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


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

  1. 1. 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
  2. 2. 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”.
  3. 3. 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
  4. 4. Slide 4 Pre-budget: OOPs services,goods
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. Slide 8 1. Reforms that fix three design flaws in Medibank I-IV and Medicare
  9. 9. 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
  10. 10. 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).”
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Slide 15 2. Payment reforms requiring slightly more cerebral activity
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. Slide 21 3. Longer term reforms that require consensus that PHI is a viable option to raising taxes
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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
  26. 26. Slide 26 NDIS-> LTCI: the German model Benefits tied to need (ADLs), home care incentives, cash/in-kind/residential care cover
  27. 27. Slide 27 NDIS-> LTCI: the German model 2% LTCI levy: surplus, 13% expenditure rise 1997-2007=CPI
  28. 28. 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
  29. 29. 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
  30. 30. 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