Tag: "Medicare"

You-Just-Can’t-Make-This-Up Feature of the Day

By its own calculation, Park Nicollet Clinic loses money on its Medicare patients… So last year, the company asked Dr. John Misa, the chief of primary care, to run an experiment. Could he design a clinic that would be able to deliver care at Medicare prices?

Misa and his team thought they had the solution: a “concept clinic” that uses doctors for only the most complex cases, and steers most patients to nurse practitioners and physician assistants… Then they did the calculations: What if Park Nicollet had used this model in 2009, when it had about a million total patient visits to primary care; and if everyone had paid Medicare rates?

They discovered that the concept clinic would have run at a 40 percent loss; about the same as the current model… The problem, in part, is that Medicare payments also drop under this kind of model; it pays less for visits with nurse practitioners than doctors. That ate up any savings.

Full article on the Park Nicollet Clinic’s lesson in Medicare.

May 16, 2011 | 5 comments | by

Medicare Trustees Report: Not Good News for Seniors

This is Medicare Chief Actuary Rick Foster on what the PPACA (ObamaCare) does to Medicare (pages 265-267 of the report):

Without major changes in health care delivery systems, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.

May 13, 2011 | 8 comments | by

How States Waste Medicaid Dollars

Today about 78 percent of the prescriptions Americans fill are generic drugs. The average cost of a generic drug prescription in the Medicaid program is $20.61, compared to the $195.54 average for name brand medications (including drugs for which there is no generic equivalent). Generic fill rates are a low as 47% in Tennessee and range all the way up to 79% in Hawaii.

State reimbursement rates to pharmacies for filling Medicaid prescriptions vary more than is warranted by market conditions, competition and business costs. Dispensing fees vary from $1.75 in New Hampshire to $10.64 in Alabama.  The average dispensing fee negotiated by private Medicare part D drug plans is about $2.00.

Over the course of a decade, increased utilization of generic drugs (when appropriate) would save $15 billion, while paying market rates for dispensing fees would save an additional $10 billion. All told, state Medicaid programs could save a total of $32.7 billion over a decade using these and other techniques.

Read more in my latest NCPA Policy Backgrounder here.

May 12, 2011 | 5 comments | by

Ryan’s Plan

Rep. Paul Ryan (R-WI) has proposed a Medicare reform plan that is being contrasted with the approach adopted by the Patient Protection and Affordable Care Act (PPACA), what some people call ObamaCare. Even though Republicans are backing away from the plan, it is the centerpiece of the House Republican budget. It’s also attracting a lot of criticism from the Obama administration and from left-of-center commentators. For example, Health and Human Services Secretary Kathleen Sebelius says it will cause seniors to “die sooner.”

Both ObamaCare and Paul Ryan propose very large cuts in Medicare spending — cuts that will continue indefinitely into the future. As I said in a previous post, neither plan has a serious proposal to slow the rate of growth of health care spending overall. So under both plans, the amount that the federal government will spend on care for the elderly and the disabled will fall further and further behind what everybody else is spending. (See the spending charts here.)

httpv://www.youtube.com/watch?v=HXGz8i0I2L0

Someday We’ll Be Together

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May 09, 2011 | 23 comments | by

No Wonder Medicare is in Trouble

There’s a reason [the] current system is unsustainable, says Eugene Steuerle, a former Treasury Department official and senior fellow at Washington’s Urban Institute. He boils it down to two simple numbers.

“An average couple retiring today has paid just a little over $100,000 in Medicare taxes” over the course of their working lives, Steuerle tells Guy Raz, host of weekends on All Things Considered.

And what do they receive?

“About $300,000 in benefits” — even after adjusting for inflation.

Full article on Medicare’s lack of stability.

May 05, 2011 | 6 comments | by

How Should Medicare Pay for Medical Care?

