As I pointed out in a public meeting, Republicans have had control of the Michigan Senate since 1992, the House two-thirds of the time, and the governorship two of 3 times up till Gretchen Whitmer came to office. Yet under the control of Republicans, the state’s infrastructure is crumbling, its economy has decreased when compared to other nearby competitive states, and employment Participation Rate still has not returned to what it was pre-2008 when the Republicans left a nation’s economy in shambles and a large deficit.

The one thing Republicans are good at is attacking the rights of everyday citizens,  a woman’s right to birth control and information, the rights of minorities to societal equality, and the rights of those living homeless and in poverty. In Michigan, the majority Republican legislature mostly sponsored by creative districting will pass a veto – proof bill based upon petitions from those who wish to deny women the right to decide rather than put the decision on a ballot initiative in Michigan.

From Bloomberg Law:

“Anti-abortion group Right to Life Michigan said it handed in more than enough valid signatures Dec. 23 to put its proposed ban of dilation-and-evacuation abortion procedures before the Legislature in 2020. The procedure, which dismembers the fetus, is the most common second-trimester abortion operation.

The vote would be held under a divisive process that allows the Michigan House and Senate to adopt citizen referendums headed to the ballot on a majority vote not subject to veto. Right to Life of Michigan has used the referendum-to-adoption process four times in the past when a governor opposing abortion restrictions proved a barrier in Lansing, and the group says it already has assurances from GOP leaders in the House and Senate that the ban will be adopted.

‘The 379,418 people who signed their names on this life-saving dismemberment ban should be confident that our prolife majorities in the Michigan Legislature will pass the bill again, just like they did back in May,’ Right to Life of Michigan President Barbara Listing said in a Dec. 23 statement.’”

Michigan Edges Toward Ban on Common Abortion Procedure, Bloomberg Law, December 23, 2019

Comments (4) | Digg Facebook Twitter |

Sigh . . .

If the general public has not caught it, there are some of us who watch the political mechanizations by commercial healthcare to improve their lot in Congress. I know the public has not caught this switcheroo in Congress causing them to look good (and boast of it) in removing new drug exclusivity from NAFTA. What we have missed is it was granted in H.R. 1865 instead and for a longer period of time to boot. Read on to see how this was accomplished.

Addressed to Congresswoman Elissa Slotkin:

The Good:

Yes with the revision of NAFTA, Democrats “removed a provision giving the makers of ultra-expensive biologic drugs 10 years of protection from less expensive knockoffs. This is up from 5 years.

Democrats opposed what they called a giveaway to the industry locking in inflated prices by stifling competition. Top examples of the injected drugs made from living cells include medications to fight cancer and immune disorders such as rheumatoid arthritis. This legislation impacted drugs such as Rituxan, Humira, and Enbrel. Humira and Rituxan being two of the more expensive drugs on the market which have incurred pricing increases exceeding twice Medical CPI. From January 2012 to December 2017, Humira experienced price increases of 124%. Rituxan which I use from time to time is right behind Humira in cost.

The Bad:

Recently finished up an article on the prices/costs of healthcare and the resulting increases in Healthcare Insurance and deductibles whether it be Employer, ACA, or Medicare/Medicaid. House Bill H.R. 1865 was passed in the Senate and one of the few to make it through the Senate. It was the 2020  budget bill coming out of the House, altered by the Senate and altered by the House and finally passed by the Senate.

Besides repealing the Cadillac tax and the Medical Device tax which were never implemented and the Healthcare Insurance tax which was implemented; the bill also included (page 1503) a phrase to include “chemically synthesized polypeptides,” medicines such as Novo Nordisk’s Victoza. While it is only for new drugs and not drugs newly deemed to be Biologics such as Humulin and Humira, it is similar to what was removed from the NAFTA bill, is 12 years long for exclusivity, and it is still a huge and similar give away to Pharmaceutical companies the same as what was in the NAFTA revisionary bill.

And The Ugly:

The reasoning for the designation is to give companies a chance to bring new and cheaper bio-similar drugs to market. Ok fine bringing a drug to market, risk adjusted costs can be recouped in 5 years for the most expensive drug such as Humira and Rituxan as detailed by the recent World Healthcare Organization Technical Report on Cancer Drugs. With anywhere from 50% increases to a doubling of prices over a two year period (JAMA Network Open), Pharma does not need legislative incentives through extended exclusivity to be creative and profitable.

