metagame theory, which is the theory of games the playing of which consists of developing the rules of another game.

This is a complex thought. If the rules of the metagame are impossible to comprehend, follow or are total opposed to the participants’ vested interest the fallback position is the rules of the first game.

Mechanism designers commonly try to achieve the following basic outcomes: truthfulness, individual rationality, budget balance, and social welfare.

This should be the goal of everyone in a rational society.

 However, it is impossible to guarantee optimal results for all four outcomes simultaneously in many situations, particularly in markets where buyers can also be sellers

A rule to the advantage of the seller can be a disadvantage to the buyer. The stakeholders need to figure out an appropriate tradeoffs.

 Thus significant research in mechanism design involves making trade-offs between these qualities.

The tradeoffs can be reasonable. They must be shown to be to the advantage of all the stakeholders.

 Other desirable criteria that may be achieved include fairness (minimizing variance between participants' utilities), maximizing the auction holder's revenue, and Pareto efficiency. More advanced mechanisms sometimes attempt to resist harmful coalitions of players.”

Pareto efficiency can be understood in the following graphic.

  Parero efficiency

 In essence when stakeholders are fighting neither B or C neither wins nor achieves total victory. The result is approximately position A. If managing complexity can convince both B and C they would be better off in position D the system has aligned incentives. Both are better being at position D.

 “Looking at the Production-possibility frontier, shows how productive efficiency is a precondition for Pareto efficiency. Point A is not efficient in production because you can produce more of either one or both goods (Butter and Guns) without producing less of the other. Thus, moving from A to D enables you to make one person better off without making anyone else worse off (rise in Pareto efficiency). Moving to point B from point A, however, is not Pareto efficient, as less butter is produced. Likewise, moving to point C from point A is not Pareto efficient, as fewer guns are produced. A point on the frontier curve with the same x or y coordinate will be Pareto efficient.”

Lodi Hurwicz contributed the idea of incentive compatibility. His point is the way to get as close to the most efficient economic outcomes is to design mechanism in which everyone does best for himself or herself. He says this can be achieved by sharing information truthfully (Price Transparency). It is easy to understand that some people can do better than others by not sharing information or lying.

Truthful information (Price Transparency) is a huge issue in the healthcare system. Hospital systems, physicians, drug companies, pharmacies, the healthcare insurance industry and the government hide behind the opacity of information.

There is a mutual distrust among stakeholders.

This mutual distrust must be overcome and price transparency achieved before any progress can occur.

Everyone claims they are afraid to be sued because of regulations. Tort Reform and regulation simplification is a must for price transparency.

If everyone’s incentives are aligned you have a much more efficient economic system. An example is defense contracting. If you agree to pay on a cost plus basis you have created incentive for the contractor to be inefficient.

 I you agree to pay a fixed price you can come close to an efficient price if you have all the truthful information. If you do not you have a fixed price and price transparency with incentives aligned, you create the incentive to be overcharged.

 The fixed pricing in healthcare must be flexible for all stakeholders. All the variables cannot be controlled during a disease process.

The variables are the patient’s responsibility for their own care, the skill of physicians to guide that patient's care and the ability to communicate information (Technology/ electronic communication) with patients and other stakeholders to increase the efficiency of the first two variables.

Most people can do better by not sharing truthful information. If the rules of the game require truthful information you can get close to an efficient market driven solution.

At present there are several impediments to ideally increasing efficiency. In fact, the incentives are present to decrease efficiency. There are numerous examples where central control has not increased efficiency.

Patients are the consumers of healthcare. Consumers must drive the healthcare system. This is the only way to maximize efficiency. 

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

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September 7, 2011
inConsumer Driven Health Care, Information Technology in Healthcare, Medicine: Healthcare System, Stakeholder Mistrust
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E-Prescription Final Rules

Stanley Feld M.D.,FACP,MACE

Physician participation in President Obama’s E-Prescription mandate has been poor. Physicians do not like mandates.

