Cuts in Mental Health Funding Continue; Supreme Court to Rule

As America waits for the U.S. Supreme Court to hear oral arguments in, and decide on, the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA) in March, state cuts in mental health funding continue unabated in many states throughout the country.  As previously mentioned here, the PPACA review undertaken by the Court will not only focus on the constitutionality of the individual mandate but will also examine PPACA’s Medicaid expansion.  By expanding Medicaid, PPACA will provide coverage to millions of those living with serious mental illness.  PPACA also provides for increased community-based outreach, from changing the waiver laws to awarding grants for new programs, in order to further improve essential services for those living with mental illness.

While many fixate on late March, local governments continue a practice that started a few years ago:  slashing funding for mental health services.  Just last week, Chicago’s Department of Public Health announced they were closing half of their mental health clinics — disproportionately affecting the city’s African-American and Hispanic populations, according to advocates.  Over the last fiscal year, New York has cut its mental health budget by $95 million, and California has by $177 million.  According to a new NAMI study released late last year, from 2009 to 2012, four states have slashed their mental health expenditures by more than 30 percent; South Carolina, at the top of the list, has cut funding by nearly 40 percent.  Alaska and Nevada — the two states with the highest suicide rates in the country — are both in the top five.  In total, “general funds for mental health” are down $1.6 billion overall between 2009 and 2012.

Besides painful, the cuts are likely to be counterproductive:  advocates argue that they will actually cost states more in the long run.  Ronald Hornberg, director of legal and policy affairs at NAMI recently told ABC news that the cuts are resulting in those in need of services showing up in emergency rooms or prisons, where they are expensively boarded because there is nowhere else for them to go.   Eric Lindquist, a clinical therapist at the Chicago Department of Public Health, called the mental health clinics that Chicago has decided to cut, when compared to hospitalizations or incarcerations, “one of the taxpayer’s best bargains.”

At the same time, headlines late last week brought news that 20 percent of Americans were diagnosed with mental illness in 2010 — nearly one in four women and about one in six men.  Among other findings, nearly nine million Americans “thought seriously” about suicide in 2010, with over one million attempting to kill themselves.  Almost two million teenagers “experienced a major depressive episode.”  Those aged 18 to 25 had the highest incidence of illness:  nearly 30 percent.

Obviously, the incidence of illness and prevalence of spending cuts nationwide does not bode well for the future of mental health care in this country.  Those that depended on the services being cut are left to try and make it on their own, and those who worked for gutted agencies are looking for jobs.  And this is why advocates look toward March.  The Court’s decision later this year will shape the future of mental health services in this country for years to come — services that, right now, are increasingly endangered nationwide.

Dr. Donald M. Berwick, Formerly of CMS: an Exit Interview Worth Considering

It is received wisdom amongst Human Resource professionals that the exit interview–that which is had when an employee is departing –is an invaluable tool in understanding and improving an organization.

That said, Dr. Donald Berwick has left the Centers for Medicare and Medicaid Services, after 17 months of serving as its head.

His parting assessment?

According to the New York Times Dr. Berwick says

that 20 percent to 30 percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.

The official, Dr. Donald M. Berwick, listed five reasons for what he described as the “extremely high level of waste.” They are overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.

“Much is done that does not help patients at all,” Dr. Berwick said, “and many physicians know it.”

According to the U.S. Census Bureau, in 2009 we spent $2.4863 trillion on health care.

I’m going to write that out because as I’ve long maintained, most people (myself included) have difficulty understanding what a billion dollars is (ten, one hundred millions, or a thousand million), no less a trillion (ten, one hundred billions or a thousand billions )–nor 2.4863 of them.

That’s

$2,486,300,000,000.

Let’s just think conservatively for the moment and suppose, hypothetically, that contrary to all that Human Resources talk about frankness in departure, Dr. Berwick was disgruntled and doubled his numbers:

So instead of 20 to 30% waste we’re looking at 10 or 15%

10% = $248.63 billion or $248,630,000,000  in waste.

15% = 372.945 billion or $372,945,000,000 in waste.

And if he’s approximately right? If somewhere between “20 percent to 30 percent of health spending is ‘waste’ that yields no benefit to patients”

25% = $621.575 billion or $621,575,000,000 in waste.

Some context is in order. What can you do with a wasted (10%) 248 or (25%) 621 billion dollars?  This below, is from the Congressional Budget Office. The 2009 numbers are actual, the rest of the years are outlay projections– in billions. And no, that’s not a typo– Social Security cost $678 billion, Medicaid $251 billion.

Recommended Reading: Recent Scholarship on Drug and Device Regulation

In Patients Over Politics: Addressing Legislative Failure in the Regulation of Medical Products (forthcoming in the 2011 volume of the Wisconsin Law Review and available on SSRN), Efthimios Parasidis proposes a significant expansion of drug and device companies’ responsibility to engage in “active post-market analysis” of drugs and devices, to be coupled with a new rule that only companies that conducted such analysis would benefit from preemption of state tort claims.  Professor Parasidis’ article includes a nuanced and revealing analysis of the historical and other reasons for the Food and Drug Administration’s heavy focus on pre-market review of drugs at the expense of post-market surveillance, as well as useful updates on both the caselaw regarding the preemption of claims involving branded drugs, generic drugs, devices, and vaccines and the ongoing efforts to use health information technology to glean information about the safety and efficacy of marketed products.  Most notable, though, is the article’s thorough explication of Professor Parasidis’ interesting proposal that “preemption laws, which often are enacted pursuant to industry lobbying efforts [be linked to] protocols that further the public health.”

