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The Fairy Tale of a Non-Profit Hospital

The Healthcare Blog - 8 hours 15 min ago

Nonprofit hospitals have higher profit margins than most for-profit hospitals after accounting for their tax obligations.  3900 (62%) of U.S. Hospitals are non-profit and therefore tax-exempt: they pay no property tax, no federal or state income tax, and no sales tax.  An article published in Health Affairs found seven of the nation’s 10 most profitable hospitals were of the non-profit variety, each earning more than $163 million from patient care services. Revoking their property tax-exempt status for not functioning as a charitable entity could return billions in healthcare dollars to local government, communities, and citizens, struggling to afford quality health care.

The idea of exempting nonprofits from paying taxes in the first place is based on the belief these entities provide charity for the underserved and underinsured who would otherwise require the government to lend a helping hand.  As the percentage of uninsured declines as a result of the ACA, the justification for tax exempt status is being called into question.

Many nonprofit hospitals calculate their charitable care by using something known as “charge master” pricing; exorbitant, non-negotiated prices which are inflated many times higher than what private insurance or Medicare would pay.  This allows facilities to overstate their provision of “charity care,” calculated as revenue loss by the hospital in exchange for their lucrative tax exemptions. In a patient evaluated with chest pain, the allowable for Medicare is $3600; however, in an uninsured patient, the hospital may “write-off” an inflated $25,600 in uncompensated costs, which is 8 times higher than actual cost of care provided.  Nonprofit hospitals should be required to meet a higher standard by providing true (non-inflated) charity care.

A study, conducted by Zack Cooper (Yale), Stuart Craig (University of Pennsylvania), Martin Gaynor (Carnegie Mellon), and John Van Reenen (London School of Economics), evaluated the way nonprofit hospitals charge.  “Not-for-profit hospitals don’t price any less aggressively than for-profits. We subsidize not-for-profits to the tune of $30 billion annually, in the form of tax exemptions, and we have to ask what that money is getting us,” says Cooper, co-author of the study.

So what is the tax exemption getting us if not to “real” charity care for those in need?  A significant amount of nonprofit hospital revenue is being spent on executive salaries and benefit packages, reinvestment in new state-of-the-art facilities, and expanded healthcare services for those who can afford it.

According to Becker’s Hospital Review in 2012, the combined compensation of the top executives at the 25 most profitable non-profit hospitals totaled almost $58 million. The highest paid nonprofit hospital CEO in the nation is Jeffrey Romoff, at the University of Pittsburgh Medical Center (UPMC.)  An article in The Pittsburgh Post Gazette found his 2015 compensation was $6.43 million dollars; he has topped $6 million for the last four years, plus notable perks, such as access to a private chef, chauffeur, and a jet.  Additionally, the Gazette found 31 UPMC executives and physicians earned at least $1 million in 2015, six of whom received more than $2 million each.

In 2013, Pittsburgh Mayor Luke Ravenstahl unsuccessfully sued UPMC to collect more taxes on the grounds his city was losing $20 million annually as a result of the tax exemptions.  CBS News aired a segment after investigating the financial details.  UPMC brought in $948 million in profit over the 2 year period 2011-2012, while providing a mere 2% of its budget in charity care, and yet was saving $200 million after tax exemption. Imagine what that could pay for in the way of healthcare for the poor, disabled, and elderly, not to mention the funding for teachers, police officers, and firefighters?

The idea nonprofit hospitals should be paying property taxes has been gaining traction ever since.  In 2015, a New Jersey judge ruled that Morristown Medical Center should be responsible for paying property taxes because it acted more like a for-profit organization than one devoted to the provision of charity care.  He said, “modern nonprofit hospitals are essentially legal fictions;” kind of like a modern day fairy tale.  Ultimately, Morristown Medical Center reached an amicable agreement with the city to pay $1 million in the way of taxes, but multiple cities have followed suit, challenging the tax exempt status of nonprofit hospitals in the state.

Illinois is the latest battleground for the property tax exemption controversy.  A 2009 report by the Center for Tax and Budget Accountability found the property tax exemptions for 47 Chicago-area nonprofit hospitals were worth $279 million. In Illinois, a charity was originally defined as an organization generating revenue from donations and providing services to those in need.   In 2010, the Illinois Supreme Court ruled Provena Covenant Medical Center was not entitled to a property tax exemption because they were not a charity, as most of their revenue was generated from fees for service.

In 2012, the Illinois Hospital Association lobbied hard to expand the definition of charity in state law.  The state legislature passed a provision—buried in the Medicaid Reform Bill 2194– allowing property tax exemptions for hospitals providing charity care in the equivalent amount to their tax liability.  Medicaid reimbursements, considerably lower than private insurance payments, were allowed to count toward the “charity care” tabulation.

The Carle Foundation Hospital is the 10th most profitable hospital in the nation, according to the May 2013 article in Health Affairs.  They filed a request to have a property tax exemption after the controversial 2012 law was enacted.  The City of Urbana argued Carle had revenues approaching $2 billion annually, functioned more as a for-profit organization than nonprofit, and caused the city to lose $6.3 million in property taxes, necessitating a rate increase for other city properties as a result.  Last year, the 4th District Appellate Court ruled the 2012 state law unconstitutional.

Dissatisfied with the outcome, Carle Foundation Hospital appealed to the Illinois Supreme Court.  On March 23, 2017 the Supreme Court of Illinois vacated the ruling of the Appellate Court, but would not consider constitutionality of the 2012 law; Carle will be entitled to the property tax exemption for now.  The Supreme Court recommended reconsideration in the lower courts as to the question of constitutionality, so the debate remains ongoing.

The days of charitable establishments singularly devoted to comforting and caring for the poor and suffering are long gone.  Most nonprofit hospitals are vast profit machines bearing little resemblance to the charitable organizations of the past.  By reinvesting in state-of-the-art facilities with unnecessary “bells and whistles,” nonprofits are currently dominating city landscapes, becoming the largest local employers, and bringing in more revenue than the cities in which they are located.
By sidestepping property tax payments to the county or city in which nonprofit hospitals reside, they are shifting the financial burden for essential services and infrastructure onto the backs of individual citizens and small business owners, who should not bear the costs alone.  Stricter criteria should be applied to determine whether a hospital meets a “charity care threshold” in order to retain the lucrative nonprofit designation.  This is a vital step toward ensuring cities and counties collect adequate revenue for developed land, while ensuring vulnerable populations have somewhere to go when in need of healthcare, which is rapidly becoming unaffordable for us all.

Categories: OIG Advisory Opinions

BTG buys Oncoverse–Amanda Goltz explains all

The Healthcare Blog - Mon, 04/24/2017 - 18:42

Amanda Goltz is a massive ball of energy in the world of digital health. For the past 2 years she’s been working for English pharma company BTG. But how does a pharma company get involved in health tech without wasting everyone’s time, and what exactly are they trying to do? Amanda certainly has both opinions and a plan. Today part of that plan became official with the purchase of Oncoverse, a cancer management program BTG has been working on with Wanda and Dignity Health. I spoke to her Monday morning my time to find out more (and yes, if you wait to the end, there is both a job “offer” and I have my own BBC Live home office moment!)

Categories: OIG Advisory Opinions

The Sad Myth of the Direct to Consumer Startup

The Healthcare Blog - Mon, 04/24/2017 - 10:55

Last week I had a startup entrepreneur come to me with an idea about how to “pivot” his company strategy. The company, which had begun as a medical device company but couldn’t quite find it’s market, was considering re-emerging as a consumer-focused digital medical device company in an adjacent market. The idea was to create a device to measure a serious medical condition and market it to consumers directly. Their plan was to target mothers who would be paranoid enough to spend money on medical devices to diagnose an issue in their children.

Imagine my heavy sigh.

Ever the heart-breaker, I had to tell this person that this strategy did not make any sense to me. As his target market representative du jour, I mentioned that there is no world in which I would trust myself to diagnose a major medical problem. Rather, if I even suspected a hangnail I would rush my precious princess straight to the doctor, do not pass Go, do not pay iTunes fees.

In fact, as I sat there explaining this psychology, I could not think of one single digital health company addressing a major medical condition that had successfully created a company by selling directly to consumers. If I am missing one, please do let me know in the comments section below. Please remember I am talking about companies that sell directly to consumers, not to physicians. And I am also talking about companies that address real, hardcore medical conditions, not fitness and not beauty. People will spend all kinds of money on fitness and beauty products even knowing full well they will make them neither fit nor beautiful. But medical products? Not so much. Insurance is supposed to pay for that. Or at least that’s what most consumers think.

Yes, there are some consumer-direct digital health companies that have had minor successes in the market, but none that have been able to achieve any size at all and certainly none that were able to deliver on venture capital return goals, even reasonable ones. And here’s why: if someone has a major medical problem they sure as hell don’t trust themselves to diagnose and treat it; they want their doctor involved, and appropriately so. Consumers might use a digital health medical device type product if their physician recommends it, but buy it off the shelf on their own without physician prescription or recommendation? Nope.

I have written about this issue before (consumer willingness to purchase medical products) and have seen my Digital Health, Destiny and Doritos article literally circle the globe. I think it’s because I talk about guacamole in the article. Everyone loves guacamole. If you don’t like guacamole, I have a digital diagnostic product to sell you that will determine your mental fitness to visit California, where guacamole consumption is mandatory.

So this is a cautionary tale for entrepreneurs, whose passion for their work is always so admirable but who don’t always think through this consumer issue to its logical conclusion (doom). And all too often, when I break their hearts by telling them what I know is the truth, they get even more committed to proving me wrong. I have broken more hearts than George Thorogood. I am pretty sure I’m not through yet.

I love this quote from George Santayana and even have it hanging on the wall of my office decorating a Road Runner & Wile E. Coyote animation piece, “Fanaticism consists of redoubling your effort when you have forgotten your aim.” Way too many entrepreneurs are way too committed to their vision of minting rational and engaged healthcare consumers when they should be thinking about how to influence those who influence consumers instead. And in case you needed further amplification on this issue: the cost of direct to consumer marketing is beyond the realm of nearly every healthcare-focused venture fund’s checkbook limit.

If I had a dollar for every entrepreneur to whom I said, “Dear God, please don’t rely on a direct to consumer strategy or you are doomed” and who later came back to me and said, “you were right.” I wouldn’t have to work anymore. In fact, this may be my new business model. Download my new app and receive a small electric shock whenever you think about going direct to consumer. I know you will thank me. That will be $1.

Categories: OIG Advisory Opinions

Finding Care Can Be Easy; Check Out The RWJF Choosing Care Challenge Finalists

The Healthcare Blog - Mon, 04/24/2017 - 09:05

How would you get to an unfamiliar destination without Google Maps, Waze, a GPS or even an old school map? Now how about your health care– how do you determine which road to take when you need local, reliable and affordable services? It can be tough to find the right care, but the RWJF Choosing Care Challenge is changing the game. In Phase I of the challenge, over 60 teams submitted seamless solutions to help patients find the care and services that fit their needs. Each team’s solution simplifies the journey to address the crucial need for personalized and accessible health care.

The challenge judges were particularly impressed with the solutions of: Stroll Health, Project Helix, A Moment Team, Luma Health and Transcendent Endeavors. Named the Phase I Finalists, each of these teams will receive $5,000 to further their tech development for Phase II of the challenge. These solutions include:

Stroll Health (@StrollHealth) helps health providers send patients directly to a local imaging center that fits their needs. Stroll delivers a convenient easy-to-use platform providing automatic referrals, prior authorization and real-time scheduling.

Project Helix (@kcdigitaldrive) utilizes a chatbot within a mobile application to walk patients through the steps of a doctor’s care recommendations. Transparency and accessibility are key in Project Helix’s technology, as the team connects with the patient each step of the way with text notifications and API data tailoring results to the patient’s needs.

Moment (@momentdesign) created “Orderly,” which has three key features: 1) patients receive up-to-date lists of preferred specialists, imaging labs and pharmacies, 2) patients can view data such as cost, coverage and location, and 3) patients can schedule next steps through provided contact information and online booking tools.

Luma Health (@Lumahealthhq) uses text message updates to connect patients with a pharmacy, imaging center or specialist as soon as they step out of an appointment. Luma’s secure chatbot collects basic information to fully understand health care needs. Once the information is collected, a phone call from a specified provider will then be initiated directing them to their choice of preferred care.

Transcendent Endeavors (@TransEndeavors) introduces “Pooled,” a web-based platform designed to collect patient demographics to be used in a patient pool. Healthcare providers can then compete, or bid, to offer the lowest price for their services. With this solution, patients can follow a bidding process to compare price and location of services to get the most out of their care experience.

Amongst the many innovative and comprehensive submissions, the judges also recognized the following five teams as honorable mentions:

  • Emrify’s (@emrify) mobile app empowers patients to document their care and discover follow-up resources to improve outcomes.
  • Markit Medical (@MarkitMedical) pinpoints a patient’s needs and identifies follow-up care at the moment when it’s most actionable for the patient.
  • Team Anakalypsi uses a Facebook chatbot to communicate with patients on a more personal level.
  • Doctible (@doctible) leverages a patient referral systems to deliver an easy-to-use experience for patients and providers.
  • HonestHealth’s (@honestHealth) consumer-focused portal on acts as a baseline to locate and acquire imaging lab services and specialists, affordable coverage options and in-network referrals.

In Phase II, three of the five finalists will be selected as winners and granted prize funding to continue to develop their tech-enabled solutions. The third place winner will receive $10,000, followed by the second place winner with $15,000, and first place will be awarded the grand prize of $50,000.  For further updates on the Phase II winners of the RWJF Choosing Care Challenge and other programs, subscribe to the Catalyst @ Health 2.0 Newsletter, and follow @catalyst_h20 on Twitter.

Chelsea Polaniecki is a Program Manager at Catalyst @ Health 2.0.

