Insurers Join Effort to Eliminate Fraud

from Bloomberg

By Alex Wayne – Jul 26, 2012 12:26 PM ET

UnitedHealth Group Inc. (UNH) and WellPoint Inc. (WLP), the largest publicly traded health insurers in the U.S., agreed to share more information with regulators in an industrywide partnership with the government to root out fraud.

The initiative targets theft of doctors’ identities and overbilling, including in Medicare, the $500 billion U.S. health insurance program for the elderly and disabled. The partnership may lead to sharing billing claims data, which could be mined for aberrations, said Richard Migliori, executive vice president of health services for Minnetonka, Minnesota-based UnitedHealth.

“There are mutual interests here in doing a better job at detecting what’s probably some $80 billion-plus per year in fraudulent payments across private and public sectors,” Migliori said in an interview. “There’s lot of enthusiasm for doing this right.”

Today’s announcement falls short of a full data-mining agreement, a long-range goal that the government said would help spot fraud such as when doctors charge different insurers for care delivered to the same patient on the same day in two different cities. There are obstacles to providing that information, particularly patient privacy and confidentiality concerns related to sharing claims data, Migliori said.

Health and Human Services Secretary Kathleen Sebelius, Attorney General Eric Holder and insurance industry leaders will discuss the partnership at 1 p.m. local time at the White House in Washington.

“This partnership puts criminals on notice that we will find them and stop them before they steal health care dollars,” Sebelius said in a statement.

Humana, Amerigroup

The collaboration includes America’s Health Insurance Plans, the industry’s main lobby group in Washington, and the Blue Cross Blue Shield Association, which represents state Blue Cross and Blue Shield plans. Along with UnitedHealth, Humana Inc. (HUM) and Amerigroup Corp. (AGP) are among companies participating, according to the government.

The Justice Department has estimated that Medicare and Medicaid, the health system for the poor, are plagued by at least $60 billion in fraud a year. The Government Accountability Office, the investigative arm of Congress, reported in 2009 that an increase in bills from several states for home health care was partly because of “fraudulent and abusive practices.”

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

Senator Paul Introduces Access to Physicians in Medicare Act

Senator Paul Introduces Access to Physicians in Medicare Act

Published on 26 June 2012 by in Press Releases

Protects seniors from losing access to quality health care

WASHINGTON, D.C. – Sen. Rand Paul today introduced the Access to Physicians in Medicare Act, which aims to reform the current physician reimbursement formula for Medicare patients and replace it with a formula that is similar to the one used to calculate cost-of-living increases for Social Security benefits.

 “As an eye surgeon, many of my patients are seniors, and many of those seniors are Medicare recipients,” Sen. Paul said. “Medicare, in its constant quest to save money, cuts physician reimbursement and in turn puts America’s seniors at risk of losing their access to quality health care. I know the value of quality care and I want to ensure our nation’s seniors continue to get it.”

 

BACKGROUND:

The Access to Physicians in Medicare Act aims to repeal the current reimbursement formula known as the Sustainable Growth Rate (SGR) and replace it with the same formula used to calculate cost-of-living increases for Social Security benefits with a cap set at 3 percent so that physicians will be able to practice medicine without the threat of massive pay cuts each year. This legislation is paid for by repealing the expansion of Medicaid and subsidy payments under Obamacare with any remaining savings going toward deficit reduction.

The legislation:

  • Repeals SGR formula used to calculate physician reimbursement under Medicare and replaces it with a formula based on the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
  • Prevents a harmful 30 percent cut to physician reimbursement currently set to enact on Jan. 1, 2013, which will jeopardize seniors’ access to quality health care.
  • Provides for an annual increase of not more than 3 percent to physician reimbursement each year beginning in 2013.
  • Paid for by repealing Medicaid expansion and subsidies payments under Obamacare.

###

 

 

Taxpayers paying twice for veterans’ health care plans

 

By Gregg Zoroya, USA TODAY

Updated 4h 30m ago

The Department of Veterans Affairs spent an estimated $13 billion to care for veterans whose health coverage was already paid for by Medicare — a case of the taxpayer paying twice, according to research published Tuesday.