In Enforcing Integrity (forthcoming in the 2011 volume of the Indiana Law Journal and available on SSRN), Katrice Bridges Copeland makes a strong case for her conclusion that neither the exclusion of pharmaceutical manufacturers from Medicare and Medicaid — a punishment which the government is reluctant to impose because it would spell the end for the company — nor the use of corporate integrity agreements coupled with large fines — which manufacturers agree to in order to avoid exclusion — works to deter illegal marketing activities.  As Professor Copeland notes, numerous companies have learned that “the punishment for multiple offenses is simply another CIA and another fine.”  She recommends that the government consider a number of alternative penalties for repeat offenders, including (1) requiring that manufacturers fund clinical trials studying the off-label uses for which they promoted their products, (2) requiring that they license the product or products at issue to other manufacturers, (3) holding high-level individuals criminally liable under the responsible corporate officer doctrine, and (4) amending the Social Security Act to allow for the exclusion of particular drugs (as opposed to entire companies) from Medicare and Medicaid.

Finally, I recommend Seton Hall Law’s own Jordan Paradise’s fascinating article, Claiming Nanotechnology: Improving USPTO Efforts at Classification of Emerging Nano-Enabled Pharmaceutical Technologies (forthcoming in the 2011 volume of the Northwestern Journal of Technology and Intellectual Property and available on SSRN), in which she argues that the United States Patent and Trademark Office’s system for classifying patents on nanotechnology-related inventions, “[w]hile undoubtedly helpful for internal purposes,” cedes too much to the courts.  Reviewing the facts of the recent case Elan Pharma International v. Abraxis Bioscience, which involved a dispute over two patents describing nano or near-nano scale versions of the same existing cancer-fighting agent and was tried to a jury verdict, Professor Paradise points out several ways in which the patents’ claims potentially overlap.  She argues that the courts are “a clumsy forum” for sorting out the “complex patent law issues that arise based on scale, size, and interactions at the nanoscale that transcend previously envisioned physical and chemical boundaries[,]” and offers concrete recommendations for steps the USPTO can take to improve its classification efforts to reduce the number of patents with potentially overlapping claims thereby making court involvement less necessary.

ACA Litigation, Implications for Medicaid and Mental Health Care

Receiving most of the attention and coverage following the passage of ACA has been the debate over the constitutionality of the individual mandate, in which Congress has required individuals to purchase health insurance.  This discussion has grown louder in the wake of the Eleventh Circuit’s Florida v. Health and Human Services decision, which invalidated the individual mandate as exceeding Congressional power under both the Commerce Clause and Taxing and Spending Clause.  As mentioned on this blog, that decision, along with the parties’ responses to it, has paved the road to Supreme Court review, likely early in 2012.

But also in the Eleventh Circuit’s decision — and a clear focus of the petitioners’ reply brief filed last week — is a discussion of whether, by expanding Medicaid under ACA, Congress exceeded its spending power.  This assertion was rejected by Judge Vinson in the Northern District of Florida, see Florida v. U.S. Dept. of Health and Human Svcs., 780 F.Supp.2d 1256, 1269 (N.D. Fla. 2011), as well as the Eleventh Circuit, see 648 F.3d 1235, 1268 (11th Cir. 2011).  The Eleventh Circuit relied on a few determinative factors to reject the argument:  (1) Congress has reserved the right to make changes to Medicaid, and the participating states were aware of this possibility; (2) the federal government will pay for nearly all costs of the Medicaid expansion; (3) states have “plenty of notice” to decide whether they want to continue to participate in Medicaid before the changes go into effect; and (4) it is not conclusive that states who do not participate in the new Medicaid lose their funding. Id. at 1267-68.

Putting constitutional concerns aside, petitioners’ argument, if adopted by the Supreme Court early next year, can work to undo much of the good the ACA accomplishes on the ground level, including the ACA’s positive effect on those living with mental illness.  Today, according to CMS, Medicaid pays for the mental health services of 58 million Americans. See Mental Health Services Overview, Centers for Medicare & Medicaid Services, available at https://www.cms.gov/MHS/ (last modified Sept. 6, 2011).  But according to an interesting Perspective piece in September’s issue of the New England Journal of American Medicine, the ACA would likely result in coverage for at least an additional “3.7 million currently uninsured people with severe mental illnesses and many more with less severe needs for mental health and addiction treatment.”  Colleen L. Barry and Haiden A. Huskamp, Moving Beyond Parity - Mental Health and Addiction Care under the ACA, 365 N. Engl. J. Med. 973-975 (Sept. 15, 2011).  Further, in addition to mandating that Medicaid benchmark plans and state-based insurance exchanges cover mental health services as part of an essential benefits package, the ACA assists in the coordination and implementation of more community-based services, from changing the waiver laws to assist the states in administering behavioral health services to establishing grants for further community outreach.  Id.

So instead of focusing on the individual mandate debate, those in the mental health field should note the Florida petitioners’ other target of attack — Medicaid expansion.  Already rejected twice, the ultimate resolution early next year will affect millions of mental health providers as well as those who use their services and will have a profound effect on the administration of mental health services in this country.

