Universal Health Care in the US: Economic Disaster or Economic Engine? May 2012 Patricia M. Chute, Ed.D. Health Policy Fellowship Abstract

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1 Universal Health Care in the US: Economic Disaster or Economic Engine? May 2012 Patricia M. Chute, Ed.D. The lucrative nature of the healthcare industry makes it a solid investment by most standards. Healthcare can maintain its high employment standing despite the drops and jolts of the recession. Over the past twelve months, health care employment rose by 360,000. Healthcare is responsible for 13% of payroll employment with 16 million people in the industry - one in eight people in the workforce. In addition, almost one third of professional degrees are in healthcare. i One American s rising medical spending is another American s rising income. Employment in a variety of healthcare sectors continues to increase and creates consumers who spend and pay taxes; however, the healthcare dollars that the federal government contributes create significant drains on other industries, goods, and services. Each dollar spent on healthcare takes money away from another area that could support growth. For example, monies that could be spent on infrastructure (e.g., roads, bridges, highways) are being diverted to cover outlays in healthcare. The challenge is to reach an equitable solution so that all Americans can receive healthcare while infusing the economy with jobs and subsequent expendable incomes. As one looks to Massachusetts for information from its short but productive history in providing health care to almost all its citizens, data suggests that health care can be dispensed effectively and add to the local economy. Providing opportunities for employment in an industry that includes education, training, research, technology, and construction will not only meet the health needs of society, but also will provide an engine for economic growth. 1

2 Gaps in Residency Training Should Be Addressed To Better Prepare Doctors for a Twenty-First-Century Delivery System Scott Cyrus, D.O. Although the nation s GME system produces skilled clinicians and stunning advances in medical science, greater attention is needed to align its educational goals with the nation s delivery system expectations. Three reports, the 1980 and 1993 Macy reports and the 1981 AAMC report, focus on the lack of GME training in the area of cost effective use of scarce resources. 2,3 Physicians generate 75% of costs and overuse diagnostics and therapeutic technologies. Time served rather than skills competency still delineates the standard for completion of GME programs. Lack of teamwork promotes fragmentation of patient care and can reduce the overall quality. As the US Congress enacts policy changes, it is important not only to understand the changes needed in the organization and financing of health care services, but also to make sure that physicians who will work in the new system are adequately prepared to function in it. GME programs should include the following: Provide more opportunities to train in outpatient settings; Prepare residents to control healthcare costs by providing relative values; Devote training time to patient care with the greatest educational value and base training time on competency measures; Train for quality outcomes by using electronic medical records and evidence-based guidelines; Teach use of diagnostic and therapeutic procedures and pharmaceuticals with consideration of their impact on cost and on optimal patient care outcomes; Teach skillful management of patients during care transitions through care coordination.

3 Retail Clinics: Improving Coordination of Care John T. Duhn, DO Health Policy Fellowship Retail clinics are a growing part of our health care system and communication between retail clinics and medical homes is an important part of safe health care delivery. As the projected decline in the generalist physician workforce is expected to grow to a shortage of over 100,000 by 2025, retail clinics have the opportunity to offer access to care for patients with common illnesses and to allow physicians to manage chronic disease and more complex conditions. If the Affordable Care Act gets fully implemented in 2014, millions of Americans will have health insurance and convenient care clinics may offer access for patients who don t have a medical home or who have high deductibles. Since 2000 retail clinics have grown from almost none to 1,300 and their numbers are increasing steadily. From of Aetna s 13.3 million enrollees, 3.8 million of them made at least one visit to a retail clinic (28%). As of 2008 forty-two operators ran nearly 1,000 retail clinics in thirty-three states and 88.4% were located in urban areas. Convenient care clinics deliver care at a lower cost. Coordination with patients medical home should be accomplished as much as possible to increase quality, decrease costs, and fewer errors. The Board of the Convenient Care Association should require that all CCCs they approve put in a good-faith effort to coordinate care with the patient s medical home. If this cannot be accomplished though their own accrediting body the next step would be to add state or federal regulations. 1

