• Should the Arkansas Medicaid program cover a $239,000/year treatment?

    Chris Conover says it should have the freedom not to do so:

    Last week, an advisory board recommended that Arkansas’s Medicaid program cover Kalydeco, a cystic fibrosis drug [which would cost the program] $239,000 per patient year.  [... B]ecause “ Arkansas appears to be the only state preventing patients who meet the eligibility criteria established by the U.S. Food and Drug Administration” the state is being sued on grounds that its policy violates a federal statute requiring state Medicaid programs to pay for all medically necessary treatments. [...]

    [P]art of the reason the Arkansas lawsuit is getting leverage is because of evidence that cost appeared to be a factor underlying the decision to deny coverage for Kalydeco. [...]

    The WHO considers a medical intervention to be “not cost-effective” if it costs more than three times a nation’s per capita GDP per year of life saved. With U.S. GDP per capita currently at $51,749, it is pretty obvious that $239,000 lies pretty far outside the bounds of what WHO would deem cost-effective.  [...]

    [T]his 7-page National Health Law Program summary of medical necessity under Medicaid highlights the complexity of the problem. The upshot is that “medical necessity” is never defined explicitly either in the Medicaid statute or regulations. It has been fleshed out in case law and administrative rulings.  The Stanford definition of medical necessity which has been adopted by a number of state Medicaid programs [has] a very restrictive definition: “An intervention is considered cost effective if the benefits and harms relative to costs represents an economically efficient use of resources for patients with this condition.”

    Such a definition does not permit administrators to do what the Oregon Medicaid program did many years ago: rank order all treatments by their cost-effectiveness and eliminate from coverage all treatments above a certain cost per added year of life threshold. [Here's one,* of many, papers on Oregon's experience with cost-effectiveness ranking.] So how did Oregon get away with adopting cost-effectiveness rankings? By getting a waiver. [...]

    Chris goes on to argue that Arkansas, and all states, should be able to apply cost-effectiveness criteria without waivers. More at the link.

    * Apart from the link in brackets, all others are in Chris’s original. They are not mine.


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  • What’s in a name: Medicaid “beneficiaries” edition

    Maybe I should have known this. Maybe I did know it and forgot. Maybe there’s a good reason for that.

    Surely the ACA’s implementers knew what they were doing when they began a campaign to convert all relevant Code of Federal Regulations language from Medicaid enrollees to Medicaid beneficiaries. Medicaid enrollees have always just been that—unlike Medicare beneficiaries—a naming convention emphasizing the provisional, conditional nature of the Medicaid entitlement. And the announcement accompanying the change acknowledged as much.

    The Code of Federal Regulations was revised on 15 and 16 July 2012 to change the word “recipient” to “beneficiary.” The following is excerpted from 77 FR 29002-01, which appeared on May 16, 2012 in the Federal Register:

    Removal of the Term “Recipient” for Medicaid: We have removed the term “recipient” from current CMS regulations and made a nomenclature change to replace “recipient” with “beneficiary” throughout the CFR. In response to comments from the public to discontinue our use of the unflattering term “recipient” under Medicaid, we have been using the term “beneficiary” to mean all individuals who are eligible for Medicare or Medicaid services.

    Just what is unflattering about the term “recipient” may be understood only in context; similarly, what is empowering about “beneficiary” may also only be understood in context. Medicare and Medicaid beneficiaries now stand on equal dignatorial ground.

    That’s from Ann Marie Marciarille’s “The Medicaid Gamble.”

    By and large, I tend to call people on Medicaid “enrollees,” and probably still will. There are two problems with “beneficiary.” First, it’s considered jargon and, apparently, is confusing or foreign to readers not steeped in health policy. Still, I do use the term, typically for people on Medicare, for which no active effort is required to receive the benefit.* Second, despite what they’re called, that’s just not the case for people on Medicaid. They really do have to enroll to benefit. So, I take issue with “beneficiary” even if it’s the regulation.

    * UPDATE: This is only true for age-based Medicare eligibility.


