"Doc Fix" Relief.

          The senate hastily passed the “Protecting Access to Medicare Act of 2014” which was first introduced on March 26, 2014. It has spiked both anger and relief from various sectors of the healthcare industry. (1) The bill was signed by the president just in time to avoid Medicare cuts being implemented under the Medicare’s sustainable growth rate (SGR) payment formula. In 1997, the year of the balanced budget act(BBA), Congress created the SGR formula, which set the Medicare budget spending to a fixed rate, with the expected growth in the economy. In the years that followed the BBA, it was evident that health care spending was not in proportion with (in-fact, it out-paced) the total national spending. The Medicare expenditure was not an exception and so, the funding soon fell short. The Protecting Access to Medicare Act of 2014 proposes many changes other than the delay of the SGR implementation. It:

•  Delays, till Oct. 1, 2015, the switch to ICD-10 
•  Provides a 0.5% Medicare pay bump over that 12-month period 
•  Revalues certain physician payment codes 
•  Delays the requirement for hospitals to comply with the "two-midnight" rule for inpatient reimbursement 
•  Pushes back recovery audits of allegedly unnecessary claims until March 2015.

         What are some of the implications of the new Act? The implementation of SGR could have done serious damage, as physicians were facing up to 24 % decrease in  the reimbursements from Medicare. To avoid lower payments, it is predicted that physicians could have resorted to avoid seeing Medicare patients, which could have far worse implications, as far as total healthcare outcomes are concerned. Due to ACA, hospitals are already facing numerous regulations and constraints, with 2014 being a bell-wether year for the healthcare industry. For struggling practices and smaller hospitals, this may well have been a death blow.

         Although this latest act does more good than harm, it's not devoid of criticism. One of the issues that were highlighted in the senate debate, by the Republicans is: whether or not, to completely repeal Medicare’s SGR payment formula, which is viewed by many as draconian. The American Medical Association, strongly opposed the 12-month SGR “doc fix”, saying it would derail efforts to permanently kill the SGR.

      For physicians and the hospital lobbists, the issue is more serious as the SGR fix comes with 2013′s Meaningful Use Stage 2 delay. Section 212 of the act says that the Department of Health and Human Services cannot mandate ICD-10 as the standard code set before Oct. 1, 2015.  Health care is changing fast:;technology and new payment models are being embraced by the industry with open arms. The government, on the other hand, is not able to keep pace with the changes.

       Centers for Medicare and Medicaid services estimate that a one year delay could cost between $1 billion and $6.6 billion, to the industry (2). Not only that, such temporary fixes are not without their price tags. Congressional Budget Office estimates that the U.S. has thus far spent $146 billion on the fixes, while the total cost of repeal would have been only $116 billion (3). It will be exciting to understand what are the reasons for not completely repealing the SGR formula? Having a consensus to discuss the issue in the senate has been reported as one reason. Personally, I believe that great pieces of legislation, ones that affect an entire nation, demand patience from not only the general population, but also from politicians.

References:

1 Washington Post

2 HIT Consultant.

3 Government Health IT

Obama administration delays employer mandate, yet again.

     Are small employers celebrating the latest delay in employer mandate? Should they? In this article the authors report a lukewarm response to the latest delay in the ACA’S employer insurance requirement. The government announced on February 10, 2014 that the requirement for small businesses be delayed, until 2016. The small businesses here, by definition, are the ones that employ anywhere between 50 to 99 employees. The authors point out that some small employers have already taken cognizant steps to comply with the requirements of the new employer mandate of the ACA. They have either: provided health insurance to their employees or cut down on the number of employees to avoid paying for penalties. Therefore, the delay doesn’t mean much to them as they have already planned for the ultimate inactment of the mandate.

     As the insurance premiums became more expensive over the years, some employers are now forced to consider the option of paying a penalty (2000 dollars per employee) rather than buying insurance; thus saving money. This is where the fallacy of the act lies; it does not guarantee coverage to the employees. Although such a practice may hurt employers in long run because the penalties may be higher in coming years, as of now it makes fiscal sense. The Obama administration states that the recent delay will provide ample time to the small employers to decide what plans they want to offer to employees (high deductible or high premium). The employers feel a need to educate themselves, and discuss the options with the employees to come to a decision. True. But many feel that the delay doesn’t mean much. The focus on small employers is not undeserved; according to the statistics small businesses make up 99.7 percent of U.S. employer firms. Even though the ACA is helping the small employers in many ways, the adverse effects of the affordable care act are very real for some businesses. For instance, UPS cut down on insurance coverage to spouses of the employees.

