Congress is planning on making big cuts to the Medicare Advantage program claiming that it is subsidizing the private insurers for this program. Is this true? The answer is yes, it is subsidizing the health plan; but it is really subsidizing the beneficiaries, not the insurers. People saw value and as a result the number of people in these plans has grown. The payments/expenditures for beneficiaries are higher on average than traditional Medicare.
The reason lies in how Medicare Advantage plans are paid. The Medicare Modernization act of 2003 set into place the present system of payment. A private insurer places a bid for what price per person it is willing to offer Part A and Part B services in a given geographic area. If it is under the government’s benchmark rate that it is willing to pay in that geographic area, they split the difference. Under the rules, the government keeps 25% of the savings, and the insurer must provide the beneficiary with additional benefits or a rebate equivalent to 75% of the difference. For example, if Medicare is willing to pay $500 per person per month to the insurer and the insurer has bid $400 per person per month, there is a $100 difference. Of that amount $25 in savings goes back to the government and $75 goes to the beneficiary in the form of a Part B or D premium rebate or additional services. Medicare pays out $475 in benefits. As you can see, the amount of additional benefits or rebates enrollees are offered makes one plan more attractive than another.
The heart of the problem is the benchmark rate calculation. By law, it must be at least as high as high as what the government would pay on average per person in the traditional Medicare fee for service (FFS) arena. Remember, Medicare pays 80% of the allowable payment rates. There are risk adjustments fir areas of the country where patients are “sicker.”
According to the Congressional Budget Office, for 2007 the “benchmarks are 17% higher, on average than projected per capita FFS expenditures nationwide.” [Note: This CBO report was released in 2007, yet proposals to fix the problem are just now coming forth.]
These benchmarks are determined by statutory rules. It requires an act of Congress to make any changes. This is the similar to the way the Medicare physician payment formula [SGR] is set. Do you see a pattern here? There is a problem anytime an act of Congress is required to make should be a common sense business decision - namely to fix the formula. Government bureaucracy seems to preclude it from making the necessary adaptations to respond in a timely manner to save money or prevent potential disruptions in service.
The next question is what will happen to current Medicare Advantage enrollees? Who will be most affected? We will try to tackle that tomorrow -
Thursday, October 29, 2009
Monday, October 26, 2009
Insurance: Profitable, but hardly obscene...
Finally today, the news media did their homework on the insurance industry and called the politicians’ bluff. According to TheStreet.com health insurers only made 2.4% last year. [I have to say it; I made this point on pages 1&2 of Healthcare Solved.] According to an article in the American Medical News, October 12, 2009 [print], the nonprofit blues insurers averaged only 2.0% profit last year. Fortune magazine ranked the industry as 35th out of 53 in profits. It is clearly not the most profitable industry in America as Senator Harry Reid has claimed. Not exactly "obscene" profit margins - in fact, the insurance industry is quite anemic in comparison to many other industries. It seems the only possible explanations for these glaring discrepancies are that our politicians are grossly negligent in doing their due diligence on the industry or they are lying.
If they are this ignorant about the industry, is it not pure arrogance to think they can “reform” it? Or, do they believe if enough of politicians repeat these outright lies enough times, Americans will fall for anything they propose? Whether clueless and content to stay that way or desperate, either is deplorable; we need real, meaningful reform. Keep informed, participate in the process. If one of those politicians is yours, call them on it. They get away with it when we let them slide. Shame them into being better men and women then they are. We need statesmen serving the best interests of the people. Accept nothing less.
If they are this ignorant about the industry, is it not pure arrogance to think they can “reform” it? Or, do they believe if enough of politicians repeat these outright lies enough times, Americans will fall for anything they propose? Whether clueless and content to stay that way or desperate, either is deplorable; we need real, meaningful reform. Keep informed, participate in the process. If one of those politicians is yours, call them on it. They get away with it when we let them slide. Shame them into being better men and women then they are. We need statesmen serving the best interests of the people. Accept nothing less.
Medicare, Medicare Supplemental and Medicare Advantage: Part I
What’s the difference?
Traditional Medicare covers 80% of allowable medical expenses for the elderly. In general, it covers hospitalizations (Part A) for free for those over the age of 65 who are also eligible for social security. The elderly who want part B coverage, which covers things like doctor visits, labs, etc., must pay monthly premiums which are deducted from the social security checks. Since it does not cover all medical expenses, many enrollees also buy a Medicare Supplemental [MedSup or Medigap] policy. There are about a dozen MedSup plan options from which to choose. Plan benefits are government-defined, but privately-insured. There is no medical underwriting for the plans, and thus, no pre-existing conditions. While there may be a dollar or two discount per month for enrollees who buy coverage through a union, trade organization or AARP, there is no need to join such an organization as the plan prices are competitive.