“They pay once to Medicare Advantage plan to deliver all Medicare-covered service and they pay again to the VA to deliver comprehensive care to the same veterans,” said Amal Trivedi, a doctor with the VA and on the faculty with Brown University in Providence.

But Medicare says the $13 billion projection identified in the study, published in the Journal of the American Medical Association, is far too high.

Spokesman Brian Cook said Medicare attempts to reduce managed-care payments to private insurance companies if veterans enrolled in those programs use them less frequently, for example, because they seek treatment from the VA.

Federal law prohibits the VA from recouping expenditures from Medicare-funded health programs. The VA issued a statement Tuesday saying that even if the law were changed, allowing reimbursement would only add administrative complexity that would impede care.

“As an example, VA would have to comply with Medicare rules and policies for Veterans, which would leave VA administering two systems of care: Medicare’s and VA’s,” the statement says.

But without that reimbursement “the government has made two payments for the same services,” the medical study concludes.

Researchers examined records for 1.3 million veterans who were enrolled simultaneously with the VA program and the Medicare Advantage managed-care program between 2004 and 2009.

They found that the number of veterans enrolled in both programs increased during that time frame from 486,000 to 925,000.

In addition, the amount of VA medical care provided to those patients grew from $1.3 billion to $3.2 billion.

Kenneth Kizer, a co-author of the study and director of the Institute for Population Health Improvement at University of California-Davis Health System, said he first became aware of the issue when he was VA undersecretary for health in the 1990s. But Kizer said the study shows the problem has worsened.

Researchers found that veterans remained enrolled in both Medicare Advantage and with the VA for about three years on average. Veterans who are entitled to VA care are also entitled to Medicare after age 65.

Contributing: Kelly Kennedy

Ex-Medicare Administrator: Premium Support “Is Going To Have To Happen”

By Marilyn Werber Serafini

KHN Staff Writer

May 31, 2012

No matter which party dominates Washington after November’s election, policy makers will have to agree to big changes in the mammoth Medicare program to limit federal spending, says Thomas Scully, senior counsel at Alston & Bird, and a former Medicare administrator under President George W. Bush. In an interview with Kaiser Health News, Scully urged Democrats and Republicans to set aside partisan differences and take a closer look at the controversial premium-support model, which would give beneficiaries a set amount of money to purchase coverage.

Here are edited excerpts of the interview.

Q: Will Congress and President Obama return to Washington after the election to cut a budget deal, which would mean major reductions in Medicare spending?  

We’re never going to have a lame duck session. These guys hate each other, sadly. They’re going to come back three weeks after an election with half of these guys having lost and they’re going to get the votes to do something big? …They’ll kick the can no matter who wins. If it’s President Romney, they’ll kick the can to June, because a new president can’t find the men’s room for the first four months. There’s no staff, no people. There are too many pieces and the relationships aren’t there. The votes aren’t there.

Q: In the longer term, will policy makers move beyond their partisan disagreements and restructure Medicare using the Republican-backed premium support model, which would limit federal spending per beneficiary?

Premium support is Part D, [Medicare’s prescription drug benefit]. When we designed Medicare Advantage, [the private health plan program in Medicare] it was premium support. Premium support is the Federal Employee Health Benefits Plan. … That is a reasonable way to fix the Medicare program, phased in over the long term. … The problem is these things get so politicized. … The world was going to end because we were going to pass Part D. … It’s worked out fine. Republicans were too dumb to take credit for it. Most Democrats like it.

More

You need to raise the retirement age to 67. … The retirement age of Social Security is 66 now [67 for those born after 1959]. Nobody noticed because it happened one [month] at a time for 12 years. You need to do the same thing for Medicare. You need to gradually move it to a premium support model so it looks more like the Federal Employee Retirement Program. You’re not limiting spending. You’re putting it under some kind of a rational, non-open ended fee-for-service entitlement. That’s going to have to happen.

