Though the federal government’s various medical payment programs are regimented and uniform, they do allow various pilot or test programs. The pilot programs start small and sometimes expand when they really work. Yet, here’s a report that Medicare is phasing out a pilot program that has fantastic results.
The program is directed at people with one or more chronic diseases. These are the people that consume most medical spending. Unlike most other programs, this one works. The government gives a vague reason for phasing out the program, and people outside the government disagree with the explanation. It’s a long article, but well worth reading.
But Health Quality Partners, with its emphasis on continuous nurse-to-patient contact, did work. Of the 15 programs, four improved patient outcomes without increasing costs. Only HQP improved patient outcomes while cutting costs. So Medicare extended it again and again — now it’s the only program still running under the demo. But Medicare has notified Coburn that it intends to end HQP’s funding in June.
Medicare’s official explanation is carefully bureaucratic. “The authority that CMS had to conduct this specific demonstration, which predated the health care law, did not allow us to make the program permanent and limited our ability to expand it further,” says Emma Sandoe, a spokeswoman for the Centers on Medicare and Medicaid Services. “As we design new models and demonstrations, we are integrating lessons from this experience into those designs.”
Every expert I spoke to — as well as a plain reading of the law — disagrees. If they wanted to make HQP permanent, or scale it up in a big way, Medicare has the power to do so. Then there’s this: “Thanks to the health care law, we can now test new, innovative models for delivering health care and expanding models that show promise,” Sandoe continues. “With this new authority, we can take best practices to scale and provide more incentives to deliver high-quality health care at lower costs.”
The Affordable Care Act of 2010 takes almost full effect on Jan. 1, 2014. Employers already need to be planning how they’ll react to and plan around the law. Here’s a thorough post that explains the different options small businesses, and even larger businesses, have for reducing their liability under the new law. The law is going to have the largest effects on low-wage employees and their employers. These are the workers who generally don’t have health insurance now, because it costs too much. The new law doesn’t change the cost, so the employers and employees have to find ways to deal with it. These actions will have follow-through and unintended effects. For example, I believe the law is increasing the number of part-time employees and holding down the number of small firms will to expand to 50 employees and beyond.
Charge Employees the Maximum Allowable Premium. This I think will be the most attractive strategy. Under the ACA, health insurance is deemed “affordable” if the employee’s premium does not exceed 9.5% of the employee’s wages.
Take an employee earning $30,000 a year. Insurance is affordable so long as the employee pays no more than $2,850. So let’s suppose the employer’s individual coverage costs $4,500. Then the employer only has to pay $1,750. He can ask the employee to pay more than half the cost. Under the law, the employer doesn’t have to contribute anything for the employee’s dependents. Let’s say the employer offers family coverage that costs $15,000. The employer can ask the employee to pay $12,150, with the employer (again) paying only $1,750. If the employee accepts the offer, the employer is only out $1,750. [Remember: the employer fine for not offering any insurance is $2,000.] If the offer is rejected, the employer is off the hook — no health insurance costs and no government fine!
Tomorrow is the big monthly Employment Situation report. I’ve long believed investors and economists put too much emphasis on these reports. One reason is employment is a lagging indicator. It doesn’t tell you anything about where the economy is going or even a good assessment of where it is. Another reason is the data contains a lot of estimates and assumptions. The numbers are heavily revised over time.
There’s a more important reason to de-emphasize the reports in 2013. Analysts simply aren’t incorporating the effects Obamacare is having on the employment situation.
Though the law doesn’t take full effect until 2014, employment data from 2013 will be used to determine if a business is subject to the employer mandate in 2014 (by having more than 50 full-time employees) or whether certain employees or job positions will be required to receive health insurance (by working more than 30 hours weekly).
Smart, well-informed business managers and owners are making adjustments in 2013 to reduce their liabilities and potential penalties in 2014.
Businesses and other people who talk to business managers tell me that they are making adjustments to their work force today by either reducing their number of employees, not hiring new employees they otherwise would, or changing jobs so the employees don’t work more than 30 hours weekly. The change in the number of hours worked probably is the biggest change in many service businesses, especially in retail and restaurants. I even hear of employers cutting employees down to 30 hours or less now but working to find these employees second jobs with other local businesses so they will have the same total hours and income they had before the adjustment. Some businesses nearby to each other are trying to work out employee-sharing arrangements in which they coordinate hours and shifts for quality employees.
Keep Obamacare and its unintended effects in mind when evaluating employment reports this year. I’m looking through the law for other behaviors that might be changed and influence the economic data.
It shouldn’t be a surprise that Costco is the place to find the lowest prices for drugs that recently became generic. CVS Caremark has some of the highest prices, according to Consumer Reports. The article will be available in the May issue, but you can preview it here.