Medicare Advantage, previously known as Medicare+Choice or Part C, is a different animal. It was established by the Balanced Budget Act of 1997. People with Medicare A and B can choose to receive their Medicare healthcare services through an Advantage plan. It is a cheaper alternative that negates the need for a MedSup plan, as it provides many of the same benefits without having to buy additional coverage, and may also provide Part D coverage. Enrollees agree to receive their care through the plan’s network of providers. “Medicare Advantage plans include (1) Medicare Managed Care plans (like HMOs), (2) Medicare Preferred Provider Organization plans (PPOs), (3) Private Fee-for-Service plans(PFFS), and (4) Medicare Specialty plans (available in some areas to provide Medicare benefits for certain people with special needs, such as beneficiaries in institutions).” [SSA website]. It was supposedly an attempt to privatize Medicare. But since there are no specific eligibility requirements for this lower cost program, it is not too surprising that this program is growing in popularity, particularly the PFFS plans. Of the 45 million Medicare recipients, 9 million are Medicare Advantage members.
Congress has Medicare Advantage, in particular, in its sites to cut costs. Tomorrow we will look at why.
Traditional Medicare covers 80% of allowable medical expenses for the elderly. In general, it covers hospitalizations (Part A) for free for those over the age of 65 who are also eligible for social security. The elderly who want part B coverage, which covers things like doctor visits, labs, etc., must pay monthly premiums which are deducted from the social security checks. Since it does not cover all medical expenses, many enrollees also buy a Medicare Supplemental [MedSup or Medigap] policy. There are about a dozen MedSup plan options from which to choose. Plan benefits are government-defined, but privately-insured. There is no medical underwriting for the plans, and thus, no pre-existing conditions. While there may be a dollar or two discount per month for enrollees who buy coverage through a union, trade organization or AARP, there is no need to join such an organization as the plan prices are competitive.
Medicare Advantage, previously known as Medicare+Choice or Part C, is a different animal. It was established by the Balanced Budget Act of 1997. People with Medicare A and B can choose to receive their Medicare healthcare services through an Advantage plan. It is a cheaper alternative that negates the need for a MedSup plan, as it provides many of the same benefits without having to buy additional coverage, and may also provide Part D coverage. Enrollees agree to receive their care through the plan’s network of providers. “Medicare Advantage plans include (1) Medicare Managed Care plans (like HMOs), (2) Medicare Preferred Provider Organization plans (PPOs), (3) Private Fee-for-Service plans(PFFS), and (4) Medicare Specialty plans (available in some areas to provide Medicare benefits for certain people with special needs, such as beneficiaries in institutions).” [SSA website]. It was supposedly an attempt to privatize Medicare. But since there are no specific eligibility requirements for this lower cost program, it is not too surprising that this program is growing in popularity, particularly the PFFS plans. Of the 45 million Medicare recipients, 9 million are Medicare Advantage members.
Congress has Medicare Advantage, in particular, in its sites to cut costs. Tomorrow we will look at why.
Friday, October 23, 2009
A.M Best: BESTWIRE: Under Proposed Reforms, Little Rate Regulation, New Customers May Mean Health for Insurers
This is an article from A.M. Best's BESTWIRE. "Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. Policyholders and depositors refer to Best's ratings and analysis as a means of assessing the financial strength and creditworthiness of risk-bearing entities and investment vehicles."
Senate Bill 1776: The Fix?
Yesterday, the press finally reported the whole story on the Baucus Bill, which you read here on October 13. Senate Bill 1776, which was supposed to fix the faulty Medicare physician reimbursement formula (Medicare SGR as continued under the Baucus Bill), failed to pass Wednesday. Congress somehow thought the American people would not figure out that paying doctors would be considered part of their supposed comprehensive healthcare “reform” if they put it in another bill. Instead, S. 1776 was an attempt to add $249 billion straight to the national debt. Let’s crunch the numbers: the $81 billion dollar savings of the Baucus bill minus the $249 billion appropriation to “fix” the physician payment formula equals +$168 billion to the national debt – not exactly budget neutral.
Senator Nelson of Florida was interviewed by Greta van Susteren last night saying he hoped this did not derail the Senate’s reform bill. He claimed perhaps we if we had a 5-year fix or even a 3-year fix, we should still push through “reform.” How does postponing the day of reckoning make it better? Certainly, physicians will be right back in the same position they are now, with further cuts threatening because the formula used is faulty; except by then healthcare reform fatigue will have set in with the American public and no one will want to hear about it.
