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The Medicare Shared Savings Program: CMS Turns To Stakeholders On Incentivizing ACO Risk


December 19th, 2014

On December 1, 2014, the Centers for Medicare & Medicaid Services (“CMS”) released its long awaited Proposed Rule to update regulation and operation of the Medicare Shared Savings Program (“MSSP”). In response to concerns raised by participating accountable care organizations, CMS proposes to revise the MSSP program in several ways to provide greater flexibility for ACOs.

However, in important areas CMS may not have gone far enough. This post describes the framework CMS has set forth and then suggests several ways in which the proposal could, in our view, be improved to achieve the CMS objective of encouraging ACOs to bear more risk. In particular, CMS should consider using its waiver authority more robustly; allowing Medicare beneficiaries to designate their primary care providers, and by extension their ACO; and revising the MSSP risk-adjustment methodology to better reflect the changing risk profiles of ACOs.

CMS is actively seeking stakeholder input, which may indicate agency recognition that further changes beyond those in the propose rule are needed. By all indications, stakeholder input will be seriously considered; more than any time in recent memory, stakeholder comments will make a difference in the shape of the Final Rule. This presents a unique opportunity for stakeholders and we urge concerned parties to share their perspectives through comments – the deadline for submitting comments is February 6, 2015.

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ACO Quality Results: Good But Not Great


December 18th, 2014

On September 23, 2014, the Centers for Medicare and Medicaid Services (CMS) released Year 1 Quality Performance results for Accountable Care Organizations (ACOs) that began participating in the Medicare Shared Savings Program (MSSP) in 2012 or 2013. Another report, released shortly before, outlined financial performance of the ACOs and showed that only 49 ACOs, or 22 percent of those ACOs, qualified for shared savings payments by successfully reducing total spending.

Opportunity for continued quality improvement aside, a troublesome snag for the program could be a very low correlation between improved quality and earned savings: our analysis shows that, in performance year one, improved quality and earned savings only correlate at 8.6 percent, so low that it is statistically insignificant (Figure 1).

In practice, this means that better quality is not associated with better financial results. Twenty-one of the 49 ACOs that did earn shared savings actually scored below the average quality of the group. For the first year, quality outcomes did not affect the size of shared savings payments, but in future years ACOs that perform poorly on quality measures will lose a portion of any shared savings.

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New Health Policy Brief: Physician Compare


December 16th, 2014

A new policy brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) looks at the evolution and current development plans for Physician Compare, a website mandated by the Affordable Care Act (ACA). A simple version of the site first launched in 2010.

Since then the Centers for Medicare and Medicaid Services (CMS) has slowly been adding limited sets of data listing the various physician groups participating in a number of Medicare quality improvement initiatives. In 2015 the site will expand to include more recent and extensive information about physician performance and quality of care, in a format that’s similar to the other ACA-generated websites — Hospital Compare, Nursing Home Compare, Home Health Compare, and Dialysis Facility Compare.

These sites, which encompass tens of thousands of facilities nationwide, are credited with advancing accountability and motivating improvements in care and quality. They are also faulted as poorly organized and inadequately audited when the data are submitted by facilities.

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The Accidental Administrative Law Of Policymaking In The Medicare Program


December 11th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

When Congress establishes a new regulatory program, it lodges the program in a regulatory agency or executive department. A regulatory agency generally has presidentially appointed commissioners with staggered terms and expert staff. This design provides insulation from politics and facilitates applying technical expertise to regulatory problems. Also, administrative agencies make rules and policy and have the powers of investigation, adjudication, and sanction to enforce compliance. Administrative law, an essential instrument of democracy, regulates the operation and procedures of government agencies.

The Social Security Amendments of 1965 established Medicare in the Social Security Administration (SSA). Medicare initially contained two parts, hospital insurance for hospital and related services and supplementary medical insurance for physician and other outpatient services. Pursuant to contract, Medicare contractors handle claims and pay providers as well as adjudicate appeals and make program policy.

This post chronicles the development administrative law, policymaking, and regulation in the Medicare program. It describes how the program evolved a revolutionary collaborative model of regulation that could provide a useful guide for other programs.

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Two Theologies Have Blocked Medicare-For-All


December 11th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.

Two Myths that Undercut Medicare-for-All: Managed Care and Competition

In the paper we presented at the Yale conference, we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.