References:

Generic Drug Groups See Giveaway to Brand Names in Spending Bill, Bloomberg Law, Alex Ruoff and Jaquie Lee, December 19, 2019

THE HOUSE AMENDMENT TO THE SENATE AMENDMENT TO H.R. 1865, Appropriations Act, 2020, Page 1503, December 16, 2019

TECHNICAL REPORT Pricing of cancer medicines and its impacts, World Health Organization

run75441 (Bill H)

Comments (8) | Digg Facebook Twitter |

American hero John Lewis has Pancreatic Cancer.

He should look at these two studies of the only treatment that has actually worked and a similar treatment.

Also read this article in The Lancet.

and in particular “Of the 18 patients given the maximum tolerated dose, 11 (61%) achieved an objective (complete or partial) response.”

American heroine Ruth Bader Ginsburg might also be interested if she has a relapse.

Comments (2) | Digg Facebook Twitter |

Perhaps, I am on the wrong side of the argument on how to control healthcare costs of which one proposed solution is a part of the latest budget bill passed in a bipartisan effort in Congress on December 19, 2019. Others may disagree with me on my thoughts.

What was passed was superficial and will not fix the rising cost of healthcare which drives increased healthcare insurance deductibles and premiums. Oh, and surprise billing in hospitals still lives! Fixing surprise billing was set aside by Congress.

The latest bill (H.R. 1865) to impact the ACA passed the House 297 to 120 and the Senate 71 to 23. In the bill, the Health Insurance tax will be repealed in 2021, the Cadillac tax in 2020, and the Medical Device tax in 2020. The repeal of the three taxes will result in the loss of a projected revenue of $373.3 billion over 10 years. The largest projected revenue loss will come from repeal of the Cadillac tax ($197 billion), followed by the Health Insurance tax ($150.8 billion), and the Medical Device tax ($25.5 billion).

All repealed for Congress to be able to say we pushed back on costs and helped to prevent the rising costs by blocking mandated tax increases. Except they also undercut the ACA and increased the annual deficit.

I am going to skip the history involved in the delays of these taxes and go right to my objections after I tell you what these taxes were expected to do.

Cadillac Tax: As Newsweek reported in 2017, the so-called “Cadillac tax” would have capped the tax deductions individuals could claim based on their health insurance benefits. It would have imposed a 40 percent excise tax on employer-sponsored plans that exceeded $10,000 in premiums per year for a single person or $27,500 for a family. The Cadillac tax was set (for the umpteenth time) to take effect in 2022. The reasoning for this tax was to capture special plans for Execs whose plans were hidden amongst the regular plans.

Health Insurance Tax: The CMS’ Office of the Actuary calculated that the net cost of private health insurance grew 15.3% in 2018, up from 9.5% in 2017, the biggest increase since 2003. The actuaries said this was driven largely by the temporary reinstatement of the Health Insurance tax, which was suspended by Congress this year. Actuaries can say what they wish too, except it ignores the last 10 years of increased healthcare costs untouched by this tax.

Medical Device Tax: The medical device tax was a 2.3 percent excise tax on gross sales of medical devices used by humans (not animals) such as x-ray machines and hospital beds. It was implemented in 2013 but had been suspended since 2015, according to the Tax Foundation. It was thought the increase in healthcare would spawn the sales f equipment (it has) and the revenue  would subsidize the ACA.

Preventing the implementation of these taxes does “nothing” to forestall increasing healthcare insurance deductibles and premiums and healthcare costs. Also keep in mind, portions of the ACA were passed under Reconciliation, the loss of revenue from the tax cancellation may cause other cuts to the ACA as the ACA must be deficit neutral at 10 years which is 2020 (?). Fix the issue!

Past the leap, what will impact the rising costs and resulting prices of healthcare and healthcare premiums.

Comments (4) | Digg Facebook Twitter |

It is not a dirty or hidden little secret. Insurance companies offering MA plans do not tell you that once you are in their plan, you are there potentially forever. Returning to traditional Medicare is ok but, getting a Medigap Plans to supplement the gap may lead to rejection or much higher premiums if you choose to come back and especially if their are pre-existing conditions.

The same as the Commercial MA companies, Medicare.gov websites are not always clear about the process of transferring out of MA to traditional Medicare and obtaining a Medigap plan. Being unconditionally accepted by a Medigap plan is guaranteed only within the first 12 months after enrolling in Medicare at age 65.