There are basically five possibilities. To compare them, let:

S = each unit of service, or a package of services

P = the price of each unit of service, or the price of a package of services

Then the government can:

  1. Dictate every service it will pay for and the price it will pay for each of them (fix S and P), leaving providers to compete only on amenities, including waiting times.
  2. Dictate S, but leave providers free to compete on P, say, through a system of competitive bidding.
  3. Dictate P, but leave providers free to compete on what S they will provide for that price.
  4. Initially fix S and P, but leave providers free to opt out, substituting different bundles of S & P as long as government’s cost goes down and quality of care goes up.
  5. Initially fix S and P, but allow patients to opt out, managing a portion of the funds directly and making their own purchasing decisions.

Alert readers will recognize (4) and (5) as NCPA solutions, (3) as the Rivlin-Ryan plan, and (1) as the status quo. But I’m getting ahead of the story.

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May 04, 2011 | 56 comments | by

How Risk Adjustment Can Backfire

We show that firms reduce selection along dimensions included in the risk-adjustment formula, while increasing selection along excluded dimensions. These responses can actually increase differential payments relative to pre-risk-adjustment levels and thus risk adjustment can raise the total cost to the government of providing the public service. We confirm both selection predictions using individual-level data from Medicare, which in 2004 began risk-adjusting payments to private Medicare Advantage plans. We find that differential payments actually rise after risk adjustment and estimate that they totaled $30 billion in 2006, or nearly eight percent of total Medicare spending.

Full article on how risk adjustment affects selection and differential payments.

May 03, 2011 | 9 comments | by

Obama, Ryan and You

Both parties are being disingenuous about Medicare reform. So let me be the first to open Pandora’s box and reveal three unpleasant truths.

First, health care spending is growing at twice the rate of growth of our income — clearly an unsustainable and undesirable spending path.

Second, any plan to reduce the growth rate of federal spending on health care without doing something about health care spending as a whole will necessarily shift costs — to the elderly, to the poor, to state governments, and to anybody other than the federal government.

Third, neither party is offering a serious plan to control health care spending as a whole.

Let’s start with President Obama, since his plan is already law. The administration calls it the Patient Protection and Affordable Care Act (PPACA). Other people call it ObamaCare. Whatever you call it, if you are confused about what it means, that’s understandable.

So tired of the straight line, and everywhere you turn
There’s vultures and thieves at your back
The storm keeps on twisting, you keep on building the lies
That you make up for all that you lack

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May 02, 2011 | 36 comments | by

Revolving Door Medicine

More evidence that providers do what they get paid to do:

Using Medicare data on more than 1 million hip surgeries done between 1991 and 2008, the researchers found that hospital stays are now averaging under four days, compared to more than nine days in the 20th century. However, the number of hip-surgery patients discharged to a skilled nursing facility nearly doubled during that time frame, from 17.8 percent to 34.3 percent; hospital readmission rates went from 5.9 percent to 8.5 percent; and the percentage of those discharged home decreased dramatically, from 68 percent to 48.2 percent.

Full article on hospital readmissions after hip replacements.

Apr 26, 2011 | 5 comments | by

They Call This Research?

The Dartmouth Health Atlas has come out with another one of its national breakdowns of Medicare claims, showing a wide variation between areas. This one is focused on end-of-life care for people with chronic illnesses. The authors do their usual job of putting vast amount of data into very colorful maps, which add up to absolutely no understanding of what is going on. They find, for instance, that:

Widespread regional variation persists in measures of end-of-life care. In 2007, the percentage of deaths in hospital varied by a factor of almost four across hospital referral regions, and the average number of hospice days per patient in the last six months of life varied by a factor of more than six.

For in-hospital deaths, the study finds that:

In 2007, the highest rates of death in hospital were in regions in and around New York City, including Manhattan (45.8%), East Long Island (41.9%) and the Bronx (39.9%)… In Minot, North Dakota, [by contrast,] only 12.0% of patients died in a hospital. Fort Lauderdale, Florida (19.0%) and Portland, Oregon (19.6%) were also among the regions with the lowest rates.

For lengths of hospital stays in the last six months of life, they found:

In 2007, patients in Manhattan spent, on average, 20.6 days in the hospital during their last six months of life, almost four times more than patients in Ogden, Utah, where the average was 5.2 days.

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Apr 26, 2011 | 10 comments | by
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