In a ground breaking study, researchers at Johns Hopkins University discovered hospital emergency departments overcharge. I know… Who would have thought ER prices are high? The study looked at 12,000 billing records for emergency medicine doctors nationwide.
President-elect Donald Trump has bashed drug prices on numerous occasions. During his campaign, he championed the idea of having the government directly negotiate the price of Medicare drugs for Part D drug plans. Trump seemingly dropped the idea later in his campaign only to resurrect it again mid-January. Many Democrats also believe the government could secure a lower price for the drugs Medicare reimburses on seniors’ behalf. However, Republicans have long opposed the idea of government meddling in private markets and codified a non-interference clause in the Medicare Modernization Act of 2003.
In April 2015, huge bipartisan majorities passed a milestone Medicare reform bill called MACRA, which imported all the worst elements of Obamacare into Medicare. At the time, I wrote an alternative proposal, and anticipated physicians would refuse to swallow the medicine MACRA prescribed. Congress passed the flawed MACRA bill, and President Obama gave a speech describing how “this legislation builds on the Affordable Care Act.” Remarkably, Republican politicians who assert they want to “repeal and replace Obamacare” have still not recanted their support of MACRA.
The gist of MACRA is that Medicare will no longer pay for “volume” but “value” in a zero-sum game wherein physicians who do not satisfy the government’s requirements for “value” transfer income to those who do. Since the bill was signed, the details have percolated from the elite physician executives who run the medical societies which lobbied for the bill down to practicing physicians. There has been pushback.
Nervous that physicians will bail out of Medicare if the government squeezes them too hard, the Administration has backtracked on MACRA’s sticks and shifted towards carrots. Last April, the Administration published a proposed rule, 426 pages long. After a lengthy comment period, the final rule, which is 2,205 pages long (!), was published on October 14.
Medicare’s Accountable Care Organizations (ACOs), which launched in 2012, were supposed to introduce a significant shift away from paying for “volume” to paying for “value.” Critics of Fee-For-Service medicine claim this system causes physicians to do more to patients so they get paid more, notwithstanding benefits to patients. Those critics seldom identify the moral hazard associated with third-party payment (by insurers or governments) as a cause of too many medical tests or procedures.
So, they introduced ACOs, which would increase quality and cut costs by getting rid of straight Fee-For-Services and putting more financial risk on physician groups. If the physician groups pass certain thresholds of cost and quality, they can pocket some of the savings. The 2015 results for Medicare’s ACOs have been reported, and the results are underwhelming:
In 2012, Medicare began to penalize hospitals which had too many readmissions. For a small number of targeted conditions, the program compares actual readmissions within 30 days to what an acceptable readmission rate should be. This is an important part of the drive to “pay for value, not volume.”
For example, if a patient who had a knee replacement is readmitted within 30 days because the implant was poorly implanted, the hospital used to profit from that readmission because the extra costs would just be submitted to Medicare for reimbursement.
Evidence so far suggests reducing readmission was low-hanging fruit. In the program’s fourth year, Medicare will penalize over half the nation’s hospitals a total of $528 million, an increase of $108 million over last year. It is a significant increase, but not a money-maker for taxpayers, amounting to just 0.18 percent of Medicare’s expected hospital spending of $287.1 billion in 2016.
In a fascinating article in Health Affairs, Ashley Bradford and David Bradford of the University of Georgia have estimated that medical marijuana has benefited taxpayers:
Using data on all prescriptions filled by Medicare Part D enrollees from 2010 to 2013, we found that the use of prescription drugs for which marijuana could serve as a clinical alternative fell significantly, once a medical marijuana law was implemented. National overall reductions in Medicare program and enrollee spending when states implemented medical marijuana laws were estimated to be $165.2 million per year in 2013. The availability of medical marijuana has a significant effect on prescribing patterns and spending in Medicare Part D.
(Ashley C. Bradford and W. David Bradford, “Medical Marijuana Laws Reduce Prescription Medication Use in Medicare Part D,” Health Affairs, 35 (7) July 2016, pp. 1230-1236.)
Let’s not get carried away, here. The Medicare Part D prescription drug program spent $69 billion on benefits in 2013, of which $59 was funded by taxpayers (not premiums). So, medical marijuana is making an insignificant dent in the burden of this entitlement.
Last May I wrote about the uproar over Medicare’s proposed changes to how it will pay doctors who inject drugs in their offices. This largely concerns chemotherapy. Currently, physicians buy the drugs and Medicare reimburses them the Average Sales Price (ASP) plus 6 percent. The proposed reform would cut the mark-up to 2.5 percent and add a flat fee of $16.80 per injection.
I did not think the reform would have a positive impact, but I also thought criticism was overblown. Well, Medicare has managed to irritate all the affected interest groups to such a degree that it is likely to toss the proposal and go back to the drawing board.
The Centers for Medicare & Medicare Services has announced Medicare (that is, taxpayers) will pay for lifestyle-intervention program that prevents type 2 diabetes:
In 2011, through funding provided by the Affordable Care Act, CMS awarded the National Council of Young Men’s Christian Associations of the United States of America (Y-USA) more than $11.8 million to enroll eligible Medicare beneficiaries at high risk for diabetes in a program that could decrease their risk for developing serious diabetes-related illnesses. Beneficiaries in the program attended weekly meetings with a lifestyle coach who trained participants in strategies for long-term dietary change, increased physical activity, and behavior changes to control their weight and decrease their risk of type 2 diabetes. After the initial weekly training sessions, participants could attend monthly follow-up meetings to help maintain healthy behaviors. The main goal of the program was to improve participants’ health through improved nutrition and physical activity, targeting at least a five percent weight loss for each individual.
The results of the Diabetes Prevention Program model are striking:
After years and years of jawboning about preventing disease and reducing health spending by catching health problems early, the federal government has finally approved one intervention that actually appears to achieve this goal!
According to a Wall Street Journal article, Medicare is experimenting with how it pays some 800 hospitals. The bundled payment initiative will hold hospitals accountable for the cost of hip replacements for 90 days after surgery. Complications or inefficient care will eat into hospitals’ bottom line.
President Obama’s nomination of Merrick Garland to the U.S. Supreme Court has not shaken Senate Republicans from their commitment not to hold confirmation hearings for any candidate President Obama might nominate to the Supreme Court in the last eleven months of his second term.
Given the high drama and politics surrounding presidential appointments that require Senate confirmation, it might be a good time to ask why another 15-member “court,” which President Obama himself established in 2010, and which was supposed to deliver its first decision in January 2014, has not yet seen its first member nominated!
This “court” is the almost forgotten “death panel,” officially named the Independent Payment Advisory Board (IPAB). Based on a target rate of Medicare spending per capita, the IPAB was supposed to start cutting Medicare payments to providers in 2015.
