24 November 2009

POTUS assigns some homework

According to TPM, President Obama and his henchman, Rahm Emanuel found this blog post by the Atlantic's Ron Brownstein a "good summary of cost containment" according to Harry Reid's health care reform bill.  Therefore, it became assigned reading for White House senior staffers.

And it actually is decent summary.  I haven't read the full bill myself (heck, I can barely find the time to read for the LLSA exam!) but the article explicates a few provisions which I had not heard about and sound pretty promising in their ability to "bend the cost curve."

While the whole piece is worth a read, I'll provide a summary of the summary, or at least the bits that I found interesting.  My observations and comments in italics:
"[MIT Healthcare economist] Gruber may be especially effusive. But the Senate blueprint ... also is winning praise from other leading health reformers like Mark McClellan, the former director of the Center for Medicare and Medicaid Services under George W. Bush."
Um, I guess this is good. McClellan is a wonk, not just a politico.  But I was not overly impressed with the direction he led CMS.  But some bipartisan support is nice, if ultimately only symbolically.
"[T]he Reid bill maintains virtually all of Baucus ideas' for shifting the medical payment system away from today's fee-for-service model toward an approach that more closely links compensation for providers to results for patients."
It's a baby step away from fee for service, just a baby step.  Will the results be dramatic, modest, or marginal?  That's the trillion-dollar question.
"The CBO projected that the bill would reduce the federal deficit by $130 billion over its first decade."
Not news but always worth repeating.
"[T]axing high-end insurance plans ... Economists argue that such a tax will help curtail the growth of private health insurance premiums by creating incentives to limit the costs of plans to a tax-free amount."
I'm astonished that this will be so effective (to the tune of $35 Billion per year) given that the tax is on plans costing more than $23K annually.  Who has a plan costing that much?  It does effectively put a hard cap on premium costs as they continue to inflate, or at least causes consumers to bear more of the cost for such plans.
"[C]hange the way providers are paid for delivering care to Medicare recipients; the hope was that once Medicare instituted these reforms, private insurers would also adopt many of them."
I think you can count on that.
"[T]o reward Medicare providers who deliver care more efficiently and penalize those that don't. ... hospitals under current law must report on their performance in treating patients for common conditions like heart problems and pneumonia; under the bill, their Medicare payments, for the first time, would be affected by their ranking on those reports. Hospitals would also be penalized if they readmit too many patients after surgery or allow too many to acquire infections while in the hospital itself. Another provision would begin the process of applying such "value-based purchasing" toward other providers like hospice providers and inpatient rehabilitation facilities."
We all knew this was coming when McClellan started P4P.  It's good (I think) to see it finally implemented, but it's hardly a novelty in the health reform world.
"The Finance Bill proposed automatic reimbursement reductions for doctors who order up the most care for Medicare recipients with similar medical and demographic characteristics. That was meant to respond to the research showing big disparities in spending on medical services for similarly-situated patients in different communities. ... the final bill takes a less direct route toward a similar end. It requires Medicare to begin studying the utilization patterns of doctors participating in the program. And then it establishes a "values based payment modifier" that would, in a budget-neutral manner, increase reimbursements for physicians found to deliver high-quality care at lower cost, and reduce them for physicians at the other end of that spectrum."
Wow.  I was unaware of this.  Would it be unfair to call this the "Gawande provision?"  That New Yorker article was highly influential.  As someone who works in a "high quality low cost" system, I like the idea of being paid for being more efficient -- we have been penalized for many years.  I like that it is budget neutral.  I worry that since it does not decouple payment from volume, that the low-efficiency area practices may respond by simply further increasing volume to make up for lost revenue.  When it's a revenue neutral game, there will always be someone at the bottom -- will this polarize practice patterns or reduce the disparities?  I don't know.
"[E]ncourages groups of providers to establish doctor-led "accountable care organizations" to more comprehensively manage patients' care by allowing them to share in any savings for Medicare they produce. It also establishes a voluntary national pilot of "bundled" payments that would encourage hospitals, doctors and other providers to work more closely together. Another pilot program would test coordinated home-based care for chronically ill seniors."
Pilot programs don't excite me too much.  Bundling worries me, that physicians will become highly subordinate to the hospitals, not in terms of practice style as much as the economics.  How do you work out revenue-sharing, especially when the physicians have little leverage?  Beyond that, these are intriguing but small cost-saving possibilities.
"[The] independent "Medicare Advisory Board" ... to offer cost-saving proposals when Medicare spending rises too fast; Congress could not reject its proposals without substituting equivalent savings. Since the board would be prohibited from offering changes that raise taxes or "ration care," and since the legislation initially exempts hospitals from its recommendations, it could choose to promote the sort of payment reforms the bill establishes. (More prosaically it might also clear away some of the expensive coverage mandates that Congress imposes on Medicare under pressure from different elements of the medical industry)"
This is pretty potent, and possibly a force for good.  It's a very big threat especially to the medical device industry, which for too long has been able to escape any rigorous cost-benefit analysis for new devices.  Which is not to say that the innovation is bad, but the costs have escalated dramatically and this may bring some rationality back to the system. 
"[A] second institution the legislation creates: a Center for Medicare and Medicaid Innovation in the Health and Human Services Department. Though this center has received much less attention than the Medicare Commission, it could have a comparable effect. It would receive $1 billion annually to test payment reforms; in a little known provision, the bill authorizes the HHS Secretary to implement nationwide, without any congressional action, any reform that department actuaries certify will reduce long-term spending."
Wow.  That really flew under my radar.  It sounds like it has pretty broad powers, and a broad scope.  This could be extremely effective at controlling costs, and de-politicizes the process of reforming payments, which is good.  I worry about the reforms that it might ultimately recommend.   Definitely a double-edged sword, from the perspective of a health care cost generator practicing physician.
"Another Republican cost-containment priority missing from the bill is meaningful medical malpractice reform. (The bill only encourages states to think about it.)"
Yes, this is a pity.  However, I blame this entirely on the Republicans.  We know that the Democrats have been four-square against tort reform for time out of mind.  There is no way they were going to put it in their bill on their own.   If Chuck Grassley had offered five solid GOP votes for the overall package in return for real malpractice reform, I am sure that Obama would have jumped at it.  Who wouldn't?  There would have been no last-minute drama over whether the bill was going to pass, the compromises would have been made in committee, and both the Democrats and GOP would have been able to claim to their constituencies that they had accomplished long-standing objectives.  Instead, the GOP chose immutable opposition as their strategy and as a result the bill reflects not one of their priorities.  Reap the whirlwind, boys.