Worse yet, with the current printing and spending spree in Washington, the present economic downturn is going to persist for a considerable period of time. Central banks around the world are warning us that our fiscal and monetary policies are “imprudent.” Given the current policies being pursued on an array of issues, there will be fewer small business starting up and more businesses laying off people. As a result, tax revenues will continue to go down, adding further to the annual deficit and ultimately the federal debt. If this continues, the country may not be able to fix the problem in 3 years. Americans voted for change. Our legislators must be responsible and get it right. If not the only change Americans may have is the change in their pockets.
Senator Nelson of Florida was interviewed by Greta van Susteren last night saying he hoped this did not derail the Senate’s reform bill. He claimed perhaps we if we had a 5-year fix or even a 3-year fix, we should still push through “reform.” How does postponing the day of reckoning make it better? Certainly, physicians will be right back in the same position they are now, with further cuts threatening because the formula used is faulty; except by then healthcare reform fatigue will have set in with the American public and no one will want to hear about it.
Worse yet, with the current printing and spending spree in Washington, the present economic downturn is going to persist for a considerable period of time. Central banks around the world are warning us that our fiscal and monetary policies are “imprudent.” Given the current policies being pursued on an array of issues, there will be fewer small business starting up and more businesses laying off people. As a result, tax revenues will continue to go down, adding further to the annual deficit and ultimately the federal debt. If this continues, the country may not be able to fix the problem in 3 years. Americans voted for change. Our legislators must be responsible and get it right. If not the only change Americans may have is the change in their pockets.
Thursday, October 22, 2009
Co-ops: Real or Phoney?
In addition page 4 of the October CBO letter to the Senate Finance Committee Chair states the Baucus Bill will “provide start-up funds to encourage the creation of cooperative exchange plans (co-ops) that could be offered through the exchanges; existing insurers could not be approved as co-ops.”
Let’s think about this for a minute. Present day insurers are entirely shut out of the game. (You can almost hear the politicians say, “We showed them.” ---but is it a pyrrhic victory?)
Whatever you think about insurers, these are the people who actually know how to do the job. They have the systems and processes in place to service the needs of their customers, send them insurance cards, provide a network of providers and pay claims. This little provision means a lot of “newbie” nonprofit companies will be popping up, by necessity.
Who are these companies? Are they reputable? Do you believe your claims will be paid in a timely manner? What is their track record? Will you get the service you expect? What assurances do we have that they will be there tomorrow to pay claims after giving them your premium dollars? Do you think this opens the public up to a lot of potential fraud? Are state regulators going to be able to handle the job, given the number of new entities that will no doubt arise due to the amount of money at stake?
Of course, we can rely on the government to protect us from the hucksters, can’t we?
Let’s think about this for a minute. Present day insurers are entirely shut out of the game. (You can almost hear the politicians say, “We showed them.” ---but is it a pyrrhic victory?)
Whatever you think about insurers, these are the people who actually know how to do the job. They have the systems and processes in place to service the needs of their customers, send them insurance cards, provide a network of providers and pay claims. This little provision means a lot of “newbie” nonprofit companies will be popping up, by necessity.
Who are these companies? Are they reputable? Do you believe your claims will be paid in a timely manner? What is their track record? Will you get the service you expect? What assurances do we have that they will be there tomorrow to pay claims after giving them your premium dollars? Do you think this opens the public up to a lot of potential fraud? Are state regulators going to be able to handle the job, given the number of new entities that will no doubt arise due to the amount of money at stake?
Of course, we can rely on the government to protect us from the hucksters, can’t we?
Wednesday, October 21, 2009
Baucus Bill Part III: Will it really be cheaper?
The CBO believes that employer provided plans will be “more expensive that the low-cost plans available in the exchanges, because healthcare services in those exchange plans would be more tightly managed.” [September CBO letter, page 4]
Administrative costs for all health plans, both for-profit and nonprofit, have averaged about 11% of premiums. The BCBS family of companies average about 10%. In fact, Highmark BCBS, a nonprofit insurer, in PA specifically states that their goal is for 90% of premiums to go toward paying medical expenses (aka medical-loss ratio) for enrollees. To more tightly manage the plan requires higher administrative costs, not less. And what does more “tightly managed” mean to the doctor and patient? You can bet there will be stricter standards for ordering tests/procedures, more “red-tape” and more non-certifications of coverage. There is simply no other way to make up for the added administrative costs, pay claims and still be competitive with the private sector marketplace, let alone be more affordable for individuals or small businesses.
