HJM: Repeat -- Medicare Advantage & Other Private Investment Hurt Medicare

http://healthjusticemonitor.org/2022/06/07/repeat-medicare-advantage-other-private-investment-hurt-medicare/ Summary: A September 2021 Health Affairs blog revealed how Medicare Advantage insurers use aggressive and fraudulent diagnostic coding practices to artificially boost revenues, with similar risks looming from Direct Contracting Entities. That blog was criticized as inaccurate by two corporate leaders in healthcare. The original blog authors responded this week, buttressing their case against Medicare Advantage and DCEs (now known as ACO Reach). The Emperor Still Has No Clothes: A Response To Halvorson And Crane Health Affairs Forefront June 6, 2022 By Richard Gilfillan and Donald M. Berwick Following our September 2021 Health Affairs Forefront articles on the “Medicare Advantage Money Machine,” the most common reaction of which we are aware has been that this was an “Emperor Has No Clothes” moment. Many knew the Medicare Advantage (MA) game, but few had called it what it was. Two responses to our articles … have been published in Forefront that find fault with our analyses. … For the most part, their arguments fail. We count more than a dozen assertions in these critiques, some matters of opinion and others matter of fact. These can be grouped into … six categories … [see HJM Comment] [Many] have documented that MA costs more than fee-for-service [largely due to the gaming of risk scores]. Every extra dollar paid to MA plans is, indeed, a transfer of taxpayers’ money to MA plans, which then benefit in terms of growth and higher profits. Those profits represent direct transfers of wealth from taxpayers to plans. The impact of MA on the delivery of care goes well beyond the Risk Score Game. Traditional Medicare presents a relatively straightforward, highly standardized approach to coverage and the financing of health care. MA creates a highly fragmented coverage and financing system that brings complexity and additional cost for all segments of the industry, particularly the providers. The result is an expensive MA administrative superstructure that we have layered on top of, and that now permeates and distorts, the actual delivery of care. Estimates of administrative costs and profits for all health system parties vary significantly but the broadest definitions are in the range of 25 percent. MA is a major driver of those costs. We must ask what we are getting for that if, after 35 years of privatized Medicare costing more than fee-for-service, we cannot demonstrate real clinical outcomes improvement. The answer is, “We are not getting much.” The opacity that comes from the privatization of public payment confounds objective, scientific analysis. Comment by: Jim Kahn Gilfillan and Berwick logically and effectively counter the two published criticisms of their September 2021 “Medicare Advantage Money Machine” blog (discussed in HJM). In so doing, they solidify an appropriately harsh assessment of Medicare Advantage and ACO Reach (rebranded DCEs). Below is a structured summary, incorporating quotations from the blog. Bottom line: Massive insurer profits achieved via widespread diagnostic upcoding deplete Medicare funds without evidence of added value for beneficiaries. 1) The Medicare Advantage Business Model Snapshot: Model = diagnostic upcoding to raise capitation rates. Coding efforts are not just to inform clinical practice, as the critic argues; they are to drive up payment rates. “MA risk scores have for decades risen continually … now almost 2 percent per year faster than those in traditional Medicare. That is not a mark of … increasing relative severity of actual illness in MA compared with the fee-for-service population; it is the Risk Coding Game …” The industry is so focused on this, it refers to a “risk score headwind” when COVID prevented home visits used to add more diagnoses. Overall, an estimated 14 percent risk score excess will result in overpayments to Medicare Advantage of $600 billion from 2023-2031. 2) The Profitability of MA Firms Snapshot: Huge profits and valuations. The critic proposes “Most businesses in most industries would see their stock prices dropping with only 4.5 percent profits [as seen with insurers].” Yet “[T]he increases in plans’ stock prices and valuations [are extraordinary].” Why? I argue in HJM that the nominal 4.5% for insurers obscures a real return rate of 30%, and thus explains why the investment is so attractive. “Profits are the product of profit margin multiplied by revenue. Risk Score Gaming positions plans to increase profits from both.“ And here’s the maximum profit strategy: if insurers buy up providers, as they are doing, the “Medical Loss Ratio” restriction on profits is easily evaded, dropping the real MLR from 85% to 70% and thus more than doubling actual profit margins. 3) The Effects of MA On Care and Underinsurance for Low-Income MA Beneficiaries Snapshot: Lower upfront costs, but poor financial protection when sick. “Plans use some of the subsidies [overpayments] from CMS to offer products with improved benefits and lower premiums for members. … Zero-premium products, with less-rich benefits and more out-of-pocket costs, are targeted at cost conscious buyers, particularly those with limited disposable income. Lower-income individuals have little choice but to trade a known zero premium cost for an unknown likelihood of greater out-of-pocket costs. But that tradeoff leaves many low-income beneficiaries underinsured and possibly experiencing significant negative impacts on their health.” The Kaiser Family Foundation found that “enrollees in Medicare Advantage do not generally receive greater protection against cost-related problems than beneficiaries in traditional Medicare with supplemental coverage, particularly for some enrollees, such as Black beneficiaries in relatively poor health...” 4) Financial Savings for MA Beneficiaries Snapshot: Impossible to tell, with distorted comparisons. The critics claim that “MA members actually spend much less money each year on care.” Gilfillan and Berwick explain why: a) MA plans are subsidized due to over-payment by Medicare, and they share the subsidies with members, and b) the plans use risk selection to enroll a healthier population than traditional Medicare. In other words, apparent savings are artifact, meaningless. 5) The Quality of Care In MA Snapshot: Mixed and ambiguous picture, with flawed data. The critics claim higher quality of care in MA. We just can’t know, say Gilfillan and Berwick. For example, “[R]ecent studies document that MA plans are actively ignoring system-improvement efforts as they use lower-quality skilled nursing facilities and home health providers more, and high-quality hospitals less, than traditional Medicare.” Claims that integrated care systems like Kaiser improve care (itself dubious, IMO) don’t carry over to the non-integrated Medicare Advantage norm. MA plans actually artificially boost quality scores – “manipulating contracts to ‘move about 550,000 enrollees from non-bonus contracts to bonus-level contracts, resulting in unwarranted bonus payments in the range of $200 million in 2019.’” “Understanding the effects of MA on quality is extremely difficult in part because MA operates in an information environment in which it is all but impossible to demonstrate better clinical outcomes for patients.” Data are missing, biased, or manipulated. [Stunning eg’s in the blog.] Gilfillan and Berwick’s positive view of ACOs diverges from my deep skepticism. But I agree with them, the greatest danger lies in the growth of investor-controlled entities. 6) The Direct Contracting Model/ACO Reach Model Snapshot: Investor control portends problems such as in Medicare Advantage. [W]e remain concerned that [ACO Reach] brings MA investor and insurer-controlled firms directly into the fee-for-service alternative payment model (APM) world. The 52 of 100 Reach ACOs that are investor-controlled operate in 49 states (including the District of Columbia and Puerto Rico) containing 99 percent of the 35 million fee-for-service beneficiaries. 7) Resolution via Single Payer Snapshot: They didn’t say this. They should have.

