Brookings: Experts - S. Lawrence Kocot

Will Obamacare Implementation Really Be a "Train Wreck"?

S. Lawrence Kocot — Mon, 20 May 2013 00:00:00 -0400

Senate Finance Committee Chairman Max Baucus, an architect and supporter of the Affordable Care Act (ACA), recently caught the Administration's attention when he voiced his concerns about the implementation of the health exchanges—the centerpiece of Obamacare now scheduled to go live on October 1—saying that he sees "a huge train wreck coming."

President Obama responded to concerns about implementation, emphasizing that he is 110 percent committed to getting implementation done right, but he also cautioned that there will be mistakes and hiccups.

While the Administration is certainly not going to highlight major problems at this point in the implementation cycle, there are a few key indicators to watch over the next few months to assess how well implementation is progressing:

1. Affordability. Very simply, can individual and small group purchasers of health insurance in the new marketplaces afford the likely cost? A recent report by the Society of Actuaries indicates that we can expect to see per member per month costs of plans in the individual markets increase by as much as 32% under the ACA -- with many states seeing increases even higher. The Administration and some advocates claim that the actuaries' report is misleading or just plain wrong, and that any cost increases will be covered by ACA's generous subsidies that will cushion the blow for most of those eligible for the benefits.

The Qualified Health Plan approval process is still in progress, so we won't know the full extent of the cost increases until later this summer. However, with projected insurance plan costs for some states now available, we can already see that there will be significant variation across the states on average costs in the non-group market. Vermont and Rhode Island are projecting favorable rates to consumers; Washington is mixed depending upon enrollee characteristics; and Maryland costs are projected to rise by 25% on average next year - but with healthy young men seeing their insurance costs rise as much as 150%- contrary to the ACA's goals of providing affordable insurance.

If the Society of Actuaries is right, we can expect that the cost of this new health insurance may be hard to swallow for some consumers who will not be eligible for subsidies - some 1 million persons in 2014, according to CBO. And for the other 6 million expected enrollees eligible for subsidies in 2014, the cost to the federal government could be more than the projected $35 billion. If overall plan and subsidy costs are much higher than anticipated, legitimate questions may be raised about the sustainability of the program.

2. Availability. Even after we know more about the "rate shock" that is predicted to come later this summer, the question then becomes: will state marketplaces be operational by October? This gets to the heart of the "train wreck" comment, as the law requires that subsidies be administered through enrollment in the marketplaces. Sixteen states and the District of Columbia have agreed to run their own state marketplaces, while the remainder have surrendered many of the operational decisions or have deferred completely to the federal government to run theirs.

Even under the best of circumstances, the Centers for Medicare & Medicaid Services (CMS) would have difficulty pulling off the simultaneous operational roll-out of more than 30 federally facilitated/partnership marketplace exchanges (FFEs) at the same time. In order for the FFEs to work as planned, CMS needs a willing state partner that is committed to making it work through precise coordination of technology and business rules, which requires extensive operational planning and resource allocation, as well as close collaboration and constant communication.

Let's face it: not all partners in the states are even willing, much less committed, to providing the time and resources to make a federal marketplace successful in their state. What Baucus is hearing about the FFE progress in Montana is consistent with what many FFE states are reporting -- many of these FFEs are not ready yet and time is running out to get them there.

So what about the 17 state-run marketplaces? They have been given over $3.5 billion in federal grants since 2010 to be ready to enroll consumers in the new insurance benefits on October 1, 2013. While some of these states are clearly ahead of the pack in terms of readiness, despite their best intentions, it is likely that not all state-run marketplaces will be fully operational by the deadline. CMS may have to decide if and when to take responsibility for some of them, which could be viewed by opponents as an early admission of failure.

To be fair, establishing marketplaces in 50 states and D.C. is an ambitious undertaking. With unprecedented cooperation required across multiple federal agencies, states, and quasi-state bodies and agencies coordinating with state insurance commissions and plans, the requirements and deadlines for effective implementation are virtually impossible. Additionally, new data systems that have never been fully tested with live data can't be expected to perform without technical glitches and a period of correction.

3. Outreach. As has been reported, CMS did not get the nearly $1 billion they said they need for outreach and implementation of the marketplaces. While this seems like a lot of money, it is not nearly enough to accomplish the task, especially given the difficulties CMS will have with some of the consumers they are trying to enroll - low-income, less healthy, and "young invincible" consumers, many of whom have not had insurance before. As polls have shown, 78% of subsidy eligible Americans do not know this benefit will be available. Like all marketplace applicants, they will need to fill out a multi-page form and will need help to get educated about subsidies to make the insurance affordable. Experience has shown that the hardest benefits to sell are the ones that cost even a little to those who have the least. This explains why Secretary Kathleen Sebelius has been desperately trying to rally insurers and private organizations such as Enroll America to step up to supplement federal enrollment efforts; the private assistance will help, but it is not likely to be enough.

So, is this really the train wreck Senator Baucus sees? It probably depends on what type of railroad one was expecting. The implementation of Medicare Part D tells us that there are plenty of opportunities for things to go wrong with exchange implementation. No implementation is without challenges and this one will be particularly rough given the size and scope.

At the end of the day, however, the measure of implementation success is probably not the expense of the benefit nor whether technology works as intended; technical problems can eventually be fixed and in the short term, manual processes can hide a lot of sins. Rather, the real measure of success is how many people actually enroll in this new benefit and get the subsidy for which they qualify. If CMS can stay focused on these measures, the light at the end of the implementation tunnel may be much brighter than the light on the political train that continues to barrel down the tracks in their direction.

