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Highlights From The Medicare Policy Summit: What’s On The Mind Of The Congressional Budget Office (CBO)?

There is no doubt in anyone’s mind that the U.S. healthcare system, in its current form, is financially unsustainable. Many in Washington believe that 2009 will usher in more sweeping reform than we’ve seen in decades. I attended the Medicare Policy Summit (along with about 100+ industry insiders and one other physician, Dr. Nancy Nielsen) to try to read the “tea leaves” regarding Medicare’s likely reform – and how that will impact the healthcare system in general.

I took 49 pages of notes during the two-day conference, but will spare you the gory details and simply capture (in a series of blog posts) what I found to be the most interesting parts of the discussion. This post is devoted to highlights from Bruce Vavricheck’s lecture, “The President’s Budget and What It Means for Entitlements.”

Bruce Varvichek is the Assistant Director for Health and Human Resources, Congressional Budget Office.

Bruce explained that if we continue on our current healthcare spending path, over 50% of all federal spending will go towards funding Medicare, Medicaid, and Social Security entitlement programs by 2018.

What are the underlying causes for this rapid rate of growth in spending?

1.    Chronic Illness. The sickest, top 5% of Medicare beneficiaries account for 43% of all Medicare spending. Cost containment should focus on identifying these 5% early, and intervening so as to prevent advancement of disease where possible. Solution: The “medical home” model may help to identify people who are likely to become sick, and engage them in preventive health programs early.
2.    Obesity. Rises in obesity rates is directly related to increased heart disease, diabetes, cancer, and other chronic disease prevalence. The fastest growing segment of the population that is becoming obese is the high income bracket. Bruce concludes: “This can’t just be explained by McDonald’s.”
3.    Non outcomes-based spending. Medicare beneficiaries with the same medical conditions receive widely different medical services depending on where they are in the country. More services, however, do not correlate with improved outcomes.
Solution: Comparative Effectiveness Research

What changes in Medicare benefits is the Congressional Budget Office considering?

1.    Creating Medicare insurance buy-in for people ages 62-64.
2.    Reduce or eliminate 24 month waiting period for disabled people to become eligible for Medicare.
3.    Increase the age of eligibility of Medicare beneficiaries to 67. This encourages people to work longer since average lifespan has been steadily increasing.

CBO Strategies to improve quality and efficiency of care:

1.    Bundle Medicare payments so that hospital and post-acute care are linked. This will incentivize hospitals to do a better job of follow up once patients are discharged from the hospital.
2.    Reduce payments (after risk-adjustment) to hospitals with higher re-admission rates.
3.    Offer physicians performance-based payments for managing and coordinating care for their patients (the medical home model).
4.    Create incentives and penalties to promote adoption and use of HIT.

CBO strategies to streamline payment structure and benefits:

1.    Modify the Sustainable Growth Rate (SGR) formula used to determine payments to physicians. Put a cap on total spending.
2.    Change Medicare Advantage program to fee for service.
3.    Replace the current beneficiary cost-sharing structure with a unified deductible and uniform cost-sharing plan. Add catastrophic limit for out-of-pocket spending.
4.    Require drug manufacturers to pay a rebate to Medicare for drugs covered in Part D.
5.    Fill in the “donut hole” in Part D.

***

Next up: Grace Marie Turner and the free market gang debate the merits of a government-run healthcare system.

How To Reduce Costs And Improve Quality In Healthcare: A Legal Approach

By Jeff Segal, M.D.

I often attend health policy discussions. I am usually the only physician in the room. My colleagues lament they just do not have time to make their voices heard. As healers, our first duty is to care of the sick and disabled; and to provide comfort when we have little else to offer. I hope the public will listen to one doctor’s voice.

We have many problems to solve: access to healthcare for the uninsured; affordable premiums for those with coverage; outcomes that provide value and keep patients safe. These goals can be realized.

Let me set the stage for a proposed solution; one that can easily complement any number of other proposals.

