Strategies and Lessons for Achieving Value


In order to get health care spending under control, the US needs to reallocate resources from low-value to higher-value interventions. We spend billions of dollars on high-tech medicine that has limited and sometimes no evidence of clinical benefits to patients, yet carries a high price tag.

Examples include vertebroplasty, a procedure that injects bone cement into fractured vertebra in the spine to reduce pain. Two blinded, randomized controlled studies indicated that this procedure produces no greater reduction in pain among osteoarthritis patients with vertebra fractures than a placebo. Further, there are serious risks associated with this procedure, such as the cement leaking out of the immediate area into the body.

Vertebroplasty is expensive. This procedure costs at least $3,000 in an outpatient setting and upwards of $16,000 in a hospital setting. An estimated 70,000 to 100,000 of these procedures are done annually in the US. Medicare continues to pay for this procedure despite no evidence of benefit and considerable evidence of harms and a high price tag.

In sharp contrast, there are many high-value interventions with a clear evidence base. The benefits to health from these interventions have been clearly established, and the price tags are typically quite modest. Examples include:

  1. Childhood immunizations, where each dollar spent saves $18.40, according to the Partnership to Fight Chronic Disease.
  2. Smoking cessation assistance
  3. Screening for hypertension, high cholesterol, and colon cancer
  4. Daily aspirin use by people at risk for cardiovascular disease
  5. Regular exercise to avert obesity among children and adolescents

We certainly need to reform the US health care system by moving away from the fee-for-service system and reducing the fragmentation in the health care delivery system. But we need to devote much more attention to the factors that drive people into the health care system in the first place.

The Enrollment Challenge – Unveiling of the New Marketplaces

The Obama administration has just announced a new and improved version of its health reform website  The site provides up-to-date information about how Americans can sign up for health insurance under the new “marketplaces,” designed to offer affordable coverage for millions. The marketplaces that are emerging from the Affordable Care Act offer a broad choice of health plans for people who lack access to affordable employer-sponsored insurance, and are ineligible for Medicare and Medicaid. This enhanced website should be just the start of an all-out campaign to educate Americans about the new law in general, and the marketplaces in particular.

Recent polling shows that about one of five Americans actually think the law has been done away with. An estimated 12% say that Congress repealed Obamacare. Another 9% say the Supreme Court struck down the law. Further, 23% say that they do not know enough about the law to say whether it existed or not.

A key challenge in making the new marketplaces work is to get younger and healthier people who are currently uninsured to take advantage of the law’s new protections and subsidies and obtain coverage. Many of these people do not know about the law’s key provisions. Others do, but may calculate that paying ACA’s modest penalties for remaining uninsured are preferable to getting coverage. If large numbers of these Americans remain on the sidelines, the marketplaces could become much more expensive than anticipated, raising the cost of the premium subsidies.

A very proactive campaign is needed, and there is no time to lose.



Affordable Insurance Coverage or Affordable Access to Care?

The first installment of the Triple Aim of health reform points to Access. For some that means access to affordable insurance, while others insist that definition needs to be broader and refer to affordable access to health care. Experts are starting to question whether the ACA’s expansion can deliver on the promise of true affordability simply by subsidizing health insurance purchases to the lower income strata of American society. Instead, these experts contend that while 30 million Americans may gain health insurance over the decade, many of those individuals will not have benefits comprehensive enough to cover their needs and mitigate out-of-pocket spending.

Concerns about rates of medical bankruptcies continues. Even with insurance, literature shows that many individuals remain underinsured, leading to personal bankruptcy, often due to overwhelming medical costs.

On the newly forming Health Exchanges, individuals will have a choice of bronze, silver, gold, or platinum level plans. Bronze will cover 60% of an average enrollee’s medical costs, meaning an individual would be expected to share in 40% of the costs in the form of co-pays, co-insurance, and deductibles. Federal authorities are projecting that the vast majority of lower income individuals will purchase silver plans, which cover 70 percent of the actuarial value – the  minimum level of plan comprehensiveness for which the premium subsidies kick in.

