Lora Pellegrini, President & CEO, MA Association of Health Plans, hammers home the point (made by the AG, academic researchers and Beth Israel CEO Paul Levy, on his blog today) that certain hospitals with leverage in the marketplace are the key drivers of spiralling health care costs:

How much evidence do we need?

This week, yet a third independent and authoritative source weighed in with the core reason for skyrocketing health care costs –escalating costs charged by hospitals and doctors.

The report by two leading researchers at Boston University follows investigative reports by the Division of Health Care Finance and Policy (DHCFP) and the state Attorney General. They are must reading for anyone concerned about the problem.

Pages 3 and 4 of the AG’s report, an “Examination of Health Care Cost Trends and Cost Drivers,” is a good place to start. They say:

Price variations are not correlated to quality, severity of services, the number of patients on Medicare or Medicaid or whether it is a teaching or community hospital;

Price variations are correlated to market leverage and higher priced hospitals are gaining market share at the expense of lower priced hospitals, which are losing volume; and

Price increases, not increases in utilization, caused most of the increases in health care costs during the past few years in Massachusetts.

Put simply, the AG’s report states that bigger or more powerful hospitals aren’t always better, but they’re often a lot more expensive, and use their clout and member base to command much higher fees for even the most basic medical care.

Meanwhile, DHCFP, in advance of the hearings it’s holding this week on health care costs, issued a series of reports that came to similar conclusions about what’s driving costs up.

According to its reports, in just three years, medical spending on privately insured Massachusetts residents grew more than 15 percent, fueled in large part by outpatient care in expensive hospitals.

The DHCFP and AG reports are the foundation of the most important hearings that state government will hold this year. If you haven’t already, I encourage readers of this blog to head over to today’s hearing at UMass-Boston or check out the information from the hearings.

But there’s more. Earlier this week, researchers at Boston University’s School of Public Health issued a report stating that Massachusetts hospitals, as of 2007, were charging 55 percent more than the national average for a variety of services. Read more…

Dr. Don Goldmann is Senior Vice President of the Cambridge-based Institute for Healthcare Improvement, Professor of Immunology and Infectious Diseases, and of Epidemiology, at the Harvard School of Public Health, and Professor of Pediatrics at the Harvard Medical School.

He submitted testimony for this week’s state hearings on cost control and offered a 10-step plan to address shortcomings in the current system:

Massachusetts has tackled the issue of access to health care and now faces the challenge of providing better care while controlling costs. Fortunately, both are possible, but they will require a series of systems improvements. Here are 10 steps that are particularly important, along with some caveats and cautions. They should be applied throughout Massachusetts – and across the nation, no matter what happens with health care reform in Congress.

1. Improve patient safety and reduce harms. Great progress has been made in reducing the rate of costly infection in hospitals, but there still is room for improvement. Hospitals must also continue to address other avoidable harms, such as pressure ulcers, falls, and adverse drug events.

While focusing on individual harms certainly is beneficial, it is inefficient and may have significant opportunity costs by shifting hospital resources from other quality and safety issues. Harm prevention needs to be addressed as a system property – part of a broader effort to transform the way we work so that the overall rate of harm and mortality declines. Patients want to know that they will be safe and will have no harm in the hospital; period. They don’t want or need to pay attention to multiple types of adverse events.

Prevention must also extend beyond the hospital walls, especially following discharge from the hospital, and errors of commission are no less important than errors of omission. A 60-year- old patient who did not receive an indicated colonoscopy and presents with colon cancer, and a patient who has a wound infection following colon cancer surgery, both have suffered terrible harms.

2. Reduce avoidable hospitalizations, re-hospitalizations, and emergency department visits. The Commonwealth is taking a leadership role in addressing these issues, especially re-hospitalizations, but significant challenges remain. Maximum benefit will be achieved, for instance, only if patients – especially those with complex medical and social problems – are supported across the continuum of care. Yet, currently, neither hospitals nor primary care providers are rewarded for avoiding re-hospitalizations. Read more…

Beginning on March 16, the State Division of Health Care Finance and Policy will hold legally-mandated hearings on how to control rising health care costs in the Commonwealth.

DHCFP Commissioner David Morales offers some thoughts on his blog today about the upcoming sessions, which will also address the question of why “the cost of health insurance has grown by approximately 7.5 percent each year (on average) for the last decade while gross domestic product (GDP) has only increased 3.8 percent per year during that same time period:”

The goal of the hearings will be to convene key health care stakeholders – health care providers, insurers, employers, consumers, and experts – in order to surface the factors driving health care costs and to identify solutions that will mitigate growth in health care spending in Massachusetts. The Division intends to build upon its earlier analyses on premium and medical costs trends as well as the work conducted by the Division of Insurance during and after their hearings on the small group insurance market, and the Attorney General’s Office, assembled through their civil investigatory demand process. These hearings will move the conversation on health care cost forward and culminate in a final report with action-oriented recommendations to mitigate cost growth and improve our health care delivery system.