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  • AcademyHealth: Health care spending straining state and local budgets

    Health spending growth is crowding state and local spending in other areas of need. But Medicaid expansion is not to blame. What is? Click to read the answer in my post on the AcademyHealth blog.



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  • Medicaid Gives the Poor a Reason to Say No Thanks

    The following originally appeared at The Upshot (copyright 2014, The New York Times Company).

    There are generally two ways that people with insurance pay for health care in the United States: premiums, which get you insurance before you receive care, and a variety of cost-sharing mechanisms — like deductibles, co-pays and coinsurance — that come into play when you do receive it.

    While Medicaid, our safety net program for the poor, has used cost-sharing mechanisms for some time, it has been prohibited from asking people to pay premiums. In the last couple of years, federal regulators have started lifting that prohibition, which is likely to lead to some negative consequences.

    Cost-sharing mechanisms are specifically intended to encourage people to consume less health care. As I have discussed in previous articles, a large body of research shows that increased cost-sharing leads to decreased utilization. The more you ask people to pay at the point of care, out of their own pockets, the less likely they are to obtain it.

    As a recognized means to reduce health care utilization and spending, insurance plans have been using cost-sharing for decades. Almost all state Medicaid programs allow for cost-sharing, usually as some form of minimal co-payments for services or drugs.

    Premiums, however, are different. They are the mechanism by which insurance companies collect the vast majority of the money that they need to cover health care costs for their beneficiaries. They are not intended to affect health care spending, as they are collected before any actual care is used. They’re the means by which most of health care spending is paid for. When health care spending goes up, insurance companies raise premiums accordingly. Now that increases are regulated on exchanges by the federal government, private insurance companies must justify premium growth with data showing that spending on health care has gone up enough to warrant increases.

    Premiums are not a means to influence whether or not an individual uses services. They’re a means to purchase insurance. It is for this reason that, until recently, premiums were not allowed in any Medicaid programs at all for anyone earning up to 150 percent of the federal poverty line. After all, if people were poor enough to qualify for Medicaid, there’s simply no way that they could afford any substantial part of its cost.

    This year, the average annual premiums for an employer-sponsored insurance plan for an individual were slightly more than $6,000. Just two years ago, Medicaid spent an average of $6,641 per person covered. In order to be below 150 percent of the federal poverty line, a person needed to earn less than $16,755 that year. The reason we traditionally provided Medicaid for such people without charging them any premium is that, after paying for the necessities of life, there really is no way that they could cover any significant percentage of the costs of their health care.

    Nevertheless, a number of states are now, for the first time, asking recipients to pay a premium for their Medicaid. In Indiana, the proposed Medicaid expansion, known as HIP 2.0, requires people making up to 138 percent of the poverty line to pay up to $25 a month to receive coverage. In Iowa, Medicaid recipients making more than the poverty line are expected to contribute $10 a month in premiums; those making 50 percent to 100 percent of the poverty line may need to pay $5 a month. In Pennsylvania, individuals making more than the poverty line may be asked to pay $25 a month. In Michigan, those making more than the poverty line must pay 2 percent of their income in premiums.

    Many might argue that these are not large sums of money. Indeed, when compared with the cost of care for the average Medicaid beneficiary, they are insignificant. That’s the point. Premiums are supposed to cover much of the cost of care. That’s why insurance with a higher actuarial value has higher premiums.

    But when it comes to Medicaid, the proposed premiums barely cover any of the cost of care at all. In fact, it’s possible that the administrative costs of collecting them may be significant compared with the amount collected. If so, why bother? Proponents of these premiums often use terms like “personal responsibility” and “skin in the game.” But these are terms usually used to justify increases in co-pays, coinsurance or deductibles; they are rarely thrown around when your private insurance plan needs to raise its premiums.