In 2019, one-third (34%) of all Medicare beneficiaries, 22 million seniors were enrolled in Medicare Advantage (MA) plans.

As most know, Medicare consists of Part A, B, C, and D plans. Part A has no premiums, Part B has a premium (paid to the Gov), and Part D (prescriptions) has a premium which is paid to commercial healthcare insurance. To cover the gaps in A & B and the gap, you buy supplemental insurance which is about the same as Part B in premium cost. Unless Medicare rules change, the most one can experience is changes in premiums.

In contrast, Part C or Medicare Advantage plans can cover a broad array of health services at a low cost. Unless one gets sick, the price for MA Plans can remain low. If one does gets sick, out-of-pocket costs can increase in later years. Once in an MA plan, getting out can result in less affordability. Medigap plans in all but four states can and do reject people or require higher premiums if you caome back to them after Medicare Advantage Plans. Diabetes, heart disease, or even a knee replacement can be criteria for exclusion.

“After Mills underwent a mitral valve repair and suffered a mild stroke with no lasting effects, the San Diego resident’s plan now charges him hundreds of dollars in monthly copays for drugs and other medical services. He had to pay $295 a night for his hospital stay.

But there was a much bigger shock. Mills, 71, learned that switching out of his MA plan he would incur exorbitantly higher costs the next time he needs a serious medical intervention. If he moves to traditional Medicare and a prescription plan, he will still need a supplemental Medigap plan to pick up his 20% copays and deductibles.”

Again, this is something most people do not know, an should know before they make any move to Medicare Advantage plans. Furthermore, there are many MA plans which have narrow networks to which you must go to. In comparison, traditional Medicare pays where ever you go in the United States.

Medicare Advantage Enrollees Discover Dirty Little Secret – Getting Out is a lot harder than Getting In, MedPageToday, Cheryl Clark, December 3, 2019.

A Dozen Facts About Medicare Advantage in 2019, Gretchen Jacobson, Meredith Freed, Anthony Damico, and Tricia Neuman, KFF, June 06, 2019

Comments (4) | Digg Facebook Twitter |

“The New Hospital Price Disclosure Rule Is Important, But Only A First Step,” Health Affairs, James C. Capretta, August 26, 2019

The new proposed regulation on hospital price transparency is an important step toward consumer-friendly price information. The regulation introduces into federal price transparency, requirements such as the concepts: of service standardization, consumer-friendly organization and terminology, and bundling of which all of are crucial for a marketplace to become price competitive.

As the administration acknowledges, this regulation by itself will not fully address the opacity of today’s market. Additional disruptive changes will be necessary to give consumers usable pricing information. Among which, meaningful transparency requires stricter standardization of the services being priced and “all in” pricing matching how consumers think about the services they need.

Additionally, the reform of the nation’s insurance payment system must be integrated into the price transparency effort to ensure consumers are price sensitive across a wider range of services. Suppliers of services will only compete on price when significant numbers of consumers have strong incentives to seek out low-cost alternatives.

Me: To which I would add there is a big difference between price and cost and it is not being acknowledged.

The Trump administration on Friday put forth two long-anticipated rules that increase price transparency for both hospitals and insurers.

The CMS’ hospital price transparency requirements finalize changes that require health systems to make their standard fees available on-demand and online. The “transparency in coverage” proposed rule would require health plans, including employer-based plans, and group and individual plans, to inform participants, beneficiaries and enrollees about price and cost-sharing information ahead of time.

The agency hopes increased price transparency will boost competition among hospitals and insurers to drive down healthcare spending.

Under the new price transparency rule, hospitals must publish their standard charges online in a machine-readable format. They will need to create at least 300 “shoppable” services, including 70 selected by the CMS.

Under the rule, hospitals would have to disclose the rates they negotiate with third-party payers, which some experts say could be illegal.

“Hospitals get ready to fight CMS in Court over Transparency,” FierceHealthcare, Robert King, November 15, 2019

More after the leap!

Comments (4) | Digg Facebook Twitter |

Median total costs Table for the most common prescriptions of each of the 49 high-volume brand-name drugs from 2012 through 2017 as detailed in JAMA Network Open’s “Trends in Prices of Popular Brand-Name Prescription Drugs in the United States” 2019.”