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CMS Proposes Coverage For Lung Cancer Screening With Low Dose CT


December 9th, 2014

On November 11, the Centers for Medicare and Medicaid Services (CMS) released its Proposed Decision Memo for Screening Lung Cancer with Low Dose Computed Tomography (LDCT), which is expected to be finalized in mid-December. Despite a negative assessment by its own advisory committee, CMS has proposed coverage with evidence development (CED) for an annual “lung cancer screening counseling and shared-decision-making visit” and, for appropriate beneficiaries, additional screening with LDCT.

Under CED, Medicare provides conditional coverage for a new treatment or technology while additional data is collected to confirm its effectiveness and make a final determination. Through this proposed decision, CMS has followed the lead of numerous other expert and advisory groups, which have concluded that the overall benefits of such screening for at-risk individuals outweigh concerns regarding gaps in evidence, generalizability and potential harms.

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The Council On Graduate Medical Education (COGME)—Not Yet Ready For End-Of-Life Care


December 4th, 2014

In November, 1985, twenty-nine years ago, members of the first session of the 99th Congress addressed growing concern and controversy regarding Graduate Medical Education (GME). Although Medicare had financed GME for the previous twenty years, Congress began to recognize that our rapidly evolving health care system could require significant changes in the composition of our physician workforce, and that these changes could impact the appropriate governance and funding of GME.

In this setting, the Council on Graduate Medical Education (COGME) was conceived and underwent rapid gestation, with its birth achieved via enactment of authorizing legislation in 1986. Its charter charged the Secretary of Health and Human Services (HHS), under Title VII of the Public Health Service Act, with responsibility for taking national leadership in the development of policies related to GME, and in the research, development, and analysis of such policies that impact on the health workforce needs of the nation. COGME was instructed to provide advice and make policy recommendations to the Secretary and committees of the House and Senate within their jurisdiction.

Contrary to a sunset provision in the legislation, COGME still survives. While continuing to function on very limited support, it recently issued a noteworthy report entitled “Improving Value in Graduate Medical Education” in 2013. COGME presently is preparing its 22nd Report, which addresses the need for change in GME due to changes in the U.S. health care system and focuses on opportunities to improve training through more effective targeting of public resources.

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Health Affairs Web First: National Health Spending In 2013 Continued Pattern Of Low Growth


December 3rd, 2014

A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) estimates that in 2013 health care spending in the United States grew at a rate of 3.6 percent in 2013 to $2.9 trillion, or $9,255 per person. The increase was slower than the 4.1 percent growth in 2012 and continued a pattern of low growth that has held relatively steady at between 3.6 percent and 4.1 percent annual growth for five consecutive years.

The continued low growth in health spending is consistent with the modest overall economic growth since the end of the recent severe recession and with the long-standing relationship between economic growth and health spending—particularly several years after the end of economic recessions, when health spending and overall economic growth tend to converge. As a result, health spending’s share of the nation’s gross domestic product (GDP) remained at 17.4 percent in 2013.

The study is being released today by Health Affairs as a Web First and will appear in the January issue of Health Affairs. It was discussed this morning at a reporters briefing in the National Press Club.

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Medicare, Medicaid, And Pharmaceuticals: The Price Of Innovation


November 20th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

Through much of the last half century, Medicare and Medicaid (MM) have not for the most part supported research intended to lead to new drugs. For their role in drug development, we need to look to infrastructure and incentives. The record of the National Institutes of Health (NIH) illustrates the potential of both for pharmaceutical innovation. The current budget of NIH, the big elephant in the zoo of the federal biomedical enterprise, is $30 billion, but apart from a dozen small programs devoted to targeted drug development, most of these billions are not aimed directly at pharmaceutical innovation (See page 234).

Yet the NIH investment in biomedicine has indirectly fueled drug development in the private sector to a huge degree. It has paid for the training of biomedical scientists and clinicians, many of whom went on to staff the drug industry, especially its laboratories. NIH-sponsored research has also generated basic knowledge and technologies and it has encouraged universities to spin out their potentially useful findings into the industry by allowing for the patenting and licensing of the findings.

Like NIH, MM has helped fuel drug development indirectly by supporting selected experimental cancer treatments, medical education, and some clinical research and training. But investment in these activities has been small and their impact on drug development apparently very limited. In contrast to NIH, the MM stimulus to drug innovation has resided not in the production of new scientists or the patented uses of new knowledge, but principally in markets and pricing.

