A “Grand Bargain” To Improve Quality and Decrease Medicare Costs

There are just a few key reasons why Medicare has become inordinately expensive. There is no end in sight for cost escalation. But there are some obvious solutions and they all begin with chronic illnesses.

Chronic illness – diabetes, heart failure, cancer, chronic lung disease, etc. – are increasing at exponential rates; are caused largely by lifestyle behaviors; and consume 70-85% of all claims paid. Medicare enrollees tend to have chronic illnesses; 85% have at least one and 50% have three or more and many are taking 5-7 prescription medications. Any attempt to control costs must begin with chronic illnesses. 

Is there a good solution to the Medicare cost rise issue? Are there approaches that could be instituted now that would have an immediate impact on improving quality of care and thereby reduce costs? There are and could be the basis of a “grand bargain.” Here are five workable suggestions. 

1) The first recommendation is to recognize that one is never too old to benefit from sound preventive measures. Most chronic illnesses are related to excess calorie consumption, lack of exercise, chronic stress and tobacco. And aging leads to impaired mobility, vision, hearing, dentition and cognition. So Medicare should strengthen the wellness, health and preventive programs with specific funding to PCPs to engage in detailed, in depth preventive care. The new annual preventative care session built into the Affordable Care Act (ACA/Obamacare) is a good start in this direction but it must be augmented since a single yearly session is not sufficient to deal with the serious lifestyle issues leading to and exacerbating these chronic illnesses. This will improve health now and substantially bring down costs in the longer term.

2) The second recommendation is to recognize that older individuals with multiple chronic illnesses on multiple prescription medications who may have visual, hearing, mobility and cognitive impairments cannot be effectively diagnosed and treated in short time periods. There must be time – to listen, think, prevent and treat. This means adequate reimbursement per visit to spend the time required. And it means Medicare must pay the PCP sufficiently and specifically to provide chronic illness care coordination. This must be done in a way that is a quid pro quo – higher reimbursements but only in return for the care the patient needs and deserves. This will markedly improve quality, substantially reduce costs and do so immediately. It means the PCP must substantially reduce his or her case load from today’s 2000 plus to no more than 1000 (and preferably substantially less) so as to have the time required for each patient. (Many believe that it best to convert from a fee for service to a fixed reimbursement system, capitation system or a salaried approach. That is probably a good idea but only if the system grants the PCP the critical needed time per patient, i.e., assignment of a limited number of patients or a large enough payment per year per patient so as to keep the total number of patients under care low enough to give the time needed.)

3) The third recommendation is that Medicare should reconsider its approach to hospital care alternatives. For example, today a patient becomes eligible for nursing home care only if he has been hospitalized for three or more days. Costs could be dramatically reduced if a patient could be sent directly to a well-qualified nursing home by his PCP who certifies in writing as to appropriateness. Similar consideration should be given to home antibiotic administration and other home care alternatives which mean better quality and lesser costs. 

4) The fourth recommendation, somewhat of an alternative of the second, begins with the realization that primary care is generally not expensive. Indeed when Medicare originated, it was the patient’s responsibility to pay for primary care and should be again. Medicare should institute high deductibles with the opportunity for a health savings account (HSA) to pay for primary care with tax advantaged dollars. Patients begin to ask questions and challenge recommendations when they are paying for primary care directly. They can request more time per visit and pay for it through their HSA. Both have the result that the care quality goes up and the overall cost to Medicare goes way down because the patient gets the time needed by the PCP to give good care, avoid excess testing and avoid the reflex to refer to the specialist unless really appropriate. The patient-doctor relationship is corrected to being a direct contractual relationship leading to better care at much lower cost. Most studies suggest that the deductible needs to be high enough to be meaningful, often about $1000 or more. This could be reduced for those of lesser means. Given the importance of preventive care, that might be excluded and continued to be paid for by Medicare. High deductibles will be politically difficult. But high deductibles are available thought the private plans for Medigap and for the Part D prescription drug policies so the precedent is there. This would lead to a much more responsible use of the entire system with better care and much reduced costs.  

Meanwhile, many PCPs are switching to a direct pay system where they no longer accept Medicare and either expect to be paid per visit by the patient or be paid a flat annual amount (retainer). Medicare is losing these physicians now who are providing better care but at a cost to the patient. Better that Medicare reexamines its policies and adapts now. 

5) The fifth recommendation relates to end of life care. Americans believe in individualism and the right to whatever care is available, damn the expenses. And physicians are trained to treat death as an obstacle to be surmounted rather than to be accepted as ultimately inevitable. This plays out eventually towards the end of life where “one last” drug, procedure, etc. is proposed or requested or both. Generally this occurs because the physician has not engaged in a constructive, honest and empathetic conversation with the patient well ahead of time and ongoing. This is fundamentally irresponsible use of the medical care system by both patient and doctor. Much better is reasoned, empathetic discussion between patient (and family) and the doctor followed by humane, compassionate active support and emotional care – in other words, death with dignity. End of life discussions are not only logical but humane. And it must be stressed that this recommendation has nothing to do with so called “death panels” or some nefarious means of rationing care. 