Administrative costs for all health plans, both for-profit and nonprofit, have averaged about 11% of premiums. The BCBS family of companies average about 10%. In fact, Highmark BCBS, a nonprofit insurer, in PA specifically states that their goal is for 90% of premiums to go toward paying medical expenses (aka medical-loss ratio) for enrollees. To more tightly manage the plan requires higher administrative costs, not less. And what does more “tightly managed” mean to the doctor and patient? You can bet there will be stricter standards for ordering tests/procedures, more “red-tape” and more non-certifications of coverage. There is simply no other way to make up for the added administrative costs, pay claims and still be competitive with the private sector marketplace, let alone be more affordable for individuals or small businesses.
Tuesday, October 20, 2009
Influenza & H1N1: Advice to help businesses cope
The information below is provided to help doctors be a resource for their communities. It is adapted from the CDC's Business Toolkit:
Public health officials are gearing up for the fall /winter flu season; this includes the seasonal flu as well as the H1N1 flu virus. While the degree of severity and amount of added illness H1N1 will cause cannot be predicted, the CDC anticipates that more communities will be affected than were this spring /summer. As such, the CDC is urging the following recommendations for businesses to be proactive in keeping employees healthy while limiting disruptions to business operations.
1. Employers should encourage all employees to get the seasonal flu vaccine, working with their health insurers to make certain their plans cover vaccine costs. This vaccine does not cover H1N1.
2. Since the influenza virus is spread by respiratory droplets, tissues and alcohol based hand sanitizers should be available in the workplace.
3. Hand washing and covering coughs and sneezes should be encouraged.
4. Regular, good housekeeping of all commonly touched surfaces in the workplace is essential, particularly for workstations, keyboards and telephones.
5. During an influenza pandemic, all sick people should be allowed to stay home from the workplace without fear of job loss.
6. Workers with flu-like symptoms, including cough or sore throat, chills or fever over 100ºF, and/or runny nose, body aches, headache, tiredness, diarrhea or vomiting, are recommended to stay home; they should not return to work until 24 hours after their fever has resolved.
Employers are encouraged to have a multilayered plan depending on severity of the outbreak. Employers should:
7. Share their flu plan with employees, along with their interest in protecting employee health and maintaining business operations. Explain the HR leave policies and what pay & benefits are available to them.
8. Encourage H1N1 vaccination, which will be available to certain groups in mid October.
9. Consider policies for telecommuting, flex hours or staggered shifts for workers who must care for sick children or other family members, or if local conditions merit that schools or childcare facilities close in your area. Ask employees to consider child care alternatives.
10. Make certain IT systems can handle the increased demand of remote access.
11. Consider cross-training employees in essential core business functions.
The CDC recommends for businesses to be flexible during this time. Requiring a doctor’s note to validate illness may not be realistic if the local health clinics and hospitals are overwhelmed. Give local managers the authority to take appropriate actions as needed and comply with local and state health authorities. Depending on the outbreak’s severity, companies should be prepared to change business practices if needed: identify alternative suppliers, prioritize customers or temporarily suspend non-critical operations if need be.
REMEMBER:
Listen to your local and state public health officials, regarding the severity of the outbreak in your area and follow their recommendations. Employers may wish to place links on their corporate and/or employee website regarding current policies and instructions for their employees. For more information, answers to any questions and links to your state health department, go to www.flu.gov .
Public health officials are gearing up for the fall /winter flu season; this includes the seasonal flu as well as the H1N1 flu virus. While the degree of severity and amount of added illness H1N1 will cause cannot be predicted, the CDC anticipates that more communities will be affected than were this spring /summer. As such, the CDC is urging the following recommendations for businesses to be proactive in keeping employees healthy while limiting disruptions to business operations.
1. Employers should encourage all employees to get the seasonal flu vaccine, working with their health insurers to make certain their plans cover vaccine costs. This vaccine does not cover H1N1.
2. Since the influenza virus is spread by respiratory droplets, tissues and alcohol based hand sanitizers should be available in the workplace.
3. Hand washing and covering coughs and sneezes should be encouraged.
4. Regular, good housekeeping of all commonly touched surfaces in the workplace is essential, particularly for workstations, keyboards and telephones.
5. During an influenza pandemic, all sick people should be allowed to stay home from the workplace without fear of job loss.