Authors

S. Lawrence Kocot

Publication: Real Clear Markets

Image Source: © Jessica Rinaldi / Reuters

Evaluating Community-Based Reforms in Care for Chronic Conditions: A Multi-Payer Template for Information Technology Initiatives

Thu, 29 Dec 2011 00:00:00 -0500

Executive Summary

Community-level interventions have the advantage of facilitating system-wide delivery and payment reform because they shift the focus of reform efforts away from particular institutions to the broader community where patients receive their care and manage their conditions, thus facilitating greater care coordination across settings. Community-based initiatives, however, have created a new set of methodological challenges around how best to determine whether and to what extent these initiatives have had an impact on cost and quality and, where they have, determining what worked and what could have worked better.

The challenge of evaluation derives from the nature of community-based innovation. Initiative design and primary objectives may vary in different communities, given different priorities and the types of available resources; typically lack randomization and control in an environment where patients may elect to participate in innovative programs non-randomly based upon characteristics that affect measured health outcomes; proceed in a dynamic environment, where many things may be changing simultaneously; and they may have differential, and sometimes completely opposite effects, on subsets of the population, in a setting where there is very limited opportunity to evaluate the impact on some of those subsets. The risk in that setting is that apparent improvements in an outcome, such as cost, in one population (e.g., Medicare enrollees) may be the consequence of cost-shifting to an unobserved population (e.g., commercial enrollees) rather than the result of genuine improvements in the efficiency with which care is delivered.

To begin to address these challenges, the Engelberg Center for Health Care Reform at Brookings has worked closely with three communities, the Primary Care Information Project (PCIP) in New York City, Vermont’s Blueprint for Health (Blueprint) and the Wisconsin Health Information Organization (WHIO) , and analysts from the Dartmouth Institute, New York University, Onpoint Health Data and OptumInsight (formerly Ingenix) to develop a multi-payer template for evaluating their ongoing and future community-based health care reform initiatives. The objective was to better equip these communities to conduct rigorous evaluation of the impact of their interventions on the cost, quality, and utilization of health care and to provide a template that would enable other communities implementing accountability-based multi-payer payment and delivery system reform initiatives to understand how they might do so.

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Authors

Cary Sennett, MD, PhD
Karen Matsuoka, DPhil, MPhil
S. Lawrence Kocot
Mark B. McClellan
Molly Chidester

Uncomfortably Numb: The Dark Side of Inappropriate Drug Use in Nursing Homes

S. Lawrence Kocot — Thu, 15 Dec 2011 00:00:00 -0500

Editor’s Note: An abridged version of this article was published in The Hill on December 14, 2011.

At a time when policymakers are focused on improving the quality of care and decreasing costs in government health programs, one change should be obvious: it’s time to end conflicts of interest and misaligned financial incentives to long term care (LTC) pharmacies that are endangering nursing homes residents and likely running up the cost of the Medicare Program.

The risk of drug-induced harm to Medicare beneficiaries in nursing homes is unacceptably high today. Research shows that as many as half of all nursing home residents may be given inappropriate prescriptions, increasing the risk of expensive and unnecessary hospitalizations.^1,2 A May 2011 report³ by the HHS Office of Inspector General found that 51 percent of Medicare claims for one kind of prescription – atypical antipsychotic drugs - were wrong, either not used for medically accepted conditions or not documented as having actually been administered to the resident. And 22 percent of these claims were not administered in accordance with government standards.

Importantly, 83 percent of Medicare claims for atypical antipsychotic drugs for nursing home residents were associated with off-label conditions and 88 percent of the drug claims were for residents diagnosed with dementia. The Food and Drug Administration has warned that the use of antipsychotic drugs for behavioral symptoms can nearly double the risk of death for older persons with dementia.⁴

There are many explanations for inappropriate prescribing and dispensing in the nursing home setting, but misaligned financial incentives deserve special scrutiny. Certain pharmacies associated with long-term care facilities, known as LTC pharmacies, collect millions of dollars each year for increasing utilization of certain Medicare Part D drugs in nursing homes.^5,6 Three LTC pharmacy entities control about 90 percent of the national LTC pharmacy market,⁷ which gives them extraordinary market power to extract financial concessions from pharmaceutical manufacturers in exchange for "moving share" in nursing homes.

In addition, LTC pharmacies typically employ the pharmacists serving the nursing home.⁸ Part of the pharmacists’ role is to make recommendations about drug selection and modification. Government rules require nursing home medical staff to act upon pharmacists’ reports, and studies indicate that nursing home physicians generally adhere to the recommendations of the LTC pharmacist.⁹ With such incredible power over drug regimens in a nursing home, a LTC pharmacist who is employed by the LTC pharmacy faces an unfortunate and potentially unavoidable conflict of interest in making recommendations about drug selection when his/her employer stands to gain or lose financially from that drug selection.

Amazingly, LTC pharmacists are not required to disclose to the nursing home medical staff nor patients that a conflict of interest exists. Thus, while federal law¹⁰ requires pharmaceutical manufacturers to report payments to physicians to guard against any bias or influence, there is no similar requirement to disclose payments made to nursing home pharmacies that promote drugs to unaware physicians who prescribe for our nation’s most defenseless beneficiaries.¹¹

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) have expressed serious concerns about these misaligned financial incentives and conflicts of interest in LTC pharmacies.¹² Yet, despite multiple sub-regulatory attempts¹³ by CMS and HHS to address these issues, these incentives and conflicts are still a fact of life in nursing homes today.

