February 18th, 2009 by Dr. Val Jones in Health Policy
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At the recent Medicare Policy Summit, Tim Hermes, the Senior Director of Government Affairs for Sepracor, offered an overview of Medicare’s current cost control strategy. These six strategies are part of Medicare’s policies, but are not necessarily applied evenly or consistently.
1. Functional Equivalency: if 2 drugs are deemed to be functionally equivalent, then their average sales price may be linked so they are reimbursed at the same rate.
2. Inherent Reasonableness: CMS has the right to decrease payments for treatments, that are deemed not to be inherently reasonable, by increments of 15% at a time.
3. Widely Available Manufacturing Price (WAMP): when the average sales price of a drug is higher than the WAMP, CMS has the right to reduce the drug’s price to the WAMP.
4. Coverage Restrictions: CMS can choose to restrict coverage for any drug, especially for off-label uses.
5. Judicial Bar: Only Medicare beneficiaries can sue CMS. Manufacturers may not.
6. Congress: there are several committees that have jurisdiction over Medicare, including the Senate Finance Committee, the House Ways and Means Committe, and the House Energy and Commerce committee. Congress can enact legislation to decrease the average sales price of drugs, and can influence Medicare cost control mechanisms.
February 18th, 2009 by Dr. Val Jones in Primary Care Wednesdays
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Dr. Val’s note: this post is Dr. Dappen’s continuation of “Sneaky Things That Doctors Do To Survive Financially.”
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The Funnel
By Alan Dappen, M.D.
Back to the gridiron we go. Two powerful teams square off. It’s Team Doctors vs Team Insurance. You, the patient, the object of our affection, have bought entry to this game through two payments. The first serves as your season ticket, and is the $800/month fee (coverage for a family of four) that goes to Team Insurance. You gain admittance to today’s game through your $20 dollar co-pay, which is collected by Team Doctor.
The $20 co-pay is really a ruse to distract attention away from Team Insurance and the plays the Doctors are about to pull. In reality, $20 co-pay doesn’t come close to covering the cost of an office visit (more about this on a future posting). Team Insurance is supposed to make up the difference of these costs for Team Doctors. To stay in the game, Team Doctors must hit Team Insurance just right to cough up enough money to cover their bills. On the other hand, Team Insurance hits back, denying and delaying payment of claims from Team Doctors, pocketing plenty of money to keep their fans (share holders) screaming “We’re Number One.” The focus of this game is on money, with the patient distracted by the $20 co-pay, believing it is fair payment and the middle man (insurance) works in their best interest.
Now let’s look at “The Funnel,” the number one play Team Doctors use to recoup their money. Let’s say you have a typical medical problem and contact your primary care provider for help. You inadvertently have stepped into the playing arena. To get you the help you need, Team Doctors will run you through “The Funnel.” This formation is the most effective play used to sustain doctors financially. Keeping The Funnel packed to the brim with patients is critical to the success of a medical office, with this success hinging on seeing at least 25 patients a day and keeping the simple problems coming back to ensure the cash follows.
Here’s how The Funnel works:
1. Overloading: Also known as seeing patients for anything. Insurance companies will only pay primary care providers for a face-to-face visit, and not a phone call or email consultation. Ironically, 70% of typical day-to-day primary care problems can be solved by a phone or email conversation only. Doctors need payment from insurance providers to stay in business so only conduct office visits, no matter what the problem. Think back on some of your medical needs and how they were handled: Need a prescription refill? Need to ask a simple question? Need an antibiotic? Need to set-up or discuss a lab test? Need a follow up? Make an appointment to be seen. Welcome to the funnel!
2. Get the patient through as fast as possible: Keeping the flow rate constant through the funnel means limiting opportunities where patients can slow their transition through the neck of the funnel, possibly plugging it up, and thus slowing the doctors’ chance for cash. Four major strategies keep the pay/time ratio flowing properly for Team Doctors:
a. Ration the long visits, like a physical, by making patients wait 6-12 weeks to come in for them.
b. Divide and conquer the 20 minute visit. Invite the patient to stick to one problem per visit and then invite her to return to the top of funnel on another day for any additional problems.
c. Find ways to “increase value” of visits by requesting additional tests or services, like “How about we do an EKG?”
d. Turfing the “complicated (time consuming)” issues to other practices. Ever been sent to a specialist that your doc couldn’t solve your problem 10 minutes? This is why.
3. Get the patient to come back, as often as possible. Also know as a refilling The Funnel. Continuous, fast-paced repeat business is the most important measure of a financially solvent office. Imagine this: Medical partners who get to know their patients and consequently care for their well-being create liabilities if that caring takes longer than 10 minutes on average per patient.
I invite readers to write in their examples of being part of the funnel. Did the funnel compromise your care or inconvenience you? Why would the doctors run you through the funnel?
Lastly is the question: What can you do about The Funnel? Better understand the system, why the funnel exists and why it’s important that you, the patient, take control of not only your care, but how it’s paid.
Until next week, I remain yours in primary care,
Alan Dappen, M.D.
February 17th, 2009 by Dr. Val Jones in Announcements
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The Biotechnology Industry Organization (BIO) announced on February 12th the creation of the Biotech Humanitarian Award, to be given to an individual in the field of biotechnology who has enhanced the human experience by harnessing the power of biotechnology to heal, feed or fuel the planet.
The Biotech Humanitarian Award will recognize individuals behind tangible improvements in the area of therapeutics, food and agriculture or industrial and environmental applications. The inaugural award and a prize of $10,000 will be presented in May at the annual BIO International Convention, and the five finalists will be recognized as well. The 2009 BIO International Convention runs May 18-21 in Atlanta, Georgia.