Categories: OIG Advisory Opinions

If I Had More Time, I Would Have Written a Shorter Blog Post

The Healthcare Blog - Sun, 04/23/2017 - 14:57

I don’t know why, but even as a young person I never could make sense of the saying, “seeing is believing”. Seeing, vision, is nothing more than a data collection instrument, not an arbiter of insight. I saw my wife frown at me the other day, for example, after I claimed to have washed the dishes so thoroughly that no spot of grease could be left behind. I have made this claim before and been incorrect, so the frown, the data, triggered an anticipation of being rebuffed. However, nothing of that sort followed. I asked, Why the frown?” She responded, “I just cut my finger”. The frown was obvious, the cause unclear. I believed I was about to be reprimanded and missed the chance to notice her accident.  This story suggests that a truer aphorism might be, instead, then, that “believing is seeing”.

These comments about bias in interpretation of data are not new. Consider the condition of “hindsight bias”; once we know, we change our minds to show how correct we now can be. How about, “confirmation bias”; since we believe we know the diagnosis we find information to justify that diagnosis, eschewing contrary data. Counselors tell us all that if you change your mind, you change your life.

But changing our minds is not that easy, and, in medical care, it is extremely difficult because of deeply held beliefs that shape the ideas, which shape the actions, which produce the consequences of costly, wasteful care.  So, let’s examine some beliefs:

If we believe that the young and well must pay through the nose to assure care for the sick, we will continue to design profitable margins into plans, and make sure inequality in those plans fulfill our beliefs. Right (sarcasm), my son and daughters should pay to make sure my 82 year old relative gets 2 CT scans, 2 MRIs, 1 PET scan, and 3 months of chemotherapy for an metastatic non treatable cancer; the treatment that finally contributes to her end from an infection during a nadir in counts.

If we believe that economics and profit matter in medicine and that medical care is a good employment system, we will continue to let economists and governments intrude in medical care. We will keep adding people to the mix of delivering wasteful care. Specialists will proliferate, physicians and nurses will proliferate, and integrative medicine groups will proliferate to bill the unsuspecting.

If we believe we can determine what is best for patients with averaged out, small-randomized trials conducted with patients who we have no idea where they came from, we will continue to produce inferior trials and not advance the science of letting individuals have information to make informed choices.

If we believe in population health we will continue to disparage the lives of individuals who are not at the mean. We will continue to aggregate into groups rather than take full advantage of the singular, cottage industry needed to provide time and space for a doc and patient to become informed about care.

If we believe that physicians know best about decisions we will continue to let physicians drive costly care to even newer highs. (See my aunts care above, and then multiply by thousands of daily decisions).

If we believe that malpractice insurance somehow protects more than harms, we will see decisions promulgated by physicians in specious attempts to protect themselves.

If we believe we need “guidelines” to bulldoze care decisions over unsuspecting physicians and patients, we will unduly continue to underwrite the economic interests of suppliers of medicines, tests, and procedures.

If we believe that money matters, as much or more than best care for people who are ill, we will see TV and radio adds targeted to unsuspecting people proliferate.

If we believe only physicians can judge the veracity of medical information we will continue to see cults of organ based physicians continue to grow. Biomedical journals will sprout to produce the weakest of seeds, as good and bad information will carry the same fermentation weights. Since patients cannot presently sift the wheat from the chaff, contrary data will destroy confidence and trust.

If we believe physicians are more important than patients, we will see the development of guilds and gilded unions to advocate for physicians and the system rather than patients.

The title of this piece is based on a well-known saying. I did not put the title in quotes, as we really don’t know who wrote it, but, who we think wrote it, did not say it this way (Blaise Pascal, according to a superficial, non-expertise based search for the quote). Its value, in my view, is that it embodies a contrary notion; we expect the end of the sentence to be 180 degrees opposite. This sort of twist is used in comedy, sarcasm and irony. But, it also suggests that sometimes what we believe is just the opposite of what is true.

This is why what we believe is paramount and penultimate to forward thinking. What we believe spawns our ideas; I think it is time for medical care to change what it believes”

Categories: OIG Advisory Opinions

Why Science is Mistrusted

The Healthcare Blog - Sat, 04/22/2017 - 15:23

Recently, the Harvard Chan School of Public Health, in their press release, reported about the effect of surgical checklists in South Carolina. The release was titled, “South Carolina hospitals see major drop in post-surgical deaths with nation’s first proven statewide Surgical Safety Checklist Program.”

The Health News Review, for which I review, grades coverage of research in the media. Based on their objective criteria, the Harvard press release would not score highly.

The title exudes certainty – “nation’s first proven.” The study, not being a randomized controlled trial (RCT), though suggests that checklists are effective, far from proves it. At least one study failed to show that surgical checklists improve outcomes.

The press release’s opening line is “South Carolina saw a 22 percent reduction in deaths.” It reports relative risk reduction (RRR). Reporting RRR is now considered a cardinal sin in healthcare journalism, because RRR inflates therapeutic optimism by making the intervention sound more efficacious than it is.

A good press release gives the reader the whole picture of competing evidence, particularly where there’s controversy. The press release mentioned one other study which showed an even higher mortality benefit of surgical checklists.

The press release goes onto say,

“Adoption of a safe surgery checklist has been demonstrated to reduce deaths in controlled research studies since 2009. But the ability to produce improved outcomes at large scale has remained questioned.”

In other words, the science is settled. But there is no mention of the Canadian study which failed to show surgical checklists improve outcomes. The reader is lulled into a false sense of certainty about the benefits of surgical checklists.

If this was a press release for a statin, or device, which, ironically, subjects itself to greater methodological rigor, it would have been taken to task. Yet, no one batted an eyelid about the press release about surgical checklists. Why does a sensational press release about an inferior quality study about surgical checklists not induce the same ire as a sensational press release about an RCT of a drug or device?

Future anthropologists might better answer this question. I’m not an anthropologist, let alone a future anthropologist. But I will speculate. In our rational age, we’re still indefatigably prejudiced, self-righteous creatures. Witnessing pharma make big bucks on false therapeutic optimism gets under our skin. Money corrupts. Nothing else quite corrupts to the same degree, we believe.

The proponents of surgical checklists don’t make money off checklists. That the proponents of checklists might advance their academic careers despite the therapeutic optimism of checklists doesn’t perturb. The nobility of their intent – they wish to make surgery safer – shields them from the scathing scrutiny reserved for drug and device industries.

It’s not easily apparent that the advocates of checklist might have the “this is my bright idea” bias. In this regard, the reaction of Atul Gawande, the author of Checklist Manifesto, who is self-evidently a true believer of checklists, to the Canadian study is instructive. He “wished the Ontario study was better.” He felt the study was underpowered and the implementation of checklists was weak.

When you don’t like the results of a study, the next step is to find weaknesses in the study design. The astute reader will note that I’ve done exactly what I’m accusing Gawande of doing. Guilty as charged. I have my biases. And there is no way to determine if one’s search for methodological weaknesses in a study is actuated by intrigue or bias. But my point isn’t whether surgical checklists work or not. My question is why do we not see the same skepticism for surgical checklists, and other policy measures, that we see for drugs and devices.

Of course, there are differences between checklists and drugs. Simple checklists cost nearly nothing to implement. If you’re wrong about the efficacy of a drug, that could be costly. If you’ve overestimated the efficacy of a surgical checklist, that’s no big deal.

But the differential standards, as justified as they may be, may lead to a deep mistrust of science and of dabblers in science. A casual observer, unfamiliar with epistemic nuances, may suspect that ideology is at play. The observer may see, in the sliding scale of methodological rigor, blatant double standards. The observer may lose faith in statistics seeing that it can be fine-tuned, like the thermostat of a shower, to prove and disprove what we wish proven or disproven.

When Anne Case and Angus Deaton showed that middle class white men were not reaping the mortality benefits of other demographics, the demolition of their analysis was swift.


In a sense, this is good because science needs refutation. But would their study have inspired the same statistical scrutiny if it had shown that Hispanic or South Asian men were dying sooner than white men? Skepticism loses credibility if seen to be applied selectively. And if we can’t trust skeptics, who can we trust?

Statisticians can debunk or defend a study using their deep knowledge of statistics by selectively highlighting the strengths and weaknesses of a study – no study design is perfect. The degree to which the weaknesses of a study can be exposed, is arbitrary – there’s no normative frame. Thus, statisticians have become the new lawyers. I wonder how long before we have a “right to a statistician.”

The ideologue with a deep knowledge of statistics is the most dangerous ideologue. The ideologue who claims God or history is on their side is easy to identify. The ideologue who claims to have science, which really means statistical technique, on their side is more difficult to identify and refute. Few have deep enough knowledge of statistics to call BS on the callers of BS. The result is that people mistrust science.

Science has become a substitute for morality. It has become a weapon to fight social injustice (whatever that term means), to reduce inequality, to mock incompatible world views. This is a blow for both science and morality. Historically, our species never resorted to science to do the right thing. Slavery was bad because it was morally bad. The Civil Rights Movement was right because it was morally right. The suffragettes were on the right side of history, not because an academic proved the net benefits of women voting in an election (p <0.0005), by analyzing a secondary database. The suffragettes were right because they were morally right. India’s freedom struggle was not initiated by a macroeconomic analysis, but because independence was morally right. If your moral intuitions can’t tell you that same sex marriage should be permitted, I doubt any scientific analysis will convince you.

It may be morally right to be politically correct. Then we should say so, and keep science away from political correctness. Science loses most credibility when seen to selectively address the favored social injustices of the time. It is not fashionable in elite circles to be perturbed by the plight of the working class white man. In this circle, which I sometimes frequent, a physician seeping with social justice from every pore, once said that it was imperative that we developed a vaccine for malaria, because the Africans have suffered enough from imperialism. He was right and wrong. He was right that a malaria vaccine will reduce the suffering of Africans tremendously, and that it was imperative that it be developed. But he was wrong. The vaccine is no more, or no less, important because of the history of the African continent. Alexander Fleming didn’t discover penicillin because he wanted to fight capitalists.

We may discourage reporting RRR for drugs and devices to curb therapeutic optimism and encourage reporting RRR for surgical checklists to encourage compliance. This is understandable, because how we frame a message, and reporting relative risk reduction is just a way of framing, depends on what we wish to achieve. But here lies another problem. Note, science is not informing us what to do. We’ve already decided what we want to do. Science is helping us implement, helping us engineer, helping us design, not a bridge, not a spacecraft, not a computer, but ourselves and society. This was once the dominion of religion. That this is now the dominion of science is ironic. But more troubling than irony is that science is no longer value-neutral. And when science ceases to be value-neutral, science ceases to be science.

(Saurabh Jha MD is a contributing editor to THCB. He can be reached on Twitter @RogueRad)

Categories: OIG Advisory Opinions

Reform & Improve

The Healthcare Blog - Thu, 04/20/2017 - 16:30

With the failure of the Republican’s American Health Care Act (AHCA), what’s next? Congressional Republicans face the ugly choice of admitting defeat and funding the Affordable Care Act (ACA), including the cost-sharing reductions (CSRs) that they have tied up in federal court, de-funding the ACA and likely being blamed for its demise, or compromising with Democrats to improve it. In all likelihood, the next set of moves will focus on avoiding/shifting blame for the imminent crisis of health plan withdrawals that failure to fund CSRs would precipitate.

But the long-term problems with the ACA should be addressed: How to sustain health plan competition? How to simplify a nearly incomprehensible medical financing scheme? How to cover more of the uninsured? How to win enough moderate Republican support to de-escalate partisan wars over the ACA? Sooner or later, Congress needs to consider serious compromise proposals for improving the ACA.

So, what might they consider?

Were a bargain on improving the ACA to be struck, Democrats would insist that it ensure full federal funding and maintain goals related to covering most Americans. Taxes will be the “sticking point” for many Republicans, but not all: Senators Cassidy & Collins’ Patient Freedom Act (PFA) retains 95% of current funding.) On the other hand, the price of support from moderate Republicans probably includes making substantial changes that borrow heavily from the best ideas in the AHCA and the PFA. The approach proposed below does both.

I propose three goals for a bipartisan effort to “reform and improve” the ACA:

  • Stabilize the individual market and risk pool, long-term
  • Simplify the ACA and de-regulate its marketplaces, so the private sector can support them
  • Cover substantially more of the uninsured, without increasing federal spending per enrollee

Stabilize the market

The core element of this proposal is an alternative to the ACA’s method for making coverage affordable. The ACA tries to do so via a complex formula for tax credits that depends on projecting a household’s income next year – which is literally impossible to do with any credibility – so that eligible applicants pay a progressively scaled percentage of their income toward the second lowest cost silver plan (SLCSP).

As an alternative to this complex formula, let’s borrow from the AHCA and PFA, which I will refer to collectively, as “Republican,” but with one major modification that is crucial to my proposal: below, say, 300% of the federal poverty level (FPL), all eligible subscribers get advance premium tax credits (APTCs) amounting to 100% of the full premium of the most basic benchmark plan available to them i.e., the lowest-priced bronze plan in their zip code. Here is a simple, bronze, high-deductible health plan (HDHP) that might serve as this national benchmark plan:

60% AV level:                    Individual           Family (2+)

Annual deductible           $5,000                   $10,000

Coinsurance                       20%                        20%

Max. OOP                           $6,600                   $13,200

Free preventive services (zero deductible first)

PCP Office visits with $25 copayment (zero deductible first)

How much would the proposed tax credit — 100% of the premium for the benchmark bronze plan – cost, relative to the ACA’s current APTCs? Because of its lower actuarial value, premiums for the proposed benchmark bronze plan should average about 85% of the premium for the second lowest priced silver plan (SLCSP). For those who received APTCs under the ACA, they averaged 72% of the gross premiums for SLCSP prior to the large premium increases of 2017.   (ASPE, Health Insurance Marketplace 2015)

Because the current ACA formula holds eligible enrollees harmless for year-to-year premium changes, in effect increasing APTCs as average SLCSP premiums increase, the large premium hikes of 2017 (averaging 22%) actually increased the level of APTCs relative to gross premiums: adjusting the 72% for large premium increases in 2017, APTCs should now average about 77% of gross premiums for SLCSPs [1-(.28/1.22) = .77]. And for those under 300% FPL, the percentage of gross premium for silver plans covered by APTCs should be even higher than 77%. Hence, I estimate that the premium for the lowest cost bronze plan – 85% of SLCSP – would only slightly exceed the today’s average APTC for a household between 100% and 300% FPL.