Q: What is the scenario if Mitt Romney becomes president?

If Gov. Romney becomes president, and you have a Republican Senate and a Republican House, they may do so much that they’re in for two years then blow themselves up. They will cut spending, they will move to premium support, and they will do some radical stuff on the entitlement side. I don’t think they’ll block grant Medicaid, but what’s a block grant? It’s a waiver. You’ve got 27 states with waivers and they’ll waive everybody and do kind of a per capita program on Medicaid. They’ll move toward premium support. They’ll probably raise the retirement age. There will be a lot of radical change. People may not like it.

Q: And if President Obama remains in the White House?

The other scenario is, if President Obama wins a second term, he realizes that we’ve got a national, fiscal crisis that should have been dealt with a couple of years ago and there’s going to have to be a big deal. And big deals require compromise. I don’t think the relationships are, sadly, what they used to be [on Capitol Hill]. But, if you put [House Ways and Means Committee Chairman Dave Camp, R-Mich.,] who’s a great guy, in a room with [Senate Finance Committee Chairman Max Baucus, D-Mont.,] who’s a great guy, you’d probably get a hell of a good result. … They’re both terrific moderates, very smart, know their stuff. There’s clearly room for a deal if you can get the political support for it.

Report IDs states with most, least dual eligibles

The Daily Briefing

Report IDs states with most, least dual eligibles

Maine, Alabama have the largest percentage of dual eligibles as a share of Medicaid

May 30, 2012

Eastern states have higher percentages of “dual eligible” patients as a share of Medicaid than Western and Midwestern states, according to a new Kaiser Family Foundation report.

Altogether, about nine million U.S. residents and more than 15% of all U.S. Medicaid beneficiaries are eligible for both the Medicare and Medicaid program.

To determine the geographic distribution of these “dual eligibles,” the Kaiser Commission on Medicaid and the Uninsured and the Urban Institute analyzed Medicaid Statistical Information Statistics data from fiscal year 2008.

Related: The Advisory Board’s primer on new efforts to coordinate care for dual eligibles.

The report found that the 10 states with the highest percentages of dual eligibles as a share of total Medicaid enrollment were:

1. Maine (where 26% of Medicaid beneficiaries are dual eligibles);
2. Alabama (23%);
3. North Dakota (22%);
4. Kentucky (21%);
4. New Jersey (21%);
4. Wisconsin (21%);
7. Florida (20%);
7. Mississippi (20%);
7. Rhode Island (20%); and
7. West Virginia (20%). 

Meanwhile, the 13 states with lowest percentages of all dual eligibles as a share of total Medicaid enrollment were:

1. Arizona (where 10% of Medicaid beneficiaries are dual eligibles);
1. Utah (10%);
3. Alaska (11%);
3. California (11%);
3. New Mexico (11%);
6. Delaware (12%);
6. Colorado (12%);
8. District of Columbia (13%);
8. Illinois (13%);
8. Michigan (13%);
8. Washington (13%); and
8. Wyoming (13%).

A state-by-state map of dual eligibles as a share of total Medicaid enrollment

According to the report, “these variations reflect a state’s demographic profile as well as state policy choices in Medicaid eligibility and coverage.” For example, the report notes that Eastern states generally have larger elderly populations than Western and Midwestern states.

Kaiser notes that 26 states have submitted proposals to test integrated care models for dual eligibles under a three-year, multi-state demonstration project (Kaiser report, 5/24; AHA News, 5/25).

Berwick on Analytics: Technology Is Ready, but Doctors Need Help

Scott Mace, for HealthLeaders Media , May 15, 2012

If Marcus Welby, MD, were practicing on TV today, would he be letting data drive his decision-making? I’m on a journey to find the answer to this and related questions. Last week this journey took me to Atlanta for a HealthLeaders Media Roundtable on business intelligence and predictive analytics, and then onward to North Carolina for a conference dedicated to healthcare analytics.