    And cost-sharing is how these “premiums” may actually play out. A recent study in the journal Health Affairs found that a $10 increase in monthly Medicaid premiums resulted in a 6.7 percent reduction in Medicaid and the federal Children’s Health Insurance Program coverage for families earning between 100 percent and 150 percent of the poverty line. It also resulted in a 3.3 percent increase in the uninsured. These small premiums may lead people not to obtain insurance.

    This mirrors work published earlier this year by Laura Dague in the Journal of Health Economics. She looked at how small premiums affected enrollment in the Wisconsin Medicaid program, and found that the creation of a $10 monthly premium was associated with a 12 percent reduction in the likelihood of people remaining enrolled in Medicaid for a full year.

    In other words, these premiums may be functioning as cost-sharing. They may be driving people away. They may be discouraging people from obtaining insurance.

    This may, of course, be part of the purpose. It’s estimated that more than280,000 people would be eligible for a Medicaid expansion in Pennsylvania. Getting 12 percent of them to refuse coverage would save the government more than $200 million. That’s a very rough estimate, of course, but the potential savings from disenrollment greatly outweigh whatever Pennsylvania might collect in premiums from the people who do enroll.

    It’s reasonable, although sometimes inadvisable, to ask people to pay more when they are actually about to obtain medical services. Cost-sharing is a mechanism to prevent people from overusing health care. Signing up for health insurance isn’t the point at which we do that, though. Premiums aren’t supposed to be a means to discourage people from gaining access to the health care system. But that seems to be how they’re functioning in Medicaid.


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  • Crowd sourcing fraud detection

    Medicare and Medicaid have active fraud detection units that are setting records for recoveries. The HHS effort is not entirely in-house, but also partners with insurance companies and other stakeholders to detect fraud. And yet the programs suffer billions in “improper payments:”


    Source: GAO 2012

    We need some fresh ideas. Perhaps we could use crowd sourcing, like the work that Charles Ornstein at ProPublica is doing with Medicare biller data that was recently made public:

    On Friday, I emailed you my story about how a misdirected fanny pack unraveled a Medicare fraud scheme.

    I’m back today with another story that was buried in Medicare’s doctor data dump, about why Illinois leads the nation in group psychotherapy sessions for patients. I found three ob/gyns and a thoracic surgeon who were paid for more than 37,000 psychotherapy sessions in 2012—more than all providers in the state of California COMBINED…

    The billings for group psychotherapy reveal other unusual patterns. A Queens, N.Y., primary care doctor, Mark Burke, was paid for more sessions than anyone else in the country — 20,841. He accounted for nearly one in every six sessions delivered in the entire state of New York in Medicare, separate data show. He did not return messages left at his office.

    Another large biller was Makeba Gordon, a social worker in Detroit. She was reimbursed for nearly 5,000 group therapy sessions for her 26 Medicare patients, an average of 190 each. She also billed for 2,820 individual psychotherapy visits for the same 26 patients, who allegedly would have received an average of 298 therapy sessions apiece in 2012. Gordon could not be reached for comment. [see the Chicago Tribune].

    If we really wanted to jumpstart fraud detection, we’d give a reward for identifying cases like this. Whistleblowers can receive 25 – 33% of the settlement, but crowd sourcing (and investigative reporting like this) won’t qualify because the key data was public, hidden in plain sight.

    UPDATE: The FY 2013 improper payments numbers didn’t report Medicare Part D, but note how the estimates vary over time:

    2013 chartSource: GAO 2014

    UPDATE 2: Good points from twitter & email:

    1.  Not all “improper payments” are fraud. Fraud requires proof of intent; “improper payments” could be innocent mistakes – see the definition in the GAO reports (h/t Paul Van de Water)
    2.  Before we heap condemnation on the gov’t for high rates of “improper payments,” what is the rate for comparable private businesses? (h/t Ezra Abrams)
    3.  HHS has a small rewards program for information leading to recoveries, but it is capped at the lesser of 10% of the recovery or $1000. (Details here.) Remove the cap and publicize the program = crowdsourcing fraud prevention.” (h/t @FrankPasquale)


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  • The effect of Medicaid on educational attainment

