Congress passes another temporary payment fix

Last night, Congress passed legislation staving off the 21 percent Medicare cuts until June 1 — another temporary fix to the SGR-based payment formula.

This vote was the latest of several moves to push back the cuts. Twice this year, CMS has had to step in and tell contractors to hold claims for 10 business days until Congress can pass a fix. The most recent period ended this week.

And once that temporary fix expires again, Congress can pass another short-term solution. Or perhaps it is really time to change the flawed SGR formula once and for all?

Trendspotter: Health Reform Will Be Mixed Bag for Physicians

By Ken Terry

The historic reform bill that Congress passed on Sunday will immediately affect physicians, but the impact will be much greater in the long term.

First, some expansion of coverage will occur within six months of President Obama’s signature on the bill—whether or not the Senate adopts an accompanying measure that would add House-sponsored changes. The bill will immediately allow parents to cover their young adult children and will prohibit children from being denied insurance because of their health status. Adults can’t have their coverage dropped when they get sick, and people who can’t get coverage because of their health condition will be eligible for beefed-up high risk insurance pools. All of these measures, coupled with small business tax credits for buying insurance, should reduce the number of patients who can’t pay their bills by the end of this year.

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The really major impact, however, will come in 2014, when the big Medicaid expansion and the individual mandate to purchase insurance kick in. By 2019, these provisions will expand coverage to an estimated 32 million people, providing physicians with many more insured patients.

The health insurance exchanges for uninsured individuals and small businesses will also be launched in 2014. Health plans that participate in those exchanges will be required to offer a minimum level of benefits, and catastrophic plans will be available only to those under 30 and those who are exempt from the mandate to buy coverage. Moreover, people who have skimpy plans at work and/or who pay more than 10 percent of their income for it will be able to buy insurance through the exchanges. The plans offered in these government-sponsored markets will also have fairly low out of pocket maximums. All of these provisions, again, will increase the number of patients who are insured and will therefore be able to afford your services—assuming you take Medicaid.

On the other hand, the expansion of coverage will lead to a massive increase in consumer demand that physicians will be expected to handle a few years from now. The legislation does include provisions to increase the supply of primary care, and recent increases in primary-care reimbursement by Medicare—albeit at the expense of specialists—should begin to attract more doctors to the primary-care fields. But much more needs to be done. For one thing, the debt burden of new residency graduates must be reduced if we expect more of them to become, say, internists rather than endocrinologists.

There are also cost control provisions in the bill—mainly pilots of new Medicare payment approaches--that could lead to lower reimbursement for physicians. Whether it’s accountable care organizations, payment bundling, or value-based purchasing, the days of unrestricted fee for service are drawing to a close. Many physicians will be unhappy about this. They don’t want to take financial risk, either alone or in tandem with other physicians and hospitals. But some kind of quality-based or budget-based approach to reimbursement, both by government and private payers, is inevitable, because the current level of cost growth is unsustainable. This will probably mean that more physicians will go to work for hospitals, and that small private practices will become less viable. But market forces are already pushing health care in both of those directions.

Meanwhile, Congressional leaders have promised the AMA that they will enact some kind of “fix” to prevent physician Medicare payments from being cut 21 percent this year and more later on. Presumably, they will find some savings in the overall national budget to cover the $200 billion plus cost of that fix over 10 years. But that is isn’t part of the reform legislation that just passed or the reconciliation bill that is now before the Senate.

Obviously, the payment method that has Medicare has used to reimburse physicians for the past decade is not viable and must be replaced. Congress’s last-minute passage of bills to prevent pay cuts to doctors, year after year, is ample proof of that. But there’s no chance that Congress will simply decide to give physicians what they want under fee-for-service Medicare. So get ready for changes in how you’re paid by both Medicare and private payers. This is no longer going to be your father’s healthcare system.

Health reform happening

Finally, after months of political wrangling, the House passed the healthcare bill approved by the Senate on Christmas Eve. The 219-212 vote last night sent the bill to President Obama. After the vote, the House also adopted a package of changes to it, which were agreed to in negotiations among House and Senate Democrats the White House, the NT Times explains, which now goes to the Senate for action this week.