Costs of these misaligned incentives and conflicts of interest to the Medicare Program are hard to quantify because LTC pharmacies are not required to disclose the incentives or the drugs they are promoting. However, an analysis¹⁴ presented recently by the Medicare Payment Advisory Commission (MedPac) should prompt a deeper examination.

In 2009, just 8 percent of beneficiaries accounted for 40 percent of total Medicare Part D spending, according to MedPac. These "high-cost" beneficiaries filled 111 prescriptions per year, more than 2.5 times the prescriptions filled by other beneficiaries. Further, their average prescription cost was more than 2.5 times that of other beneficiaries, due in part to more prevalent use of brand name drugs when a generic alternative was available. And, not surprisingly, MedPac found that one of the common attributes of high-cost beneficiaries is that they are more likely to reside in nursing homes.

While further study needs to be conducted to learn more about what is driving Medicare beneficiaries to consume higher volumes of more expensive drugs in nursing homes, financial incentives designed to drive drug utilization are a part of the story that cannot and should not be ignored any longer.

To address these conflicts of interest and misaligned incentives, CMS is now proposing to change the current nursing home pharmacy delivery model for Medicare to require LTC facilities to use the services of a licensed pharmacist who is independent and not affiliated with the facility's pharmacy.¹⁵ Congress should go further and provide CMS with the authority to prohibit LTC pharmacies from receiving financial incentives that are designed to prefer, protect or maintain a drug manufacturer’s product utilization.

No son or daughter of a vulnerable beneficiary in a LTC facility should ever have to worry that their parent may be receiving a drug because of the financial interests of the company that is delivering it. Furthermore, the Medicare Program can’t afford the growing costs of unnecessary and dangerous drug overutilization in nursing homes. These misaligned incentives in the Medicare program put our nation’s most frail Medicare beneficiaries at a greater risk for serious harm in nursing homes. We owe it to these Medicare beneficiaries to take them out of harm’s way.

1. Lau DT, Kasper JD, Potter DEB, Lyles A. Potentially inappropriate medication prescriptions among elderly nursing home residents: their scope and associated resident and facility characteristics. Health Serv Res. 2004;39:1257–1276.
2. Lau et al (2005). Hospitalization and death Associated with Potentially inappropriate medication Prescriptions Among Elderly Nursing Home Residents. Archives of Internal Medicine. 165: 68-74.
3. United States. Dept. of Health and Human Services. Office of Inspector General. Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents. May 2011. OEI-07-0800150.
4. FDA. Public Health Advisory: Deaths with Antipsychotics in Elderly Patients with Behavioral Disturbances. April 11, 2005. Accessed at: http://www.fda.govon December 14, 2011.
5. Johnson & Johnson paid $3,098,673 in rebates for the drug Levaquin to Omnicare at an annualized rate in 2002 according to an internal Johnson & Johnson email that was entered into evidence in United States v. Johnson & Johnson, et al. Accessed at http://www.justice.gov/usao/ma/news/2010/January/JJ/Exhibit%2013.pdf. The 2010 Form 10-K for PharMerica Corporation reads "For the years ended December 31, 2008, 2009 and 2010, rebates recorded as a reduction in cost of goods sold were $34.7 million, $34.1 million, and $37.2 million, respectively."
6. According to the HHS Office of Inspector General, 54% of the pharmacy directors interviewed reported that their pharmacy receives rebates from drug manufacturers either directly or through group purchasing organizations. For example, one pharmacy director explained that if 90% or more of the insulin she sells is from a particular manufacturer, she receives a 1% rebate. See HHS, Office of Inspector General, ‘‘Availability of Medicare Part D Drugs to Dual-Eligible Nursing Home Residents,’’ June 2008. Available online at http://oig.hhs.gov/oei/reports/oei-02-06-00190.pdf.
7. Managed Health Care Associates (MHA), Omnicare, and PharMerica Corporation serve 90 percent of all LTC facility residents according to website of Long Term Care Pharmacy Alliance. Accessed at http://www.ltcpa.org/-about-us-/ on December 14, 2011
8. According to the HHS Office of Inspector General, 80% of nursing home administrators reported that the consultant pharmacists who perform their drug regimen reviews are employees of the LTC pharmacy that provides Part D drugs to their residents. See HHS, Office of Inspector General, ‘‘Availability of Medicare Part D Drugs to Dual-Eligible Nursing Home Residents,’’ June 2008. Available online at http://oig.hhs.gov/oei/reports/oei-02-06-00190.pdf.
9. HHS, Office of Inspector General, ‘‘Availability of Medicare Part D Drugs to Dual-Eligible Nursing Home Residents,’’ June 2008. Available online at http://oig.hhs.gov/oei/reports/oei-02-06-00190.pdf.
10. Section 6002 of the Affordable Care Act added section 1128G to the Social Security Act requires manufacturers of drugs, devices, biologicals, or medical supplies covered under title XVIII of the Act (Medicare) or a State plan under title XIX (Medicaid) or XXI of the Act (the Children's Health Insurance Program, or CHIP) to report annually to the Secretary certain payments or other transfers of value to physicians and teaching hospitals.
11. According to the HHS Office of Inspector General, only 3 of the pharmacy directors interviewed reported that their pharmacies disclosed receipt of rebates to nursing homes or to physicians. See HHS, Office of Inspector General, ‘‘Availability of Medicare Part D Drugs to Dual-Eligible Nursing Home Residents,’’ June 2008. 13. Available online at http://oig.hhs.gov/oei/reports/oei-02-06-00190.pdf.
12. Michael O. Leavitt, Secretary of Health and Human Services. Report to Congress - Review and Report on Current Standards of Practice for Pharmacy Services Provided to Patients in Nursing Facilities. 2005. Accessed at: www.cms.gov/Reports/downloads/leavitt.pdf. See also: Patrick Conway, Chief Medical Officer and Director, Office of Clinical Standards and Quality, Centers for Medicare & Medicaid Services, Department of Health and Human Services. Statement to U.S. Senate Special Committee on Ageing. The Overutilization of Atypical Antipsychotics in Long-Term Care Settings, Hearing, November 30, 2011. Accessed at: http://www.hhs.gov/asl/testify/2011/11/t20111130a.html
13. See, for example, Part C&D Weekly Bulletin for the week ending May 12,2006. Centers for Medicare and Medicaid Studies. Accessed at: https://www.cms.gov/PrescriptionDrugCovContra/downloads/WeeklyBulletin_05.12.06.pdf.
14. MedPAC, September 16, 2011. Beneficiaries with high drug spending under Part D. Accessed at http://medpac.gov/transcripts/bene_sept2011_final(handout).pdf.
15. See Federal Register Volume 76, Number 196 (Tuesday, October 11, 2011). "Medicare Program; Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2013 and Other Proposed Changes; Considering Changes to the Conditions of Participation for Long Term Care Facilities" (RIN 0938-AQ86)