A Bit of A Summary: This particular table relates back to a post I wrote; Does Trump Read JAMA Network Open? which reviewed the latest JAMA findings (Trends in Prices of Popular Brand-Name Prescription Drugs in the United States) on pharmaceutical price increases from 2012 to 2017. It is another in a series of articles which have looked at the rising prices of pharmaceuticals. The World Health Organization (2018) findings reflected on R & D costs for cancer drugs and the amount of time needed to recoup those costs (median of 3 years for $750 million) with an average return of $14. 50 for every $1 invested in R & D for cancer drugs.  For the maximum estimated risk-adjusted cost of R&D (US$2.827 BN), the time to cost recovery was 5 years (range: 2 years; 10 years, n=56).

Click on the JAMA Table: Median Total Cost of Top-Selling Brand-Name Drugs 2012 – 2917 to enlarge and again to magnify if needed.

Taken “From the Trends in Prices of Popular Brand-Name Prescription Drugs in the United States” findings, substantial cost increases among these drugs was near universal, with a 76% median cost increase from January 2012 through December 2017, and almost all drugs (48 [98%]) displaying regular annual or biannual price increases. Of the 36 drugs available since 2012, 28 (78%) have seen an increase in insurer and out-of-pocket costs by more than 50%, and 16 (44%) have more than doubled in price. Insulins (ie, Novolog, Humalog, and Lantus) and tumor necrosis factor inhibitors (ie, Humira and Enbrel) demonstrated highly correlated price increases, coinciding with some of the largest increase in drug costs. Relative price changes did not differ between drugs that entered the market in the past 3 to 6 years (2012 – 2017)  and those having been on the market longer (number of drugs, 13 vs 36; median, 29% increase from January 2015 through December 2017; P = .81) nor between drugs with or without a Food and Drug Administration – approved therapeutic equivalent (number of drugs, 17 vs 32; median, 79% vs 73%; P = .21). Changes in prices paid were highly correlated with third-party estimates of changes in drug net prices (ρ = 0.55; P = 3.8 × 10−5), suggesting that the current rebate system, which incentivizes high list prices and greater reliance on rebates, increases overall costs.

The ICER Report (Unsupported Price Increase Report) compared the percentage increases in the  Wholesale Acquisition Cost (WAC – second Column)  to the increase in the Medical Care Consumer Price Index (CPI) over the same period and excluded those drugs with a WAC increase less than 7.32% or two times the increase in Medical Care CPI over the same period. The medical care CPI is one of eight major components of the CPI recorded and reported by the US Bureau of Labor Statistics .

CPI for Medical consists of medical care services (professional services, hospital and related services, and health insurance) and medical care commodities (medical drugs, equipment, and supplies). ICER using overall Medical CPI and not a lone services or commodity related one or subcomponent(s) of either or each was to reflect increases in drug prices relative to inflation in the overall price of medical care. The 77 drugs shown in the ICER Table 2.2 had an increase in Wholesale Acquisition Cost (WAC) greater than 7.32% over  the two-year period (4th quarter 2016 – 4th quarter 2018). The remaining 23 drugs were excluded from further analysis even though they may have been greater than one times CPI.

The ICER Table 2.3 depicting 9 drugs of the 77 shows  the percentage change in net price (Column 3) over the two-year period from the fourth quarter of 2016 to the fourth quarter of 2018, and the and the increase in drug spending during calendar years 2017 and 2018 and the 4th column depicts net revenue after discounts, rebates, concessions to wholesalers and distributors, and patient assistance programs same as Table 2.2 in the report. Only the ICER Table 2.3 is shown here (JAMA chart above).

The first seven drugs under assessment did not display evidence meeting the criteria accepted evidence grading system called GRADE. As a result, the seven are reported as having price increases “unsupported by new clinical evidence.” GRADE is a method used by systematic reviewers and guideline developers to assess the quality of evidence and decide whether to recommend and intervention.  GRADE differs from other appraisal tools for three reasons: (i) because it separates quality of evidence and strength of recommendation, (ii) the quality of evidence assessed for each outcome, and (iii) observational studies can be ‘upgraded’ if they meet certain criteria.

So What Does All of This Mean?

Other reports recognize similar. Healthcare costs are increasing at a much higher rate than inflation, enough so, JAMA is reporting patented pharmaceutical price increases to be 50% to 100% between 2007 and 2014, as are the generic versions, and those introduced during 2007 and 2014 have seen similar sizeable increase. The exhibited JAMA report details the increases.