The new final rules were published in the Federal Register on August 30,2011, CMS added new "significant hardship" exemptions. The exemption qualifications were broadened. Physicians who qualify for exemptions will not be penalized starting January 1, 2012.

CMS also agreed to extend the application for exemptions one month until November 1,2011. The number of physicians who qualify for bonus has not been published. The number of physicians vulnerable for penalty has not been published. CMS hopes that many physicians will apply for the exemption.

In an August 10, 2008 blog post I warned that the E-Prescription program as written would not work as outlined.

 I said,

When is congress going to learn that punitive action is not a wise course to pursue against a vital workforce? Real incentives work. Bogus incentives always fail.

My e-prescription plan would provide physicians incentive to use the software because it would be free and driven by their patients demand. 

The U.S. Senate on July 9 passed legislation to revise several Medicare provisions and authorize incentive payments for use of electronic prescribing technology.

Please note the complexity of President Obama’s schedule. Physicians have learned that anything incomprehensible is an administrative trick to reduce reimbursement.

 Therefore, they do not participate. If they do not participate the incentive fails. It is similar to the art of war. You simply do not show up to fight.

The bill calls for Medicare incentive payments for e-prescribing of 2% in fiscal 2009 and 2010, 1% in 2011 and 2012, and 0.5% in 2013. Sec. 132. Incentives for electronic prescribing.

Physicians despise mandates. The questions that arose are:

 2% of what?

Will it cover my cost of installing an E-Prescription system?

What is the Obama trick play here?

Does the government want to develop an easy way of following my prescribing habits so they can reduce reimbursement?

The law

  1. Provides positive incentives for practitioners who use a qualified e-prescribing systems in 2009 through 2013.
  2.  Requires practitioners to use a qualified e-prescribing system in 2011 and beyond.
  3. Enforces of the mandate achieved through a reduction in payments of up to 2% to providers who fail to e-prescribe.
  4.  Prohibits application of financial incentives and penalties to those who write prescriptions infrequently.
  5. Permits the Secretary to establish a hardship exception to providers who are unable to use a qualified e-prescribing system.
  6. Requires more reporting by physicians. The increased reporting consists of any e-prescribing quality measures established under Medicare’s physician reporting system.

“Beginning in 2012, payments to physicians not electronically prescribing would be reduced by 1%, then 1.5% in 2013 and 2% in subsequent years.      

I believe congress is mistaken if they think this will work. It will be costly to the healthcare system and someone other than physicians will make some money. The plan will only generate more mistrust among physicians for the government.”

The old rules were confusing, cumbersome and duplicative. CMS published reasons for the easing of qualifications for exemptions.

 "After we published the 2011 Medicare Physician Fee Schedule Final Rule last fall, we heard about additional circumstances that could keep physicians and other health professionals from being successful e-prescribers," Patrick Conway, MD, chief medical officer and director of CMS' office of clinical standards & quality wrote in a blog post on the final e-prescribing rules.

 "For example," he wrote, "some providers weren't sure whether certified electronic health record technology that the Medicare and Medicaid EHR Incentive Programs require is also a 'qualified' electronic prescribing system as required by the Medicare eRx Incentive Program. [Other] providers brought up additional hardship situations that the 2011 MPFS final rule didn't address."

 The 2012 hardship exemptions in the final rule cover eligible professionals who:

  • Cannot electronically prescribe due to local, state, or federal law or regulation or have limited prescribing activity.
  • Are not a physician, nurse practitioner, or physician assistant as of June 30, 2011 and do not generally have prescribing privileges.
  • Are located in rural areas without sufficient high speed Internet access or in an area without sufficient available pharmacies for electronic prescribing.
  • Additionally, organizations that have already registered to participate in the Medicare or Medicaid EHR Incentive Programs and adopt certified EHR technology do not have to prove that they are successful e-prescribers, since that program already requires meaningful users have e-prescribing capabilities.

 CMS needs the cooperation of physicians. It also needs to save face for conceiving this complex, incomprehensible, bureaucratic mandate.

