Health Care Reform

My research has always revealed that health care follows the money. So I was not surprised that the Insurance Company industry is profiting from the Health Law Mandate. This is not a “bad profit” if coverage has high quality of care and high quality of life.

Bloomberg reports

The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived,” Gosselin said. “There is a shift to government work under way that is going to represent a fundamental change in their business model.

The Justice Department had filed its first brief on Friday in the US Supreme Court. The Court is being asked to define questions about Congress’s power. This will have huge impact in Florida if the Law is upheld and the state is forced to comply. A watchful eye on this issue is needed. For more information please follow the link below.

Panel Wrestles with Federal Rules for Health Funding
“The issue centers on a $1-billion-a-year program known as the Low Income Pool, which sends extra money to hospitals and other providers statewide that care for large numbers of poor and uninsured patients. The so-called “LIP” program was created as part of the pilot, which is controversial primarily because it requires most Medicaid beneficiaries in five counties to enroll in managed-care plans.

Federal officials agreed in December to extend the pilot through June 2014 but placed strings on how $50 million of the LIP money could be used. Those strings call for taking money that otherwise could go toward hospital services and requiring that it be spent on new or beefed-up programs to improve quality of care.”

http://www.sunshinestatenews.com/story/panel-wrestles-federal-rules-health-funding

CNN is reporting that  with Medicare reforms Doctors are going broke.  As a counter point, accountable care organizations start this month, Doctors may seek shelter in these practices. ACO may offer more compensation to those providers if they can keep patients  from needing expensive care.  This is part of great effort to rewrite our social contract of care. If all the doctors roll into ACOs and this approach fails then we will start to head in a single provider system.  We will need to keep an eye on this.

Health Care Reform has been attempted by seven presidents. Obama’s administration with the Affordable Care Act, has put forth meaningful change. Even it’s detractors will state that it is legislation that is significant and can’t be ignored. There is strong argument that this is a mixed public policy debate on how to spend limited resources and survive in the political arena.

Whoever provides medical care or pays the costs of illness stands to gain the good will of the sick and their families. The prospect of these good-will returns to investment in health care creates a powerful motive for governments to intervene in the economics of medicine. Political leaders since Bismarck . . . have used insurance against the costs of sickness as a means of turning benevolence to power. Similarly, employers often furnish medical care to recruit new workers and instill loyalty to the firm. Unions have used the same means to strengthen solidarity. To be the intermediary in the costs of sickness is a strategic role that confers social and political as well as strictly economic gains. Paul Starr, The Social Transformation of Medicine

The quote above is a bit stale in today’s marketplace of medicine. Health Care services will always follow the streams of payment from whatever sources are available. With state governments unable to afford federal matching funds for entitlement programs the infrastructure of our community’s health care structure is truly at risk.

As the true cost of this health care infrastructure becomes more of a local government issue, limited funding may cause consolidation at the Hospital Level. Special Taxing Districts may increase to fund Hospitals. As the debate becomes more local a closer look a medical outcomes and cost of care will be fought at our doorsteps. We need to be watchful of this issue.

In the Tampa Bay Times, Sue Brody the CEO of Bayfront Health System, has written an excellent editorial on health care reform. She states, “health care is experiencing a paradigm shift unrivaled in the last 25 years.”   According to Ms Brody providers have a tough mandate from the community and the government.  While noting that “providers are re-engineering processes to make way for increased access and improved quality at lower costs”, she warns of risks to the community’s quality of care due to drastic cuts from the state budget.  Large amounts of government money provide the funding for the poor who need specialized medical care.  This enables private insurance and their insureds to access medical specialist at their local hospital who were made available due to Medicaid funding. click here

Michael Porter a Harvard professor on strategy looked at Health Care financial waste and suggested that only a few centers of excellence exist and redundant facilities of care be closed.  There are more choices in the public debate, but we need to keep our eyes on this one.

On March 23, 2011, Governor Rick Scott established a commission to review whether government-run hospitals are in the best interest of taxpayers. He was motivated by a Florida Tax Watch report. This report show the rapid growth in hospital special taxing districts to pay for indigent care.

The Commissions draft report does highlight how concerned hospitals are over the medicaid reform approach the state is taking. The report did not suggest that public hospitals are not in Florida’s best interest. Here is the pull quote from the report. It

The Legislature has also established timeframes for the Medicaid program to move to managed care for the vast majority of its recipients. This is to be completed for the individuals receiving Medicaid long term care services beginning July 1, 2012 and completed by October 1, 2013; and for Medical services by October 1, 2014—Implementation begins January 1, 2013.