The bill requires most Americans to have health insurance, adds 16 million people to Medicaid, subsidizes coverage to low- to middle-income people, and sets up an insurance exchange.

So eventually, an estimated 32 million more Americans will have health insurance, which means you could be seeing more patients in your office. Are you ready for that? Check out our recent story about how to prep your practice for reform’s new patients.

Trendspotter:Healthcare Reform Is First Step To Shore Up Deteriorating System

By Ken Terry

Many pundits have weighed in on the likely consequences of not passing healthcare reform, which is expected to come to a head within the next few days. But a recent blog post by Matthew Mintz, MD, an internist in Washington, DC, puts things in perspective for physicians.

Judging by his essay, Mintz is neither a Tea Partier nor a single payer advocate like those who belong to Physicians for National Health Program (PNHP). Both the Tea Party and PNHP oppose the reform bill—the former because it would expand government intervention in healthcare, and the latter because it fails to put government in charge of healthcare. Mintz is not concerned that the proposed legislation would give the government too much power; rather, he worries that, in the absence of reform, the healthcare system will continue to deteriorate. In fact, he believes that while the reform bill deserves to pass because it expands insurance coverage, healthcare will decline even if it's adopted. What’s missing, he says, are more stringent cost control measures and a plan to increase the supply of primary care.

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Writes Mintz: “Though our dysfunctional system and plans for reform may not affect you now, things will get worse. Without addressing costs, premiums will continue to go up and even more patients will lack the ability to afford health care coverage. Without addressing the bureaucracy of insurance paperwork and the pay disparity between specialists and primary care physicians, students will continue to go into non-primary care fields and current primary care doctors will retire. In addition, our nation is only getting older and fatter, and thus sicker and more expensive.”

Despite the shortcomings of the reform bill, Mintz views it as an essential step toward providing everyone with high-quality care at an affordable cost. If the legislation is voted down, he points out, Congress will probably not revisit the issue for a long time to come. By then, he says, things will be so bad that everyone will be demanding reform.

I agree with Mintz on the politics of reform, and I also concur that the system’s decline will accelerate unless the federal government takes decisive action. But several elements in the bill could help slow cost growth. One is the proposed Independent Medicare Advisory Board, which would theoretically have more power than the current Medicare Payment Advisory Commission (MedPAC) to make changes in Medicare reimbursement. While the proposal has elicited strong opposition from the healthcare industry, including medical societies, it's needed because Congress is too political to make the required cost-cutting decisions. The problem with the proposal in its current form is that it takes hospitals, physicians, and drug companies off the table for the next decade. So it would not have much practical effect unless later legislation gave the independent board real authority.

Another provision in the bill would encourage the formation of accountable care organizations – combinations of hospitals and physicians that would share in whatever savings they produced for Medicare by improving coordination of care. Most likely, big healthcare systems would take advantage of that opportunity. There are also demonstration projects for payment bundling and enhanced home care for chronically ill seniors. Many hospitals are already preparing for payment bundling—which would provide a single payment for multiple kinds of services, such as acute and post-acute care—by employing more physicians.

Last but not least, the Senate bill that forms the backbone of the final reform legislation places 1 to 2 percent of hospitals’ Medicare reimbursement at risk for meeting quality and efficiency targets. While the bill is not specific about physician incentives, it proposes studying physician utilization patterns before deciding how much of your reimbursement to put at risk.

As for increasing the attractiveness of primary care to young doctors, the bill would shift some Medicare funds from specialists to primary-care physicians—a direction in which CMS has already started moving.

Needless to say, the AMA and many specialty societies oppose most of these initiatives. So if Washington is really interested in cost control, it’s unlikely to get much help from physicians. And yet, if both public and private health spending growth is not restrained, an increasing percentage of patients will no longer be able to afford your services.

