In a recent speech, Kentucky Republican Senate Candidate Rand Paul said that Medicaid is “intergenerational welfare.” His stated rationale was that coverage has spread beyond those “truly in need” and citing the fact that 800,000 people out of Kentucky’s approximately 4.314 million citizens (18.5%) were on Medicaid. Given Kentucky’s Medicaid eligibility requirement—$13,671 in annual household income for family of 4 (62% of the federal poverty level)—I would say that has more to do with the income distribution in Kentucky.

I find Dr. Rand’s comments a bit hypocritical. This is coming from a candidate who is an ophthalmologist (an ophthalmologist who invented his own board certification, no less) and has 50% of his income coming from Medicaid and Medicare. This is the candidate who said in an interview on October 3, 2010 that he would cut Medicare benefits and raise the retirement age for Social Security in order to keep the full Bush-era tax cuts. So while depending on your perspective, I suppose you could consider this to be intergenerational welfare; I would maintain that it is, in fact, intergenerational war.

One of the big ‘war of words’ in health care is the issue of Medicare managed care – namely the Medicare Advantage program. President Obama and many Democrats want to scuttle the program because the cost of the managed care version of the Medicare program is purportedly 13% above the costs of the same beneficiaries in the fee-for-service version. Many consumers, and many Republicans, like the features and benefits and the voucher-like market orientation (respectively) of these plans.

The basic objections are captured quite succinctly by Ezra Klein in a piece in the The Washington Post, A private Medicare System Would be a Costlier Medicare System. He states, “They save money by limiting the generosity of the vouchers. Because the dirty little secret is that turning Medicare into a voucher program would actually make it cost much, much more. How do we know? Well, putting aside the fact that Medicare currently costs much less than private insurance, we actually have a private voucher program in Medicare as we speak. [...] But today, the market-based arm of the program costs more, not less, per beneficiary. Those fixed monthly payments to Advantage plans are, on average, 13 percent above fee-for-service Medicare costs.”

I think Medicare Advantage plans are an inevitable solution for the Medicare plan. The current fee-for-service system is an ungainly muddle of rules, with only the reduction in benefits (not politically feasible) and reduction in provider fees as its cost containment mechanisms. Even the health care reform initiative recognizes this through the creation of “accountable care organizations,” which are essentially provider-owned managed care plans. (And, it won’t take long for those provider-owned plans to “buy” managed care infrastructure from the current managed care programs.) Only this change in financing, moving us away from fee-for-service, permits the health care system to move beyond the current silos of reimbursement and allows for the rationing of services, which is an inevitability with, or without, health care reform.

That said, the failure that we currently have in the excessive rates mentioned by Mr. Klein is not a failure in program design, but rather a failure in contract negotiations and management. Medicare Advantage plans should not cost 13% more (or any more) than their fee-for-service alternatives. And, the medical loss ratio reporting requirements absolutely must be applied to Medicare Advantage plans to permit true transparency for consumers and a contract management tool for Medicare.

On December 31, 2009, the federal Department of Health and Human Services (HHS) released an interim final rule (IFR) with definitions for certified electronic health record (EHR) technology that will meet the Stage 1 “meaningful use” requirements the Medicare and Medicaid EHR Incentive Programs. Eligible professionals and hospitals must use certified EHR technology to qualify for the financial incentives described in the American Recovery and Reinvestment Act of 2009 (ARRA). HHS will adopt the IFR’s initial set of certification criteria on February 12, 2010.

Once the IFR came out, the behavioral health and human services space was abuzz discussing what was missing, what was unclear, how meaningful ‘meaningful use’ could be—you name it. The other day I came across a great feature written by John Halamka, MD, the Chief Information Officer of Beth Israel Deaconess Medical Center and Chief Information Officer at Harvard Medical School. While teaching a health care information technology (HIT) class at Harvard, he asked his class to read his EHR implementation project and then to “develop a list of barriers to EHR implementation.” The result? Ten major barriers to successfully deploying EHRs:

10.  Usability—products are hard to use and not well engineered for clinician workflow.

9.  Politics/naysayers—every organization has a powerful clinician or administrator who is convinced that EHRs will cause harm, disruption, and budget disasters.

8.  Fear of lost productivity—clinicians are concerned they will lose 25% of their productivity for 3 months after implementation. Administrators are worried that the clinicians are right.

7.  Computer Illiteracy/training—many clinicians are not comfortable with technology. They are often reluctant to attend training sessions.

6.  Interoperability—applications do not seamlessly exchange data for coordination of care, performance reporting, and public health.

