Putting the Value Framework to Work | Health Policy and Reform

by Thomas H. Lee, M.D.

“Value” is a word that has long aroused skepticism among physicians, who suspect it of being code for “cost reduction.” Nevertheless, an increasing number of health care delivery organizations, including my own, now describe enhancement of value for patients as a fundamental goal and are using concepts developed by Michael Porter (see 10.1056/NEJMp1011024, and the framework papers in Supplementary Appendixes 1 and 2 of that article) to shape their strategies. What has changed? And what are these organizations actually doing?

Practical motivations lie behind the interest in the value framework. Rising costs and a stagnant economy pose problems with no easy solution. Budgets cannot be planned responsibly by hoping for growth in volume. As all players try to protect their incomes, nerves are fraying. Physicians are pitted against hospitals, specialists against primary care physicians, academics against the community.

In this fractious context, value is emerging as a concept — perhaps the only concept — that all stakeholders in health care embrace.
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Congress Passes Legislation to Avert Medicare Physician Cuts and Extend Programs

Congress has passed legislation that prevents a 25 percent reduction in payments to Medicare physicians from taking effect on January 1. The bill, known as the Medicare and Medicaid Extenders Act of 2010, also prevents further cuts to physician payments effectuated under the Sustainable Growth Rate formula enacted by Congress in 1997, and maintains current Medicare physician payment rates through December 31, 2011.

The Medicare and Medicaid Extenders Act also extends a number of other programs that were set to expire on December 31, including the Qualified Individual (QI) Program and the Medicare therapy caps exception process. The legislation extends QI, a Medicare Savings Program (MSP) that helps pay Part B premiums for individuals with incomes between 120 and 135 percent of the federal poverty level, until December 31, 2011. The legislation also extends for an additional year the Medicare therapy caps exception process, which allows consumers to apply for exceptions to the $1,860 coverage limit for combined speech and physical therapy services and the $1,860 coverage limit for occupational therapy services if such services are medically necessary.

Read the House Majority Leader’s press release.

Read Joe Baker’s statement on the passage of the Medicare and Medicaid Extenders Package of 2010.

Massachusetts pressing for shift to global payment system :: American Medical News

Image via WikipediaBy Emily Berry, amednews staff

More than a year after a special commission recommended that all Massachusetts insurers leave behind the fee-for-service health care payment model, state officials are pressing for legislative action as soon as January 2011. Physicians with the state medical society are again warning against ushering in change too quickly.

At a Sept. 21 meeting on national health reform, the state's secretary for health and human resources, JudyAnn Bigby, MD, said she expects legislation to be drafted and introduced as early as January that would shift the state to a global payment system. Such a system would pay physicians a flat montly fee per patient, adjusted for each patient's health status and other factors.

Proponents say this would improve health and hold down costs because it would encourage doctors and patients to focus on overall health and move away from a fee-for-service system, which Gov. Deval Patrick's office described as encouraging the "overuse and misuse of services."

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The Paying for Eldercare Puzzle

By Alex Guerrero

When thinking about paying for eldercare, it can be overwhelming to consider the many different financial and care options.Differing eligibility requirements and different types of benefits can further the confusion. By grouping options into categories, we can help families better understand programs available to them.

Short Term Resources

Long term elder care often begins by using short term resources. Medicare, Medigap, private health insurance and similar programs for military retirees and veterans such as TRICARE and CHAMPVA all provide limited time benefits for long term care. These programs’ benefits are designed for seniors recovering from surgeries or accidents and are not meant as a long term care solution. However, they will pay a high percentage of the cost of nursing home care for up to 100 days.

Long Term Resources

Resources for ongoing elder care costs can be grouped into 5 categories.

Pensions and Retirement Resources

The first resources most families tap for the cost of eldercare are recurring pensions and retirement savings. These include social security benefits and veteran’s pensions such as the Aid and Attendance benefit and a family’s own savings. The costs and types of long term care have changed dramatically in recent years and unfortunately many of those who require care today did not retire with the recurring monthly income to cover those costs.

