Medicare

HEALTH REFORM: Dialysis Done Right

Allison Levy — Mon, 23 Nov 2009 21:30:00 -0500

Medicare hasn't put the finishing touches on its new dialysis reimbursement policy quite yet (you have until December 16 to get your comments in) -- but has decided to invest in educating the public on various dialysis treatment options. It's part of a longer term effort to give patients more of a say in managing their chronic diseases, and in changing some of the inefficient ways Medicare pays for kidney care.

More than 350,000 Medicare patients with end stage renal disease undergo dialysis. Most patients undergo out-patient treatment three times per week at either an independent or hospital based facility -- in the United States, fewer than a tenth are treated at home. (Rita Rubin of USA Today notes that three treatments per week is the standard not necessarily because it is "optimal but because that's the way it has been done for nearly four decades.")

But Medicare's education campaign will help patients make more informed decisions about where and how often they are treated.

"These education sessions will provide patients with chronic kidney disease information they need to understand their treatment options and participate in better management of their own care," Dr. James Sloand, senior medical direct of Baxter's North American renal business, told the Chicago Tribune recently. "This program empowers individuals to take measures to slow the progression of their kidney failure."

One option, as Bruce Japsen explained in that Tribune story, is for more patients to get dialysis at home. It's less expensive -- and research suggests that it is more effective as patients can "dialyze" more frequently, for longer periods of time and on their own schedule.

As Japsen explains, reimbursement for dialysis is complicated by Medicare's current payment structure, a "prospective payment system known as the basic case-mix adjusted composite payment system." In case you need a translation -- dialysis outpatient facilities bill Medicare for the routine dialysis service separately from some injectable medications and non-routine laboratory tests. These separately billable items account for 40 percent of total Medicare payment per dialysis treatment -- and are billed on a fee-for-service basis.

But, in September, the Centers for Medicare and Medicaid Services released a proposed rule to change that. Beginning January 1 of 2011, Medicare will "bundle" all the routine dialysis outpatient care -- the dialysis itself, the drugs and those lab tests -- into a single base payment (around $200 but adjusted for location and patient characteristics). (Look at this presentation for more specific details.)

Since 1972, the government has financed dialysis treatment regardless of the ESRD patient's age -- it cost an annual $10,000 per dialysis patient then, and more than $73,000 now. But Medicare believes that by bundling the payment, unnecessary medications will be eliminated and patients will receive efficient, quality and patient-centered care.

"Combining a fully bundled prospective payment system with required performance standards would encourage facilities to operate more efficiently and ensure that beneficiaries receive high quality care, while saving dollars for both beneficiaries and the Medicare program," said Jonathan Blum, director of the agency's Center for Medicare Management. (Here is another recent post about another form of bundled payment.) Not only will patients receive efficient and high quality care -- but they will be able to make an informed choice concerning the treatment option that works best for them.

HEALTH REFORM: Highlights from the Senate Bill

Elizabeth Carpenter — Thu, 19 Nov 2009 16:04:00 -0500

The latest version of Senate health care legislation (pdf available here) crafted by Majority Leader Harry Reid is making its rounds. There is a lot to review, but an initial read shows the bill is close to the legislation approved by the Senate Finance Committee in early October with a few notable changes: more generous subsidies, a higher threshold for the excise tax on insurers who offer high-cost plans, an increase in the Medicare payroll tax for Americans making over $250,000, and the addition of a long-term care insurance program for people with disabilities.

While this legislation also delays the implementation of insurance market reforms and subsidies (when compared to the Senate Finance legislation) there are a number of provisions that would start helping Americans immediately. In particular, the legislation:

Provides $5 billion to enact a temporary insurance program for those who have been uninsured for several months and have a pre-existing condition. Financial assistance would be available for the purchase of such coverage until the exchanges (or new insurance marketplaces) are established.
Prohibits insurers from selling insurance products that have lifetime or annual caps on benefits and from rescinding coverage except in the case of fraud or misrepresentation.
Requires health insurance companies to report publicly the percentage of total premium revenue spent on patient care and quality versus administrative costs. Health insurance companies will be required to refund enrollees if costs not related to patient care exceed a certain threshold.
Establishes small business tax credits to help small employers afford coverage for their workers starting in 2011.
Extends dependent coverage to require all insurers to allow young adults to remain on their parents' insurance until the age of 26.