Beyond 300% FPL, which approximates median U.S. income, APTCs would phase out in large steps, such as 2/3rds of the full credit from 301-400% FPL, and 1/3rd the full credit from 401-500% FPL.

The focus on HDHPs is right out of the Republican policy book. The critical difference is that, by definition, APTCs would suffice to make the benchmark plan “free” for most of the uninsured. This offers three huge advantages:

  1. “Free” is literally the most powerful word in sales and marketing, and most of the uninsured should opt for coverage;”
  2. It works reasonably well even without the individual mandate, thereby undercutting much of the popular opposition to the ACA; and
  3. Having a free plan makes auto-assignment practical, so that when the uninsured land in ERs, apply for other benefits, or fail to renew coverage, they can be auto-assigned.

However, if 70% actuarial value in the ACA benchmark plan was considered skimpy coverage for those earning below 250% FPL – hence the addition of CSRs — then 60% actuarial value is even thinner coverage. Fortunately, there is a far simpler and more efficient method than CSRs to reduce cost-sharing. (CSRs must be “fronted” to the enrollee by health plans, and then retroactively claimed by carriers from the IRS. And because they are available only to silver plan enrollees on marketplaces, hundreds of thousands, if not millions, of marketplace enrollees forego them, often inadvertently.)

Adapting a third Republican policy preference, it would be far simpler, more equitable and easier to fund Health Reimbursement Arrangements (HRAs) than CSRs. Exchanges (public or private), brokers, and/or carriers could establish HRAs on behalf of each enrolled household under, say, 400% FPL, to be funded by a tax credit. A reasonable funding level for those below 300% FPL might be the full deductible on the benchmark bronze design, so that they would be responsible only for the 20% coinsurance payments, and then half that deductible (from 300% to 400% FPL). Like CSRs, HRAs are only expended as services are used — unused funds would revert to the IRS. But unlike CSRs, the HRA can bear a certain degree of retroactive funding, which is very helpful when administering credits tied to a household’s projected MAGI.  This feature allows HRA funding to be tied directly into tax filings, including real MAGI calculation, for the plan year.

A fourth, important change to the ACA, taken from Republican bills, would reduce average premium levels overall, an important goal of Republican proposals. The ACA’s maximum premium range of 3-to-1, under which a 21-year old cannot be charged less than one-third as much as a 64-year-old, over-charges younger relative to older adults, and raises the average cost of coverage for all enrollees. The average medical cost of someone in their 20’s is about 1/5th of someone in their 60’s. By discouraging enrollment of the healthiest age group, this cross-subsidy from young to old makes the risk pool older and sicker in the aggregate, and thereby raises the average premium (index=1) around which the age range of rates are constructed.

While 5-to-1 strikes some sensibilities as an unfair burden on older Americans, covering the full premium of the benchmark plan for lower-income enrollees of all ages, as is proposed, largely negates the affordability and fairness arguments. Also, this is not a zero-sum game: by adding more young adults to the risk pool, a 5-to-1 age-rating band would reduce the average premium, perhaps enough that covering the full premium of the benchmark up to 300% FPL would cost less than today’s average APTC.

In addition to the four major changes described above, Republicans have proposed a series of small steps to stabilize the individual market, which should be adopted. For example, strictly enforcing the restrictions on off-season enrollment, so that Special Enrollment Periods are not “abused” by those who wait until they get sick to buy coverage. (See Oliver Wyman, “Special Enrollment Periods and the Non-Group, ACA-Compliant Market”.) Other common-sense underwriting practices include shortening the annual open enrollment window, reducing the 90-day grace period for lapsed premium payment, and reinstituting a federal-state funded stop-loss program for very high cost cases.

Finally, without an individual mandate, we need to encourage the maintenance of coverage and protection of the risk pool from those who jump in when they need services. Even if free to those below 300% FPL, those above 500% would pay full premiums. There are many ways to protect the risk pool from this sort of adverse selection, but the AHCA’s 30% surcharge strikes me as counter-productive – a penalty for enrolling. I prefer a conventional, commercial underwriting approach: a 6-month waiting period for covering pre-existing conditions for those who have not maintained continuous coverage.

Simplify the ACA & Reduce Market Regulations

ACA marketplaces depend upon the active participation of private health plans. So, let’s reduce all but necessary requirements on health plans that offer products in the direct market: one standard bronze plan (the benchmark plan) would have to be offered by any issuer that intends to offer health plans that qualify for a tax credit. This would help consumers make apples-to-apples shopping comparisons for the “benchmark” plan, and would likely intensify competition in terms of price, network breadth and service, rather than often mystifying benefit twists. Beyond that, qualified issuers should be required to offer richer benefits of their own design, including at least one at a reasonably rich level, such as 80% actuarial value. Although not full federal de-regulation, this proposal accords with Republican’s efforts to return insurance regulation to the states and flexibility to the markets.

Under the construct described above, eligibility determination for APTCs would be greatly simplified: legal residence, age, household size, and zip code would be required, as is the case with the ACA and the AHCA. However, instead of determining APTCs based on exact income projections, there are a few steps that most filers can understand and the IRS can readily assess: 100% – 300% FPL, 301-400% FPL, and 401-500% FPL.

HRAs are controversial, but are recommended here primarily as an administratively feasible cost-sharing mechanism that ties directly to annual tax filings. It also readily accommodates financial rewards for healthy patient behaviors, such as engagement with chronic disease management, and prudent consumer behavior, such as shopping for best value.

An important Republican innovation is to divorce eligibility determination from plan shopping. The IRS would administer the tax credits, and allow brokers and exchanges (public or private) to organize plan shopping. Or the consumer could buy directly from a health plan. The federal government is already working on a solution – Eligibility Verification as a Service (EVaaS) — to enable private entities at the point of shopping to understand the applicant’s net premium (after APTCs). This approach reduces the public costs of operating exchanges – or the surcharge on premiums that fund those public costs — and unleashes the private sector to locate, message and sell to the uninsured.

With sincere respect for the tremendous efforts made to date by state-based marketplaces, direct-to-consumer marketing is not generally considered a core strength of the public sector. Allowing a range of commercial (and public) web-based entities to market qualified health plans could add substantially to enrollment. (Private options, such as Softheon, eHealth, and Getinsured either did not exist or were far less robust when the ACA was drafted.)

Borrowing again from Republicans, over/under payments by IRS would be fully reconciled on each year’s tax filing and fully recoverable from filers. Indeed, given the simplification of calculating APTCs and the substitute of HRA for CSR, the IRS could rely on self-attestation for estimating the current year’s household income, using past filings as a check.

Any reform of the ACA should clear out the dead wood: eliminate both the small employer marketplace and the ACA’s convoluted 2-year tax incentive for very small employers (<25 FTEs) of low-wage workers to provide group coverage. Neither program has attracted significant use. By now, even ACA supporters can probably identify at least another half dozen special programs and pieces of the ACA which have simply failed – COOPs being the most spectacular of them – so let’s sunset them.

Increase enrollment

The ACA still falls short of its primary goal, to cover 95% of Americans. We could meet this goal with a few changes to Medicaid eligibility and qualified health plans that might attract a coalition of Democrats and center-right Republicans.

First, since expanding Medicaid eligibility to 133% FPL has not attracted voluntary participation by 19 states, let’s lower the bar. Why not let the remaining states choose to expand eligibility to 100% FPL, or cap the higher federal funding for all states at 100% FPL? With bipartisan reform, most of the holdout states are likely to raise their income-eligibility standard to 100% FPL, thereby rapidly boosting enrollment and filling in the awkward hole between those who earn too much for Medicaid and too little for APTCs. This one change would reduce the number of uninsured Americans by millions!

Second, one of the advantages of a zero-premium benchmark plan is that it virtually sells itself, even without a mandate. However, we can go even farther. We should make auto-assignment to the “zero-premium” benchmark plan the default option, and force eligible tax-filers to make a choice if they prefer to go bare. The ACA now covers only about 60% of APTC-eligible uninsured Americans. The combination of zero-premium coverage and auto-assignment might be so powerful that we end up covering a lot more of the uninsured without the individual mandate than with it!

Political Prospects

Coverage is all about the money. My rough estimate is that APTC costs per enrollee would be comparable to the existing ACA, but this proposal contains plenty of variables that can be adjusted to make a 10-year budget impact comparable to the ACA’s:

  1. The cost/savings of the option to expand Medicaid eligibility to 100% fpl
  2. The income cut-off for full APTCs (300% fpl)
  3. The step-function for phasing out APTCs (to 500% fpl)
  4. The level of HRA funding;
  5. The income cut-off for full HRA funding
  6. The step function for phasing out HRA funding
  7. The start-date for capping employers’ contributions to ESI

Of course, there are strong arguments against cutting costs for these variables, as any savings to federal outlays will also reduce the number of subsidized enrollees and/or generosity of coverage. The one essential element of this proposal which cannot be altered to meet budget requirements is maintaining a free benchmark plan for lower-income households.

Admittedly, the likelihood of Republicans joining Democrats to improve the ACA any time soon seem modest. But the intermediate-term perils of inaction are also considerable: without any substantive action on the ACA, congressional Republicans look foolish entering the 2018 election cycle; with Republicans already attacking each other over tax reform, the President needs a legislation he can claim credit for; and Democrats need to improve and de-escalate the rhetoric around their landmark reform.

Jon Kingsdale, Ph.D., teaches health policy at Boston and Brown universities. He founded the Massachusetts Health Connector (marketplace) and consults with CMS and a dozen states on the ACA.

Categories: OIG Advisory Opinions

A Modest Health Care Economics Experiment to Fight Rising Costs

The Healthcare Blog - Thu, 04/20/2017 - 10:24

Healthcare providers, medical institutions, local pharmacies and pharmaceutical companies generally set the price of their products/services well above the payment they expect to receive from all insurers. These healthcare vendors set their fee schedule at 150%, 200% or 1,000% of the maximum payment they expect to receive from their most generous payor.

Here in Massachusetts, when a healthcare product or service is consumed and the patient has health insurance, the vendor submits a bill to the insurance company who specifies the “allowed fee,” which is considerably less than the “billed fee,” and the vendor “writes off” the balance of the  “billed fee” from their books.

For example, I recently had some blood tests done at Quest Diagnostics. Quest Diagnostics sent a bill to my insurance company for $660. The “allowed payment” was $110, so Quest wrote-off $550 and the “allowed payment” of $110 was divided between me and my insurance company.

In my practice, where the fee schedule is created by my hospital, the “billed fee” for a level 3 follow-up office visit is about $230. The actual payment received from various insurance companies range from $62 to $164.

The “cash price” for many medications at a patient’s local pharmacy is also far above the amount the pharmacy expects to receive from any insurance company. For example, the cash price for Viagra is about $60/pill but the agreed reimbursement rate, between the local pharmacy and the insurance company, is about $10/pill. The same is true for many other medicines.

As the healthcare vendors’ fee schedules do not closely mimic the actual “competitive market rates,” patients who have either no health insurance or poor quality health insurance are required to pay outlandish medical bills. In this regard,  “capitalism” has failed to bring down the price of healthcare services.

In August 2012, Massachusetts created the Health Policy Commission, which set a targeted maximum rate of rise of healthcare spending in Massachusetts. The Commission was to cajole healthcare providers into staying within this limit. In 2015 the Bill seemed to have some effect as the rise in healthcare spending dropped from 4.2% (2014) to 3.9% (2015), although it was greater than the targeted rate of rise of 3.65%. Some argued that this data was proof that the law was having its intended effect as the Massachusetts rate of rise of healthcare spending was lower than the national average (4.9%), lower than the prior year and statistically close to the allowed limit.

I believe that the existing exorbitant (and market disconnected) fee schedules in the Massachusetts healthcare market may be one reason why this law has not been as effective as its designers had hoped.  Although there are restrictions which specify how fast the cost of healthcare spending can rise for a medical group/vendor, the fee schedule for specific services/products is so far above the payments received in the prior year that it will take decades before the “billed fee” schedule closely approximates the “allowed payment” fees set by the insurance companies. This huge disparity between the “billed fee” and “allowed payment” will make it more likely that healthcare spending will continue to rise more rapidly than permitted by the Massachusetts Health Policy Commission.

One way to mitigate the rising healthcare spending in Massachusetts might be to prohibit providers of healthcare services/products from setting their fee schedule higher then say 3.65% above the maximum payment they had received from an insurance company in the previous calendar year.

While some will argue that this flies in the face of capitalism, nobody will argue that the cost of healthcare spending is out of control and we must stem the rise in healthcare spending long before it consumes the entire discretionary Federal budget, bankrupts the public and makes our products fiscally noncompetitive around the world. Thus, this restriction on “fee schedules” might be a “healthcare economic experiment” we want to consider trying in a few in states.

Categories: OIG Advisory Opinions

Health 2.0 has something important to tell you

The Healthcare Blog - Wed, 04/19/2017 - 04:30

Important news about my day job at Health 2.0 from my partner Indu Subaiya and me! You can also see the press release here and watch a video discussion with HIMSS CEO Steve LieberMatthew Holt

Indu and Matthew are excited to announce that after 10 years of convening the Health 2.0 community through our events and programs around the world, our conference company has found a new home and a partner who will help us exponentially expand our reach and impact. Effective immediately, we are joining forces with HIMSS and will be established as a new Health 2.0 business unit within the enterprise that includes HIMSS North America, HIMSS Analytics, HIMSS Media, HIMSS Europe, HIMSS AsiaPacific and the Personal Connected Health Alliance.

