MEDICARE CONTINUES ITS ASSAULT ON HOSPITALS

We are often told by the advocates of government-run health care that a single-payer system would be innocuous because our masters inside the beltway would not actually own hospitals or employ clinicians. Well, the WSJ Health Blog demonstrates the vacuity of that assertion by explaining the latest P4P proposal from the single-payer system known as Medicare:

“Pay for performance,� one of the great health-care buzzwords of the moment, is often described as paying hospitals more if they take better care of patients. In a 104-page proposal unveiled today, Medicare offers a twist: Pay hospitals less if they aren’t among the top performers.

The problem with this bureaucratic stroke of genius is that Medicare’s current payment scheme only pays 95% of costs (that’s costs, not charges). So, how much further below costs are they planning to go?

Medicare would withhold 2% to 5% of hospitals’ reimbursement funds — with some payments excluded — and use it to create a big incentive pool. The incentive money then would be parceled out to two groups of hospitals: those that score the highest on a set of quality indicators, and those that show the most improvement.

Here’s news flash. A hospital cannot stay open if it is paid less money for its services than it costs to provide those services. In 1980, before Medicare began implementing its various price control schemes, there were 7,000 hospitals in the U.S. Now, there are fewer than 5,000. Many rural areas have no hospital at all.

The primary effect of government price controls, which is what we are dealing with here, is shortages. Unfortunately, our masters in Washington have never absorbed this blindingly obvious fact. Thus, they will continue to produce schemes like this latest P4P boondoggle, and the inevitable result will be widespread shortages of primary care and hospital services.

And don’t forget: Medicare doesn’t own any hospitals or employ any physicians. Yet its bureaucrats are using the power of the purse to do serious damage to the health delivery system. How can anyone with an IQ exceeding single-digits think this situation will improve if we give these clowns the whole system?

Comments 31

  1. Marc Brown wrote:

    Are you implying that purchasers should make no stipulation of quality – the reproting which is a huge weakness in your ‘system’? I see that a poor man in a hospital in Rhode Island had the wrong side of his brain operated on – the _third_ such mistake in a year at this fine establishment.

    Posted 28 Nov 2007 at 9:06 am
  2. Catron wrote:

    The whole “quality” narrative is a sham, Marc. This is about cutting reimbursement.

    And, even if this were really about quality, it cannot be imposed from the top down.

    Posted 28 Nov 2007 at 9:17 am
  3. Marc Brown wrote:

    Two points. You have to start cutting healthcare costs – even you believe that. And this isn’t ‘top down’ – Medicare is a customer, albeit a large one. I’m sure you agree that it is the customer who should demand evidence of both quality and cost-effectiveness.

    Posted 28 Nov 2007 at 9:38 am
  4. Rich wrote:

    If there were real-world opportunities for new enterprises to compete for business and revenue based on customer satisfaction and quality of service, quality would not be an issue.

    Starting a new enterprise where the revenue is guaranteed to be less than costs, however, is no opportunity at all.

    I suppose, Marc, that you believe that cutting reimbursement to the Rhode Island hospital will improve matters? As it stands, they, like other hospitals, are scrambling to reduce costs in order to keep their doors open. The threat of further revenue reductions is not likely to change this situation.

    No, they should have the proper incentive to produce a higher quality product : a competitor down the road.

    Posted 28 Nov 2007 at 9:41 am
  5. Catron wrote:

    This isn’t ‘top down’ – Medicare is a customer.

    Nope. Medicare decides what services will be performed and and dictates what it will pay for them. This is not the behavior of a customer. It is the behavior of an arrogant bureaucracy.

    Posted 28 Nov 2007 at 9:53 am
  6. drmatt wrote:

    Medicare doesnt decide what services will be performed, the doctor and patient do, medicare decides which ones they will pay for and how much, all the insurance companies do that, is there a point in there? Medicare by the way is a govt run insurance company that was put into place because your precious business model did not want to take the high risk expensive elderly population, and if they did the rates for insurance for that population would not be affordable.

    Posted 28 Nov 2007 at 10:03 am
  7. James Lansberry wrote:

    While I agree that this is just stupid on Medicare’s part–there are hospitals out there who don’t take Medicare and Medicaid. Some of them are also charitable (a handfull at best).