What is single payer?

What is Single Payer? Summary: Today we take a step back to review a fundamental issue – the definition of single payer. Also its typical features and options. Why? Because sometimes we get lost in technical details, and forget the big picture. And too often experts get confused, and thus confuse others. Comment by: Jim Kahn It drives me to distraction when health policy researchers, journalists, medical journals, and critics misrepresent single payer. This has come up several times in recent months. I guess it’s understandable, with all the misinformation that’s floating around. But I’m eager to settle on a single, correct definition. Here’s my attempt… DEFINITION: One entity (a public agency) pays for health care. This agency receives all funding and disburses all payments for standard comprehensive coverage. Private insurers are prohibited from this role. All patients and providers deal with just one payer for the standard coverage. This is especially important for providers, offering the simplicity of a single payment source. TYPICAL FEATURES: These elements are typical in single payer, if not in the definition, in order to achieve overall goals of universal, equitable, efficient, and affordable access to care. Everyone is covered. Universal, lifelong – meeting a fundamental human need, and part of single payer’s efficiency. Everyone has identical comprehensive coverage / benefits. This is hugely different from our current system, with myriad and varied restrictions on benefits according to health plan. Payment rates are the same for everyone. Again, this is vastly different from today, with up to 10-fold differences in payment levels for the same services, creating strong economic forces for unequal access. Cost-sharing is minimal. No deductibles, and co-pays either not used or small with low-income exemptions. This avoids financial barriers to care. Capital spending (investment) decisions are made by the payer, not by providers. This assures that capacity is increased where most needed. Negotiated drug & medical equipment prices. A single payer negotiates a single set of prices, directly with manufacturers. Currently prices vary widely across insurers and plans, and intermediary PBMs distort the market and extract profits. Long-term care. In most single payer plans, long-term care (both institutional and community-based) is included as an essential care need. A single electronic health record, focused on clinical care rather than billing. With much simpler billing, a universal EHR would reduce the burden on providers and facilitate exchange of medical information and enable effective public health tracking and intervention. DO WE HAVE SINGLE PAYER NOW? NOT MUCH Veterans Affairs (the VA) has a single payer (the federal government). With full-time staff, the VA resembles a national health service. Access to and quality of care is better than average. Some patients have private insurance as well, and recently more VA funds have been used for community providers, but still, a single payer. Medicare is not a single payer, even though it’s the predominant payer for seniors. This is a common misunderstanding. Medicare is not a single payer because from the perspective of providers, it’s just one of many payers, losing the efficiencies and equity enhancements of single payer. The large role of private insurers in Medicare Advantage further distances Medicare from single payer. CHOICES UNDER SINGLE PAYER: Provider payment mechanisms. Fee-for-service is the most common proposed approach for individual providers, but they can also be paid with salaries. Hospitals and other institutions may be paid via global budgets. Indeed, capitated provider groups (without intermediaries, and not-for-profit) may be possible, though controversial and require very strong rules to prevent undertreatment and gaming. Supplemental or complementary insurance. Many nations permit focused (small scope) additional insurance, e.g. to speed access to specialty care. These are fraught, potentially undermining standard coverage, but satisfying demand for service enhancements. In other countries, they take many forms and work acceptably (not materially reducing access for the broad population) … but can they in the US? Parallel single payer systems. A single payer approach may permit having a second system in tandem, such as the VA. Two independent systems, each meeting the definition of single payer from the perspective of participating providers and patients. Opting out. Providers can practice outside of the single payer system, accepting direct payments for services. But they are not permitted to both participate in single payer and accept payment for the same services. That is: either fully in or fully out. So, now that we’ve clarified, let’s get back to winning the long-running battle for an efficient and equitable system to pay for health care – single payer (you know what I mean!). From Health Justice Monitor