Investing in Time Banks: More than Just Feel-Good Potential

What distinguishes the time bank concept from established volunteer service organizations? Not much, really, since time banks — over 300 total in existence within 23 countries– allow individuals to join and indicate what service they would like to provide: ranging from home repairs, child care, visiting the incapacitated, and accompanying patients to the doctor. Anti-poverty activist Edgar Cahn, is often viewed as somewhat of a time bank pioneer; he wrote about the concept early, and has attributed the rise in time banks to the cuts in social programs during the Reagan years. The currency of time banks is, not surprisingly, measured in hours rather than dollars, and members may accumulate credits and use them on those services offered by other time bank members. The barter/exchange system is seemingly win-win, since individuals are able to provide services they feel comfortable providing, and may receive like-time in services they want. With time banks, all work is equally valued– as such, it is said to be deemed non-taxable barter.

While the social benefits and altruistic aspects of time banks can be clearly inferred, the health payoffs may not be as explicitly recognizable but are seemingly also present– perhaps evidenced by just how many time banks are sponsored by healthcare providers. According to the New York Times, “The largest one in New York City is the Visiting Nurse Service of New York Community Connections TimeBank.” Also according to the Times:

Elderplan, a New York health insurance company, also runs a time bank for members.   Hospitals such as the Lehigh Valley Health Network, based in Allentown, Pa., run time banks.  In Britain, even private medical practices have established time banks.  At Rushey Green Group Practice in London, Dr. Richard Byng was convinced that what many of his patients needed wasn’t medication, but friends, social connections and a way to feel useful and valued.  Now doctors there routinely prescribe that patients join the Rushey Green Time Bank.

Importantly, time banks often provide simple practical aid that may not be directly medical-related and might not be covered by Medicaid or Medicare: an elderly woman, for instance,  who was just released from the hospital but is still too frail to purchase her own groceries or get to a follow-up appointment receives these services. These not directly medical challenges, if not navigated, can easily land such patients right back in the hospital. Importantly, re-hospitalizations are monetarily disincentivized through Medicare and Medicaid. As such, hospitals are seemingly incentivized to facilitate such simple ancillary care which can decrease the recurrence of re-hospitalizations and the lack of reimbursement for repeat hospital stays. Time banks may be one way to offer those solutions for many.

Time banks have been shown to make people feel better and improve members’ health– in particular, they have shown benefit for those with  low-incomes and living alone. They are also, at least anecdotally, economically beneficial; but in order for more health care organizations and providers to actually invest in time banking efforts, quantitative data showing proven cuts in the cost of health care resulting from time bank initiatives is seemingly needed. But there is some. A briefing published by the New Economics Foundation (NEF) provided the following:

• Volunteer Caregiving in Richmond, Virginia, where asthmatics are enrolled in a telephone time bank and befriend other asthmatics: the experiment cut the cost of treating those involved by 73 per cent — a total of $80,000 saved in the first year of the asthma program, rising to $137,500 in the second year.

The Times also reports that

A study published by the Transportation Research Board, an organization funded largely by state and federal transportation agencies, found that providing rides to non-emergency medical appointments was cost effective for every condition studied - especially for asthma, pre-natal care, heart disease and diabetes.  Regular visits from neighbors can also catch early signs of serious problems.  One time bank, for example, asked people who worked with diabetics to pay special attention to early signs of glaucoma.

UK studies provide more evidence. In Britain, the Nu Social Health Organization (NUSHO) found a cost savings of £250,000 within its first year. An economic model by the London School of Economics (LSE) concluded that the cost of each time bank member would average £450 per year, but the economic value of each member’s contributions would exceed £1,300.

The relative lack of published quantitative evidence on the projected savings that time banks will create may have something to do with them not being yet widespread. But with the urgency our nation faces to cut health care costs, there is, seemingly, great potential in time banks. But as the Times writer noted, the evaluations of time banking perhaps need to focus more on monetary value outcomes so that the case for the economic impact of time banks can be more convincingly made.  With this kind of information, if available, perhaps a push can be made and the potential of time banks can be effectuated.

The CareMore Model and the Need to Better Coordinate Care for Dual Eligibles

In The Quiet Health-Care Revolution, an article by Adrian Slywotzky and Tom Main in the November issue of The Atlantic, the authors tell the story of CareMore, a for-profit company serving more than 50,000 elderly patients through 26 care centers located in Arizona, California, and Nevada.  Founded by Sheldon Zinberg, a gastroenterologist, CareMore was originally a group physician practice but it has since become a Medicare Advantage managed care plan.  As such, it is paid a capitated, risk-adjusted rate for each patient it serves, giving it a financial incentive to hold down costs.  Slywotzky and Main report that, through an emphasis on care coordination and creative “upstream” interventions, CareMore has improved outcomes, held down costs, and stayed in the black.

Each CareMore patient has a personal physician, called an “extensivist,” who ensures, with the help of an electronic medical record, that all of the members of the patient’s care team are communicating and coordinating with one another.  The extensivist is also charged with ensuring that the patient understands and is able to comply with his or her treatment plan.  One of Dr. Zinberg’s early decisions was that “noncompliance is our problem, not the patient’s.”  As a result, among other things, CareMore provides its patients with free-to-them transportation to medical appointments.