Health 2.0 and HIMSS share a single mission, to improve health outcomes by leveraging the best that technology has to offer. While terms change through the years, that common end goal hasn’t and won’t moving forward.

Our integration with HIMSS is a transformative opportunity to bring the knowledge and expertise from Health 2.0’s global network of entrepreneurs, developers and end-users together with that of clinicians, IT professionals, health care executives, policy leaders and other stakeholders to make a sustainable difference.

We are at a critical inflection point in the evolution of the health technology industry. Exciting advances in data science and AI, precision medicine and genomics, sensors and hardware to name just a few, coupled with the increased rate of adoption of digital health technologies by health care providers, payers, life science companies and communities require a level of collaboration like never before.

And yet, start-ups face barriers to access and distribution while large organizations face challenges in vetting and selecting new technology partners. Working with HIMSS, we will be able to create even more vibrant formats for interaction and more efficient mechanisms for innovation to spread throughout the healthcare system.

Countries around the world want to share models and best practices, to import and export health technology innovation while growing their own markets and their market reach globally. Working with HIMSS, we will be able to combine and expand our global footprint to be better ambassadors as well.

Indu will join HIMSS as executive vice president for the newly established Health 2.0 business unit and continue to co-host Health 2.0’s Annual Fall and Wintertech conferences with Matthew, while he will be our globe-trotting ambassador and continue to host and develop our international business.

Since 1961, HIMSS has focused on its vision of improving health and healthcare with the best use of information technology. Now, more than 55 years later, it continues on this path to improve the quality and affordability of, and access to, healthcare.

Health 2.0 was born from a need for consumers to take charge of their health using new technology frameworks that disintermediated access to health information and services. Over the past 10 years the Health 2.0 community has spawned an ecosystem of companies that helped bridge the gap between the institutional world of care delivery. We were bound to meet in the middle.

As with all great partnership journeys, we know this is not an ending, but a beginning.  When it comes to technology, there will always be a new frontier. It’s going to take all of us to explore that frontier together and to translate new ideas into the industry standard. We need both the foundation and the means to continually experiment to make good on our mission to leverage the best technology has to offer in helping us live healthier lives.

Onwards and together,

Indu & Matthew

Indu Subaiya is Co-Chairman & CEO of Health 2.0, and Matthew Holt is Co-Chairman of Health 2.0

Categories: OIG Advisory Opinions

Are Europeans Ready to Become Health Consumers?

The Healthcare Blog - Tue, 04/18/2017 - 11:30

“Health consumers” – the concept is a little foreign to our conception of health services in Europe. As Europeans we tend to think that if it touches our health it should be free. In this context, how can we count on health consumers to fuel the development of the Health 2.0 industry in Europe?

There are some cases where we are ready to get our wallets out. We’re more inclined, for instance, to pay for our wellness than we are to pay for our health. We’re OK to pay for an activity tracker; we think a diabetes management solution should be covered and reimbursed. There are also a few niches where we don’t hesitate to become health consumers: the market of fertility solutions is a good example.

With the wide range of Health 2.0 apps and solutions out there, we’re rediscovering the concept of choice along with a different kind of empowerment… as customers.

What are the other ways Europeans are turning into empowered health consumers?

Join a meaningful conversation at Health 2.0 Europe 2017, which will include insightful demos on this topic from Indigomed (France), Knok (Portugal), SpeechAgain (Germany), Thryve (USA), and Juno Fertility (Austria).

The Consumer Tools session will be about choice, convenience, added value, design, ease of use, service, customer experience and focus on apps and solutions that empower us as consumers of health services.

It’s not too late to join the discussion and Health 2.0 Europe. Register here!

Pascal Lardier is the International Executive Director of Health 2.0.

Categories: OIG Advisory Opinions

The Strange Making of the “Marketplace Stabilization Rule”

The Healthcare Blog - Mon, 04/17/2017 - 17:04

On April 13 CMS published the agency’s final “market stabilization” rule.  The proposed rule was summarized by THCB’s editors on February 15, the day it was published, and on March 22 THCB published my essay in which I noted CMS provided no evidence any of the proposed reforms would actually stabilize the state marketplaces.  The final rule, ostensibly a carbon copy of the proposed, finalizes the six proposed changes without, again, providing any evidence these changes will stabilize the markets by increasing enrollment and issuer participation.

Briefly, the final rule will reduce the 2018 enrollment window from three months or to six weeks, or from November 1 to December 15.  The rule narrows the definition of guaranteed availability by allowing issuers to apply re-enrollment payments to outstanding debt.  The rule will require 100 percent verification for enrollees’ attempting to acquire insurance during a Special Enrollment Period (SEP) and places other payment, eligibility and exceptional circumstances restrictions on SEP enrollment.  The rule finalizes an increase in de minimus variation from +/- 2 percent to -4/+2 percent except for bronze plans which increases to -4/+5 percent.  The rule will allow states to determine plan  network adequacy or make a determination using an issuer’s accreditation status.  The rule finalizes a reduction from 30 to 20 percent of plan providers being defined as an Essential Community Provider (ECP).  For plans that cannot meet the 20 percent determination, CMS will allow for a narrative explanation.

In the final rule’s “impact analysis” CMS is again unable to provide any evidence these changes will produce the intended effect.  In the proposed rule CMS stated “on the one hand” premiums could fall but “on the other hand” premiums could increase.  In the final rule, CMS stated, “the net effect of these provisions on enrollment, premiums and total premium tax credit payments are uncertain.”  “Premiums will tend to fall if more young and health individuals obtain coverage . . . .”  “However,” CMS followed, “if changes such as shortened open enrollment period, pre-enrollment verification for special enrollment periods, reduced AV of plans, or less expansive provider networks result in lower enrollment, especially for younger, healthier adults, it will tend to increase premiums.”

What we do know or still know is these changes will likely reduce enrollment or destabilize the markets.  As noted in my March 22 post, those aged 18 to 24 are far less likely to complete an enrollment verification process due to “hassle costs” than those aged 55 to 64.  Expanding actuarial values would, per the Center for Budget and Policy Priorities estimates, increase out of pocket costs for families.  A shorter open enrollment period will likely produce the same result.  In a recent Health Affairs blog post, using Kentucky marketplace data, Paul Shafer and Stacie Dusetzina showed that 25 percent of new enrollments took place in the final week, 60 percent of those eligible for financial subsidies enrolled during the latter half of the enrollment period and those who changed their plans also did so in the latter half of the enrollment period. 1

CMS proposed and went final with this rule because the agency believes it must act.  In the final rule CMS argued “we considered maintaining the status quo,” however, “we determined that the changes are urgently needed to stabilize markets, to incentivize issuers to enter or remain in the market and to ensure premium stability and consumer choice.”

From a certain perspective it’s unsurprising CMS went forward with this rule.  The agency was responding to industry pressure that absent changes, they would withdraw from participating.  The day the final rule was released,  AHIP, not surprisingly, stated, “This final rule adopts some important changes that have been needed for some time in order to improve the functioning of the individual market, and we appreciate those changes. Those improvements include tightening up rules for special enrollment periods, greater flexibility in product and benefit design, and simplified administrative processes.”

What is surprising is the fairly obvious confirmation bias exhibited here.  The Trump administration has stated over and again it believes the ACA is a failure.  The marketplaces are in a death spiral.  If you are biased toward a particular belief you are then prone to interpret information in such a way as to confirm your pre-existing beliefs.  Even if CMS truly believed the agency had to act, what is also surprising is the agency, again, promulgated and finalized a rule lacking any evidence.  Instead, the final rule is based simply on the agency’s beliefs.  CMS’ explanation for these policy changes in sum amounts to “we believe” – a phrase the agency uses over 50 times in the final rule.  In his recent work, The End of Expertise, The Campaign Against Established Knowledge and Why It Matters,” Tom Nichols cautioned when everything becomes a matter of opinion whether policy is made based on weak or no factual basis becomes irrelevant.  Imagine if the FDA approved a drug that the FDA admitted would have an “uncertain” effect.

1. Paul Shafer and Stacie Dusetzina, “Looking Ahead to 2018: Will a Shorter Open Enrollment Period Reduce Adverse Selection in Exchange Plans?” Health Affairs Blog (April 14, 2017), at:

Categories: OIG Advisory Opinions

Struggling to Get Customers, Revenue and Traction in the Digital Health Market?

The Healthcare Blog - Mon, 04/17/2017 - 11:13

Imagine the peace of mind and confidence you will feel if you had a quick, proven process to take your solution or concept from its current state to one that generates sustainable revenue, hoards of customers and value to the healthcare ecosystem.

Elena Lipson has been working with organizations and entrepreneurs in the digital health community for more than 15 years to help them successfully bring new products and services to market, identify and engage new customers and partners, and grow their market share.

For the first time, she is offering a free webinar training to the Health 2.0 community to share the three steps you need to create a blueprint for your digital health solution that will get you customers, accelerate your path to revenue, and help you go to market quickly even if:

  • You haven’t worked in healthcare before
  • You don’t have product development or sales experience
  • You don’t have partners

Think about what happens if you can’t secure the customers, revenue and funding you need to grow your business?  

Or worse, you don’t have enough to run the business?

According to Bloomberg, 80% of entrepreneurs who start businesses fail within the first 8-10 months. Most fail because they simply run out of cash.

But the cracks in the foundation start well before these companies run out of money.

What if you never had to worry about whether customers wanted your solution and impressing investors? What if you could focus instead on bringing valuable products and services to the market without hitting potholes?

What if you knew exactly how you were going to scale your business and could predict how customers, investors and the broader market would react to your offering?

If you’re a digital health entrepreneur and this is your first venture, or if you’re a more seasoned entrepreneur who has successfully launched other start-ups but you’re entering healthcare for the first time, then this training will be valuable for you.

You will walk away knowing about the broader trends shaping the digital health ecosystem in 2017, the unique challenges in this market and how your business can capitalize on them by creating a Digital Health Blueprint.

Join us on: May 1 at 1pm EST to get the exact Blueprint that will help you get customers, accelerate your path to revenue and give you the confidence so that you can go to market quickly in 2017.

Continue here>>

You will walk away with:

  • The main reason so many digital health entrepreneurs fail and how to avoid their mistakes
  • The 3 steps to a proven Digital Health Blueprint that brings in money and customers
  • Elena’s process to develop the Blueprint so that your business gets you customers, revenue and confidence to go to market quickly.

Continue here>>

Elena Lipson is the Principal and Founder of Mosaic Growth Partners.

Categories: OIG Advisory Opinions

The 401W: A Wellness Program Even Al Lewis Could Love

The Healthcare Blog - Mon, 04/17/2017 - 07:35

I’ve been quite vocal about supporting only wellness done for employees and not to them…but what if there could be a “conventional” wellness program – even including screening, HRAs etc. – that both you and I could love?

People manage what’s measured and what’s paid for. If employers want people to stay healthy in the long run, why not measure and pay for health in the long run?

Why not give people the incentive to stay healthy during their working years, instead of giving them the incentive to pretend to participate in programs of no interest, just to make a few bucks? Or, worse, give employees the incentive to learn how to cheat on biometrics, and how to lie on health risk assessments. Attempts to create a culture of health often create a culture of resentment and deceit.

Short-term incentives haven’t changed weight, as noted behavioral economist Kevin Volpp has shown. Nor have they changed true health outcomes – it is easily provable that wellness has almost literally never avoided a single risk-sensitive medical event. So-called outcomes-based programs, ironically, are more about distorting short-term outcomes than achieving long-term outcomes. They have more in common with training circus animals to do tricks in exchange for treats than they do with helping employees improve long-term health.

The only thing that’s proven? Some vendors and some programs harm employees. Nor is wellness popular — look at almost any article in almost any major lay or academic publication in the last four years. Then read almost any comment to those articles.

Wellness industry leaders know that wellness has failed, and that’s why my proffered $2-million reward for demonstrating success remains unclaimed.

The 401W Wellness Savings Account

Why not discard all this year-to-year micromanagement?

The goal of wellness isn’t to interfere in employees’ personal lives. It’s for employees to be healthy enough in the long run to avoid expensive events. So you are rewarding/penalizing them annually…but the benefit to you as the employer is way down the road — if indeed someone who would have infarcted in the next 20 years, doesn’t.

Future event avoidance is the only healthcare outcome that matters.

So let’s align incentives so that everyone is focused on long term health. Instead of doling out money and otherwise micromanaging programs and micromanaging incentives, why not create a 401W Wellness Savings Account, the equivalent of a 401K for wellness? People who reach retirement without a major avoidable health event can collect their entire accumulated amount. Along the way, they can choose to participate or not in the programs your company offers. There is no money at stake for those offers, so no financial coercion. With or without your help — totally their option — employees need to reach the goal: no lifestyle-related events through retirement.

There are a few asterisks that go with this, including but not limited to:

  • The ultimate reward would be based on years of service and retirement age – each employer would have its own formula;
  • Because some people are unlucky and get events despite their best efforts, participation itself would earn the reward even if someone had a heart attack or other event. Put another way, by participating, employees are insuring themselves against their own possible bad luck.
  • In order to avoid the optics of only caring about employees until they retire, the reward could be partially or totally swapped for an even larger payout after retirement that would take the form of subsidies and special deals on health-related endeavors.
  • It wouldn’t just be heart attacks, but it would have to be discrete avoidable events. Bypasses, spinal fusions, and COPD come to mind– would also be included. Anything that is discrete, avoidable, common and expensive could be included, but there are some complexities as you move beyond those events.