The fiscal picture of the legislation should also give moderates a lot to cheer about. CBO not only says the legislation would reduce the deficit by $130 billion over the next decade, but it also expects that:

Medicare spending under the bill would increase at an average annual rate of roughly 6 percent during the next two decades -- well below the roughly 8 percent annual growth rate of the past two decades...Adjusting for inflation, Medicare spending per beneficiary under the bill would increase at an average annual rate of roughly 2 percent during the next two decades -- much less than the roughly 4 percent annual growth rate of the past two decades.

In other words...curve benders rejoice!

COST: Medicare Fraud Gets Increased Scrutiny

Meredith Hughes — Mon, 16 Nov 2009 20:44:00 -0500

The government paid $47 billion (that's billion with a B) in false or questionable Medicare claims last year, according to a new federal report obtained by the Associated Press.

The report shows a dramatic increase in Medicare fraud from previous years. In 2008, the government paid an estimated $17 billion in improper claims. So what caused this number to nearly triple in the past year? The most likely culprit is not more fraud attempts, writes the AP, but the increased scrutiny on Medicare claims. The Department of Health and Human Services's new stricter methodology is part of the Obama Administration's effort to crack down on Medicare fraud.

The report mentioned several new government strategies for combating fraud, but also warned that challenges lie ahead, reports the AP. We've written before about initiatives to combat Medicare fraud, such as the Health Care Fraud Prevention and Enforcement Action Team (HEAT). The new report suggested that such "aggressive actions" on the part of the government had yet to yield up significant savings, but were still in their early stages, according to the AP. In his testimony to the Senate Judiciary Committee, Deputy HHS Secretary Bill Corr estimated that anti-fraud, waste, and abuse activities had returned about $13.1 billion to the Medicare trust fund.

Fraudulent or questionable Medicare claims come in many varieties. False claims can include everything from prescriptions from dead doctors, treatments for imaginary patients, and requests for things like special shoes for diabetics that have had their legs amputated, according to the AP.

In an effort to reduce fraud and make way for "honest budgeting," writes the AP,

Obama is expected to announce new initiatives this week to help crack down on Medicare fraud, including a government-wide Web site aimed at providing a fuller account of health-care spending and improper payments made by various agencies. The Centers for Medicare and Medicaid Services also will launch an interactive Web site next month that will allow users to track Medicare payment information.

With the Medicare budget already strained, it’s important that every available dollar is going toward providing care for those in need. Increased scrutiny of Medicare payments and initiatives like HEAT are a step forward in protecting and preserving Medicare.

HEALTH REFORM: How to Control Rising Health Care Costs

Len Nichols — Wed, 11 Nov 2009 15:14:00 -0500

In its Room for Debate section, The New York Times asks a group of health experts what one or two provisions could be added to health reform legislation to help contain health care costs going forward. Below is my contribution to the discussion. For more on the issue, you can read my colleague's post on the real versus the ideal options for slowing the growth of health care costs.

The Medicare payment reforms in both the House and the Senate bills will help to slow the growth of costs by rewarding value over volume, as will the proposed Medicare commission and the tax on insurers who offer high-cost health plans, which are in the Senate Finance Committee bill. And both House and Senate legislation also includes “innovation centers” which will allow us to test different payment models and health care processes.

Even with these steps, the reform bills could be strengthened. Specifically:

The Medicare commission in the Senate Finance Committee legislation should be allowed to recommend changes that will reduce system-wide cost growth, not just in Medicare. The scope of the commission should be broadened to include both the private and public sectors.
Administrative costs are the fastest growing expense for most providers. Administrative simplification provisions should require private insurers to use common claims forms and adjudication approaches or adopt Medicare’s processes.
The current duplicative regulation system costs providers time and money. Evidence-based medicine should be rewarded with a regulation structure that streamlines existing oversight to form three regulatory bodies focused on quality, financial integrity, and workforce.
The current legal environment presents barriers to high-quality coordinated care. A task force chaired by the Health and Human Services Secretary and the Attorney General should lower these barriers by addressing current antitrust, self-referral, profit-sharing and medical malpractice laws.