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Analysis Of Medicare Spending Slowdown Leads Health Affairs Blog October Most-Read List


November 17th, 2014

Loren Adler and Adam Rosenberg’s examination of the causes of slower Medicare spending growth was the most-read Health Affairs Blog post in October. Their post was followed by Jeff Goldsmith’s interview with former Kaiser Permanente CEO George Halvorson.

Next on the top-ten list was J. Stephen Morrison’s look at the US response to Ebola and the role of Centers for Disease Control and Prevention Director Tom Frieden, followed by Tim Jost’s post on reference pricing and network adequacy.

The full list is below:

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Risk And Reform Of Long-Term Care


November 14th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

The 50th Anniversary of Medicare and Medicaid offers an opportunity to reflect on how U.S. social policy has conceived of the problem of long-term care.

Social insurance programs aim to create greater security—typically financial security—for American families (See Note 1). Programs for long-term care, however, have had mixed results. The most recent attempt at reform, which Ted Kennedy ushered through as a part of the Patient Protection and Affordable Care Act (ACA), called the CLASS Act, was actuarially unsound and later repealed. Medicare and especially Medicaid, the two primary government programs to address long-term care needs, are criticized for failing to meet the needs of people with a disability or illness, who need long-term services or supports. These critiques are valid.

Even more troublesome, however, long-term care policy, especially in its most recent evolution toward home-based care, has intensified a second type of insecurity for Americans. This insecurity arises when someone becomes responsible for the long-term care of a loved one. In a longer forthcoming article, I argue that this insecurity—which I call “next-friend risk”—poses a serious threat to Americans and needs to be addressed. (I borrow the phrase next friend from a legal term for a person who in litigation represents someone with a disability who is otherwise unable to represent him or herself. Although not a legal guardian, the next friend protects the interests of an incompetent person.)

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Reforming Medicare: What Does The Public Want?


November 13th, 2014

Is Medicare adequately meeting the needs of seniors, or are there ways that its core attributes could be improved? Numerous elected officials, policymakers, and other thought leaders have offered perspectives on ways to change the program. Few efforts, however, have been directed at understanding how the public—given accurate information, a variety of options, and a valid structure for weighing the pros and cons—would change Medicare’s basic design.

The MedCHAT Project

Recently, the American Enterprise Institute and the Brookings Institution co-hosted a briefing on the results of a California project that did just that. The “MedCHAT” project, sponsored by the nonprofit, nonpartisan Center for Healthcare Decisions, asked 800 residents—the lay public, as well as health care professionals and community leaders—to consider Medicare’s current benefits and decide if those should be changed. Respondents represented the full spectrum of age, race, ethnicity, education, and income level.

Using an interactive, computer-based system, participants were asked to respond as “social decisionmakers;” they were tasked with making Medicare more responsive to the needs of current and future generations without imposing a greater cost burden on the country. The computer-based CHAT (“Choosing All Together”) program uses actuarial estimates to show the relative costs of health care benefits, allowing participants to make trade-offs with an understanding of the fiscal impact each benefit has on the program.

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The Short-Term And Long-Term Outlook Of Drug Coupons


November 12th, 2014

In the October 2014 Health Affairs article, “Specialty Drug Coupons Lower Out-Of-Pocket Costs And May Improve Adherence At The Risk Of Increasing Premiums,” Catherine Starner and coauthors explore the relationship between drug coupons and specialty drugs. Specialty drugs, primarily injectables and biologics, are costly drugs used to treat complicated, chronic conditions that typically require special handling, administration, and monitoring. Starner et al. report that specialty drugs have an average monthly cost to patients and payers of about $3,500.

In their innovative study, Starner et al. find that nearly half of the patients in their sample who were prescribed specialty drugs used personal drug coupons to reduce their personal financial responsibilities. Coupons come in the form of maximum copay and monthly savings cards, and can be accessed from the brand-name manufacturer’s website, printed out, and cashed in at the pharmacy.

Manufacturers promote drug coupons as supplementary patient assistance programs that can fill gaps in insurance coverage by reducing individual patients’ responsibilities for out-of-pocket health care costs related to high-cost specialty drugs or other pharmaceutical products. For example, patients taking etanercept (Enbrel), an expensive biologic specialty drug indicated for rheumatoid arthritis, can receive savings via the Enbrel Support plan, which reduces the monthly co-pay to $0 for the first six months and $10 per month thereafter.