The agenda for the hearings, which will be held for three days, March 16th, 18th and 19th, is now available, as are preliminary reports on health care delivery and spending in Massachusetts.

Everyone has an opinion on yesterday’s marathon White House health care summit, and indeed, details both minute (did Obama wink at McCain?) and monumental (do the Democrats have the chutzpah to go it on their own) were reviewed by every major news outlet.

Here’s a local take by Michael Doonan, Ph.D., assistant professor at Brandeis University and Executive Director of the Massachusetts Health Policy Forum, who writes: “I basically think the President is resuscitating his presidency:”

The president was successful in putting health care back on the agenda with his bipartisan summit on health care reform, and this was no small feat. Whether reform can ultimately survive is another question, but for now the patient is off life support systems. After more than a year of debate, health care reform passed both chambers of Congress and was closer to passage than at any point in our history. But the Democrats lost control over this issue.

Tea Party shout downs, special deals for hold out legislators, traditional cries of “socialized medicine,” and finally the election of Senator Scott Brown put reform on ice. More than a few Democrats quivered, reassessing how votes on reform might impact their political futures. President Obama in his state of the union address warned fellow party members not to “run for the hills.” At the Blair House Summit he called them back.

The challenge of passing comprehensive reform is steep with scrap heaps of bills that once burdened landfills that are at least recycled now. Major domestic policy change has generally taken place during profound crisis and/or when the Democrats enjoyed super majorities. We are largely a conservative country favoring incremental change with a political system designed to put the brakes on redistributive policy. James Madison said that the Senate is like a saucer to cool the passions of the people, to slow things down and contemplate them for a while. The system works as designed. An impassioned minority can most often thwart the will of the majority.

It was pretty clear before the summit that a bipartisanship kumbaya was not going to break out. No deal was going to be struck. So why the seven hours? The partisans around the table kept to their scripts. Republicans echoed the refrain, “Mr. President, the American people do not want this bill.” We need to start over, focus on cost containment, take it one step at a time, trust the American people to make their own health care decisions, let the free market work, open cross state insurance options for small business, and above all reduce not expand the role of government.

Cue up the Democrats. “Mr. President, you just won’t believe what happened to a woman/man/family in my district.” Republican ideas have been considered, many are in the bills, but incremental change will cost more, fail to stop insurance companies from discriminating against people with pre-existing conditions, and leave millions uninsured. The public option has been dropped in favor of exchanges the Republicans used to support. We cannot afford to wait.

Great, everyone brilliantly on message, so what? I argue that the point is the process, the theater and the audience. The process showed the President firmly in control of the complex details and nuances of reform. Bringing together both parties but equally important both chambers of Congress under the guise of comity and finding common ground was brilliant. The openness may have mitigated some of the earlier seediness of the legislative process. The use of “C-Span,” cable outlets, and internet streaming created a bully pulpit Teddy Roosevelt could only dream of.

The stage of this theater was set to the advantage of the President. My grandfather said, “if you keep score you should win.” Obama was the score keeper, the arbiter of what was legitimate, who spoke when, the sub-topics and of course he has the last word. While past Presidents sweated out one monthly news conference, this President subjected himself to seven hours of opportunity to screw up on a complex topic that is just part of his day job. A reporter on NPR this morning said that he rewound the tape three times to see if the president at one point winked at someone. This is scrutiny.

The audience here was critical. The idea was for the president to reframe the issue for the public to demonstrate that reform is not a big scary government takeover, but a wise effort to regulate “insurance bullies,” control costs and cover the uninsured. He wanted to show that he was reaching out to Republicans and that they are intransigent on this issue. Read more…

Here’s The Washington Post’s E.J. Dionne Jr. delivering a crystal-clear message to Democrats, who are still struggling to prove to the public that they can, indeed, govern. In the piece called, “What’s Holding The Democratic Party Down,” Dionne writes:

If you want to be honest, face these facts: At this moment, President Obama is losing, Democrats are losing and liberals are losing.

Who’s winning? Republicans, conservatives, the practitioners of obstruction and the Tea Party.