"The biggest issue was [that] the eligible professionals did not want to have to deal with the payment adjustment for 2012. We think there's an attempt here to do that. Given the current environment, the providers are still feeling squeezed overall. To have them go through the adjustment in 2012 really wasn't fair," she said.

 CMS is attempting to make it easier for providers to apply for exemptions. It has added an online tool to its site. Physician practices, however, still have to submit a written letter by November 1,2011 to receive the exemption..

If congress voted for my Ideal Electronic Medical Record it would avoid the barrier of high cost of physician entry into the program. 

An E-Prescription component could be integrated into the Ideal Electronic Medical Record solving two problems at one time. Logic has not prevailed thus far.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.  

 

 

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Healthcare Costs Are All About Chronic Disease Management

July 13, 2011
inChronic Disese Management, Consumer Driven Health Care, Medicine: Healthcare System, Patients Problems
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Stanley Feld M.D., FACP,MACE 

The National Institute for Healthcare Management Foundation is a nonprofit, nonpartisan organization focused on healthcare. The foundation just published an excellent report on the distribution of  healthcare costs in the population.

The results indicate that reducing healthcare cost is all about reducing and managing chronic diseases.

U.S. healthcare spending has sharply increased between 2005 and 2009 by 23 percent from $2 trillion to $2.5 trillion per year.

This is a result of a combination of factors. Chief among them is the increasing incidence of obesity. 

Who spends the money?

 Five percent of the population is responsible for 47% of all health care spending in the United States. Ten percent of the population accounted for 63.3% of the expenditures.

Fifty percent (50% percent) of the population accounted for only 3% of the healthcare expenditures.

The low cost person spent $233 in 2008 for healthcare services. Those in the top half of spending cost insurers, the government, or themselves $7,317 a year. The top 1 percent cost $76,476 per year. These are discounted fees not retail fees.

Healthcare expenditures were concentrated among a small group of high-cost patients. These high cost patients were older patients (over 55 years old) with one or more chronic diseases. If they were young and they had one or more chronic diseases healthcare expenditures increased. The more chronic diseases a patient had, the higher the likelihood the patient would be in the top 5% of healthcare dollar utilizers.

Fifty percent of the top 5 percent of healthcare spenders had high blood pressure, a third had high cholesterol, and a quarter had diabetes. The incidence of hypertension, hypercholesterolemia and adult onset type 2 Diabetes Mellitus is directly proportional to the presence of obesity.

It is logical to conclude that as the incidence of obesity and its severity increases the complications of obesity (hypertension, hypercholesterolemia, and Type 2 Diabetes) will increase.

It follows that healthcare costs will increase as a result of the increasing incidence of obesity. America must control the obesity epidemic.

Little progress is being made to decrease the increasing incidence of  obesity or Type 2 Diabetes.

In a perfect world, if obesity could be decreased, the incidence of chronic disease would be decreased.

In a perfect world, if the patients with chronic diseases could be taught to self-manage their disease, healthcare costs would decrease because the incidence of complications of chronic disease would be decreased by at least 50%.

 The treatment of the complications of chronic diseases is the most costly healthcare expenditure.  

President Obama’s Healthcare Reform Act mentions prevention and chronic disease management. There are no concrete incentives for patients to learn how to manage their chronic diseases. There are no specific financial incentives for physicians to develop facilities to teach patients to mange chronic diseases.

Americans are in for a long and costly dysfunctional healthcare system to the disadvantage of consumers and physicians.

President Obama’s Healthcare Reform Act puts consumers in a passive dependent position. Consumers need to be put in a proactive position to care for and be responsible for their health and healthcare needs.

Physicians have to have incentives to teach consumers to be self-reliant.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

 

 

 

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Patients and Physicians Must Control Health Care Costs

July 6, 2011
inConsumer Driven Health Care, Healthcare Insurance Industry, Medicare, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

The primary stakeholders in the healthcare system are patients and physicians. The incentives for patients and physicians to save money are non existent. The secondary stakeholders have taken advantage of non existent incentives to create a healthcare system that generates ever increasing costs.

