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For High-Risk Medicare Beneficiaries: Targeting CMMI Demonstrations On Promising Delivery Models


April 22nd, 2014

Medicare beneficiaries with multiple chronic conditions, certain types of serious conditions (e.g. heart disease, pulmonary disorders, mental disorders, cancer), and functional limitations have higher health and long-term care costs and more adverse outcomes than other beneficiaries.

One of the biggest opportunities for savings for Medicare, Medicaid, and beneficiaries themselves, is through reducing hospitalizations, readmissions, and institutional care, especially for these high-risk beneficiaries. Achieving these savings and serving this population will require innovative delivery models and a clear business case to convince organizations to implement those new models.

The Affordable Care Act set aside $10 billion for experiments in innovative care delivery and payment systems.  With these funds, the Centers for Medicare and Medicaid Innovation (CMMI) is launching and evaluating several initiatives, primarily Accountable Care Organizations (ACOs), bundled payment for care innovation, and primary care transformation.  These initiatives change financial incentives for health care providers so that while they bear some financial risk for the costs of providing care, they also stand to benefit from any savings produced.

Historically, it has taken additional legislative action to apply successful delivery models more broadly across the Medicare program. Now, the health care law has removed this barrier, giving the Secretary of Health and Human Services the ability to expand successful innovations that improve quality or lower costs.  While early results show improvements in quality and modest savings, most CMMI pilots and demonstrations to date are not specifically targeted on high-risk beneficiaries, where the biggest gains can be expected.

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Return Of The Repressed: Spending Growth Is Back, But What To Do?


April 21st, 2014
by Rob Cunningham

The sheer magnitude of the Affordable Care Act and its implementation seems to have briefly preempted the attention of the health policy community, distracting it from its perennial and inescapable preoccupation with spending growth. Everyone knew, of course, that when the dust settled, access and insurance market reforms would set off in ever starker relief the menace of the spending dragon. But in the meantime, an eerie 4-year lull in growth seemed to dull the edge of the problem.

There was research suggesting that structural changes, some in anticipation of payment and delivery system reforms encouraged by the ACA, might continue to restrain growth as the health economy joined a recovery from recession. This hopeful scenario got a boost as the lull outlasted a return to improved GDP growth. Flagging growth in pharmaceutical spending and unexpectedly low premiums in many state and federal insurance exchanges were other favorable straws in the wind. Could a generation-long growth trend averaging nearly two-and-a-half points above GDP finally be at an end? Some saw cause for cautious optimism.

This month, however, the Michigan-based Altarum Institute released an analysis based on government data that showed health spending growth began to surge last October, when it reached a 5-percent annual rate, and has continued to accelerate to a 6.7 percent pace in February, 2.4 percent above GDP and a 7-year high. Growth over the fourth quarter of 2013 was 5.6 percent, a 10-year high.

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Implementing Health Reform: The Latest Affordable Care Act Coverage Numbers (Updated)


April 18th, 2014
by Timothy Jost

On February 17, 2014, the White House announced that 8 million Americans have signed up for private health insurance coverage through the health insurance marketplaces, or exchanges. This significantly exceeds the White House’s original goal of 7 million enrollees. It is far more than the Congressional Budget Office’s recent projections of 6 million.

The number of actual enrollees will be smaller than this number. The CBO’s projections are for the average number of those actually enrolled in coverage over the course of a calendar year. To calculate the average number of enrollees, one must subtract from the 8 million the number of individuals who fail to pay their premiums and thus are never actually enrolled in coverage, as well as those who will drop coverage at some later point during the year. To that reduced number, then, must be added back the number who become newly covered through special enrollment periods during the remainder of the year. In the end, 6 to 7 million average enrollees is probably a reasonable estimate.

This does not, however, exhaust the number of Americans who are now covered under the Affordable Care Act. The fact sheet states that 3 million young adults are covered under their parents’ plans because of the ACA. This number is probably high, but it is clear that the ACA has dramatically increased coverage of Americans between the age of 19 and 25 — the age group most likely to lack health insurance prior to the ACA (and still).