Home Equity

With inadequate recurring monthly income to pay for long term care, many families use the equity of their homes as a financial resource. Reverse mortgages and to a lesser extent home equity loans can provide a significant amount of monthly income. There are several new financial programs that allow seniors to tap their home equity as an alternative to reverse mortgages. However, these are only available in some states and their value is somewhat diminished due to the drop in home prices in recent years.

Insurance: Long Term Care and Life

Most families do not have long term care insurance, but those that do receive direct payments to help them with the cost of care. Life insurance is more common and there are multiple options for exchanging a policy for cash. For seniors in poor health, viatical settlements and accelerated death benefits allow them to receive a lump sum payout. Life settlements and death benefits loans are two other options for seniors with life insurance that require care but are not terminally ill.

Programs for the Financially Challenged

There are a variety of programs provided by federal, state and non-profits organizations for the financially needy. Chief among them is Medicaid in its various forms. Qualified seniors can receive Medicaid benefits in various ways; direct care, waivers to receive home care, and family caregivers can even receive payment for the care they provide. Supplemental Security Income can provide a boost to Social Security checks. Some cities offer government housing with assisted living services.

Eldercare Loans

In the last few years, there has emerged a new class of loan specifically targeted at helping families pay for assisted living. The loans have rapid approval processes and are structured to allow multiple family member or friends to share the cost of paying for an elderly individual’s care. These are a good option for families in shorter term, crisis situations.

Reducing the Cost of Care

Another way to think about paying for long term care is to think about how one might reduce the cost of care. This is especially valid for families that care for their loved ones at home. Some respite care programs offered by non-profits and Area Agencies on Aging offer as much as 30 hours / month of care for free or for very reasonable fees. This can offset the need for full-time home care services. There are also federal and state tax credits and deductions for caregivers. The cost of medications can be reduced by purchasing prescriptions online in bulk or from Canadian pharmacies. By combining many of these ideas, families can reduce their cost of care by hundreds or even thousands of dollars per month.

The website, PayingForSeniorCare.com, offers a deeper investigation of the Pros and Cons of each of these financial and care resources. Their Eldercare Financial Resource Locator Tool helps families find which options are relevant to them to help pay for home care, assisted living and long term care. Alex Guerrero serves as the Director of Operations for the organization.

Paying for the ‘Institutionalized Spouse’ - The New Old Age Blog - NYTimes.com

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By CRAIG REAVES

Craig Reaves, past president of the National Academy of Elder Law Attorneys, practices in Kansas City, Mo., and on occasion fields questions from New Old Age readers. You may submit your question to newoldage@nytimes.com. Please limit your inquiries to general legal issues; Mr. Reaves can’t offer personal legal advice.

Q.

What happens when one half of a married couple is retired and in need of expensive nursing home care while a younger spouse is still working and earning income? Are there options for protecting any of the income or accumulated wealth (such as retirement accounts) of the younger spouse? Or does it all have to go to pay for the care of the one who’s ill?

A.

There’s no simple, legal way to shelter your income or most of your wealth in this circumstance. Spouses have a legal duty to support each other. The income or assets of a working spouse (known in the Medicaid world as the “community spouse”) must be used for the care of the spouse in the nursing home (in official parlance, the “institutionalized spouse”).
Couples who find themselves in this situation essentially have three options.
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U.S. GAO - Fiscal Year 2009 Financial Report of the United States Government

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The U.S. Government Accountability Office (GAO) could not render an opinion on the consolidated financial statements of the federal government (other than the Statement of Social Insurance) because of widespread material internal control weaknesses and other limitations.

“While financial management has improved significantly since the government began preparing consolidated financial statements, for the 13th year in a row now shortcomings in three areas again prevented us from expressing an opinion,” said Gene L. Dodaro, Acting Comptroller General of the United States. “I’m referring to serious financial management problems at the Department of Defense (DOD), the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between agencies, and the ineffective process the federal government uses to prepare the consolidated financial statements.”