Nominations are open to all individuals and can be accessed via iambiotech.org. Nominees must have achieved one of the following: produced new applications, significantly advanced biotech applications or made available tangible, applicable results in the food and agriculture, industrial and environmental, or therapeutic sectors.
Qualified nominees for the Biotech Humanitarian Award will be professionals in the biotechnology field including scientists, researchers, academics, entrepreneurs, financiers, philanthropists, educators, advocates and others who have added value to society through their pursuit of biotechnology processes.
February 17th, 2009 by Dr. Val Jones in Health Policy
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Republicans do not support Barack Obama’s economic stimulus bill, nor are they too keen on the democratic approach to healthcare reform. Congressman Paul Ryan outlined an alternative approach to healthcare reform at the recent Medicare Policy Summit conference. His key points:
1. All Americans should have access to the same health benefits that federal employees have. They receive a medical savings account, with subsidies offered when they are sick, according to their need. Full support is available for low-income beneficiaries, while partial support is offered to high income beneficiaries. Ryan argues that targeting Medicare according to need will keep the program solvent (rather than offering full coverage to the very wealthy, etc.)
2. Tax credits should provide the basis for healthcare coverage so that individuals are not dependent on their employers for health insurance. Individuals would purchase their own health insurance either via their employer or on an open market that would promote competition between the plans to drive prices down. Individuals would be able to keep the remainder of their tax credit if they select a health plan that costs less than their yearly credit.
3. Americans will be allowed to purchase health insurance across state lines, allowing them further coverage options and increasing competition among the plans to decrease costs.
4. Small businesses may join a national group (Associations Health Plans) to pool risks and drive down the cost of providing health insurance to their employees.
5. States would create “high risk pools” for people with pre-existing conditions who could not afford insurance premiums. Federal funding would help to offset the cost of insuring these individuals.
Ryan explained that the Ways and Means Committee that oversees Medicare is basically “a bunch of politicians sitting in a room playing Caesar – giving either a thumb’s up or thumb’s down to healthcare reform and finance issues.” He warns that they will be doing a lot more of that if America continues on its current course of “more regulation, with the federal government dictating the practice of medicine, and rationing our healthcare.”
Ryan’s predictions are grim:
1. Within 2 years 17% of our economy will move from the private sector column to the public sector column.
2. Pete Stark will lead the charge for an Institute of Comparative Effectiveness to direct care choices in medicine. Physicians will have fewer treatment options to offer their patients.
3. Small health plans will go out of business, leaving only a few large plans, with decreased competition and fewer choices for consumers.
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For more information about Ryan’s views, please check out The Roadmap For America’s Future.
February 16th, 2009 by Dr. Val Jones in Health Policy
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One of the highlights of the Medicare Policy Summit was a panel discussion entitled “Medicare Expansion, Entitlement Reform, and National Health Coverage.” The goal of the discussion was to explore the potential role that Medicare could have in serving as a model for universal health insurance coverage in America. I’ve captured some of the key points that each panelist made:
First panelist: Grace Marie Turner, President, Galen Institute.
Grace Marie Turner has been instrumental in developing and promoting ideas for reform
that transfer power over health care decisions to doctors and patients.
She speaks and writes extensively about incentives to promote a more
competitive, patient-centered marketplace in the health sector.
Top 5 reasons why “Medicare for all” will not work:
1. The provider payment rate is not sustainable.
2. It cannot be sold as a free-standing health insurance policy. Medicare is full of gaps in coverage which must be covered with a series of supplemental plans like Medi-Gap.
3. The centralized nature of the benefit structure limits patient choices.
4. There will be political opposition by seniors to opening the flood gates to millions more beneficiaries, which would reduce their current coverage.
5. Medicare is already in debt to the tune of 38 trillion dollars.
What is a better solution to achieve universal coverage?
Private, competing plans can better provide tailored benefits to groups of uninsured. This would also increase patient choice and customization of care. Medicare Part D is run under a private sector model and is currently 40% under budget. This is evidence that the private sector, influenced by market forces, is better at cost containment.
The bottom line is that we have to decide if we want to reform healthcare with top-down directives or by aligning incentives. I believe we need to do a better job of coordinating care – it’s a financial issue.
Second panelist: Robert E. Moffit, Ph.D., Director of the Center for Health Policy, The Heritage Foundation.
Moffit has been an advocate of the free market principles of consumer choice and competition since the early 1990s, when he chastised Congress for keeping such a system of choice and competition ” exclusively for itself and federal workers while considering ways to impose vastly inferior systems on almost all [other] Americans.”
Who do you want to make key healthcare decisions for you?
1. Your employer
2. The government
3. Individuals and families
Other industrialized countries have accepted option #2, but America is a very different culture. We must enlist the states as the laboratories of democracy that they should be. The Medicare Advantage plan is revolutionary.
Third panelist: Robert Berenson, M.D., Senior Fellow, The Urban Institute
Dr. Berenson’s current research focuses on modernization of the Medicare program to improve efficiency and the quality of care provided to beneficiaries.
The consumer-directed healthcare system is not what the public wants or needs. We need supply-side solutions, not demand-side solutions. Medicare has been more successful than private plans at reducing costs.
There’s no doubt that a government-run healthcare system is not what Americans want – but I see no other alternative. The Massachusetts (state level solution) is not going to be successful because they provided universal coverage without any cost containment mechanisms in place, so costs simply sky rocketed.
Currently, 20% of Medicare beneficiaries discharged from the hospital are readmitted, and half of those are due to avoidable complications. Follow up care (after hospital discharge) is not well managed. Most patients discharged from the hospital don’t see a healthcare professional for follow up within 30 days of their discharge. We have to do better.
