#274 - Medicaid and Louisiana

#274 - Medicaid and Louisiana
May 31, 2011

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Across the country, in response to budget pressures and poor outcomes, states are shifting their Medicaid systems away from fee-for-service toward managed care solutions. If done properly, this represents a responsible way to save the state money while still providing necessary care for Medicaid recipients. So why is Louisiana House Speaker Jim Tucker (R-Algiers) opposing this step in his state?

Tucker has been pushing to kill Louisiana Gov. Bobby Jindal’s plan for Coordinated Care Networks, which would move 800,000 Medicaid recipients into private managed-care networks next year – exempting the elderly and the developmentally disabled. But while blocking this reform of the system, Tucker also has endorsed a significant chop in the overall Medicaid budget of $81 million – $59 million of which will have to come out of reductions in provider rates and cutbacks in services.

This seems an irresponsible move at best. Instead of pursuing a fundamental reform of the unsustainable Medicaid system – which accounts for roughly $6.6 billion of Louisiana’s current annual budget – to allow for greater predictability in costs for the states and for a single doctor to make decisions with patients, Tucker is endorsing a chop-off-the-top cut. Perhaps this plays better as a short-term political posture, but it does nothing to solve the long-term problems within the system. As anyone who’s learned from political experience in the past knows, this is a profoundly inefficient way to do things – as Robert Gates said last week, referring to Department of Defense expenditures, “Salami-slicing is a way to avoid hard choices on what to fund.”

Just engaging in cuts without applying pro-consumer reforms of a system is a failure of leadership. As we’ve learned time and again in the past, cuts that don’t address a fundamental problem in a program, but just shrink it – or in this case, shrink its payments to providers – result in lowered access and worse coverage. Consider past studies regarding access problems for Medicaid patients across the country, or the New York Times report from earlier this year in Louisiana itself:

Nicole R. Dardeau, 46, a nurse in Opelousas, La., in the heart of Cajun country, can attest to that. She said she could not work because of unbearable pain in her right arm. Doctors have found three herniated discs in her neck and recommended surgery, but cannot find a surgeon to take her as a Medicaid patient.

From her pocketbook, she pulls an insurance card issued by the Louisiana Department of Health and Hospitals. “My Medicaid card is useless for me right now,” Ms. Dardeau said over lunch. “It’s a useless piece of plastic. I can’t find an orthopedic surgeon or a pain management doctor who will accept Medicaid.”

Tucker’s cuts won’t solve this problem, and by refusing to support a reform that could improve the situation, he’s standing in the way of good government policy. He should at least be asked to explain why.

-- Benjamin Domenech


IN THIS ISSUE:


FEDS TARGET CEOS IN CRACKDOWN ON INDUSTRY

The Associated Press reports on the disturbing trend of “federal enforcers” who are “targeting individual executives in health care fraud cases” that used to stop at a finding of fault for corporate entities:

The new tactic is raising the anxiety level – and risks – for corporate honchos at drug companies, medical device manufacturers, nursing home chains and other major health care enterprises that deal with Medicare and Medicaid.

Previously, if a company got caught, its lawyers in many cases would be able to negotiate a financial settlement. The company would write the government a check for a number followed by lots of zeroes and promise not to break the rules again. Often the cost would just get passed on to customers.

Now, on top of fines paid by a company, senior executives can face criminal charges even if they weren’t involved in the scheme but could have stopped it had they known. Furthermore, they can also be banned from doing business with government health programs, a career-ending consequence.

Many in industry see the more aggressive strategy as government overkill, meting out radical punishment to individuals whose guilt prosecutors would be hard pressed to prove to a jury.

We’ve seen in the past how willingly this administration utilizes the politics of public shaming, when President Barack Obama and HHS Secretary Kathleen Sebelius wagged their fingers about the unjustified insurer rate hikes. Expect to see more and more of this public-theater-as-policy in the years to come under his health care regime.

SOURCE: Associated Press


WILL CER KILL MORE PEOPLE THAN IT HELPS?

Ronald Bailey at Reason writes on the devastating potential of comparative effectiveness research, leaning on the study from John Vernon and Robert Goldberg we linked recently:

A provision tacked onto the $787 billion stimulus package passed by Congress in 2009 aims to help find those half-price blue pills. Various federal health bureaucracies received $1.1 billion to spend on comparative effectiveness research. Opponents worried, however, that federal CER is the first step toward rationing treatment based on cost-effectiveness determinations made by bureaucrats.

Asked if CER might result in rationing health care, Centers for Medicare and Medicaid Services Administrator Donald Berwick stoked this concern. “We can make a sensible social decision and say, ‘Well, at this point, to have access to a particular additional benefit [new drug or medical intervention] is so expensive that our taxpayers have better use for those funds,’” replied Berwick. “We make those decisions all the time. The decision is not whether or not we will ration care--the decision is whether we will ration with our eyes open.”

