Health for life

Simultaneous conservative praise and liberal support for something called the "Wyden-Ryan Plan" prompted the inquisitive Disease Management Care Blog to look up the document. 

Could this be **THE** template for a grand bipartisan compromise orm of Medicare?  Thanks to this consolidated DMCB summary, readers will not only get to ponder that question, but contrast their health market and business acumen with non-DMCB coworkers and colleagues with self-serving and career-advancing questions like:

"So Barry, do you foresee any business opportunities related to the annual risk review audit envisioned in the Wyden Ryan plan?"

Without further ado, here are the facts:

Persons who are currently age 55, i.e. become Medicare eligible on or after January 2, 2022, can choose to be enrolled in either

1) traditional Medicare "as we know it" or,

2) a competing commercial plan with "premium support" funding provided by Medicare.  This option includes either old fashioned Medicare Advantage or a fee-for-service plan.  Either would be required to provide a benefit package that is "actuarially equivalent" to standard Medicare. 

Beneficiaries are given a voucher to pay for Medicare advantage or the fee-for-service plan.

What is the value of the voucher?  It depends on a competitive bidding process.  Competing commercial plans would have to submit premium bids to CMS. For any service area, the second lowest bid would serve as the local benchmark.  If a beneficiary chooses that plan, they would be given a voucher that pays the bid i.e. the full cost of the insurance.  Beneficiaries are free to chose other plans that submitted a losing bid, but the beneficiaries pay the difference.  If a beneficiary chooses that plan with the lowest bid, Medicare will rebate the difference.

If the beneficiary is older or sicker than average, the amount in voucher will be "risk-adjusted" upward.  Lower risk beneficiaries would have their voucher adjusted downward.  This is designed to compensate insurance plans for the increased risk of enrolling sicker patients.  Participating plans would be required to accept anyone who applies for coverage.  That means there would be no underwriting, i.e., no cherry picking i.e. there would be guaranteed issue.

Once enrollment is complete, plans would be subjected to an "annual risk review audit." Those with an excess of low risk enrollees would pay a fee to make up for a more profitable book of business, while those with an excess of high risk enrollees would get a rebate.

If, despite the introduction of competition described above, Medicares nationwide costs exceed the growth of the U.S. gross domestic product (GDP), Congress would be "required" to act with a suite of options including reducing provider payments or requiring richer seniors to pay more (i.e., means testing).

Competing plans would be listed in an exchange.  They would also be closely overseen by CMS.

Beneficiaries could switch plans during an open enrollment period

Medicares Part A and B deductibles would be combined and a cap that limits out of pocket spending.

So what is the DMCBs take:

"Medicare Advantage" and fee-for-service plans for Medicare beneficiaries are not new.  Whats new is the introduction of vouchers. The DMCB predicts critics will view vouchers as a political Trojan Horse ultimately intended to undo traditional Medicare.

The plan relies on competitive bidding to drive down costs.  Its unclear if bidding will be the "tail" that wags the "dog" of an aging U.S. population that wants the best and a health care-technology industrial complex that wants to sell their goods at the highest price point they can justify.

Recall all those past protests from the insurance industry over the prospect of competing with a publicly funded program?  The DMCB thinks this is different because they will benefit from Medicares price controls.

Ingredients for commercial insurer voucher success will include actuarial smarts over the details of prospective risk adjustment and retroactive claw backs, neutralizing the pernicious effects of variation with high enrollment and not only making money but doing right by the beneficiaries with a higher level of service.  If all they do is return value to their investors, Congress will shut em down.

Last but not least bloggers smarter than the DMCB have problems with the proposal and are worth a look.

New recipe for capitation?

Readers of Kaiser Health News, Politico and The Hill (here, here and here, respectively) were treated to the faux news of another expert report on the tedious topic of physician payment orm.  While the Disease Management Care Blog is a big fan of the brainy Society of General Internal Medicine (SGIM), this physician compensation communique is another rehash of "misaligned incentives" leading to "quantity over quality."

Yawn.

The good news is that there may be insights that were missed by KHS, Politico and The Hill.  In this instance, the DMCB has been listening closely and found one thing the experts arent saying.

What was said?

Like the many other decrees that have preceded it, the Report of the National Commission on Physician Payment Reform recommends the recalibration and then phasing-out of stand-alone fee-for service (FFS) while transitioning to other payment models that blend FFS with global payment, salaries or "capitation."  It also advocates increasing payment for "congnitive" over procedural services, removing any hospital overhead costs from the fees that are paid for any service that can also be performed at a free-standing facility, rewarding measurable quality, paying for telemedicine, increasing the use of risk adjustment, repealing the sustainable growth rate (SGR) and orming the RUC.  And like everyone else, it assures the reader that paying for the savings from all these orms will more than pay for themselves.

And yes, the word "capitation" was in the report.

What isnt being said is that there is a growing consensus that scuttling of traditional fee-for-service will usher in a new era of capitation.  The DMCB thinks of it as Capitation 2.0.

"Capitation" doesnt necessarily have a good name, but that doesnt mean this new rose doesnt smell as sweet or have fewer thorns. Originally spawned by the go-go managed care era of the 1990s, it was blamed for putting profits before patients by giving physicians an incentive to withhold needed medical services.  While a much younger Donald Berwick reported that the medical literature "did not make capitation out to be the villain that some believe it is," the complex risk taking, a lack of individual physician support and unseemly group practice behaviors undoubtedly fueled the physician backlash and the end of managed care in the 1990s.

 So why is capitation coming back?  The DMCB suspects one reason is that there are only passing erences to it and that its been rebranded with more benign sounding names like "gain-sharing" and "global payments."  Another is Medicare FFS fatigue, caused not only by the SGR but by CMS unending hassles, the uncertainty surrounding PQRS and the dread of having to go through one of those repugnant "RAC audits."  Unwilling (so far) to simply drop out of Medicare altogether, docs are backing into acquiescing to the recommendations of groups like the SGIM.

And why does the DMCB call it Capitation 2.0? Writing in SGIMs Journal of General Internal Medicine more than a decade ago, Thomas Bodenheimer predicted the survival of managed care thanks to the allocation of full capitation to institutions, not individuals. Its then up to those institutions to leverage both FFS and capitation at the individual physician level.  The DMCB would add that a third ingredient is tying any payments under capitation to specific quality goals, like control of chronic illness or maintaining access to care.

The DMCBs conclusions?

What they didnt say: The track record of original capitation or advent of Capitation 2.0 doesnt mean physicians are embracing what their organizations and political allies are saying whats best for them.  They simply dont see an alternative. The 1990s could happen again.

What they got right, sort of: Outside of large organizations that take capitation, we have much to learn about the best combination of FFS and fixed payments when it comes to physician incentives and protecting patients.  Like other reports before it, the National Commission suggests we need 5 years to assess new payment models.  Given the decades of experience with managed cares capitation and Medicares institutional inertia, that may be overly optimistic.