The bigger picture is that consumers need to be educated on total health care costs, not just insurance premiums. Tools to calculate expected or potential cost-sharing would go a long way in creating informed consumers who can better control their health care choices and costs.

Hospitals’ Financial Model Undermines Quality

Reforming the health care system largely depends on improving the quality of medical care, while lowering the costs. And yet, evidence continues to illustrate the perverse incentives that undermine progress. Last week, the Journal of the American Medical Association (JAMA) published a study that linked hospital profits to surgical complications for patients. In other words, the worse care delivered, the more a hospital was paid and vice versa.

According to the Washington Post summary, complications led to a 330 percent increase in margins for the privately insured and 190 percent for Medicare patients. As study author Atul Gawande says, “hospitals see little reason to invest in technologies that would reduce complications when that would only lower income.” Technologies could include health information technology to manage medical errors and patient allergies, but they can also include simple improvements like safety checklist to provide for quality control.

Payers have started to modify reimbursement in an effort to change provider behavior. The Centers for Medicare and Medicaid Services (CMS) have instituted several programs to emphasize quality care over volume including the Value Based Purchasing Program and the Hospital Readmissions Reduction Program. The advent of Accountable Care Organizations (ACO) is also an attempt to align payer’s interests with providers, allowing both parties to share in their savings.

Innovations that encourage better care and financially reward providers and payers equally for the savings accruing to the system are the types of changes that will take hold in the health reform era. As such, payment reform will be delivering improved health and lowering costs.

Value-Based Purchasing Program Earns Criticism in Early Reviews

The Value-Based Purchasing (VBP) program is an attempt by CMS to begin to transform the payment incentives embedded in Medicare, and ultimately in the health system. VBP aims to pay hospitals, who  serve Medicare patients, largely based on quality of care, instead on the volume of care that has traditionally driven financial success. With a complex bonus and penalty system that alters overall reimbursement rates, hospitals are now being judged on the quality of care delivered and patient satisfaction.

Although the program is just in its first year, findings of potential bias are already emerging. A Kaiser Health News analysis found that doctor-owned hospitals are disproportionately benefitting from the bonuses compared to those that are note physician owned. In fact, ninie of the 10 hospitals receiving the largest bonuses in the first year are physician-owned.

The question emerging from proponents and critics  is why? While physicians from the hospitals contend that this program simply rewards better performing hospitals for delivering care that is quality-focused, experts from other institutions question the program design. Supposedly, the program was to have corrected for concerns about cherry picking of healthier, better insured patients as well as issues of specialty hospitals that care for patients with very specific health care needs, like orthopedic surgery, that does not create complex health spillovers. The complaint being that this is not an apples to apples comparison.

In the end, the amount of money is minor. The early years of VBP will max out at 1% of reimbursement, ramping up to 2% in later years, for either bonuses or penalties. The more important policy question that must be grappled with is the effect that the program will have on the health system – what kind of signal does VBP send to hospitals and health care providers in terms of quality of care that we want to emphasize?

Dialogue on Future Health Care Spending Gaining Broad Consensus

For years, stakeholders from across the ideological spectrum have discussed the need to stabilize the growth in health care costs, but it appears that the many players are beginning to agree on the broad parameters of a sustainable system. Recently, the Partnership for Sustainable Health Care, an alliance comprised of diverse health care interests, put forth recommendations on controlling costs and improving the quality. Representing manufacturers, insurers, business, and consumers, the group made a number of recommendations that align with other cost containment reports like those included in “Bending the Cost Curve” and “Confronting Costs”.

The five recommendations mainly address financial misalignment in health care, especially a system built on fee-for-service reimbursement that rewards volume of care, instead of quality of care. The Partnership also makes clear that none of the improvements to the system can be achieved without making investments in infrastructure that emphasize coordination of care. Finally, some onus is placed on patients to take responsibility for their health and become a partner in their health, and thereby lowering system costs.

Meanwhile, President Obama unveiled his 2014 federal budget proposal to Congress this week. The $3.7 trillion budget cut spending in several large categories including Medicare. The news of reductions in federal expenditures gave budget hawk Congressman Paul Ryan a sense that an opening for a bipartisan deal would be possible. As always, the devil is in the details. While Republicans are looking for deep cuts that would likely require a combination of adjusting the eligibility age, reducing benefits, and changing reimbursement or provider structures, the President’s proposal recommends a more incremental approach to reforming the program.