4 Mitigating the Societal Costs of Poor Coordination of Health Care Through Improved Electronic Health Record Communication Eric Gish, D.O. Health Policy Fellowship The cost of health care in the United States continues to rise without apparent limitations. The most recent World Health Organization statistics demonstrate the US currently spends 17.6% of the gross domestic product on health care - $2.6 trillion - the highest of any industrialized nation in the world. One culprit suggested to play a significant role in high costs is a fragmented health care system. Diminished patient clinical outcomes, increased medical errors, unnecessary medical exams and treatment, delays in medical care, and an increase in the practice of defensive medicine are symptomatic of a healthcare delivery system with poor coordination of patient care. Electronic health records (EHRs) have not been fully implemented by healthcare providers. Concerns regarding the cost of implementation, user friendliness, incompatibility between proprietary system platforms, and perceived diminished productivity overshadow the perceived benefits of health outcomes monitoring, preventative care reminders, and ease of recalling pertinent information within the medical record. Better coordination of care via electronic health records could reduce the cost burden of healthcare. EHRs can improve access to health care information, help reduce duplication of unnecessary testing, and improve communication between providers all of which lead to improved coordination of care and decreased expense to the medical system. 6 However, interoperability between EHR systems, or the ability to communicate electronically across proprietary software platforms, is imperative to fully maximize the utility of these systems.

5 Public Health Prevention Interventions and Healthcare Spending Dr. T. Lucas Hollar Audience: Chairperson Tom Harkin (D-IA) and Ranking Member Michael B. Enzi (R-WY), US Senate Committee of Health, Education, Labor and Pensions Issue: Public health prevention interventions are one set of effective means for reducing healthcare costs associated with chronic disease and poor behavioral health In 2012, US healthcare spending reached $2.7 trillion. Roughly 60% of the growth in spending is attributable to individuals worsening health habits. As such, approximately 75% of healthcare spending is directed at treating potentially avoidable chronic diseases through clinical services. Meanwhile, the nation devotes less than.05 cents of every healthcare dollar to health promotion and disease prevention. Accordingly, the US spends more money on administrative overhead within the healthcare system than it does on public health activities aimed at addressing individuals health habits and preventing chronic disease. Some argue that efforts to prevent disease do not actually save any money. They argue that up to 80% of preventive measures actually increase healthcare costs. However, research involving public health approaches to prevention demonstrates cost-saving successes. Public health prevention differs from clinical prevention by focusing on the avoidance of disease and illness, rather than detection and treatment, and by focusing interventions on social and environmental determinants of health and disease. Evidence-based, population-level public health interventions have a noteworthy ability to reduce healthcare costs while improving the wellbeing of individuals and communities. By acknowledging the benefits and costs of various approaches to prevention, and by synthesizing the various approaches into an optimally effective and efficient system of care, those involved in the healthcare system can improve the way they design and manage healthcare policy, organization, and finance. Public health prevention is an effective means for reducing healthcare costs associated with chronic disease and poor behavioral health. Health Policy Brief: Public Health Prevention Interventions and Healthcare Costs Page 1 of 1

6 The Future of Graduate Medical Education Funding Kimberly A. Hopely Health Policy Fellowship Class of 2012 A.T. Still University Osteopathic and allopathic medical schools are expanding class size, opening regional campuses, and establishing new medical schools to address the anticipated physician shortage. The most prominent barrier to a more rapidly paced expansion is the cap on federally-financed graduate medical education (GME) slots and the lack of alternative funding sources to help establish new slots. Future financing for Graduate Medical Education (GME) is a major challenge as there is substantial pressure to reduce and potentially eliminate Centers for Medicare and Medicaid (CMS) funding for residencies. New residency positions need to be established to meet the need for healthcare, but current funding streams are not likely to be able to expand without involving private stakeholders hospitals, professional organizations, and health plans. The potential changing role of federal funding for graduate medical education provides an opportunity for collaboration with state governments, regional medical schools, and local communities to create new, sustainable residencies that meet the changing needs in the state. The American Osteopathic Association (AOA) and Association of American Colleges of Colleges of Osteopathic Medicine (AACOM) have an opportunity to support their constituents in efforts to collaborate regionally with stakeholders to identify innovative funding options and find alternatives to the capitation and possible reduction in current levels of federally-funded GME slots.

