Editors’ Note: Public disgust with the existing US healthcare-for-profit system is so overwhelming and sentiment for a single-payer health care system has grown so strong that the insurance companies have changed their strategy. They are kicking sand in the eyes of the public and trying to dumb down the whole public discussion to a slogan, “Medicare For All”. They want progressives to settle for “Bernie’s bill” and not sweat the details. The insurance giants hope that, if control of Congress changes, in the sausage-making of the legislative process, insurance lobbyists and compliant legislators can torpedo real reform so that in the end what emerges is a trivial “public option” or nonviable legislation corrupted by managed care and missing the essential savings of true single payer. The more far-seeing reform advocates, such as the writer below, see the danger. His article is long and detailed, but we urge you to read it. If we are to avoid yet another failure of national health care reform, as in 1994 and in 2010, advocates of change must sweat the details.

A Critique of Section 611(b) in Bernie Sanders’ “single payer” bill

By Kip Sullivan, JD

Kip Sullivan chairs the Policy Advisory Committee of Health Care For All Minnesota, and is a member of the Minnesota chapter of Physicians for a National Health Program. The original article, which is excerpted below,  was posted in full at <http://www.healthcareforallmn.org/wp-content/uploads/2018/08/op-critique-of-Section-611b-S-1804.pdf>



The most important defects in Bernie Sanders’ “single payer” bill, S 1804, are:

(1) The absence of budgets for institutional providers (hospitals and nursing homes) and clear authority to set uniform fee schedules for individual providers; and

(2) Section 611(b), which requires the maintenance of the “reform activities” authorized by the Affordable Care Act and MACRA (the Medicare Access and CHIP Reauthorization Act of 2015) for the elderly (the most important one being accountable care organizations, which closely resemble HMOs), and the extension of these “reforms” to the non-elderly.1 In this paper I discuss only the second defect – the “payment reform activities” that Section 611(b) perpetuates and extends.

This paper focuses on the seven most important of these. These and related proposals are often referred to collectively as “value-based payment” (VBP) proposals. What all of these “reforms” have in common is they are worsening racial and income health disparities. These “reforms” have that effect because they all require that doctors and hospitals be given bonuses and penalties based on crude measurement of the two components of their “value” or “merit” – that is, their cost and quality. The crudeness of today’s cost and quality measures guarantees that providers who treat a disproportionate share of the sick and the poor will be penalized while providers who treat a disproportionate share of the healthy and wealthy are rewarded

Section 611(b) reads:

APPLICATION OF CURRENT AND PLANNED PAYMENT REFORMS.—Any payment reform activities or demonstrations planned or implemented with respect to such title XVIII [this is the title in the Social Security Act that created Medicare] as of the date of the enactment of this Act shall apply to benefits under this Act, including any reform activities or demonstrations planned or implemented under the provisions of, or amendments made by, the Medicare Access and CHIP Reauthorization Act [MACRA] of 2015 (Public Law 114–10) and the Patient Protection and Affordable Care Act (Public Law 111–148).

A paper in a recent edition of JAMA entitled, “How value-based Medicare payments exacerbate disparities,” observed: “In this [VBP] game, the losers are more likely to be physicians who care for poorer or sicker patients, and, in turn, their patients. ‘We are literally taking money from providers that serve the poor and giving it to providers that serve the rich,’ said Karen Joynt Maddox, MD, MPH, a cardiologist and health services researcher at the Washington University School of Medicine in St. Louis.” http://www.pnhp.org/news/2018/february/exposing-the-value-based-payment-meme

If VBP reforms were at least cutting costs, their proponents might argue that the worsening of disparities is an acceptable price to pay. But they aren’t cutting costs either. When the cost of implementing the “reforms” is taken into account, some of them, possibly all of them, are raising costs…..

Concluding Observations

VBP programs are not saving money, some or all of them are raising costs, and they are harming poorer and sicker patients. There are several reasons why VBP programs don’t save money, including: (1) their proponents greatly overestimate the role that excess quantity of medical services, as opposed to the price of those services, plays in driving up US health care costs, and VBP programs focus primarily on quantity; (2) determining when a service is unnecessary is often difficult even for the doctor in the examining room, and even more difficult for supervisors and analysts hundreds or thousands of miles away; and (3) VBP interventions are not free and their costs may outweigh whatever savings were achieved in the form of reduced utilization of medical services. VBP nostrums inflict harm on poorer and sicker patients because risk adjustment of cost and quality scores (adjustment of scores for factors beyond provider control) is very crude. To give you a sense of how crude, consider this description of the inaccuracy of CMS’s Hierarchical Condition Categories (HCC) risk adjustment method, the most studied and perhaps the most sophisticated risk adjuster anywhere in the world today.

According to MedPAC’s June 2014 report to Congress, the HCC overpays for the healthiest 20 percent of Medicare beneficiaries by 62 percent and underpays for the sickest 1 percent by 29 percent (see first column in Table 2-1 page 30 http://medpac.gov/docs/default-source/reports/jun14_ch02.pdf?sfvrsn=0).

The result of crude risk adjustment is that providers who treat a disproportionate share of the sick and the poor are punished and have even fewer resources than they should have, and the threat of punishment in turn creates an incentive to avoid the sick and to deny services to the sick who can’t be avoided.

The research I have reviewed here should convince reasonable people not only that Section 611(b) should be removed from S 1804, but that Congress, state legislators, and regulators should refuse to endorse any proposals that purport to reward “value” unless those proposals have been rigorously tested and demonstrated to be safe and effective.