Authors

S. Lawrence Kocot

Image Source: © Lucas Jackson / Reuters

Achieving Better Chronic Care at Lower Costs Across the Health Care Continuum for Older Americans

S. Lawrence Kocot and Mark B. McClellan — Thu, 28 Oct 2010 14:47:00 -0400

Improvements in the efficiency and quality of care delivered by the U.S. health care system is largely dependent on reforming the way that care is supported, reimbursed, and delivered to older Americans, who often have multiple chronic illnesses and are in need of long-term services and supports (such as home and community-based services, intermediate care facilities for people with mental retardation/developmental disabilities, or nursing homes). Our rapidly growing older Americans population, which is expected to double by 2030, faces unique health care challenges, making this population among the most expensive individuals in the health care system. Individuals with multiple chronic illnesses warrant particular attention: while they represent only 20 percent of Medicare beneficiaries, they account for approximately 80 percent of Medicare spending. In addition, many older Americans require long-term services and supports (LTSS). Payers like Medicare, Medicaid, older individuals and their families, and private plans spend over $200 billion a year on LTSS (over 10 percent of U.S. health expenditures). LTSS costs are expected to double in the next 30 years.

The recently passed health care reform bills – the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (ACA) – include a range of new payment and delivery system reforms designed to improve the overall performance of the health care system and contain the costs of expanding health insurance coverage. Initiatives in the law reflect considerable evidence that addressing the overuse, underuse, and misuse of medical therapies can help “bend the curve” of rising health care spending. The legislation addresses how payment reforms should incorporate long-term care delivery. Future payment and delivery reforms can make a big difference in helping individuals with multiple chronic diseases that face many preventable complications and duplicative or poorly coordinated services.

This paper addresses many of the challenges facing individuals with chronic conditions and functional impairments and identifies new opportunities for the integration of medical services and social supports tailored to older Americans and supported by new payment designs.

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Publication: Engelberg Center for Health Care Reform

Ensuring Access to Effective Patient Medication Information

Tue, 12 Oct 2010 08:30:00 -0400

Event Information

October 12, 2010
8:30 AM - 4:00 PM EDT

New Hampshire Ballroom
Renaissance Dupont Hotel
1143 New Hampshire Ave. NW
Washington, DC

Consumers and patients need information about their medications that is accurate, balanced and delivered in an easily understood format. Unfortunately, recent studies have shown that current systems for delivering prescriptions to consumers consistently fail to fulfill the need for pertinent details.

On October 12, the Engelberg Center for Health Care Reform at Brookings hosted a public forum to discuss strategies for ensuring that patients have access to effective patient medication information (PMI). Through a series of panel discussions, key stakeholders explored patients’ expectations for this information and how they access the details and warnings, along with feasible solutions for delivering higher-quality information to patients.

After each panel, speakers took audience questions.

Transcript

Event Materials

Participants

Panelists

Janet Woodcock

Director, Center for Drug Evaluation and Research, Food and Drug Administration

Rachel Behrman

Director, Office of Medical Policy, Center for Drug Evaluation and Research, Food and Drug Administration

Amie O’Donoghue

Social Science Analyst, Division of Drug Marketing, Advertising, and Communications, Office of Medical Policy, Center for Drug Evaluation and Research, Food and Drug Administration

Doris Peter

Manager, Consumer Reports Health Ratings Center

Nancy Hughes

Assistant Vice President of Communications and Marketing, National Health Council

Vanessa Cajina

Statewide Policy Analyst, California Immigrant Policy Center

N. Lee Rucker

Senior Strategic Policy Advisor, AARP Public Policy Institute

James Heywood

Co-Founder and Chairman, PatientsLikeMe
d'Arbeloff Founding Director, ALS Therapy Development Institute

Tom Bizarro

Vice President, Health Policy and Industry Relations, First DataBank

Baxter Byerly

Vice President, Information Technology, Catalina Health Resource

Marissa Craddock

Manager, Labeling, Advertising, and Promotional Materials, Roxane Laboratories, Inc.

Freda Lewis-Hall

Senior Vice President and Chief Medical Officer, Pfizer, Inc.