7 The Physicians Role in Health Care Cost Containment: A Duty to Provide Parsimonious Care Jorge D. Luna, D.O. The osteopathic profession should consider updating its Code of Ethics to include the concept of parsimonious care as a first step to accept some of the responsibility for the cost of health care. Our healthcare system is designed to maximize the quantity of the care provided to individual patients (as long as they are insured) rather than the quality of care. Physician and clinical services were responsible for 20% of the total $2.6 trillion, while hospital care accounted for another 31%. However, given that most services require a physician s order, physicians control 85% of the total expenditures. Waste in the health care system has been estimated at between 30 and 40%. The growth rate of healthcare costs is unsustainable. Waste diverts major resources from necessary care and other priorities. The American College of Physicians Ethics Manual (6 th edition) endorses physicians primary responsibility for the patient, but expands on physicians responsibility to society. Physicians have a responsibility to practice effective and efficient health care and to use health care resources responsibly. Parsimonious care that utilizes the most efficient means to effectively diagnose a condition and treat a patient respects the need to use resources wisely 2 Delivery of parsimonious care could potentially reduce the costs of defensive medicine; create a safe harbor for adherence to evidence-based clinical practice guidelines; encourage use of clinical-decision support systems that incorporate these guidelines.

8 Impact of State vs. Federal Control of Maryland s Health Insurance Exchange Glenn Nordehn, DO Under the Affordable Care Act (ACA) states may choose whether or not to establish and control their state health insurance exchange (HIE). If a state elects to set up its exchange, the state selects a benchmark plan from a list of ten options; the federal government will use one pre-defined benchmark. State exchanges must include both essential health benefits (EHB) as defined by the Institute of Medicine (IOM) as well as state mandated benefits. The ACA requires that the state pay for any state-mandated benefits not currently in the benchmark selected, even though they are not considered essential health benefits according to IOM guidelines. Costs to the state would be minimized if the state selects a benchmark that includes the most expensive state-mandated coverage categories that are considered essential health benefits and that are already covered by the benchmark chosen. Passage of the Maryland Health Benefit Exchange Act of 2012 would allow Maryland to select Maryland s largest HMO for its state benchmark. Selecting the HMO option will cost Maryland taxpayers $10 million per year. The federal government will use the state's small business insurance plan, a default selection for any state that refuses to establish their own exchange. Having the federal government set up Maryland s exchange will cost the state $80 million per year. State control of the health insurance exchange is crucial. Passing the Maryland Health Benefit Exchange Act would maintain state rights and lower costs of its health insurance exchange.

9 Cost Implications of Hospitals Employing Physicians Sonia Rivera-Martinez, DO, FACOFP Faced with declining revenues and pressures to reduce health care spending, hospitals have been aggressively hiring physicians and purchasing private physician practices in an effort to expand their market share and referral base. This trend has been fueled by the Patient Protection and Affordable Care Act s (ACA) creation of Accountable Care Organizations. A major concern is the potential for hospitals to convert greater market power into higher prices and less competition. Though ACOs and other integrated physician-hospital care organizations could potentially provide higher quality care at lower cost, they also increase provider market power. Physician and hospitals in largely integrated systems have considerable influence for commanding large payment increases when negotiating with commercial insurers. Indeed accumulated national data over the past several decades of hospital mergers and acquisitions have demonstrated that consolidation of provider markets drive up healthcare prices. Another source of increased prices is that hospitals and their employed physicians practice in a predominantly fee-for-service (FFS) environment which incentivizes healthcare providers to increase the volume of services delivered. A different payment model that incentivizes delivery of quality may assist in curtailing the exponential growth in healthcare expenditures. Multiple models have been studied. Unfortunately these have failed to produce the desired results. The American Academy of Family Physicians has proposed a blended payment model with a phase out of FFS. This blended payment model has built-in incentives to improve quality of care and reduce costs, which makes it a sensible option for a Centers for Medicare and Medicaid Services (CMS) sponsored demonstration project.