6. Workers with flu-like symptoms, including cough or sore throat, chills or fever over 100ºF, and/or runny nose, body aches, headache, tiredness, diarrhea or vomiting, are recommended to stay home; they should not return to work until 24 hours after their fever has resolved.
Employers are encouraged to have a multilayered plan depending on severity of the outbreak. Employers should:
7. Share their flu plan with employees, along with their interest in protecting employee health and maintaining business operations. Explain the HR leave policies and what pay & benefits are available to them.
8. Encourage H1N1 vaccination, which will be available to certain groups in mid October.
9. Consider policies for telecommuting, flex hours or staggered shifts for workers who must care for sick children or other family members, or if local conditions merit that schools or childcare facilities close in your area. Ask employees to consider child care alternatives.
10. Make certain IT systems can handle the increased demand of remote access.
11. Consider cross-training employees in essential core business functions.
The CDC recommends for businesses to be flexible during this time. Requiring a doctor’s note to validate illness may not be realistic if the local health clinics and hospitals are overwhelmed. Give local managers the authority to take appropriate actions as needed and comply with local and state health authorities. Depending on the outbreak’s severity, companies should be prepared to change business practices if needed: identify alternative suppliers, prioritize customers or temporarily suspend non-critical operations if need be.
REMEMBER:
Listen to your local and state public health officials, regarding the severity of the outbreak in your area and follow their recommendations. Employers may wish to place links on their corporate and/or employee website regarding current policies and instructions for their employees. For more information, answers to any questions and links to your state health department, go to www.flu.gov .
Monday, October 19, 2009
Saving healthcare dollars: Medical malpractice reform
Today's post is a reprint of the article I wrote for the Indianapolis Business Journal, published this week October 19-25, 2009 on page28, entitled, "Let's cut healthcare cost by cutting out the lawyers: Expert panels would bring perspective to malpractice suits." [The editors gave the article a much more provocative title than mine (see above) - guess they know what sells. :) ] It is an opinion piece rather than the usual impartial commentary, but perhaps it will spark discussion to find a better solution. Hope you enjoy it.
One issue Washington seems reluctant to address in any health legislation is that of tort reform. Malpractice premiums are estimated to be over $29 billion annually, of that the actual cost of litigation is about $10.5 billion. Given their inherent nature, certain specialties are much more affected than others. However, the largest costs arise because all physicians believe they must practice defensive medicine. This often means working up every possible obscure cause of any condition, for fear of missing something and the patient not following up in a timely manner. It is estimated that defensive medicine accounts for 5% to 9% of the cost of healthcare or $115 to $207 billion per year.
“No one wants to see patients harmed by bad medical practice or negligence, least of all doctors. The problem with the current civil system is that doctors are not judged by a jury of their peers; they are judged by non-medical people. (Anyone who has ever been in a meeting of physicians can verify that doctors tend to be the harshest critics of one another.) Both the plaintiff’s and defendant’s lawyers proceed to parade their experts in front of the medically naive jury. Between the few unscrupulous physicians who make an excellent living saying whatever will benefit the party paying them and good lawyers who divert attention from the actual medical issue, it is small wonder that the process is seen as less than fair to all.
The standard we use in the insurance industry is outside peer-review. Qualified peer-reviewers are board-certified physicians with a number of years in clinical practice, as well as an academic appointment and/or research background. They are authorities in their field.
Why not apply that to malpractice cases? A panel of say, five qualified, same-specialty physicians vetted by the medical board could peer-review the medical records of the case. To avoid the appearance of a conflict of interest these individuals should not be from areas in close geographic proximity to the defendant. The plaintiff, defendant and their counsels and experts could make presentations before the panel and the panel could question both sides. Much like the Supreme Court, the panel would deliberate, vote and write an opinion, including dissenting views.
If the panel decides that there is a case, it would proceed to the courts. A jury of the general public would hear the case and then be given a copy of the panel’s report. In the presence of the attorneys and judge, the jury could question a member representing the panel regarding the report. The member may not give an opinion. The opinion is the report. His job is merely clarification. The jury would then be sequestered to deliberate the case and judgment award.
There are two components to the award. Economic damages refer to the cost to the inured person, such as past and future medical expenses, lost wages, etc. Noneconomic damages refer to pain and suffering. Both are intended to provide compensation to the injured party. Punitive or exemplary damages are awarded to punish conduct that is reckless disregard for the safety of others beyond negligence. Some states have statutes imposing caps on punitive noneconomic damages treating them separately from compensatory noneconomic damages. Many advocate limiting noneconomic damages and punitive awards to $250,000. In most cases, that is reasonable; however, I have also seen some horrific mistakes that $250,000 would not cover. Limits have been shown to decrease medical malpractice rates for physicians. However, I believe the solution just presented is fair to everyone, eliminating frivolous suits and moving only credible suits forward. Medical judgment is determined by same-specialty medical professionals who understand how to apply the standards of care to the case. The damages are determined by a jury representing the public, with the standard oversight by a trial judge.