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Four Years Into A Commercial ACO For CalPERS: Substantial Savings And Lessons Learned


April 17th, 2014
 
by Glenn Melnick and Lois Green

Editor’s note: In addition to Glenn Melnick, this post is coauthored by Lois Green.

Background: In a very short period of time, Accountable Care Organizations (ACOs) have become an important and widespread part of the US health care landscape. A recent Health Affairs Blog post estimates the total number of public (Medicare) and private ACOs at more than 600 nationally, covering more than 18 million insured population. Despite their rapid and widespread adoption, relatively little is known about how ACOs actually work and how successful they have been. This is due in part to their relative “newness,” as many reported ACOs are just getting up and running. Others have been operational for short periods of time and have yet to produce meaningful or long-term sustainable results.

This Health Affairs Blog post helps fill some of this void by reporting on the operational experiences of one of the oldest (4+ years) and largest commercial ACOs in the nation. A previous Health Affairs Blog post reported on its initial planning and start-up phase, and a subsequent Health Affairs article reported on its early financial results.

In 2007, Blue Shield of California, along with provider and employer partner organizations, began exploring development of one of the first ACO-like programs in the country to serve Commercial patients. It launched in 2010 and, as reported below, has been generating savings to consumers throughout the period. Located in the competitive Sacramento market of northern California, the ACO is an example of an innovative shared savings model involving a large insurer—Blue Shield of California; a purchaser—the California Public Employees Retirement System (CalPERS); a physician group—Hill Physicians Medical Group (HPMG); and a hospital system—Dignity Health. The population served approximately 42,000 CalPERS employees and their families covered by Blue Shield.

In this Health Affairs Blog interview, senior executives from each of the partnership organizations, all of whom have operational responsibilities and oversight of this ground-breaking Commercial ACO, discuss key operational aspects of the ACO and its implementation. They discuss evolution of the culture, governance and essential “partnership” relationships an ACO requires to survive and thrive. In addition, they detail specific operational initiatives designed to coordinate and manage care, and report on how these initiatives have fared over the four-year period since the ACO’s launch. Empirical results show success in many areas, with challenges in some others. Of particular note has been overall cost of health care (COHC) savings reported at gross savings of more than $105 million, with net savings of $95 million to CalPERS members, since 2010. Finally, the partners illuminate the ACO’s future directions and offer lessons for other organizations considering development of an ACO delivery system for the Commercial market.

The interview was supported by funding from the California HealthCare Foundation.

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We’ll Need A Bigger Boat: Reimagining The Hospital-Physician Partnership


April 17th, 2014
 
by Francis J. Crosson and John Combes

Editor’s note: In addition to Francis J. Crosson, this post is coauthored by John Combes.

Change is underway in the delivery and financing of American health care, and it is manifested in the evolving relationship of hospitals and physicians across the U.S. These developments are most striking in California, but are appearing in various forms in almost all states. Physicians and hospitals are being both “pushed” and “pulled” together in new ways by a variety of market forces, including the development of Accountable Care Organizations (ACOs) for both Medicare and commercially insured patients, increased direct employment of physicians by hospitals, the emergence of new payment mechanisms such as global payments, and, in general, by the need for physicians, physician groups and hospitals to deliver greater “value.”

All of this presents the opportunity to redesign care to be more coordinated, efficient, patient-driven, and effective. These integration forces could lead to the kind of organizations envisioned 15 years ago in the Institute of Medicine report “Crossing the Quality Chasm”, resulting in the Triple Aim of better health, better patient care experiences and outcomes, and improved affordability — driven, in part, by new patient care models and payment methods including incentives for improving the value of health care services.

Many physicians are uncomfortable with the idea of physician-hospital integration for several reasons. The long tradition of “professional autonomy”– perhaps best described as “the need for physicians to be able to make appropriate and scientifically based patient-by-patient decisions in the best interest of those patients” — can raise fears among some physicians about becoming part of a larger practice or institution and losing that autonomy. Additionally, some physician groups have shown that they can develop a successful ACO without the need for hospital and insurance partners, preferring to manage the clinical and financial risk alone.