The ICER report goes a bit further and establishes a benchmark of increase at twice Medical CPI and whether a price increase greater than the benchmark can be justified by the result of significant value brought to the market to account for the increase. At greater than a generous twice Medical CPI, the top nine drugs exceeded this benchmark and after investigation,  did not bring significant value to the market place following the 4 significant values claimed by pharmaceutical companies. This analysis was completed on  9 of 77 drugs having price increases greater than twice Medical CPI. Seven of the nine drugs were shown to have price increases for which additional value could not be substantiated. The remaining two had evidence of clinical value which could not be examined at this time. Then there is the balance of the 77 drugs which have had price increases greater also. Legit or not?

Remember, the ICER is the organization which justifies pricing for many of the new drugs coming to the market place.

The World Health Organization Report reviews the costs of R & D for Cancer Drugs which pharmaceutical companies blame as a the major factor for higher prices over the life of their patents. The WHO document reports the R & D costs are recouped in a median 3 to 5 years for R & D investments of $750 million to $2.8 Bn. Drug patents are significantly long than the recovery. Rent taking . . .

This is just pharma alone and I did not look at hospitals, clinics or hospital supplies. Briefly, “Health Affairs – Hospital Prices Grew Substantially Faster Than Physician Prices For Hospital-Based Care In 2007–14″ reports  inpatient care at hospital prices grew 42 percent, while physician prices grew 18 percent. Similarly, for hospital-based outpatient care, hospital prices grew 25 percent while physician prices grew 6 percent. Both this report and Kocher and Berwick’s “While Considering Medicare For All: Policies For Making Health Care In The United States Better: Health Affairs” point to increases in hospital care as the leading cause of increased healthcare insurance premiums.

The emphasis by politicians has been on the pricing of drugs without looking at the supply chain and the PBM’s influence on it; without looking at the costs of R & D, the return from sales revenue and how quickly those costs are recovered; and without looking at the exclusivity granted drugs through patents that allow the ability to increase pricing without a returning benefit clinically, socially, to the system, and most of all to the patient. The emphasis by government should be a review of drug costs to establish a fair market value/price. I do not see a foundation being established for the setting of pricing.

Trends in Prices of Popular Brand-Name Prescription Drugs in the United States, JAMA Network Open, Nathan E. Wineinger; Yunyue Zhang; Eric J. Topol, May 2019

Unsupported Price Increase Report, Institute for Clinical and Economic Review; David M. Rind, Foluso Agboola, Varun M. Kumar, Eric Borrelli, Steven D. Pearson; October 2019

Technical Report, Pricing of cancer medicines and its impacts; World Health Organization; 2019

While Considering Medicare For All: Policies For Making Health Care In The United States Better; Health Affairs; Kocher and Berwick; 2019

“Health Affairs – Hospital Prices Grew Substantially Faster Than Physician Prices For Hospital-Based Care In 2007–14;” Health Affairs; Zack Cooper, Stuart Craig, Martin Gaynor, Nir J. Harish, Harlan M. Krumholz, and John Van Reenen; 2019

Run75441 (Bill H)

Comments (4) | Digg Facebook Twitter |

Since Major Provisions of Affordable Care Act Took Effect

Key Findings:

• The number of uninsured children in the United States increased by more than 400,000 between 2016 and 2018 bringing the total to over 4 million uninsured children in the nation.

• These coverage losses are widespread with 15 states showing statistically significant increases in the number and/or rate of uninsured children (Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Indiana, Missouri, Montana, North Carolina, Ohio, Tennessee, Texas, Utah, West Virginia), and only one state (North Dakota) moving in the right direction.

• Loss of coverage is most pronounced for white children and Latino children (some of which may fall into both categories), young children under age 6, and children in low- and moderate- income families who earn between 138 percent and 250 percent of poverty.

• States not expanding Medicaid to parents and other adults under the Affordable Care Act have seen increases in their rate of uninsured children three times as large as states that have expanded Medicaid.

Causes of Decreased Coverage

The Georgetown Health Policy Institute (full report) details in its report the following factors have contributed to the erosion in children’s health coverage: efforts to repeal the Affordable Care Act and cut Medicaid; an intentional delay by the Republican administration to fund the Children’s Health Insurance Program (2017); the elimination of the individual mandate penalty (2019); cuts to enrollment outreach and advertising pre-ACA enrollment; inadequate oversight by the federal government of state Medicaid programs which create more red tape barriers; and an administration enacted, climate of fear of deportation and intentional confusion for immigrant families discouraging them from enrolling eligible children in Medicaid or CHIP (2016).