      Whether the latest delay is to give employers ample time to prepare for the future, or merely for postponement of such adverse effects till next big elections; is unclear. Digging deep into the policies and regulations, it is evident that the ACA has many provisions for small businesses. For instance, small businesses with 25 Full time equivalent employees (FTE’s) or fewer, with average wages below $50,000/year, can get tax credits to help save for employee premiums. Not only that, but businesses with over 50 FTEs are exempt from the fee on first 30 FTEs - decreasing the negative effect the law could have on businesses who narrowly qualify as a large firm. The rising discontents of the conservative political class can be mitigated, by the fact that - the law, as it is, will upset less than 0.2 % of small businesses (96% of all businesses or 5.8 million out of 6 million total firms have under 50 employees). It is out in the open: from humble startups to the largest corporations, employers have countless new rules and regulations to keep track of. And in some cases, there are new costs too. How this will play out in the biggest capitalistic economy of the world remains to be seen.

Sources:

1. Wall Street Journal

2. Obama care Facts  

ACA and Women's Salaries.

Show me the money, honey.

In this recent New York Times article, Casey B. Mulligan draws our attention to the intended/unintended consequences of the employer mandate, of Affordable Care Act (ACA, on labor market. The article discusses, in particular, how salaries of female labor force will be affected under the new act. It has been observed that employers are trying to cut down on the number of full time employees to avoid paying for their health insurance; therefore, escape the penalty imposed by the government under the ACA. According to the federal law, part time employees can work up to a maximum of 29 hours to continue to be considered part time. There is a strong likelihood of employers cutting down the hours of employees to 29 hours; they are more likely to shave off extra hours from the workers who are already working close to 29 hours. Casey states: because of this, women are the target of such unintended labor force cuts. Women working as full time employees often work fewer hours (almost twice as likely as men) and devote rest of the time taking care of their families. This type of arrangement, which works very well for a many families, is now under threat. Naturally, working fewer hours means less pay. Now, working fewer hours may also mean fewer benefits. Even though, ACA did not invent part-time work regulations, but it may be encouraging small employers to use it in an unwise manner only to comply with the ACA, and thus it may be increasing the gap between salaries of two genders.

Granting that ACA has multiple provisions for women (free preventive care, outlawing gender rating, maternity coverage, and no co pays for certain preventative services e.g. gestational diabetes etc.), the author takes a deep dive into facts and analyses patterns that will emerge in the labor market because of the ACA. It’s a well-known social phenomenon that the part-time work is a female domain. Choosing family over work, perforce results in career breaks and acceptance of more part time work for women. Such a practice ties them down to gender roles (which are far more difficult to fight), further hurting career development. It is a vicious circle. It does not need a rocket scientist to figure out why women are at a greater risk for old age poverty. Although, choosing part time work is detrimental to anybody’s career (not just women), it is precious for economies. In rapidly aging populations, higher female labor force participation helps mitigate the impact of shrinking workforce, and therefore continues to contribute to macroeconomic gains.

Rebuttal to this argument is that, with the economic growth reviving back to pre-recession rates, employers will soon be faced with a dilemma of: either cutting back on full time workers and therefore hiring new part time employees (which could be more expensive), or to just convert part time workers to full time and pay for their benefits. The decision will depend on cost benefit analysis by individual employer. If the economy picks up, then ACA may well be a tool to empower part time workers, hence women. But if it doesn’t then this type of forecasting begs the question: should health care coverage be divorced from employment status? It would be wise to pose a larger question: in light of these facts, shouldn’t there be policies around safeguarding female labor force participation? Solutions to the current problem are not clear but what is clear is that ACA affects almost every aspect of the healthcare industry. It will also cause ripple effects in other industries and the macro economy for years to come.

Healthcare in France.

Imagine yourself touristly trapped in the humbug of a hot Paris afternoon, in Montmartre square, sitting in front of an amateurish artist posing for an even amateurish portrait. Suddenly, you begin to feel squeamish. It’s difficult to hold your smile. Falling sick in a foreign country is the stuff of nightmares. You have to go and see a doctor, but before that you have to see the inside of a restroom. 

Some hours later you find yourself in the heart of France, not admiring the Eiffel tower but a doctor’s clinic. This is what you see. A clinic as simple as can be. No file cabinets for paperwork. In fact no paperwork! Detailed price list of inexpensive procedures on the walls. After minutes of arriving, your name is called by a nurse who shows you to the doctor’s room. Waiting time is minimal. You find the doctor kind and empathetic who gives you ample time. At the end of your treatment, you receive a feuille de soin, an amber colored receipt noting the treatment, the attending physician, and the charges which you’ll be expected to pay before you leave. The payment is much less than you’d pay back home, in United States. 