5.  Privacy—there is significant local variation in privacy policy and consent management strategies

4.  Infrastructure/IT reliability—many IT departments cannot provide reliable computing and storage support, leading to EHR downtime.

3.  Vendor product selection/suitability—it's hard to know what product to choose, particularly for specialists who have unique workflow needs

2.  Cost—the stimulus money does not flow until meaningful use is achieved. Who will pay in the meantime?
1.  People—it's hard to get sponsorship from senior leaders, find clinician champions, and hire the trained workers to get the EHR rollout done. (this was the #1 concern by far)

They say health care is recession-proof. But, that's not exactly the case. The health and human services sector has proven to be both recession-resistant and a recession laggard. And—if U.S. governors are right—the start of the ‘recession’ in the health and human service sector will begin on July 1, 2011. The fiscal year that begins in July will be “the most difficult to date,” according to a survey of 45 states released at the winter meeting of the National Governors Association.

States must find a cumulative $18.8 billion to balance their budgets in remaining months of the current fiscal year, and in fiscal 2011, an estimated $53.6 billion in shortfalls awaits, according to the survey. For governors, Medicaid is one of the top budget issues. Medicaid spending for fiscal year 2009 was $335 billion, an increase of 7.8 percent over the previous year. Enrollment increased 5.4 percent in fiscal year 2009 and will grow 6.6 percent in fiscal 2010. Additionally, 3.3 million more people were enrolled in Medicaid in June 2009 compared to the previous year—the largest one-year increase to date.

If you haven't started your management strategy for this time of economic freefall, now is the time. For starters, employ a three-prong recession management strategy consisting of short-term cash management, business development, and preparing for the post-recession marketplace.

For more, check out:

• Prepare for the Emerging Post-Recession Marketplace: Five Management Best Practices for Organizational Sustainability
• Anticipating Emerging Post-Recession Market Models: Consumer & Payer Demands for Behavioral Health & Social Services

The December 17 issue of Business Week had a provocative headline—The Coming U.S. Doctor Shortage: Health-care reform will mean 30 million more patients—and bigger crowds in waiting rooms. I thought the positioning of this piece played into the 'fear of health care reform' camp that looks at the nation's health as a zero sum game. If you give minimal coverage to all, the rest of us with insurance will suffer. But the piece did raise some interesting points:

• In 1997, lawmakers placed a cap on the number of medical residencies in order to contain costs under Medicare, which pays for most of these training slots.Medicare pays $100,000 a year per residency, at a total cost to the program of about $9 billion. The funding began in 1965 when the U.S. was preparing to extend government health coverage to 19 million elderly Americans. As the Medicare rolls grew—to 45 million by the end of 2008—a cap was placed on the number of medical residencies to control spending.
• According to the U.S. Department of Health and Human Services, last year there were nearly 17,000 fewer primary-care doctors than needed in inner-city and rural areas. The Association of American Medical Colleges predicts that by 2025 there will be a shortage of as many as 159,300 doctors.
• An amendment to the health-care reform bill—proposed by Senate Majority Leader Harry Reid (D-NV), Charles Schumer (D-NY), Bill Nelson (D-FL.)—would add 15,000 residencies at a cost to Medicare of about $1.5 billion to anticipate and prepare for this shortage

What caught my attention in the article was this handy chart—showing the growing demand for services and the almost-flat supply line. I believe we can flatten the demand line for physicians and increase the supply line with just a few policy changes.

On the demand side, if we encourage individuals to take more control of their own health care, demand for physician time will decline. There are also a variety of technological substitutions for physician office visits and an array of non-physician health professionals that can fit the bill.


On the supply side, there are two major ways to enhance supply. First, use technology to increase physician productivity—less paperwork, e-health to extend reach, and more. The other way is to pay primary care physicians more. Payment policies have favored procedure-oriented specialists—and the physician’s choice of specialties reflects this.

A few weeks ago, Newt Gingrich with the president/CEO of the National Center for Policy Analysis John C. Goodman jointly responded to President Obama's challenge for Republicans to show him a better idea on health care reform. Their ten ideas, outlined in the Wall Street Journal’s “Ten GOP Health Ideas for Obama” are as follows, with my reactions in red.