Medical malpractice truly is eliminating “access to care” in many parts of the country. In West Virginia, I was told by a gentleman on the medical board at the time that virtually every suit brought, resulted in a judgment against the doctor. In fact, it had gotten so bad that certain specialties were in danger of becoming extinct in the state, such a trauma surgeons and neurosurgeons. Imagine if you or a loved one were in an accident with a head injury, and there was nowhere in the state you could be flown for treatment. A considerable number of states face this issue with “high risk” specialties, such as those listed above, as well as obstetricians, cardiothoracic surgeons and anesthesiology. Other physicians in high liability states have chosen to limit their scope of practice to reduce their liability. Others move to another state. We can no longer ignore this growing problem,” if we are going to preserve access to care and lower healthcare costs.
One issue Washington seems reluctant to address in any health legislation is that of tort reform. Malpractice premiums are estimated to be over $29 billion annually, of that the actual cost of litigation is about $10.5 billion. Given their inherent nature, certain specialties are much more affected than others. However, the largest costs arise because all physicians believe they must practice defensive medicine. This often means working up every possible obscure cause of any condition, for fear of missing something and the patient not following up in a timely manner. It is estimated that defensive medicine accounts for 5% to 9% of the cost of healthcare or $115 to $207 billion per year.
“No one wants to see patients harmed by bad medical practice or negligence, least of all doctors. The problem with the current civil system is that doctors are not judged by a jury of their peers; they are judged by non-medical people. (Anyone who has ever been in a meeting of physicians can verify that doctors tend to be the harshest critics of one another.) Both the plaintiff’s and defendant’s lawyers proceed to parade their experts in front of the medically naive jury. Between the few unscrupulous physicians who make an excellent living saying whatever will benefit the party paying them and good lawyers who divert attention from the actual medical issue, it is small wonder that the process is seen as less than fair to all.
The standard we use in the insurance industry is outside peer-review. Qualified peer-reviewers are board-certified physicians with a number of years in clinical practice, as well as an academic appointment and/or research background. They are authorities in their field.
Why not apply that to malpractice cases? A panel of say, five qualified, same-specialty physicians vetted by the medical board could peer-review the medical records of the case. To avoid the appearance of a conflict of interest these individuals should not be from areas in close geographic proximity to the defendant. The plaintiff, defendant and their counsels and experts could make presentations before the panel and the panel could question both sides. Much like the Supreme Court, the panel would deliberate, vote and write an opinion, including dissenting views.
If the panel decides that there is a case, it would proceed to the courts. A jury of the general public would hear the case and then be given a copy of the panel’s report. In the presence of the attorneys and judge, the jury could question a member representing the panel regarding the report. The member may not give an opinion. The opinion is the report. His job is merely clarification. The jury would then be sequestered to deliberate the case and judgment award.
There are two components to the award. Economic damages refer to the cost to the inured person, such as past and future medical expenses, lost wages, etc. Noneconomic damages refer to pain and suffering. Both are intended to provide compensation to the injured party. Punitive or exemplary damages are awarded to punish conduct that is reckless disregard for the safety of others beyond negligence. Some states have statutes imposing caps on punitive noneconomic damages treating them separately from compensatory noneconomic damages. Many advocate limiting noneconomic damages and punitive awards to $250,000. In most cases, that is reasonable; however, I have also seen some horrific mistakes that $250,000 would not cover. Limits have been shown to decrease medical malpractice rates for physicians. However, I believe the solution just presented is fair to everyone, eliminating frivolous suits and moving only credible suits forward. Medical judgment is determined by same-specialty medical professionals who understand how to apply the standards of care to the case. The damages are determined by a jury representing the public, with the standard oversight by a trial judge.
Medical malpractice truly is eliminating “access to care” in many parts of the country. In West Virginia, I was told by a gentleman on the medical board at the time that virtually every suit brought, resulted in a judgment against the doctor. In fact, it had gotten so bad that certain specialties were in danger of becoming extinct in the state, such a trauma surgeons and neurosurgeons. Imagine if you or a loved one were in an accident with a head injury, and there was nowhere in the state you could be flown for treatment. A considerable number of states face this issue with “high risk” specialties, such as those listed above, as well as obstetricians, cardiothoracic surgeons and anesthesiology. Other physicians in high liability states have chosen to limit their scope of practice to reduce their liability. Others move to another state. We can no longer ignore this growing problem,” if we are going to preserve access to care and lower healthcare costs.