10 Moving the Nation Away from a Health Care System Focused on Sickness and Disease to One Focused on Wellness and Prevention Martin Scott, D.O. The United States spends more than $2.5 trillion on health care each year, but invests just four cents out of every dollar in prevention and public health, despite studies showing that disease prevention can effectively improve health and reduce health care spending. Chronic diseases are this century s epidemic; they currently affect almost half of Americans and account for twothirds of all deaths in the United States. The Affordable Care Act (ACA) includes a Health Prevention Strategy (Section 2713) to move the nation away from a health care system focused on sickness and disease to one focused on wellness and prevention. This policy could have significant impact in improving health and reducing long term costs. The National Prevention, Health Promotion, and Public Health Council (NPC) Strategy includes the Prevention and Public Health Fund (PPHF). The fund appropriated $5 billion for fiscal years 2010 through 2014 and $2 billion for each subsequent fiscal year to support prevention and public health programs. Rep. Joseph Pitts (R-PA) proposed H.R to repeal the Prevention and Public Health Fund, and this year Sen. Alexander Lamar (R-TN) sponsored the Interest Rate Reduction Act/S which would repeal funding for the PPHF and use that money to prevent increasing interest rates on student loans. The Prevention and Public Health Fund is essential to create programs and legislation encouraging healthy lifestyles as a means of preventing chronic diseases. This brief provides objective research to enable the reader to formulate a decision of the benefits of supporting continuance of the Health Prevention Strategy (Section 2713).

11 Skorin/Page 1 of 1 The Negative Impact of Defunding of Centers of Excellence and Health Careers Opportunity Programs on Our Nation s Health Care Workforce Leonid Skorin, Jr., D.O., O.D., M.S. Racial and ethnic minorities comprise over a quarter of the total population of the United States, yet only roughly 6% of practicing physicians are Latino, African-American or Native American. As racial and ethnic minority populations increase, a corresponding need exists for increased numbers of minority physicians. The Centers of Excellence (COE) and the Health Careers Opportunity Program (HCOP) seek to increase health professions educational opportunities for educationally and/or economically disadvantaged students and underrepresented minorities in the health professions. Institutions that receive funding for diversity programs recruit and graduate up to five times the number of disadvantaged and underrepresented minority health professionals as other institutions. Seventy percent of participants in HCOP are accepted into health professional schools and such students are up to ten times more likely to practice in medically underserved areas when they finish their training. This evidence shows that these are effective programs that are accomplishing their stated goals. The defunding of COE and HCOP would have a negative impact on our nation s health care workforce. As of July 2012, half the babies born in the United States are racial minorities. Young people in minority racial/ethnic groups are the future workforce in health care and other economic sectors. Both COE and HCOP are important components in helping achieve the increased diversity of our nation s health professionals.

12 The Potential Impact of Payment Bundling on End-of-Life Care Ward W. Stevens, M.S. Health Policy Fellowship 2012 While providing quality and compassionate care to terminally ill Medicare patients is of the utmost importance, the issue of cost cannot be ignored. Each year approximately five percent of Medicare beneficiaries die, roughly 1.8 million individuals. Unfortunately, the needs of dying patients for a dignified death are not consistently being met and dying is expensive. Almost onefourth of all Medicare expenditures are spent on beneficiaries during their last year of life. The percentage of Medicare beneficiaries over the age of 80 will grow triple between now and Medicare s financial reimbursement systems need to encourage the best care in the best setting at the best cost for this vulnerable population. The Patient Protection and Affordable Care Act of 2010 (ACA) authorizes demonstration projects to fund innovative payment models such as bundled payments. Bundled payments reimburse providers a lump-sum payment for a defined set of services provided during an episode of care. The goals of bundled payments include: 1) addressing the failure of fee-forservice payments to encourage health care providers to coordinate care across care settings 2) controlling the volume or cost of services, and 3) rewarding providers for providing quality care. Bundled payments for end-of-life care might better incentivize providers to coordinate care resulting in care that is desired and valued by patients. The Center for Medicare and Medicaid Services should strongly consider conducting a demonstration project to determine if bundled payments can provide better end-of-life care and better cost.