More on Medicare payment shenanigans

In case you missed the latest in the Medicare payment shenanigans in Washington, the Senate voted again last night to delay the 21 percent cuts. (This after Sen. Bunning blocked the bill last week.)

Now, Congress has until April 1 to fix the flawed payment formula.

From AMA President J. James Rohack, MD: “Physicians are outraged by the Senate’s failure to act before the March 1 deadline, as their patients and practices are hurt by the continued instability in the Medicare system.”

He continues to say, “The vicious cycle of short-term delays … must come to an end.”

Gerald O'Malley, DO: Some thoughts on the healthcare summit

Today, I worked a 7-3 shift in the ER while our political leaders were meeting to talk about what to do with healthcare. Ironic, considering there are roughly two dozen physicians in Congress and not one was seated at the table. Can you have a serious summit on energy policy without engineers? Can you have a serious summit on national security without law enforcement experts? The only members of the government that actually have any experience with the actual delivery of healthcare were absent, which should tell you everything you need to know about the healthcare summit of 2010.

As the snow swirled around outside in the most recent snowpocalypse to affect the city this winter, we struggled to get our patients out of the waiting room and into an exam room as quickly as possible. We waded through their poorly described complaints and tried to identify any life threatening problems quickly and efficiently.

We probably saved a half-dozen lives in eight hours; an acute myocardial infarction and a stroke, an ectopic pregnancy, an acute appendicitis, and a septic old lady were all “rocked and locked” — a euphemism for getting the job done quickly and expeditiously. In addition, we treated a number of “non-life threats” — broken bones and lacerations and asthma attacks and strep throats.
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We tried to follow the proceedings on TV and online whenever we could, but I had to wait to get home to watch the news in order to digest the proceedings.

I heard a lot of sound bites (mostly from Republicans) asking for tort reform, but beyond the sound bite, there was no follow-up discussion. The trial lawyers have spent so much money buying access and influence that I doubt any meaningful tort reform is possible.

Some idiot congressman actually suggested that a plan for “stealth patients” be written into the bill in order to “root out Medicare fraud.” He said that we should send “fake patients claiming to have broken legs” to MRI centers and if “they continue to treat them like broken legs, then we know there is fraud going on.” There are so many things wrong with that statement, including the fact that broken legs are not diagnosed by MRI, that I don’t know where to begin, and what’s worse is that this half-wit congressman was actually describing something that had been proposed by Senator Tom Coburn, who is an obstetrician! Maybe the physicians shouldn’t be at the table, if they are going to make ridiculous suggestions like that!

After work I picked up my kids and was driving home when I received a “remember that patient you saw the other day” phone calls from my vice chairman: “Gerry, you need to meet with risk management next week to talk about this case.” You don’t actually need malpractice to be sued — all you need is a bad outcome.

What are the odds that this patient was a “stealth patient” or someone that is already talking with a lawyer?

Medicare payment cut update

Late last week, the clock was ticking for Congress to pass legislation to stave off the 21 percent Medicare payment cuts, which were to go into effect today.

But they left for the weekend before doing so, surely leaving many practitioners in a panic about the impending cuts and their own future with accepting Medicare patients.

Then, this morning the news is that CMS delayed the physician cuts themselves.
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So the issue was that the Medicare payment fix was part of a larger jobs bill that would have extended unemployment benefits and federal subsidies for health premiums. But Sen. Jim Bunning, a Republican from Kentucky, blocked the bill, saying it should be paid for rather than added to the deficit. With him refusing to relent, the NY Times explains, Dems will have to move to override his objections, but that couldn’t happen until early this week.

This morning, HealthLeaders Media reports that CMS ordered contractors to hold claims for 10 days, which temporarily halts the pay cut. This gives CMS and Congress 10 days to fix it. CMS also said they don’t expect this affect provider cash flow.

How do you feel about accepting Medicare?

Will you stop accepting Medicare because of the looming rate cut?

Time is running out for Congress to step in and block a 21 percent Medicare reimbursement rate cut set for Monday. Some docs are saying they will stop taking Medicare patients, Kaiser Health News reports.