    What stops the hospitals from opting out of receiving the government patients? It’s a lot of paperwork to weed through, but the guys over at AAPS would be willing to help. And if they don’t have that option, why not? That would be the way to fight it–say we don’t want your money anymore.

    But hospitals don’t want to do that–and so they made their bed off government purchasing of health care. Let them lie in it.

    Posted 28 Nov 2007 at 10:41 am
  8. Catron wrote:

    Medicare doesn’t decide what services will be performed.

    Oh really? So, what happens when a Medicare-participating hospital refuses to provide free care (per EMTALA) to some drug seeker who shows up in the ER for the ten-thousandth time? Answer: Medicare pulls the plug on the hospital.

    That means Medicare is dictating not only what services will be performed, but also it who must receive those services.

    Posted 28 Nov 2007 at 11:13 am
  9. Catron wrote:

    What stops the hospitals from opting out of receiving the government patients?

    Government patients comprise about 50% of the patients hospitals treat. This would put 80% of U.S. hospitals out of business.

    Posted 28 Nov 2007 at 11:15 am
  10. drmatt wrote:

    EMTALA is another band-aid law put in place to cover what capitalistic health care wouldn’t. Again, if private health care had stepped up to the plate in any way shape or form you wouldn’t need EMTALA, COBRA, HIPPA, or medicare. The monster was created by the fact that the private health care industry wouldn’t take care of these issues.
    Point in fact, if medicare “pulls the plug” they still arent dictating what services you must or will provide, they are however exerting financial pressures, which is also done by the private sector, what was your point again?

    Posted 28 Nov 2007 at 11:34 am
  11. Catron wrote:

    If medicare “pulls the plug� they still arent dictating what services you must or will provide.

    If they pull the plug, drmatt, you’re out of business. They have a gun to the collective head of the hospital industry, and they use that coercive power to dictate how the system will work. That means, by the way, that there is no substantive difference between “single-payer” and “socialized” health care.

    Posted 28 Nov 2007 at 12:09 pm
  12. drmatt wrote:

    I would direct you to james lansberry’s comments above. Nobody forced the hospitals to do business with medicare, it is a “business decision” albeit bad, happens all the time in business. are you ignoring the fact that all these govt interventions you so loath are band-aides for a private system that wasn’t even comming close? do know that the base word for ignorance is ignore?

    Posted 28 Nov 2007 at 12:20 pm
  13. Marc Brown wrote:

    Only you could turn a drive to improve standards into coercive power. And yes – if Medicare is that important then providers are stupid if they don’t look after their key customer.

    Posted 28 Nov 2007 at 12:42 pm
  14. Catron wrote:

    Only you could turn a drive to improve standards into coercive power.

    Again, it’s not about improving standards. It’s about price controls.

    Posted 28 Nov 2007 at 1:48 pm
  15. Rich wrote:

    Price controls never never never never improve quality. Ever. Price controls reduce quality by increasing shortages, and therefore reducing resources available to the individual “consumer” (or patient in this case).

    They can call it quality improvement until they are out of breath, but history has shown that it will not happen.

    Posted 28 Nov 2007 at 2:51 pm
  16. Marc Brown wrote:

    No, you’re quite wrong. In fact, I’m surprised you don’t like this as it’s about getting value for your money, and it’s a Republican programme. I think your readers should see this context:

    ‘On August 22, 2006, President Bush issued an Executive Order, “Promoting Quality and
    Efficient Health Care in Federal Government Administered or Sponsored Health Care
    Programs,� which requires the Federal Government, to the extent permitted by law, to:
    • Ensure that Federal health care programs promote quality and efficient delivery of
    health care using interoperable health information technology, transparency
    regarding health care quality and price, and better incentives for program
    beneficiaries, enrollees, and providers.
    • Make relevant information available to these beneficiaries, enrollees, and
    providers in a readily useable manner and in collaboration with similar initiatives
    in the private sector and non-Federal public sector.
    To support this mandate, Department of Health and Human Services (DHHS) Secretary
    Michael Leavitt has embraced “four cornerstones� for building a value-driven health care
    system:
    1) Connecting the health system through the use of interoperable health information
    technology;
    2) Measuring and publishing information about quality;
    3) Measuring and publishing information about price; and
    4) Using incentives to promote high-quality and cost-effective care.