While in North Carolina, I got to sit down with Don Berwick, MD, former administrator at the Centers for Medicare & Medicaid Services, and prior to that, founding CEO of the Institute for Healthcare Improvement. We talked about data analytics, but our discussion ranged far and wide around healthcare IT. Here is a portion of our conversation.

HealthLeaders Media: How far along is healthcare with its adoption of analytics?
Berwick: I certainly see the potential. At CMS we did do some early trials with Oak Ridge National Laboratory, which has tremendous data capacity. [CMS] gave them access to privacy-protected Medicare information. They have tremendous analytic capacity, and it was stunning what they did. I remember visiting Oak Ridge, and they had modeled some uses of Medicare and Medicaid data, and they were coming up with insights right away, of geographic patterns of variation that I don’t think Health Services researchers knew about.

HealthLeaders Media: Why was Oak Ridge doing this? I don’t think of them usually in this space.

Berwick: Oak Ridge is not just a Department of Energy supplier. They work with other government agencies that want to contract with them to do essentially analytics and data mining. The one place I saw analytics working was in our early work on predictive analytics for fraud. The Affordable Care Act suite of efforts to reduce fraud involves the traditional what they call pay-and-chase, which is enforcement. You find something wrong and you prosecute. We were working with the Department of Justice and the FBI and local law enforcement to catch criminals. That’s traditional and effective. You need to do it. But it’s, after all, after the horse has left the barn.

So upstream from that, there’s prevention. Make sure that the people that want to offer home healthcare or durable medical equipment, that they’re qualified to do so, they don’t have a history that makes you suspicious, and since there’s a very high concentration of fraud in certain parts of Medicare payment, one’s able to target prequalification as an area. But I thought the most promising was predictive analytics, which was take the data and turn loose the ability to go through it looking for weird patterns. The technology was ready.

Along about this time, I took a vacation with my wife in Turkey. I got online to buy a ticket for an internal flight in Turkey from Istanbul to an interior village, and I’d say a minute or two later, my cell phone rang, and it was American Express saying, “Just checking—a purchase was made in Turkey. Is this you?” Well it’s the same thing, where we can get not just retrospective but almost real-time signals. I remember the first run of predictive analytics, the volume of insights and ideas and hot spots that were spotted, it was really something.

HealthLeaders Media: I was listening to a podcast with Dr. Lynn Vogel, CIO of MD Anderson Cancer Center, who told an interviewer that the number of facts going into physicians’ decisions on treatment is growing exponentially. What’s the healthcare system going to do about that?

Berwick: It is doing [things] about it. I don’t know what Dr. Vogel meant by that comment particularly, but there are at least two meanings. One is that the science base is expanding vastly. A few years ago, I did a Google search to see how many randomized clinical trials in the world are underway right now, and the number that came up in the search was 40,000. At any one time there are 40,000 randomized trials underway. The concept that an individual human mind could possibly search through that and find out what’s relevant to your needs when I see you in my office, that obviously is folly. There has to be some intermediation of the science so that someone, some technologically supported, trusted agent is digesting that and making it available. We’re quite a way along there. We’ve had wonderful work, professionally led by the American College of Physicians and the American College of Surgeons and the cardiologists to do exactly that: intermediate between the scientific wealth and direct application. So I think that’s going okay. I’m sure it could be better. There’s been some ambivalence in public policy around this. This is the big debate about clinical effectiveness research, which is this kind of confusing question as to should we use science in decision-making? We actually are asking that question. Hopefully we’ll get over that at some point.

On the [care] delivery side, the data stream is overwhelming now. Every beep on a monitor is a data point. There are some successes. For example, Intermountain Healthcare has for years had in the ICU real-time data collection, multiple facts about a patient that can help guide action in real time. You’ll see more and more of that. I don’t think that’s conventional. I think most docs are still bathing in that kind of data without much help.

HealthLeaders Media: In all the debate about Meaningful Use, it seems to me that the incentives don’t encourage knowledge transfer from the successful innovators, like Intermountain, to those who are following.