The AMA continues their intense lobbying effort to have Congress repeal the cuts and the faulty SGR payment formula on which the rates are based. But in the meantime, they are also providing information to their members, including how to remove themselves from the Medicare program and help their patients find other doctors, AMA according to CNN.

If you’re losing money every time you see a Medicare patient, why keep seeing them? Primary-care physician and blogger Kevin Pho (KevinMD) put it this way: Duty and conscience. He references fellow doc and blogger Dr. Robert Lambert’s post on the topic. Dr. Lamberts writes:

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“So why in the world do I accept M/M still? Why would I continue to make my life so difficult? Two words: duty and calling. I view my seeing M/M patients as a social responsibility (especially Medicare). These people need to be seen and they deserve good care, and despite the hassle and drain on income they cause, I make a reasonable income. So far.”

Dr. Lamberts says his conscience and tolerance of pain keep him accepting Medicare, but that he is sympathetic to docs who drop insurance and Medicare. For some, the conscience isn’t enough to stay in business.

Congress has consistently stepped in in the past to stave off the payment cuts, most recently just a few months ago to extend the deadline to March 1. But what if they fail to act this time? What will you do? How do you feel about accepting Medicare patients?

After the healthcare summit, now what?

Perhaps it’s little surprise that little was accomplished yesterday at Obama’s healthcare summit. The issue has become far too partisan. I thought the NY Times summed it up nicely here:

“If there was any question about how deeply divided Republicans and Democrats are about how to reshape the American health care system, consider that they spent the first few hours of President Obama’s much-anticipated health care forum on Thursday arguing over whether they were in fact deeply divided.”

In the end, Republicans rejected the idea of voting for Obama’s bill, and Democrats are considering pushing it through without their support. (I tend to think this is a path they should have taken a long time ago. Some issues should be legislated without all the bipartisan wrangling for votes. Why not just rely on the simple majority and pass some form of reform? Had they taken that route far sooner, perhaps the bill wouldn’t be the weaker version of insurance reform it is now.)

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The Times does note a few things the Republicans and Democrats agree on: the need for more regulation of insurers, and the idea that government should help individuals and small businesses pool purchasing power for insurance. How to accomplish these things? Now that’s where they disagree.

Americans similarly agree on certain elements of reform (tax credits to small businesses, a health insurance exchange, financial help for low to middle income), according to the latest Kaiser Family Foundation poll. The same poll shows Americans split (43 percent to 43 percent) on the healthcare reform legislation, though.

And another interesting point in the poll is that most Americans — 59 percent — say the delays are “more about both sides playing politics,” and 25 percent say they are “more about Republicans and Democrats having disagreements.”

Twenty-two percent want Congress to put healthcare on hold, and 19 want to see them pull the plug on the effort for 2010.

Obama's healthcare compromise

President Obama presented his compromise healthcare legislation today (in advance of Thursday's healthcare summit in Washington), in an attempt to bridge the differences between the House and Senate versions that have stalled.

According to the White House’s announcement, Obama’s legislation:
• Provides a middle class tax cut for health care and reduces premium costs, to help make coverage more affordable for 31 million Americans.
• It sets up a health insurance market through state-based insurance exchanges
• Gives the government authority to block premiums rate hikes and claim denials

It also closes the Medicare prescription drug “donut hole,” increases the threshold for a tax on high-end insurance plans, and eliminates the Senate provision that exempted Nebraska from paying increased Medicaid expenses, according to CNN. And it does not include the public option.

Thoughts on his proposal?

Obama's mention of healthcare reform

Where is that healthcare reform bill?

In his State of the Union address last night, President Obama waited more than half an hour in before mentioning healthcare, and as the NT Times puts it, it was then “wedged into a catalog of presidential priorities, which included jobs, the economy, education, bank regulation, energy independence, deficit reduction and the war in Afghanistan.” This suggests the outlook is grim for the legislation.
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In fact, about seven paragraphs of the 70-minute speech was dedicated to healthcare, Politico reports. That's after spending a year on it.