 This is the essence of French health care - inexpensive fast and excellent.  If you are feeling elated about this little discovery of yours then here’s a spoiler. This is no discovery. French healthcare has been studied in detail over years by many countries around the globe. Esp. after WHO ranked it number 1 in overall healthcare delivery, about 13 years ago. So, what is the purpose of this article again?  This article aims to break down the highly complex healthcare jargon into something that even my mom can understand.  

WHO’s world health report angered a lot of countries, including USA. To see France enjoy a seat at the top and to feel the heat crunched between Costa Rica and Slovenia, at 37^th spot, it didn’t go down well. 

Here are some of the indices to get jealous about.

• Life expectancy: 81 years (USA- 76.6)

• Infant mortality: 4 per 1,000 live births (USA- 6.89)

• Doctors per 10,000 people: 34. (USA- 24.22 )

• Health spending as a percentage of GDP: 11.2%in 2000, 11.6 in 2010 (USA- 13.4 in 2000, 17.6 in 2010). Source: World Health Organization.www.oecd.org/health/healthdata. 

History

A long long time ago, there lived an uninsured French man like the rest of uninsured around the world. Diseased and sickened with worry, little did he know that his fate was to change soon and in 1928 change it did. That is the year national health insurance (NHI) came into existence. Not overnight, but in a series of reforms and implementations. At first, the NHI program covered salaried industry workers who were unable to pay for healthcare. (Source- http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447687/#r).  Then in 1945, it covered all industrial workers and their families, irrespective of wage levels. Subsequently: farmers (1961), professionals (1966), and the rest (2000), were brought under the umbrella. Yes, it took nearly a century. What means to be universal in healthcare? That it covers everybody, every time and everywhere. So, the entire population must pay compulsory health insurance. It does take away the personal choice but bows to personal responsibility as citizens. Besides, if you can’t pay for the insurance the govt. will help you. That doesn’t sound too bad. 

Basic framework

French health care system is based on a social insurance model, i.e. contributions to the program are based on income. A premium is deducted from all employees' pay automatically. The system is not government run but government financed. Like Medicare and social security, it is funded by compulsory payroll taxes with some income tax contributions. So, it can be thought of as a Medicare for everybody, but with a more generous benefit package. What the French don’t have is a choice of insurer for basic coverage. What they do have is the privilege of never being turned down for preexisting conditions and that they will be covered at all times- even when in between jobs/ or without one. 

If the morale behind French healthcare has to be explained in one word then that word would be solidarity, which basically means that more ill a person becomes, the less they pay. This implies that for people with serious or chronic illnesses (cancer, AIDS, severe mental illness etc.) the insurance system reimburses 100% of expenses and waives their co-payment charges. Of course like any other nationalized insurance system there are fees that the system does not cover, but unlike other systems the French have private players which sell complementary health insurances. Such extra insurances (Med gaps) commonly pay for lifestyle medicine - facelift, Viagra, tummy tucks etc. 85% of French people benefit from complementary private health insurance and hence the market for these programs is very competitive. All the more such insurance is often subsidized by the employer, which means that premiums are usually modest. 

Interesting facts-

·         Universal: Insurance covers everybody. It is illegal to be without insurance.

·         Premiums are inexpensive.

·         Employer based insurance. 
 If unemployed, Government provides insurance, and a supplemental insurance pays for the patient’s side also (it is even cheaper!)

·         Insurance pays everything, never denies or discriminates.

·         Government negotiates on the behalf of sickness funds.

·         Nonpayers in the French system are: the pregnant, the poor, and the chronically ill.

·         Insurance plans never have to worry about making profits, hence denying or delaying claims.
 In fact delay in re-reimbursement is illegal. Patient is reimbursed in a month. Doctor in a week

·         The system is not perfect though as some insurance companies are in deficit and the government often has to help.

Structure

Mutules /sickness funds- There are 3 main NHI funds:

1.   those for salaried workers (caisse nationale d’assurance maladie des travailleurs salariés, or cnamts). The cnamts covers 84% of legal residents in France, which includes: salaried workers; those, uninsured, who were recently brought into the system.
2.  for farmers and agricultural workers (mutualité sociale agricole, or msa) which covers 5% of the population.
3.  and for the independent professions (caisse nationale d’assurance maladie des professions indépendentes, or canam). Covers 7% of the population.

    

In addition, there are 11 smaller funds for workers in specific occupations and their dependents.  The beneficiaries of 7 of the smaller funds that are managed by the cnamts are also covered by cnamts. The remaining 4% of the population is covered by the remaining 4 funds.