In a managed care environment, health plans and hospitals will negotiate a rate. They are not tied to the Medicaid rate, but the Medicaid rate is normally used in the negotiations as a reference or starting point. Sometimes, it ends up being the negotiated rate. If the state moves to DRGs, questions will occur as to how this may affect the health plans/hospital negotiation and establishment of a rate, as well as how local contributions may be affected.

Health plans will be required to contract with “essential providers” that offer services that are not available from any other provider within a reasonable access standard. Statutory teaching hospitals, hospitals that are trauma centers, hospitals located at least 25 miles from any other hospital will be included in this group.
It will be essential that managed care companies selected by AHCA in the competitive procurement process for the new managed care programs receive a fair portion in the capitation payment for the cells that represent the hospital component for each individual. Providing a system where managed care companies and hospitals receive fair compensation is a major challenge that will need continued monitoring and development by the Agency and the Legislature. It has been a somewhat contentious battle between hospitals and managed care companies surrounding the rate issues. Hospital rate increases should not be implemented without coordination of the managed care rate for the new program to be a success.

Taking both reports together, it would seem likely that property taxes may increase to fund local indigent care in the public hospitals. Keep an eye on this issue.

What a powerful speaker. Ira Magaziner is one of the smartest policy wonks on health care. Worth the time to get the gems of his knowledge.

Politifact 2011 Lie of the Year.

When the journalist becomes the story, critics will state the myth of objectivity is exposed. Politifact named the Lie of the Year Democrats claim of the end of Medicare. However, the program called Medicare will continue. For the Baby Boomers, however Medicare will be nothing like it is today. For a nuanced view, take a look at the NPR posting on the issue. Click Here

Watch carefully as the social contract for care changes to reflect the decision that our great society can not afford the health care we made available to our parents. Personal responsibility will be one of the main terms of the new social contract. Phrases like “skin in the game” and “medical loss ratio’s”
will cause major shifts in political debate. Social Media tools will also be exploited. Fear and extreme examples will define the edges of the debate.

Contrast with

Keep your eyes on the spin factor as the fallout of CMS approval of Florida’s Medicaid Waiver expands. The Heritage Foundation post on Medicaid Reform shows how the politics of reform can be hyped.

Florida’s Medicaid Reform Pilot is pro-patient and pro-taxpayer, and the Obama Administration agrees. ….The Florida reforms work by giving patients a choice of the private health plan that works best for them. Enrollees can choose from plans with varied benefits and provider networks, and a monetary rewards system creates incentives for healthy, responsible behavior. By shifting away from failed policies of central planning toward a consumer-driven program, the program has been successful on a number of levels.

Compare and contrast to Floirda CHAIN. Florida CHAIN is a statewide consumer health advocacy organization.

“The message sent today by the Administration is clear: insurance companies will be held accountable and there’s no way around it. The decision by HHS sends a strong message that the important consumer protections in the ACA can’t be stripped away, regardless of maneuvers by insurers to boost profits or by state leaders to push a political agenda. “Individuals and families in Florida are expected to gain up to an additional $70 million in health insurance rebates, which is anticipated to be paid out by August 2012. We are thrilled to be able to report this huge victory for the hard-working people of Florida, who stand to gain money saved in their health care premiums and peace of mind that they’re health care dollars are being spent to keep them healthy.” click here for full report

Insight can be gained on the Obama Administration response itself. As Forbes reports:

The Department of Health and Human Services has denied the State of Florida’s request that they be permitted a waiver to the medical loss ratio requirements of the Affordable Care Act.

Rather than live with the 80 to 85 percent requirements established by the health care reform law, Florida had asked for an adjustment that would allow insurers to meet the signficantly lower thresholds of 68 percent in 2011, 72 percent in 2012 and 76 percent in 2013. Click Here for full report

So as the groundwork of private insurance for medicaid patients is established in the state of Floirda, all parties are fighting for how much profit can be in the system to administer the program and adjust to the risk of utilization of services. If private insurance can in fact step up and provide mandated services in a more efficient manner, they will be fighting a steady retraction of funding per patient as the Baby Booms start into the long term care system. With limited financial reward for improvement, then it stops being true insurance and becomes “dollar trading”. Dollar Trading will result in significant limits in profitability and shareholder value. The public policy debate will continue to twist the politics of Medicaid Reform.

For those clients seeking Medicaid at this time, the value of good advice can be very helpful. Understanding the changing landscape of care and how families will be asked to contribute more financially is a radical shift from the Medicaid of the past. With proper planning clients can have more choices and a better understanding how the system works. Once the impact to famlies is understood a more nuanced discussion can take place. Until then, more shouting from both sides is needed to create well thought out solution to Long Term Care.