Shopping around is a key to controlling your personal medical expenses. In past issues of Retirement Watch we’ve demonstrated that with all types of medical insurance and prescription drugs. Too many people believe they have to pay whatever price is quoted to them. Medical insurance and care isn’t generic, and there is competition. Ask questions, and look for more than one source.
Consumers may find good deals at local independent pharmacies, Consumer Reports said.
One of the big takeaway messages from the analysis is that the customer must ask the pharmacist for the best price, the publication said.
“Especially for the independent pharmacies, if they want to retain your business and loyalty, they will help you get the best price,” Lisa Gill, an editor at Consumer Reports, said.
I hear regularly from readers that it is difficult for Medicare beneficiaries to find new doctors or make nonemergency appointments. The reason is the way Medicare treats medical providers. Doctors are part of the story. Their reimbursements have been reduced over the years, though there’s an annual budget maneuver to prevent the reimbursements from declining as far as they’re scheduled to.
This article gives an example of how other medical providers, particularly testing companies, also are treated. Medicare, after receiving complaints from private insurers, decided its reimbursement formula for certain types of tests was wrong. But it didn’t wait until it figured out a better way to reimburse. Instead, it simply stopped reimbursing testing companies until it comes up with a new formula. The companies in the meantime must survive without revenue. Expect more of this type of behavior as the Affordable Care Act of 2010 is implemented.
The private health plans could have fixed this on their own, by demanding that labs provide more information. But many health plans, looked to Medicare to fix the billing system. Under pressure, the agency said it would develop a new scheme.
The prior payment system was far from optimal. But so is Medicare’s approach to replacing it. Moreover, under the new payment schemes, even when Medicare starts to pay its bills again, the rates for individual tests are likely to come down. That was the overriding impetus for changing the scheme in the first place – to save the government money. It’s another reason why big lab companies that make a lot of their margin on the complex, molecular tests could get pinched going forward.
Full implementation still awaits the beginning of 2014, but researchers are finding clear trends in medical delivery and pricing as we prepare for Obamacare. The reports are springing up now, because we hit the third anniversary of enactment of the Affordable Care Act of 2010.
A key trend identified is a medical provider shortage, especially a doctor shortage. Fewer people are going into medicine, and many of those in medicine are retiring, often earlier than initially anticipated. Another trend is rising costs. These trends already began before the law has taken effect or the government even has issued all its regulations.
The burden appears to be falling especially on Medicare beneficiaries. Reimbursements to insurers for Medicare Advantage plans are down, resulting in higher premiums, deductibles, and copayments or reduced coverage or both. Medicare beneficiaries also are going to suffer from less service and coverage. There’s a summary of the recent research here.
It’s not hard to figure out why there’s so much discontent. Four in ten doctors reported to Deloitte that, from 2011 to 2012, their income fell. A full 40 percent of those whose income was cut blamed Obamacare. Nearly half of all doctors (51 percent) believe physicians’ incomes will fall dramatically in the next one to three years. In addition, doctors see little chance for positive reforms passing Congress. Only one in ten expect meaningful medical-liability reform to become law in the next one to three years. Only a quarter think Congress will change its practice of ratcheting down Medicare reimbursements.
The crackdown on Medicare reimbursements has meant that seniors have less access to doctors. A fifth of doctors overall and 31 percent of primary-care physicians are now limiting the number of new Medicare patients they accept. Those numbers are expected to grow as spending is squeezed on privately managed Medicare Advantage plans and other programs in order to pay for Obamacare’s expansion of health-care benefits to the uninsured. “Medicare patients are likely to have a tougher time seeing their doctors,” says Grace-Marie Turner, president of the Galen Institute, a health-care think tank. “Every day about 10,000 Americans turn 65. It’s estimated 25 million new Medicare recipients will be joining the program by the year 2020.”
There’s a shortage of doctors, especially those to treat older people. The shortage increased in recent decades, and there are no plans to reverse course. You can expect it to get harder to find a doctor or specialist. Those who ask doctors to accept Medicare are going to have an even harder time. I’ve encouraged people for many years to line up doctors before they need them and establish relationships. Otherwise, you might not be able to find a doctor when you need one. In the meantime, medical providers are testing different ways to provide care to patients.
Experts agree there are not going to be enough primary care physicians – family doctors, internists and pediatricians – to care for all of the newly insured patients so hospitals and clinics are staffing up with allied health professionals.
The report linked here from Staff Care, an Irving, Texas-based physician staffing company and subsidiary of AMN Healthcare (AHS) shows 10 percent, or 1 in 10, of all staffing requests from hospitals and clinics in 2012 were for temporary physicians’ assistants and nurse practitioners, advanced degreed nurses who have the ability to prescribe and do other tasks beyond a registered nurse. By comparison, just two percent of all requests to Staff Care in 2010 were for physicians’ assistants and nurse practitioners.