    From The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions, by Sarah Cohodes, Samuel Kleiner, Michael Lovenheim, and Daniel Grossman (NBER, 2014):

    The effect of Medicaid expansions on access to healthcare and on subsequent child health has been studied extensively, (e.g., Currie and Gruber, 1996a, 1996b; Moss and Carver, 1998; Baldwin et al., 1998; Cutler and Gruber, 1996, LoSasso and Buchmueller, 2004; Gruber and Simon, 2008), typically showing that Medicaid expansions increase healthcare access, decrease infant mortality, and improve childhood health. Furthermore, these expansions and Medicaid access more generally have been linked to a lower likelihood of bankruptcy and to less medical debt (Gross and Notowidigdo, 2011; Finkelstein et al., 2012). If Medicaid leads to better health outcomes among children and to more stable finances among low-income households, as suggested by prior research, Medicaid expansions could lead to long-run benefits for affected children.

    But the effect of Medicaid expansion for children on their educational attainment has not been studied, until this paper.

    We find consistent evidence that Medicaid exposure when young increases later educational attainment. A 10 percentage point increase in average Medicaid eligibility between the ages of 0-17 decreases the high school dropout rate by 0.5 of a percentage point, increases college enrollment by between 0.7 of a percentage point and 1.0 percentage point, and increases the four-year college attainment rate (i.e., BA receipt) by 0.9-1.0 percentage point. These estimates translate into declines in high school non-completion of about 5%, increases in college attendance of between 1.0% and 1.5% and increases in BA attainment of about 3.3%-3.7% relative to the sample means.

    Go read Adrianna for more on this study.


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  • Massaging Medicaid

    A week-and-a-half ago, the D.C. Circuit upheld the criminal conviction of the owner of a clinic that bilked Medicaid out of millions of dollars:

    [Jacqueline] Wheeler owned and managed the [clinic]. Between January 2006 and April 2008, Wheeler, who was wholly responsible for all of the [clinic’s] medical billing, submitted bills to Medicaid for more than $8 million in treatment allegedly provided. Medicaid paid the [clinic] roughly $3.5 million on those bills, $3.1 million of which was for massage treatments.

    Acting on a tip that the [clinic] was cheating Medicaid, the Inspector General of the U.S. Department of Health and Human Services began an investigation in 2008. The FBI and Medicaid’s Fraud Control Unit soon joined the effort. Investigators easily concluded that many of the [clinic’s] bills to Medicaid were false. For example, several bills claimed that the [clinic] had given more than twenty-four hours of massage therapy to a single patient on a single day. Others reported hundreds of hours of massage therapy for days when only one therapist was on staff. Some sought payment for the treatment of patients hospitalized elsewhere.

    What’s demoralizing is the familiarity of this story. Back in 1997, the D.C. Circuit issued another opinion involving a Washington, D.C. physician who claimed he worked more than 24 hours in a day. Any halfway-sophisticated computer system should have uncovered fraud this blatant. Well over a decade later, however, Wheeler was able to do exactly the same thing. Even then, it took an informant’s “tip” to clue officials into the fraud.

    Wheeler’s claims for never-ending massages should never have been paid. Yet Medicaid, as with Medicare, generally pays first and asks questions later. The government calls this “pay and chase,” and the predictable result is that a lot of pretty obvious fraud slips through. Stephen Parente and his co-authors have estimated that improving the technology for processing claims would save Medicare about $21 billion per year—and that’s without any close scrutiny of medical records. (Austin discussed the Parente study here.)

    Keep that figure in perspective: even $21 billion is a small fraction of the $500 billion per year Medicare program. And there’s no good data on whether Medicare and Medicaid fraud is more prevalent than fraud against private insurers. Even so, why not take more assertive steps to prevent fraud before it happens? The practice of giving cursory scrutiny to Medicare and Medicaid claims threatens to erode confidence in programs that serve urgent public needs.