Each of these recommendations incorporates a balancing of rights and responsibilities. The first offers the enrollee added wellness and preventive services but it must come with the responsibility to use them effectively. The second grants the PCP added revenue per patient but only for the commitment to take the needed time with patients and of offering extensive preventive services and chronic illness care coordination. This of course means limiting the total number of patients under care per PCP. The third grants a new approach to paying for alternative care but only provided that it is certified as appropriate. The fourth places the responsibility for first dollar coverage on the patient/enrollee but with it must come a right to a better doctor-patient contractual relationship – one that the patient can void if the response is not adequate for the dollars expended. And the fifth recommendation places a responsibility on patient and doctor alike to have in depth and rational discussions regarding end of life options and needs while expecting Medicare to pay not only for the discussion time but also for the option selected. 

These five recommendations could have a major impact on Medicare expenditures, beginning immediately. The real benefit of course is that these recommendations will improve health care quality while leading to more satisfaction by patient and doctor alike. It would be a valuable “Grand Bargain.”

 

 

Medicare and the Continuing Loss of Primary Care Physicians

Primary care physicians (PCPs) have been marginalized by Medicare for decades with low reimbursement rates for routine office visits which has led to the 15-20 minute office visit with 10-12 minutes of actual “face time” and a panel of patients that well exceeds 2000.  

Is there a good solution to the Medicare cost and quality issues? Setting aside either the Democrats’ approach to basically enact price controls by ratcheting down reimbursements or the Republican’s plan to re-structure Medicare to a defined contribution plan, albeit not for ten years, are there approaches that could be instituted now that would have an immediate impact on improving quality of care and thereby reducing costs? There are, but in this Part 6 of my Medicare series, we first need to understand one of the major issues facing Medicare today – the crisis in primary care.  

A 10-12 minute interaction means no time for the PCP to truly listen, no time to prevent, no time to coordinate and no time to just think. This has in turn meant that whenever a patient has a slightly more complex issue, one that is not easily recognized in a short time frame, then the PCP is quick to refer to a specialist. It is this very act that dramatically drives up expenditures with added tests, imaging and procedures along with the specialist’s fees. Medicare has been exceptionally short sighted in this regard and as a result is the prime culprit in the rapidly rising costs of care.  

Further, this lack of time being reimbursed means that two critical quality care needs area left largely unattended. The first is offering extensive preventive care and the second is coordinating the care of the patient with chronic illness. Recall that 85% of Medicare enrollees have at least one chronic illness and 50% have three or more. These are mostly the result of years of adverse behavior patterns but it is never too late to begin preventive care so time spent here is valuable for better health quality and ultimately reduced costs. And those with a chronic illness need to have their team of caregivers coordinated – every team needs a quarterback and the PCP is the obvious choice. But Medicare does not reimburse for this critical function which when done correctly means less reliance on specialists, tests, procedures and prescriptions. The result of this low reimbursement for routine visits and lack of reimbursement for either extensive preventive care or chronic care coordination over the years is a PCP shortage, many current PCPs no longer accepting Medicare, and the remaining PCPs trying to see 24 to 25 patients or more per day, each for 15 minutes despite the patient’s complex problem list. And this means less than stellar patient care in many instances. 

The result is a real problem facing Medicare right now - the rapid loss of primary care physicians (PCPs) who will no longer accept Medicare. In 2009 there were 3700 physicians that opted out of Medicare; the number rose to 9500 in 2012 according to CMS in a Wall Street Journal article; this on top of the shortage of PCPs across the country, with no end in sight. The ACA does include an extra 10% increase to primary care providers but this will probably be too little, too late. And if the mandated 27% across the board physician cut in reimbursement is ever implemented by Congress (it probably never will be but Congress refuses to clarify itself) then it is reasonable to expect that there will be a mass exodus from accepting Medicare reimbursements by all physicians, not just PCPs. 

What is the fix? As long as fee for service predominates in the payment system, Medicare needs to increase its reimbursement of PCPs in a manner that ensures that they will offer the patient more time per visit. Time to listen, to prevent, to coordinate and to think. And in a capitated system, Medicare (or its agent) needs to pay enough per patient per month/year to insure that each PCP does not have more than a maximum of 1000 patients (even fewer if the practice is largely geriatric) so that there can be adequate time per patient encounter. 

The next post will highlight some specific recommendations for Medicare to enact that would improve quality and reduce costs.