    Building on these four cornerstones, the Centers for Medicare & Medicaid Services
    (CMS) has articulated a vision for health care—the right care, for every person, every
    time. To achieve this vision, CMS seeks to implement policies that will promote the
    delivery of care that is safe, effective, timely, patient centered, efficient, and equitable.

    Current Medicare hospital payment policies generally reward the quantity rather than the
    quality of care delivered and provide neither
    incentive nor support for improving quality of care.
    Today, hospitals are usually paid the same for
    services rendered regardless of the quality of care
    they provide, and in some cases, hospitals may
    even receive additional payment for treatment of
    avoidable complications. Value-based purchasing
    (VBP), which links payment more directly to
    performance, is a key policy mechanism that would
    transform Medicare from a passive payer for
    services to an active purchaser of care for millions
    of Medicare beneficiaries. CMS would focus on
    purchasing value for the Medicare program, which
    means that hospitals would receive differential
    payments depending on their performance. VBP is
    a key policy mechanism to achieve desired
    programmatic goals.’

    Posted 28 Nov 2007 at 2:58 pm
  17. Rich wrote:

    A) Intelligent citizens do not accept policies based on the party of the politician who proposes or orders them.

    B) The good intentions of those at CMS do not change the cold hard facts – CMS has a limited budget with no room for growth, they ALREADY impose price controls, and their “four cornerstones” will require additional funding, which is not available, unless they reduce expenses elswhere. So until there are enough cost savings realized by reducing expenditures (i.e. reducing physician compensation – scheduled for a 10% across the board reduction in January, and penalizing those with PERCEIVED poor quality) there will be yet another unfunded mandate.

    Alas, their fourth “cornerstone” is incentives. But “we will not reduce our payments further” is a lousy incentive.

    In spite of all this talk, there is yet to be any good measure of across-the-board quality. Programs striving to earn “bonuses” or keep from having the reimbursements reduced, will put whatever resources they have into improving JUST THOSE MEASURES that are being used. So time to first dose on antibiotic in pneumonia will decline and discharge prescription for aspirin after a coronary event will go up, and any “soft” quality improvements that might otherwise be made will continue to be ignored.

    Posted 28 Nov 2007 at 4:17 pm
  18. Rich wrote:

    it’s about getting value for your money

    Please define “value”, as it pertains to any patient suffering from, or being treated for, an illness for which there is not a quality measure.

    No. It’s about keeping the groess federal healthcare spending constant while increasing the number of patients covered: Price controls.

    Posted 28 Nov 2007 at 4:20 pm
  19. Marc Brown wrote:

    ‘In spite of all this talk, there is yet to be any good measure of across-the-board quality’

    So your solution is? Do nothing and watch costs spiralling out of control with no attempt to but quality care? I think you’re living in cloud cuckoo land if you think a huge purchaser of services won’t strive to improve cost effectiveness.

    Posted 29 Nov 2007 at 4:12 am
  20. Rich wrote:

    I think you’re living in cloud cuckoo land if you think a huge purchaser of services won’t strive to improve cost effectiveness.

    I think the huge purchaser of services DOES strive to improve cost effectiveness. I agree with that statement completely.

    The larger question is, other than reduced or static spending, how is “cost-effectiveness” defined, in a broad sense?

    It is one thing to choose one treatment over another for single or groups of patients because it has been shown to be cost effective. But how do you measure this for “healthcare” in general? You must also admint that the most cost effective treatment is not always the best treatment.

    So a few surrogate markers of “quality,” for which there is little evidence of correlation to actual quality, will determine that status of an institution or priovider for which those measures represent 5% (my estimate) of the service they provide?

    Here is an alalogy – you work in an assembly line, making widgets. Your performance is measured by sampling your work. One out of every twenty widgets is inspected by your customer, and the quality of your work and your reimbursement and continued solicitation by the customer is dependant upon the assessment of those samples and your agreement to provide tham at a very low price they determine.