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Payment and Delivery Reform Case Study: Congestive Heart Failure


April 15th, 2014
by Darshak Sanghavi

Editor’s note: In addition to Darshak Sanghavi (photo and bio above), this post is coauthored by Meaghan George, a project manager at the Engelberg Center for Health Care Reform at the Brookings Institution. The post is adapted from a full-length case study, the first in a series of case studies made possible through the Engelberg Center’s Merkin Initiative on Physician Payment Reform and Clinical Leadership, a special project to develop clinician leadership of health care delivery, payment and financing reform. The case studies will be presented using a “MEDTalk” format featuring live story-telling and knowledge-sharing from patients, providers, and policymakers. The event series will kickoff on Wednesday, April 16 from 10 a.m. – Noon EST.

Introduction

Clinicians and hospitals across the nation struggle with providing and paying for optimal care for their congestive health failure (CHF) patients. However, there are opportunities to make care better. In fact, of the more than 10,000 pages in the Affordable Care Act (ACA) implementing regulations, the least talked about are the dozens of small experiments led by the Center for Medicare and Medicaid Innovation (CMMI) that test new ways to pay for medical services.

We use a case study approach to investigate and tell the story of what two academic medical centers, Duke University Health System (“Duke”) and University of Colorado Hospital (“Colorado”), are doing to innovate and improve CHF care while implementing alternative payment models offered by CMMI.

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Takeaways From The Aspen Institute’s Care Innovation Summit


April 10th, 2014
by Matthew Richardson

Back in February, The Aspen Institute and The Advisory Board Company sponsored the Care Innovation Summit in Washington, DC. With a keynote address from Secretary of Health and Human Services Kathleen Sebelius, the daylong summit featured some of the newest data and research on the rapidly evolving U.S. health care landscape.

Featured speakers such as Jeffrey Brenner of the Camden Coalition of Healthcare Providers and Claudia Grossmann of the Institute of Medicine in addition to others from State and Federal government, insurers, hospitals, and research institutions offered insights on higher-value care and improved health for individuals and populations.

Here are five most memorable takeaways:

1. Health Care Cost Inflation Has Slowed

Perhaps the most eye-catching data trend presented was the dramatic slowing of Medicare spending showcased by Patrick Conway, Director of CMMI (presentation available here). The collapse of annual per capita spending growth is important not only because it implies significant value changes are underway in the provision of ever more services by Medicare, but also because it can further mean many things to many people.

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What The Affordable Care Act Means For Pregnant Inmates


April 4th, 2014
 
by Katy Kozhimannil and Rebecca Shlafer

Editor’s note: This post is published in conjunction with the March issue of Health Affairs, which features a cluster of articles on jails and health.

The Affordable Care Act (ACA) is anticipated to expand coverage to 44 million Americans. As John Iglehart noted in his introduction to the March issue of Health Affairs, expansion of Medicaid through the ACA will open an important door for a particularly vulnerable population – those who are cycling in and out of the criminal justice system.

Although Medicaid does not cover standard health care for inmates during incarceration, expansion of Medicaid to single and childless adults has meant that prisons and jails can start enrolling inmates (a substantial portion whom meet these criteria) so they are covered upon release.

The ACA also allows Medicaid to pay for inmates’ care for hospital stays longer than 24 hours. Such changes have important implications for a group of inmates that is not often the focus of health policy dialogue – incarcerated pregnant women.

A Particularly Vulnerable and Costly Group: Pregnant Prisoners

Nationwide, 75 percent of incarcerated women are of reproductive age, and about 6-10 percent of female prisoners are pregnant during their incarceration. Incarcerated women fare worse than incarcerated men, and their reproductive health care needs, including access to contraception and abortion services, often go unmet. Inmates who are pregnant face additional risks. Compared with similar women that are not incarcerated, pregnant inmates have more risk factors and worse birth outcomes, for both mothers and babies.