The two immediate causes for this state of affairs are a single election result in Massachusetts and the way the United States Senate operates. What’s not responsible is the supposed failure of Obama and the Democrats to govern as “moderates.” Pause to consider where we would be if a Democrat had won the Massachusetts Senate race last month. In all likelihood, health reform would be law, Democrats could have moved on to economic matters, and Obama would be seen as shrewd and successful.

But that’s not what happened, and Republican Scott Brown’s victory revealed real weaknesses on the progressive side: an Obama political apparatus asleep at the switch, huge Republican enthusiasm unmatched by Democratic determination, and a focused conservative campaign to discredit Obama’s ideas, notably his economic stimulus plan and the health-care bill.

But there may still be a path toward legislative victory, at least for health care. According to The Post’s Shailagh Murray, a very limited health care reform bill with certain critical elements — like health insurance coverage for all children and tax credits for small businesses to help defray costs — appears to enjoy fairly broad public support.

Dennis Keefe, CEO of Cambridge Health Alliance and a frequent CommonHealth blogger, writes in The Boston Globe today, about the corrosive incentives in the health care system that must be realigned in order for reform to take hold. Keefe writes:

…a powerful triumvirate made up of physicians, hospitals, and insurers remains the foundation on which our health care delivery and payment system is based. Consumers and other purchasers of health care are largely left out of the debate – except they ultimately bear the price as costs skyrocket with each participant pursuing higher and higher revenues in our fee-for-service system.

Physicians’ income generally depends on the number of patient visits and the volume of tests and procedures they generate. Hospitals chase more patient admissions and expanding use of expensive specialty services and the latest technologies. The pursuit of highly qualified doctors and nurses creates a shortage of health care workers and requires increasing salaries, creating the need for higher revenues to support the burgeoning costs. It is a needless medical arms race that isn’t providing value to patients.

Meanwhile, insurers, including Medicare and Medicaid, carry most of the financial risk, while trying to restrain growth by imposing stringent managed care requirements so their costs are covered by the premiums they collect.

Add Big Pharma to the mix, with its neverending pursuit of higher profits, and we have a four-headed hydra, fueling a system that will ultimately wreck the economy.

I asked the folks who represent insurers and hospitals to respond to Gov. Deval Patrick’s new proposal to control small business health care costs by essentially allowing the administration to cap rates charged by doctors, insurers, hospitals and other providers. Both Lora Pellegrini, acting president and CEO of the MA Association of Health Plans, and Lynn Nicholas, president and CEO of the MA Hospital Association argue — not surprisingly — that the governor’s plan may not address the thorniest problems contributing to rising costs.

Here’s Pellegrini’s post:

Recently, Governor Patrick announced legislation to promote job creation, which included proposals to provide tax credits for businesses that create new jobs and proposals for small business health care costs. We share the Governor’s concern about the impact of rising health care costs and agree with him that we need to take action to provide relief to small businesses. For the last seven months, we have been working with business groups and legislative leaders on a proposal filed by Representative Harriett Stanley and Senator Richard Moore – House Bill 4452 – known as “The Affordable Health Plan”. The bill would require both health plans and providers to control their costs and could cut premiums for small business by as much as 22 percent.

We are concerned that the Governor’s proposal will not generate any savings unless it first addresses provider costs, as the bulk of the premium dollar – nearly 90 cents – pays for medical services such as doctor visits, prescription drugs and hospital stays and other services that directly benefit consumers.

The rising cost of medical services charged by providers is the major reason for premium increases. Among the findings in the Attorney General’s recent Investigation of Health Care Cost Trends and Cost Drivers:
· Provider rate increases caused most of the increases in health care costs during the past several years;
· Differences in prices between and among providers were not related to quality, the sickness or complexity of the patients served, or whether the facility was a teaching or community hospital; and
· Market clout of certain providers was the main factor driving the price of services.
The Division of Insurance’s 2008 trends in health care claims report found that medical costs rose at an average annual rate of 11.6% between 2002 and 2006 and there is nothing to indicate that increases in provider rates have abated. (And here’s more data, out this week from the state Division of Health Care Finance and Policy, on the factors contributing to cost hikes.)

The Affordable Health Plan is the only solution that would provide small businesses with immediate and significant savings that could be used to hire more workers, increase employee salaries, fund capital expenditures, and make other investments that will help jumpstart the Commonwealth’s economic recovery. It would also complement the Governor’s proposed tax credit for businesses that create new jobs. For example, a 40-person company with a mix of employees in their 30s and 40s, some with family coverage and others with individual coverage, that pays $525 per employee for health insurance, could lower its premiums by as much as $115 per employee per month, resulting in over $55,000 annually in savings, which could create a new job and leverage the tax credits the Governor has proposed.