Pull full article from the Floirda CHAIN website:

Greg Mellowe, has an expansive post explaining the extension of Florida’s Medicaid Reform Experiment. Although the posting is broader than just senior issues, to is one of the clearest statements of the current Medicaid Reform. A few of the points raised in the agreement between CMS and the State of Florida are below.

* Obtain federal approval for any type of expansion of Medicaid managed care beyond the five Pilot counties. Florida has such a request pending at this time.

* Spend at least 85% of taxpayer-funded Medicaid payments on direct patient care or direct care quality improvement activities.

* Set a well-defined minimum standard for plans to provide Medicaid benefits that meet the needs of at least 98.5% of enrollees. Plans may not reduce benefit levels below this minimum standard.

* Prevent disruptions in patient care, particularly those caused by plans in the past. Florida must take steps to prevent plans from pulling out of any geographic area. The State must also use a detailed procedure to ensure continuity of care for patients when they’re forced to change plans.

* Hold managed care plans more accountable to ensure access to and quality of care.

Florida:
- must set, justify, and enforce standards for plans, including standards for provider network adequacy and access to care.
- must ensure that the patient-level “encounter data” that has been promised for more than five years is collected, analyzed, and used to monitor health care access and quality.
- must receive federal approval of any process used to select and negotiate with managed care plans as well as plan contract documents.

* Allow most recipients who do not have a choice of at least two managed care plans to enroll in the MediPass program (or regular fee-for-service Medicaid).

* Improve its choice counseling efforts, not reduce them. Florida must not only continue its choice counseling activities to help patients make informed choices, the State must also perform activities that were supposed to have been doing since 2006, including increasing health literacy and reducing minority health disparities through outreach. Choice counseling must also use a plan rating system.

* Apply the same rules for determining eligibility and requiring co-payments in any Medicaid managed care experiment that apply elsewhere in Medicaid. The State cannot use the flexibility of the Medicaid waiver to jack up co-pays, demand payment of premiums, or restrict who can qualify for Medicaid. In other words, the State cannot use the waiver to evade the basic protections of Medicaid.

The Wall Street Journal, today, states on its editorial page the definite and imperative need for Medicare reform in one sentence. “The brutal math is that Medicare spending has been growing about three percentage points faster every year than the overall economy for the last quarter-century and is now the main driver of the financial crisis.” Legislative leadership is shifting to a stipend approach. This may cap the Federal Government’s financial exposure. With a stipend one often finds not enough payment to cover the choice you prefer.

How will Health Care marketplace respond to this change of focus? How will consumer directed care be better served?

These questions and many others will reframe the debate about health care entitlements. It is probably time to reframe the debate, the boomers are not their parents elders. Choices and alternatives to traditional long term care approaches are desired by the boomers. Life style and personal preferences are key to the boomers making these choices. As the role of the patient changes into a health care consumer the market place and pricing for care will respond. The Boomer who desires to create a supportive care environment that does not financial exhaust may find satisfaction with the flexibility that a market driven choice could provide.

Keep you eyes on the ball, the politics of Medicare is an interesting game.

Medicaid pays for 75% of total Nursing Home Care costs through the Institutional Care Program. The State of Florida pays only 35.17% of this expense, the balance is paid for by the Federal Government. The 35.17% share of cost, however, has become one of the most expensive items in the state budget.

Lawmakers in the state have demanded a cap of future growth in Medicaid budget despite decades of annual increases. The State of Florida also seeks to control not only its Medicaid Nursing Home costs but its total share of cost for Medicaid Care in the Community.

In the past Florida received a small amount of funding under a program called Money Follows the Person. The Federal Government was offering a federal grant of $35.7 million to enlarge choices other than nursing home for frail elders. Despite work by several state agencies and disability support groups, Florida will not receive a federal grant of $35.7 million.

“Not only would accepting the Money Follows the Person grant go against our policy of implementing federal health-care reform, but it would be redundant to the multiple efforts that Florida has already made to improve the delivery of long-term care,” said Rep. Denise Grimsley, R-Sebring, chairwoman of the state’s House Appropriations Committee. Source Orlando Sentinel

This is reminds me of the book Whats the Matter with Kansas. . The federal grant would have only cost the state $627,963. $35.7 million would have created a lot of jobs and services that would have been delivered to the citizens of Florida. This was done to consolidate all efforts into the medicaid reform waiver.

A key aspect of the medicaid reform waiver is to incentivize insurance companies to manage the care of all florida nursing home residents and those seniors in the community on medicaid. Profits for the insurance companies will also result in a huge savings for the state. As the boomers reach out for nursing home care, other choices may be available, that do not fall under a government entitlement. This will result in more personal responsibility within the extended family.

So Floridians will not have a slow exodus from Nursing Home Care. It will be a dramatic change resulting in nursing home care for those who need only the most acute care.

Jack M. Rosenkranz