Berwick: We’re just barely in Phase 1. The concept of meaningful use is going to grow. What doctor in the end would not want access, if it were technically available, to the answer to the question, Who does the best at this, or What does Mayo think, or Where’s the best science? We’re just in an adolescent moment in terms of evolution of that kind of knowledge transfer. Right now, my daughter is a second-year resident in medicine at the Brigham hospital in Boston. When I was in training, the message was, put it all in your head. Get it in your head. Read it, memorize it, and then spout it out at Rounds. They carry their iPhones on Rounds. So a question comes up, and they’re using their iPhones and iPads right there to get the information. Why would they store it in their head if it’s in the world? That’s a basic human factors design idea. Knowledge in the world is more useful than knowledge in the head. Young doctors and nurses are coming from a totally different mindset about access to knowledge.

 

Kaiser Health News Digest – Dual Eligibles

States Push Feds To Include 3 Million ‘Dual Eligibles’ In Pilot Program

May 08, 2012

Though only designed for 2 million beneficiaries, states want the federal government to open a pilot program on dual eligibles — those who qualify for both Medicare and Medicaid — to 3 million. In the meantime, California is shifting its dual eligibles to managed care.

Modern Healthcare: Dual-Eligibles Pilot Program Faces Rush From States
States want to include more than 3 million dual-eligible beneficiaries in a CMS pilot program to overhaul their care and payments.  The number is 1 million more than the program was designed for and represents about a third of all that category’s beneficiaries, whose care is one of the biggest drivers of the growth in Medicaid costs (Daly, 5/7).

California Healthline: Risks, Rewards Higher for Managing Dual Eligibles 
The state is working to shift older, low-income Californians eligible to receive Medi-Cal and Medicare — known as dual eligibles — into managed care plans, hoping to coordinate and improve care, as well as save money. The state also is shifting Medi-Cal beneficiaries participating in the Multi-Purpose Senior Services Program into managed care. … About 60 percent of the 7.6 million people covered by Medi-Cal are in managed care plans. … The most-expensive Medi-Cal beneficiaries, many of them older with multiple chronic conditions, are still in fee-for-service plans (Lauer, 5/7).

Americans Support Medicare Reform, But Not on Their Dime: Poll

Respondents to Harris Interactive/HealthDay survey want drug companies, higher-income beneficiaries to pay more

April 26, 2012

By Karen Pallarito
HealthDay Reporter

THURSDAY, April 26 (HealthDay News) — Medicare, the federal health insurance program for older and disabled Americans, may be hurtling toward the critical list, but most people don’t want to pay for needed reforms from their own wallets, a new Harris Interactive/HealthDay poll finds.

Eighty-three percent of those polled believe changes are needed to keep Medicare affordable and sustainable, and 51 percent think that “a great deal of change” is necessary. But they’d rather not make any personal sacrifices, according to the poll.

“There’s a clear majority who think there is a problem that needs to be addressed, but (people also believe) if the changes are going to cost me money in terms of higher co-pays, higher deductibles or higher taxes, no thank you,” said Humphrey Taylor, chairman of The Harris Poll.

When people were presented with nine proposals for slowing the rate of Medicare spending, the poll revealed strong approval (72 percent) for cutting the price Medicare pays for prescription drugs to pharmaceutical companies, and modest support for trimming fees to hospitals (47 percent favor, 28 percent oppose) and doctors (41 percent to 35 percent).

Few favor higher taxes and out-of-pocket contributions, such as increased co-pays and deductibles. Fifty-three percent and 60 percent, respectively, oppose those options. But a majority said people with higher incomes should pay more for Medicare benefits than lower-income individuals (57 percent favor, 21 percent oppose).

Medicare, which serves 49 million older and disabled Americans, is under severe financial strain. More than 15 percent of the federal budget goes toward Medicare, and that’s projected to increase to 17.5 percent by 2020 — the third largest government expenditure after Social Security and defense, government statistics show.

Experts say rising prices, new technologies, beneficiaries’ increasing use of services and the aging of the population are fueling the growth in Medicare spending.