    We’re doing more chasing nowadays, to be sure. Last year, for example, the federal government recovered $4.3 billion in fraudulent Medicare and Medicaid payments. The Justice Department and HHS crowed that, “for every dollar spent on health care-related fraud and abuse investigations … the government recovered $8.10. This is the highest three-year average return on investment in the 17-year history of the [fraud-prevention program].”

    But what does that rate of return imply? It’s possible that we’re ferreting out more fraud. It’s also possible, however, that Medicare and Medicaid are paying out more dubious claims than ever—and that $4.3 billion is just the tip of the iceberg. When the Armenian mafia decides that Medicare fraud is a growth area, you’ve got a major problem on your hands.

    Criminal convictions and big fraud settlements are important, but they’re not enough. Medicare and Medicaid have to do more to prevent fraud from occurring in the first place—and, indeed, CMS is already taking tentative steps in that direction. No question, there are tradeoffs here. It will be costly to improve computer systems, to monitor compliance with program rules, and to scrutinize claims. Hassled providers will howl. But the Jacqueline Wheelers of the world will continue to submit abusive claims unless Medicare and Medicaid develop the systems to reject them.


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  • Demand for Medicaid is downward sloping

    In a wonky, literature-referencing post on Vox, Adrianna reports on the consequences of even small Medicaid premiums.

    Researchers [in the Journal of Health Economics] looked at enrollment trends in Wisconsin, which introduced monthly premiums for Medicaid beneficiaries living above 150 percent of the federal poverty line. The premiums started at $10 per month and increased with income.

    The study found that the premium requirement itself — not the size of the required monthly payment — is what discourages enrollment. Introducing a $10 premium makes enrollees 12 to 15 percentage points more likely to exit the program. Though premiums got more expensive as enrollee income increased, these changes had little or no effect on enrollment.

    This matters because a handful of states pursuing alternative Medicaid expansions have proposed premiums for enrollees between 100 and 138 percent of the federal poverty line. This Medicaid expansion population is poorer than the enrollees studied in Wisconsin, meaning they could be even more sensitive to required monthly payments.

    So far, four states have requested to impose premiums on some of their Medicaid expansion populations who have incomes above the poverty line and two — Iowa and Michigan — have already received permission to do so. [...]

    Indiana and Pennsylvania are still in negotiations with the Department of Health and Human Services to expand Medicaid. Under its proposed expansion plan, Pennsylvania wants to charge premiums of $13 per month for single adults and $17 per month for families. Under Governor Pence’s “Healthy Indiana” plan, Hoosiers between 100 and 138 percent of the federal poverty line will be required to make monthly contribution of $3 to $25, depending on income.

    Adrianna, with whom I caught up by email, said, “I attest that the paper is worth reading in full.”


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  • Where do high health care administration costs come from?

    Here’s a graph I posted yesterday that shows that the cost of health care administration is much higher in the US than in comparable countries.

    Screenshot 2014-05-19 10.53.22

    So where does this excess administrative cost come from? I have a story from a meeting I was in this morning that will give you a sense of the problem and why it matters.

    I’m at my US job this week and the day’s project is to measure the quality of care delivered by a large pediatric Accountable Care Organization (ACO). We want to know, for example, whether the kids have all their vaccinations. This seems like a simple question. When a kid gets his shot, his doctor submits a claim to the kid’s insurer for the service. So just pull together all the claims, count the kids who have claims for a vaccination, and divide by the number of kids in the system. Then you know what proportion of the kids have been vaccinated. Right?

    Uh, no. To understand why not you need to, of course, follow the money. The money starts with the state Medicaid office. From there, it goes to five managed care organizations (MCOs). Because the MCOs never learned how to actually, like, manage care, they subcontract their business to the ACO. The ACO then works directly with the physicians. You can see a source of waste right away, because money passes through too many middlemen on the way to the doctors. It’s also a pain for the doctors who have to deal with the ACO and multiple MCOs, each asking for information on their own forms.

    Still with me? Recall that the ACO, which is responsible for the quality of care, wanted to use these claims to determine whether the kids have gotten their shots. The next problem is that the claims only come to the ACO from the MCOs after the MCO is finished processing them, which can take months.