The Washington Post reports Obama’s plan would generate nearly $400 billion in savings primarily from Medicare, with the bulk of the cuts falling on drug companies and other providers. However, Medicare beneficiaries making over $170,000 would also pay higher premiums. In addition, the program would require beneficiaries to substitute generic drugs for more expensive brand names.

As the Partnership plan and the ’14 Budget proposal suggests, the future of the U.S. health care system is far from cemented, but policymakers are making strides on how the system should operate, what we should be paying for, and what kind of strategies show promise.

Replacing Medicaid with Private Plans – Empowerment or Cost-Shifting?

Even though the Affordable Care Act broadly expands coverage for Americans, especially at lower incomes, the details of state plans differs widely, demonstrating attempts to realign the ways in which the federal and state governments actual offer health care coverage to the poor and near-poor. Nowhere is that more evident than in the emerging battle over how states can use dollars intended for Medicaid expansion up to 133% FPL per the ACA. Instead, a number of states are crafting proposals to shift the would-be newly enrolled onto the Exchanges to purchase private plans.

In Wisconsin, Governor Scott Walker is looking to draw back the size of government, in line with other moves he has made in his tenure, including by closing down experimental, waiver-approved parts of Medicaid that have made it more expansive than many others in the country. The Exchanges, accompanied by premium subsidies, and potentially fully covered by the federal government for individuals up to 133% of FPL, would allow Governors like Walker to shift poor individuals and families to private plans.

The concern voiced by consumer advocates is two-fold. First, private plans typically have higher cost-sharing, making these plans less affordable for already cash-strapped families, which directly conflicts with the law’s thrust. Moreover, by erecting financial barriers to accessing care, shifting individuals into private plans may exacerbate the existing problem of individuals forgoing care because of affordability, leading to more acute and expensive health problems down the road.

Stepping back to look at this issue from a brief historical perspective of the health reform law, there is reason to worry that this unintended implementation will negatively impact insurance enrollment. What health reform planners struggled with since the beginning in designing the individual mandate is the issue of adverse selection. The higher the entrance fee to join the risk pool, from health premiums to co-pays, the more likely individuals of lesser means are likely to forgo coverage altogether, resulting in smaller risk pools filled with a sicker group of individuals. Study after study has shown that this problem of adverse selection cannot be solved by the market, unless adoption costs are essentially nullified for those most likely to ignore the signals.

States Enacting Scope of Practice Changes to Address Looming Clinician Shortage

The ACA provides for a massive coverage expansion, which will drive an estimated 30 million new insured individuals into primary care and other health care services over the next five years. While states are busily building health insurance Exchanges and planning Medicaid expansions, many are thinking forward about smart workforce deployment. Some 170 scope-of-practice bills have been introduced in 39 states, according to the National Conference of State Legislatures (NCSL). Training new physicians is not necessarily timely, practical, or cost-effective. Instead, expanding what mid-level practitioners like nurse practitioners and physician assistants can do in a medical setting may be more expeditious.

Other innovative ideas that  states are exploring include:

  • Increase number of community health workers – Florida lawmakers have proposed creating the Community Health Worker Task Force. The workers would leverage community volunteers who would provide basic services and connect individuals to clinics.
  • Let out-of-state doctors practice – New York and New Mexico are considering allowing doctors with out-of-state licenses to practice inside the state. Limitations include that the service would have to be voluntary, which seems illogical given the reason for loosening up practice laws is due to increasing health insurance. Directing clinicians to underserved areas is a good idea, but restricting reimbursement will not address historical access barriers.
  • Authorize pharmacists to give vaccinations to children – Maine wants to make it easier for kids to get vaccinations, permitting pharmacists to give shots to adults and children under proposed law. Basic, public health and prevention necessitates these common sense moves.
  • Allow midwives more authority – Indiana and New Mexico are both considering revising and expanding regulations on midwifery practice. Midwives play an integral role in the care and delivery of babies in many states.
  • Allow NPs to write treatment plans for physical therapists – Florida wants to let nurse practitioners assign people to physical therapy. Physical therapists would be authorized to follow treatment plans outlined by not only doctors but also NPs.
  • Let mid-level practitioners declare death – New Jersey and New York have suggested devolving authority to physician assistants and NPs. NJ is considering letting nurse practitioners determine the cause of death and sign a death certificate if a doctor isn’t available. NY has proposed allowing physician assistants, writing the order under the supervision of a physician, to issue a death certificate.