The American Way - Tarbell

The American Way - Tarbell: “It requires less effort and background investigation to buy an AR-15 assault rifle than it does to adopt a kitten from the local humane society.” This is

The Blind Spot in Medicare for All | The Nation

The Blind Spot in Medicare for All | The Nation The United States is the only high-income nation to insist that health should be determined by markets and profits rather than rights and dignity. The result is that the prohibitively high cost of American health care causes tens of thousands of preventable deaths every year. For the first time since the Covid-19 pandemic compounded this long-standing national disaster, Congress is considering the state of America’s health care system. The House recently held hearings on Medicare for All, and the Senate Committee on the Budget is convening parallel proceedings today. In this context, many members of Congress who benefit from the status quo are rehashing their opposition to Medicare for All, citing the importance of defending of “freedom” and “choice.” With thousands of people dying each week precisely because they have no choices in our current health care system, this rhetorical game should fool no one. Although universal health care appears unlikely to be enacted by this Congress and has never even appeared on President Biden’s agenda, the current hearings serve an important purpose. They remind the US public that our existing system of for-profit health care exclusion is a deliberate policy choice, not an inevitability. While Medicare for All would be an enormous step forward for the health of Americans and the health of US democracy, it’s essential to recognize that what determines our health care system is not simply who pays but also for what we pay. If we adopt a single-payer structure without remaking the bureaucracy by which the value of care is determined, we will perpetuate the perversity at the core of our system and its world-leading inefficiency. Despite efforts to implement alternative models over the last two decades, a fee-for-service framework remains embedded in American health care and endures as its dominant underlying driver. Fee for service compensates doctors, clinics, and hospitals based upon number and type of visits involved in a patient’s care, creating incentives for unnecessary procedures, excessive clinic appointments, and the mountains of paperwork that have become the bane of American doctors’ daily lives. This system, which places value on specialized services rather than on primary care, is also a crucial factor behind the worsening shortage of primary-care doctors. The persistence of fee for service is no accident. It’s the consequence of a long political campaign initiated by doctors that has since been taken over by industry executives and their lobbyists. Fee for service solidified its central role in American health care in 1965 when Congress passed legislation to create Medicare and Medicaid. For years, the American Medical Association (AMA), a physicians’ lobbying group organized to protect doctors’ economic interests, had been doing all it could to oppose public health-insurance programs like Medicare and Medicaid. They feared that government involvement in health care would lead to a decline in doctors’ earnings and professional status. The AMA campaigned to associate government-financed health care with Cold War fears of a communist takeover of medicine. American doctors had struggled for several decades to build respectable professional status and high incomes. Now, they were told that if “socialized medicine”—that is, health care that’s a public service—came to America, then they would earn no more than Soviet factory workers and would be overwhelmed by bureaucracy and documentation requirements. When the AMA realized in the 1960s that its efforts to keep government out of health care were failing, it shifted its strategy to protect the fee-for-service model upon which high physician compensation had been built. AMA leadership drew from Relative Value Studies, an experiment the AMA had pioneered in California that created a billing model for the burgeoning private insurance industry, and made a list that they hoped would allow them to control government involvement in health care. This list, the Current Procedural Terminology (CPT), was comprised of a series of billable procedure codes, stratified by compensation levels. The AMA persuaded doctors across the country that endorsing this list was vital for preserving their autonomy and income. With physician support, the AMA then convinced the government to adopt the CPT list as the foundation of its new billing system when it rolled out Medicare and Medicaid in 1966. This allowed doctors and hospitals to bill the government just as if it were another private insurance company. The CPT system thereby stymied any substantive changes to the private, fee-for-service model of American health care. More than half a century later, the CPT system, most recently revised as CPT 2022, remains in