Going hand-in-hand with CareMore’s emphasis on coordination is a focus on “upstream” interventions. For a patient with congestive heart failure, a wireless scale transmits the results of her daily weigh-in to a clinic allowing fluid build-up to be caught early.  For a frail patient, “light muscle-training sessions and periodic toenail clipping” reduce the risk of falls.  And for a diabetic patient, aggressive treatment of a cut foot reduces the risk of infection and amputation.

How does all of this impact quality and cost?  Slywotzky and Main report that:

“CareMore, through its unique approach to caring for the elderly, is routinely achieving patient outcomes that other providers can only dream about: a hospitalization rate 24 percent below average; hospital stays 38 percent shorter; an amputation rate among diabetics 60 percent lower than average.  Perhaps most remarkable of all, these improved outcomes have come without increased total cost. …  CareMore’s overall member costs are actually 18 percent below the industry average.”

As with other, better known providers like the Mayo Clinic, whether the CareMore model is scalable is a question, one that may be answered in coming years because the company is growing and is likely to grow more after its purchase in August by WellPoint.

In a recently-released study conducted for AHIP–the industry group representing health plans–Kenneth Thorpe makes the financial case for enrolling more individuals, in particular those who are eligible for both Medicare and Medicaid, into health plans like CareMore that employ a coordinated, team-based approach to care.  As Thorpe explains, so-called “dual eligibles” are among the most chronically ill and therefore expensive of all patients, accounting, despite their relatively small numbers, for “36 percent of total Medicare spending and 39 percent of Medicaid spending.” In 2011, Thorpe writes, “the federal government–through Medicare and Medicaid–will spend over $230 billion on dual eligibles.” Currently, “[f]ewer than 2 percent of dual eligibles are enrolled in a coordinated care program that managed all Medicare and Medicaid covered benefits.”  Thorpe projects that if all dual eligibles were required to enroll in such a program, the federal government would save up to $125 billion and the states up to $34 billion over the next ten years.

Achieving better alignment of Medicare and Medicaid for the benefit of dual eligibles is not without its complications, of course.  Yesterday, AHIP issued a proposal reviewing key differences between the programs-including the nature and scope of covered services, eligibility and enrollment rules and procedures, provider networks and access requirements, and beneficiaries’ right to information and to appeal-and recommending ways to eliminate or work around them.  Among AHIP’s recommendations is that “States be given opportunities to share with the Federal government and with health plans, as appropriate, in savings generated through increased integration.”  As it stands, “it may be difficult for States to justify State investment in efforts to generate such savings, for example through programs intended to decrease acute hospitalizations or increase reliance on Medicaid-covered [i.e. partially State-funded] services.”

Community Based Medicaid ACOs in New Jersey: A Signature Away

Almost daily, there is a new article or study emphasizing the need for innovative reform to save Medicaid amidst growing threats of deep cuts to the already struggling program.  New Jersey, as one of the states with the highest Medicaid spending per beneficiary in the country, is paying attention.  And help may be on the way in the form of a medical home/safety net.

Showing promise, the medical home model of care is an oft proposed reform.  As Mary Takach explains in the July 2011 edition of Health Affairs, “[a] patient-centered medical home is an enhanced model of primary care in which care teams, led by a primary care provider, attend to the multifaceted needs of patients and provide whole-person, comprehensive, coordinated, and patient-centered care.”  (See “Reinventing Medicaid: State Innovations to Qualify and Pay for Patient-Centered Medical Homes Show Promising results,” Health Affairs, July 2011, 30(7):1325-34.)

According to the National Academy for State Health Policy, thirty-nine states are working to implement medical homes for Medicaid and CHIP participants, and New Jersey is one of them.  In September 2010, Governor Christie signed Assembly Bill 226 into law, which established a three-year Medicaid medical home demonstration project that, at minimum, will include “primary care providers utilizing a multi-disciplinary team that provides patient-centered care coordination through the use of health information technology and chronic disease registries across the patient’s life-span and across all domains of the health care system and the patient’s community.”  The statute requires that the payment system “be structured to reward quality and improved patient outcomes” and that Medicaid “[c]onsider payment methodologies that support care-coordination through multi-disciplinary teams, including payment for care of patients with chronic diseases and the elderly, and that encourage services such as: (a) patient or family education for patients with chronic diseases; (b) home-based services; (c) telephonic communication; (d) group care; (e) oral health examinations, when applicable; and (f) culturally and linguistically appropriate care.”   You can learn about various medical home initiatives in New Jersey at the National Center for Medical Home Implementation web site.

Takach’s report focuses on seventeen states that have aligned “patient-centered medical home standards with incentive payments to support reform in the delivery of primary care” — Colorado, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and West Virginia.

Although these programs are in their infancy, Takach interprets limited early data from a few states as encouraging. Vermont, for example, documented that inpatient use had decreased twenty-one percent, with a corresponding twenty-two percent decrease in per person per month inpatient costs, and that emergency department use had decreased thirty-one percent, with a corresponding reduction of thirty-six percent in per person per month costs (although its second pilot community had what Takach describes as “mixed results”).  Colorado similarly has seen decreases in its median Medicaid costs per patient for children.