This year, tens of thousands of physicians will receive a sobering letter. The summons will claim the doctor recklessly, negligently, and with wanton disregard for safety injured his patient. The poor doctor will not recognize this butcher in print and might not even remember the patient, now a plaintiff. The doctor will never forget this day. And this day will have expensive consequences for all of his future patients.

Fear of litigation is ubiquitous. The experience is so odious we physicians will do almost anything to avoid repeating it. We will order tests, perform procedures, and recommend referrals, all to prevent sitting in front of a jury. As one ER physician put it, “I will scan patients until they glow if it will keep me out of court.” And there are 800,000 of us who are fully capable of ordering just as many tests and referrals as the fictional TV character, Dr. Gregory House. We euphemistically label it defensive medicine.

Defensive medicine eludes easy definition, but it is pervasive. Some defensive tests provide value to the patient. Some paradoxically put the patient in harm’s way. Most of the time, no value accrues, just cost and inconvenience.

Combine defensive medicine with a sub-critical mass of health information technology, and the formula is complete for overpriced, idiosyncratic, fragmented care. That said, we can harness the tremendous emotional energy surrounding litigation for more positive ends, benefiting all stakeholders. Let me explain.

Healthcare is a partnership between stakeholders (patients, physicians, and payers); each with different needs and wants.

Patients want lower health insurance premiums without sacrificing timely access to physicians or safety. If something untoward happens, they do not want to lose their home.

Physicians want protection against meritless lawsuits, lower professional liability premiums, and to be front and center in developing the care pathways for managing patients. If they deliver superior outcomes, they want to be paid more.

Payers (insurance carriers, business, and the government) want care delivered in the most cost-effective way possible.

These goals are not mutually exclusive.

We proposed a model which relies on a contractual interaction between the various stakeholders. Patients (consumers) purchase a modified health insurance policy. That policy includes transferring a potential future right to sue – to the payer- or more accurately- to a neutral third party. In exchange, the patient receives not only health insurance, but a disability and life insurance policy. If a patient is injured, he receives a near-term predictable remedy. Not a lottery jackpot, but enough to carry on. He also pays a lower premium. And the system guarantees implementation of health information technology, including patient safety systems.

The payer (neutral third party) now has the ability to sue the doctor down the road if something goes wrong. To minimize any untoward outcomes, payers enter into an agreement with physicians. If the doctor follows cost-effective algorithms, developed bottom up with substantial physician input, the physician is effectively immunized from litigation. If these algorithms are not followed, the doctor could document why. It is only the combination of the physician ignoring the pathways, associated with a breach in the standard of care causing damages, that puts the physician at risk for litigation. Some or all of an award from such litigation could be passed back to the patient.

Physicians would be armed with knowledge of how to predictably avoid an adversarial legal process. The conventional tort system remains as a backstop incentivizing the doctor to voluntarily embrace efficient best practices. Care will be more consistent and patients will be safer. Dollars will be saved.

How much? We ran a sophisticated financial analysis on such a proposal. The system saves enough cash to bundle the disability and life insurance policies at no extra cost; pay for health information technology infrastructure and maintenance; with enough money left over to buy a health insurance policy for every uninsured American. The model ran Monte Carlo simulations that demonstrated if physicians are properly incentivized to follow efficient best practices, there is enough money left over to prefund these initiatives. Monte Carlo simulation is a computer model that generates thousands of probable future outcomes. The simulation looks at a number of inputs combined in ‘‘random’’ order. As a result, it is designed to account for the uncertainty inherent in complex systems such as health care.

The simulation concludes that by providing a formula for decreasing frequency of litigation, patients can paradoxically be safer, have better access to care, and have broader remedies if they are injured. Where the conventional tort system arguably has failed, namely in maximizing patient safety and making those who are injured whole, a reformed system that more often than not keeps doctors out of court could succeed.