    Now imagine that the customer tells you, in advance, precisely which samples will be evaluated. You will produce 1 sample for every twenty that is flawless, and in order to stay in business with the purchaser-dictated price, the quality of the remaining 19 will decline, to reduce your costs, and make the entire endeavor profitable, or at least tenable.

    The situation in healthcare described above is really no different. Until and unless quality can be measured in a relaiable, reproducible, and meaningful manner, quality improvement projects tied to reimbursement degenerate into nothing more than price controls.

    Posted 29 Nov 2007 at 7:31 am
  21. Marc Brown wrote:

    ‘It is one thing to choose one treatment over another for single or groups of patients because it has been shown to be cost effective. But how do you measure this for “healthcareâ€? in general?’

    You can measure almost everything, from surgeon skills to the rate of hospital acquired infections to treatment by class and race to rates of overtreatment to the often extortionate extras that your hospitals add to bills. If you’re saying you can’t measure the performance of healthcare systems then I say you’re talking nonsense.

    Posted 30 Nov 2007 at 9:11 am
  22. Rich wrote:

    Very good. You’ve made my point. Not one of the things that you mentioned for measurement reflects the impact of care for those with uncomplicated hospital courses, hopefully (and in my experience) the bulk of the patients.

    Most patients do not have operative errors or hospital acquired infections. Is there research that demonstrates the abundance of “extortionate extras” or their impact on the patients’ outcomes? Is the gold standard for care “no errors and no hospital acquired infections?”

    The bulk of patients admitted with pneumononia recover and are discharged home. How is the quality of their care measured? Fortunately, many people admitted with ACS do well, and are stabilized and return home after a short stay. How do you measure the “performance” of the hospital in those cases? How is one program distinguished from another in uncomplicated, common cases of hospital care? How is performance measured in the case of the diabetic admitted for a foot amputaion, who has an uncomplicated post-operative course?

    It is not easy. We have reduced performance measurement in acute coronary care to the percentages of aspirin and beta-blockers prescribed, ann the rate of treatment complications. Do you really believe that that tells the whole story? Is it so hard to believe that a hospital could have good outcomes, but poor measures, such as these? Or that a hospital might have great measures, but poor outcomes?

    Of course they can. It is very hard, and often subjective. What is not, subjective, however, is the number of dollars.

    One big problem witgh performance measures is that there are variables outside of the providers control, which will alter the behavior of a provider. High risk patients will be viewed as high risk, and their care will be deferred because there is no possible outcome that will not harm the providers “performance measures.”

    Posted 30 Nov 2007 at 12:32 pm
  23. Rich wrote:

    Also, note that the program as proposed bases incentives on “a set of quality indicators.” So these indicators will improve, while care in general declines – after all, resources are limited.

    Posted 30 Nov 2007 at 12:33 pm
  24. Marc Brown wrote:

    ‘Is it so hard to believe that a hospital could have good outcomes, but poor measures, such as these? Or that a hospital might have great measures, but poor outcomes?’

    I think you’re skating round the issue. It’s in fact easier to put in place quality standards for uncomplicated, routine care. While the population treated will of course be variable – age. socioeconomic, other conditions – in different locations, a hip replacement is still a hip replacement and confounding factors can be controlled for.

    Posted 03 Dec 2007 at 6:40 am
  25. Rich wrote:

    “I think you’re skating round the issue.”

    Not at all. Perhaps I am just ill-informed. If you could please educate me, what are the “quality indicators” for uncomplicated hip replacement?

    What are the quality indicators for uncomplicated treatments of medical problems, such as pneumonia (otehr than “time-to-first-antibiotic”), diabetic wound care, idiopathic pleural effusion, diverticulitis, etc.?

    Posted 03 Dec 2007 at 10:21 am
  26. Marc Brown wrote:

    ‘what are the “quality indicatorsâ€? for uncomplicated hip replacement?’

    Surely you must realise there are all sorts of factors, not least the number of procedures performed by surgeons and the resultant rate of infections and revisions. To take a really obvious example, what about mammography? There has been a big drive in the US to raise quality standards.

