2011 Potpourri XXXXII

By October 28, 2011 Commentary

A paper sponsored by the University of Minnesota’s Carlson School of Business forecast potential changes in Medicare Advantage under the reform law provisions.  Under the program CMS contracts with health plans to provide coverage for beneficiaries who chose to enroll.  About a fourth of Medicare beneficiaries are in such plans, generally at a lower out-of-pocket cost with better benefits and higher quality than the fee-for-service program.  The reform law contains provisions which will lower the reimbursement for the plans.  The report finds that this change will ultimately reduce enrollment in Medicare Advantage by 50% and increase costs for the beneficiaries in the program by over $3000 annually.   ( MA Paper)

The California Healthcare Foundation adds more data to the discussion on variation in health care services, with a report of elective procedure rates in California.  Based on data from hospitalizations and ambulatory surgery center visits from 2005 to 2009, rates for 13 common elective procedures showed wide variation from the state average, in some cases as much as 5 times the average.  The data covered not just Medicare patients, but also commercial, Medicaid and the uninsured.  These patterns of variation tend to persist over time and may reflect physician preference more than patient desires.  The obvious solution is to identify the physicians engaged in well-over-average procedure rates and let them know they are being watched and make them give their patients data on their rates and outcomes.   (CHCF Report)

Every year the Office of the Inspector General puts out a work plan on areas of audit focus in regard to federal health care related activities.  A lot of the audit areas are similar from year-to-year (home care and durable medical equipment are always going to be hot spots) but especially if you are a provider, the work plan helps you identify where to put your compliance efforts.  For hospitals, there is a renewed emphasis on the accuracy of quality reporting and use of present-on-admission indicators.  Hospices’ marketing practices are singled out.  Payments for physician-administered drugs will be reviewed.  A number of new audits related to Part D prescription drug plans are anticipated.    (OIG Work Plan)

A Perspective in the New England Journal of Medicine looks at health care labor and its costs.  A long-standing difficulty in the prices paid for health care has been the lack of productivity growth in labor, which accounts for over half of total health spending.  Health care has shown no productivity gains for 20 years, while wage growth has been well above average.  It will be much harder to control spending without productivity growth.  As the Perspective notes, however, federal and state regulations often make it hard to substitute lower cost professionals for physicians and have staffing requirements that may not add to quality.  Since it is hard to reduce unit prices in health care due to market power, productivity is an important way to lower the effective cost of a service and initiatives to increase productivity should be undertaken.   (NEJM Perspective)

The Institute of Medicine released its report on what should be included in the minimum benefit package required by the reform law.  After several months of examination and writing a very lengthy report, the Institute basically said don’t make it cost too much.  Really!?!  HHS is supposed to define these “essential” benefits and pretty much tried to pass the buck to the IOM which saw its task as just defining a process for determining the benefits.  A great example of government waste and inefficiency, which the “reform” act is larded with.  One good thing is that the Institute is emphasizing first and foremost that the benefits must be affordable, or many people will end up with no insurance at all (see, e.g., state mandates)   (IOM Report)

The FDA’s process for approving medical devices has been under review, both because of safety lapses and because of industry concerns about uncertainty and delay.  The Institute of Medicine was asked to examine the process and make recommendations and two Perspectives in the New England Journal of Medicine commented on the process as well.  The IOM in essence clarified that class III devices, so-called high risk ones, should never go through the 510(k) process and that class II, or moderate risk devices, should no longer be able to be cleared by use of predicate devices but should have an independent review process that includes some assessment of safety and efficacy.  This may improve patient safety but may also hinder funding of the medical device sector, which does provide good jobs, and delay development of worthwhile technology.   (IOM on FDA)  (NEJM Perspective) (NEJM Perspective 2)

Leave a Reply