The ACP Advocate Blog

by Bob Doherty

Tuesday, July 24, 2012

Facts challenge physicians’ views on Medicare spending

If you ask doctors about Medicare spending growth, most will tell you that Medicare payments to doctors haven’t increased in a decade, and that doctors are turning away Medicare patients in droves. But they would be mistaken on both counts.

An authoritative compilation of current data from the Medicare Payment Advisory Commission shows what is really happening with Medicare physician spending:

Medicare spending per beneficiary on physicians’ fee schedule services steadily increased from 2001 to 2011.  In 2001, Medicare spent $1,374 per enrolled senior, and $1,160 per disabled enrollee; ten years later, it was $2,181 and $1,883 respectively.

Volume growth is the reason Medicare is spending more.  From 2000 through 2010, Medicare payment updates increased by only 8 percent (due principally to the Medicare SGR formula), compared to a 22 percent increase in physicians’ costs of delivering care as measured by the Medicare Economic Index. But overall spending per beneficiary on Medicare physician fee schedule services increased by 63.7 percent during the same ten-year period. How could that be?  Because the volume of services—the number of tests, visits and procedures ordered by physicians on their Medicare patient’s behalf—increased at a much faster rate, pushing overall spending per patient upward, even as payment rates didn’t keep up with inflation. 

More diagnostic testing and procedures are the main culprits.  From 2000 through 2010, the volume of diagnostic tests increased by 89 percent, the volume of imaging by 81 percent, and the volume of procedures other than major surgery by 65 percent. The volume of major surgical procedures, and evaluation and management services (office, nursing home, home, hospital, and other visits), increased at a much lower rate of  35 percent.

Because of higher volume, physicians’ Medicare revenue has increased.  Even though the SGR has kept payment updates below inflation, MedPAC reports that “growth in the volume of services contributed more to the rapid increase in Medicare spending payment rate increases ... both factors—updates and volume growth—combine to increase physician revenues.”

Medicare patients have better access to physicians than the privately insured.  In 2011, 74 percent of Medicare beneficiaries, and 71 percent of privately insured patients, reported “never” having to wait longer than they wanted to get an appointment for routine care. Medicare beneficiaries also reported more timely appointments for injury and illnesses. Only 6 percent of Medicare enrollees said they were looking for new primary care physician, compared to 7 percent of the privately insured, suggesting that “most people are either satisfied with current physician or did not have to look for one.” 

A larger, but still comparatively small, number of Medicare patients reported trouble finding a primary care physician. Of the 6 percent of Medicare beneficiaries who were looking for a new primary care physician in 2011, 35 percent reported having trouble finding one—23 percent of them reporting their problem as “big” plus 16 pecent reporting their problem as “small.” The Commission notes that “although this number amounts to about 2 percent of to the total Medicare population reporting problems, the Commission is concerned about the continuing trend of greater access problems for primary care.”

I suspect that the first reaction of many physicians to these data will to insist that MedPAC must be wrong, that they know from their own experiences that Medicare payments haven’t kept pace with their costs and that they know of many doctors who are turning away Medicare patients.  And they may be right, in the sense that their own personal experiences may not match the data on national trends and the cumulative impacts of spending growth per patient and physician.

But just as good physicians don’t ignore or dismiss clinical data that challenges their own perceptions and experiences, the medical profession shouldn’t ignore the data on what is really going on with Medicare spending and access. The fact is that spending on physician services in the aggregate has grown rapidly, even with the SGR-imposed limits on payment updates, and the culprits are more testing, imaging, and procedures being ordered for each beneficiary. And despite some evidence of greater access problems for primary care, most Medicare patients—so far—are not having major problems getting appointments or finding a primary care physician or a specialist.

Armed with these data, Congress isn’t likely to spend hundreds of billions to just eliminate the SGR, absent a plan to control the volume of services. As MedPAC notes:

“Volume growth increases Medicare spending, squeezing other priorities in the federal budget, and requiring taxpayers and beneficiaries to contribute more to the Medicare program . . . They are largely responsible for the negative updates required by the SGR formula. Rapid volume growth may be a sign that some services in the physician fee schedule are mispriced.”