 

 

Democrats Fix For Medicare –Price Controls

The two party’s approaches are quite different. The Democrats’ plans are contained generally in the Affordable Care Act (ACA) and for the most part are based on rate or price controls. This is Part 4 of my series on Medicare.  Politicians realize that Medicare will not be able to continue on its current track. Something has to change since the country will simply not be able to afford the inexorable growth and expenditures. But politicians do not like to take away entitlements so proposals generally are couched in vague terms and often with positions that are unrealistic. 

The most commented upon action today from the ACA/Obamacare is that the payments to Medicare providers will be reduced over ten years by $716 billion. These include reductions in hospital reimbursements and reductions in payments for Part C plans (Medicare Advantage.) 

These cuts were instituted to free up dollars for other aspects of the ACA. Some would call this “robbing Peter to pay Paul.” But others would argue that it is simple prioritization of the funds available; kudos to those who accepted the responsibility for making the difficult decision. Basically these are “price control” mechanisms but price controls rarely work; Medicare has used them for decades with obvious inadequate results. And as demonstrated over the years, providers will make up the difference with more visits, procedures, hospitalizations, etc. The proponents note that the plan only reduces payments to the providers; it does not cut benefits. How reducing provider payments will not ultimately result in less for the beneficiaries is a legitimate question. 

Physician payments were scheduled to be cut by about 27 percent December 31, 2012. This was based on a formula established in 1997 called the Sustainable Growth Rate. It goes into effect unless Congress explicitly exempts it. Over the years, Congress has repeatedly given such an exemption but only for a short time, allowing themselves to claim that eventually they would enact the cuts and use them to offset budgets. And true to form, Congress (Republicans and Democrats alike) – after the election –created another short term exemption. Hardly a satisfactory way to govern.   

The ACA recognizes that there is a shortage of primary care physicians (PCP) and that PCPs are under reimbursed. To this end, PCP reimbursements will be increased by about 10% over a few years’ time. Just how this increase corresponds with the 27% reduction or whatever number in the future is unclear. 

The ACA also creates some new benefits for enrollees. Chief among them relates to prevention and wellness. Each enrollee is allowed an annual extensive preventive medicine evaluation with no deductibles and no co-pays. Medicare also pays the full cost of screening such as mammography and colonoscopy, cholesterol tests, etc. along with appropriate vaccinations. An interesting sidelight – if a colonoscopy detects a polyp which is removed during the procedure, that converts it to a therapeutic procedure with deductibles and co-pays.  

The ACA created the Independent Payment Advisory Board (IPAB) whose job it will be to recommend steps to save dollars within Medicare without reducing benefits or without expecting beneficiaries to pay more - a tall order. They will be nominated by the President, ratified by the Senate, have prolonged terms and their recommendations become effective unless Congress votes them down en bloc, i.e., no cherry picking. Republicans have criticized this plan as allotting too much power in a small group of individuals not accountable to anyone. Democrats counter that the structure allows them to be honest brokers unaffected by competing constituencies.  

Recently, there has been controversy within Democratic circles. Howard Dean, a physician, former presidential primary candidate and Democratic Party chair, recently wrote an op-ed in the Wall Street Journal that the IPAB should be repealed because it will not control costs, will become essentially a rationing organization and will lead to much added bureaucracy in medical care delivery. He added that rate setting has never worked in the past forty years. Within two days, Peter Orszag, former director of the Office of Management and Budget for President Obama retorted to the contrary on Bloomberg View. Clearly it is controversial.  

Altogether, the Democrat’s plan is projected to reduce annual Medicare cost escalation from the currently expected about 4% to about 3.5% per year over the coming decade. This may not seem like much but compounded each year it really adds up. 

In my next post, the Republicans’ plan – quite different from that of the Democrats.

 

 

A Disease Industry vs. A Healthcare System

Today America does not have a true healthcare system that focuses on wellness and disease prevention. Rather it focuses on disease diagnosis and treatment paid for on a unit basis. Each visit, each procedure, each test, each drug, each hospitalization is charged for. The result is more and more units of care are given rather than a focus on how to give good preventive care and how to coordinate the care of those with complex chronic illnesses. As long as we have a disease industry – driven by our current payment system – we will have rising costs. It is inevitable because providers (and the affiliated hospitals, pharmaceutical firms, medical device manufacturers and others) will find new ways to diagnose and treat – and although these new approaches might be an improvement over what we have today it will also be much more expensive.

Eventually, as pressures mount, there will be a push for a change to a true healthcare system from the current disease-based system. This will probably take a fair length of time given that Congress did not address the payment system in the healthcare reform legislation. Basically on this point, they left it as just more of the same.

But there could be a breakthrough. Some group, some organization or some jurisdictions might create a model, gain some success and that might lead to wider adoption. Some of the large multidisciplinary “clinics” like Mayo, Geisinger, Dean and others which have contracts for “covered lives” have had success in giving more comprehensive care yet reducing costs. And some insurer/provider combined organizations – such as Kaiser-Permanente – have shown the same beneficial effects. Perhaps others will begin to adopt their examples toward better health care at lower cost.