    Worse, you have to match claims to kids using patient IDs, and each claim has a patient ID that is specific to that MCO. Unfortunately, kids often switch from one managed care plan to another, at which point the kid gets a new ID. This means that the same kid can appear in the data under multiple identifiers. But to determine whether the kid got all of his shots, you need to look at all his claims, and this means that you have to reconcile the multiple IDs. This takes work, the matching is never completely accurate, and the process slows everything down even more.

    The delay and needless processing add cost to the system and noise to the eventual quality measure. Measuring quality of care is a dry, tedious topic, but it’s incredibly important.

    The problem I’m dealing with is a problem of Medicaid. But it is not a problem unique to Medicaid and some of the overlapping financial entities arose from previous attempts to privatize aspects of the system. The next round of reformers need to strive for simplicity.


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  • What dental care can teach us about coverage expansions

    A simple prediction about the Affordable Care Act’s impact on health care access might go something like this: we have too few primary care providers and expanding coverage is going to cause a spike in demand that those providers can’t meet. Doctors will either refuse to see Medicaid patients or will do so at the expense of the privately insured, who will see longer wait times. Ergo facto, access will suffer. The outlook is bleak.

    Well, maybe. But a new NBER working paper from Tom Buchmueller, Sarah Miller, and Marko Vujicic serves as an important reminder: supply-side effects matter, too. That is, providers can change the way they practice to accommodate new demand, but the studies on provider behavior are much scarcer than demand-side (patient behavior) literature.

    Buchmueller et al examine how changes in Medicaid’s dental benefits—optional for states to provide for adults—influences dental practice. Dentistry might not seem like the most obvious place to search for lessons for the ACA, but it’s actually pretty excellent: dentistry is a form of preventive care and, like traditional primary care, there’s growing worry over a provider shortage. There’s also concern about low participation in the program due to low reimbursements; evidence suggests that access is improves when Medicaid covers dental, but only 39% of dentists in the sample reported serving Medicaid patients. Dentists often work with hygienists, much as a physician can work with nurse practitioners or physician assistants.

    So, what happened when states introduced dental benefits in adult Medicaid? Dentists didn’t just find a way to accommodate new demand—they did so while increasing their incomes by 7% on average.

    We find that when states expand Medicaid dental coverage for adults, there is an increase in the percentage of dentists that participate in the program and an increase in the supply of services to publicly insured patients, with no decrease in the number of visits for other patients. Dentists accomplish this mainly by making greater use of hygienists: following the expansion of public coverage, dentists employ a greater number of hygienists and hygienists provide about 5 additional visits per week. As a result, dentists’ income increases following the adoption of Medicaid adult dental benefits by approximately 7 percent. These effects are largest among dentists who practice in poor areas where Medicaid coverage is most prevalent. We also find that these coverage expansions cause wait times to increase modestly [less than a day, on average]. However, this effect varies significantly across states with different policies towards the provision of dental services by hygienists. The increased wait times are concentrated in states with relatively restrictive scope of practice laws. We find no significant increase in wait times in states that allow hygienists greater autonomy.

    This has pretty self-evident lessons for coverage expansion under the ACA. Just as dental hygienists were able to help meet new demand, researchers have highlighted that reorganizing how we deliver medical care—delegating more tasks to nurses, pharmacists, and other clinicians—could go a long way toward easing the PCP shortage. And like with dental hygienists, defining scope of practice falls squarely to the states, illustrated in the map below from Health Affairs.

    Maximizing access doesn’t rest exclusively on expanding the role of non-physician clinicians; innovations like retail clinics will also play a role. But this paper suggests that scope of practice will play an incredibly meaningful role in access and variation in access—and that there are actions that states can take to ease coverage expansion. You should go ahead and add that to the list of implementation issues that will play out at the state—not national—level.

    The paper is ungated, and well worth reading in full.

    Adrianna (@onceuponA)

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