And here’s Nicholas’ post:

In today’s tough economic environment, addressing small business healthcare costs is a must. Governor Deval Patrick’s new proposal to have the state regulate healthcare rates from insurers and providers aims to do just that, but is a dramatic and difficult step even if done on a temporary basis and some of what the Governor proposes isn’t temporary. The Governor has said that his proposal is meant to start the conversation and he deserves credit for that. Starting the conversation is good because there is a lot to talk about and a lot to do.

The governor’s “Job Creation Bill for Small Business” calls for any contract for payment between an insurance company and a hospital, physician group practice, or imaging service to be submitted to the Division of Health Care Finance and Policy (DHCFP). If DHCFP finds that the payments – adjusted for volume and patient acuity – increase by a rate greater than the previous year’s rate of medical inflation, the increase would be presumed to be excessive and disapproved, pending a hearing to justify the increase. The bill also places some limits on insurers, but far less challenging.

There are important questions to be asked in this “conversation” including questions about the feasibility of implementing what is proposed, the administrative complexity and cost of implementing what is proposed, the impact of many providers who are struggling to survive today, whether there is a need to address demands for medical services if one is proposing to limit provider costs, which provisions are sunset and which provisions continue, will the proposal actually lower small business premiums and if so at what cost, what effect will increased regulation have upon our economy and jobs, what is the impact upon long-term reform of adding greater complexity to the payment system, does the proposal take into account costs that providers can’t control – such as an aging population and the high level of coverage benefits in Massachusetts, how do providers account for the government not paying the costs for caring for MassHealth patients? Read more…

Barbra Rabson, executive director of the non-profit Massachusetts Health Quality Partners, details some of the findings in a new report released today; an interactive database that allows consumers to compare and contrast physician groups throughout the state based on specific medical measures:

As Massachusetts Health Quality Partners (MHQP) releases our sixth annual report on the performance of primary care physician groups across the state, I’ve been thinking about how we should measure the impact of our work. While MHQP is only one of many organizations in the state that is dedicated to advancing the quality and safety of health care, we have the longest track record of public reporting, so, with six years of data behind us, what can we say about the quality of patient care in Massachusetts? Here are a few thoughts.

Overall quality is very high: Statewide, primary care physician groups performed better than the national average on 28 of 29 adult and pediatric measures reported by MHQP, and above the national 90th percentile benchmark on 15 of these measures. Even more encouraging, we have seen improvements not just in process measures but in outcomes. For instance, more diabetes patients are getting appropriate screening for cholesterol and blood pressure and more are keeping their levels under control.

Unwarranted variation is being addressed: If we look at the data on a group-by-group and measure-by-measure basis, a more complex picture of quality emerges, with a great deal of variation in performance across the state and plenty of room for improvement. The great news is that, for some key measures MHQP has been tracking for several years, variation has narrowed as the lowest scoring groups have improved. For example, three years ago, the best performing groups met the standard for cholesterol screening of cardiovascular patients 100% of the time, while the lowest performers were at only 72%. Now, the lowest score is 83%, which means the variation statewide has dropped from 28 percentage points to 17 in three years.

Reducing overuse is a continuing challenge: The news is not as good, however, for the appropriate treatment of low back pain, a measure where high performance not only results in safer, better-quality care, but also helps reduce unnecessary medical spending. While, statewide, physicians scored above the national average in avoiding the inappropriate use of imaging studies (x-rays, CT scans and MRIs) for adults with low back pain, the highest performing group had a 97% score, while the lowest score was 52%, a 45 percentage point variation. What’s more, the amount of variation has increased since last year, not decreased, for this important, value-related measure. Read more…

USA Today’s opinion blog offers five ideas that could help restart negotiations on national health reform. They include: eliminating sweetheart deals (see Nebraska), holding firm on cost-controls and imposing some type of tort reform.

And in a piece called, “Finish the Kitchen,” The Washington Post’s E.J. Dionne borrows a metaphor about a fraught kitchen renovation to nudge lawmakers to get back to the table and hammer out a health reform bill soon.

The Boston Globe today unearths the owner of the Newbury Street modeling agency that represented freshly-certified Senator Scott Brown back in the days when he appeared in catalogs more often than in the Capitol.

According to Maggie Trichon, owner the agency Maggie, Inc., Brown was often hired to pose in catalogs as “the young daddy,” or “the young businessman.” And she’s released the photos to prove it. (Don’t worry, none are as racy as the infamous nude shot in Cosmo).

According to the Globe story, Brown’s wife Gail Huff was also represented by the modeling agency, and now his daughter, Arianna, has signed on too.