Patients and physicians are the only stakeholders that can control costs. They initiate the use of the healthcare system’s resources. 

Healthcare costs for medical procedures such as an MRI or CT scan have been found to vary by as much as 683% in the same town, depending on which physicians patients choose, according to a study by Change: Healthcare.

The implication is that individual physicians are responsible for the differences. Most physicians do not own MRIs, CAT scanners or PET scanners. Secondary stakeholders own the equipment. They price the procedures and profit from the equipment, not the physicians.

"There's been a barrage of studies that show differences from region to region," said Christopher Parks, founder of Change:healthcare. "That makes sense — California's more expensive than Alabama. But this 683% is within a 20-mile radius in your own town." 

This finding illustrates several dysfunctional issues in the healthcare system.  President Obama’s Healthcare Reform Act is causing these issues to surface as secondary stakeholders are beginning to adjust to the upcoming changes.

For a pelvic CT scan, they found that within one town in the Southwest, a person could pay as little as $230 for the procedure, or as a much as $1,800. For a brain MRI in a town in the Northeast, a person could pay $1,540 — or $3,500. 

The social contract in medicine is between patients and physicians.  Patients should choose physicians and physicians should care for the patients the best they can with integrated healthcare team approaches. Physicians should be the captains of this team approach. 

Patients should be at the center of medical care and be educated to make wise medical decisions.

Physicians should be the coaches and advisors to patients on how to make wise decisions and attain better health.

In the beginning, patients’ employers provided first dollar healthcare insurance coverage. Patients were not at any financial risk. There was no need for patients to care about medical costs. The healthcare costs were their employer’s problem. 

Healthcare insurance companies enjoyed this setup. The more they paid out in benefits the higher they could raise the insurance premiums. Premium increases resulted in higher profits. It worked until employers said stop.

The insurance companies take 40-60 cents out of every healthcare dollar. Medicare and Medicaid outsource administrative services to the healthcare insurance industry. The healthcare insurance industry also takes 40 to 60 cents out of every Medicare and Medicaid dollar.

In anticipation of a reduction in government reimbursement for Medicare and Medicaid, the healthcare insurance industry has raised private insurance premiums, decreased covered illnesses, increased deductibles and increased co-pays.  

The Healthcare insurance industry is also moving toward  "reference-based pricing."

These changes have increased the liability of consumers for out of pocket expenses as opposed to having first dollar coverage. 

Medicare has different allowable fees for procedures in different regions. Medicare pays 80% of the allowable fee after a patient meets his deductible. Providers are only allowed to bill patients 20%.  By law balanced billing is illegal. It does not matter what providers charge for a procedure. Providers cannot bill patients for the balance of beyond the allowable fee. The Medicare fee is the most the provider can receive for a procedure.

“The Medicare Balanced Billing Program works to protect Medicare beneficiaries from being billed by healthcare practitioners for amounts beyond those approved by Medicare. The program investigates and takes action against those practitioner who violate the law.

Many providers are refusing to accept Medicare payment as Medicare reimbursement decreases. These providers can charge patients their fee. It is the patient’s responsibility to know if providers accept Medicare reimbursement. If providers do not accept Medicare, patients should understand their liability for the fee. Patients are liable for the total bill.   

Providers also contract with private healthcare companies. Some providers try to get the highest fee possible for the procedure. Private insurance companies pay different amounts depending on their need to build physician networks. This results in the wide spread in price in the same area. When providers are under contract with private insurers they cannot collect more than the contract price for a procedure. 

"It was eye-opening," said Howard McClure, CEO of Change:healthcare.

McClure said health plans are moving toward "reference-based pricing," in which they look at the average price of a procedure for a region, then say that's all they'll reimburse. But if a patient does not know how much a procedure costs, he or she gets stuck with the remainder of the bill if it goes above that average price.

"It helps the small business," McClure said, "but the consumer's left out in the cold."

Healthcare insurance coverage is changing with “reference-based pricing.”  Consumers are getting stuck with the retail price for procedures. The healthcare industry is using this to keep premiums down for business and compete for employer business.

