Friday, October 04, 2019

Trump's bid to destroy Medicare

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It's clear that Trump is working to destroy U.S. democracy -- selling U.S. aid and favors to countries in exchange for pursuing trumped-up charges against his political opponents.

Now he's following up via executive order with a bid to destroy Medicare.

In the runaway train that is U.S. healthcare costs, Medicare (and Medicaid) is the only substantial brake, in that the government sets prices paid to providers, albeit with outsized provider input. Medicare hospital rates are about half* those paid on average by commercial insurers. Rates paid to physicians average about 78% of commercial rates -- and in high-demand specialties and regions with few providers, commercial insurers often pay four, five and six times Medicare rates.

In countries that successfully offer universal coverage, the government either serves as the sole payer, sets rates for all payers, or oversees all-payer negotiations. The U.S. alone leaves commercial insurers to be divided and conquered by payers. That's the main reason U.S. healthcare costs average about double the OECD average.

In an executive order that begins with a deranged preamble slandering Medicare for All proposals, Trump orders the Department of Health and Human Services to prepare the ground for ending Medicare rate-setting:

(b)  The Secretary, in consultation with the Chairman of the Council of Economic Advisers, shall submit to the President, through the Assistants to the President for Domestic and Economic Policy, a report within 180 days from the date of this order that identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.
It's quintessentially Trumpian to inject "competition" into a market by decreeing that the lower payers shall pay rates comparable to those paid by the highest payers. That's what Trump is ordering up.

Taken by itself, the provision above seems incoherent as well as potentially destructive. Medicare Advantage payment rates are closely tethered to the rates paid by traditional, fee-for-service (FFS) Medicare. In brief, for Medicare Advantage plans in each region, CMS sets a benchmark per-member premium based on FFS Medicare rates, and MA insurers bid against that benchmark. If their bid is above the benchmark, they have to charge the difference to enrollees; if it's below, they can offer additional services or reduced premiums. The per-capita payments ensure that the plans will pay providers at rates comparable to FFS Medicare.

Commercial insurance offered through employers or in the individual market has no such tether -- and that's the gravy train for providers. Slightly more than half of Americans get their insurance through plans that pay far more than Medicare.  So how can FFS rates reflect rates paid in both markets -- Medicare Advantage and commercial?

A later elaboration (in Section 9) explains how, laying out a kind of two-step: cut Medicare Advantage's tether to FFS Medicare, and let both rise to commercial market levels. The goal is to reverse the relationship between FFS Medicare and Medicare Advantage, so that the latter serves as a benchmark for the former (my emphasis):
(b)  The Secretary shall study and, within 180 days of the date of this order, recommend approaches to transition toward true market-based pricing in the FFS Medicare program.  The Secretary shall submit the results of this study to the President through the Assistants to the President for Domestic and Economic Policy.  Approaches studied shall include:
(i)    shared savings and competitive bidding in FFS Medicare;

(ii)   use of MA-negotiated rates to set FFS Medicare rates; and

(iii)  novel approaches to information development and sharing that may enable markets to lower cost and improve quality for FFS Medicare beneficiaries. 
This directive appears to echo Paul Ryan's yearly budget proposals, starting in 2011, to convert Medicare to a voucher system -- that is, to provide enrollees with a fixed sum they would use to pay for plans offered in a marketplace structured something like the ACA's, with FFS Medicare participating as one plan among many rather than serving as a benchmark.

Without the government-set benchmark, MA plans might indeed end up paying commercial rates, i.e. those paid in the employer and individual markets. That would bust the federal budget and lead to reductions in Medicare coverage -- and likely end the defining virtue of traditional Medicare, an all but unlimited choice of providers.  Ironic, since in its scaremongering attack on Medicare for all, the order touts the fact that "Medicare empowers seniors to choose their own providers."