The Wellness 401W Plan offers many advantages over traditional wellness, for both employers and employees:

  • Employees can’t hate it because there’s nothing to hate. It’s truly opt-in. No annual money is at stake. They don’t lose money by not participating — as long as they patrol their own health. And whether they succeed in patrolling their own health is determined objectively.
  • Employees no longer need to share PHI, except at the end if they want to collect. At that point presumably most employees wouldn’t care, because they are no longer insured by their employer. (In any event, it would be a third party looking at the claims and reporting thumbs up to the employer.)
  • No cheating. These events/procedures are very discrete. And they won’t cheat on HRAs and biometrics because there is no reason to cheat – they are only cheating themselves. If they intended to cheat, they wouldn’t participate. They would patrol their own health.
  • No need to make employees get screened or get checkups every year — or to pay for it. Rather, screening according to guidelines is fine. Screening would be available but not required and employees would be educated (most like using Quizzify) about optimal screening and checkup intervals.
  • Incentives are completely aligned.
  • Because a certain number of years of service would be required according to any given formula, retention is likely to increase. On balance, a company could retain and attract healthier people, since by definition they can make more money.
  • Great PR is possible as well. “Wellness” and “great PR” are rarely found in the same sentence but this would be an exception.

This doesn’t even include the biggest advantages to employers. Finally, after thirty years of provably making zero impact on medical events nationwide, employer wellness programs will have a strong likelihood of being able to do just that. Employers don’t have wait to see savings, either. Savings will be close to immediate. There is no need to pay vendors to screen the stuffing out of employees. Employees can be screened –and participate in other programs – but only if they want to. You can offer guidance on USPSTF or Choosing Wisely guidelines, but you don’t have to push people into overscreening.

Also whenever someone quits before their 401W vests, their 401W becomes employer savings. (There are probably no specific regulations around the finances here, like there are for pensions. The 401W is like a deferred commission for a salesperson who keeps an account – only in this case the “account” is his or her own health.)

And what would a great idea be if it didn’t involve Quizzify? The explanation of this novel program to employees would benefit from a Q&A vehicle already in place. It would also educate them along the way in how to stay healthy, what they need to do to access their account, how their account would grow over time etc. Participating in Quizzify a certain number of times a year would “count” as participation in wellness, for the purposes of claiming the 401W. Further, the option of Quizzify allows employees to participate regardless of health status, with no disclosure of PHI.

Sure, there are loose ends. What if someone participates some years and not others? Would 401W’s be portable? Would portability depend on whether someone quits or was fired? (Remember, there are no regulations around 401Ws now. You can make your own rules.) Would you need an exam at the end of program or is claims data enough?

To start this program, a phase-in is recommended. It’s tough to take away people’s incentives, which many have come to view as part of their compensation. But as employees see their accounts growing, their excitement will grow too – not just about the state of their 401Ws which could reach well into the five figures by retirement, but also about the state of their own health.

Of course, some employees want their money now…and as you read the FAQs, you’ll see that issue, along with many others, can be elegantly addressed.


How is this different from a health savings account? (HSA)

You need to have an “official” high-deductible plan to have an HSA. HSAs can’t be tied to true health outcomes. Further, they can’t just be paid out. They are regulated in many other ways too, and consequently they don’t address the problem at hand. Even so, whatever fiduciary administers your HSA could also administer your 401W.

Is this taxable to the employee when earned, like a participation incentive?

No. It is contingent and deferred. It is taxed when paid out, meaning it can compound pretax. You are not constrained in how you invest it, as in a pension fund, so it can presumably compound faster.

We think our millennials want their money now. Can we do that?

Yes. You could let people take a haircut and get their incentive right away. This creates immediate savings for you, as the amount you would have to give right away is likely to be less than what you would be budgeting. Example: if your incentive is $400 today, your incentive in the 401W could still be $400, but if someone wants it now, they could participate, and get (for example) $200.

How does this address privacy concerns?

Employees are free to give up zero PHI with no penalty. They can do this either by picking the self-patrolling, self-underwriting option and do whatever they want to do on their own. Or they could “participate” by selecting Quizzify-type options requiring no disclosures. Only at the end, when they want their money, does the employer have to know (presumably through a third party).

Wellness is also criticized for ageism. How does this get addressed?

Depending on how the program is set up, it is likely that older employees will have more money in their kitties sooner, because they reach retirement sooner. So it’s quite the opposite: employers can design programs that are more appealing to older workers, since they are the ones who suffer by far the majority of the wellness-sensitive medical events. By contrast, under the current systems, older employees typically get charged for higher weights and blood pressure that are likely age-related rather than lifestyle-related.

Is this consistent with the Employee Health and Wellness Program Code of Conduct

Yes. It is totally voluntary. Any employee can qualify without even letting the employer know what they are doing for their health, let alone divulging information. So employee dignity is totally respected. Employees are free to adhere to USPSTF guidelines and still collect. And there can’t be any lying about outcomes. While crash-dieting contests are still legal in a 401W plan, there is no reason for an employer to offer them, since they harm employees.

Is the 401W consistent with clinical guidelines?

There is the assumption that much or all of what an employee can “opt in” for is clinically sound. That means HRA advice and the selection and recommended frequency of screening tests must conform to guidelines. The 401W could theoretically be done without adhering to guidelines, but that just means employers will pay more, both to the vendors and then in medical claims. One reason to include Quizzify in the selection of options for a 401W is that employees are assured of at least one option conforming to the Code, to clinical guidelines, and to the standards of the Validation Institute.

Is this consistent with creating a healthy environment?

It is quite consistent. Employees would likely support it and take advantage of it, since they are being paid to stay healthy. Further, you will have extra money in the pot to provide it, both from spending less on screenings and the incentives that get earned but didn’t vest.

You are giving the employees a stake in their own long-term health, self-underwriting as oppose to community rating, so to speak. Giving people financial responsibility for their own health creates a natural constituency to want employers to do something about it.

You say event avoidance is the only healthcare outcome that matters. What about non-healthcare outcomes, people feeling their best and giving their best work?

There is no reason at all to assume conventional “voluntary” participation programs or outcomes-based jump-through-hoops programs will help people feel their best. By contrast, giving people a menu of offerings and the chance to opt into their own offering would certainly make people feel better than charging insurance by the pound, reporting employee weight to shareholders, collecting employee DNA, and other ideas that have been seriously proposed by the wellness industry. There is no scenario under which people would feel better being economically coerced into wellness (and we all know how employees feel about that) than being able to chart their own path to health, with or without employer guidance.

What if spinal fusions and bypasses/transplants are part of the no-fly zone of invalidating events, but the person really needs one?

First, remember that an employee participating in the program doesn’t lose the kitty under any circumstances other than not satisfying vesting requirements. You could also define “participating” as “using a Center of Excellence hospital” (the model pioneered by Walmart and described in Chapter 5 of Cracking Health Costs) and have that be part of the program as well. In the case of those hospitals – at least the ones in Walmart’s model – they often find the admitting diagnosis and/or the recommended operation to be respectively incorrect and unneeded/likely harmful.

There could also be an appeals process for people who genuinely need one, whereby they don’t lose their kitty.

What if (for example) getting diabetes voids your 401W, but you got diabetes because you were on statins?

As long as an employee is participating in the program, he or she is still eligible. Remember, the event disqualifier only kicks in for non-participants. And one thing employees would learn in Quizzify is that, for people who aren’t at high risk of heart attack, statins increase the chances of diabetes more than they reduce the chances of a heart attack. So presumably inappropriate statin use would decline.

Categories: OIG Advisory Opinions

MACRA Is Broken. It Needs to Go Away Now.

The Healthcare Blog - Sat, 04/15/2017 - 15:52

At its January 12, 2017 meeting, the Medicare Payment Advisory Commission (MedPAC) made it clear they had reached the conclusion that the Merit-based Incentive Payment System (MIPS) cannot work (see my last post ). MIPS is the larger of the two programs within MACRA; the Alternative Payment Model (APM) program is the other. The commission’s primary rationale for its conclusion about MIPS is that it’s not possible to measure physician “merit” (cost and quality) at the individual physician level.

But rather than recommend that Congress repeal MACRA (the Medicare Access and CHIP Reauthorization Act), MedPAC decided to try to fix it. At the January and March 2 meetings, the commissioners discussed a staff proposal to amend MIPS substantially and to tweak the APM program. Those discussions went nowhere.

I give MedPAC credit for finally stating unequivocally that MIPS cannot work. But MedPAC should never have volunteered to fix MACRA. It can’t be done. By proposing modest amendments to MACRA and thereby implying it’s fixable, they stepped into an intellectual tar pit. I will illuminate this tar pit by describing the commission’s unproductive discussion about the staff’s proposed amendments to MACRA. To give you a sneak preview of what that discussion was like, I give you two excerpts from the transcript of the January meeting:

[Commissioner Kathy Buto] As I look at this whole [MACRA] system, I worry about the complexity of it and whether it’s going to achieve anything.… Medicare has sometimes a way of getting into a system it can’t get out of, and this has that feeling about it, that we could go down a rabbit hole and not be able to get out…. (p. 290, transcript )

[MedPAC director Mark Miller] And the reality of MIPS right now is it’s dead in the water because of those complexities. And that’s what we grind tons of time on, and I just wonder sometimes how we’re going to get out of this…. (p. 298, transcript, January meeting)

Allow me to introduce Scylla and Charybdis

MedPAC’s staff, under the direction of Chairman Francis Crosson, presented its alternative to the MIPS program at the January 12 meeting. The staff proposed reducing MIPS’ reporting burden substantially but also increasing the financial pressure on physicians who refuse to flee MIPS and join a group where, allegedly, physician “merit” would be measurable. According to the staff’s proposal, physicians could either stay in MIPS and sacrifice 1 to 2 percent of their Medicare revenue, or flee to: (1) a MACRA APM (the ACO is the main APM prototype); (2) a “virtual group” (the staff did not explain what that might be); or (3) a group defined solely by geographical criteria that CMS would select (the staff did not explain this ephemeral entity either).

The staff was essentially proposing that the commission abandon one impossible mission (figuring out how to measure “merit” at the level of the individual physician) for another – figuring out how to jam all doctors into functioning groups so that measurement of “merit” can be more accurate. The staff didn’t warn the commissioners they were asking them to swap one impossible mission for another. The staff merely asserted that measuring cost and quality at the individual physician level is impossible because each doctor serves relatively few patients and that herding doctors into large groups would solve the small-numbers problem. As Chairman Crosson put it at the March meeting, “[T]he whole point of [the staff’s proposal] is to achieve a volume of care of Medicare beneficiaries that is actually measureable….” (p. 228, transcript  of the March 2 morning session)

As is so often the case when managed care advocates promulgate their proposals, the staff did not identify assumptions that have to be true for their proposal to work. The most fundamental of the unarticulated assumptions is that functioning groups of doctors (be they APMs, “virtual,” or geographically defined) will pop up all over the country so that all doctors who wish to flee MIPS will have a group to run to. In addition to being universally available, these groups must be real (not mere constructs on CMS or Dartmouth Atlas computers), and they must be functional – they must actually improve care and lower costs at the system level (not just for Medicare), something no previous managed care fad (HMO, ACO, “integrated” whatnot, “medical home”) has managed to achieve.

If Dr. Crosson and the MedPAC staff had bothered to articulate these and other assumptions, they might have grasped that measurement at the group level presents obstacles as insurmountable, and as mind-bending to contemplate, as measurement at the individual level. But they didn’t do that. Predictably enough, this failure to lay out the unarticulated assumptions caused the commissioners to descend swiftly down a rabbit hole where productive discussion became impossible.

Adventures in the rabbit hole: The January meeting

As I noted in my last post, when the staff finished presenting their proposal at the commission’s January 12 meeting, Commissioner Craig Sammit asked, “[D]o we have a sense of how accessible and feasible it will be for clinicians to join APMs?” Staff member David Glass replied, “I would say that’s a little hard to say right now.” (pp. 248-249, transcript) That was the commission’s first warning that a rabbit hole was opening under their feet. But no one noticed, and down they went.

The commission’s discussion of Dr. Sammit’s question focused at first on the difficulties small clinics would face in creating an organization that would qualify as a MACRA APM. One of the criteria for an APM is that it must bear “two-sided risk” (the risk that the APM will lose money as well as make money). Can small practices be expected to do that? Commissioner David Nerenz noted that very few of the groups that have signed up for Medicare’s MSSP ACO program signed up for the “track” that requires they take both upside and downside risk, so why should anyone expect small clinics to expose themselves to two-sided risk? “We have no good working examples of people willing … to step into the two-sided risk models of the MSSP,” Nerenz warned. “It’s a tiny, tiny fraction of those that are accepting two-sided risk. You can force people in. You could declare everything else to be a felony punishable by law, but we don’t have examples of how to do it.” (p. 268)

Commissioner Jack Hoadley asked the staff if they could refer the commission to “any history” of successful “physician groups” the commission might learn from “so that we’re not in the business of just creating … organizations that aren’t really doing anything….” (p. 291)

The staff had no answers for Nerenz, Hoadley, Buto and other commissioners who asked how small clinics were supposed to meet the two-sided-risk requirement for a MACRA APM. Commissioner Paul Ginsburg summarized the prevailing evidence accurately when he said, “I think that the reality is that for the fairly large percentage of physicians, they probably don’t have very extensive APM activities now.” (p. 250)

So if smaller clinics don’t want to stay in MIPS where they’ll lose 1 to 2 percent of their Medicare reimbursement, and if they can’t flee to an APM because they can’t handle two-sided risk, maybe they could flee to one of the other two types of groups proposed by the staff – “virtual groups” that doctors might form, and geography-based groups CMS would define. The commission discussed that scenario next. But that discussion also led nowhere. The commission wound up agreeing that groups of any sort (APM, virtual, geographical, whatever) make sense only if the groups are built on a shared culture – a consensus among the participating doctors about how they want to practice. This shared culture cannot be fabricated top-down by CMS or hospital executives seeking to expand their empires. They must arise organically.