1. Make insurance affordable. This could be done by reforming the "arbitrary and unfair" taxation on health insurance. (Read: no more tax exemptions on employee health benefits)
2. Make health insurance portable. Employers should give employees insurance that can be brought from job to job, and people should be able to buy insurance across state lines. (Read: eliminate state-specific regulation of insurance comapnies and move to interstate insurance)
3. Meet the needs of the chronically ill. Help them take charge of their own care with Health Savings Accounts. (Not sure what this means)
4. Allow doctors and patients to control costs. Doctors and patients should be liberated from government-imposed payment rates that reward physicians for treating the sick but not for keeping healthy people healthy. (Not sure what this means)
5. Don't cut Medicare. Medicare's on an unsustainable course, but the $500 billion in cuts the Democrats propose are not the answer. (Interestingly odd for Republicans)
6. Protect early retirees. A bridge to Medicare can and should be built to help the millions who retire before they qualify. (Not sure what this means)
7. Inform consumers. Government data on cost and quality should be made public. (Of course. . .)
8. Eliminate junk lawsuits. "We do not need to study or test medical malpractice any longer," Gingrich and Goodman write, pointing to Texas' liability protection efforts as a model. (As a consumer, I'm skeptical of eliminating legal redress for medical malpractice without more regulation to 'disbar' bad physicians. As a health care analyst, the savings are only in the 1.5% range.)
9. Stop health care fraud. Approaches including third-party liability verification, and electronic payment can help cut the $120 billion lost to fraud every year, (Of course...)
10. Make medical breakthroughs accessible to patients. Red tape should be cut to get new drugs and treatments to patients faster. (Good on paper but full of practical, legal, and scientific problems.)

So what do you think? Can this GOP hit list be married with the existing bills to give us something resembling universal coverage with cost containment? Let me know what you think!

The health care reform bill tug-of-war currently happening between the House and Senate is too much for many of us to keep up with. I took interest with an article in Slate by Christopher Beam that includes a hit-list of those health care reform issues that still need to be ‘hammered out’ in the final bill. His six issues include:

• The exchanges—while the House bill would create a national exchange, the Senate bill would create a series of state-based exchanges. There’s no happy medium. It is either state or national.
• The mandates—what will be the real penalty for not buying health insurance? The House bill would charge a 2.5% tax on all income above the filing threshold ($9,000/individuals or $19,000 for couples), while the Senate bill would impose a flat penalty, which itself fails to acknowledge the wide variance in American income levels and their ability to pay up. The employer mandate is a big one as well; will employers pay an 8% tax on total wages or levy a $750 fine per employee? Who will be eligible for exemptions?
• Medicaid expansion and subsidies—the House bill would make Medicaid available to individuals earning up to 150% of the poverty level, while Senate bill would expand it 133%. The differences are in the subsidies, in that the House bill provides far more support for families at or below 300%, while the Senate bill seems to focus more on middle income families between 300% and 400%.
• CHIP—key questions posed by Beam: “Does Congress really want to end the Children’s Health Insurance Program and push kids into exchanges and Medicaid, as the House bill would do? Or does it want to extend CHIP until 2015, as the Senate bill would do?
• Narrowing the ‘donut hole’—the gap in Medicare coverage known as the ‘donut hole’ is addressed far more in the House bill, which phases it out altogether by 2019 by ‘filling’ it with money from the pharma industry. The Senate bill would only close the gap halfway (and only temporarily).
• Paying for it—the House would levy a 5.4% surtax on individual income above $500,000 while the Senate would tax plans that cost more than $8,500 for individual and $23,000 for a family; Senate would also tax indoor tanning services (yes, seriously).

As our eyes dart back and forth between this legislative ‘volley,’ I will be interested to see how flexible the House and Senate are on certain issues—and which issues they refuse to compromise on.

We're on the eve of the implementation of behavioral health parity legislation. Medicare has released the procedures for implementation of parity for their beneficiaries—see “Medicare Claims Processing Transmittal 1843: Outpatient Mental Health Treatment Limitation.” The regulations for the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act will be released in January of 2009, “Wellstone Act Mental Health Parity Effective Date Delayed Until 2010.”

But the various pieces of parity legislation will only be as meaningful to consumers as their implementation. To that end, there is a great piece in the December 2, 2009 issue of Medical News Today, “Lessons From the Implementation of Mental Health Parity in California.” Coauthors Margo L. Rosenbach, Ph.D., Timothy K. Lake, Ph.D.; Susan R. Williams, M.P.P., also affiliated with the Mathematica Policy Institute, and Jeffrey A. Buck, Ph.D., offer three pieces of advice from their research:

• The need for increased oversight of health plans—monitoring health plan performance related to access and quality, in addition to monitoring coverage and costs;
• The need to look at the breadth of diagnoses covered by health plans; and
• The need to ensure consumer awareness of parity—mounting a campaign to education consumers about their insurance benefits.
  

Three points we should all put on our 2010 new year's resolutions!