The main portion of the Affordable Care Act of 2010 kicks in at the start of 2014. If you own or work for a small or mid-size business, you should be prepared for major changes. An employer of 50 or more employees (defined as those working 30 hours or more per week) has to offer insurance with at least certain coverage or pay a penalty per worker. The rules aren’t set yet, so most businesses don’t know what they’ll do.
The betting is that there will be major changes, because most small businesses don’t offer coverage that meets what appear likely to be the minimum required. Many employers reportedly are avoiding expanding or replacing workers, because they want to avoid the 50-employee trigger point. Both employees and employers should be prepared to make changes toward the end of 2013 after the rules are clearer.
Nearly three years after the health-care law was passed, federal regulators have only recently begun to define its terms. Major pieces of the overhaul, such as state-run exchanges that will serve as marketplaces for qualified health insurance plans, have yet to take shape, and several rules remain unwritten. Consequently, the picture remains anything but clear for small-business owners, some of whom have been warned that their premiums may spike and that their current coverage may fall short.
“There is tremendous confusion and fear among many of my competitors and other business owners in my network, particularly about what you have to cover and how you have to report,” said Hugh Joyce, owner of James River Air Conditioning in Richmond. “In speaking to them, I am convinced that the primary reason we aren’t seeing a robust economic recovery is the uncertainty and costs associated with this health-care law.”
Members of Medicare Advantage plans can expect a new round of premium increases or reduced benefits or both. The plans are very popular with their beneficiaries, and they’ve been growing as a percentage of the Medicare population. But the current administration in Washington doesn’t like them at all. Money put into the plans was reduced as part of the Affordable Care Act of 2010 (Obamacare). Various short-term rulings delayed any additional benefits in the election year of 2012. Now that the election is over, the new round of cuts was announced.
Be prepared to shop around for a new plan when the next open season comes around at the end of 2013. Insurers will react differently to the changes. Some likely will stop offering the Advantage plans. Others will make different combination of premium and other cost increases and coverage reductions. Some probably will accept reduced profits to avoid major changes for members. Medicare Advantage plans still are better than traditional Medicare for a number of people. You can stay in the plans until the administration finally eliminates their appeal over traditional Medicare. Then, you can switch to traditional Medicare.
Federal auditors suggested the project was illegal, but in any case it is now winding down and HHS is making up for lost time. Even as ObamaCare-mandated cuts of roughly 3.4% hit in 2014, out of nowhere HHS gamed the complex formula to conjure a new 2.2% cut in the fixed payments that insurers receive for each senior they cover under Advantage.
Folding in ObamaCare’s $8 billion tax on insurers next year that is the equivalent of a smaller subsidy, the Medicare Advantage cuts will total anywhere from 6.9% to 7.8%. Thus Advantage will become the only entitlement for which real spending will fall slightly year over year and continue to decline, even as health costs rise and more people join the program. Mr. Obama would never tolerate this in any other area of government, no matter what tool was used.
The Affordable Care Act of 2010 kicks into full effect in January 2014. There are pluses and minuses in the law for everyone. The law affects those who are in or nearing retirement. But it especially will alter the decisions for those considering retirement before the Medicare eligibility age of 65. Here’s a good summary of the key provisions for those who are planning their retirement medical care.
I’m going to do a more detailed analysis for Retirement Watch members in the near future. For now, the key changes are that after 2013 you can’t be denied coverage because of pre-existing conditions. You’re also going to receive more care fully covered (primarily preventive tests). But the premiums likely are going to be higher than they were a few years ago, and for some people substantially higher. As I’ve always said, be sure to carefully consider medical expenses when planning your retirement and leave a cushion for surprises.
Make sure you like the plan you have now – When new rules go into effect next year, they’ll certainly have an impact on any new major medical insurance plans that hit the market. But, there is no consensus yet on how insurance companies will treat existing policies held by current customers. Some insurers, like United Health One in this video, are encouraging customers to buy now before the new rules go into effect. They’re rationale is that you’ll be able to get a lower cost plan now, before the new more expensive benefit plans become mandatory.
Research alternatives – The market for supplemental insurance products like short-term health insurance, critical illness insurance and accident insurance are all becoming popular. These plans don’t offer comprehensive health coverage, and have terms and benefit guidelines you should research before you buy. But, they do provide a low-cost alternative to major medical health insurance for people who either cannot afford or qualify for health insurance today. And, in the case of short-term health insurance, they can offer you a bridge to guaranteed health coverage in 2014.
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