Back to Basic

John Jacobi over at HealthLawProfBlog is going over some interesting future implementation challenges with PPACA. One of the reforms that he sees as a critical piece of the puzzle is the expansion of Basic health plans:

First, and most obviously, states and advocates should be examining the Basic Plan Program, which will finally be ready for roll-out in 2015. The Program, authorized by § 1331 of the ACA, is a public health insurance program intended to bridge the gap between Medicaid and subsidized private insurance for people with income between 138% and 200% of FPL. It could serve two purposes: It could reduce “churn” between Medicaid and private insurance as insureds’ income fluctuates in the low range, therefore minimizing disruption in ongoing access to providers. It could also improve the affordability of coverage by allowing states to piggy-back on their Medicaid provider networks and premium structure, allowing Program participants rich coverage with little or no out-of-pocket cost. There are downsides: the Program would reduce the exchange’s pool, perhaps increasing per-enrollee costs and threatening actuarial destabilization of the individual plan market; and Medicaid provider networks are already fragile in many states. But faced with the risk of cost-based attrition and/or low service utilization by low-income exchange enrollees, states will want to consider this option.

From a mechanical point of view, Basic plans have significantly more flexibilty than Medicaid in benefit design and implementation choices, and providers may be more willing than the professor thinks to join the Basic networks. 

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Less stress now, better outcomes later

Shocking news — reducing immediate stress allows people to improve their distant futures.

Adrianna MacIntyre at Vox passes along an interesting study concerning Medicaid expansion and educational attainment:

A 10 percentage point increase in childhood Medicaid eligibility reduced the rate of high school dropouts by 5 percent and increased completion of a bachelor’s degree by 3.3 to 3.7 percent.

Previous research has demonstrated a positive short-term relationship between access to health care and education — when schools offer health care services to students, attendance rates rise and teen pregnancies fall — but this paper is the first to look at educational impacts over a longer time frame.

 We’ve seen a lot of evidence on the economics and choice structures during scarcity that people are cognitively overloaded because there is no such thing as a good decision just a series of really nasty and ugly trade-offs that must be made to solve a current problem. 

This mindset brings two benefits. It concentrates the mind on pressing needs. It also gives people a keener sense of the value of a dollar, minute, calorie or smile. The lonely, it turns out, are better at deciphering expressions of emotion. Likewise, the poor have a better grasp of costs.

This scarcity mindset can also be debilitating. It shortens a person’s horizons and narrows his perspective, creating a dangerous tunnel vision. Anxiety also saps brainpower and willpower, reducing mental “bandwidth”, as the authors call it. Indian sugarcane farmers score worse on intelligence tests before the harvest (when they are short of cash) than after. Feeling poor lowers a person’s IQ by as much as a night without sleep. Anxieties about friendlessness have a similar effect. In one experiment a random group of people were told that their results on a personality test suggested a life of loneliness. This random subset subsequently performed worse on intelligence tests and found it harder to resist the chocolate-chip cookies provided for them.

We know that the people who were eligible for Medicaid expansions pre-PPACA tended to be from families that were either poor or sick.  Medicaid functions as an imperfect substitute for increased cash income as people both feel better/are healthier which is quite valuable in and of itself, and Medicaid replaces previous cash outlays for medical services.  Increased income or more accurately, an increased consumption budget that is tied to current resources without indebting the future usually means a better ability to plan for the future.  This is not rocket science — remove immediate stress and problems allows people to devote resources to their futures.

Practice composition and partisan contributions

Kevin Drum is playing around with Sarah Kliff’s piece on how doctors donate to political parties:

 As high earners, you’d think that doctors would be more likely to contribute money to Republicans than Democrats. But it turns out that isn’t true. A new analysis in JAMA Internal Medicine shows that merely well-off doctors—your allergists, your pediatricians, your pulmonologists—favor Democrats. It’s only when you get into the territory of medical royalty—your surgeons, your urologists, your radiologists—that political contributions start to heavily favor Republicans. Even within one of the best paid professions in the country, there’s a class divide, with the haves favoring Republicans and the have-nots favoring Democrats. That’s fairly remarkable.

I think a sub-component of this split is practice composition.  The basic providers (primary care physicians, pediatrics, cardiology etc) have been under significant pressure in the past fifteen years to move away from the solo or small group practice model towards an employment model.  The NIH has shown this shift:

The percentage of physicians in groups of more than fifty increased from 30.9 percent in 2009 to 35.6 percent in 2011. This shift occurred across all specialty categories, both sexes, and all age groups, although it was more prominent among physicians under age forty than those age sixty or older….