place. Fatefully, when the AMA licensed the CPT billing system to the government, it managed to include in the licensing contract a stipulation that prohibited the government from either seeking an alternative billing system or from creating its own. It required the government to mandate that health care organizations use this system to bill Medicare and Medicaid, and required the government to encourage all health care entities, regardless of relation to Medicare and Medicaid, to adopt this system as well. With a brilliant clerical strategy that was largely hidden from public view, the AMA took American health care hostage. Since 1966, it has been virtually impossible to function as an American health care provider without using CPT codes. As a result, the AMA reaps an undisclosed amount every year from CPT licensing contracts. In 2019, for example, this appears to have been in excess of $100 million. These dollars support the AMA’s lobbying efforts and its prioritization of doctors’ and administrators’ economic interests, often over the interests of patients, public health, and rational improvements to the US health care system. But direct revenue gleaned by the AMA from the CPT billing system pales in comparison to the influence it allows the organization to exercise over the US health care system. The AMA’s plan to preserve fee-for-service medicine was successful, but its consequences for patient experiences and physician workdays have been disastrous. This system has, in part because of government efforts to catch and prevent health care fraud by private actors, produced ever-expanding documentation requirements that now constitute the bulk of American doctors’ workloads. This is a major factor behind the alarming rates of physician burnout. As the US faces an already severe doctor shortage, one in five physicians now plans to leave their job Despite our desire as physicians to believe that our patients’ care is determined by the nuances of doctor-patient relationships and the wisdom of our clinical recommendations, the truth is that patient care is largely determined by billing structures. Medical care in America entails only an illusion of choice. Bureaucrats dictate the options in advance, guided not by the goal of the best possible patient care but by the aim of maximizing revenue. The “freedom” of America’s private health care system has come at the cost of real choices—both doctors’ and patients’. We will not produce genuine change in the American health care system nor can we effectively remedy its inequalities until we address its political-economic determinants. In this moment in which a pandemic has exposed and deepened the chronic crisis of access, quality, and equity in American health care, the medical community needs a new guiding ethic. We must reject the self-serving illusion that caregiving could ever be simply a matter of clinical duties and embrace the fact that care is always also a matter of political responsibility. Rather than continue to acquiesce to systems designed to generate wealth, advance careers, and protect doctors’ professional status, doctors have an ethical duty to organize in solidarity with our coworkers and patients. Collectively, we should demand that our lawmakers build the systems required to ensure highest-quality care for all, beginning with those communities whose needs the American health care industry has historically refused to meet. To achieve this, Congress must not only establish a single-payer system; it must also reexamine what we mean when we talk about the “value” of care and who it is that determines this. Health care should be, as it is in all peer nations, a fundamental right ensured by the state via public systems paid for with public dollars. Instead of equating value in health care with billing, price, and profit, we need to invest in public systems that render each of these market-oriented terms irrelevant. Only once we have done so will we be able to make a right to health care an actual reality rather than simply an empty rhetorical gesture.

Who’s in charge, them or us? – McCanne Health Justice Monitor

Who’s in charge, them or us? – McCanne Health Justice Monitor

Republicans Have Stopped Trying to Kill Obamacare. Here’s What They’re Planning Instead

Full Article: https://www.politico.com/news/magazine/2022/04/26/gop-obamacare-aca-health-care-00027585 Couple quotes: "The result would be a system with more options and fewer guarantees. Giving employees less money to cover slimmed-down health insurance will lead many workers to forego coverage entirely. Are conservative politicians prepared to look the other way when they develop serious diseases and have no way to pay for care?" "The two behemoths of federal health policy, Medicare for senior citizens and many disabled, and Medicaid for low-income households of every variety, are far less the reform target of Republicans and conservatives than they used to be. An essential reason for this is that both programs, with little controversy, have become increasingly privatized."