Pamela Budny

Manager in Regulatory Affairs - Global Scientific Policy, Eli Lilly and Company

William Shrank

Assistant Professor of Medicine, Harvard Medical School Associate Physician, Division of Pharmacoepidemiology and Pharmacoeconomics, Brigham and Women’s Hospital

Kate Berry

Senior Vice President, Strategy and Innovation, Surescripts
Executive Director, Center for Improving Medication Management

Will Lockwood

Assistant to the Executive Director, American Society for Automation in Pharmacy

John Coster

Senior Vice President, Government Affairs, National Community Pharmacists Association

Russell Teagarden

Vice President, Clinical Practices & Therapeutics, Medco Health Solutions, Inc.

An Evaluation of Recent Federal Spending on Comparative Effectiveness Research

Tue, 05 Oct 2010 13:00:00 -0400

ABSTRACT: The American Recovery and Reinvestment Act of 2009 included new funding for developing better evidence about health interventions, with a down payment of $1.1 billion for comparative effectiveness research. Our analysis of funds allocated in the legislation found that nearly 90 percent of the $1.1 billion will eventually be spent on two main types of activities: developing and synthesizing comparative effectiveness evidence, and improving the capacity to conduct comparative effectiveness research. Based on our analysis, priorities for the new funding should include greater emphasis on experimental research; evaluation of reforms at the health system level; identification of effects on subgroups of patients; inclusion of understudied groups of patients; and dissemination of results.

Read the full article at Health Affairs » (subscription required)

Authors

Joshua S. Benner
Erin K. Karnes
S. Lawrence Kocot
Mark B. McClellan
Marisa R. Morrison

Publication: Health Affairs

Reforming the Medicaid Disproportionate Share Hospital Program

Cindy Chen, S. Lawrence Kocot, Aaron McKethan and Nadia Nguyen — Thu, 21 Jan 2010 00:00:00 -0500

INTRODUCTION

As the Senate and House work to merge their respective health reform bills, reductions in future federal funding for the Medicaid Disproportionate Share Hospital (DSH) program are being considered as one means of financing coverage expansions. The Medicaid DSH program provides funding allotments to states to subsidize certain hospitals for the unreimbursed costs they incur treating uninsured and Medicaid patients. Under current law, the federal government is expected to spend more than $100 billion on the Medicaid DSH program over the next 10 years.

Proposed funding reductions in Medicaid DSH payments are based on the expectation that expansions in insurance coverage will lead to reductions in uncompensated care. However, even in a reformed health care environment, DSH payments will still to be necessary to support care for those who will remain uninsured — estimated to be 18-23 million — as well as to subsidize the relatively low Medicaid reimbursement rates for 15 million new Medicaid patients. Bills in the House and Senate use different policy approaches to reduce Medicaid DSH spending by different aggregrate levels. In this issue brief, we examine these approaches to consider the potential impact on safety-net care and the degree to which they can help improve some of the historical shortcomings of the Medicaid DSH program.

Building on the recent paper published in Health Affairs, we outline a specific financing approach that would initially link future state Medicaid DSH allotments to measures of Medicaid enrollment and the number of uninsured persons at the state level. In future years, state allotments would be linked to more direct measures of uncompensated care volume as they become available. This approach would produce more gradual spending reductions over time relative to current legislation and would explicitly avoid funding “cliffs” that could subject providers of safety-net care to additional financing pressures. Further, it would recognize the critical role that Medicaid will continue to play in expanding insurance coverage through health care reform and the ongoing reliance by many institutions on relatively low Medicaid reimbursements.

Additionally, we include new ideas that could help ensure federal spending on Medicaid DSH is more directly connected to the delivery of care for vulnerable populations than it is now. This includes promoting greater innovative delivery system reform approaches to better coordinate care for vulnerable populations, as well as new options to support DSH institutions when they take steps to promote greater accountability for results.

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Policy Brief

Authors

Cindy Chen
S. Lawrence Kocot
Aaron McKethan
Nadia Nguyen

Improving Quality and Value in the U.S. Health Care System

Fri, 21 Aug 2009 12:00:00 -0400

Executive Summary

The U.S. health care system faces significant challenges that clearly indicate the urgent need for reform. Attention has rightly focused on the approximately 46 million Americans who are uninsured, and on the many insured Americans who face rapid increases in premiums and out-of-pocket costs. As Congress and the Obama administration consider ways to invest new funds to reduce the number of Americans without insurance coverage, we must simultaneously address shortfalls in the quality and efficiency of care that lead to higher costs and to poor health outcomes. To do otherwise casts doubt on the feasibility and sustainability of coverage expansions and also ensures that our current health care system will continue to have large gaps — even for those with access to insurance coverage.

There is broad evidence that Americans often do not get the care they need even though the United States spends more money per person on health care than any other nation in the world. Preventive care is underutilized, resulting in higher spending on complex, advanced diseases. Patients with chronic diseases such as hypertension, heart disease, and diabetes all too often do not receive proven and effective treatments such as drug therapies or selfmanagement services to help them more effectively manage their conditions. This is true for insured, uninsured, and under-insured Americans. These problems are exacerbated by a lack of coordination of care for patients with chronic diseases. The underlying fragmentation of the health care system is not surprising given that health care providers do not have the payment support or other tools they need to communicate and work together effectively to improve patient care.