Obama did call on Congress not to give up the effort, the Hill reports. “Don’t walk away from reform. Let us find a way to come together and finish the job for the American people.”

But he didn’t offer much guidance on how to break the impasse, and meanwhile Democrats have been debating the best approach for the stalled legislation. House Speaker Nancy Pelosi said yesterday that the Senate would have to make changes to the bill before the House would act again, the NY Times reports.

So once again, the fate of the reform effort remains unclear, but grim.

EHR stimulus update

Do you have meaningful use on the brain? In a follow up to the primer on EHR stimulus incentives, Ken Terry's EHR Incentives Update in the February journal digs deeper into the meaningful use criteria.

There's a good chance you've got some confusion or anxiety about acquiring and learning to use an EHR. But if you want to get the maximum federal dollars, you can't really hesitate. Ken's article will help clear up some confusions and get you on the right path for the EHR incentives.

I also welcome your comments here about what you're doing to acquire and meaningfully use an EHR.

After Mass. race, is healthcare reform dead?

Republicans took the Massachusetts Senate seat last night, reducing the majority the Democrats needed to blog GOP filibusters and signaling a bumpy road ahead for Obama’s agenda.

So what does Scott Brown’s win mean for the healthcare reform efforts?
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Brown campaigned on his opposition to the legislation and he promised to kill the bill when he got to Washington. His vote as the 41st Republican senator was just the number the GOP needs to blog the legislation, the LA Times reports.

It’s not entirely clear yet what will happen with the bill. Speaker Nancy Pelosi tried to be optimistic about it, but other Dems said it’s back to the drawing board for healthcare reform, according to the Washington Post.

Perhaps the most obvious option is for the House to pass the bill cleared by the Senate, because the chances are slim that they can salvage “the full scope of the current legislation.” The Democrats could also start over in the Senate with a scaled-back bill, or they could shelve it entirely and only try to pass a few of the popular initiatives in the existing bills. Either way, what looked like a sure-thing to pass is now hanging by a thread.

Perhaps that’s not a bad thing. Even those who want healthcare reform and were at one time very optimistic of real reform will be glad to start over. The legislation has surely been watered down over the months of debate, and in many ways fails to achieve meaningful reform. Sure, it was a step – but maybe it wasn’t the best way to go about healthcare reform? Maybe starting over will yeild a better result in the end?

Don McDaniel: Health reform death spiral

I gave a speech in early January 2010 to a group of bankers and accountants to discuss the impact of proposed health reform on business. Everyone is nervous about what’s coming down the pike, and the average business owner (or even the average business advisor) doesn’t have the time or the proclivity to dig into reform legislation to understand how it might affect them — it seems our legislative process is geared to obfuscation.

As I thought about health reform and how it might affect business, I started to focus on the impact on one of my favorite small businesses: the physician practice. It seems that even without reform in the offing, the physician-entrepreneur is moving toward extinction — how many businesses can, or want, to operate in an environment where revenue is largely fixed, heavily regulated — sort of like a utility — and highly dependent mostly upon factors outside the control of the entrepreneur, and operating and capital expenses are rising every year.
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So, cash flow is being squeezed from every conceivable angle, the government is mandating purchase of expensive information technology (which mostly benefits others that aren’t contributing to the purchase), and practicing physicians in many states deliver services every day under the specter of being sued.

What else could happen to make things even peachier? How about health reform, which is really insurance reform, which is really focused on expanding coverage for the uninsured?

Here’s one scenario from a particularly contrarian observer (me) that nonetheless has legs. As health reform will be paid for largely on the back of reductions in the Medicare program — almost $700 billion in cuts over the next 10 years — it seems an inevitability that the Medicare program will continue devolving into one of the poorest payers for physicians and hospitals, second only to the Medicaid program.

And, oh by the way, a lot of the proposed coverage expansion in the Senate bill will manifest as new Medicaid enrollees — yes, that’s right, the program that is busting the budgets in states all across the country, will be expanded. So, we’ll have growing public sector programs, at the expense of commercial insurance enrollment, which is today subsidizing the underpayments from Medicare and Medicaid.