Troubles Enrolling the Uninsured in Local Programs Offer Lessons for the Exchanges

As the anticipation for the massive coverage expansion builds with less than nine months away from the individual mandate kicking in and the Exchanges and Medicaid expansion becoming effective, the big unknown of how many Americans will actually gain insurance coverage continues to worry officials. While the Congressional Budget Office projects over 30 million Americans will obtain health insurance thanks to the health reform law, the scale and target groups of new enrollment suggest that bringing people into the risk pools won’t be such a sure thing.

In South Florida, the county set up a subsidized program for residents not qualifying for Medicaid, and not able to afford health insurance on the individual market. Kaiser Health News and The Washington Post that within one  year of instituting the program, fewer than 500 people had signed up — less than a third of the number expected. Although enrollment would grow with time and outreach, officials were confounded by the slow take-up of heavily discounted coverage.

As such, programs like Vita in South Florida and others around the country offer a number lessons for policymakers implementing the ACA coverage provisions right now:

  1. Education – affordability is relative, but the real challenge is convincing individuals that health insurance is a necessary investment in one’s health and a good bet against catastrophic issues. Overcoming adverse selection, when only the sick sign up, is partly addressed by the individual mandate and associated penalty.
  2. Engagement – changing norms and individual’s perceptions of health insurance is a major challenge for current health insurance programs and for the coverage expansion moving forward. Health insurance is a foreign, complex concept to the average American. The Exchanges emphasis on engaging consumers through navigator programs and other community initiatives will be vital to helping the public access benefits as well as increasing health coverage literacy
  3. Communication – the health law’s benefits, deadlines, and financial ramifications for consumers, insurers, agents/brokers, and businesses must be made loud and clear for all parties.
  4. Preparation – Open enrollment begins in October, 2013, just five months away. Three years after the authorization of the landmark law, few Americans or businesses really understand what’s in it for them. Given that the law is no longer in constitutional jeopardy, it’s probably time that the federal and state governments start a serious public education campaign to communicate the upcoming dates and opportunities for residents

Mississippi Dems Attempt to Create a Political Crisis on Medicaid Expansion

Turning the tables on Republicans and adopting a strategy recently employed by Republicans in Congress, Mississippi democratic leglislators are threatening to deauthorize the entire Medicaid program if state Republicans do not allow floor debate and a vote on the ACA Medicaid expansion, which the Republicans oppose. Even though the Democrats widely support the program and the expansion, they sense their only option to force exploration of expanding the program to Mississippi’s poor, uninsured is by creating an untenable position of unwinding the entire program. Such a move would have dire political consequences for the Republican majority, and be unlikely to see the light of day.

Medicaid is an important safety net program for state residents and a financial boon for a resource-starved state. According to the Governing Magazine, approximately 750,000 of Mississippi’s 2.9 million residents are enrolled in Medicaid, and the program pumps more than $4 billion annually into the state’s economy. But the ultimate decision on the expansion will have major consequences, too: About 19 percent of the state’s population is uninsured and more than 300,000 would gain insurance coverage through Medicaid under the ACA. The state’s uninsured population exceeds the national average of 16 percent. Moreover, the ACA is projected to pour an estimated $15 billion in federal dollars into the state over the next 10 years.

What’s more likely is that the state legislature will strike some sort of compromise that fits the state’s politics. Perhaps something akin to Arkansas’ deal with HHS that allows for Medicaid expansion dollars to go towards private insurance purchases on the Exchanges. In that way, Mississippi would only have to expand its program to the 100% of FPL.