The New York Times in 2010 noted this pattern as well:

As recently as 2005, more than two-thirds of medical practices were physician-owned — a share that had been relatively constant for many years, the Medical Group Management Association says. But within three years, that share dropped below 50 percent, and analysts say the slide has continued…

The move towards Accountable Care Organizations, coordinated care and bundled payments in PPACA has pushed the generalists and PCPS towards more risk bearing and more capital intensity.  The private practices with only a handful of docs usually don’t have the money to upgrade electronic medical records or participate in the risk of patient population management.  So the smaller practices are being bought out by either large hospital based physician groups or banding together to form regional co-ops.  From here, the shift from being owner to employee is rapid, and class interest comes into play.  The high end specialists have not had that degree of pressure yet, so the combination of being very high income, typically older than average and still working as owners may be coming into play here.

Roll yer own…

Nicholas Bagley at the Incidental Economist passes along a clear case of fraud, waste and abuse at a massage clinic.  He then laments the oversight process failing to catch the fraud at a low level and writes a simple, elegant paen to informatics that is completely useless:

What’s demoralizing is the familiarity of this story. Back in 1997, the D.C. Circuit issued another opinion involving a Washington, D.C. physician who claimed he worked more than 24 hours in a day. Any halfway-sophisticated computer system should have uncovered fraud this blatant. Well over a decade later, however, Wheeler was able to do exactly the same thing. Even then, it took an informant’s “tip” to clue officials into the fraud.

A good computer program can investigate oddities and identify outliers. It can’t prove fraud or even get a 2 sigma estimate of fraud.

There is something that he is missing.  Claims payment and claims processing rarely reflects reality, especially when services are performed by mid-level clinicians.  We saw this with the recent release of CMS Medicare claims data.  Some of the highest paid individuals were truly performing all the services that they were getting paid for.  However, others were medical directors of large studies or claims rolling up to a single NPI or Medicare ID:

  • Claims rolling up to a provider’s NPI or Medicare ID.  Non-MD/non-D.O. clinicians such as Certified Nurse Practicioners, Physician Assistants, Master and Doctorate level Physical Therapists etc. often will roll their billing up to a doctor’s Medicare billing number.  This means we can’t do a simple time management bullshit detection study based solely on “This provider is claiming he is doing 17 Medicare Part B procedures a day.  Each of these procedures takes 30 minutes… IMPOSSIBLE”.  That type of first level analysis might identify odd situations, but most will be explained by seeing three or four CRNPs/PAs doing most of the work that the doctor than bills for.

The story that Bagley flags in his post is for a massage clinic.  Assuming they are billing for therapeutic and rehabilitative massages (a legitimate billing category), most of the providers who are actually performing the massages are certified massage therapists or atheletic trainers who are loosely suprevised by a single doc.  It is quite possible that five, six, or seventy people are billing under a single claim number so seventy hours of compensated care can be provided in a single day.  I know when I tweaked my ankle and needed physical therapy, the billing was done by an orthopedic surgeon who I saw once for eight minutes and then I worked with a great therapist for the next eight weeks.  Every session I had, I saw at least four therapists on the clock with patients. 

An automated outlier detection system is useful.  But it won’t be the end all and be all of fraud detection and prevention.  Medical billing is too byzantine and convoluted for that.

Buses vs. streetcars

Matt Yglesias,in an otherwise good VOX explainer about the high cost of transportation infrastructure in the United States, is getting something very wrong as to why street cars have more political support from relevant local actors than expanded bus services:

7. The clearest case is the growing popularity of mixed-traffic  streetcar projects. These are much cheaper than grade-separated light- or heavy-rail, but still far more expensive than a conventional bus without actually moving people any faster. In terms of offering a transportation service, spending money on a streetcar is much worse than spending the same amount of money on multiple new bus routes or upgrades to existing ones.

8. Streetcars appeal, however, because those high costs create construction jobs and because the aura of classiness around them appeals to real estate developers and other would-be drivers of gentrification. So cities across America are opening stub streetcar lines rather than investing in improving the transit experience of bus riders.