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Clinical Nuance: Benefit Design Meets Behavioral Economics


April 3rd, 2014

On Capitol Hill, there’s a growing chorus of support from both sides of the aisle to move the focus of health care payment incentives from volume to value. Earlier this month, legislators introduced proposals that would have fixed the sustainable growth rate in Medicare, as well as made other changes, including allowing for clinical nuance in Medicare benefit designs. The Centers for Medicare and Medicaid Services, too, is embracing this trend, recently asking for partners in a demonstration project to used value-based arrangements in benefit design. These efforts of policymakers and agencies to innovate Medicare’s benefit design are crucial both for the health of seniors and to ensure value in the Medicare program.

The concept of clinical nuance, implemented using value-based insurance design (V-BID), is a key innovation already widely implemented in the private and public payers. It recognizes two important facts about the provision of medical care: 1) medical services differ in the amount of health produced, and 2) the clinical benefit derived from a medical service depends on who is using it, who is delivering the service, and where it is being delivered.

Today’s Medicare beneficiaries face little clinical nuance in their benefit structure. Medicare largely uses a “one-size-fits-all” structure that does not recognize that some treatments, drugs or tests are more important to health than others. Not only does it create inefficiencies in the health system, it can actually harm the health of beneficiaries.

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The Manifest Destinies Of Managed Care And Palliative Care


April 2nd, 2014
 
by Richard Bernstein and Karol DiBello

Editor’s Note: This post is also coauthored by Karol DiBello and is the sixth in a periodic Health Affairs Blog series on palliative care, health policy, and health reform. The series features essays adapted from and drawing on an upcoming volume, Meeting the Needs of Older Adults with Serious Illness: Challenges and Opportunities in the Age of Health Care Reform, in which clinicians, researchers and policy leaders address 16 key areas where real-world policy options to improve access to quality palliative care could have a substantial role in improving value.

Two unremitting forces are shaping changes in the U.S. health care system: (1) the graying of America or “silver tsunami,” in which 10,000 individuals are now turning age 65 each day and (2) the cost trends associated with caring for seniors and those with multiple chronic and often life-limiting conditions. Health care experts have identified palliative care and managed care as essential ways to address the special needs of an aging population and for providing care that can lower the rate of national health expenditures.

The complex set of clinical demands of this growing wave of Medicare members includes multimorbidity, frailty as well as functional and cognitive decline.  To effectively and cost-efficiently manage the needs of this population, Managed Care Organizations (MCOs) as well as other risk assuming entities must address the quality and cost of the most expensive segment of this group of seniors.

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Embarking On A New Journey With Health Affairs


March 31st, 2014
by Alan Weil

I am delighted to be taking on the role of editor-in-chief of Health Affairs. This is a dynamic time in all aspects of health and health care: insurance coverage expansions, delivery system changes, and growing attention to population health.  Building upon thirty-three years of peer-reviewed scholarship, Health Affairs will continue to serve as the nation’s primary resource for the health policy community.

My goals for Health Affairs coalesce around a single theme: broadening the reach of the journal.

Health Affairs is strong in the core health policy community, but our scholarship is relevant to myriad actors in the one-sixth of the United States economy represented by health care.  My goal is to broaden our engagement with the worlds of law, finance, design, and many others.

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Health Insurance Coverage Is Just The First Step: Findings From Massachusetts


March 26th, 2014

As the rollout of coverage expansions under the Affordable Care Act (ACA) continues across the country, more Americans are gaining insurance coverage, with all the benefits that that implies in terms of health care access and financial protections. However, if, as President Obama has argued, affordable health care is a cornerstone of economic security for American families, findings from a survey of Massachusetts residents suggest that insurance coverage alone will not be enough.

Since its 2006 health reform initiative, Massachusetts has had the nation’s highest level of insurance coverage. But though there have been improvements in access to health care and health care affordability, insurance coverage has not eliminated the burden of high health care costs for Massachusetts families.

Health care costs are a problem for many insured adults. In 2012, more than one-third (38.7 percent) of Massachusetts adults with health insurance coverage for all of the past year reported problems with health care costs, with the level much higher for low-income insured adults (41.6 percent for those with family income at or below 138 percent of the poverty line—the income eligibility standard for the Medicaid expansion under the ACA) and middle-income insured adults (49.5 percent for those with income from 139 to 399 percent of poverty—the income group targeted by the new health insurance Marketplaces). Insured adults in Massachusetts report going without needed health care, cutting back on other spending, reducing savings, and taking on debt to deal with health care costs.