Overall, it's promising -- as a start. I don't think this will be the end, not by a long shot.  A large number of critics claim that the health reform bills do "nothing" to control costs.  This is not nothing -- not by a long shot.  Whether it will work at all, or whether it will do enough are open questions.  I also find it interesting that the providers who have been most concerned about the escalation of health care costs (I'm looking at you, Kevin) have not weighed in on this element of reform.  As a provider, I have really mixed feelings about the potential for cost containment to (further) erode physician autonomy and to (further) reduce physician income.  However, no sane person can look at the rate of medical inflation and not see the burning need for cost containment.  I just worry that too much of it will fall on our shoulders, since reining in costs any other way is tricky and politically unpopular.

There, Mr President, I've done my homework.  Do I get extra credit?


  1. I see that there's a lot of talk about higher "performing" physicians and that worries me. While I can see the flaws of procedure based medicine, what about those docs that take care of populations that 1)do not care for their own health, 2) are disproportionately poor, or 3) people that are predisposed to suffering poorer outcomes.

    I tend to think areas with huge minority populations (like Los Angeles) with very different backgrounds are less inclined to trust their doctors and follow through with the physician's advice. My own father (a minority) recently told me that he discourages his friends from taking their medication! Should doctor salaries suffer because of these patients' poor outcomes?

    There are so many factors that play into health outcomes that are not related to what the doctor has to say that I feel like it may not be fair to doctors under these conditions. Now is it still better than pay for performance? I don't really know. Is it going to cause a lot of disruptions in the medical practice? Definitely, but I suppose that's a part of growing pains.

  2. That Obama and his minions take Brownstein's piece seriously is a clear indication that they aren't qualified to "reform" health care. It's one of the dumbest articles on health care I've ever read.

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