Damage is dictated by other means as well. The order seems to call for rule-making that would end Medicare enrollees' protection against balance billing -- the scourge of insured patients in the commercial market. About 20% of ER visits and 9% (or more) of inpatient hospital visits for commercially insured patients result in a surprise bill – often in the thousands or tens of thousands of dollars. HHS is directed to propose
a regulation that would eliminate burdensome regulatory billing requirements, conditions of participation, supervision requirements, benefit definitions, and all other licensure requirements of the Medicare program that are more stringent than applicable Federal or State laws require and that limit professionals from practicing at the top of their profession.
At present, providers that participate in Medicare -- as over 95% of physicians and virtually all hospitals do -- cannot balance bill Medicare patients.  Is the prohibition against fleecing Medicare enrollees a "burdensome" requirement that keeps doctors from "practicing at the top of their profession" - e.g., billing up to 1100% of Medicare? It would appear so.

To publish an executive order like this is a long way from effecting policy change. The order directs the HHS Secretary to propose various rules within 180-365 days.  Proposed rules go through a months-long review process. It's doubtful that the basis of FFS Medicare and Medicare Advantage payment can be changed by executive order -- in fact, on this front, the order only directs HHS to submit a study. Perhaps, though, the Center for Medicare and Medication Innovation (CMMI), created by the ACA "to test innovative payment and delivery system models," can be used to deploy a pilot program. CMMS has "the authority to waive most statutory constraints in Medicare, though it can't green-light every single demonstration project that it might wish," says Nicholas Bagley, law professor at U. Mich.  Or perhaps Trump's HHS will use or abuse some other kind of waiver authority to get the ball rolling on this front, as they did to create medically underwritten, lightly regulated full-year plans in the individual market.

The ban on balance billing in Medicare is set by statute and  would presumably have to be changed through legislation.

This order probably won't effect major change before January 1, 2021. But as a statement of intent, a sign of determination to push the envelope without recourse to Congress, and a marker of what Republicans would do if they regain control of Congress and reelect Trump, it's chilling.

UPDATE, 10/5: Timothy Jost, law professor emeritus at Washington & Lee University, points out to me that Section 11 of the order is designed to open a market for high-end care at top prices to wealthy seniors. HHS is ordered to " revise current rules or policies to preserve the Social Security retirement insurance benefits of seniors who choose not to receive benefits under Medicare Part A" and "remove unnecessary barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate the development of market-driven prices." Two new markets appear to be envisioned: 1) for wealthy seniors who opt out of Medicare and buy private insurance paying lucrative rates to providers, and 2) for Medicare enrollees who agree to be balance billed at rates well above Medicare, and above the extra 15% that a small class of "non-participating providers" are currently allowed to balance bill.  To further grease these markets, Sec. 3 directs HHS to reduce barriers to obtaining tax-sheltered Medicare Savings Accounts, which currently must be paired with specially designated high deductible Medicare Advantage plans.

I would add, based on the experience of seniors I'm close to, that a top-tier Medigap policy, which pairs with traditional Medicare, is the keys to the U.S. healthcare kingdom. Top Medigap policies cover virtually all out-of-pocket costs and offer an all but unlimited choice of providers. The chief beneficiaries of high-end private senior markets would be providers who want to serve the superrich at absolute top dollar. If such a market is created, perhaps more physicians will opt out of Medicare.

Under current law, those who opt out of Medicare Part A also have to opt out of Social Security, and it's forbidden to sell private full-service non-Medicare insurance to those who are enrolled. Jost points out, "Ironically, Judge Kavanaugh, when a circuit judge, held that the opt out [of Medicare Part A] permitted by section 11 [of Trump's order] violates the Medicare statute." For more, see Hall v. Sebelius in Jost's roundup of Kavanaugh's healthcare-related decisions.

*  A 2017 Congressional Budget Office report estimated commercial insurance payment rates to hospitals at 188% Medicare. A more recent RAND study pegged the rate at 241% Medicare.

1 comment:

  1. Thanks for posting. I had not paid much attention to the "Medicare vs. Med Advantage issue, because I have found that the fees on both sides are often close to one another.

    But the threat to end the ban on balance billing is a huge deal.

    Also, in Medicare the patient is normally not liable if a claim is denied. If this clause was taken away, that would also be a terrible thing.

    We might not be able to provide Medicare benefits to all, but we should be applying Medicare protections to all.

    Instead of this awful crusade by Republicans in CMS.