Anyway as FFS reimbursement for Medicare (and Medicaid) continues to degrade, physicians, especially primary care physicians, will vote with their pocket books and decide to, in the short run, drop out of public sector programs, and in the longer term, those historically groomed to practice medicine are going to start deciding to choose another career path — one without frivolous malpractice risk, crazy student loans, ever-growing expenses and fixed revenue.

That seismic workforce shift will further drive structural physician shortages, creating a lot of upward pressure on prices (i.e. outsize growth in expenditures) forcing the dreaded r-word – explicit rationing. Get ready to queue-up for that procedure!

Don McDaniel, president and CEO of Sage Growth Partners LLC, is an entrepreneur, economist, technologist, educator, speaker, and writer. He is a skeptical contrarian who writes about the power of free markets, disruption, innovation, and technology in healthcare.

Trendspotter: What health reform will mean for you

By Ken Terry


While congressional leaders dicker over the details of healthcare reform legislation, this is a good time for physicians to take stock of how reform will affect them and what they can do to help repair the system.

On the issue of Medicare reimbursement, don’t expect the Senate to follow the House’s example and restore projected Medicare cuts to physicians for the next 10 years. The Senate earlier rejected this permanent fix, and it is unlikely to reverse its position. Instead, the final reform package will probably eliminate the planned cuts this year and perhaps next year, according to consultant Julius Hobson, former lobbying chief for the AMA. After that, the issue will again come up for debate.

However, I do not believe that we will see Congress continue to do its annual dance with the AMA over these cuts, giving back the money at the last minute without solving anything. The direction of Medicare reimbursement will be increasingly tied to approaches like the value-based purchasing and payment bundling proposals in the Senate bill, as well as to the accountable care organizations (ACOs) that the measure encourages providers to form. These aggregations of hospitals and physicians, similar to the Mayo Clinic or the Cleveland Clinic, but perhaps more loosely organized, will deliver care within some kind of budget and will be able to keep a portion of any savings they achieve. If Medicare starts doing this, look for private payers to follow suit.
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So how will all of this affect you if you don’t belong to an ACO and are not involved in a CMS demonstration project? It won’t affect you immediately, but eventually the tsunami of change will reach your practice. When it does, you may find that what worries you now is no longer relevant. In fact, the issue that medical societies have emphasized during this reform season — how much the government will pay doctors for each unit of service — will eventually become moot, because fee for service is on its way out. In five or 10 years, you’ll be paid on an entirely different basis.

This is going to happen because fee for service is one of the key drivers of healthcare inflation in the U.S. Don’t be fooled by the recent announcement that health cost growth in 2008 dropped to its lowest level in decades: That was largely due to the recession, and the growth in spending was still far higher than general inflation or the rise in GDP. Costs are still out of control; the number of uninsured is rising; and more and more employers will drop coverage of their workers unless something is done. If you think that won’t affect your business, you’re living under a rock.

The current reform legislation is a step in the right direction: by expanding coverage and making it easier to afford insurance, it should result in more timely and comprehensive care that will keep many out of the ER and the hospital. But the measure will also create a couple of problems for physicians and patients. First, it is going to produce a tremendous demand for services from the previously uninsured without increasing the number of doctors. (This has already become a problem in Massachusetts, which enacted similar reforms.) And second, it does too little to restructure healthcare financing and delivery. So in essence, the reform is going to pile more volume on a system that is outmoded, wasteful, and inefficient.

What can you do about it? To begin with, recognize the simple fact that, despite your belief that payers control the game, physicians actually have the power to effect meaningful change. After all, your medical decisions determine how about 80 percent of the money in the system is spent. So if you start changing how you practice, you can have a surprisingly large impact. Of course, that might reduce your income, because the system is not yet set up to reward quality or nonvisit care.