COST: Can Health Reform Heal the Federal Budget

Paul Testa — Fri, 06 Nov 2009 16:58:00 -0500

Can health reform heal our federal budget? Yes, but whatever passes now is just the beginning, and there will always be room for improvement.

That's our takeaway from an excellent event we tweeted this morning hosted by the US Budget Watch, a joint project between the Committee for a Responsible Federal Budget and The Pew Charitable Trusts.

There was a lot of ground covered by a panel of experts moderated by the Washington Post's Ceci Connolly and featuring New America's director of health policy Len Nichols. They tackled everything from raising Medicaid eligibility rates to fixing the Sustainable Growth Rate formula in a fiscally responsible way. But for now, we'll just give you the highlights of the discussion.

What impressed us the most was how little question there was about whether health reform will be paid for. Sure, James Capretta of the Ethics and Public Policy Center questioned the accounting of the bills and Donald Marron from the Georgetown School of Public Policy wondered if we're using some pay-fors for health reform that should be used elsewhere. For example, the savings from Medicare Advantage could be used to permanently fix the SGR. But all of the panelists agreed that if passed, health reform one way or another will be paid for and that, as Paul Van de Water of the Center for Budget Policies and Priorities says, is a big accomplishment.

The real discussion focused on whether health reform will actually bend the cost curve. Van de Water was quick to list many provisions such as the excise tax, accountable care organizations, medical homes, and bundled payments that have the potential to revolutionize care. Still, Marron and Capretta were skeptical of the real impact of these provisions -- whether cuts would be made and savings realized. During the Q&A, one questioner asked a similar question about how scalable these reforms were and whether best practices could really be universalized using Medicare as a leader. Len replied that past changes in Medicare such as prospective payment and DRGs had dramatic effects -- for example, reducing inpatient stays by two days without lowering the quality of care. The challenge, of course, was taking these principles (which are sort of a form of bundled payments within hospitals) and applying them across the system to promote better and more coordinated care.

Finally, on the question of predictions, AARP's John Rother believes that there will be a signing ceremony in the Rose Garden -- he just doesn't know when and what they'll be signing. He noted that in talking about a federal budget, it is important not to lose sight of costs in the context of households and the system as a whole. The key, Len said, is that the legislation must make a credible commitment to changing business as usual and moving us toward a system that rewards high-value care. He noted that when President Obama pledged to be the last president to take on health care, what he really meant was that he would be the last to discuss "whether." There will still be plenty left to do after reform passes, which Ceci Connolly noted, enhances the prospects for full employment for wonks like us.

QUALITY: A Good Beginning for Better Endings

Joanne Kenen — Fri, 06 Nov 2009 16:02:00 -0500

After all the sound and fury of last August, we're pleasantly surprised that the right hasn't risen again with all sorts of horror stories about the resurrection, so to speak, of the "death panels." Maybe because all that fear-mongering was finally discredited. Maybe we are finally getting just a little bit smarter.

The inevitable focus on the politics of health reform, and the disproportionate amount of attention paid to the public plan, sometimes obscures the many ways that the House and the Senate health plans are ambitious. Not perfect. Ambitious. I've heard experts, people I like and respect, say the legislation does "nothing" to advance the cause of quality of end of life care in America. They are wrong. The House and Senate bill each contain measures that would advance that cause -- not fix it completely, far from it, but they will take us important steps in the right direction. It's too soon to know which of these measures - if any -- will survive a final melding of House and Senate legislation. But let's look at them here because, except for the end of life consults which got way too much of the wrong kind of attention, they haven't gotten adequate attention. In an accompanying guest post. Dr. Ira Byock, director of palliative medicine at Dartmouth-Hitchcock Medical Center in New Hampshire, talks about what these changes can mean for his patients and their families.

One of the most damaging myths, or at least misunderstandings, in what passes for our national discourse about health policy is that our culture (and too often our doctors) have trouble talking about end of life care. And when we do talk about it, we don't always know what we're talking about. That confusion in turn fueled the "death panel" chaos of last summer.

An advanced directive -- whether a "living will," a health care proxy or a Physician Order for Life Sustaining Treatment -- does not mean "pull the plug." It does not constitute a license for rationing. It does not obligate you to "give up." It is not irrevocable.

