Comments on: Dangerous Confusion On Medicare Cost Control http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/ The Policy Journal of the Health Sphere Tue, 24 Nov 2009 19:57:48 -0500 hourly 1 By: Medicare’s Financing Problems: Some Details | The Incidental Economist http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/comment-page-1/#comment-31423 Medicare’s Financing Problems: Some Details | The Incidental Economist Thu, 05 Nov 2009 18:45:09 +0000 http://healthaffairs.org/blog/?p=1255#comment-31423 [...] also the recent Health Affairs piece by Joseph White on the degree to which Medicare is able to control costs. AKPC_IDS += [...] [...] also the recent Health Affairs piece by Joseph White on the degree to which Medicare is able to control costs. AKPC_IDS += [...]

]]> By: Peter McMenamin, Ph.D http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/comment-page-1/#comment-25966 Peter McMenamin, Ph.D Sun, 14 Jun 2009 20:21:44 +0000 http://healthaffairs.org/blog/?p=1255#comment-25966 What's mainly left out of these comparisons is the change in the extent of monetary coverage via private health insurance. On paper at least Medicare has always paid not quite 80% of approved charges. Disaggregating the National Health Accounts for private insurance only, in 1960 private insurance covered 28 percent of payments for health services. In 2007 private insurance covered 72 percent of payments. Depending on the time frame in question, some part of increases in private insurance payments represents increases in that coverage. For both Medicare and private insurance cost increases include changes in enrollment, changes in users per eligible, changes in utilization per user, and changes in allowed charges per service. Controlling for enrollees only hardly makes the comparisons apples to apples. What’s mainly left out of these comparisons is the change in the extent of monetary coverage via private health insurance. On paper at least Medicare has always paid not quite 80% of approved charges. Disaggregating the National Health Accounts for private insurance only, in 1960 private insurance covered 28 percent of payments for health services. In 2007 private insurance covered 72 percent of payments. Depending on the time frame in question, some part of increases in private insurance payments represents increases in that coverage. For both Medicare and private insurance cost increases include changes in enrollment, changes in users per eligible, changes in utilization per user, and changes in allowed charges per service. Controlling for enrollees only hardly makes the comparisons apples to apples.

]]> By: acavale http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/comment-page-1/#comment-25925 acavale Mon, 08 Jun 2009 02:06:07 +0000 http://healthaffairs.org/blog/?p=1255#comment-25925 Cindy, you might be new to this craziness called Medicare, but you hit the nail on the head. The combination of prefixed rates for procedures and ICD codes is the true problem that nobody in the governmental world is willing to debate. Perhaps your question will elicit some answers here. But don't hold your breath. If providers and consumers of care had clear and transparent information about what any service should cost, people can make rational and cost-effective decisions about purchasing the care that best meets each person's needs, not just what the government or insurer will pay for. Every payer is afraid of transparency and that is the real problem. Cindy, you might be new to this craziness called Medicare, but you hit the nail on the head. The combination of prefixed rates for procedures and ICD codes is the true problem that nobody in the governmental world is willing to debate. Perhaps your question will elicit some answers here. But don’t hold your breath.

If providers and consumers of care had clear and transparent information about what any service should cost, people can make rational and cost-effective decisions about purchasing the care that best meets each person’s needs, not just what the government or insurer will pay for. Every payer is afraid of transparency and that is the real problem.

]]> By: CindyThroop http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/comment-page-1/#comment-25918 CindyThroop Sun, 07 Jun 2009 01:11:51 +0000 http://healthaffairs.org/blog/?p=1255#comment-25918 I am fairly new to the health care world, but not a stranger to policy, math, and the importance of asking the right questions. Looking at health spending from an “outsider’s perspective,” the role Medicare plays in establishing standard fees for medical procedures for the entire industry may be part of the larger underlying problem of cost within the U.S. health care system. I find it strange that pricing standards are established in processes that are far removed from public view. The impression I am getting is that overall health care costs are, at least partly, being driven by standardized per-procedure charges. Wild variations in cost within the U.S. may have more to do with wild variations in the amount of procedures ordered per person (regardless of their insurance provider) within different communities. This could be a geographic community or the community created by a predominant integrated health system. Also, at least from an outsider perspective, the whole system around CPT codes (the development and implementation of the codes / the revenue stream created by defining and maintaining them) is truly bizarre. To access the CPT codes, one must purchase a license *and* pay royalties each time an individual CPT code is used? I truly hope I am misunderstanding something here. Is the pricing and reward structure of U.S. health care system at least somewhat dependent on *copyrighted* material that produces revenue? Where does that money go? What percentage of my health care dollars, in effect, go towards supporting this peculiar system? I am fairly new to the health care world, but not a stranger to policy, math, and the importance of asking the right questions.

Looking at health spending from an “outsider’s perspective,” the role Medicare plays in establishing standard fees for medical procedures for the entire industry may be part of the larger underlying problem of cost within the U.S. health care system.

I find it strange that pricing standards are established in processes that are far removed from public view. The impression I am getting is that overall health care costs are, at least partly, being driven by standardized per-procedure charges. Wild variations in cost within the U.S. may have more to do with wild variations in the amount of procedures ordered per person (regardless of their insurance provider) within different communities. This could be a geographic community or the community created by a predominant integrated health system.

Also, at least from an outsider perspective, the whole system around CPT codes (the development and implementation of the codes / the revenue stream created by defining and maintaining them) is truly bizarre. To access the CPT codes, one must purchase a license *and* pay royalties each time an individual CPT code is used? I truly hope I am misunderstanding something here. Is the pricing and reward structure of U.S. health care system at least somewhat dependent on *copyrighted* material that produces revenue? Where does that money go? What percentage of my health care dollars, in effect, go towards supporting this peculiar system?

]]> By: RobertBurney http://healthaffairs.org/blog/2009/06/05/dangerous-confusion-on-medicare-cost-control/comment-page-1/#comment-25886 RobertBurney Fri, 05 Jun 2009 18:03:53 +0000 http://healthaffairs.org/blog/?p=1255#comment-25886 Spending per beneficiary is an improper metric, particularly when comparing Medicare with other heatlh insurance. First, there is the age disparity and the consequent disparity in services used. Second, Medicare doesn't pay the full cost for their beneficiaries--witness the plethora of "Medicare Supplement" plans. However, the most important disadvantage to Medicare--or any government insurance plan--is that it is subject to political whims. Decisions are based on politics, not business practices, and may be over-ruled by Congress. (Witness the effort to introduce competition to medical device markets.) A better metric would be to compare the cost of an appendectomy for a Medicare patient vs. private insurance. Here, however, you'd have to look at what the patient actually paid, not what Medicare paid. Many providers do not accept any insurance, and thus, what Mediare pays is irrelevant in the cost of services to their beneficiaries. Spending per beneficiary is an improper metric, particularly when comparing Medicare with other heatlh insurance. First, there is the age disparity and the consequent disparity in services used. Second, Medicare doesn’t pay the full cost for their beneficiaries–witness the plethora of “Medicare Supplement” plans. However, the most important disadvantage to Medicare–or any government insurance plan–is that it is subject to political whims. Decisions are based on politics, not business practices, and may be over-ruled by Congress. (Witness the effort to introduce competition to medical device markets.)
A better metric would be to compare the cost of an appendectomy for a Medicare patient vs. private insurance. Here, however, you’d have to look at what the patient actually paid, not what Medicare paid. Many providers do not accept any insurance, and thus, what Mediare pays is irrelevant in the cost of services to their beneficiaries.

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