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PCORI’s Research Will Answer Patients’ Real-World Questions


March 25th, 2014
by Joe Selby

As a physician, I know the challenge of helping patients determine which health care options might work best for them given their personal situation and preferences. Too often they — and their clinicians — must make choices about preventing, diagnosing and treating diseases and health conditions without adequate information. The Patient-Centered Outcomes Research Institute (PCORI) was created to help solve this problem — to help patients and those who care for them make better-informed health decisions.

Established by Congress through the Patient Protection and Affordable Care Act as an independent research institute, PCORI is designed to answer real-world questions about what works best for patients based on their particular circumstances and concerns. We do this primarily by funding comparative clinical effectiveness research (CER), studies that compare multiple care options. But more research by itself won’t improve clinical decision-making. Patients and those who care for them must be able to easily find relevant evidence they can trust. That’s why our mandate is not just to fund high-quality CER and evidence synthesis but to share the results in ways that are meaningful to patients, clinicians and others. We’re also charged with improving the methods used in conducting those studies and enhancing our nation’s capacity to do such research.

We will be evaluated ultimately on whether the research we fund can change clinical practice and help reduce the variations and disparities that stand between patients and better outcomes. We’re confident that the work we’re funding brings us and the audiences we serve closer to that goal.

Recently, some questions have been raised in health policy circles about our holistic approach to PCORI’s work. That view holds that direct comparisons of health care options — especially those involving high-priced interventions — should be the dominant if not sole focus of PCORI’s research funding approach as a path to limiting the use of expensive, less-effective options.

We agree that discovering new knowledge on how therapies compare with one another is a critical mandate of PCORI and is essential to improving the quality and effectiveness of care. However, ensuring that patients and those who care for them have timely access to and can use this knowledge, so that they can effectively apply it to improve their decisions, is also very important. That is the reasoning behind our integrated approach path that addresses the gaps in available evidence, and also studies how best to make the evidence available and usable.

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The Health Workforce: A Critical Component Of The Health Care Infrastructure


March 24th, 2014
by Edward Salsberg

Editor’s note: This is the first in a periodic series of Health Affairs Blog posts on health workforce issues by Edward Salsberg. Mr. Salsberg has spent over 30 years studying the health workforce, including nearly 20 years establishing and directing three centers dedicated to workforce data collection, analysis and research. The first center, at the University at Albany, was focused on state health workforce data collection and issues. The second, at the Association of American Medical Colleges, was focused on the physician workforce across the nation. The third, the National Center for Health Workforce Analysis, was authorized by the Affordable Care Act. Mr. Salsberg has now joined the faculty at George Washington University where they are establishing a new Center for Health Workforce Research and Policy.

In the post below, Mr. Salsberg provides an overview of workforce issues. Future posts will discuss more specific health workforce questions and developments.

It could be argued that the health workforce — the people who provide direct patient care, as well as the staff that support caregivers and health care institutions — is the most significant component of the infrastructure of the health care system. Yet as a nation we have invested very little in collecting and analyzing health workforce data or in supporting the necessary research to inform effective public and private decision making. The results of this lack of investment are surpluses and shortages, significant mal-distribution, and less efficient and effective care than would be possible with better intelligence on our workforce needs.

For many health care professions, it takes years to build education and training capacity to increase, supply, or to change curriculum and modify the profession’s skill set. For these professions, we need to not only assess today’s needs but to project our future needs.

What the nation needs is a system to provide data, research findings, and information to thousands of individual stakeholders. This includes individuals considering a health career; colleges, universities and training programs that will educate and prepare them; the health organizations who will employ them; policy makers who need to decide what, if any, programs and policies to support; and the private sector that needs to decide whether to invest in workforce development. The responsibility for assuring an adequate supply and a well prepared health workforce is shared between the public and private sectors at both the national and the state and local level. Regardless of who is making the decisions related to health professions education and training capacity and health professions preparation, accurate and timely data is extremely important to support informed decisions.