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Yes, We Can Transcend Obamacare


November 6th, 2014

In a recent  Health Affairs Blog post, Washington and Lee University law professor Timothy Jost described a new health-reform plan designed by one of us (Roy) and fiscally modeled by the other (Parente) as a “serious proposal [that] deserves to be taken seriously.” Jost praises parts of the plan. Most notably, he writes that its suggested reform of Medicaid “makes a lot of sense and is similar to proposals made earlier by progressive commentators,” and describes its aim of enacting a uniform annual deductible for Medicare as a “common sense proposal.”

But much of Jost’s review is filled with ideological pique—there are various harrumphs about “nostrums” and “talking points” and “hobby horses.” His article contains some factual and analytical inaccuracies, but also a few good points worth discussing.

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Social Insurance Is Missing A Piece: Medicare, Medicaid, And Long-term Care


November 6th, 2014

Editor’s note: This is the first of several periodic posts stemming from presentations to be given at “The Law of Medicare and Medicaid at Fifty,” a conference that will be held at Yale Law School on November 6 and 7. The issues covered in this post and in Professor Feder’s presentation at the conference will be more fully treated in Feder J. “The Missing Piece:  Medicare, Medicaid and Long-Term Care,” in Cohen AB, Colby DC, Wailoo KA, Zelizer JE, eds. Medicare and Medicaid at 50: America’s Entitlement Programs in the Age of Affordable Care. New York: Oxford, 2015.

Medicare and Medicaid are partners in providing health insurance protection to older people and people with disabilities. But when it comes to helping the very same people with long-term care—assistance with the basic tasks of daily life (like bathing, eating and toileting)—no such partnership exists.  Instead, there’s a gaping hole in protection that leaves people who need care, along with their families, at risk of catastrophe.

That hole is not an accident.  From Medicare’s inception, long-term care was explicitly excluded from its social insurance benefits, despite the close tie of many long-term care needs to medical conditions.  With some short-lived lapses, Medicare rules have restricted the program’s benefits to avoid financing long-term care, even as it has overpaid long-term care providers for medically-related “post-acute” services. Ironically, Medicare has fueled growth in expenditures on long-term care providers without actually covering long-term care.

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An Emerging Consensus: Medicare Advantage Is Working And Can Deliver Meaningful Reform


November 6th, 2014

Since enactment of the Affordable Care Act (ACA) in 2010, much of the attention in the policy community has been on modernizing Medicare’s traditional fee-for-service (FFS) program.  Through Accountable Care Organizations (ACOs), larger “bundles” of payments to fee-for-service providers for episodes of care, and tests of pay-for-performance models, the hope is that the traditional Medicare model can be remade through sheer force of bureaucratic will.  The stated intent is to find a way to pay for value, not volume.

These efforts may or may not bear much fruit, but, over the longer term, it’s not likely to matter much.  That’s because a more important transformation of Medicare is already well underway and is occurring despite more resistance than assistance from the program’s bureaucracy.  According to the 2014 Medicare Trustees’ report, enrollment in Medicare Advantage – the private plan option in Medicare — has been surging for a decade.  In 2005 there were 5.8 million Medicare beneficiaries enrolled in MA plans — 13.6 percent of total enrollment in the program.  Today, there are 16.2 million beneficiaries in MA plans, or 30 percent of program enrollment. (See Table IV.C1)  In addition, the Medicare drug benefit, which constitutes about 12 percent of total program spending, is delivered entirely through private plans. (See Table II.B1)

As MA enrollment has surged, so has recognition of its improved value.  A recent, comprehensive review of the evidence conducted by Joseph Newhouse and Thomas McGuire of Harvard University makes a compelling case that MA plans are providing higher value services at less societal cost than the traditional FFS program.  Based on their findings, Newhouse and McGuire argue for policies that would provide incentives for even more beneficiaries to enroll in MA plans in the future.

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The Law Of Medicare And Medicaid At Fifty


November 4th, 2014

Editor’s note: This is the first of several periodic posts stemming from presentations to be given at “The Law of Medicare and Medicaid at Fifty,” a conference to be held at Yale Law School on November 6 and 7.

This post introduces an online symposium in connection with The Law of Medicare and Medicaid at 50, an upcoming interdisciplinary conference at Yale Law School.  Many thanks to Health Affairs for its co-sponsorship of the conference and for this opportunity to preview some of the work to be presented.