Only consumers owning their healthcare dollars can stop this. President Obama cannot unless he controls the entire system and dictates prices. It never works because people figure out how to get around restrictions.     

Patients are led to believe that physicians are sending patients to higher priced providers for procedures because physicians will make more money.

Most physicians do not know the prices patients are charged for referred procedures.

Most physicians do not own MRIs, CAT scans or Pet Scanners. It is against the law to receive kickbacks.

It is essential that providers make their fee transparent to all providers and consumers.  Then consumers can choose wisely and create price competition.

Consumers must drive this process to create competitive pricing. Third party payment does not work.

 Consumer driven healthcare using the ideal Medical Saving Account will make it happen. It is the only model that makes economic sense.

 Consumers would start caring about the price of services when making healthcare decisions.

The challenge is to teach consumers to change their mentality toward healthcare costs and force providers through competition to be accountable for these costs.   

This will never happen under President Obama’s administration.  His goal is to empower the government and not consumers. Under President Obama’s administration the healthcare system will become more dysfunctional and further increase the deficit to unsustainable levels.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

 

 

 

 

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Economic Incentives Motivate!

June 22, 2011
inConsumer Driven Health Care, Health Savings Accounts vs Medical Savings Accounts, Medicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

The use of economic incentives to motivate behavior is neither a Democratic or Republican idea. It is human nature to be motivated by economic incentives. The concept of individual responsibility is an American idea. It has been tarnished in recent years.

There is no question in my mind that government has the responsibility to be compassionate and help the needy. It is my view that government should help individuals help themselves.

The costs associated with Medicare and traditional healthcare insurance are rising. Every stakeholder points a finger at the other stakeholders as the cause.

President Obama’s Healthcare Reform Act is raising costs higher in anticipation of cuts in the future. He is in the process of forcing individuals to be more dependent on the government rather than promoting individual responsibility.

Obamacare will fail to control costs.

All anyone has to do is look at a Rand Corp. study of 29 years ago to see what works and what doesn’t work. After all that is said what matters are results in decreasing costs, not your political ideology.

The Rand Corp’s political leanings are more left of center than right of center. The Rand Corp tries not to be biased by these leanings in its scientific studies. Its conclusions from its own data are sometimes skewed to the left ignoring its own evidence.

The Rand Health Insurance Experiment looked at consumers’ healthcare consumption in healthcare plans with different deductibles as well as an HMO. It monitored the results and reported its findings in 1982.

The findings were:

  1. Patients are responsive to out-of-pocket costs (the more they have to pay, the less health care they buy).
  2. Changes in the amount of spending have no apparent impact on health care outcomes in most cases.
  3. Judging from the difference in behavior between HMO doctors and fee-for-service doctors, physicians are also very responsive to economic incentives.
  4. Consumers with high deductibles were as likely to cut back on useful health services, as they were to cut back on unnecessary care.
  5. The critics of the consumer driven model have used this last point as proof that consumer driven healthcare doesn’t work. They claim that these consumers will not get appropriate care if they have a high deductible and try to save money.

If health care was free, spending soared with no improvement in health status. In the government controlled model government has to limit individual choice of care and access to care in order to keep consumption of care down.

The 1982 RAND study proved to me that consumer driven healthcare can work. Healthcare consumption is driven by the economic incentives the healthcare system offers consumers, physicians, hospital systems, pharmaceutical companies and healthcare insurers. Consumer driven healthcare patients used services they felt were essential to them and did not spend money on services they felt were not essential.

A consumer driven healthcare system would stimulate the growth of full-service diabetes centers that would force physicians into competing for diabetic patients because patients would be managing their own healthcare dollars. CDHC could energize the chronic disease healthcare market. It would create specialized centers competing for the care of patients with chronic diseases. Preventing the complications of chronic disease with education about self-management is in the interest of patients with the disease as well as society. The medical care of the complications of chronic diseases consume 80% of all healthcare dollars. Consumers and physicians respond to economic incentives. The healthcare social contract is really between consumers and physicians not government and hospital systems.  