Dodaro also cited material weaknesses involving improper payments estimated to be at least $98 billion, information security across government, and tax collection activities. He noted that four major agencies-DOD, the Department of Homeland Security, the Department of State, and NASA-did not get clean opinions.

The material weaknesses discussed in GAO’s audit report hinder the government’s ability to (1) reliably report on many of its assets,liabilities, and costs; (2) accurately measure the full cost as well as the financial and non-financial performance of certain programs and activities; (3) adequately safeguard significant assets and properly record various transactions; and (4) have reliable information to operate efficiently and effectively.

“Long term, the federal government faces huge structural deficits driven by rising health care costs and demographics. Focused attention from Congress and the administration is needed to address these problems and put the government on a more sustainable path,” Dodaro said.

Beginning this year, new financial reporting standards will require a clearer and more comprehensive assessment of the federal government’s financial condition over the long term. “Sound data on federal operations will be essential to the nation’s efforts to return the country to a sustainable fiscal path,” Dodaro said.

He also singled out meaningful financial regulatory reform as especially urgent. “Problems in the nation’s financial sector have exposed major weaknesses in the current U.S. financial regulatory system. If those weaknesses are not adequately addressed, we could see similar or even worse crises in the future,” Dodaro cautioned.

Dodaro commended the commitment and professionalism of the Inspectors General across government who are responsible for auditing the annual financial statements of individual federal entities each year.

Link to Report

The Potential of Global Payment: Insights from the Field - The Commonwealth Fund

In the 80s and early 90s, health care providers in the managed care world were frequently paid via capitation—that is, a flat fee per patient. Use of the practice has eroded significantly, but experienced provider and plan leaders believe moving to improved models of capitation, called global payment, would result in much better care for all types of patients at more reasonable cost. In researching this report, the author interviewed 16 individuals from four geographic markets with extensive expertise managing capitation and global payment. These experts unanimously supported global payment and estimated that proper alignment of payment and quality incentives could generate a 20 percent to 30 percent cost reduction while greatly improving care quality. They believe it is now possible to resolve problems that plagued capitation in the past, such as avoidance of sicker patients and excessive risk assumption, but that environmental changes have also created new challenges.

Download Report (71 pages)

Building A Path To Integrated-Care Payment Systems – Health Affairs Blog

by Chris Fleming

With health reform currently in limbo, one of the few areas that command bipartisan support is reforming provider payments to promote integrated-care delivery models such as accountable care organizations, episode-based payments, and medical homes, Paul Ginsburg said as he introduced a February 8 panel on this subject at the National Health Policy Conference. As a result, even if Congress does not pass a comprehensive reform bill, payment reforms could still be enacted, for example as part of a Medicare bill blocking currently mandated physician payment cuts, said Ginsburg, the president and CEO of the Center for Studying Health System Change.

The problem, Ginsburg said, is that “we’re not ready yet … development is needed, piloting is needed, a process to go from piloting to implementation is need.” Ginsburg’s panel therefore addressed the issue of how we get from where we are now to where we would like to be, with an emphasis on three questions: 1) What piloting and development activities are needed?; 2) What kind of governance mechanisms at the Centers for Medicare and Medicaid Services could best move this process forward?; and 3) How can private insurers participate in developing new models of payment reform?
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The Health Care Blog: Massachusetts’ Problem and Maryland’s Solution

By MAGGIE MAHAR

While health care reformers argue about what it would take to “break the curve” of health care inflation, the state of Maryland has done it, at least when it comes to hospital spending.

In 1977, Maryland decided that, rather than leaving prices to the vagaries of a marketplace where insurers and hospitals negotiate behind closed doors, it would delegate the task of setting reimbursement rates for acute-care hospitals to an independent agency, the Maryland Health Services Cost Review Commission.
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The Health Care Blog: How Maryland “Broke the Curve”: A Solution For Massachusetts?

Massachusetts has succeeded in providing health care insurance for all but 2.6% of its citizens.

