Tag: "Medicare"

Money Matters

In 1997, Medicare consolidated the geographic regions across which it adjusts payments for physician services, generating area-specific price shocks that are plausibly exogenous with respect to health care demand. Areas with higher payment shocks experience significant increases in health care supply. On average, a 2 percent increase in payment rates leads to a 5 percent increase in care provision per patient. Elective procedures such as cataract surgery respond twice as strongly as less discretionary services like dialysis. Higher reimbursements also increase the pace of technology diffusion, as non-radiologists acquire magnetic resonance imaging scanners more readily when prices increase. The magnitudes of our empirical findings imply that changing provider incentives explain up to one third of recent growth in spending on physician services. The incremental care has no significant impacts on mortality, hospitalizations, or heart attacks.

This is from a new paper by Joshua D. Gottlieb at Harvard University. HT: Tyler.

Dec 08, 2011 | 4 comments | by

The Cost of Dying

Source: New England Journal of Medicine. HT to Don Taylor, who provides an interesting discussion.

Dec 05, 2011 | 5 comments | by

Washington Post Fact-Checker Gets His Facts Wrong about Medicare Cuts

In a review of her previous claims, the Washington Post fact-checker gave presidential candidate, Michele Bachmann, two Pinocchios for the following statement:

“Senior citizens get this more than any other segment of our population, because they know in Obamacare the president of the United States took away $500 billion — a half-trillion dollars — out of Medicare, shifted it to Obamacare to pay for younger people.”

The Post went on to explain why it thought the statement was inaccurate…

The Medicare savings in the health-care law are aimed at providers, not seniors; meanwhile, seniors stand to benefit from aspects of the health-care law that Republicans want to repeal.

The Medicare chief actuary would seem to agree with Bachmann. In his illustrative alternative report, Richard Foster explained that under the impending cuts to the Medicare program, one in seven hospitals that treat Medicare patients would be insolvent; Medicare reimbursements would fall below Medicaid levels, causing seniors to increasingly have difficulty finding providers who will treat them.

Dec 02, 2011 | 4 comments | by

Medicare Advantage Plans

Here is an interesting overview from Austin Frakt:

Nov 30, 2011 | 5 comments | by

Do We Really Spend More and Get Less?

The conventional wisdom in health policy is that the United States spends far more than any other country and enjoys mediocre health outcomes. This judgment is repeated so often and so forcefully that you will almost never see it questioned. And yet it may not be true.

Indeed, the reverse may be true. We may be spending less and getting more.

The case for the critics was bolstered last week by a new OECD report that concluded:

The United States spends two-and-a-half times more than the OECD average health expenditure per person … It even spends twice as much as France, for example, a country which is generally accepted as having very good health services. At 17.4% of GDP in 2009, U.S. health spending is half as much again as any other country, and nearly twice the average.

Similar claims were made recently in The New York Times by former White House health advisor, Zeke Emanuel, who added that we are not getting better health care as a result. The same charge was aired at the Health Affairs blog the other day by Obama Social Security Advisory Board appointee Henry Aaron and health economist Paul Ginsburg. It is standard fare at Ezra Klein’s blog, at The Incidental Economist and at the Commonwealth Fund. It is also unquestioned dogma for New York Times columnist, Paul Krugman.

What are all these people missing? On the spending side, they are overlooking one of the most basic concepts in all of economics.

You can’t always get what you want.

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Nov 30, 2011 | 24 comments | by

Surprising Fact of the Day: There is No Such Thing as an “Unbundled” Medical Bill

Have you noticed that quite a few of my Health Alerts are devoted to pointing out the obvious? If so, you probably have an ounce or two of common sense. If you do, that makes you somewhat of a rarity in the field of health policy. Bear with me anyway. What follows may come in useful at cocktail parties and other gatherings where you find the need to respond to people who say silly things.

Today’s topic is bundling. “Saving by the Bundle,” was the clever title of Zeke Emanuel’s editorial in the Sunday New York Times. That same day, Health Affairs alerted me to a less elegantly titled study [gated, but with abstract], “Large Variations in Medicare Payments for Surgery Highlight Savings Potential from Bundled Payment Programs.”

Emanuel explains it this way:

[W]e must introduce “bundling” — which, as the name implies, means paying for a patient’s entire care episode rather than every single test and treatment he gets. Imagine, for example, a patient who comes to the hospital for a hip replacement. That patient and his insurer (whether it’s Aetna or Medicare) will be billed separately for the X-rays, laboratory tests, the surgeon’s fee, the anesthesiologist’s fee, the rehabilitation services, the hospital bill and the visits to the doctor after he’s discharged.

In a bundled payment system, all the bills are rolled into one standard hip-replacement charge. The idea is to force all of a patient’s care providers to work together. They have a strong incentive to eliminate unnecessary tests and treatments and use less expensive implants, drugs and devices that don’t compromise quality, and to prevent infections and other complications that could land the patient back in the hospital.