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A Lifetime Value-Based Proposal For Medicare Payment Reform


March 14th, 2014
by Zhou Yang

urrent Medicare reform policy proposals mainly focus on lowering annual cost or cost increase per capita, but they fail to recognize Medicare as a lifetime plan that covers each beneficiary from age 65 to death. I propose a Lifetime Value-Based Payment Plan (LVBPP) for Medicare reform. LVBPP aims to achieve efficient use of the government contribution to Medicare for each beneficiary from age 65 to death and features shared responsibility among beneficiaries, providers, and federal government.

LVBPP includes six major components to create incentives for chronic disease prevention and efficient use of medical care resources by promoting market-based competition on quality of care and innovations in medical technology and care delivery models. Preliminary results indicate that LVBPP could lead to better health in terms of longer longevity and lower disability rate, save up to $70 billion over 10 years, and save up to $164 billion for the federal government over the lifetime of the cohort of upcoming beneficiaries age 55 to 59, as of the 2010 census. (The bases for these savings estimates, as well as suggested values for the expenditure thresholds and copayment rates involved in LVBPP, are provided in the Simulation Appendix below.)

The challenge. There is wide consensus that chronic disease is the leading cause of mortality and rapidly increasing health care costs in the US. Lifestyle choices have been found to be a major factor behind the increasing prevalence of chronic disease. It is estimated that 60 percent of deaths and 70 percent of health care spending in the US are related to lifestyle choices. However, despite volumes of science-based clinical trial results demonstrating positive effects of behavioral change on patients’ long-term well-being, and continuous public media campaigns promoting lifestyle change, there is no sign of reduction in the prevalence rate of chronic disease in the US population.

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New Health Policy Brief: Geographic Variation In Medicare Spending


March 6th, 2014
by Tracy Gnadinger

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation describes geographic variation in Medicare spending. Data from the Centers for Medicare and Medicaid Services (CMS) show that in 2012 Medicare spent an average of $9,503 nationally per beneficiary, ranging from $15,957 in Miami, Florida, to $6,569 in Grand Junction, Colorado.

This brief looks at the factors that may be driving these variations, including the amount Medicare pays for services, the health status of beneficiaries, the types of services provided to a region’s population, and whether the local spending patterns are consistent with the spending on patients with private insurance.

As policy makers continue to find ways to improve quality in health care and eliminate unnecessary spending, a better understanding of geographic variation in Medicare spending has the potential to help achieve the so-called Triple Aim: better health, better health care, and lower costs.

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Medicare Part D Proposed Rule: Where Did Things Go Wrong?


March 6th, 2014
by Ian Spatz

It’s worth sitting up and taking notice when everyone seems to hate what you are doing. Last week, 20 of the 24 members of the sometimes fractious Senate Finance Committee wrote Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner about a Medicare Part D proposed rule CMS published on January 10. They told her that they were “perplexed as to why CMS would propose to fundamentally restructure Part D …” and urged her to scrap the plan.

The House Energy and Commerce Committee held a hearing, also last week, with the hardly neutral title of “Messing with Success: How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors.” At the hearing, Medicare Chief Jon Blum, one of the most well-liked federal health officials there is, was subjected to a bipartisan, first class, grilling.

These Congressional complaints followed on the heels of Feb. 28 letter slamming the proposed rule from 277 organizations (with more organizations continuing to sign on) including patient advocates, insurance companies, health plans, pharmacists, employers, and both brand and generic drug companies.

In fairness to CMS, this is only a proposed rule and comment is what they are seeking. Well, it is comment that they are getting. What has led to this firestorm of criticism?

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Physicians In Congress: A Prescription For Better Health Policy?


March 5th, 2014
 
by Brian Powers and Sachin Jain

Editor’s note: This post is also authored by Sachin H. Jain of Harvard Medical School and Boston VA Medical Center.