Saturday, October 17, 2009
Key Issues Not Addressed by the Baucus Bill: Part II
Continuing our look at the Baucus Bill based on the CBO Analyses of September 22 and October 7, 2009...
- The fees and taxes this bill imposes on insurers, medical device makers, clinical laboratories and drugmakers will be considered a “pass-through;” that is - passed through to consumers! It seems the CBO recognizes this on page 2 of the September letter which states those fees “will ultimately raise insurance premiums by a corresponding amount.” This is a tax on every person. It further raises medical costs. It’s counterproductive.
- The CBO admits on page 3-4 that comparing costs of coverage to the present system is difficult “for many reasons, including the extent of the coverage…;the rates and methods used to pay providers…; the quantity and intensity of services used; the insurer’s administrative costs; state regulations of the insurance market; employment status and employers’ decisions about offering coverage and the underlying health of the enrollee pool.” It seems that these are huge gaps in analysis that simply cannot be overlooked if this report is to be taken seriously.
Friday, October 16, 2009
Key Issues Not Addressed by the Baucus Bill: Part I
Let’s take a closer look at what wasn’t included in the bill. Since there is no actual written version of the bill, we will look at the CBO Analyses of September 22, 2009 and October 7, 2009:
- The CBO bases its analyses on the low-cost “silver” plans which will be offered in the exchanges. It is reasonable to think if there are silver plans, there are also gold plans. It begs the question, what package of benefits will be covered under either plan? Apparently the bill does not enumerate them. Federal subsidies are tied to the premiums on the ‘silver’ plans. Unlike the Medicare program which covers 80% of approved charges, the Baucus silver plans will only cover 70% of those charges, with the rest still owed by the patient. It seems there will still be a need for supplemental plans to cover the difference, as with Medicare. This appears an incomplete solution. For those with incomes under 200% of the federal poverty level [$23,600(projected for 2016)] there would be a sliding scale to assist in payment. However, for individuals making $14,700 annually (pre-tax), the premiums plus cost-sharing payments the patient is expected to pay would equal $1,200. This burden still seems quite high for our poorest people. It seems likely they will forgo coverage to save what little they have.
- Premiums are still allowed to vary by age. This is problematic because it fails to address the 13% of those aged 55-64 who are uninsured. Because of their age, these people are the most likely to have accumulated chronic conditions and need insurance coverage to optimally manage their care.
Thursday, October 15, 2009
Baucaus Plan's Impact on Insurance Premiums
The big controversy today is whether or not the Baucus Bill will actually be a solution to higher health insurance premiums. Politicians claim the Price Waterhouse Coopers report commissioned by America’s Health Insurance Plans (AHIP) is alarmist and self-serving in stating that insurance premiums will be higher in the proposed health insurance exchanges. However, it seems this report confirms the Congressional Budget Office’s letter to Senator Max Baucus dated September 22, 2009. It explicitly states on page 6 “…premiums in the new exchanges would tend to be higher than the average premiums in the current-law individual market – again with all other factors held equal – because the new policies would have to cover pre-existing medical conditions and could not deny coverage to people with high expected cost of healthcare. (CBO has not analyzed the magnitude of that effect.)…People with low expected costs for healthcare, however, would generally pay higher premiums.” The CBO admits it has not analyzed the effect of the no-prexisting condition policy mandate. And, it seems the CBO agrees with the PWC report.
The plan is written to fail because healthy small employer groups and individuals will go to the private sector for insurance. When they are ill, they will switch to a relatively “lower” cost co-op plan. Since pre-existing condition exclusions are outlawed, this co-op will be a magnet for the high-risk individuals or employer groups, either because of sickness or age. Since there is not a mandate for continuous coverage to be maintained, some individuals may choose to “save” money, by paying the federal fine and purchasing coverage only when they are ill. From an underwriting standpoint, there is nothing to protect the financial integrity of the Baucus plan.
The plan is written to fail because healthy small employer groups and individuals will go to the private sector for insurance. When they are ill, they will switch to a relatively “lower” cost co-op plan. Since pre-existing condition exclusions are outlawed, this co-op will be a magnet for the high-risk individuals or employer groups, either because of sickness or age. Since there is not a mandate for continuous coverage to be maintained, some individuals may choose to “save” money, by paying the federal fine and purchasing coverage only when they are ill. From an underwriting standpoint, there is nothing to protect the financial integrity of the Baucus plan.