While many patients often do not receive medically necessary care, others receive care that may be unnecessary, or even harmful. Research has documented tremendous variation in hospital inpatient lengths of stay, visits to specialists, procedures and testing, and costs — not only by different geographic areas of the United States, but also from hospital to hospital in the same town. This variation has no apparent impact on the health of the populations being treated. Limited evidence on which treatments and procedures are most effective, limited evidence on how to inform providers about the effectiveness of different treatments, and failures to detect and reduce errors further contribute to gaps in the quality and efficiency of care. These issues are particularly relevant to lower-income Americans and to members of diverse ethnic and demographic groups who often face great disparities in health and health care.

Reforming our health care delivery system to improve the quality and value of care is essential to address escalating costs, poor quality, and increasing numbers of Americans without health insurance coverage. Reforms should improve access to the right care at the right time in the right setting. They should keep people healthy and prevent common, avoidable complications of illnesses to the greatest extent possible. Thoughtfully constructed reforms would support greater access to health-improving care — in contrast to the current system, which encourages more tests, procedures, and treatments that are at best unnecessary and at worst harmful.

This report reviews the evidence on a range of payment and delivery system reforms designed to improve quality and value. It reaches several conclusions:

1. While there is ongoing debate about the ability of various delivery system reforms to increase value, there are clear attributes of different approaches to reform that are more likely than others to improve health and slow cost growth.

Chronic Disease Management, Primary Care Coordination, and Health Information Technology (HIT) — There is strong evidence that particular approaches or programs in these areas can improve quality and health outcomes. Some interventions also show evidence of lowering total cost growth. At the same time, these reforms, as implemented, have been very heterogeneous, and improvements in value and especially reductions in cost have not been automatic. While we find promising evidence that delivery system interventions can help slow the growth of health care costs, we argue that it should be possible to achieve larger and more certain savings by having meaningful risk-adjusted accountability incentives and requirements in place. These incentives and requirements should also be tied to particular quality improvement steps.

Comparative Effectiveness Research (CER) — Investment in CER holds promise for improving the value of health care over the longer term. Contrary to some common definitions of CER that focus narrowly on supporting and disseminating more head-to-head trials for particular treatments, CER could have a much larger impact if it is more broadly focused on (1) comparing the risks, benefits, and costs of different health care practice; (2) evaluating and revising policies that influence practices; and (3) developing strategies for targeting practices to specific groups of patients. This more broadly conceived approach to CER can support continuing improvements in the delivery system and reduce disparities in health care based on race, geography, and other factors.

2. Interventions that are targeted to specific patient populations and clinical areas typically have a greater impact on quality improvement and cost containment than broader approaches.

Targeting treatments to the appropriate patients is increasingly important in medical science, and particularly important to promoting quality and value. Using predictors — such as high utilization, complexity of conditions, or other clinical and personal characteristics — may improve the returns from delivery system investments. Research has found that certain groups, including individuals with multiple chronic diseases, low-income and minority populations, and patients undergoing care transitions, are particularly vulnerable and are more likely to benefit from certain interventions. Further, chronic care management programs can have a substantial impact on frail patients and those with multiple chronic diseases via improved health outcomes, patient and family satisfaction, and reduced costs. Unfortunately, these subpopulations often have the least access to effective care management programs. Developing better evidence and analytic capabilities for targeting delivery system interventions appropriately will be particularly important for future reforms.

3. Delivery system reforms are most effective when they are integrated and ensure real accountability from providers and patients to improve results.

Evidence suggests that multiple approaches to delivery system reform may be necessary to bend the cost curve and improve care quality. For example, the effectiveness of a single disease management program may be limited for patients who have multiple chronic conditions and who require coordinated care from many specialists. Moreover, efforts to coordinate care will be less effective without the use of electronic medical records and more comprehensive decision support for both patient and provider. Alone, sophisticated HIT systems will be ineffective if providers do not have payment and other incentives to promote systematic coordination of care. Finally, providers will not be as successful as they can be over the long term if they have do not have access to practical evidence on which clinical practices work best in particular cases or which patients need timely interventions. Evaluations of past efforts to integrate delivery system reforms show promising results. Delivery system reforms must be implemented in concert with other reforms to provide the tools, resources, and incentives (for patients and providers) needed to assure better patient outcomes.

4. Reforms are needed to transition provider reimbursement away from volume and intensity of services and toward quality and value.

Changing provider reimbursement — Moving away from a focus on the volume and intensity of services provided and toward accountability for overall cost and quality is essential for supporting integrated delivery system reforms. Many valuable services that providers already deliver, such as effective preventive care or coordinated posthospitalization care, are generally underprovided because doctors and hospitals do not have adequate financial or other support to provide them. The current system creates incentives for providing more care and more intensive treatments, with little regard to the effectiveness of these treatments in terms of improving health at the lowest possible cost. A reformed system should reward value before volume, quality before quantity, and organized delivery over disorganized care. Without payment reforms that give providers the support they need to be increasingly accountable for delivering better care at lower overall cost, individual, incremental delivery reforms or interventions are unlikely to be adequate to address the major gaps in quality and value that currently exist in the U.S. health system.

Changing benefit designs — Assuring that cost is not a barrier to care is a critical component of designing health benefits. When faced with significant out-of-pocket expenses, patients are just as likely to forego necessary care as they are to forego unnecessary care. Cost-sharing requirements and coverage should be designed to encourage patients to utilize cost-effective primary care and preventive services that can delay or prevent the onset of costly chronic conditions.