Physicians in Congress are on the rise. From 1960 to 2004, only 25 of the 2196 members of Congress were physicians. During an era that brought such fundamental changes to health policy as the creation of Medicare and Medicaid, physicians were disproportionately less likely to hold congressional office than their counterparts in law (979) and in business (298). In recent years, the ranks of physician-representatives have swelled—twenty physicians currently hold seats in the 113th Congress.

This surge in membership comes at a crucial time, for health care has become a defining issue in American politics. The passage of the Affordable Care Act has divided the nation and brought party relations to a standstill. In the 2012 presidential election, health care ranked as the second most important issue to voters, its highest level in twenty years. And with health care spending projected to be the largest long-term contributor to national debt, the nation’s health and economic future depends on sound health policy. What role can this new cadre of physician-representatives play in shaping this process?

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The Payment Reform Landscape: Pay-For-Performance


March 4th, 2014
by Suzanne Delbanco

Editor’s note: This is the second post in a Health Affairs Blog series by Catalyst for Payment Reform Executive Director Suzanne Delbanco. Over the coming months, Delbanco will examine how different methods of payment reform are being employed and how well they’re working. The first post in the series provided an overview of payment reform; this post examines pay-for-performance.

One of our core beliefs at Catalyst for Payment Reform (CPR) is that we need to move away from fee-for-service, toward new models that pay for care based on value, not volume. And while our National Scorecard on Payment Reform shows these new payment models are spreading, we still don’t know if they are really delivering the value we hope for — higher-quality care at more affordable prices. So we decided to make 2014 a year “all about the evidence,” taking an in-depth look at different payment reform models and assessing whether they are proving to enhance value. We’re delighted Health Affairs Blog is our partner in this journey. This month we examine pay-for-performance.

What is pay-for-performance? Is it widespread?

A pay-for-performance (P4P) model provides what are typically financial incentives to providers to improve the quality of the care they deliver and/or reduce costs. In CPR’s terminology, pay-for-performance is an “upside only” method of payment reform. The model gives health care providers the chance for a financial upside – such as a bonus — but no added financial risk, or downside. Our 2013 National Scorecard on Payment Reform demonstrated that almost 11 percent of commercial payments are value-oriented; approximately 1.6 percent of commercial payments are fee-for-service with pay-for-performance.

Despite the small portion of dollars flowing through pay-for-performance programs, we know it is a relatively popular model of payment reform. According to a 2010 report issued by the National Conference on State Legislatures (NCSL), an estimated 85 percent of state Medicaid programs were expected to operate some type of pay-for-performance program by 2011. Provisions in the Affordable Care Act expand the amount of pay-for-performance in Medicare as well.

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Patients’ Views On Reforming The Physician Fee-For-Service Payment System


February 28th, 2014
by David Schleifer

Virtually all serious proposals for health care cost containment include reforming the fee-for-service payment system.  Last fall’s bipartisan proposal to fix Medicare’s sustainable growth rate included provisions to reward physicians for providing high-value rather than high-volume care.  Ostensibly, realigning physicians’ financial incentives would lead to higher quality, better coordinated, and more appropriate care.

But would patients necessarily be aware that their physicians are being paid differently? And would they even care? A new research report from Public Agenda and the Kettering Foundation suggests that consumers could play a role in advancing payment reform.  But in order to work through the trade-offs of changing the system, employers and payers must help members of the public understand that most reimbursement is currently fee-for-service.

Public Agenda asked a total of 44 insured and uninsured Americans, 40 to 64 years old, to deliberate together in focus groups over the pros and cons of several approaches to cost containment. Participants had some recent contact with the health care system as patients but none were seriously ill. They considered payment reform, price transparency, increased consumer cost-sharing, government price-setting, and expanded access to Medicare, among other approaches.  We held the deliberative focus groups in February and March 2013 in Secaucus, New Jersey; Montgomery, Alabama; and Cincinnati, Ohio, as well as a pilot in Stamford, Connecticut. After the groups, we followed up with participants for in-depth interviews. These focus groups do not provide information about how other types of consumers, particularly young people, view different approaches to addressing health care costs.

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