A 2011 Rand study of more than 800,000 families from across the United States found when people shifted into health insurance plans with high deductibles their healthcare spending dropped an average of 14 percent compared to families in health plans with lower deductibles.

In October 2010 Cigna released a report covering 5 years of real-world experience with 897,000 plan members, about half in “traditional” coverage plan and the rest in consumer-driven plans. 

All of the results show that CDHPs are working beyond anyone’s expectations.

  1. CDHPs save 15 percent in the first year, 18 percent in year two, 21 percent in year three, 24 percent in year four, and 26 percent in year five.
  2. All this while individual out-of-pocket exposure is about the same (17 percent) in both types of plans.
  3. Using Cigna’s quality measurements (which are wrong), there is 8 percent to 10 percent higher use of preventive services in the CDHPs.
  4. CDHP enrollees are 9 percent more likely to get evidence-based treatment in the first year and 14 percent more likely in the second year of enrollment.
  5. CDHP enrollees are five times more likely to complete a health risk assessment.
  6.  CDHP enrollees are19 percent more likely to work with a health advocate.
  7. CDHP enrollees are 40 percent more likely to use on-line cost and quality tools when making decisions.
  8. CDHP enrollees have a 13 percent decrease in the use of emergency rooms.
  9. CDHP enrollees are 9 percent more likely to switch to generic drugs.
  10. CDHP enrollees have a 14 percent lower prescription costs.
  11. CDHP enrollees are 21 percent more likely to participate in a disease management program.
  12.  CDHP reduce their costs by 21 percent for joint disease, 8 percent for diabetes, and 7 percent for hypertension.
  13.  CDHP enrollees are slightly more satisfied with their plans than people in traditional approaches (83 percent versus 82 percent).

Finally according to the Employee Benefit Research Institute(EBRI), 22 million people are enrolled in consumer-driven and high-deductible health plans.

In 2010 EBRI conducted “Consumer Engagement in Health Care Survey” (CEHCS) analyzing the behavior and attitudes of 4,509 adults ages 21–64 with private health insurance coverage.

The findings were;

  1. People who enroll in these plans are more cost-conscious than those who have traditional health insurance policies.
  2. 53 percent routinely check to see whether their plan would cover specific care, compared with 47 percent of traditional policyholders.
  3. More than 50 percent check if a generic drug is available, compared with 44 percent in traditional plans.
  4. CDHP enrollees were more likely than traditional plan enrollees to choose doctors based on their use of health information technology.
  5. CDHPs enrollees also were more likely to exercise and less likely to be obese compared with traditional health plan enrollees.

President Obama’s Healthcare Reform Act will eliminate consumer driven health care plans.  I believe this is ill advised. CDHPs have decreased the cost of healthcare by motivating consumers to drive their healthcare decisions. A government directed system will not achieve this goal.

The results above were gotten with Health Savings Accounts. The use of my Ideal Medical Savings Account increases the economic incentives for consumers.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Emily • June 30, 2011

    I agree with the idea of CDHC, but as a consumer, I’m frustrated by the execution. I absolutely pay attention to price with the plan, but it is frequently a problem to know what the price is. I took my son to the ER after a fall and when I asked about price, they had NO IDEA. Not even a ballpark. In fact, by reading a sign posted in the room, I was more clear about the billing process than the woman collecting my billing information. Doctors often don’t know either when it comes to tests and meds. I don’t hold them entirely responsible or think cost can always be a leading consideration, but you can’t really even consider costs if you don’t know even know them. It’s a hassle to find them out too.
    If you want to look at prescriptions, look here http://www.frugalpharmacies.com/ The prices vary considerably from pharmacy to pharmacy. Who would pay over $600 for Topamax at Walgreens when you could buy it for $440 from Walmart? But, I’m guessing few would even consider that a great option if they realized it was under $25 at Costco. This is one of the more breath-taking examples, but it is not unique.

  • Dear President-elect Trump Part 3 | Stanley Feld M.D., FACP, MACE

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