Yet the Commonwealth still struggles to make that coverage affordable. Health care inflation is driving Massachusetts’ system toward a cliff. Total outlays for medical services and products are climbing 8 percent faster than the state’s economy. Unless something is done to rein in the cost of care, health care spending in Massachusetts is projected to nearly double over the next 10 years, hitting $123 billion in 2020. State officials know they must find a way to put a lid on spending so that it grows no faster than the state’s gross domestic product. .

But how?

With that question in mind, The Massachusetts Division of Health Care and Policy (DHCFP) contracted with the RAND Corporation to develop a menu of cost containment strategies and options. In September RAND came back with a report that recommended 12 strategies for reducing health care bills.

Near the top of the list (right after “bundling” payments for doctors and hospitals), Rand suggested that Massachusetts set hospital prices by “establishing a regulatory board to determine appropriate rates for hospital inpatient, outpatient, and emergency department care, limiting payment to the minimum amount necessary to cover hospital operating expenses, and requiring all payers (both private insurers and Medicare) to adhere to the rates set.

In other words, Rand recommended that Massachusetts consider the “Maryland solution” (a.k.a. the “all-payer” strategy). Here’s a brief summary: In Maryland prices for all hospital services are set by seven commissioners appointed by the governor to four-year terms. When setting rates for at individual hospitals, the Commission takes into account each hospital's wages, charity care and severity of patient illnesses. Hospitals can appeal only to the commission or take the dispute to court.
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AMA Unhappy With Senate Plan For Medicare 'Doc Fix'

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from Medical News Today

The American Medical Association is criticizing "a Senate plan for avoiding a proposed 21 percent cut in government payments to physicians who treat the elderly, calling the proposal a 'Band-Aid' measure," Bloomberg/BusinessWeek reports.

"The plan, part of an $80 billion job-creation proposal announced yesterday by Senate Majority Leader Harry Reid, would block the Medicare payment cuts from taking place as scheduled March 1." But the AMA "urged a permanent repeal of Medicare's payment formula, which has led the government to propose annual fee cuts. While Congress has overridden the payment reductions each year so doctors would continue to treat elderly patients, the Chicago-based group backed a permanent fix in companion legislation to a proposed revamp of the U.S. health-care system, which now is stalled" (Thomas, 2/10).
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• Senate's Doctor-Payment Fix Meets Criticism From Physicians (businessweek.com)
• AMA: Why patients should care about fixing the Medicare physician payment cut (kevinmd.com)

Standoff Between Continuum and UnitedHealthcare Over Costs - NYTimes.com

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By ANEMONA HARTOCOLLIS

A front in the national health care battle has opened in New York City, where a major hospital chain and one of the nation’s largest insurance companies are locked in a struggle over control of treatment and costs that could have broad ramifications for millions of people with private health insurance.

The fight is between Continuum Health Partners, a consortium of five New York hospitals, including Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, both major teaching hospitals, and UnitedHealthcare, which includes Oxford health plans and has 25 million members across the country, one million of them in New York.

While Congress has been haggling over covering as many as 15 million uninsured Americans, the prestigious hospitals and the major health insurer have been in bitter contract negotiations, not just over rates but also over UnitedHealthcare’s demand that the hospitals notify the insurance company within 24 hours after a patient’s admission. If a hospital failed to do so, UnitedHealthcare would cut its reimbursements for the patient by half.

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Payments to R.I. hospitals vary widely | The Providence Journal

By Felice J. Freyer

If you had surgery at Kent Hospital, your insurer would pay Kent significantly more than if you had the exact same procedure at South County Hospital –– even if the same doctor did the work.

On average, Kent is getting paid nearly twice as much as South County for inpatient care, according to a new report from the health insurance commissioner that is causing a stir across the state’s health-care industry.

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Read the Insurance Commissioner's Report

"Better Ways to Pay for Health Care" Recommended by National Health Care Quality Coalition - RWJF

As Congress and the Obama Administration search for ways to reform health care, a new report demonstrates that rationing and price controls are not the only ways to control health care costs. Better Ways to Pay for Health Care: A Primer on Healthcare Payment Reform provides an easy-to-understand explanation of the problems with current health care payment systems, and describes alternative payment systems that will address these problems.