Why focus on the law of Medicare and Medicaid?  These two programs are almost always analyzed from a policy perspective, but one of the most significant changes that the 1965 legislation wrought was bringing two major federal statutes—and, with them,  the three branches of the federal government—squarely into the center of  health care and regulation.  To be sure, Congress had passed laws related to health prior to 1965, but until Medicare and Medicaid, most health policy was made at the local level, by state courts and state governments, and by the medical profession itself.

Medicare and Medicaid brought not only Congress, but the Supreme Court and the rest of the lower federal courts into the picture. It also made the federal administrative apparatus—federal agencies ranging from Health and Human Services, to Treasury, to the Department of Justice—central players in the world of health policy and enforcement.  Nevertheless, amidst the thousands of pages that have been written about the two programs, there has been relatively little reflection on how the distinct features of law—and federal law in particular—have affected the programs’ development and successes.

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The $500 Billion Medicare Slowdown: A Story About Part D


October 21st, 2014

A great deal of analysis has been published on the causes of the health care spending slowdown system-wide — including in the pages of Health Affairs. Much attention in particular has focused on the remarkable slowdown in Medicare spending over the past few years, and rightfully so: Spending per beneficiary actually shrank (!) by one percent this year (or grew only one percent if one removes the effects of temporary policy changes).

Yet the disproportionate role played by prescription drug spending (or Part D) has seemingly escaped notice. Despite constituting barely more than 10 percent of Medicare spending, our analysis shows that Part D has accounted for over 60 percent of the slowdown in Medicare benefits since 2011 (beyond the sequestration contained in the 2011 Budget Control Act).

Through April of this year, the last time the Congressional Budget Office (CBO) released detailed estimates of Medicare spending, CBO has lowered its projections of total spending on Medicare benefits from 2012 through 2021 by $370 billion, excluding sequestration savings. The $225 billion of that decline accounted for by Part D represents an astounding 24 percent of Part D spending. (By starting in 2011, this analysis excludes the direct impact of various spending reductions in the Affordable Care Act (ACA), although it could still reflect some ACA savings to the extent that the Medicare reforms have controlled costs better than originally anticipated.) Additionally, sequestration is responsible for $75 billion of reduced spending, and increased recoveries of improper payments amount to $85 billion, bringing the total ten-year Medicare savings to $530 billion.

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Teaching Health Centers: An Attainable, Near-Term Pathway To Expand Graduate Medical Education


October 17th, 2014

Stakeholders in Graduate Medical Education (GME) and members of Congress eagerly anticipated the long delayed but recently released Institute of Medicine (IOM) GME report. While perceptively characterizing the defects in our GME system, recommendations of the report generated substantial controversy among participants at a recent GME forum hosted by Health Affairs. The IOM proposed limited and gradual changes in Medicare GME financing, but the lack of support for GME expansion was not well received by some.

At present there are multiple legislative GME proposals, but none has gained broad support among the various stakeholders. Congressional committees responsible for GME funding view this lack of consensus among GME stakeholders as a major obstacle.

We describe a near-term and attainable pathway to expand GME that could gain consensus among these stakeholders. This approach would sustain and expand Teaching Health Centers (THCs), a recent initiative that directly funds community-based GME sponsoring institutions to train residents in primary care specialties, dentistry and psychiatry. We further propose selectively expanding GME to meet primary care and other demonstrable specialty needs within communities, and building in evaluations to measure effectiveness of innovative training models.

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A Patient Advocate’s Perspective On Paying For Value


October 9th, 2014

When patient-centered outcomes research “is used well, it can be a powerful tool in making medical care better informed, without limiting patients’ and providers’ choices.” That was the promise that I, and many others, held out with creation of the Patient-Centered Outcomes Research Institute (PCORI) in 2010. Will PCORI achieve this goal? It is increasingly clear that evolving “value-based” payment models in health care, accelerated via the Affordable Care Act (ACA), will play a central role in how that question gets answered.

The movement to place greater financial risk on providers in an effort to pay for value rather than volume will have the effect of fundamentally changing the way health care providers interact with patients. But the question in value-based payment remains: value to whom? The answer should be, of course, value to the patient. And the answer will be, intrinsically, shaped by application of evidence.

While I applaud efforts to improve and advance our health care system through payment and delivery reforms, I am also mindful that such value-based payment systems must be built upon the foundation of “patient-centeredness.” Indeed, lawmakers and policy experts have long agreed that a “patient-centered healthcare system” is the Holy Grail of bipartisan health care reform. Yet despite significant progress in advancing patient-centeredness in our health system, much more work remains to be done.

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