Tag: "Health Care Costs"

Why the New MLR Rule Will Cause Higher Insurance Premiums

The [minimum Medical Loss Ratio (MLR)] rule will make it necessary for state regulators to require higher premiums. Why? Before the MLR rule came into effect, insurers could use reserves built up in low-claim years to pay claims in high-claim years, thus reducing premiums (averaged over multiple years) from what they would have been otherwise. Now, with the MLR rule in effect, in low-claim years insurers will have to pay higher rebates rather than accumulate more reserves. This means that premiums will, on average, have to be higher than they would have been otherwise — because insurers will have to pay more claims in high-claim years, without being able to accumulate as much reserve funding in low-claim years. Now, when a specific insurer has a low-claim year, they will end up paying rebates — including federal subsidy dollars — to their customers.

More from Robert Book.

Apr 18, 2013 | 14 comments | by

Hospitals Make More Money When Things Go Wrong

A surgical complication increases a procedure’s average contribution margin by 330 percent for the privately insured and 190 percent for Medicare patients, according to a study published this week in the Journal of the American Medical Association…

When a surgical complication occurred, the profit margin jumped from $16,936 to $55,953. For Medicare patients, profits grew from $1,880 to $3,269.

HT: Sarah Kliff.

Apr 18, 2013 | 15 comments | by

Headlines I Wish I Hadn’t Seen

Companies won’t even look at resumes of the long-term unemployed.

Telemedicine may not be cutting costs.

Nation’s largest theater chain cuts work week, blaming ObamaCare.

White House brain initiative may be stymied by the medical device tax.

Apr 16, 2013 | 14 comments | by

Obama: $85,000 is Rich

Retired as a city worker, Sheila Pugach lives in a modest home on a quiet street in Albuquerque, N.M., and drives an 18-year-old Subaru.

Pugach doesn’t see herself as upper-income by any stretch, but President Barack Obama’s budget would raise her Medicare premiums and those of other comfortably retired seniors, adding to a surcharge that already costs some 2 million beneficiaries hundreds of dollars a year each.

More importantly, due to the creeping effects of inflation, 20 million Medicare beneficiaries would end up paying higher “income related” premiums for their outpatient and prescription coverage over time…

Currently only about 1 in 20 Medicare beneficiaries pays the higher income-based premiums, which start at incomes over $85,000 for individuals and $170,000 for couples. As a reference point, the median or midpoint U.S. household income is about $53,000…

The administration is proposing to extend a freeze on the income brackets at which seniors are liable for the higher premiums until 1 in 4 retirees has to pay. It wouldn’t be the top 5 percent anymore, but the top 25 percent.

This is from the Associated Press.

Apr 15, 2013 | 13 comments | by

What Did He Expect?

Michael Millenson on the government’s attempt to get everyone to use electronic health records:

Now we come to the behavior that really should inspire the outrage. We as a nation paid out billions in bribes because so many physicians simply refused to believe they could benefit from an EHR that the hospitals dependent on those doctors for admissions refused to buy computerized records no matter what the evidence. The vendors, aiming to ease the transition when hospitals did buy, designed clumsy interfaces based on provider habits and inefficiencies from the paper world. When the market finally changed, all the bad stuff got baked in: difficult interfaces and missing functionality that frustrated physicians; poor customer service from vendors puffed up with profits; absurd flaws ­— a medical record less searchable than a ten-year-old PC ― that were never corrected while piled-on new features created a kluge-job catastrophe.

Then there were the unintended consequences that occur when any innovation is taken to scale. Is it any surprise that academics focusing on efficiency and clinical improvement were blindsided by sharpies who focused, instead, on how EHRs could help game the reimbursement system to make more money? Is it a surprise that a new technology deployed in a hurry can be downright dangerous as well as helpful? Unfortunately, painting a picture of a panacea was useful for public relations purposes, but prompted a widespread backlash when reality set in.

Apr 12, 2013 | 11 comments | by

Hospitals Game the System

One hospital group encouraged its docs to exaggerate the severity of patient conditions and needlessly admit patients from the ER to hospital beds in order to bill more for their treatment. Another hospital group that owns three hospitals and also partially owns an ambulance company was making patient transfers (using their own ambulance company despite slower response times) a top priority — to the extent that a doctor’s transfer rate was a factor in bonuses and performance reviews. An admin email stated that “the performance we are looking for are transfers.”

This is from Roy M. Poses.

Apr 11, 2013 | 14 comments | by

Medicare FFS Cut by 2 Percent

You may have been under the impression that the sequester cuts were aimed solely at defense and discretionary spending and that entitlements such as Social Security and Medicare would be unaffected. CMS recently issued this notice that Medicare will cut two percent from provider payments in its fee-for-service (traditional Medicare) program starting April 1 –

This listserv message is directed at the Medicare FFS program (i.e. Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

HT: Donna Kinney.

Apr 10, 2013 | 11 comments | by

Does Decreased Length of Hospital Stay Equal Lower Cost?

Based on a 20 percent sample of Medicare claims from 1985-2005 for people 65 and older, Brauer et al. 2009 provide data on length of hospital stay for people with hip fractures in the U.S.

The median length of stay for hip fracture over the period decreased from 12 days to 5 days. Risk-adjusted mortality at 30, 180, and 360 days improved for both men and women:

Men vs. Women

Source: Carmen A. Brauer et al. 2009. “Incidence and Mortality of Hip Fracture in the United States,” JAMA, 302, 14, 1573-1579.

Innumerable studies in the health care literature use reduction of days in hospital as a measure of reduced costs. Unfortunately, the simple reduction of days in hospital and death rates, while welcome, tells us little about readmissions, total costs, or extent of recovery.

With the passage of DRG reimbursement in 1983, hospitals began adjusting their business models to accommodate flat rate payments. One outcome was “quicker but sicker” discharges. In 1986-88, the paper notes that 34.3 percent of hip fracture patients went home with self-care and 33 percent were discharged into skilled nursing facilities. By 2003-05, only 5.3 percent of patients were discharged home with self-care. The majority, 52.9 percent, were discharged to a skilled nursing facility.

Apr 09, 2013 | 8 comments | by

Australia Compensating Organ Donors, and Other Links

Australia to pay organ donors.

Teach for America teachers are besting their peers.

Are Democrats the one marshmallow party?

President’s budget leaked.

Worst items: A tax on large IRA accounts and a Pre-K entitlement.

Apr 08, 2013 | 11 comments | by

Weight Loss Therapy a Bargain for Medicare

Emory Professor, Kenneth Thorpe, examines the costs of treating obesity-related conditions and found medications that help Medicare enrollees lose weight could save money for Medicare in the long term.

Permanent weight loss of 10 to 15% will yield $9,445 to $15,987 in gross per capita savings throughout their lifetime, and $8,070 to $13,474 over ten years. Similarly, initial weight loss of 10 to 15% followed by 90% weight regain will result in gross per capita savings of $7,556 to $11,109 over their lifetime, and $6,456 to $8,911 over ten years. Targeting weight loss medications to adults with obesity (BMI ≥ 30) produces greater savings to the Medicare program.

Apr 05, 2013 | 10 comments | by
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