An advanced directive is a tool. Properly used, it is a tool that helps you decide how you want to live out your final days, weeks or maybe even months. It is a tool that helps your doctors know what your wishes are so they can respect them. It is a tool that lets your family know what you want, so they too can respect your values and wishes, and avoid the anguished second-guessing and potential family conflict that ensues when people don't know or can't agree on what is best for an incapacitated loved one. If you want aggressive high tech care, a ventilator and a feeding tube and all that is offered in an advanced ICU, you can state that. If you want a DNR you can state that. And if you want something in between those options, you can say that too. (And we do so wish that the move to change the terminology eventually catches on, so that instead of Do Not Resuscitate, or DNR, we talk about Allow a Natural Death, or AND).

The House kept in its bill the VOLUNTARY advanced directive consult provision.(The word VOLUNTARY appears at least five times.) Basically, this means that Medicare will reimburse doctors for taking the time to talk to an elderly patient about what he or she may face medically and how he or she wants to confront it. Right now, there are all sorts of built-in disincentives -- cultural, emotional, legal and yes financial -- against having that conversation. The incentives lie in the other direction: Doctors, and ERS and ICUs are all reimbursed for giving you the aggressive care, and aggressive care is often the default form of care. Maybe our system should make sure you want it.

In addition, the House bill (Section 240) requires health plans in the new insurance exchanges make available to beneficiaries information about end of life planning and the option (Repeat after me: The Option. Not the requirement. The Option) to complete an advance directive or, in accordance with state law, a Physician-Order for Life-Sustaining Treatment (Not Life Terminating Treatment. You can repeat that a few times too.) The bill explicitly states this "shall not promote suicide, assisted suicide, euthanasia, or mercy killing." It also explicitly states that the provision "shall not presume the withdrawal of treatment and shall include end-of-life of life planning information that includes options to maintain all or most medical interventions."

The Senate left that out of the Finance bill. But the Senate bill does incorporate some -- not all -- of what's been on the wish list of hospice and palliative care doctors and nurses and social workers and chaplains for years. For instance, a number of states have been individually seeking Medicaid waivers so that seriously ill children can get hospice for 12 months instead of six -- and that they can also get concurrent, curative care. In other words, as a parent, you don't have to choose between say, chemotherapy, and all the support and symptom management and family assistance of hospice. The Finance bill would wipe out that lengthy, cumbersome, bureaucrat, financially-restrictive waiver process. All seriously ill children in Medicaid in any state could get concurrent curative and hospice care. It isn't that expensive, and it is so badly needed.

And it's not only kids who benefit. The Finance bill sets up a 26-site hospice concurrent care demonstration project in Medicare, so adults too in these test programs can have both curative and hospice care. Some earlier tests and research suggests that this isn't just going to improve the quality of care for people with advanced and life-threatening illnesses, it's actually cost effective. Given a better and gentler continuum of care, without having to make the stark either/or choice of hospice, people often end up gradually shifting the balance as their disease progresses. It is their choice. But their choice is often less aggressive care toward the end.

The concurrent care model, says Jon Keyserling, vice president of public policy and communication at the National Hospice and Palliative Care Organization, "lets you meet patients where they are." The NHPCO and other trade and advocacy groups have a longer list of programs they'd like tested, but Keyserling noted that legislation can be monumental or incremental -- and in some ways, health reform 2009 is both. The sweep of the whole bill is monumental; some components are incremental. But they are a start, and they can be built upon.

The House and/or the two Senate bills do include numerous provisions that have the potential to improve care for seriously ill people (and even nibble around the edge of the long-term care crisis -- which isn't addressed head-on by the current health reform bills). This post is long enough, so we won't go into detail here. But the bills include things like advanced medical homes for people with chronic disease, iniatives to reduce hospital readmissions, bundled payments, transitional care benefits (paying hospitals to do a better job of moving a patient from one care setting to another), assorted quality measurements, pilot programs to improve home-based (as opposed to institutional) care, even a new research initiative on undertreatment of pain. All these steps, whether they survive in a final bill this year or become part of the "building on" agenda for the future, mean paying attention to, and talking about, and doing something about, the needs of the old, the frail, the seriously ill and the vulnerable among us. Our grandparents. Our parents. And someday, ourselves. It's the one thing we all have in common.