Source- http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447687/#r33

Operation

All NHI funds are legally private organizations responsible for the provision of a public service. Strictly non-profit they can be better called as quasi-public organizations supervised by the government ministry that oversees French social security. The main NHI funds have a network of local and regional funds that function somewhat like fiscal intermediaries. They cut reimbursement checks for health care providers, look out for fraud and abuse, and provide a range of customer services for their beneficiaries.

 

Smaller funds with older, higher-risk populations (e.g., farmers, agricultural workers, and miners) are subsidized by the cnamts, as well as by the state, on grounds of what is termed “demographic compensation.” For example, although coinsurance and direct payment is symbolically an important part of French NHI, patients are exempted from both when (1) expenditures exceed approximately $100, (2) hospital stays exceed 30 days, (3) patients suffer from serious, debilitating, or chronic illness, or (4) patient income is below a minimum ceiling, thereby qualifying them for free supplementary coverage.

The structure of Health insurance funds is such that they are not permitted to compete by lowering health insurance premiums or attempting to micromanage health care. They reimburse differently for different types of services offered at different healthcare setups: for seeking ambulatory care they reimburse for services rendered; for inpatient hospital services there are budgetary allocations as well as per diem reimbursements. The sickness funds annually participate in negotiations with the state regarding the overall funding of health care in France. Each fund is free to manage its own budget and reimburse medical expenses at the rate it saw fit.

Role of  the Government- The government has two responsibilities in this system:

1.     Playing the big brother at the negotiating table- The government fixes the rate at which medical expenses should be negotiated annually and it does this in two ways.  Firstly, the Ministry of Health directly negotiates prices of medicines with the manufacturers, based on the average price of sale observed in neighboring countries. A board of doctors and experts decides if the medicine provides a valuable enough medical benefit to be reimbursed (note that most medicine is reimbursed, including homeopathy). Secondly, the government fixes the reimbursement rate for medical services; this means that a doctor is free to charge the fee that he wishes for a consultation or an examination, but the social security system will only reimburse it at the pre-set rate.

2.     Supervision of health-insurance funds and public hospital network – It is the government’s responsibility is to ensure that they are correctly managing the sums they receive.

Hospitals- Around 65% of hospital beds in France are provided by public hospitals, around 15% by private non-profit organizations, and 20% by for-profit companies. Also, unit service chiefs in public hospitals have the right to use a small portion of their beds for private patients.

Doctors- Patient have a free choice as to which doctor they want to see. There is no gatekeeping role of GPs(General Physicians), or such terms as “in network” and “out network”. But this changing slowly as under recent rules, general practitioners are expected to refer patients to a specialist or a hospital when necessary. So, when a patient chooses to go to a GP first he/she gets 70% reimbursed, but if a specialist is seen first the insurance pays only 60% of the bill. 

Doctors belong to labor union which negotiates on their behalf (which means a lot of strikes!). They are also modest earners who are in the profession for any number of reasons but money isn’t one of them.  The average monthly salary of a GP is $3,620 as compared to $8,189 of a doctor in USA. Although there are some benefits provided by the state but nothing compares to a good paycheck and the fact remains – The French don’t pay their doctors enough. (Source- http://www.worldsalaries.org/generalphysician.shtml)

The government tries to help the doctors in many ways-

1. Medical Students pay no tuition for medical School.  (Source - http://www.kevinmd.com/blog/2009/11/training-doctor-france-differs-united-states.html)
2.  The French National Insurance system pays for a part of social security taxes owed by doctors that agree to charge the government-approved fees. (Note the compulsory deductions column in the table on http://www.worldsalaries.org/generalphysician.shtml)
3.   Malpractice costs are negligible in fact less than 1 percent of total health care expenditures. Doctors don’t practice “defensive medicine,” or order unnecessary tests just to cover any potential charges of negligence later on. Government has helped doctors in this regard since 2002 by introducing a national no-fault compensation scheme. What do you call a hundred lawyers at the bottom of the ocean? A good start. The number of attorneys per capita in France is far smaller than in the United States.

^·          

Economics of price control.

• Small population. Area wise, a smaller country.

• Introduction of Carde vitale - card of life, no unnecessary paperwork.

• High doctor to population ratio.

•  Free medical education (This compelling article in NY Times tells us how it is a money saver for the economy in long term - http://www.nytimes.com/2011/05/29/opinion/29bach.html?_r=0)

• Low Malpractice insurance costs (1/48 of that in USA)

•  Co-pay at the time of treatment (which is later reimbursed). Rational being that the patient is reminded that healthcare is a costly service.

•  Last but not the least - a solid system which they keep improving.