Classiness may or may not be a significant part of the developpers’ value proposition.  However the dominant reason why urban developpers who have the choice of supporting either bus mass transit or street car mass transit is permanance.  Once tracks are laid down, the route is fixed and the political inertia is to continue to run streetcars on a route for as long as feasible.  Buses are much more flexible.  That is their advantage, but that also means that a transit orientated development built with bus transit in mind is at the whims of the regional transit agency deciding not to move 75% of the buses to other, higher priority lines.

Street cars and other rail transit systems allow developpers to plan with a much higher degree of certainty than bus transit.  That is their value proposition to local developpers, not the implied classiness.

Provider AR Preferences

Kaiser Health News has an interesting article on safety net hospitals’ revenue cycles improving because of Obamacare:

At Seattle’s largest safety-net hospital, the proportion of uninsured patients fell from 12 percent last year to an unprecedented low of 2 percent this spring—a drop expected to boost Harborview Medical Center’s revenue by $20 million this year…

 About 80 percent of the system’s new Medicaid patients had previously been seen by the hospital as uninsured patients, she said. Their enrollment in coverage means the hospital is paid more for their care and is able to direct them to outpatient services and preventive care.

She said that UAMS has also seen a drop in ER visits by uninsured patients — from 6,000 visits in first three months of 2013 to about 4,000 visits in first three months of this year, calling the decline “significant.”

Providers have their preferences as to what patients and insurance scenarios they see.  Uninsured individuals have always been the least preferred by both the treatment/clinical side and the finance side for a multitude of reasons.  Uninsured patients are more likely to present themselves with more complicated cases as they have been trying to avoid costly treatment for as long as possible so managable conditions tend to fester to crisis conditions and since cost is a massive barrier to follow-up care, uninsured patients tend to be more likely to avoid the full regimen of follow-up care.  The finance department wants to avoid uninsured patients because they tend to have more complex and expensive interactions and they have the lowest expected value of payment.

Providers have clear account receivable preferences as to what patients they treat.

The ideal patient from an account recievables perspective pays a very high percentage of the billed charge with a high degree of certainty and a short turn around time and minimal haggling.  Excluding celebrity rehab centers and $40,000/year per person coverage, there are few payers who meet this provider ideal.  Everything else is a trade-off.

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Penny wise, dollar foolish

The Incidental Economist is passing along an interesting study that looks at how people respond to co-pay changes for treatments of acute crisis:

study just published in JAMA Pediatrics looked at how children with asthma obtained care under different levels of cost-sharing, and how much stress their families were under financially because of their child’s illness. It’s important to understand that children with asthma, by definition, require care.

We want them to use the health care system. With respect to asthma, prevention and maintenance are far better than trying to treat a child already suffering from an attack.

What we see from this study is that families with higher levels of cost-sharing were significantly more likely to delay or avoid going to the office or emergency room for their child’s asthma. They were more likely to have to borrow or cut back on necessities to afford care. They were more likely to avoid care.

This isn’t a good outcome. We’re talking about children with a completely manageable chronic condition who are being hampered by cost-sharing. That’s not what cost-sharing is supposed to do.

This is why I don’t think high deductible health plans or HSAs are a good policy solution.  They work reasonably well as true insurance products.  They are horrendous at the health maitenance component of health insurance.  As I’ve said before, HSAs and HDHPs can be an appropriate health insurance offering for a small class of people:

If I was the health insurance dictator in this country, I would allow high deductible plans to be sold.  They would only be sold to individuals and families who are reasonably young (age is a pre-exisiting condition) without any signifcant claims history.  The policies would not be automatically renewed until the most recent claims and medical history was reviewed.  Furthermore, the potential buyer pool would be limited to people who have the ability to absorb a one-time shock of several thousand dollars without it being a crisis.  This sub-population is fairly small, and can absorb the risk shifting that is inherent in a high deductible plan design.  Anyone with chronic conditions or recurring health maitenance problems should not be a plan designed like this

 If we assume that there is a general public policy goal of promoting good health at reasonable cost, then the obvious solution is to redesign out healthcare delivery and financing systems to account for reality instead of theory.  The obvious solution with plenty of real world comparables is some type of regulated public utility model of healthcare delivery plus social service enhancement plus collective single payer or regulated public utility payer systems mostly funded by general taxation.  Every other OECD country can make it work better and cheaper, so there are easy gains available.  However, I don’t think we’ll get to a national single payer or single payer-like system before my almost 2 year old can rent a car without surcharge, so I’ll be posting on a couple of second and third best kludges over the next week.