At this point MedPAC’s director, Mark Miller, could see that the commission was beginning to realize they had swapped one impossible mission (measuring at the individual level) for another (measuring at the group level). But rather than advise the commission that the problem they were having was the intractability of the obstacles to measurement at both the individual and group level, Miller blamed the commission members for being unable to complete either mission. “[M]easuring in the aggregate, measuring in the individual, you guys are the commissioners. I don’t care,” he began. Then he complained that advocates of measurement mania are damned if they try to measure at the individual level and damned if they try to measure at the group level (as if the measurement advocates were the victims here). “[B]ut at some point in time, somebody has got to decide how this is going to go.” Miller offered no way out of the rabbit hole he had led the commission down. He instead offered only his own frustration at finding himself in the hole. “What are we doing here?” he asked. (p. 274) [1]

As the January meeting drew to a close, both Crosson and Miller expressed their confusion about how to summarize the commission’s discussion, presumably for the purpose of setting the agenda for the March meeting and to begin writing a chapter in the June 2017 report to Congress. Crosson was reduced to saying “[W]e need to take, you know, a much more effective approach, and I couldn’t describe it right now.” (p. 303) Commissioner Buto gamely tried to help Crosson by asking, “Are we essentially saying that on MIPS that … we don’t think it potentially is going to work the way it’s structured? … I think we still need to fill in the blank as to what we think should happen.” (p. 304) No one could answer Buto’s question; no one filled in any blanks.

Crosson ended the meeting with this plaintive question to the commission as a whole: “So a paper with suggestions. Is that what you’re saying”? (p. 307)

Further adventures in the rabbit hole: The March meeting

Crosson and the staff apparently learned nothing from the January meeting. They returned to the March meeting with the identical proposal they had presented at the January meeting, with one addition: They proposed to change the way in which primary care physicians (PCPs) who participated in ACOs would be paid, but not the amount they would be paid. The staff’s refusal to alter its proposal, and their addition of a partial-capitation method of payment for PCPs, made no sense. Here is my guess at the staff’s rationale for adding the PCP bauble. They left the January meeting aware that the commission was worried that small clinics wouldn’t have any groups to flee to; many of these small clinics have PCPs in them; if the PCPs were given more upfront financial support, smaller clinics might be able to join or start an ACO and survive two-sided risk. I realize this doesn’t make sense, but that’s the only rationale I can imagine. [2]

Following the staff’s presentation, the commission took up where they left off at the January meeting – posing questions about how the staff’s proposals for measuring “merit” at the group level would work. Commissioner Jack Hoadley led off with a question about why doctors in “virtual groups” and geographically defined groups would have any influence over the cost and quality measures they would be subjected to. “[I]t certainly doesn’t feel like it has any potential for anything I do as a clinician to make those measures go up or down,” he said (p. 207, transcript of March meeting).

Commissioner Brian DeBusk asked whether the staff had “explored” whether groups in lower-income areas would be punished by the proposed “quality” measures because of factors outside physician control. (pp. 209-210) Commissioner Kathy Buto said, “I do not know what we are trying to do with primary care….” (p. 235) Commissioner Alice Coombs (a doctor) said she was struggling with the question of “finding a home for the primary care physician [within] MACRA.” She asked her fellow commissioners to “have a little mercy on the onesie-twosie groups.” She said the “whole notion of attribution [of patients to doctors] within a geographic region” is riddled with problems. (pp. 222-223) [3]

Again, the staff’s answers to these obvious questions and concerns were grossly inadequate. Staff director Mark Miller was especially unhelpful. He implied the commissioners were spoiled brats asking for the moon. He said they needed to remember how bad MIPS is now and that anything would be better than MIPS. For example, after a brief discussion about whether hospitals could serve as the staging ground for an ACO when few doctors follow their patients into hospitals anymore, Miller said:

In listening to you guys, you are absolutely right. Tons of physicians do not set foot in a hospital, but you could almost have the hospital-based physicians … say, “Okay, let’s reach out and get these sets of physicians so that we can all be measured together.” And then I will just say this again: Keep in your mind, what is the alternative?…. [E]ach time you guys say this I am going to … force you back to the status quo…. [Y]ou are right, this has a bunch of problems; so does the status quo…. And so if there is another idea, that is what we are searching for. (pp. 228-229) [4]

But no one offered another idea. The closest thing to “other ideas” were bromides like, “I really think that we need to give up on … repelling people from unorganized care and drawing them into organized care” (Ginsburg, p. 237), and, “I think it is time to put our thumb on the scale for ACOs” (DeBusk, p. 246).
What next?

At the end of the January meeting, Chairman Crosson made an attempt to summarize the commission’s confused and unproductive conversation. It was embarrassing; Crosson sounded incoherent (see pp. 301-303, transcript, January meeting). His attempt accomplished nothing other than to drive home how much time the commission had wasted discussing the staff’s proposal. But Crosson, whose term expires this month, made no attempt to summarize the commission’s discussion at the end of the March meeting. Instead he ended the meeting abruptly with this cryptic happy talk: “We will be returning to this issue probably early in the next MedPAC term…. We are going in the right direction.” (p. 247)

Crosson himself observed at the January meeting that the commission could not just sit on the sidelines “and watch a dysfunctional thing unravel.” (p. 305) But it appears now that’s exactly what MedPAC intends to do. For the foreseeable future, it appears MedPAC will do what MedPAC always does after they identify defects in a managed care nostrum they previously endorsed – they will dither.

[1] Here is a lengthier version of the statement MedPAC director Miller made at the January meeting expressing his frustration with the commission’s inability to figure out how to make measurement at both the individual and group level work:

[T]here has been a 15, 20-year discussion about this, where it’s like, okay, you can’t do anything but measure me at my individual level, and … you have to tell me precisely how you are measuring me. [T]he physicians groups argue this. Then they are upset that it is too burdensome, that the comparisons aren’t fair, … and nobody is happy. [This] exchange [about individual versus group measurement] … basically … just stopped the process because it’s too complicated. So then, as an analyst, you’re sort of like, “I don’t know what to do, except go to a more aggregated level and measure.” Then everybody says, “But this isn’t me, and that’s not fair.” So fine, but at some point in time, somebody has got to decide how this is going to go. And I’m going to throw just one last bomb into the middle of this. A few meetings back, [commissioner] Paul [Ginsburg] said, “Why are we measuring and paying for quality?” and I’ll just ask that question. I mean, as long as this is so complicated and nobody can come to any agreement on this – and any model you pick, you’re going to have a bunch of unhappy people and a bunch of logical or analytical failure. Then maybe Paul’s point should come into the conversation and say, “What are we doing here?”…. [W]hat the hell. (pp. 273-274)

[2] Here is how MedPAC staffer Ariel Winter explained the partial-capitation payment method at the March meeting: “[T]he … approach would allow primary care practitioners in two-sided ACOs to receive an upfront, lump sum payment…. PCPs in ACOs would not receive new money for this upfront payment; instead, they would be shifting some of their own revenue from fee-for-service payments to the upfront payment.” Why, you might ask, should doctors feel happier about being swallowed by an ACO and bearing two-sided risk if they receive no increase in revenues, only a change in the chronological distribution of those revenues (more in January and less over the remaining months of the year)? Winter offered this non-explanation: “The advantage of this upfront payment is that it would give providers more flexibility to invest in infrastructure and staff for care coordination activities.” (pp. 199-200).

This “explanation” illustrates the free lunch syndrome . Winter is saying primary care doctors would now be “free” to spend money on something Medicare won’t currently pay for, for example, nurses stationed at nursing homes to reduce emergency visits, but new revenue to pay for the additional nurses would not be coming from CMS. Let’s see here, where might the extra revenue come from? Tinker Bell?

[3] Commissioner William Hall also commented on the attribution issue. “It seems to me that with MIPS … we are [telling] a group of physicians who call themselves primary care providers … ‘You are responsible for some kind of a catchment area…. And as we look at your area …, you have some problems – like maybe diabetes is not being cared for … very well, or there seems to be too much alcoholism in your community.’ And we are saying: ‘Why don’t you fix that?’ …. I think we have very muddy expectations what modern primary care should do.” (p. 238)

[4] The following conversation between Chairman Crosson and Commissioner Alice Coombs about whether hospitals could create “organized staff models,” taken from the transcript of the March 2017 meeting, illustrates one of the many dead ends the commission ran down in their search for the prototype of a physician group that would want to take on two-sided risk:

DR. CROSSON: So, Alice, … let’s just think about the organized medical staff model for a moment [Crosson was for many years an executive within Kaiser Permanente]. As you well know, … it’s kind of a group but not really a group…. Essentially, everybody is … nominally working in the same institution …. Historically, the organized medical staff has had a role … in trying to oversee and manage quality within that institution, right? Now, some are effective, and many have not been, and in fact, the enthusiasm for the value of the organized medical staff model has kind of waned over the last couple of decades. So at least one of the ways I’ve been thinking about this … is that … joining an A-APM would be an option, but then you would have the other option, which is to organize your organized medical staff to be the unit of measurement on these population-based measurements.

DR. COOMBS: So there’s an underlying assumption that you just made. … In our community [Dr. Coombs is from Massachusetts], 80 percent of docs don’t even come to the hospital. The hospital’s program has superseded … every single service. Pediatrics has an inpatient hospitalist. … [B]elieve it or not, the majority of care happens outside the hospital…. In the olden days, you’re right

DR. CROSSON: Yeah. [pp. 226-228]

Categories: OIG Advisory Opinions

Measuring MACRA

The Healthcare Blog - Sat, 04/15/2017 - 11:10

With all the machinations over ACA repeal and replace, the new law that makes big changes in the way the federal government pays doctors—the Medicare Access and CHIP Reauthorization Act, or MACRA—hasn’t garnered much attention lately.

But doctors nationwide are sure thinking about it. That includes many of the regular commentators on THCB. I think it’s accurate to say that most of them have been highly critical of MACRA since the law was enacted in April 2015, and even after it was significantly amended late last year to address physician complaints. (See, for example, Kip Sullivan’s most recent post here.)

The law’s main provisions kicked in on Jan. 1, 2017, with 2017 being the first performance-reporting year, affecting payment in 2019.

In a policy brief on MACRA for Health Affairs published late last month, I raised a host of questions about MACRA.

As Kip and many others have noted, some parts of MACRA are weakly designed and both the law and regulations implementing it make some big assumptions. Excerpts from one section of the policy brief are below. The whole brief can be had at the link above. If you are well versed in MACRA, you can skip to the section titled “What’s the Debate?

Is the overall design coherent and workable?

Major special-interest groups, including those representing physicians, industry, and consumers and patients, supported MACRA’s intent and the general framework of the regulations through three comment periods.

However, almost all groups sought changes and raised questions. CMS’s final revisions were most responsive to physician groups, which were insistent on an easier path and more flexibility for doctors in the initial years of the program.

Dissenting voices raised questions that are not easy to dismiss, however. These could gain credence and traction if implementation proves difficult or falters. For example, does the assessment of individual physicians’ performance with existing quality measures yield meaningful results?

Some critics say there’s no clear evidence that current measures, or the scoring framework proposed by CMS, will provide anything close to a full and accurate picture of how well an individual doctor does in treating his or her Medicare patients. Thus, basing payment to individual doctors on the MIPS scoring sys- tem—or any scoring system—is flawed and irresponsible.

These critics would scrap MIPS and, over time, prod doctors to join APMs. But other critics take aim at the whole notion of changing or incentivizing physician behavior through performance measurement and financial incentives. They assert that this has not conclusively yielded improvements in care or in the health status of the US population.

Still other critics say there’s only weak evidence indicating that ACOs and APMs
(including bundled care payment) improve care and lower cost growth enough to justify the administrative costs they incur—which would extend to the administrative costs that physician groups, APMs, and the federal government will now incur as MACRA gets implemented.

CMS officials and other health policy experts don’t reject these critiques completely. But they do argue that some early evidence suggests that financial incentives, performance measurement, and ratings can and do propel individual clinicians and groups of physicians to improve care.

Moreover, they assert, the government has a moral duty to prevent unnecessary and wasteful care, and a powerful fiduciary duty to spend tax dollars wisely, in part by restraining excessive growth in health care spending, which makes up a substantial part of the federal budget as well as business and consumer spending.

Is the program good or bad for solo doctors and small or rural practices?

MACRA is designed to push doctors who practice on their own or in small groups into larger groups and into APMs. A vocal group of such doctors don’t want to do this. They prefer their current arrangement.

The government recognized this dilemma and increased the number of physicians who would be exempt. It also gave clinicians more flexibility, primarily to accommodate those in small practices who had not to date been participating in any pay-for-reporting or pay- for-performance programs.

CMS officials and other experts acknowledge that the evidence is not strong that solo or small practices deliver poorer-quality care than larger practices. Even so, debate continues about the pros and cons of larger versus small physician groups or solo doctors.

That debate will continue and is likely to trigger changes to MACRA rules in the years ahead as evidence mounts one way or the other.

In comments accompanying its final rules, CMS said: “Although small and solo practices have historically been less likely to engage in [the existing physician quality reporting system] and quality reporting, we believe that small and solo practices will respond to MIPS by participating at a rate close to that of other practice sizes.” The agency also estimates that “at least 80 percent of clinicians in practices with 1–9 clinicians will receive a positive or neutral MIPS payment adjustment [in 2017 and 2018].”

Does MACRA constitute government intrusion in the practice of medicine?

Federal law dating back to the 1930s discourages, and in some cases prohibits, the government from dictating how doctors practice medicine, collectively or individually. Some, mostly conservative, commentators and physician organizations say that recent history has eroded that principle.