The Republican party has made it a goal to repeal the ACA as passed by Barack Obama and Democrats early on in its administration. Under President Trump, the Republicans have done everything possible to deny healthcare coverage to legal immigrants and their families, the poor, and those who are marginalized. The full report includes a series of charts which pictorially represents the issues briefly cited here. It also includes a state by state analysis of the uninsured. It should come as no surprise, the South has 52% of the total uninsured children with Texas have 21.5% of the total uninsured children in the nation.

The Number of Uninsured Children Is On the Rise,” October 2019, Georgetown Health Policy Institute, Joan Alker and Lauren Roygardner

Families looking for information on how to enroll their children in Medicaid or CHIP should call 877-KIDS-NOW or visit insurekidsnow.gov

Run75441 (Bill H)

Comments (1) | Digg Facebook Twitter |

The ICER (Institute for Clinical and Economic Review)

Is an independent and non-partisan research organization. Its purpose is to evaluate the clinical and economic value of prescription drugs, medical tests, and health care and health care delivery innovations. ICER conducts rigorous analyses of all clinical data with key stakeholders to include patients, doctors, life science companies, private insurers, and the government and translate the evidence into policy decisions that lead to a more effective, efficient, and just health care system.

As explained by their site information, ICER is known as the nation’s independent watchdog on drug pricing. It’s drug assessment reports include a full analysis of how well each new drug works and the resulting “clinical value, quality of life, benefit to the health-care system and society” used to establish a price. Using the drug assessment report, a “value-based price benchmark” is established  reflecting how each drug should be priced addressing all four factors. Reports also evaluate the potential short-term budget impact of new drugs to alert policymakers to situations when short-term costs may strain health system budgets and lead to restrictions on patient access. Ensuring objectivity in its work, all ICER reports are produced with funding from non-profit foundations and other sources that are free of conflicts of interest from the life science industry or insurers.

What I have seen in the past is the ICER establishing pricing for new drugs taking into consideration these factors; “the patient’s quality of life, and the resulting benefits to the health-care system, and society.” This is the first time I am seeing the ICER looking at price increases and determining whether the value delivered substantiates a price increase. By the numbers: Here are the drugs (and manufacturers) highlighted in a recent ICER’s report, with the increase in net spending attributable to each drug’s price increase, and citing the increases could not be justified by the value delivered.

The figures reflect the dollars Americans spent on drug copays and other out-of-pocket costs in addition to the higher amounts people paid through health insurance premiums and taxes.

Past the leap is an explanation on how the ICER reached its conclusions for the nine drugs and the limitations to this findings.

Comments (2) | Digg Facebook Twitter |

It is a given, Trump’s new executive order  is calling for “market-based” pricing or whatever the market will bear pricing to replace Medicare set pricing. Trump sees a conflict between Medicare and the market. Well he is right; but, his solution ll only aggravate the problem of costs.  It will drive up costs for everyone in Medicare, destroy traditional Medicare as healthcare for the elderly, steer more people into costly commercial healthcare, reduce Medicare funds at a faster pace, and allow the already profitable healthcare industry to increase profits well beyond what it is today.

But, but are Medicare Advantage Plans ripping people and Medicare off? “Yes they are” a for-profit industry is profiteering by taking advantage of a system of healthcare for which they wanted to be a part. As Trump signed the EO, it is stunning to watch a bunch of seniors up on the stage clapping as el jefe was showing off his executive order allowing commercial healthcare to further pickpocket them, exploit healthcare, and destroy Medicare. All smiles there . . .

Medicare Advantage programs are managed differently than Fee for Service traditional Medicare. Besides providing a series of services not found in regular Medicare, the MA plans instituted a different form of physician/hospital payment called Capitation. Capitation Payments are theoretically used by managed care organizations to control health care costs. The VA is a good example of this type of managing costs. A capitation payment model  controls the use of health care resources by putting the physician at a financial risk if too many services are provided to patients or if quality decreases as witnessed by return patients for the same disorder or illness. To ensure patients do not receive suboptimal care through under-utilization of health care services, MAOs measure the rates of resource utilization in physician practices. These utilization reports are then made available to CMS to measure health care quality, utilization, costs, etc.. They are also linked to financial rewards such as withheld fees and bonuses.

Past the leap, I explain how the capitation model can be gamed by Advantage plans.

Comments (2) | Digg Facebook Twitter |