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Physicians in private practice (and in proprietary hospitals) are paid directly by patients on the basis of a national fee schedule. Patients are then reimbursed by their local health insurance funds. Proprietary hospitals are reimbursed on a negotiated per diem basis (with supplementary fees for specific services) and public hospitals (including private nonprofit hospitals working in partnership with them) are paid on the basis of annual global budgets negotiated every year between hospitals, regional agencies, and the Ministry of Health. 

As for prescription drugs, unit prices allowable for reimbursement under NHI are set by a commission that includes representatives from the Ministries of Health, Finance, and Industry.

 

Charges for services provided by health professionals are negotiated every year within the framework of national agreements concluded among representatives of the health professions, the 3 main health insurance funds, and the French state. Once negotiated, fees must be respected by all physicians except those who have either chosen or earned the right to engage in extra billing, typically specialists located in major cities. Indeed, in Paris, up to 80% of physicians in selected specialties engage in extra billing, in contrast to the national average of 20% among general practitioners.

Major Reforms-

1945 - Different health-care funds begun to reimburse at the same rate.

1998- A series of reforms extended the system so that the wealthier with capital income (and not just those with income from employment) also had to contribute. In its place a wider levy based on total income was introduced, gambling taxes were redirected towards health care and the recipients of social benefits were asked to contribute! In simpler words, everybody contributes and everybody benefits.

2000- The government provided health care to those who are not covered by a mandatory regime (those who have never worked and who are not students, meaning the very rich or the very poor).

2001- The social security funding act, set the rates for health insurance covering the statutory health care plan at 5.25% on earned income, capital and winnings from gambling and at 3.95% on benefits (pensions and allowances).

2004- The system underwent a number of reforms, including the introduction of Carte Vitale smart card system.

2004- To counter the rise in health-care costs, the government requires most people to declare a referring doctor in order to be fully reimbursed for specialist visits

2006 - Installed a mandatory co-payment.

Pros-

It is a universal health care system, but not a single-payer system. It features a mix of public and private services, relatively low expenditure, high patient success rates and low mortality rates, and high consumer satisfaction.(Source- http://www.ncbi.nlm.nih.gov/pubmed/9158964)

There is no explicit health care rationing in France. There are no waiting lists for specialized hospital treatments. There is very easy access, perhaps too easy, to specialized services. There is excellent prescription drug coverage, and people have extraordinary choice and freedom to navigate the system as they see fit.

An important characteristic of the French system is that the sicker you are, the better you’re reimbursed.

They have great access to primary care. Physician to population ratio is among the best in the world.

In the end it’s not even completely nationalized! Universal coverage does not preclude the existence of private insurers. There’s a whole private insurance sector which is thriving.

Cons-

First, despite the achievement of universal coverage under NHI, there are still striking disparities in the geographic distribution of health resources and inequalities of health outcomes by social class.

Second, there is a newly perceived problem of uneven quality in the distribution of health services. In 1997, a reputable consumer publication issued a list of hospitals delivering low-quality, even dangerous care.

Third, although, compared with the United States, France appears to have controlled its health care expenditures, within Europe, France is still among the higher spenders. The share of public spending on health was higher in France than in other European countries such as Spain and Switzerland, but lower than in most Nordic countries and the United Kingdom.

Fourth, Prices per service unit are exceedingly low by US standards, and this has led to increasing tensions (physicians’ often go on strikes and demonstrations) between physician associations and their negotiating partners—the NHI funds and the state.

Reception

In terms of consumer satisfaction, a Louis Harris poll placed France above the United Kingdom, the United States, Japan, and Sweden(Source- http://www.ncbi.nlm.nih.gov/pubmed/2365256).  A more recent European study reports that two thirds of the population is “fairly satisfied” with the system. (Source- http://www.ncbi.nlm.nih.gov/pubmed/9158964)

The rising cost of the system has been a source of concern, as has the lack of emergency service in some areas since there are no enforceable budget ceilings on French national health care expenditures, annual increases tend to exceed spending targets, which in turn leads to frequent cries that the system is “unsustainable.”

At the same time, France’s medical costs have been rising sharply, which has led to higher taxes on employers and workers. Meanwhile, the national insurance system has been running deficits since 1985 — it currently stands at $13.5 billion. Nevertheless there is a lot to be learnt from The French Healthcare system.

Lessons from French Healthcare.

•  It is not mandatory to be a “single-payer” system in order to provide universal coverage.

• It is possible to bring in a healthcare reform without a “big bang”, it can be accomplished in incremental stages just like the French

• Universal coverage can be achieved without excluding private insurers, there is enough room for everyone. 

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·         Hope this article helped your understanding of the French Healthcare.