Both Colorado and Oklahoma also have seen increases in participating providers since the medical home model started operating.  In Oklahoma, more than 244 new physicians enrolled in Medicaid.  Ninety-six percent of pediatricians now accept Medicaid in Colorado, up from only twenty percent before the program began.  Increasing the number of Medicaid providers is critical, given national shortages of available primary care Medicaid providers.

As Takach summarizes:

Some of the early findings from Colorado and Oklahoma, which have statewide Medicaid initiatives, demonstrate that modest increases in payment aligned with quality improvement standards have not only resulted in promising trends for costs and quality, but have also greatly improved access to care.  This is an important finding for other states as they consider how to meet the tremendous increase in demand for care that will result from the expansions to Medicaid in the Affordable Care Act of 2010.

But beyond a medical home, there needs to be a safety net for the most vulnerable urban populations who are, in a sense, medically homeless– and are, by EMTALA default,  frequent utilizers of high cost emergency room services.

As this blog and other sources, including The New Yorker, have discussed, New Jersey  is home to the Camden Coalition of Healthcare Providers, which describes itself as “a citywide organization of social workers, nurses, physicians, administrators, hospitals, health services organizations, and clinics that serve the health needs of Camden, New Jersey residents.  [It] work[s] in a variety of settings — from small neighborhood based practices to hospital based offices — with the goal of improving the coordination and capacity of the healthcare system for residents of Camden.” Dr. Jeffrey Brenner has been leading this effort since 2002.  His work offers promising program models for safety-net providers throughout the country to “improve the quality, capacity, and accessibility of the healthcare system for vulnerable populations.” Indeed, even though the budget bill signed by Governor Christie slashed Medicaid funding in New Jersey by $540 million, his Commissioner of Human Services has expressed continuing support for the Coalition’s pilot because it is seen as a smart reform that could save money while improving care.  Newark and Trenton also have established citywide healthcare coalitions to improve medical care for their vulnerable, underserved residents. And we at the Center for Health and Pharmaceutical Law and Policy have worked closely with the Greater Newark Healthcare Coalition.

In a recent post on the Health Affairs blog, Dr. Brenner and Nikki Highsmith note that although the Camden Coalition “has had preliminary successes and offers potential long-term savings, such community-based endeavors are difficult to initiate and sustain without start-up financing, ground-level technical assistance, and buy-in from state and local policymakers, health plans, patients, and community members.”  They thus call on CMS to “jump start investments in safety-net ACOs” by pursuing a national demonstration project to support programs similar to Camden’s pilot.

New Jersey is poised to be ready if CMS heeds this call for a national Safety Net ACO demonstration project because the Coalition and other New Jersey stakeholders, including Seton Hall Law Professor John Jacobi, have been active in advocating for a bill (S2443) authorizing geography-based Medicaid ACOs in New Jersey. As the Coalition’s web site summarizes:

The proposed New Jersey law would authorize a three-year Medicaid ACO demonstration project whereby community-based, non-profit coalitions can apply for recognition by the State of New Jersey as a Medicaid ACO.  The applicants must propose a geographic focus and will need 100% of the [general] hospitals, 75% of the primary care providers, [four] behavioral health providers, and two community [organizations] from that geography on the board of the organization.  The providers in the community will continue to receive their usual Medicaid payments and the ACO, if its providers meet quality benchmarks, would be eligible to receive shared savings payments, that can be distributed to participants based on a proposed gain sharing plan.

The proposed legislation specifically recognizes that patient-centered medical home models are one way, among others, to achieve coordination. On June 27, 2011, the Assembly and Senate passed S2443, and it is awaiting Governor Christie’s signature.

New Jersey’s proposed Medicaid ACOs go beyond Medical Homes. They are built on a foundation of sound primary care, but they offer the promise of reaching vulnerable populations in many settings, and of assuring that the right care is provided at the right location for people who are often left out of health reform efforts. The financing mechanisms provided by the bill awaiting the governor’s signature go some way towards financing these innovating community organizations, although, as Brenner and Highsmith point out, more needs to be done –particularly in the way of providing start-up funding for community providers.

Appropriately cultivated, patient-focused collaborations such as these may  yield synergies in care and cost of a substantial scale.   But another recent Health Affairs article suggests that adoption of the medical home may well develop at a slower pace in states, like New Jersey, where physicians tend to be organized in smaller practices.  New Jersey’s Medicaid ACO pilot could  help to accelerate the development of practice reformation in New Jersey — particularly if CMS provides the support advocated by Jeff Brenner and Nikki Highsmith.

It’s an exciting time for growth and innovation in the Garden State … if we just get that signature.

Medicaid Cuts and the March Toward a Charity Model of Care

Last week, Nic Terry compiled a list of current threats to Medicaid funding. As he noted then, Medicaid coverage is increasingly becoming meaningless for those seeking specialist care. Though more people are slated to enter the program, policymakers are unlikely to fix these flaws before they arrive. To the contrary, “physician reimbursement will decrease, and hospitals are looking to cross-subsidize some of their Medicaid patient expenditures from the privately insured.” Something to remember next time we hear about how imperative it is to cut public health expenditures: there is an inevitable pressure to “rob Peter to pay Paul.”

The budget drama narrative has so far focused on Republican efforts to further slash (or end) Medicaid, and Democratic resistance. But now even the Obama Administration is showing signs of reverting to form and endorsing a patina of Medicaid coverage without its substance. It is now too scared to even try to assess the full extent of the access problem. Like “death panels” before, the buzzword “spying on doctors” ended a promising program to measure the relative difficulty of getting access to care using different forms of insurance.