My first reaction was: Darn, why didn’t I think of that. My second reaction was: What would an “unbundled” payment look like? Answer: there aren’t any.

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Nov 28, 2011 | 24 comments | by

Another Medicare Pilot Program Failure

Just to remind everybody, the Obama administration has put all its hope for cost control in pilot programs (as in, “we’ll find out what works and then go do it”). Here’s the latest:

The study included 242,417 patients (163,107 in the intervention group and 79,310 in the control group). The eight commercial disease-management programs did not reduce hospital admissions or emergency room visits, as compared with usual care. We observed only 14 significant improvements in process-of-care measures out of 40 comparisons. These modest improvements came at substantial cost to the Medicare program in fees paid to the disease-management companies ($400 million), with no demonstrable savings in Medicare expenditures.

Nov 27, 2011 | 5 comments | by

Ripping Off Medicare

If this were a novel, it would require too much suspension of disbelief. From Kaiser Health News:

Here’s how the complaint alleges the arrangement worked: Since Medicare Advantage pays HMOs monthly per-patient fees, the HMOs had a financial incentive to avoid chronically ill patients, who need lots of treatments. So the HMOs referred many of their chronically ill patients for hospice care at Vitas [a hospice], which accepted them even though their conditions weren’t considered terminal.

Although expensive for the HMOs, these patients made money for Vitas, the complaint alleges. That’s because Medicare reimburses a hospice with a flat fee for each day a patient is enrolled. Long-stay hospice patients tend to be more profitable since the big costs in hospice care come when patients first enter the program and need to be evaluated and at the end, when they are dying and require more care, according to the Medicare Payment Advisory Commission, a congressional agency that has faulted Medicare’s payment formula.

On top of that, the lawsuit claims that when the health of Vitas patients required expensive hospital services, the company kicked them out of the hospice program “in order to shift the high costs of hospital procedures and prescription medications” away from the hospice and onto Medicare’s traditional fee-for-service program.

Nov 22, 2011 | 3 comments | by

Is Super Committee Failure a Good Thing?

By Wednesday, the so-called “Super Committee,” a bipartisan group of legislators, is supposed to reach an agreement on how to reduce future deficits. Almost everybody expects the effort to fail. The result:  automatic across-the-board spending reductions called “sequester.” Is that a good thing or a bad thing?

On the left, Paul Krugman says “failure is good.” On the right, Phil Gramm says that in failure there is a “silver lining.” Surely somebody is miscalculating, and it probably isn’t Gramm. E.J. Dionne observes that if Congress did nothing there would be $7.1 trillion in deficit reduction (primarily through the expiration of the Bush tax cuts and already legislated reductions in Medicare spending), in contrast to $1.2 trillion of sequestration. Ezra Klein endorses that view and provides the breakdown.

What about the fear that across-the-board spending cuts would harm defense spending and other vital programs? Gramm says that the law governing the Super Committee contains a little-noticed provision from the old Gramm-Rudman budget rules: In the face of sequestration, Congress can pass better budget-cutting provisions on a majority vote, with no filibuster. Avik Roy provides additional explanation.

Nov 21, 2011 | 7 comments | by

A Better Way to Approach Medicare’s Impossible Task

As the “Super Committee” faces mounting pressure to rein in Medicare spending, two sides seem to be squaring off. The don’t-touch-a-thing-other-than-squeezing-provider-fees position seems to appeal to mainly Democrats, while eat-your-spinach reforms, including more cost sharing and higher premiums, seem to appeal mainly to Republicans. Neither position is very appealing to voters, however, nor should they be.

Is there a third way? Is there a way to get the job done and appeal to voters — young and old — at the same time? We think there is. Tom Saving and I suggested a different approach in a recent post at the Health Affairs blog.

To see how it might work, we first have to understand that what Medicare is currently trying to do is virtually impossible. Consider that Medicare has a list of about 7,500 separate tasks that it pays physicians to perform. For each task there is a price that varies by location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor will be a candidate to perform every task on Medicare’s list.

Still, Medicare is potentially setting about 6 billion prices at any one time all over the United States of America, as well as in Guam, Puerto Rico, the Mariana Islands, American Samoa and the Virgin Islands.

Each price Medicare pays is tied to a patient with a condition. And of the 7,500 things doctors could possibly do to treat a condition, Medicare has to be just as diligent in not paying for inappropriate care as it is paying for procedures that should be done. Medicare isn’t just setting prices. It is regulating whole transactions.

Let’s say that the 50 million or so Medicare enrollees average about 10 doctor visits per year and let’s conservatively assume that each visit gives rise to only one procedure. Then considering all of the ways a procedure can be correctly and incorrectly coded, Medicare is regulating 3 quadrillion potential transactions over the course of a year! (A quadrillion is a 1 followed by 15 zeroes.)

Is there any chance that Medicare can make the right decisions for all these transactions? Not likely.

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Nov 21, 2011 | 23 comments | by
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