The medical home movement is trying to show physicians how to do this without losing money, but it’s still a daunting challenge, especially for small practices. So another thing to consider is how you and your colleagues can start to change the equation in your own community, perhaps through your IPA, your PHO, or your hospital.

While I don’t have the space to discuss this in detail, I’d heartily recommend an article in The New England Journal of Medicine by Elliott Fisher, MD, a Dartmouth professor who has done important research on regional variations in Medicare costs; Donald Berwick, MD, president and CEO of the Institute for Healthcare Improvement; and Karen Davis, president of the Commonwealth Fund, a New York think tank. Entitled “Achieving Healthcare Reform — How Physicians Can Help,” the essay argues that physicians should join integrated delivery systems, which could be “virtual,” to achieve the aims of the Institute of Medicine report “Crossing The Quality Chasm.”

ACOs are already being formed across the country on a de facto basis, as more and more physicians go to work for hospitals. Already, more than a third of all doctors are employed by healthcare systems. But you don’t necessarily have to give up private practice to get involved in some kind of physician organization. The important thing to recognize is that the small, unaffiliated practice is a dinosaur. Only by connecting with your colleagues can you hope to have a voice in the changes that are going to remake medicine in the coming years.

Ken Terry is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." In his weekly Trendspotter column, Ken is looking out for trends and changes that may affect your practice.

Merging the two bills

The next step in the healthcare reform legislation path is to merge the House and Senate bills. Right before the holiday, the Senate passed their version of the legislation; the House had already passed theirs.
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Now, to merge the bills, instead of going through a conference committee, lawmakers have agreed to do what’s called “ping-pong” the bill – send the Senate bill to the House to amend and approve, and then send it back again, the Hill reports. The idea here is to avoid Republican delay tactics.

It also looks like without the formal conference committee, the House will basically be accepting much of what is in the Senate bill (and therefore not in the House bill.) For one, the Senate bill does not have a public option, and rather than a national health insurance exchange, states would create their own. For a clear breakdown of the differences between the two bills, check out this NY Times graphic.

Podcast: Congressman and physician Michael Burgess

Have you ever wondered how the healthcare reform debate might be different if the lawmakers were themselves physicians? Well, 16 members of Congress are physicians and no doubt bring a unique perspective to the legislation and how it will affect practicing physicians.

I recently spoke with Congressman Michael Burgess, R-Texas, who was an OB/GYN for many years before being elected to Congress. We spoke about the insight his background provides and what he thinks is missing from the legislation.

Rep. Burgess said that, unlike many of his colleagues, he recognizes that medical practices are often small business, and patients still have to be seen, the office still has to stay open. "At the end of the day things have to work," he said.

Listen to our conversation in this month's podcast, and let us know your thoughts about the discussion here.

Healthcare reform roundup

Here's a roundup of some of the coverage of the Senate vote last week.

MedPage Today

Wall Street Journal

New York Times

Please let us know what you think about the healthcare reform debate. What's your take on the legislation? How do you think it will affect your practice?

Health reform on the horizon

Is it really possible? Will the Senate actually pass a healthcare bill this week?

It looks like they will pass the legislation on Christmas Eve, the WSJ reports. The Senate’s bill would extend health insurance coverage to some 30 million Americans, create a national insurance exchange, and include subsidies for low- and middle-income to comply with an insurance mandate.
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It also is tough on insurers, barring them from denying coverage to children with pre-existing conditions (and adults with pre-existing conditions starting in 2014).

But it also includes cuts of $480 billion over a decade in payments to Medicare providers.

Meanwhile, new, last minute provisions hiked the cost of the bill up by $23 billion to $871 billion over ten years. Reasons for the increase include expanding the small business tax credit and deleting provisions for increase payment rates under Medicare.

Senators scrapped a one-year fix to the Medicare payment rates because doctors don’t just want a temporary fix, Reid told MedPage Today. This leaves the door open for Congress to permanently repeal the flawed SGR-based payment formula. Last week, the House and the Senate passed two-month fixes, delaying the cuts until March 2010 or until a more permanent solution can be passed.

