Obama and Advamed: Some Details Emerge

The White House released the two page letter from Advamed (an association  including America’s Health Insurance Plans, The American Hospital Association, the American Medical Association, PhARMA, the SEIU (a large union) and medical device manufacturers) detailing promised health industry efforts to curb costs.  The goal will be to save $2 trillion over 10 years, so health care costs will increase from $2.5 to $3.5 trillion (instead of $4 trillion) from now until 2019.

 

The White House, in its statement, said

 

We need to reform our payment system to promote efficiency and accountability while we eliminate waste and cost shifting; align incentives toward quality care and healthy outcomes; encourage shared responsibility; reduce fraud and abuse; build the base of information to undertake future program modernization; address the underlying causes of unnecessary health care spending; and encourage care coordination, prevention, and other services that are found to promote high quality, efficient health care

From the White House, a summary of promised cost savings (all over 10 years):

·         Bundled hospital payments to avoid paying for readmissions ($25 billion)

·         Decreasing payment to private Medicare Advantage plans  ($177 billion)

·         Increased drug rebates to state Medicaid programs (amount not specified)

·         Decreased fraud (amount not specified)

·         Increased inpatient quality ($12 billion)

 

So, only $214 billion  of the promised $2 trillion in 10 year savings is clearly defined. 

 

From Advamed, a list of promises includes

·         Administrative simplification, standardization, and transparency

·         Aligning quality and efficiency incentives to decrease overuse and misuse

·         Encouraging coordinated care and evidence-based practice

·         Reducing the cost of doing business

 

Advamed also suggests that the country must stress health promotion and disease prevention – with special attention to obesity prevention.

 

The White House memo includes real dollars, although not nearly enough – and the Advamed proposal is a good statement of principles, but without enough detail to assess its chances of success.  

 

Some questions raised by these communications

1)      Will the Advamed constituents agree to a government-financed system competing with private insurers?  Many feel that this would lower costs per unit substantially – so physicians and hospitals could join the insurance industry in opposing this.

2)      Will the Advamed constituents call off their opposition to a national Comparative Effectiveness effort?   Pharma and the device companies are worried that this will lead to restriction of access to new technology, and the UK experience shows that a comparative effectiveness organization could negotiate lower prices.

3)      Will providers aggregate to allow for true bundled payments?

4)      Has the administration calculated the impact of reducing undercare as we improve the health care delivery system –and removed that from the “savings” accrued from these other laudable efforts?

 

Getting these disparate organizations together is an excellent first step.  It looks like the Obama administration continues to push hard for meaningful health care reform.

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No Reprise of Harry and Louise? Stay Tuned

The White House announced yesterday that the Advanced Medical Technology Association has pledged to work with the administration to identify $2 billion in cost savings in health care over the next ten years – cutting the growth rate of health care by 1.5 raw percentage points, or by 1/5.  The AMTA  is  a lobbying group that includes medical device manufacturers; the American Hospital Association; the American Medical Association; America’s Health Insurance Plans, a trade group for insurers; the Pharmaceutical Research and Manufacturers of America; and the Service Employees International Union.

 

This is big news – AHIP is the successor to the insurance trade organization that ran the Harry and Louise ads during the unsuccessful attempt to reform health care in the Clinton administration, and all of these organizations have a substantial role to play in reforming health care.  On the other hand, the $2 trillion is income – largely to these organizations – so the details will be difficult. 

 

Speaking of details – the Advamed web site and whitehouse.gov do not have the text of the Advamed letter as of 7am – so it’s hard to parse the words.   More to come on this.

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Transition from Fee For Service?

Reed Abelson reports in Saturday’s New York Times  that hospitals which develop programs to decrease hospital readmissions financially penalized by Medicare (and most other payers).   This is not “new” news – and there has been substantial reporting on this for some time, including previous writing in the Times .  See my post from March referencing a number of other examples.  This is a story worth continuing to cover – and one of the reasons why it is challenging to lower the cost of health care with a predominately fee for service system. 

Interestingly, the commission on payment reform in Massachusetts is working toward a transition to more bundled (or even capitated) payments.   Massachusetts state officials feel that a Medicare waiver (to allow bundled Medicare payment to MA providers) is an important component of the transition  - but there are high hurdles to obtaining this waiver.  Here is a link to the most recent presentation from this commission’s public hearings.

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