“You’ve got a situation now where health care is somewhere around 18 percent of GDP (gross domestic product), and it’s going to go to 20 percent in a few years,” said Nathan Goldstein, chief executive officer of Gorman Health Group, a Washington, D.C.-based consulting firm. “It’s like a dragon eating the economy from the inside.”

The situation will only worsen in the coming years as more and more baby boomers become eligible for the program, swelling Medicare enrollment to more than 80 million people by 2030.

Because of these trends, the board of trustees that oversees Medicare’s financial operations predicts that the hospital insurance trust fund, known as Medicare Part A and a key component of the program, will be depleted by 2024.

To put the program back on stable footing, policymakers are considering a variety of cost-cutting and revenue-raising strategies.

One proposal being advanced by House of Representatives Budget Committee Chairman Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) would give seniors a voucher to shop for their own private health insurance. Under their so-called “premium support” plan, Medicare would no longer provide a “defined benefit.” Instead, beneficiaries would receive a “defined contribution” toward the cost of health insurance.

But support for such a plan depends on political affiliation, the poll found.

When described as “one proposal to change the Medicare program,” a small plurality (32 percent to 27 percent) of those polled said they favor a voucher plan. When described as a House Republican plan, Republican support increases to 47 percent from 35 percent while Democratic opposition rises to 48 percent from 31 percent.

At a press briefing on Friday to unveil recommendations for Medicare reform, the American College of Physicians (ACP) said it could not endorse such a “premium support” plan without pilot testing and strong protections for beneficiaries. However, the college said it does support policies to improve the delivery of care, reduce the government’s cost of prescription drugs and pay providers based on the value of services provided.

“Difficult choices must be made to ensure (Medicare’s) solvency, but not at the expense of patient health,” Robert Doherty, ACP’s senior vice president of governmental affairs and public policy, said during the briefing.

A majority of adults (54 percent to 18 percent) polled agree that doctors and hospitals should be paid based on quality and results, rather than the volume of care provided. Even in Washington, D.C., Taylor noted, “there is an acceptance . . . that the traditional fee-for-service way of paying for things is a kind of toxic incentive and needs to be changed.”

The poll also found that people like having a choice between traditional fee-for-service Medicare and Medicare Advantage plans. Only small percentages would like to see the program run exclusively by the federal government (12 percent) or by private health plans (13 percent).

The online survey of 2,229 adults aged 18 and older was conducted April 5 to 9. Figures for age, sex, race/ethnicity, education, geographic region and household income were weighted, where necessary, to make them representative of actual proportions in the population. Weighting was also used to adjust for respondents’ likelihood to be online.

Analysis – Supreme Court Ruling

Obamacare Collapse Would Put Employers In Charge

by The Associated Press

WASHINGTON April 24, 2012, 01:12 pm ET

WASHINGTON (AP) — If the Supreme Court strikes down President Barack Obama’s health care overhaul, don’t look to government for what comes next.

Employers and insurance companies will take charge. They’ll borrow some ideas from Obamacare, ditch others, and push even harder to cut costs.

Here’s what experts say to expect:

— Workers will bear more of their own medical costs as job coverage shifts to plans with higher deductibles, the amount you pay out of pocket each year before insurance kicks in. Traditional insurance will lose ground to high-deductible plans with tax-free accounts for routine expenses, to which employers can contribute.

— Increasingly, smokers will face financial penalties if they don’t at least seriously try to quit. Employees with a weight problem and high cholesterol are next. They’ll get tagged as health risks and nudged into diet programs.

— Some companies will keep the health care law’s most popular benefit so far, coverage for adult children until they turn 26. Others will cut it to save money.

— Workers and family members will be steered to hospitals and doctors that can prove that they deliver quality care. These medical providers would earn part of their fees for keeping patients as healthy as possible, similar to the “accountable care organizations” in the health care law.