Last week, ACP’s President David Bronson, MD, FACP, told the House Energy and Commerce Committee about innovative, physician-led initiatives that could help solve the Medicare SGR problem, and today, he testified before the House Ways and Means on how ACP proposes “to transition from a fundamentally broken physician payment system to one that is based on the value of services to patients, building on physician-led initiatives to improve outcomes and lower costs.”

Ignoring the facts will not heal a broken payment system, but offering the medical profession’s own diagnosis and treatment plan informed by the evidence just might help. 

Today’s question: what is your reaction to the data on Medicare spending on physician services?

Tuesday, July 10, 2012

The uninsured aren't the issue???

For most of the past 100 years, there has been a bipartisan consensus that enacting legislation to ensure that every American has access to health insurance is a national priority, even as Republican and Democrats disagreed on how to get there. The Washington Post’s Ezra Klein notes that as recently as 2007 Senator Jim DeMint (R-SC), now a Tea Party favorite, sent a letter to then-President George W. Bush offering to work with him to pass legislation that would “ensure that all Americans would have affordable, quality, private health coverage, while protecting current government programs. We believe the health care system cannot be fixed without providing solutions for everyone. Otherwise, the costs of those without insurance will continue to be shifted to those who do have coverage.”

Senator DeMint could have been channeling President Teddy Roosevelt, who first called for universal coverage in 1912. Teddy, of course, was a Republican.

Much has changed in five years. Earlier this week, Senate Minority Leader Mitch McConnell was asked by Fox News how the GOP planned to address the more than 30 million uninsured who will lose access to health insurance if the Affordable Care Act is repealed, and he replied “that is not the issue.” His position is now the mainstream consensus among most Republicans—enacting legislation to provide coverage to all Americans is no longer the party’s objective. None of the “replace” plans offered so far by the GOP—selling insurance across state lines, health savings accounts, or medical liability reform—do much of anything to reduce the number of uninsured. 

Which is too bad. The country could surely use a spirited debate between the parties on how to make sure Americans have health insurance coverage they can afford. We know that the GOP hates Obamacare and will do everything it can to make it go away. But I wish it would offer an alternative that shows us how they would cover everyone that costs less, doesn't raise taxes, uses free market principles, and has a smaller role for government, if such a thing is possible, instead of saying that the uninsured are not the issue. In other words, do what the 2007 version of Jim DeMint advocated, and develop a plan to “ensure that all Americans would have affordable, quality, private health coverage, while protecting current government programs.” This would be a debate worth having in this election year.

And in my mind, and in ACP's view, the uninsured ARE the issue. Today, the Annals of Internal Medicine published a commentary from me, asking whether the Affordable Care Act, as changed by the Supreme Court, is a milestone or detour on the road to universal coverage. My answer is that it is both: it will expand coverage to tens of millions, but the Supreme Court's decision on the Medicaid provision opens up the possibility that in some states, coverage would be available to everyone except the poor. I don't know how anyone could reasonably justify making an explicit policy decision to shut out the poorest among us from coverage. Yet that's what the Supreme Court decision allows, and what some states, regrettably, are threatening to do.

My Annals article quotes Dr. Atul Gawandes's observation that “[M]any levers of obstruction remain; many hands will be reaching for them. For all that, the Court's ruling keeps alive the prospect that our society will expand its circle of moral concern to include the millions who now lack insurance. Beneath the intricacies of the Affordable Care Act lies a simple truth. We are all born frail and mortal—and, in the course of our lives, we all need health care. Americans are on our way to recognizing this.”

I hope he is right, and that Republicans and Democrats alike will once again agree that the uninsured are the issue, and that our society must expand its circle of moral concern to include the millions who now lack health insurance. And then debate how best to get them insured, instead of saying that this isn't the issue.

Today's question: Do you agree or disagree that the uninsured aren't the issue?

Monday, July 9, 2012

What will it take for the ACA to survive its perilous journey?

Read my analysis http://bit.ly/OSaVXF just published in the Annals of Internal Medicine, The Supreme Court and the Affordable Care Act, Milestone or Detour on the Road to Universal Health Insurance Coverage?  Physician leadership will be critical in making the care that health insurance for all is a moral, ethical and clinical imperative.  More in a future blog post.