The Senate’s healthcare bill does raise some revenue by increasing the payroll tax on higher income individuals and families (from 0.5 percent to 0.9 percent for individuals making $200,000 and families making $250,000), according to HealthLeaders Media.

And unsurprisingly, the bill includes funding benefiting specific constituencies, inserted to clench certain lawmakers’ support, the NY Times reports, such as “victims of environmental hazards,” i.e. people exposed to asbestos from a mine in Montana – home state of Finance Committee chairman Sen. Max Baucus.

Healthcare reform game changers

By Don McDaniel

There’s so much discussion about health reform – how to bend the cost curve, how to drive a higher take-up of insurance coverage, etc. All of the banter seems to ignore, or worse, disabuse any notion that the virtues of free enterprise and competitive markets can free our health care system of its run-away costs, marginal quality, and opportunistic innovation.

They say, “Markets have been tried and don’t work in healthcare; look at the evidence.” Well, as complex as healthcare is, there are a small handful of changes that, if implemented, could be game changers.
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Of course, probably the biggest single game changer of them all would be true payment system reform – moving third-party payments away from evil fee-for-service to a payment system focused on paying for the care of a population or true outcomes-based payments.

Don’t get me wrong, there is still room for fee-for-service payments in medicine – especially in cases where the diagnosis of the ailment is highly speculative, requiring a necessarily iterative problem-solving approach. However, as science evolves, and as diagnosis becomes more predictable, we should need less and less of fee-for-service and more fee-for-outcomes.

That being said, following payment reform, my list of game changers is as follows: reforming medical malpractice; eliminating state’s coverage mandates on health insurers; allowing individuals to purchase health insurance in any jurisdiction; either eliminating the tax deduction for employer-sponsored plans or extending the deduction to individuals as well; and only providing tax deductibility for “true” insurance policies.

Malpractice reform will eliminate most or all of the costs of the practice of defensive medicine – most experts peg this at 10 percent of total health system expenditures or about $250 billion per year, predominantly in over-ordered procedures and diagnostics to protect from frivolous lawsuits.

Many states mandate that insurers cover certain procedures or services regardless of the size or class of the employer purchasing the insurance. This creates an artificial cost floor that places health insurance out of the reach of many employers. To add insult to injury, large employers are typically not impacted by mandates as they are self-insured and exempted by the ERISA law. These mandates can add at much as 5 percent, 10 percent, or more to premiums in many states – and I thought the goal was to innovate products to provide coverage to more folks, not less!

According to the Council for Affordable Health Insurance, my home state of Maryland mandates over 60 benefit requirements, which add at least 15 percent to the insurance premiums of health plan subscribers.

President Obama’s administration claims there’s not enough competition? There are well over 1,000 insurers in the domestic U.S. But I do agree on one thing, there’s not enough competition among differentiated products, payment methodologies, and benefit designs. To nip this in the bud, we ought to allow those seeking the purchase of health insurance to buy it from any insurer sanctioned in any state. This would create significant competition not only among insurance products, but among states that want to become a haven for health insurers.

Finally, with respect to true insurance market reform, there’s a valid argument that the tax-advantage of employer sponsored plans ought to be eliminated, for many reasons. It would raise almost $200 billion in tax revenue, individual purchasers lose out, and the system is regressive in that lower wage earners gain less of a benefit. Let’s create a market for true insurance in healthcare by allowing deductibility only for policies that provide insurance for events that are uncertain, infrequent, and financially significant, forcing Americans to become true consumers of healthcare – and provide that deduction to both individual market consumers and those purchasing through an employer group.

The current lack of consumer sovereignty and prevalence of third-party payments, even for mundane services, creates an artificial supply/demand dynamic that undervalues health care services, thus creating an incentive for overconsumption. We need to pressure of the consummate to truly reform healthcare.

Don McDaniel, president and CEO of Sage Growth Partners, LLC, is an entrepreneur, economist, technologist, educator, speaker, and writer. He is a skeptical contrarian, and writes about the power of free markets, disruption, innovation, and technology in healthcare.