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Slide 1 Medicare: a sacred cow that needs new pastures Paul Gross PhD Director, Health Group Strategies Pty Ltd Australia and Greater China Invited address, The Future of Medicare Conference, 13 August 2014
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Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Sep 03, 2014

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Health & Medicine

Dr Paul Gross delivered the presentation at the 2014 Future of Medicare Conference.

The Future of Medicare Conference was a timely event as the Abbott government debates a full over haul of the Australian healthcare system. This conference presented a chance for government representatives, regulators, health care providers in the public and private sector, educators and private investors to come together and debate the proposed changes to Medicare as well as discuss the best practice methods of implementing new measures and frameworks.

For more information about the event, please visit: http://bit.ly/FutureofMedicare2014
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Page 1: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 1

Medicare: a sacred cow that needs new pastures

Paul Gross PhD Director, Health Group Strategies Pty Ltd

Australia and Greater China

Invited address, The Future of Medicare Conference,

13 August 2014

Page 2: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 2

Warning to this audience: this paper mentions zombie ideas

“... a zombie idea is a proposition that has

been thoroughly refuted by analysis and

evidence, and should be dead — but won’t

stay dead because it serves a political

purpose, appeals to prejudices, or both”.

Page 3: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 3

Four zombie ideas

Medicare is unique

Medicare can be fixed by raising the levy

We can learn nothing from other nations

Big-bang reform [aka single payer] is painless

Page 4: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 4

Pre-budget: OOPs services,goods

Page 5: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 5

Pre-budget: OOPs/TCHE,2003-11

Source: OECD 2014: OOPs: out-of-pocket expenditure, TCHE: total current healthcare expenditure

Type of expenditure

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Total current expenditure

Services of curative and rehab care

Services of LT nursing care

Ancillary services to health care

Medical good

Public health services

Year 2011

Year 2007

Year 2003

Page 6: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 6

CoA and May Budget impacts

1. CoA priorities: uninformed silo thinking

2. GP $7 & PBS copays: weaken Medicare/PBS

3. Aged care cutbacks in home support: bad policy

ON THE POLITICAL RADAR: INEQUITY

SHARE OF HOUSEHOLD INCOME PAID AS OOPS

MEDICARE/PBS/ DENTAL PRICING & REBATES

Page 7: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 7

Medicare: four new pastures

1. Low hanging fruit in health reform:

fix three long-standing Medicare flaws

2. Slightly harder payment reform:

create incentives for PAC, transitional care, quality,

safety

3. Slightly noisier reform requiring a

pecuniectomy:

transform the pharmacy CSO subsidy to incentives for safer integrated care

4. Very hard reform:

replace subsidies for NDIS, long-term care, and

high cost drugs and medical devices by new

insurance

Page 8: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 8

1. Reforms that fix three design flaws in Medibank I-IV

and Medicare

Page 9: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 9

A new Medicare: fix these flaws

FLAW 1: Extra payments (aka extra billing) above the MBS are linked to the steady erosion of the MBS fee

FLAW 2: Medibank, COAG and excessive privacy blocked access to linked data, and thus the use of “big data” to restructure PHI and chronic care management

FLAW 3: Medibank did nothing on the supply side to make transparent the price of care or size of subsidies and we wasted the opportunity on the demand side to nudge changes in behaviour

Page 10: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 10

Extra billing and the MBS: Boxall

Page health scheme, 1954: “Because governments were unable to

regulate medical fees, there was a constant leapfrogging- as fees moved well

beyond the level of the combined Commonwealth subsidy and insurance benefit,

pressure mounted on the government to increase subsidies… Any increase was

quickly swallowed up by a further rise in doctors’ fees (p35).”

Medicare 1984: “ Medical insurance had been a problem for the funds since

the 1960s. The public blamed the funds whenever the gap between medical fees

and benefits widened, even though this depended substantially on what doctors

decided to charge and the level of government subsidies for medical fees (p134).”