— Some workers will pick their health plans from a private insurance exchange, another similarity to Obama’s law. They’ll get fixed payments from their employers to choose from four levels of coverage: platinum, gold, silver and bronze. Those who pick rich benefits would pay more.

“Employers had been the major force driving health care change in this country up until the passage of health reform,” said Tom Billet, a senior benefits consultant with Towers Watson, which advises major companies. “If Obamacare disappears … we go back to square one. We still have a major problem in this country with very expensive health care.”

Business can’t and won’t take care of America’s 50 million uninsured.

Republican proposals for replacing the health care law aren’t likely to solve that problem either, because of the party’s opposition to raising taxes. The GOP alternative during House debate of Obama’s law would have covered 3 million uninsured people, compared with more than 30 million under the president’s plan.

After the collapse of then-President Bill Clinton’s health care plan in the 1990s, policymakers shied away from big health care legislation for years. Many expect a similar reluctance to set in if the Supreme Court invalidates Obama’s Affordable Care Act.

Starting in 2014, the law requires most Americans to obtain health insurance, either through an employer or a government program or by buying their own policies. In return, insurance companies would be prohibited from turning away the sick. Government would subsidize premiums for millions now uninsured.

The law’s opponents argue that Congress overstepped its constitutional authority by requiring citizens to obtain coverage. The administration says the mandate is permissible because it serves to regulate interstate commerce. A decision is expected in late June.

The federal insurance mandate is modeled on one that Massachusetts enacted in 2006 under then-Gov. Mitt Romney. That appears to have worked well, but it’s unlikely states would forge ahead if the federal law is invalidated because health care has become so politically polarized. Romney, the likely Republican presidential nominee, says he’d repeal Obamacare if elected.

That would leave it to employers, who provide coverage for about three out of five Americans under age 65.

“With or without health care reform, employers are committed to offering health care benefits and want to manage costs,” said Tracy Watts, a senior health care consultant with Mercer, which advises many large employers. “The health care reform law itself has driven employers, as well as the provider community, to advance some bolder strategies for cost containment.”

First, employers would push harder to control their own costs by shifting more financial responsibility to workers.

Data from Mercer’s employer survey suggests that a typical large employer can save nearly $1,800 per worker by replacing traditional preferred provider plans with a high-deductible policy combined with a health care account. “That is very compelling,” said Watts.

It won’t stop there. Many employers are convinced they have to go beyond haggling over money, and also pay attention to the health of their workers.

“As important as it is to manage the cost of medical services and products, and eliminate wasteful utilization, there has been a strong recognition that ultimately healthier populations cost less,” said Dr. Ian Chuang, medical director at the Lockton Companies, advisers to many medium-size employers. His firm touts programs that encourage employees to shed pounds, get active or quit smoking.

Employer health plans were already allowed to use economic incentives to promote wellness, and the overhaul law loosened some limits.

A Towers Watson survey found that 35 percent of large employers are currently using penalties or rewards to discourage smoking, for example, and another 17 percent plan to do so next year. The average penalty ranges from $10 to $80 a month, but one large retailer hits smokers who pick its most generous health plans with a surcharge of $178 a month, more than $2,100 a year.

Overall, one of the most intriguing employer experiments involves setting up private health insurance exchanges, markets such as the health care law envisions in each state. Major consulting firms such as Mercer and Aon Hewitt are developing exchanges for employers.

As under the health care law, the idea is that competition among insurers and cost-conscious decisions by employees will help keep spending in check. Aon Hewitt’s exchange would open next January, with as many as 19 companies participating, and some 600,000 employees and dependents.

“The concept of an exchange does not belong to Obamacare,” said Ken Sperling, managing the project for Aon Hewitt. “We’re borrowing a concept that was central to the health care law and bringing it into the private sector. Whether the law survives or not, the concept is still valid.”

Medicare trustee report hangs on uncertain assumptions

 

Mon, Apr 23 2012

By David Morgan

WASHINGTON (Reuters) – Medicare, the U.S. healthcare program for the elderly, should be able to stave off insolvency for the next 12 years, depending on a number of financial and political assumptions that may prove unrealistic, officials and other experts said on Monday.