In keeping with that emerging debate, doctors and groups allied with conservative and libertarian interests believe that MACRA is intrusive and that, by definition, it pushes doctors to practice in certain ways that could be inimical to good patient care. The same argument was brought to bear against managed care, as wielded by both government and private insurers, in the 1990s and early 2000s.

Mainstream medical groups disagree that MACRA dictates to doctors how to treat individual patients. However, recent surveys indicate that a majority of physicians have low morale and are concerned about excessive paperwork, the time they have with patients, and the future of medicine. In one large-scale 2016 survey that garnered responses from 17,236 physicians, only 14 percent said they had the time they needed to provide the highest standards of care.

“Volume to value”—slogan or sound policy?

Critics allege that the volume-to-value movement is, for now, based more on faith than strong or conclusive evidence. For example, they cite the experience of countries in Europe that control spending primarily through regulated prices and fees in fee-for-service systems, instead of relying on performance measurement and payment incentives.

Critics also argue that “value” in medicine is an elusive concept and not one likely to be pinned down through a single composite score—especially for an individual physician. As yet, these critics further allege, value has not been clearly pegged or produced by ACOs, patient-centered medical homes, or integrated health care systems.

Such criticisms are countered by researchers who point to published studies as well as hundreds of initiatives and innovations in care delivery over the past twenty years that claim to have improved care delivery through enhanced accountability, quality measurement, and incentive payments.

The magnitude, depth, and significance of the improvements certainly can be disputed, and MACRA’s impact will almost certainly trigger continued debate on this issue.

MIPS versus alternative payment entities

It’s clear that in designing MACRA, Congress wanted the majority of physicians, over time, to join APMs. Larger potential bonuses (compared to MIPS) and fee increases are inducements to physicians to take the alternative model path. MIPS is designed as a bridge to that end, although it is unclear when and if MIPS would be terminated.

This approach is consistent with the Obama administration’s approach under the ACA and with other recent bipartisan laws, as well as marketplace dynamics, over the past fifteen years. All promote larger group practices, integrated systems, a shift away from fee-for-service, and enhancement of the Medicare Advantage program as an alternative to traditional Medicare.

How much financial risk should physicians take on in alternative payment models?

An APM will qualify as an advanced APM in performance years 2017 and 2018 if it is at risk of either losing 8 percent of its revenues when Medicare expenditures are higher than expected or repaying CMS up to 3 percent of total Medicare expenditures, whichever is lower.

However, it’s not yet clear how much financial risk will flow down to individual physicians in APMs. CMS uses the phrase “more than nominal risk” to define its approach, but physician interest groups want limited physician exposure to losses from taking on insurance or financial risk.

“Physicians will be much more willing to take on accountability for costs that they can affect through their own performance, such as the costs of preventable complications, than they are to take on risk for the total cost of care for a large patient population,” the AMA said in its initial comments on the MACRA proposed rules.

Measures that matter

A majority of the comments on the proposed regulations urged CMS to adopt a common core set of measures focused on population health, clinical outcomes, and assessments of patient experience for both MIPS and the alternative payment entities.

Most also urged CMS to eliminate overlapping, duplicative measures and “topped out” process measures that no longer provide meaningful barometers of quality of care or performance.

CMS in its final rule concurred on these points and said it was undertaking efforts to focus on “measures that matter.”

Notably, in February 2016 CMS and the insurance industry jointly released an initial set of core physician performance measures intended to replace existing overly complex measure sets.

In its initial MACRA comments, the AMA expressed concern about a too-rapid shift to claims-based cost and outcome measures. “We would view proposals to dictate the percentage of measures that must be based on outcomes rather than process as highly premature,” the group said.

For their part, employer and consumer groups want CMS to put more emphasis on the results of patient experience surveys such as those developed by the Agency for Healthcare Research and Quality’s Consumer Assessment of Healthcare Providers and Systems (CAHPS) program.

Employer and consumer groups also have urged CMS to aggressively explore the use of patient-reported outcomes—information and data that patients themselves document about their care. But physician interest groups such as the AMA are divided on the utility of CAHPS and patient-reported outcomes. The American College of Physicians, for example, requests that CAHPS surveys not be used at all under MIPS.

Other comments reflect near-universal agreement that CMS should make more use of the data contained in patient registries, as CMS proposes. But how such registries can be standardized is an open question.


Physician groups urged CMS to concentrate on assessing performance and quality at the group-practice level and avoid grading individual physicians in MIPs and APMs.

Employer and consumer groups, in contrast, want CMS to push toward performance measures at the level of the individual physician, where appropriate, since, they argue, that is what consumers want.

Under the ACA and now MACRA, CMS is mandated to assess performance and quality at the individual physician level. But this intense debate is unlikely to go away anytime soon. It reflects a fundamental disagreement—as mentioned above—about whether current methods and tools allow accurate assessments of individual physician quality of care or outcomes.

Public reporting

MACRA mandates that performance results be made available to Medicare beneficiaries and consumers broadly, to aid their choice of individual physicians and physician groups.

CMS says it is finalizing how it will fulfill this public reporting requirement, of MIPS information, through the Physician Compare website. The agency says it remains committed to reporting performance results for both individual physicians and groups, in “an easily understandable format” for consumers.

Debate over the reliability of performance results for individual physicians, versus groups, could undermine this intent, however. Some observers say they expect the Trump administration to take a fresh and close look at what will be posted on Physician Compare, and when.

Electronic health records

CMS concurred with commenters that the previous EHR “meaningful-use” program was in need of reengineering under MACRA. To that end, there will be far less emphasis on data entry and “check the box” use of EHRs and more emphasis on the secure exchange of patient information; promoting patient engagement; and reporting to state and federal public health agencies and clinical data registries.

Steven Findlay is an independent journalist, health policy analyst, researcher and consumer advocate.

Categories: OIG Advisory Opinions

Yes, Mr. President. Health Care is Complicated. And Also Hard.

The Healthcare Blog - Fri, 04/14/2017 - 11:03


“Nobody knew that health care could be so complicated,” President Donald Trump told us a few weeks ago.  As the failure of the House Republican  bill shows: Healthcare is hard.

The American Healthcare Act failed to clear the House of Representatives despite catering to longstanding conservative demands: rid the ‘individual mandate’ (designed to force able-bodied people to pay insurance so it’s cheaper for sick people), subsidies to individuals, and revamping Medicaid into block grants to states.

Even with the claim it could be deficit-neutral, the act failed to win enough moderate or conservative Republicans.

While Obamacare stays, the progressive wing of the Democrat party still calls for a single-payer Medicare-for-all health care system.

They would offer a dual catharsis: the moral certitude of declaring health care as a right; and the beguiling simplicity that one only need expand an existing entitlement and simply include the 264 million Americans not currently covered.

But leave aside questions of practicality and which option balloons the national debt further (both actually would), no proposed alternative delivers a cure-all.

At the heart of the question is a basic reality: We spent $3.2 trillion in 2015 on health care — that’s nearly $1 of every $5 that this nation produces.

There are several drivers for these healthcare costs.  My experience as a surgeon collaborating and teaching in several countries puts in stark relief, however, that many of these costs are unique to the United States.

Examine just three of these drivers — investments in research (which I support), expectations of the medical experience, and the controversies over end-of-life care–and we quickly see that difficult choices ahead.

My international experiences confirm what the data shows — countries spending a fraction on health care deliver excellent care.

Australia, for example, spends 9% of its GDP on healthcare to the United States’ 18%, but deliver better quality outcomes for many cancers, heart disease, and stroke.  Japan performs similarly well.

But no other country spends nearly $500 billion, more than 50% of the global total, on science and medical research.

And U.S. research yields discoveries: gene therapy to cure recurrent cancer; brain to limb connections that will help a paraplegic walk; and drugs that will dissolve clots before one damages a brain or heart.

Likewise, with only 5% of the world’s population, the U.S. covers 42% of all pharmaceutical investment that enables drug discoveries for which the rest of the world pays pennies on our dollars.

No country comes close in discoveries that will save lives, nor shows the generosity of Americans in paying forward for the world to benefit.

Trump proposes to end this generosity by crushing the National Institutes of Health.  But businesses already invest more in research than the federal government. Even if the NIH is stripped, Americans will still subsidize the world unless there is a fundamental shift.

Behold the pie chart of the American healthcare expenditure. Note that $1 trillion was spent on hospital services.

Nearly a quarter of all Medicare payments went to hospitals directly.  And a quarter of that went into administrative costs — almost double those for Canada.

Academic hospitals spend billions to supplement research budgets and underwrite resident training. They are safety-nets for many without health insurance.

But competition for lucrative hospital payments from insurers also drive renovations in many competing hospitals: luxe cedar-paneled maternity suites complete with waiters serving delicacies; patient rooms that might feature 1500- thread count bedsheets, wall-sized flat screen televisions, mood lighting, and decadent bathrobes and slippers you can take home.

While children’s hospitals in most countries that I visit still feature wards filled with dozens of beds, those in the U.S. offer all-private rooms.  The standard today is built-in video game consoles and iPads in every room, rollout beds and fully stocked kitchenettes for the parents.

In contrast, Canada has a tiered medical system where a single-payer government insurance system covers a ward bed in a room with four other roommates, while in the same hospital, private insurance or cash payments afford a single room with a host of amenities.

In Mexico City, separate hospitals cover the privately-insured.  So while a patient with the government insurance, Seguro Popular, will receive excellent care, but stay in large wards and bide time on waiting lists at a public hospital, the fortunate few with private insurance will experience a parallel universe of in-suite luxury and care that exceeds the best in this country.

Concierge medicine and separate suites for those who choose to pay has arrived in the United States, but do Americans want to see this era of tiered health care systems?  Will they pay for healthcare-for-all and luxury-for-all?

Finally, Americans must get honest about end-of-life care.  Of  the $554 billion spent by Medicare to cover 55 million Americans, nearly a third, or $170 billion is spent on a patient’s last six months of life.

We have the right, today to demand all measures to extend our lives–no matter the cost–even when treatment is futile.  This demand fuels extended stays in intensive care units that can cost well over $10,000 per night, and billion dollar hospital investments in proton beam accelerators, for example.

A family of a 90-year-old man may demand a treatment for metastatic melanoma with the breakthrough drug ipilimumab, which, on average, extends life by less than three months, but at a cost of $158,252 per person.

A scenario where a consumer may demand any product, any service, no matter the cost, and no matter the futility of treatment, while remaining separated from the cost, is unique to the United States.

A system that allows health care providers to charge any amount without revealing price lists is equally untenable.

But even an early attempt to promote a rational discussion regarding end-of-life-care with a patient or family in Obamacare statutes, was met with the odious, and indignant accusation of “death panels” and “rationing” of care.

While politicians reduced the critical healthcare discussion to ideological fusillades launched across the aisle, few politicians demonstrate the courage to level with Americans.

The most affluent nation in the world should indeed have the highest quality healthcare delivered in hospitals, clinics and rehabilitation facilities that are the envy of the world.  But these costs are being passed down across generations, even while Americans are treated to discussions that never focus on where their healthcare dollar actually goes.

This is what makes healthcare complicated.

Aseem R. Shukla, M.D., FAAP, is an Associate Professor of Surgery at the Perelman School of Medicine, University of Pennsylvania.  He writes at the intersection of healthcare, religion, and policy and tweets at @aseemrshukla “Views expressed here are personal”

Categories: OIG Advisory Opinions

Protection? Fairness? Hardly.

The Healthcare Blog - Fri, 04/14/2017 - 07:33

The American Health Care Act (aka Trumpcare or Ryancare) failed because it was patched together and would have imperiled insurance benefits for millions of the neediest Americans. Two other health care related bills – the Protecting Access to Care Act and the Fairness in Class Action Litigation Act – have made it out of the U.S. House and are currently pending in the U.S. Senate.  If passed they will produce the same abysmal result.  Like the American Health Care Act, they should be rejected.

Protection and fairness?  How could anyone be against that?  Unfortunately, the titles hide the motive of these bills: maybe cost savings and damn the public good.  These bills appear to have been written by lobbyists to protect corporate bottom lines.  Both bills will add to the substantial roadblocks injured patients already face in attempting to vindicate their rights against powerful entities and corporations in the legal system.

The Protecting Access to Care Act (H.R. 1215) is being touted as a way to control the cost of frivolous medical malpractice lawsuits.  The Act would limit medical malpractice victims’ ability to have their day in court by making certain providers immune from lawsuits and imposing strict caps on damages for victims of medical malpractice regardless of the degree of injury or the extent of negligence involved.  Some variation of this bill has been floating around Republican circles for decades.  There is no question this bill would likely reduce costs for medical providers and insurance companies, but there is every reason to believe it will do so by harming ordinary Americans.


The key justification for this bill is that there is a substantial amount of frivolous medical malpractice litigation in the United States.  However, the leading study on this issue from The New England Journal of Medicine concluded, “portraits of a malpractice system that is stricken with frivolous litigation are overblown.”  The study noted that (1) the great majority of patients who sustain a medical injury as a result of provider negligence do not sue and (2) the majority of medical malpractice lawsuits that are brought have at least some merit.  The rate of paid medical malpractice claims in the United States has declined significantly, dropping nearly 56 percent between 1992 and 2014. Simply put, evidence of a health care system mired by frivolous litigation does not exist.  If anything, studies demonstrate that the legal system is pretty good at weeding out unmeritorious claims.  This law won’t do better.  There is simply no need for this legislation.

Ordinary Americans would also be wise to keep their eyes on the Fairness in Class Action Litigation Act (H.R. 985).  This Act would significantly impact consumers’ ability to fight corporate wrongdoing in court.  For example, one of the only ways that drug purchasers can combat rising drug prices is through class action claims targeted at anticompetitive practices by big pharmaceutical companies.  But the Fairness in Class Action Litigation Act imposes strict one-size-fits-all requirements on top of the extraordinarily complex procedural hurdles that already exist for those litigating these cases.  This is why the rule making body of the U.S. federal courts and the American Bar Association both weighed in against this Act stating their belief that existing rules get the job done.  Indeed, working with the rules that we already have has also been endorsed by the newest Supreme Court member Neil Gorsuch who stated during his confirmation hearings that these complex cases require a close look at the facts presented.