Obama officials are also engaged in more troubling substantive capitulations. Consider this CBPP report:

An Obama Administration proposal that’s on the table for budget negotiators would reduce federal Medicaid expenditures by reducing the federal share of Medicaid and CHIP costs, shifting costs to states and likely prompting states to cut payments to health care providers and to scale back the health services that Medicaid covers for low-income children, parents, people with disabilities, and/or senior citizens (including those in nursing homes). . . . The proposal would replace the various matching rates at which the federal government reimburses states for their costs in insuring people through Medicaid and CHIP with a single “blended rate” for each state. A state’s blended rate would be set at a level that provided the state with less federal funding than under current law, thereby saving the federal government money.

Abigail Moncrief has noted that states “are statutorily required—and should be judicially required—to pay a reasonable price for the services they buy” by the Medicaid Act’s equal access provision (42 U.S.C. 1396a(a)(30)(A)). But the Obama Justice Department is apparently complementing the budget team cost cutters by arguing that the Supremacy Clause does not “provide[] a cause of action for an injunction to enforce” the equal access provision. As Steve Vladeck observes, this is “a shift in policy that, if endorsed by the Supreme Court, would make it all-but-impossible to enforce the equal access mandate–one of the most important statutory requirements of the Medicaid program.”

Put it all together, and you have what bloggers Joan McCarter and Digby call a serious reversal for the President:

I don’t think anyone expected the Democratic leadership and the president to walk away from their own hard fought health care reforms before they even had a chance to be implemented. . . . I did think they would have wanted to give their legacy issue a chance to be implemented in full at the beginning, so they could continue to brag about bringing health care to 30 million uninsured Americans if nothing else. . . .But as the president says, in these tough times the government has to tighten its belt just like all American families. I guess he must realize that one of the things American families have had to cut out is their health insurance. So much for that legacy.

Perhaps a “balanced solution” to the budget debate is impossible now. But let’s at least acknowledge where we are heading with the endless Medicaid cost cutting. Much of the developing world has what is essentially a “charity option” for the very poor: they have nowhere near the purchasing power necessary to buy care, but have to rely on the kindness of strangers or NGO’s. We are not imminently headed to that level of catch-as-catch-can care for all of the Medicaid population’s problems: very urgent problems will continue to get attention due to some combination of EMTALA and Medicaid funding. But for many other types of issues, we may need to rely more and more on a combination of cost-shifting and charity. One model is the Global Eye Foundation in India, where “more than 80 percent of the surgeries that the model hospital performs are free of cost to the patient.” When you hear establishment economists talk about increasing the “competitiveness” of the American labor force, and fighting rising health care costs, remember that moving to a developing world model of care is one powerful way of achieving those ends.

Man Robs Bank for Medical Treatment

We’ve talked often on this blog about the difficulties experienced by the uninsured. About the expenses associated with health care and how hard those expenses fall on some– how people eschew treatment because of cost, and even how a governor, by releasing two inmates, rid his state of the cost of care for dialysis and  possible transplant. Maybe the following is just a natural extension of the premise–or the flip side of the governor as a cost-shifting state benefactor in a down economy amidst rising healthcare costs.

A 59-year-old former truck driver took it upon himself, with the tools available to him, to engage in some cost shifting as well. In need of medical care and unable to afford it– and seemingly unwilling to bankrupt himself or his family through medical expense– he robbed a bank.

After losing his truck driving job of 17 years and a short lived driving job thereafter, James Richard Verone, who took a job as a convenience store clerk in a failed attempt to make ends meet, entered into a Gastonia, N.C. bank and, with a note, demanded of the cashier the sum of $1 and some medical attention. He then told the teller he would sit and wait for the police.

The convenience store job, apparently, took its toll on Verone. Yahoo News reports that

But Verone’s body wasn’t up to it. The bending and lifting made his back ache. He had problems with his left foot, making him limp. He also suffered from carpal tunnel syndrome and arthritis.

Then he noticed a protrusion on his chest. “The pain was beyond the tolerance that I could accept,” Verone told the Gaston Gazette. “I kind of hit a brick wall with everything.”

Verone knew he needed help–and he didn’t want to be a burden on his sister and brothers. He applied for food stamps, but they weren’t enough either.

So he hatched a plan. On June 9, he woke up, showered, ironed his shirt. He mailed a letter to the Gazette, listing the return address as the Gaston County Jail.

“When you receive this a bank robbery will have been committed by me,” Verone wrote in the letter. “This robbery is being committed by me for one dollar. I am of sound mind but not so much sound body.”

Mr. Verone is being held awaiting trial under a charge of larceny. As of last week, he was scheduled to see a doctor this week. Mr Verone is said to have observed, “If you don’t have your health you don’t have anything.”

Reform Rodeo

1. The NYT reports on how Florida is retooling their Medicaid system by, among other things, channeling some Medicaid patients into for-profit HMOs.

2. ihealthbeat.org reports on the role of patient-driven PatientsLikeMe.com in creating the first clinical trial from social network data.