HEALTH REFORM: Medicare Reform Will Benefit Seniors

Meredith Hughes — Mon, 02 Nov 2009 21:32:00 -0500

Seniors are a primary target of the misleading rhetoric in the health reform debate. Though the harmful rumors have been proven false time and time again, seniors have had to worry about everything from "death panels" to Medicare cuts. Organizations like the AARP have stepped up to get the truth out to seniors -- health reform will protect Medicare, not diminish it. A recent report from the Center for Budget and Policy Priorities (CBPP), House Health Reform Bill Would Strengthen Medicare, came to the same conclusion.

The CBPP reports that the House health reform bill would help all beneficiaries, and it highlights the provisions that will improve care for seniors:

Eliminate the "doughnut hole" in the Medicare drug benefit over time. Currently, Medicare beneficiaries have to pay for 100 percent of the cost of their medications once they exceed an initial coverage limit, until catastrophic coverage kicks in. Many seniors who fall in this hole are already struggling to pay their bills -- and when they can't afford their medication, they end up sicker in the long run. CBPP reports that closing the doughnut hole would, on average, lower beneficiaries' out-of-pocket drug spending by providing greater financial protection against high drug costs.

Expand access to preventive care services for Medicare beneficiaries. To enable seniors to get vital preventative care services (such as cancer screenings), the House bill will waive Medicare deductibles and co-insurance for all preventive care services.

Expand eligibility and increase participation in programs that assist low-income Medicare beneficiaries with their premiums and cost-sharing. Many low income Medicare beneficiaries receive additional assistance through from state Medicaid programs, in the form of Medicare Savings Programs (MSPs) and the Low-Income Subsidy (LIS) that help pay for prescription drugs and certain benefits. The House bill would both increase the number of beneficiaries eligible for these programs and make it easier for beneficiaries to enroll and stay enrolled.

Create incentives for health care providers to improve the quality of care they furnish to Medicare beneficiaries. The House bill would change how Medicare pays a variety of health care providers like hospitals, physicians, and nursing homes in order to encourage greater coordination of care that could produce better health outcomes for patients at lower cost. (For more about realigning incentives to promote value in the health care system, check out our Health CEOs for Health Reform paper, Realigning U.S. Health Care Incentives to Better Serve Patients and Taxpayers).

Make Medicare more efficient by modifying payment rates in order to lower costs while maintaining beneficiary access to the providers that care for them. The House bill would eliminate the overpayments that private insurers receive through the Medicare Advantage program. Medicare Advantage pays private insurers, on average, 14 percent more to cover the same beneficiaries through private plans instead of traditional Medicare. This, as well as other payment changes, would produce significant savings that would help pay for the cost of Medicare improvements and the overall health reform legislation. These measures also extend the solvency of the Medicare program by five years.

HEALTH POLITICS: The Thing Speaks for Itself

Paul Testa — Thu, 15 Oct 2009 15:06:00 -0400

Over at InsureBlog, Hank Stern takes exception to Len Nichols' thorough debunking of the recent report produced by PriceWaterhouseCoopers for AHIP.

Like the Latin title of Hank's post (Res Ipsa Loquitur...), most of his points speak for themselves.

If he wants to object to the idea that "Good policy research uses nationally and statistically representative data so that its conclusions reflect behavior of the actual population," that's his prerogative.

If he's ignorant of the IRS tax code that governs the non-partisan work of the Robert Wood Johnson Foundation and the Urban Institute, well, we guess that's fine, too.

But if he thinks there's no difference between the research produced by such independent institutions and stuff that's made to order for private interests, he should take a look at the work PriceWaterhouse did for the tobacco industry in the early 90s. An independent review of that study found "serious methodological problems and errors of omission." (h/t Media Matters) The same could be said of their latest work. AHIP got what it paid for and InsureBlog should be less credulous of the talking points it's buying.

There is one issue which warrants further discussion, and that's the question of Medicare cost-shifting. As Len points out, the PWC report assumes "all Medicare savings will be converted into private sector cost shifts." There many reasons why this assumption is unrealistic, none of which appeal to Mr. Stern.