Medicare 2002: “General practice rebates for patients have been neglected

for so long now that there’s a situation where doctors have lost confidence in the

Medicare benefit schedule, and they don’t want to have to be tied to it and be

worried about the viability of their practices any longer (p165).”

Page 11: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 11

Medicare reform 1: fees & prices

1. Not all consumers are fools

2. Section 51 (xxiiiA) of the Constitution allows patients to select their doctors, and doctors are free to set their own fees

3. Government sets the MBS rebate for the purpose of reimbursement, but consumers do not see doctor costs or product prices

4. Many consumers are both willing to see AND act on better information on prices and quality of care

5. Better transparency on the pricing and quality of health care requires a new Medicare philosophy

Page 12: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 12

Medicare reform 2: data sharing

1. The sharing of data from all payers (feds, DVA, PHI) and comparisons of data on prices, quality and patient satisfaction do not take us anywhere near “US managed care”

2. Medicare data (MBS, PBS) plus other data (states, PHI) should chart EACH patient journey and its outcomes

3. Consumer acceptance of copayments is conditional on “communication, certainty and affordability”,1 AND on data

4. Consumer responsibility on the demand side, fiscal constraint and affordability are achievable with high-reductible PHI coverage plus health savings accounts with economic “nudges”,2 AND we need linked data to model such concepts

Page 13: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 13

Medicare reform 3: real transparency

1. Institutional care

Doctor qualifications, contact information,

availability and admitting privileges

3. Quality of care

Basic patient safety

measures for each unit

4. Patient satisfaction

Data from all patients

5. Comparisons of hospitals

Cost, quality and patient satisfaction data across

multiple providers

2. Prices of services

Basic Px and Dx tests

OOPs for MDs, drugs

6. Comparisons of health insurers

Costs of limited set of health insurance packages

Prices of MDs and drugs paid to major providers

(public, private)

GPs

Specialists

Clinical labs

Medical imaging

Page 14: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 14

Driving transparency in 2016

By 2016, a National Healthcare Affordability Council (like the G-BA in Germany) will have

initiated a public-private partnership to create and speed up access to linked Medicare and PBS data

engaged the AMA in a process where doctors post their prices on a website (Maine model)

created the first vehicle for transparency in healthcare whereby patients can compare the prices and quality of medical and hospital care

Page 15: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 15

2. Payment reforms requiring slightly more cerebral activity

Page 16: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 16

Medicare payment reform: core issues

1. The personal

responsibility problem

2. The payment incentive

problem

3. The healthcare system

coordination problem

PROBLEM: Non-

differentiation of high

value and innovative

care, and one-size-fits-

all cost-sharing

PROBLEM: Poor

care coordination

of highest risk

case across acute

care, LTC,

behavioural health

and community

based service

PROBLEM:

Unhealthy

lifestyles in all

income groups

Based on: Milkovich and Sullivan 2014

Page 17: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 17

Medicare payment reform 1: lifestyle nudge

1. The personal responsibility problem

Patient incentives in Healthy Indiana Plan for uninsured poor,

non-disabled 19-64

• Health savings account: US$ 1,100/adult for medical costs

• Financing: no more than 2% of gross family income + state subsidy

• Basic commercial benefits package once annual medical costs exceed $1,100

• Coverage for free preventive services including annual exams, smoking

cessation, and mammograms

Healthy Michigan for some target groups

• Healthy savings account with limits on co-pays of 5% of income for cost-

sharing PLUS copayments limited to 2% of income

PROBLEM: Unhealthy lifestyles in all income groups

Page 18: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 18

Medicare payment reform 2: compliance

2. The payment incentive problem

Connecticut

•Guideline based clinical services for DM,

cholesterol, BP, CVD, asthma, COPD

•Negative incentive for non- compliance with

screenings and care management

Oregon Public Employers Benefits Board

•Evidence-based care via health prevention,

accountability, sustainability and better health

outcomes

•Patient decision-support modules to encourage

provider communication PLUS disincentive to

use low value services or over-use

PROBLEM: Non-differentiation of high value and

innovative care, and one-size-fits-all cost-sharing

Page 19: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 19

Medicare payment reform 3: coordination

3. The healthcare system coordination problem

New framework San Diego to rebalance hospital & out-of-hospital care

•Transition care coaches

•Nurses

•Personalised technology

•Caregiver engagement

FOCUS: Nursing home admissions to hospital

Management of PUs in NHs

Adherence to drug therapy post discharge

PROBLEM: Poor care coordination of highest risk case across acute

care, LTC, behavioural health and community based services

Page 20: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 20

Medicare reform 4: pharmacists

NSW Integrated Care in NSW, 20 March 2014

How to expand pharmacist role in CCM?

- Rx management of high risk patients

- post discharge Rx reconciliation in transitions of care

- medicine reviews for minor ailments and out-of-hours care

- risk factor education

- patient education to use EHR, IT

FUNDING: CSO -> FFS payment by 2019

Page 21: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 21

3. Longer term reforms that require consensus that PHI is a

viable option to raising taxes

Page 22: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 22

Medicare and PHI funding of GPs

Not without other parallel reforms

Three concerns:

- risky for insurers to pay GPs while the MBS still pays them

- temptation for a cash-strapped Treasury to transfer more of the MBS costs to insurers

- doctors could rort the dual system

Page 23: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 23

Medicare and PHI funding of GPs

Better option:

– Insurers collaborate with GPs, but not by paying

add-ons to the MBS rebate for a simple consult - Insurers pay GPs for things that GPs do not do often or well under MBS, such as * coordinating the care of seriously-ill members * incentives for patient activation to reduce RFs * home visits following a hospital stay

Page 24: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 24

GP role via PHI:care management

MODEL: UK NHS Proactive Care Programme, providing the 800,000 patients with the most complex health & care needs with:

a personal care and support plan

a named accountable GP

a professional to coordinate their care

same-day telephone consultations.

FUNDING: New Care Management Insurance covering GP care coordination, HHC, transition care, GP visits to LTC facilities

Page 25: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 25

4. Very hard reform: transform budget-constrained subsidies of NDIS, long-term care, and high cost drugs and medical devices into supplementary insurance

Page 26: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 26

NDIS-> LTCI: the German model

Benefits tied to need (ADLs), home care incentives, cash/in-kind/residential care cover

Page 27: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 27

NDIS-> LTCI: the German model

2% LTCI levy: surplus, 13% expenditure rise 1997-2007=CPI

Page 28: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 28

PBS with higher-cost drugs: supplementary HI

Taxes

Section 100

OOPs

Rx public

hospitals

Taxes

Supplementary

PHI for high-

cost drugs

OOPs

Rx public

hospitals

2014 2023

Page 29: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 29

PBS:four models of public/private insurance

Supplementary

PHI for

(high cost)

drugs

MODEL 1

US Medicare

Part D

1. Annual drug cost limit with coinsurance

and gaps

2. Catastrophic coverage for higher drugs

1. Non group coverage 65-

2. Seniors coverage 65+

3. Palliative care drug coverage

4. MS drug coverage

5. Diabetic supplies coverage

6. Transplant drug coverage

7. HIV drug coverage

8. Other drugs (CF, HGH, macular degen)

Fixed allowance per year in 4 Rx groups

1. Rx with ability to prevent serious medical

episode (CI)

2. Rx for LT conditions (Ca, CVD, MS)

3. Rx to reduce symptoms and improve daily

functioning (pain, allergy, arthritis, GERD)

4. Rx to improve psych/emotional/physical

WB (obesity, sexual dysfunction, acne)

MODEL 2

Alberta

Health

MODEL 3

Quebec Drug

Insurance Pool

MODEL 4

Humana

Rx Impact

Within PHI fund and all-payer pool

Page 30: Dr Paul Gross - IHETA - Medicare: a sacred cow that needs a new pasture

Slide 30

“ No longer will the people accept as gospel policies that have been honed over the years and barely change in terms of imagination.

The party that fails to acknowledge the significance of this shift is playing with fire.”

N Wran