3. Health Data Management reports on J&J’s acquisition of device maker Synthes for $21.3 billion.

4. Health Affairs has a piece on how comparative effectiveness research can change the practice of medicine.

5. Becker’s Hospital Review has a piece on the 6 technology building blocks of ACOs.

Why Reduce Health Care Costs?

One rare point of elite consensus is that the US needs to reduce health care costs. Frightening graphs expose America as a spendthrift outlier. Before he decamped to Citigroup, the President’s OMB director warned about how important it was to “bend the cost curve.” The President’s opponents are even more passionate about austerity.

Journalists and academics support that political consensus. Andrew Sullivan calls health spending a “giant suck from the rest of the working economy.” Gregg Bloche estimates that “the 30% of health care spending that’s wasted on worthless care” is “about the price of the $700 billion mortgage bailout, squandered every year.” He calls rising health spending an “existential challenge,” menacing other “national priorities.” Perhaps inspired by Children of the Corn, George Mason economist Robin Hanson compares modern medicine to a voracious brat:

King Solomon famously threatened to cut a disputed baby in half, to expose the fake mother who would permit such a thing. The debate over medicine today is like that baby, but with disputants who won’t fall for Solomon’s trick. The left says markets won’t ensure everyone gets enough of the precious medical baby. The right says governments produce a much inferior baby. I say: cut the baby in half, dollar-wise, and throw half away! Our “precious” medical baby is in fact a vast monster filling our great temple, whose feeding starves our people and future. Half a monster is plenty.

But when you scratch the surface of these sentiments, you have to wonder: is the overall level of health care spending really the most important threat facing the country? Is it one of the most important threats? There are many ways to raise revenue to pay for rising health costs. Aspects of the Affordable Care Act, like ACOs and pilot projects, are designed to help root out unnecessary care.

I am happy to join the crusade against waste. But why focus on total health spending as particularly egregious or worrisome? Let’s explore some of the usual rationales.

Terrible Tax Expenditures and Suspect Subsidies?

Employment-based insurance gets favorable tax treatment, and much Medicare and Medicaid spending is drawn from general revenues. So, the story goes, medicine’s big spenders don’t have enough “skin in the game.” Once health and wealth are traded off at the personal level (as the Harvard Business School’s Clayton Christensen advocates), people will be much less likely to demand so much care. Government can attend to other national priorities, or individuals will enjoy higher incomes and will be free to spend more.

I respect these arguments to a point, but I worry they partake of the “nirvana fallacy.” If I could be certain that leviathan would repurpose all those wasted health care dollars on infrastructure, or green energy, or smart defense, or healthier agriculture, I’d be ready to end tax-advantaged health insurance in an instant. But I find it hard to imagine Washington going in any of these directions presently.

Giving tax dollars back to taxpayers also sounds great, until one processes exactly how unequal our income distribution is. In 2004, “the top 0.1% — that’s one-tenth of one percent — had more combined pre-tax income than the poorest 120 million people.” To the extent health-related taxes are cut, very wealthy households may see millions per year in income gains; the median household might enjoy thousands of dollars per year. Sure, middle income families will find important uses for those funds (other than bidding up the price of housing and education). But at what price? What if the insurance systems start collapsing without subsidies, and more physicians (who are already expressing a desire to work less) start seeking out pure cash practices? A few interactions with the the very wealthy may be far more lucrative than dozens of ordinary appointments.

Consider the math: billing a $20,000 retainer from each of 50 millionaires annually may be a lot more attractive to physicians than trying to wrangle up 500 patients paying $2000 each—or, worse, getting the money from their insurers. There are about 10 million millionaires in the US; that’s a lot of buying power. One $10,000 score by a cosmetic dentist from such a client could be worth 400 visits from Medicaid patients seeking diagnostic procedures. Providers are voting with their feet, and a Medicaid card is already on its way to becoming a “useless piece of plastic” for many patients. Given those trends, simply reducing health care “purchasing power” generally risks some very troubling outcomes for the very people the health care cost cutters claim to protect. No one should welcome a health care plutonomy, where the richest 5% consume 35% of services, regardless of how sick they are.

Is Anyone Underpaid in Health Care?

Health commentators rightly draw attention to big insurer CEO paydays. Top layers of management at hospitals and pharma firms are also getting scrutiny. Wonks are up in arms about specialist pay. Read more

Medicaid Incentives for Healthy Behavior: Turning That Cigarette Back Into Cold Hard Cash

The Centers for Medicare and Medicaid Services (CMS) recently announced a $100 million program through which states can reward Medicaid enrollees who adopt healthy behaviors. The grant program is part of the Patient Protection and Affordable Care Act and allows states to offer incentives for tobacco cessation, controlling or reducing weight, lowering cholesterol or blood pressure, and avoiding the onset of diabetes or improving management of the condition. The goal of the program is prevention, as spending on chronic conditions is said to account for more than 75 percent of annual healthcare expenditures in the U.S.

According to CMS Administrator Dr. Donald Berwick,

With the right incentives, we believe that people can change their behaviors and stop smoking or lose weight. Not only can preventive programs help to improve individuals’ health, by keeping people healthy we can also lower the nation’s overall health care costs.

States are not limited to direct cash incentives– proposed plans could include waiving premiums, deductibles and coinsurance payments, or offering coupons or gift certificates for weight management classes or tobacco cessation counseling.