Friday, July 6, 2012

The next battleground: states that plan to deny health coverage to the poor

The Supreme Court ruling poked a major hole in the Affordable Care Act by allowing states to opt out of expanding Medicaid to people below 133 percent of the Federal Poverty Level. As the law was originally written, states would have been offered a very strong incentive—100 percent federal funding initially of the costs of covering the new enrollees, gradually declining by 2020—to expand coverage to the poor and near-poor, and a very strong disincentive to opt-out—the potential loss of all federal dollars for their existing Medicaid programs. The Supreme Court ruled that the government can still offer the incentive of more federal funding to encourage states to go along, but it can’t punish states that don’t by cutting off existing Medicaid funds to them.

And, because of the way that law is written, the official "poor"—those who make the poverty level or less—are not eligible get the subsidies to buy health insurance available to people with higher incomes, because they were supposed to be brought under Medicaid. So if a state chooses not to go along with the Medicaid expansion, their poorest and most vulnerable residents might have no access to affordable coverage.

Well, it didn’t take long for a number of governors in Republican-controlled states to announce that they will not go along with the Medicaid expansion, and for many others (including a few Democratic governors) to indicate that they are thinking twice about it. The major justification offered is that they are concerned about the costs to the states—even though the federal government pays almost all of the cost (they either don’t trust that the money will be there, or argue that it really won’t cover their costs). Ideological opposition to "Obamacare" is another factor, of course. A desire to pressure Congress into converting Medicaid into a block grant program may be another.

How all of this will play out remains to be seen, and it certainly is possible that some of the states that are now saying that they will opt-out may be singing a different tune as we get closer to 2014, when the Medicaid expansion is supposed to go into effect.

But if some states don’t go along—especially some of the larger ones like Florida, whose governor, Rick Scott, has already given thumbs down to the Medicaid expansion—it will mean that the United States will have many millions more uninsured persons in 2014 (all of whom, by definition, will be the poorest of the poor). In explaining his position, Governor Scott said that "the most important thing is working on getting everybody a job," to increase the numbers of people with health insurance. But the fact is that having a job doesn’t guarantee health insurance. A new Gallup survey finds that only 55.9 percent of adults aged 26 to 64 received employer-provided health insurance in 2012, down from 61.6 percent in 2008.

And the fact is that most of the poor have a job. More than three-quarters of the uninsured are in working families: 61 percent are from families with one or more full-time workers and 16 percent are from families with part-time workers. But the poor (including the working poor) are more likely to be uninsured mainly because their employers don’t offer it, or they can’t afford the employee contribution, and they don’t qualify for the existing Medicaid program (most states don’t cover adults without children, no matter how little they earn), and they aren’t old enough to qualify for Medicare.

So it is a fiction that "getting everyone a job" (a good thing, of course!) will get everyone health insurance coverage, it won’t. It is a fiction that the poor don’t have health insurance because they don’t have a job, they do.

And it is a fiction that Medicaid doesn’t do any good for the people enrolled in it, it does. A new study found that new enrollees to Medicaid have marked improvements in reported health status and financial well-being than their counterparts that do not have access to Medicaid.

By the way, speaking of fiction, the independent fact-checking organization PolitiFact, winner of the Pulitzer Prize for journalism, said that Governor Scott "gave a misleading account of how much the Medicaid expansion would cost the state."

I understand that governors have a responsibility to think carefully about taking on new budget obligations, but they should at least get their facts right. The facts are that most of the poor work, but having a job doesn’t necessarily mean they can get health insurance they can afford. And the costs to the state(s) of enrolling all of their poor in Medicaid is much lower than being represented by some in explaining their decision to opt-out.

All of this means that the states will be the next big battleground in the fight to expand health insurance to (nearly) all Americans. But if the Governor Scotts of the world have their way, we will end up with the poorest of the poor having no access to health insurance coverage.

Today’s question: Do you think most states won’t go along with providing Medicaid coverage to the poor? And what will be the impact if they don’t?

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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