Cost-shifting is a difficult concept, one for which there is a great deal of debate. The issue is more complex than a simple squeezing the balloon type model where cutting costs one place just leads them to pop up elsewhere. As Jason Lee, Bob Berenson, Rick Mayes, and Anne K. Gauthier argue in Health Affairs, the degree to which cost-shifting matters "varies, depending on the power and position of actors in the health care system." For how this actually works, take a look at the March 2009 MedPAC Report to Congress: Medicare Payment Policy, specifically Chapter 2A. One of the report's central conclusions is that high financial pressure leads hospitals to constrain costs. Financial pressure, in MedPAC's analysis, essentially reflects the degree of competition faced by a hospital (greater competition and less market power lead to lower margins and higher financial pressure).

As the tables below illustrate, hospitals in competitive markets (high financial pressure) actually make money on Medicare. In less competitive situations, where hospitals have the market power to raise prices, they do so. Thus, while their private margins increase, Medicare margins remain low.

In recent statement to the Ways and Means, MedPAC explains how it is that hospitals with the highest per unit costs can also have the highest profits:

When financial resources are abundant, hospitals spend more and increase their costs per unit of service. High costs by definition lead to lower Medicare margins because costs do not affect Medicare revenues (which are based on predetermined payment rates). Therefore, when costs increase, Medicare margins decrease. In other words, income affects spending and in turn costs per unit of service. Hence, if Medicare were to increase its payment rates, it is not reasonable to think that hospitals with market power will voluntarily lower the prices charged to insurers and reduce their revenue. Instead, hospitals might spend some or all of that revenue, resulting in higher costs.

Focus on cost-shifting arguments, obscures the real goal of payment reform: creating incentives for high quality efficient care. Sometimes a savings is really a savings. The thing speaks for itself. Hank Stern just doesn't like what it says.

HEALTH REFORM: Evidence-Based Change You Can Believe In

Joanne Kenen — Thu, 08 Oct 2009 17:55:00 -0400

About a year ago, Drew Altman, president and CEO of the Kaiser Family Foundation, wrote an essay about "delivery system" folks and "coverage" folks. When I saw Drew soon after that, interviewing him for an unrelated magazine piece, I said I thought the overlap in that Venn diagram of coverage and delivery was both bigger than he described it, and expanding faster than he perceived it. I thought that as health reform became something that might really and truly happen the "coverage" camp had a growing appreciation of how delivery system reform, properly done, could improve quality of care while saving money needed to pay for that very same expansion of coverage. And the delivery system camp, at least the people I knew reasonably well, certainly thought it was high time that the United States did what every other developed country on the planet (and some of the not-so-well developed ones) has managed to do: make sure that everybody has decent affordable health coverage.

So it was a pleasant surprise to find Kaiser (which I think of as more on the coverage side) publishing a very useful, worth-reading paper on what we do and do not know about delivery system reform, at least with regard to Medicare.

The formal title is "Strategies for Reining in Medicare Spending Through Delivery System Reforms: Assessing the Evidence and Opportunities." The author is Randall Brown of Mathematica Policy Research.

We'll divide this post in two, possibly three, as it's a bit long and we keep thinking of more things we want to say. First, we'll look at what Brown writes about -- some of the most talked about ideas for change in Medicare (medical homes etc). Later we'll look at some of the other steps Brown recommends for bringing about rapid savings, targeted at a slice of the Medicare population that has chronic diseases and frequent hospitalizations.

I should say at the outset, too, that some experts that I know and respect (my delivery system acquaintances) think Brown overstates the obstacles. He draws on the published literature from past experience -- which by definition lags what we can see when we look around in the real time real world. And when we do look around, we see doctors and hospitals and health systems pushing ahead with innovation.

But it's still fair to ask how quickly those early adopters will become the norm, and how much the change-resisters will, well, resist change -- even if Congressional health reformers do swap out some of the obsolete carrots and sticks in our current payment environment. Also Massachusetts, which started with coverage, is now tackling delivery system and cost. We hope we can learn from them, just as we have learned from Massachusetts about affordability and access and insurance exchanges.

All that not withstanding, I found Brown's paper quite a useful picture of what we need to keep in mind as we move forward.. (Also, note that he was writing mostly in the context of what would happen under what was then the latest version of the House bill.)