At the same time, patients should be encouraged to choose high quality care at a lower overall cost, and should have access to information to help them make well-informed decisions. Often, patients cannot get reliable information on the important outcomes and overall costs of their treatment options. With better information on value — outcomes, satisfaction, and costs — patients could make more confident decisions about getting the care they need while spending no more than necessary. This is important because, in many insurance plans today, patients with chronic diseases incur substantial out-of-pocket costs. And in the frequent cases where they have reached the out-of-pocket spending limit in their plan, they do not stand to share in any of the savings that could be achieved if they get less costly care that meets their needs. Enabling such patients to pay less when they get better care that lowers overall costs would provide better support for effective integrated care.

These findings also suggest that efforts to support integrated delivery reforms through provider payment and benefit reforms should be combined with expanded health care coverage to improve the performance of the overall system in a feasible and sustainable way.

5. To be most effective, changes in the delivery system and coverage expansions should be implemented together.

Reforming health care payment and delivery and expanding coverage are not only complementary; each is critical to achieving the other. Coverage expansion is critical to fully address the underuse of effective care, a problem that is particularly severe among the uninsured. At the same time, successful payment and delivery reform is needed to increase the value of health care, with better quality care and slower cost growth. These improvements will likely induce more Americans to purchase health insurance coverage as it becomes more affordable and valuable. Modeling results presented in this paper predict that if delivery system reforms can help achieve reasonable increases in value, millions of additional Americans could obtain health insurance coverage by 2019, even absent expansions in coverage. Of course, delivery system reforms alone will not ensure universal coverage; major steps must be taken to explicitly ensure coverage for every American. Yet substantial progress toward effective delivery system reform is critical to achieving goals with respect to expanded coverage.

These findings have several implications for policy actions by Congress and the Administration:

Lead with Medicare by implementing a clear vision for transitioning payments to promote greater accountability for improving the value of health care. Efforts to promote delivery reform that do not include Medicare cannot have a major impact on the environment of medical practice.
Develop and promote the consistent, meaningful use of valid and widely available information on the quality and cost of health care, with a particular emphasis on measuring health outcomes and overall costs at the level of episodes of care and at the level of individual patients. This includes using HIT systems to simplify data collection and reporting, and building better evidence on which delivery approaches best work.
Promote an integrated approach to delivery reform by giving providers a feasible pathway for organizing local delivery systems around the principle of accountability. Simultaneously work to (1) implement and continually improve HIT and quality measurement infrastructure, (2) provide better systems for the coordination of primary care and the delivery of preventive care, and (3) introduce new payment systems to support reductions in cost growth and improvements in quality.
Encourage efforts at the state and regional levels to enable public and private payers, including Medicaid and Medicare, to participate in private-public initiatives aimed at using better, outcome-focused performance measures to support payment and benefit reforms that promote accountability for greater value.

More detailed conclusions and recommendations are included in the final section of this report and in a separate report that summarizes the Leaders’ comprehensive health care reform package.

Read the full report »
Read the press release »

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Full Report

Authors

Niall Brennan
Nicole Cafarella
S. Lawrence Kocot
Aaron McKethan
Marisa Morrison
Nadia Nguyen
Mark Shepard
Reginald D. Williams II

Publication: Bipartisan Policy Center

Reforming the Medicaid Disproportionate-Share Hospital Program

S. Lawrence Kocot, Aaron McKethan, Nadia Nguyen and Benjamin E. Sasse — Tue, 18 Aug 2009 12:00:00 -0400

Abstract: Congress and the Obama administration are considering redirecting federal spending on the Medicaid disproportionate-share (DSH) program to help pay for health reform. In this paper, we propose linking federal Medicaid DSH funding to state-level Medicaid enrollment or uninsured populations, or both.

This approach could produce as much as $44 billion in federal savings over time without exposing hospitals to uncertain or across-the-board spending cuts. It could also gradually address state variations in Medicaid DSH funding. We also offer ideas to ensure that DSH spending is more directly connected than it is now to improvements in care for vulnerable populations.

Read the full article » (external link)

Authors

S. Lawrence Kocot
Aaron McKethan
Nadia Nguyen
Benjamin E. Sasse

Publication: Health Affairs

Medicare Part D: Good for Patients and an Opportunity for Pharmacists

Joshua S. Benner and S. Lawrence Kocot — Mon, 02 Feb 2009 14:22:37 -0500

SUMMARY

With more than 25 million Medicare beneficiaries enjoying guaranteed access and choice of a drug benefit in 2008, and 2009 average monthly plan premiums projected at a 37% lower cost than 2003 estimates, it’s safe to say the Medicare Part D prescription drug benefit continues to prove it’s worth. Part D isn’t just beneficial to Medicare beneficiaries, however; pharmacists play an increasingly important role in delivering this benefit, and must recognize the opportunity for sizeable economic growth. Josh Benner and Larry Kocot explore this issue in their editorial, “Medicare Part D: Good for Patients and an Opportunity for Pharmacists.”

Read the full article in the Journal of Managed Care Pharmacy »

Authors

Publication: Journal of Managed Care Pharmacy

Creating a Long-Term Care Quality Alliance: A Town Hall Meeting

Wed, 17 Dec 2008 14:00:00 -0500

Event Information

December 17, 2008
2:00 PM - 5:00 PM EST

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Numerous organizations have expressed interest in establishing a Long-Term Care Quality Alliance in an effort to achieve sustainable, high-value, and person-focused long-term care in the United States. Based on an initial meeting and subsequent discussions with a wide range of stakeholders, there is consensus that the Alliance should focus on implementing or speeding efforts to improve quality in long-term care and related areas at the person level, regardless of setting.

The Engelberg Center for Health Care Reform hosted a discussion on the formation of a Long-Term Care Quality Alliance. This session builds on the momentum gained from the August stakeholder meeting, and focused on presenting, discussing and developing practical next steps for the Alliance.