While on first blush, the system is financed by decreasing or eliminating the practice and the costs of defensive medicine, the opportunity is much broader. Intertwined with the concept of defensive medicine, but separate, is savings associated with implementation of efficient best practices. Across the country there is considerable variation in practice patterns. This variation imposes considerable costs without a requisite improvement in outcomes. For example, at the population level, Medicare patients with severe chronic illness in higher-spending regions receive more care than those in lower-spending regions but do not have improved patient survival, quality of life, or access to care. In fact, their outcomes appear worse.1 It is reasoned that embracing best practices would improve clinical outcomes at a lower cost; in other words, improve patient safety at a lower cost. Although pay-for-performance programs have been proposed as one way to coax physicians to embrace efficient best practices, an equally powerful incentive would include a solution to litigation.

This model has been vetted and received warmly by those on the left and the right. I want to address three concerns.

In the model, what happens to dangerous doctors? Most doctors who are sued are not repeat offenders. To the extent individual physicians pose a recurrent danger, their care would be reviewed, and action would be taken, on an administrative level.

Isn’t the model cookbook medicine? No. Almost no clinical algorithm is applicable 100% of the time. Nonetheless, physicians must use their judgment 100% of the time. Physicians need latitude to deviate from algorithms. The proposed model allows such deviation if, in the physician’s clinical judgment, it is the right thing to do. There, the physician has contemplated the algorithm and consciously avoided its use with his patient. In such a setting, he is presumably doing so because he believes it is in his patient’s best interest. Such deviation will not trigger litigation.

How will plaintiff’s attorneys react? This model has been reviewed by a number of seasoned veterans. To their credit, those surveyed find much to like, preferring a bottom-up contract based approach to a top-down legislative dictate. Further, the current paradigm is a high stakes, high risk, long term game of poker. By the time a case gets to trial, an attorney has spent tens of thousands, sometimes hundreds of thousands, of his own money. He has to hire experts, attend depositions, file motions, and more. And, he often loses in court. If the system were more predictable and transactional, even attorneys could find a great deal to cheer about.

The outline sketched above just scratches the surface. There are many more details. We live in a time of great change. Any model that earns the support of physicians, patients, payers, and attorneys might actually be the change we have been waiting for.

***

1.  Fisher E, Wennberg D, Stukel T, Gottlieb D, Lucas F, Pinder E. The implications of regional variations in Medicare spending. Part 2: health outcomes and satisfaction with care. Ann Intern Med. 2003;138:288–298.

Dr. Segal, a neurosurgeon, is the founder and CEO of Medical Justice Services.
Medical Justice Services is a member organization of Center for Health Transformation.

The Healthcare Agenda For The New President And Congress?

The Kaiser Family Foundation and Harvard School of Public Health teamed up to survey Americans about their healthcare reform priorities (Kaiser has been doing this every year since 1992). A random sample of 1,628 adults participated in the telephone survey between December 4-14th, 2008. The results were presented at a press conference that I attended on January 15th.

Although you might want to view a presentation of the entire webcast here, I’ll summarize the points that I found the most interesting:

Dr. Robert Blendon (Professor of Health Policy at the Harvard School of Public Health) offered some fascinating commentary on the survey results:

1. Americans Are Fickle About Healthcare Reform Issues. Most public opinion polls do not take into account the degree of conviction with which people describe their health reform priorities. In reality, the public is generally quite ambivalent regarding the specifics of how to achieve reforms like improved access to care, and decreased healthcare costs. The Kaiser survey clearly demonstrated the public’s tendency to agree with specific reform ideas, but then change their minds when the potential downsides of such initiatives were described. So for example, most survey respondents liked the idea of an employer insurance mandate (requiring employers to subsidize employee health insurance costs), but when asked if they would favor it if it might cause some employers to lay off workers, then they no longer supported the mandate.

2. Public And Government Priorities Differ. While the public is primarily focused on relief from skyrocketing healthcare costs, the government is focused on healthcare delivery reform.

3. Americans Don’t Want Change To Affect Them. An underlying theme in the survey was that the average respondent didn’t want to pay more for healthcare, and they also did not want to be forced to change their current care and coverage arrangements.

4. It’s All About Money. America is in a near economic depression, and therefore the healthcare reform climate is very different from that of 1992 (when the Clinton reform plan stalled). Middle income Americans in an economic downturn are not willing to pay more taxes. The only way forward in our current economy is to find a revenue stream for reform that does not increase taxes on the average American. Blendon summarizes:

“It isn’t enough that all the groups agree on how to spend money on healthcare. ‘Who is going to pay?’ is the critical issue.”