Wednesday, October 14, 2009
Senate Finance Committe Approves Baucus Bill
What exactly was voted on yesterday? The Senate Finance Committee refused to post a copy of the proposed bill online for Americans to read. It appears that the reason why may more likely be found in the CBO's October 7, 2009 letter to the Chairman of the Senate Finance Committee, Sen. Max Baucas, page 8 which states that "The Chairman's mark, as amended, has not yet been converted into legislative language. The review of such language could lead to significant changes in the estimates of the proposals effects on the federal budget and insurance coverage."
The CBO goes on in that letter to state (page 9) that "Federal spending that would be funded by future appropriations is not reflected in these estimates. For example, implementation costs for operations of the Internal Revenue Service and the Centers for Medicare & Medicaid Services are not included." Any business must count the costs to implement an idea before it can determine whether or not there will be a positive return on the investment. How is government any different?
It seems the rules of order are now disregarded in the Senate, committees are now passing what is at best the notion of a bill/plan as opposed to a definitive plan. How can such a bill/plan be responsibly administered? A health plan requires a written contract to administer it. Apparently, Americans are now discovering not only is Congress too lazy to read the bills presented for a vote, Congress is now too lazy to even write the bills it passes! Are notions of legislation all we need now? Are we now making it all up, after the fact? This is a travesty of democracy. Americans work hard, pay their taxes and deserve far better treatment than this from their elected officials.
The CBO goes on in that letter to state (page 9) that "Federal spending that would be funded by future appropriations is not reflected in these estimates. For example, implementation costs for operations of the Internal Revenue Service and the Centers for Medicare & Medicaid Services are not included." Any business must count the costs to implement an idea before it can determine whether or not there will be a positive return on the investment. How is government any different?
It seems the rules of order are now disregarded in the Senate, committees are now passing what is at best the notion of a bill/plan as opposed to a definitive plan. How can such a bill/plan be responsibly administered? A health plan requires a written contract to administer it. Apparently, Americans are now discovering not only is Congress too lazy to read the bills presented for a vote, Congress is now too lazy to even write the bills it passes! Are notions of legislation all we need now? Are we now making it all up, after the fact? This is a travesty of democracy. Americans work hard, pay their taxes and deserve far better treatment than this from their elected officials.
Tuesday, October 13, 2009
The Baucus Bill & Physician Reimbursement
The Baucas Bill [America's Healthy Future Act of 2009] does not eliminate the flawed physician reimbursement formula [Medicare SGR (sustainable growth rate)]. It allows for the .5% increase Congress appropriated for 2010; however, it does not eliminate the scheduled 25% cut in 2011. It is assumed that reimbursement rates will remain at current low levels (as specified by the SGR) for the subsequent years through 2019.
Historically, Congress has made adjustments annually to this "flawed" reimbursement formula which rises significantly slower than the rate of medical inflation. By cutting reimbursement rates in 2011 by 25% and keeping them there, there will be far fewer providers willing to provide services to Medicare patients. On the other hand, if Congress continues the annual adjustment process, the projected Congressional Budget Office "savings" in the bill begin to evaporate.
The bill does little to address the current high costs of providing actual care, which someone must pay. Physicians will not be able to sustain a 25% pay cut to provide care for Medicare patients. Those that do, will not be able to continue such services in subsequent years without any inflation adjustments. Apparently, a significant portion of the expense of providing care for the elderly in the future is expected to be born by physicians.
The projected "savings" of this bill are dubious at best; it is really cost-shifting. It seems a bit premature for the Senate Finance Committee to be patting itself on the back, given that this is not actually a viable solution.
Historically, Congress has made adjustments annually to this "flawed" reimbursement formula which rises significantly slower than the rate of medical inflation. By cutting reimbursement rates in 2011 by 25% and keeping them there, there will be far fewer providers willing to provide services to Medicare patients. On the other hand, if Congress continues the annual adjustment process, the projected Congressional Budget Office "savings" in the bill begin to evaporate.
The bill does little to address the current high costs of providing actual care, which someone must pay. Physicians will not be able to sustain a 25% pay cut to provide care for Medicare patients. Those that do, will not be able to continue such services in subsequent years without any inflation adjustments. Apparently, a significant portion of the expense of providing care for the elderly in the future is expected to be born by physicians.
The projected "savings" of this bill are dubious at best; it is really cost-shifting. It seems a bit premature for the Senate Finance Committee to be patting itself on the back, given that this is not actually a viable solution.
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