Discussion Topics

Potential Scope of Activities and Initial Focus Areas
Organization and Governance of the LTCQA
Long-Term Sustainability

Background Materials

6-Month Workplan (.pdf)
Appendix (.pdf)

Participants

Panelists

Projects

Mon, 01 Jan 0001 00:00:00 -0500

The Engelberg Center is conducting a range of projects that support comprehensive health care reform. These projects and partnerships enhance the Center’s ability to implement change at all levels and bring academic and technical expertise to bear on practical solutions to state and national health care challenges.

Accountable Care Organization (ACO) Learning Network »
The Brookings-Dartmouth ACO Learning Network is a member-driven network that provides participating organizations the tools necessary to successfully implement accountable care. Brookings and Dartmouth have been working together since 2007 to foster the adoption of ACOs that will improve care quality and bend the cost curve.

Development and Use of Medical Devices »
Medical devices play an important and increasing role in the delivery of health care. The Engelberg Center is involved in efforts to support better tracking of medical device use and associated outcomes and to understand the drivers of medical device innovation and policy solutions to facilitate new research and development in needed areas.

Health Information Technology »
The goal of advancing the adoption and use of health IT is reflected in projects across the Engelberg Center, including one that will focus on improving chronic care with effective health IT.

Patient Medication Information »
Through a cooperative agreement, the Engelberg Center for Health Care Reform worked in collaboration with FDA to convene three workshops between May 2010 and February 2011 to discuss optimizing, implementing, and evaluating adoption of a single standard medication information document.

Payment and Delivery Reform »
The Dr. Richard Merkin Initiative on Payment Reform and Clinical Leadership (Merkin Initiative) was launched to ensure that further steps in health care reform reflect the best opportunities identified by clinicians to improve care and lower costs.

Quality Alliance Steering Committee (QASC) »
The High-Value Health Care Project supports the Quality Alliance Steering Committee in its efforts to better understand how well physicians, hospitals and other health care providers are performing.

The Sentinel Initiative »
The FDA Amendments of 2007 expanded FDA's authority to monitor and ensure medical product safety. As a result, FDA has undertaken a number of new initiatives, including the creation of the Sentinel Initiative.

Sentinel Initiative for Active Medical Product Surveillance

Mon, 01 Jan 0001 00:00:00 -0500

In May 2008, the FDA announced the Sentinel Initiative, a national, integrated, electronic system for active surveillance of medical product safety that utilizes the capabilities of multiple, existing data systems. FDA awarded the Center a grant in September 2009 to address the need for this drug safety monitoring system and to craft practical implementation pathways for FDA drug safety legislation. Through a series of meetings that encourage collaboration among academics, public and private partners, papers that address the key challenges involved in building a more effective system of post-market evidence, and analyses that build on the lessons learned for this effort, the Center aims to improve the public's confidence in drug safety and to maximize the benefits of approved medications.

The Center convenes multiple activities, described below, related to medical product safety. For each meeting, Center staff will summarize, synthesize, and communicate findings from these discussions to a broad range of organizations and individuals that can use the information to further develop active medical product surveillance methods and systems.

Active Medical Product Surveillance Roundtables »
Convened by the Engelberg Center for Health Care Reform at Brookings, roundtables provide a forum to discuss public and private initiatives that are developing methods, data sources, and technology relevant to active medical product surveillance. These roundtables are intended to ensure that a broad range of stakeholders are informed about and engaged in current and upcoming activities related to medical product surveillance. These one-hour conference calls / webinars are free and open to the public.

Expert Workshops »
As part of its portfolio of active medical product surveillance activities, the Engelberg Center for Health Care Reform will convene a series of discussions among experts to help inform development of the Sentinel System. Such discussions are needed on a range of issues, and the expertise required to inform them will change based upon the topic. To help plan these events, the Center will assemble planning committees comprised of subject matter experts and FDA staff on topics critical to implementing active medical product surveillance. Deliverables from these events include pre-meeting issue briefs and summary reports for public dissemination.

Public Stakeholder Workshops »
On an annual basis, the Engelberg Center for Health Care Reform convenes a large, public, multi-stakeholder event spanning a variety of topics related to active medical product surveillance. This event is an opportunity for FDA and contractors working for FDA to provide an update on the progress of the Sentinel Initiative, and to engage the public in a discussion of the issues most pressing for the coming year.

Brookings Active Surveillance Implementation Council (BASIC) Meetings »
The Engelberg Center for Health Care Reform convenes BASIC meetings to bridge discussions and insights from ongoing pilot projects and expert workshops to the actual implementation of a national system for postmarket active surveillance of drugs and other medical products. BASIC meetings are comprised of 20-25 thought leaders with broad expertise in public health policy, safety science, informatics, and related fields. The Council includes individuals directly involved with FDA's active surveillance pilot projects as well as experts working on related projects not funded by FDA. During semi-annual meetings, council members discuss high-level implementation issues that need to be addressed in the next one to two years for successful implementation of active surveillance.

Discussing Medical Product Safety Initiatives with Additional Audiences »
The Engelberg Center is pursuing additional opportunities to advance active medical product surveillance efforts with a variety of stakeholders beyond FDA. These efforts are largely focused on convening panel discussions and presentations at relevant public forums, where the Center can highlight its work as well as contribute to broader conversation about medical product safety.

Back to Engelberg Center Projects »

Sentinel Initiative for Active Medical Product Surveillance

Mon, 01 Jan 0001 00:00:00 -0500

Back to Engelberg Center Projects »