At this point in time, it looks as if the American public is most supportive of the healthcare reforms listed below (but their opinion is certainly subject to change, depending on how the political discussions unfold, and how the media influences the debate). Blendon also cautions: “This doesn’t mean that this is a sensible health reform plan, it’s just what has public support at the moment.”

Healthcare Reform Initiatives Currently Favored By Americans

Expanding Coverage

1. Health insurance mandate for children

2. Fill the Medicare doughnut hole

3. Tax credits to employers to help them offer coverage to more employees

4. Health insurance for the unemployed

5. Eliminate medical underwriting (“pre-existing condition” carve outs and such)

6. Expand Medicare to cover people ages 55-64 who are without health insurance

7. Require employers to offer health insurance to their workers or pay money into a government fund that will pay to cover those without insurance

8. Increased spending on medical care for veterans

9. Increased spending on SCHIP

Controlling Costs

1. Negotiate for lower drug costs under Medicare

2. Allow Americans to buy prescription drugs imported from Canada

3. More government regulation of healthcare costs

4. More government regulation of prescription drug costs

5. Regulate insurance companies’ administrative spending and profits

Raising Revenue

1. Increase the cigarette tax

2. Increase income taxes for people from families making more than $250,000 a year

***

As you can see, the public supports reform that would result in substantial increases in healthcare spending without a clear idea of how to pay for those initiatives. Our government, in partnership with healthcare’s key stakeholders, is going to need to come up with a reform plan that identifies new revenue streams to cover the costs associated with expanding coverage. I find it hard to believe that increasing taxes on cigarettes (and a few very wealthy Americans) is going to be sufficient. If ever there were a time to nurture our American entrepreneurial spirit, it’s now.

Grand Rounds Edition 5:18, January 20th – Call For Submissions

Dr. Val is hosting the historic inauguration day Grand Rounds at MedPageToday. Please send your submissions to this email address: valjonesmd AT gmail dot com. Put “Grand Rounds Submission” in your email title and please use this format for the body of your email:

  1. Post title
  2. Post url
  3. Short description of the post
  4. Blog title
  5. Blog url

Although I have never done a themed Grand Rounds before, it would be terribly remiss of me not to acknowledge healthcare reform on the very inauguration day of our new President, Barack Obama. So please send me your best posts about the change you’d like to see in healthcare. If we do a really great job of this, maybe Tom Daschle will take a looksie? Don’t laugh, but DC is a small world – I share a hair stylist with Tom’s wife, Linda!

Please send me your submissions by midnight, ET, Sunday January 18th. I will include all submissions, but will give more weight to those that are about healthcare reform.

For those of you who are reading this and wondering what on earth I’m talking about – please read about Grand Rounds here. It’s the weekly summary of the best blog posts from the medical blogosphere.

My inaugural Grand Rounds will be published at MedPageToday at 8am, Tuesday, January 20th. (This link will work from that time on). I hope that we’ll reach an unprecedented number of readers on this platform.

I look forward to receiving your submissions!

Warmest Regards,

Val

P.S. Please enjoy Barbara Kivowitz’s Grand Rounds this week – it has a Sci Fi theme! The January 27th edition of Grand Rounds will be hosted by: Chronic Babe.

Ten Good Things About The U.S. Healthcare System

President-elect Obama and Secretary of HHS designate, Tom Daschle, invited concerned Americans to discuss healthcare reform in community groups across the country. My husband and I hosted one such group at our home in DC yesterday. Although we had been instructed to compile a list of compelling stories about system failures – instead we decided to be rebellious and discuss “what’s right with the healthcare system” and compile a list of best practices to submit to the change.gov website.