CMS has based the program on data suggesting a short-term change in behavior when people are offered monetary incentives. Current research shows that while people may be internally motivated to make healthier decisions because of future consequences, they don’t often weigh those delayed outcomes with the immediate reward of engaging in the behavior. For example, knowing that smoking increases lung cancer risk 20 years from now isn’t always going to stop someone from smoking a cigarette. The benefit of monetary incentives is therefore their immediacy– they replace one unhealthy reward with another less harmful one. In short, CMS is betting that someone would put down that cigarette right now if you just paid them to.

But the experience of making healthy decisions seems to align more with what Mark Twain opined in Following the Equator,

He had had much experience of physicians, and said “the only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d druther not.

Though an individual may make a healthy choice now because they would prefer a cash incentive, that doesn’t automatically change their instinctual behavior. Someone could theoretically be convinced to take a grocery store gift card instead of buying a fast food dinner, but that does not change how much they enjoy the taste of a cheeseburger. In many circumstances, people engage in certain behaviors simply because they like to. For this very reason, critics are quick to point out that monetary incentives are unlikely to spur long-term changes in unhealthy habits. Critics also note that there is little research on whether these incentives will be successful in the Medicaid beneficiary population.

What may redeem the initiative from these criticisms is that CMS is candidly calling it a  ”demonstration program,” designed to figure out which strategies produce long-term behavioral changes. By allowing states to develop their own programs and keep data on the experience, CMS seems to be hedging its bets, wagering that at least one program will provide a successful model. Further, CMS can use the data to evaluate other factors such as the administrative costs incurred by states in rendering the programs.

Could $100 million federal grant dollars be used to support preventative health in a different way? Of course. But as long as this money is being set aside to incentivize healthy behavior, we may get an answer to whether external motivators spur long term behavior change. I, for one, would love to know just how much money it costs to convince someone to stop smoking, or to consistently trade in that Big Mac for some broccoli. It almost has to be cheaper than what we’re doing right now.

Reason to Hope in NJ as State to Propose Stipend for Families Caring for the Developmentally Disabled

The Star Ledger reports that in the midst of group home waiting lists populated with thousands of developmentally disabled adults, New Jersey is on the verge of proposing help–in the form of at least $10,000 per year, perhaps $15,000, for families to “take care of their disabled children on their own.”

The waiting list for group home admission is said to top 8,000 each year with waits as long as 10 years for entrance.

The Star Ledger reports that in New Jersey

There are 8,840 people with developmental disabilities in 2,200 state-licensed homes, according to the state. About 8,000 more are on a waiting list to get into group homes or receive services designed to meet their needs. Because of budget cuts, in some years 100 people on the list have moved into homes.

According to the state, a group home costs approximately $120,000 per year to operate. With 8,840 in 2,200 homes, that comes out to roughly $30,000 per person.

The proposal will require federal approval, as Medicaid supplies funding for the need of the developmentally disabled. In this case, the federal government would be expected to provide approximately $45 million in matching funds.

The Star Ledger writes

Christie administration officials say the state would still try to build group housing for the developmentally disabled, but the payment would help families acquire services such as part-time aides, pay for summer camp or buy vehicles with wheelchair access. Families could also pool their funds to set up housing arrangements on their own rather than wait for a state-sponsored group home to open.

When only half of those in need are provided with what they need, and waits exceed 10 years to fill that need– the word “crisis” is not hyperbole. Anyone raising children can relate to demands– even, or perhaps more so, after those children have reached the age of majority. But families caring for the developmentally disabled are called upon to meet needs that often border (if not surpass) the heroic. And although money doesn’t solve everything, anyone who has been without knows it can help. Putting the access to services that money can buy into the hands of those struggling to provide for their children is a good step in the right direction.

Reform Rodeo

1. NPR has a story about the Obama Administration’s move to accept a bipartisan proposal that will allow states to opt-out of some of the ACA regulations if they can provide a suitable alternative.

2. Respectful Insolence has a detailed story about Bruesewitz v. Wyeth — a SCOTUS decision that recently upheld the federal law that preempts design defect suits against vaccine manufacturers, instead channeling the complaints into a Vaccine Court that awards damages from an industry-sponsored fund.

3. The Healthcare Economist has a review of a Robert Wood Johnson article on the ACA’s various Value-Based Purchasing provisions.

4. Bradley Herring at the NEJM has a an economic perspective on the individual mandate’s severability from the ACA.

5. The Wall Street Journal has a piece about governors’ struggle with Medicaid budgets, and the strategies they are implementing to deal with ballooning costs.

Reform Rodeo

1. Medicaid in Arizona: Kevin Sack of the New York Times discusses Arizona’s planned removal of  a quarter of a million Medicaid patients from their rolls; Secretary Sebelius has signed off.

2. Essential Benefits: Ian Spatz at the Health Affairs Blog continues the discussion of the controversial determination of essential benefits under the health reform statute.

3. Integration and Prices: Maggie Mahar at Health Beat has a piece on the concern about price increases due to integration by accountable care organizations and other similar entities.

4. Clinical Practice Guidelines: David Williams at KevinMD.com details a recent survey which appeared to find more public support for arguments against treatment guidelines as opposed to arguments in favor of the guidelines.

5. Individual Mandate: Bob Laszewski at Health Care Policy and Marketplace Review posits alternatives to the individual mandate.

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