I hope he forgives me for starting with an oversimplification of his take-home message:

1) A lot of the ideas being discussed won't generate savings during the next five to 10 years ("although they could have a sizable impact over the longer term"

2) There are huge practical, legal and political obstacles to some of these ideas (especially Accountable Care Organizations and bundling)

3) There are a bunch of things that aren't being discussed enough right now that deserve more attention. They aren't such heavy lifts and they could do a lot, even in our current fee-for-service environment, for the large slice of the Medicare population that is frequently hospitalized with chronic diseases.

Now onto a slightly less oversimplified version of his critique of specific popular items on the reform agenda:

Medical homes are potential savers beacuse they can improve care coordination and wrap case management around patient treatment. But the "Medicare medical homes demonstration program, as currently designed, is not likely to achieve near-term savings because it targets too broad a range of patients, and dilutes focus on those individuals most in need of a medical home." He also notes that small practices -- and most physicians are still in small practices and most Medicare patients get their care from small practices - don't have enough chronically ill Medicare patients to support the additional staff needed for a successful medical home model (or in this context is it a medical model home?)

Electronic health records are definitely needed to improve health care, but it will "take a long time to offset startup costs."

Bundling is a good concept but there will be a food fight about who gets paid for which services, about how to allocate both payment and responsibility. Bundling payment for acute and post acute services may be "difficult to implement given the ambiguities and tensions regarding what services are to be bundled together, which providers (hospitals, skilled nursing facilities (SNFs), home heath agencies, specialists, and other physicians) will share in the bundled payment for a particular patient, and how payments are to be distributed among them."

Pay for Performance is a valid quality improvement tool, but it doesn't necessarily take into account cost. And sometimes better quality, such as higher rates of screening, can raise costs at least in the short term.

Accountable Care Organizations are challenging. He can see them evolving in settings where physicians are on staff and salaried, but creating collaborations out of hospitals, physicians groups, clinics, home heatlh agencies, consumers, insurers and others will require "seismic change in the delivery systems." It would also require overcoming a zillion legal and regulatory obstacles. (For more detail on Brown's views of ACOs and how they may or may not befall the same fate as HMOs, see page 11 of the PDF. We also had an attorney guest-post a few months ago on possible hurdles to creating ACOs and how to overcome them.)

Comparative effectiveness will or will not (eventually) be a curve-bender depending on how Medicare uses the data, and whether the studies are done right. (Brown wants clinical trials, he's not a big fan of clinical registries). The direction he wants to see us go in is letting Medicare take cost and effectiveness both into account -- with timely exceptions made for patients who need the costlier treatment or drug or procedure for one good reason or another.

Tomorrow or maybe Monday, we'll take a look at what Brown's more optimistic about in the short-term. And there's quite a bit of it -- including several challenges and solutions we've been writing and thinking about ourselves.

COST: Helping Cover People in their 50s Might Save Medicare Money

Joanne Kenen — Tue, 06 Oct 2009 17:04:00 -0400

A study in the Annals of Internal Medicine (Hat tip Kit Seelye) finds that people who are uninsured in their 50s and early 60s end up costing Medicare a lot more money when they hit 65. The extra cost is about $1,000 a year -- meaning that the savings would pay almost half the $197 billion it would cost to cover them in the first place.

And because Medicare pays a tad less than half ofall health care spending for the elderly, the reductionin total medical spending (not just from Medicare but also out-of-pocket spending and from other insurers) after age 65 may be even greater.

A lot of the costs can be attributed to uncontrolled or poorly controlled diabetes and cardiovascular disease such as hypertension, heart attacks or stroke.The uninsured may also delay surgeries such as joint replacement until Medicare will pay for them."For adults with these chronic conditions," Dr. Michael McWilliams and his colleagues at Harvard Medical School and Harvard School of Public Health wrote," improvements in blood pressure, blood glucose, and cholesterol control associated with gaining coverage may substantially reduce subsequent annual health care costs."

Medicare spends about $5,800 annually on the previously uninsured -- versus $4,770 for the previously insured. Once they entered Medicare, the uninsured group had higher hospitalization rates.

The study looked only at medical bills -- not at any lost productivity or other indirect costs of illness in the working age, pre-retirement population.