The event was attended by a wide range of healthcare stakeholders, including a government relations expert, FDA manager, US Marine, patient advocate, health IT specialist, transportation lobbyist, real estate lobbyist, health technology innovator, Kaiser-trained family physician, medical blogger, and EMR consultant. Here is what they thought was “right” with the healthcare system:

1.    Customer Service. Market forces drive competition for business, resulting in increased convenience and customized service. Healthcare consumerism has driven patient-centered innovations that improve quality of life. Examples include convenient walk-in clinics, online scheduling, services available in a one-stop location, and seamless transfer of health information (such as within the Kaiser Health system).

Memorable Quote: “We have a tremendous amount of choice in our system. That’s very good for patients and I hope we never lose it.”

2.    Accommodations For People With Disabilities. Kaiser Permanente was cited as an organization that takes special interest in facilitating good patient experiences for vulnerable populations and people with disabilities. For example, extra time is allotted for travel to and from the clinic, and schedules are built with flexibility to accommodate mobility impairments.

Memorable Quote: “Kaiser trains all its staff to be sensitive to people with ethnic, racial, and sexual preference differences. They learn to listen to the patient, and never assume they know what they think or feel.”

3.    Specialty Care. So long as a person has health insurance, access to the very best specialists in the world is available in a very democratic fashion to all patients. Several success stories included surgery and follow up for major multiple trauma, and congenital anomaly repair.

Memorable Quotes: “I’m only here today because of the technical skills of a U.S. surgeon who saved my life…” “I’ve traveled all over the world, and I wouldn’t want to get my medical care in any other country.”

4.    Social Media. Internet-based tools and social media platforms are leveling the communication “playing field” between providers and patients. People are discussing their care and treatment options with others like them online, as well as socializing with physicians and receiving real-time input on health questions.

Memorable Quote: “On Twitter I have I.V. access to physicians. I asked a health question and within 10 minutes I had 6 physicians answer me.”

5.    Access To Allied Health Professionals. Scheduling time with mid-level providers is easy, convenient, and effective. Patients enjoy the ability to access generalist care with nurse practitioners (for example) who provide quality care at a more relaxed pace.

Memorable Quote: “I love my nurse practitioner. She really listens to me and her schedule is much more flexible than physicians I’ve known.”

6.    Drug Development For Rare Diseases. The U.S. government offers grants, extended patents, and exclusivity to drug companies willing to develop drugs for rare diseases. This dramatically improves the quality of life for patients who would otherwise have no treatment options.

Memorable Quote: “The FDA recently approved the first drug for Pompe’s disease. Only a few hundred patients in the U.S. have the disease, and yet this life-saving medication was developed for them thanks to government incentives.”

7.    Patient Autonomy. The healthcare consumerism movement has replaced medical “paternalism” with care partnership. Patients are seen as consumers with choices and options who must take an active role in their health.

Memorable Quote: “Patient accountability is key to better health outcomes. But they need guidance and decision support… General health literacy is at a sixth grade level.”

8.    Health Education. Technology has improved health education dramatically. Patient education about their disease or condition is often facilitated by demonstration of computer-based anatomic models.

Memorable Quote: “I think that doctors are getting much better at communicating with patients in ways they can understand.”

9.    Coordination of Care. Some hospitals like the Mayo Clinic do an excellent job of coordinating care. For example, they provide each patient with photos and names of all the physicians, nurses, and specialists who are on their care team. Nurses update the patient’s schedule daily to reflect the tests and procedures anticipated and provide dignity and sense of orientation to the hospital experience.

Memorable Quote: “The Mayo Clinic has gone Facebook.”

10.    Democratization of Information & Transparency. Patients have the right to view and maintain all their medical records. They have many PHR options, and may be provided with CDs or thumb drives of their personal radiologic information to take with them to their next provider. Many doctors write their notes with the understanding that the patient will be reading them.

Memorable Quote: “One day soon, hospital stays will no longer occur in a black box. Family members and friends will be invited by the patient to view their daily schedule online, while nurses update planned procedures, events, and meetings. Family members won’t miss the opportunity to meet with the patient’s care team, because it will be on the schedule. MyChart (from EPIC) is working on making this hospital experience a reality at the Mayo Clinic soon.”

***

Thanks so much to all of you who attended. My husband will be preparing a report for the transition team shortly.

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