The concise guidebook, produced by the national nonprofit Network for Regional Healthcare Improvement (NRHI) with support from the Robert Wood Johnson Foundation, demonstrates how the way we pay for health care today drives up costs and penalizes doctors and hospitals that deliver higher quality care. But the report doesn’t just document the problems—it explains alternative payment systems that can solve the problems without placing the kinds of restrictions on doctors and patients that doomed many managed care initiatives a decade ago.
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Government To Decide On Payment For Doctors Who Use Medical-Imaging - Kaiser Health News

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The government is weighing whether to cut Medicare payments to physicians who use medical-imaging machines to screen patients for diseases like cancer and heart problems. The decision could come as early as Friday. Lawmakers and the Centers for Medicare and Medicaid Services see the cuts as a way to prevent overuse of the technology, which drives up health care costs.
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Tulsa Hospital Gives Medicare Patients Cash Back For Surgery - Kaiser Health News

By Phil Galewitz

An hour into knee replacement surgery — with U2’s I Still Haven’t Found What I’m Looking For playing in the background — Dr. Yogesh Mittal smiles as he raises the left leg of his patient, 76-year-old Frank Morrow.

While holding Morrow’s thigh, the surgeon lets the bottom half of the leg fall. “Look at that,” he says, pointing to the wide range of motion permitted by the metallic-colored implant. “He’s going to love this new knee.”
Medicare, the government program that is paying for Morrow’s surgery, likes it, too.

The surgery at the 691-bed Hillcrest Medical Center here is part of an experiment testing a new “bundled” payment system. Medicare makes a single reimbursement for all the hospital and doctor care for heart and joint procedures, rather than making separate payments to the facility and physicians.
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H.R. 3572: COLA Assistance Act of 2009 (GovTrack.us)

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To provide a cost-of-living increase for Social Security benefits for 2010 of 2.9 percent.

Sponsor: Rep. Rodney Alexander [R-LA5](no cosponsors)

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Status:

Occurred: Introduced Sep 15, 2009
Occurred: Referred to Committee on Committee on Ways and Means.

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The Health Care Blog: Getting Rid of “Friction” in Health Care

By FLETCHER LANCE

Friction occurs when an object moving through space encounters resistance, slows down and has its forward energy diverted. In the world of health care, friction is a term that has become synonymous with paperwork.

Today, the U.S. spends $2.3 trillion on health care, and the U.S. Health Care Efficiency Index estimates that we could reduce this cost by $30 billion if we could eliminate the friction of phone-based and paper-based systems.

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Improper Payments: Responses to Posthearing Questions Related to Eliminating Waste and Fraud in Medicare and Medicaid

GAO Response to Congress "This letter responds to a May 29, 2009, request for responses to questions for the record related to our April 22, 2009, testimony. Our responses are based on work associated with previously issued GAO reports (see Related GAO Products at the end of this correspondence), data included in HHS’s fiscal year 2008 annual financial report (AFR), and data reported for fiscal year 2008 by CMS. We conducted our work from May 2009 to July 2009 in accordance with all sections of GAO’s Quality Assurance Framework that are relevant to our objectives. The framework requires that we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our stated objectives and to discuss any limitations in our work. We believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions in this product. Your questions, along with our responses, follow." Read Complete Letter:

Medical News: Massachusetts Should Dump Fee-For-Service, Health Panel Says - in Public Health & Policy, Health Policy from MedPage Today

By John Gever, Senior Editor, MedPage Today Doctors and hospitals in Massachusetts should be paid according to the number of patients they treat, instead of on the traditional fee-for-service basis, the state's healthcare payment commission said. Read More: Medical News: Massachusetts Should Dump Fee-For-Service, Health Panel Says - in Public Health & Policy, Health Policy from MedPage Today