The annual report of the Medicare trustees predicted that the program’s key hospital trust fund will become exhausted in 2024, prompting Medicare to begin paying out only 87 percent of scheduled hospital benefits to tens of millions of future retirees and disabled beneficiaries.

With the fate of Medicare a hot-button election year issue for the program’s 49 million beneficiaries, the report is likely to become fodder for Democrats and Republicans as they battle for control of the White House and Congress.

The 2024 forecast is unchanged from a year ago and shows that the deterioration of $549 billion-a-year program’s finances has not accelerated since 2010.

But the outlook is based on assumptions that may be unlikely, including a scheduled 31 percent pay cut for doctors in 2013, which Congress is almost certain to override.

The forecast also assumes that a deficit-reduction agreement to slash Medicare spending by 2 percent a year can be sustained over the coming decade and that the U.S. Supreme Court will not overturn President Barack Obama’s healthcare reform law in June.

The trustees also said Medicare is on an unsustainable path over the long term that could cause expenditures to more than double as a percentage of the U.S. economy, from 3.7 percent now to 10.4 percent in 2086, under a worst-case scenario.

Officials said that even the most optimistic sections of the report underscore the need for reform.

“The sooner the policymakers address these challenges, the less disruptive the unavoidable adjustments will be … and the greater the likelihood that the solutions we adopt will be balanced and equitable,” said trustee Robert Reischauer.

Administration officials seized on the report as evidence that Obama’s Patient Protection and Affordable Care Act has strengthened Medicare by encouraging efficiencies, combating fraud and waste and eliminating unnecessary costs.

MEDICARE AND MEDIOCRE COVERAGE

“Medicare’s in a much stronger position than it was a few years ago, thanks to the Affordable Care Act,” said Health and Human Services Secretary Kathleen Sebelius, who told reporters that an estimated $200 billion in Medicare savings from reforms had pushed the expected insolvency date back from 2016.

“This is an approach that will put Medicare on a stable trajectory without eliminating the guaranteed benefits that beneficiaries have counted on for decades or shifting tremendous new costs onto seniors,” she said.

But analysts said Medicare could be forced to begin paying only partial hospital benefits earlier if assumptions about physician pay, deficit reduction and the fate of reforms fail to pan out.

“Medicare is in trouble,” said Joseph Antos, an analyst at the conservative American Enterprise Institute. “Are we really holding the line? Absolutely not.”

Earlier on Monday, a new report from the nonpartisan Government Accountability Office raised new questions about Medicare’s ability to improve care delivery, reduce costs and combat waste.

The GAO said Medicare is spending $8.3 billion on a test project that is supposed to improve the quality of private health coverage but has mainly rewarded mediocre insurance plans.

The watchdog agency urged the administration to cancel the Medicare Advantage quality bonus payment initiative, a three-year project described as the largest-scale test to improve Medicare services to date.

The administration defended the program as a necessary effort to determine how best to improve quality and reduce costs in Medicare Advantage, which provides about one-quarter of Medicare beneficiaries with coverage from private insurers.

The demonstration project, designed to promote quality by awarding performance bonuses to private insurers that offer coverage through Medicare, was undertaken to test whether annual quality improvements could be achieved more quickly than under Obama’s healthcare overhaul.

“We think this is a really important step,” Sebelius said. “At the end of 2014, it will have accomplished just what the goal was, which is to give some financial incentives to those plans that are improving quality results.”

Medicare Advantage was adopted under George W. Bush as a way to bring market efficiency to the sprawling government program. Some of the largest providers of Medicare Advantage plans are UnitedHealth Group and Humana Inc.

But Medicare Advantage has proved to be more expensive than traditional Medicare.

Sebelius said that even with the costs of the quality test program, the administration has been able to reduce the cost of Medicare Advantage from 114 percent of the fee-for-service program to 107 percent over the past two years.

(Editing by Maureen Bavdek and M.D. Golan)