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
Sep 03, 2014
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
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”.
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
Slide 4
Pre-budget: OOPs services,goods
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
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
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
Slide 8
1. Reforms that fix three design flaws in Medibank I-IV
and Medicare
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
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).”
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
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
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
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
Slide 15
2. Payment reforms requiring slightly more cerebral activity
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
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
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
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
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
Slide 21
3. Longer term reforms that require consensus that PHI is a
viable option to raising taxes
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
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
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
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
Slide 26
NDIS-> LTCI: the German model
Benefits tied to need (ADLs), home care incentives, cash/in-kind/residential care cover
Slide 27
NDIS-> LTCI: the German model
2% LTCI levy: surplus, 13% expenditure rise 1997-2007=CPI
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
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
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