It is not only political moderates that have staked out their opposition to the bill.  So have those in the Tea Party via the House Liberty Caucus.  In a policy statement the House Liberty Caucus urged its members to vote against the Fairness in Class Action Litigation Act stating that class actions “are a preferable alternative to government regulation because they impose damages only on bad actors rather than imposing compliance costs on entire industries.”

If the failure of the American Health Care Act has taught us anything, it should be that blunt attempts to control costs are short-sighted and do a disservice to consumers’ health and well-being.  Hopefully, the U.S. Senate will determine that these bills are similarly flawed and encourage a more nuanced approach to controlling the costs of health care related litigation.

Arthur Caplan, Division of Medical Ethics, NYU SOM
Zachary Caplan, Antitrust Attorney, Berger & Montague, P.C.

Categories: OIG Advisory Opinions

Insurers: Getting To Know The New B In B2B2C

The Healthcare Blog - Thu, 04/13/2017 - 17:53

Startups are increasingly counting on partnerships with payers and insurers to accelerate the commercialization of their solutions.

Health 2.0 was recently invited by AXA and the International Federation of Health Plans (IHFP) to be part of a meeting in Paris with 15+ European/global health insurers. On March 14th, we took this opportunity to organize a Health 2.0 Paris meetup and present several solutions designed to be implemented or reimbursed by health insurers.

The presentations generated a strong interest and fueled a lively discussion. Insurers had a lot of questions for our panel of presenters… but, not necessarily the ones you would expect. We often think of insurers as payer organizations that only care about saving costs. However, the ROI question was not raised once.

The questions were, in fact, a lot more basic:

  • Does it work?
  • How do you engage people in using it?
  • Why should we trust you when you say you’re the best in the market?

They seemed less concerned about ROI or cost savings than the fact that adopting these solutions meant engaging their brand in the partnership and asked questions like:

  • What if it didn’t work?
  • What if it failed to engage and deliver on the promise?
  • What if the solution ended up ranking one of the worst and making them look bad to their customers?

Startups often attempt to become one-stop-shops for health and wellness. They build comprehensive suites that cover everything: smoking cessation, alcohol, and other addictions, physical activity, stress management, etc… Most of the insurers in the room have already had one or several of these modules covered, which raised another question: how do these solutions integrate with what they already had in place?

They were also more interested in adopting “the best” smoking cessation app, rather than adopting a one-stop-shop that included “a” smoking cessation module. So, when it comes to selling to insurers, highly specialized, and modular solutions may have an advantage.

Building their pipeline of solutions is certainly NOT a priority. Insurers receive more information from startups every day than they can digest.

How can insurers and startups build a more efficient approach to meeting each other’s needs? Join me at Health 2.0 Europe, as I discuss this topic and more with insurers on May 3-5 in Barcelona!

Pascal Lardier is the International Executive Director of Health 2.0.

Categories: OIG Advisory Opinions

This Doctor Says #BoycottUnitedAirlines

The Healthcare Blog - Thu, 04/13/2017 - 13:03

Watching events unfold at United Airlines over the last few days have filled me with shock, awe, and horror. As a result of this public relations disaster, their motto “flying the friendly skies” has turned into “not enough seating, prepare for a beating.” America stands as a beacon of freedom from oppression. In my opinion, United Airlines was an iconic American company until last Sunday.

That ended Sunday.

Much of the backlash was initially a result of the lackluster attempt at an apology from the CEO of United Airlines, Oscar Munoz. Despite three attempts, he still appears rather oblivious to the real suffering of Dr. Dao. Physicians have been taught that the best thing to do in the face of a medical error is to be honest, forthcoming, and apologize; it must be genuine and from the heart — acknowledge our blunder, take responsibility for our mistake, and convey our sincere regret. Executives at United Airlines would do well to heed these words.

According to scientific research, there are six ingredients which constitute a proper apology – 1. Expression of regret, 2. Explanation of what went wrong, 3. Acknowledgement of responsibility, 4. Declaration of repentance, 5. Offer of repair, and 6. Request for forgiveness. The request for forgiveness is missing from apologies offered by this corporation.

Describing the violence caught on video as “re-accommodating customers” was offensive. Engaging in “blaming the victim” by describing the man who was dragged, while screaming and bleeding, up the aisle and off the airplane as both “disruptive and belligerent” made matters worse. However, as United Airlines watched their market value plummet by $250 million, this story began to take on an even more shameful context.

Does the background of a fare-paying passenger matter when evaluating an infringement on his rights? No. His “troubled past” should be completely irrelevant as to how United Airlines handled the forcible removal of a ticketed passenger unwilling to give up his seat. United Airlines actions are reprehensible and unjustified. We must not allow ourselves to be distracted by the salacious details of Dr. Dao’s life story; unless we are ready to risk exposure of our own personal secrets should we refuse to give up our paid seat someday.

The victim in this story is the passenger and could have just as easily been any one of us. More troubling to me is the thought Dr. Dao might be suffering from PTSD, in my opinion, based on the video footage. The fear conveyed in his guttural scream coupled with his passive demeanor as he was dragged down the aisle of the airplane indicated Dr. Dao seemed familiar with the brutality of forced compliance. At no point on the video is Dao seen attacking the security officers. In fact, he was later observed standing in the aisle saying quietly, “I want to go home, I want to go home.”

However, Dr. Dao’s hometown paper, the Courier-Journal, capitalized on the opportunity to break a story, noting he was convicted of a drug-related offense more than a decade ago. As if implying United Airlines was vindicated in their mistreatment of him; in effect, victimizing him twice. His medical license was suspended by the Kentucky Board of Medical Licensure and reinstated in 2016. Public documents indeed confirmed Dr. Dao carries a diagnosis of PTSD stemming from his traumatic childhood and additional distress experienced while working as a physician after coming to America.

Dr. Dao initially agreed to disembark the overbooked flight, from news reports, and when he discovered the next flight was not until Monday afternoon, he expressed the need to return to work. He is recorded on video saying “I can’t be late, I’m a doctor. I’ve got to be there at 8am tomorrow.” His license is restricted with supervisory requirements. It is highly likely unexplained absences could harm his chances of a full return to an occupation he dearly loves.

Research has found (Blair, 2000), 85% of Asian refugees have experienced horrible traumas prior to immigrating to the United States, including starvation, torture, and losing family members to war. A report released by the Surgeon General’s Office in 2001, reveals the effect culture, race, and ethnicity can have on mental health. Suffering from a mental health disorder can be highly stigmatizing and reflect poorly on one’s “family honor,” making it difficult to accept. Historical events and circumstances many individuals of Asian descent have lived through can be extremely traumatic. One study found as many as 70% of Southeast Asian immigrants suffer from PTSD.

Dr. Dao graduated from the University of Medicine of Ho Chi Minh City in Vietnam, in 1974, a tumultuous time in Vietnam before the fall of Saigon in 1975. He very likely has had experiences many of us born and raised in America cannot fathom. His lawyer confirmed as much this morning on a live news conference. This man is the father of 5 children, four of whom are physicians, and he is married to a pediatrician. He has clearly worked very hard and overcome numerous obstacles in his life. He has atoned for his own missteps while holding his head high and that deserves our respect. According to public record, he complied satisfactorily with The Kentucky Board of Medical Licensure recommendations for rehabilitation and requirements to have his license reinstated. Dr. Dao embodies a quintessential American story.

Let us return for a moment to United Flight 3411 last Sunday evening where this man was physically assaulted as he was forcibly removed from the airplane he had been initially allowed to board. Can you imagine his fear and anxiety as he was “selected” to be evicted? When three large men returned to force him from his seat, what was HIS subjective experience? Even, the passengers who stood up for Dr. Dao were emotionally disturbed witnessing this horrifying event.

How more emotionally provocative would it be if one already suffered from PTSD, anxiety, or depression? If the airline industry cannot make allowances for individuals in this country who are singled out unfairly on the basis of age, race, or even disability, then everyday Americans must stand up for those individuals being victimized who are unable to do so for themselves. This could have happened to any one of us.

Nelson Mandela once said, “To deny people their human rights is to challenge their very humanity.” A second hero in this story, in addition to Dr. Dao, is the woman who said, “No. This is wrong. Oh My God. Look at what you are doing to him.” Thank you for lending your support to someone being wronged.

If we as a nation lose sight of our humanity, we will lose everything for which we stand. Corporations are not people. We should bring United Airlines to their knees until they truly comprehend the damage they have done, mentally, physically, and emotionally to this innocent 69 year old physician and man. United Airlines should do more than apologize profusely; they should ask forgiveness of Dr. Dao, his family, our nation, and the world.


Categories: OIG Advisory Opinions

Who’s to Blame For the Shortage of Doctors? Doctors and Politicians

The Healthcare Blog - Wed, 04/12/2017 - 16:54

After missing an appointment with a physician recently, one of us was tongue-lashed by a medical assistant who explained that the practice has a months-long waiting list for new patients.  The dressing-down included a threat.  Another no-show and the miscreant would be discharged from the doctor’s practice and have all medications cut off.

Wondering if patients really wait months to see this doctor, the delinquent called back, pretended to be a new patient, and asked how quickly he could get in.  The first available appointment at the closest location was, in fact, 2 months out.  (The wait could have been cut in half by driving to an office that was farther away.)

Two months is a long time to wait to see a doctor.   If your auto mechanic or air conditioner repairman told you that it would take a week to fit you in, you’d find someone else to take care of the problem and you’d never go back to the person who told you to wait.  Given the transcendent importance of health, why do patients who need medical assistance routinely wait far longer?  And if patients with good insurance wait for two months, how long is the queue for those who rely on Medicaid or who have no insurance at all?

According to a survey by Merritt Hawkins—one that received little press attention because it came out while Congress was debating the GOP’s Obamacare replacement plan—wait-times lengthened by 30 percent from 2014 to 2017.  On average, new patients who live in large metropolitan areas wait longer than 3 weeks to see doctors.  Longer delays are common.  In Boston, specialists are booked out a month and a half in advance, while family physicians have queues of almost 4 months.  Not all big cities are that bad, fortunately.  In Dallas, average wait time was only 2 weeks.

Residents of mid-sized cities have things especially bad.  The average wait for a new patient appointment in a mid-sized metro area is 32 days, 33 percent longer than in the major metropolitan areas.

When one considers how much Americans spend on medical services, these delays are not just lamentable; they’re perverse.  Germans can usually get same day or next day appointments to see their doctors; most Americans can’t.  We pay twice as much as they do for health care—and we pay our doctors far higher salaries too—but their access is better than ours.  That’s one reason why people go to emergency rooms so often and use ERs even more frequently when given insurance.  People with urgent needs can’t tolerate the delays that doctors impose.

Why are wait-times so long in the U.S?  Several decades ago, doctors’ groups and public health researchers convinced our leaders that a physician glut was impending.  Soon, the story went, highly trained doctors would be sweeping floors and driving taxis.  The federal government responded by paying hospitals not to train physicians and by freezing the number of medical schools and slots.  The prediction was wildly wrong (as were prior predictions that the supply of doctors was too small).  Within a few years, a shortage ensued which, owing to political control of the training process, continues to this day.  The US has 2.5 doctors per 1,000 population.  Germany has 4.1.

Looking back, it is tempting to conclude that those responsible for this fiasco were idiots.  In free labor markets, gluts are self-correcting.  When there are more plumbers, electricians, construction workers, or mechanics than there are jobs, wages fall and people move into other lines of work.  The same goes for the professions.  Since 2007, when the Great Recession caused the market for legal services to collapse, enrollment in law schools has plummeted.  With few jobs to fill, potential law students have explored other options.  Had there been a surplus of doctors, students thinking of applying to medical schools would have looked elsewhere as well.  The same dynamic applies to shortages.  When there aren’t enough people willing to do a job or profession, wages rise, attracting people into that line of work.

What are the implications of this episode for health reform?  One is that neither organized medicine nor policy wonks nor public officials can regulate the delivery of medical services better than the free market.  To the contrary, none of these worthies can match supply to demand as well as the free market can because all have too little information and deficient incentives.

To avoid misjudgments that saddle society with enormous costs, we should prefer market-based arrangements to top-down systems run by elites.  Freeing up the supply of physicians and mid-level providers like physician assistants and nurse practitioners could be part of a populist agenda for healthcare reform that, as Professor Clark Havighurst recently argued, should appeal to both Trump supporters and Democrats.

A second implication is that any policy that is designed to extend coverage to tens of millions of people will, all else being equal, cause patients to wait longer.  Merritt Hawkins found that, from 2014 to 2017, the average wait for a new patient appointment in the largest metropolitan areas grew by 6 days.  This increase was predicted.  When more people have coverage, they use more medical services and everyone waits longer in line.

This doesn’t happen in other service markets.  The US has never experienced a crisis of access to automobile repair centers even though the number of cars on the road has steadily grown.  Rising demand doesn’t generate significant delays in other markets for two reasons.  In the short-run, price increases allocate services to people who need them the most.  In the long-run, supply expands and more consumers are served.

But when it comes to health care, neither of these strategies works.  Prices don’t matter because third-party payers absorb most of the cost.  And, the number of doctors is artificially capped below the market-clearing level.  Consequently, people pay for access with their time.  If we want to fix these problems, properly diagnosing their causes is the best place to start.

Charles Silver is a professor at the University of Texas School of Law, and David A. Hyman is a professor at Georgetown University School of Law.  They are co-authors of After Obamacare: Making American Health Care Better and Cheaper (forthcoming 2018).

Categories: OIG Advisory Opinions