    Posted 03 Dec 2007 at 2:37 pm
  27. Rich wrote:

    Now you are skating around the issue…

    “Number of procedures done” is not a quality indicator. Uncomplicated hip replacements are, by definition, free of infection. Sure there are factors, but they are not “quality indicators” which is the crux of this post, and the basis for the incentives/disincentives in the proposed program.

    The question remains – what are the “quality indicators” for routine, uncomplicated care, that makes up the bulk of what hospitals do? it is cleanliness, nurse communication, doctor communication, etc. Actual clinical measures are proportion of patient who received pneumovax, or MI discharges who were prescribed aspirin, and the like. Again, they are a narrow set of measures, which will improve everywhere, while those things that are not measured will deteriorate.

    Posted 03 Dec 2007 at 7:09 pm
  28. Marc Brown wrote:

    ‘Number of procedures doneâ€? is not a quality indicator.’

    I think you need to do some reading on this – surgeons who do only a few of a certain procedure often have worse outcomes than those who do an ‘optimum’ number. It is an important factor. And as I said, mammography quality has been hugely variable, and has benefited from guidelines and policing, including federal sanctions.

    You dismissed the result of poor cleanliness earlier. As for doctor and nurse communications, this is the subject of increasing training and research – check out the field of pyscho-oncology.

    Posted 04 Dec 2007 at 4:51 am
  29. Rich wrote:

    You are missing my point.

    First, “Number of procedures done” is not a quality indicator. It is a statistical predictor of outcomes, which ARE quality indicators. Yes it is an important factor, but it is not a quality indicator. Read the report. Saying that “number of procedures done” is a quality indicator is analgous to saying that the amount of Windex purchased is an indicator of cleanliness.

    Second, I have no problem with assessing the quality of hospitals on ANY of these factors. What I have a problem is is PENALIZING hospitals by reducing an already insufficient reimbursement based SOLELY on indicators that are not directly correlated to outcomes.

    When I go to the hospital, I want to have an uncomoplicated course. Good communication, cleanliness, are nice, and as a consumer I might make choices based on these, assuming outcomes are the same. But the clean hospital with excellent communication skills might just be the one most likely to fail to provide adequate care, resulting in my death. So I will choose clinical outcomes over cleanliness and communications anyday.

    Of course, clinical outcomes measures are HARD to make. Much harder than suveying patients and asking them if they thought their doctor or nurse were nice, or if the floors were mopped adequately. Much harder than counting the number of pneumococcal vaccine injections given to those with unrelated conditions.

    All of the cognitive work that goes into determining clinical outcomes is ignored by these measures. It is ineveitable that if someting like this is imposed on hospitals, practioners are next. I am already judged as a practitioner, not based on outcomes, or cognitive skill, but on the percentage of patients receiving pneumovax, receiving statins, recieving flu vax, receiving mammograms and DREs. No quality measurement is made of my cognitive skill: how well sick patients are managed, or those with complic ated problems are managed.

    It will soon by that the “best” doctors are those with loads of healthy patients and a good system for ensuring that all of the “quality measures” are met. Those with sicker patients will have poorer ratings, and as a result, more and more sick patients will have fewer and fewer options, as these patients become a liability. They will inevitably lower a doctor’s “quality score” because of the inherent complexity, and quality measures that are contraindicated. Dotors will favor healthier patients to get better quality scores, supply will decrease, and access with it.

    Posted 04 Dec 2007 at 8:43 am
  30. Marc Brown wrote:

    ‘Number of procedures doneâ€? is not a quality indicator. It is a statistical predictor of outcomes, which ARE quality indicators.’

    You’re splitting hairs – it’s a proxy of course.

    ‘Those with sicker patients will have poorer ratings, and as a result, more and more sick patients will have fewer and fewer options, as these patients become a liability. They will inevitably lower a doctor’s “quality scoreâ€? because of the inherent complexity, and quality measures that are contraindicated.’

    Quality measures that don’t take into account the characteristics of the patient population are pretty meaningless. Take them into account and they have meaning.

    Posted 05 Dec 2007 at 2:49 pm
  31. Rich wrote:

    “Quality measures that don’t take into account the characteristics of the patient population are pretty meaningless.”

    Meaningless they are, and utilized everyday by payers nevertheless.

    Posted 05 Dec 2007 at 4:53 pm

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