In a passionate 2009 editorial in The New England Journal of Medicine, Harvard medical professor Jerry Avorn denounced the conservative “backlash” against CER. He praised Congress for not letting “warnings of a dystopian scientific police state undercut the nation’s need to learn what works best in medicine.”

Yet, even Avorn acknowledged CER raises important issues such as the question, “What is the moral responsibility of the physician to care for a patient for whom the best therapy may not meet conventional standards of cost-effectiveness?” Berwick suggests that one way to confront this dilemma is “at some point we might say nationally, regionally, or locally that we wish we could afford it, but we can’t.”

But will CER achieve its goal of improving health care while simultaneously lowering costs? A new econometric study [download here] by University of North Carolina health care economist John Vernon and Robert Goldberg, president of the non-profit Center for Medicine in the Public Interest, argues instead that CER will likely increase costs and worsen health outcomes.

The CMPI study can be found here.

SOURCE: Reason.com


REPUBLICAN GOVERNORS PRESS AHEAD ON EXCHANGES

Sarah Kliff at Politico offers this update from the states:

In Indiana, Gov. Mitch Daniels issued an executive order that allowed the state to become one of just three to receive a multimillion dollar grant to establish a health exchange, the online insurance marketplaces that all states must eventually have if the reform law stands up in court.

Wisconsin, under the leadership of Gov. Scott Walker, is one of six states to win an Early Innovator grant. While the grant was received under Walker’s predecessor, Gov. Jim Doyle, Walker has continued to use the resource, setting up the Office of Free Market Health Care that has prominently advertised its innovator status.

And in a weird twist of politics in Mississippi, state agencies of Gov. Haley Barbour have relied on little-used statutory authorities to set up an exchange, reviving a Democratic-sponsored effort to do so through the Mississippi State Legislature.

Daniels, Walker and Barbour are a stark contrast to Republican governors who are more stridently opposed to all aspects of health reform. Govs. Rick Scott of Florida, Bobby Jindal of Louisiana, and Susana Martinez of New Mexico have come out in fierce opposition of any kind of implementation. Scott and Jindal have also shunned federal money to plan their exchanges.

It’s a fair critique – had Daniels run for president, he’d have been the only candidate on the dais at the debates who was actually implementing Obamacare. But in conversation with contacts in Indiana and Wisconsin, it appears both states are moving slowly to allow for the court case to play out. While I disagree with the decision, it’s nowhere near the kind of mistake Barbour is making by pressing forward despite the opposition of his own party. In any case, the example of the opponents is likely to be the one that is ultimately justified by what lies ahead.

SOURCE: Politico


FDA PLANS TO REGULATE MEDICAL APPS

Ah, the usefulness of technology – and the clumsiness of regulators who attempt to blunt its capabilities and innovation:

A handful of developers has sought and received Food and Drug Administration clearance for their mobile apps considered to be clinical devices. And the FDA, which hasn’t involved itself in regulating or enforcing any rules that might be related to clinical app development, has indicated that it will be more proactive in monitoring that class of product.

Elisa Maldonado-Holmertz, vice president of business development for Emergo Group, which provides regulatory guidance to companies seeking FDA approval, recently learned about the agency’s efforts to regulate apps. At a town hall meeting she attended with the FDA in March, she found out that the agency’s Center for Devices and Radiological Health plans to issue guidance on mobile medical applications later this year.

So far, the app market has gone unregulated for the most part, although many clinical apps probably would fall under FDA 510(k) rules, an FDA classification reserved for medical devices. In February, the FDA finalized the rule that defines so-called Medical Device Data Systems. Under the rules, devices that transmit data but do not control or alter the function of a medical device are defined as MDDS, a Class I device that is exempt from 510(k) rules. The 510(k) classification is reserved for devices used for patient monitoring.

How quickly will these guidelines become mandates? Wait and see.

SOURCE: American Medical News


ON MEDICARE, RYAN PLAN VS. BUREAUCRATS

Ramesh Ponnuru writes at Bloomberg in a piece directly targeted at many Hill staffers – even more than their bosses – pushing to go limp-kneed on Paul Ryan’s Medicare reforms. As someone who counseled against the plan from the get-go, Ponnuru still advises not to go all scaredy cat:

Your impatience, however understandable given how fast insolvency is approaching, was unwise. You would have been better off tackling easier spending issues like Medicaid first and holding hearings on Medicare’s problems and how to fix them. You should have recruited presidential candidates to raise the issue in 2012, when they will have a megaphone as big as President Barack Obama’s.

Since you don’t pay me just to say I told you so, though, I’ve been thinking about what you should do now. The bad news is that you’re stuck with this vote. A year and a half from now the Democrats and their interest groups are going to run ad after ad attacking you for trying to kill old folks. You can’t say you’re sorry for that vote without looking weak and insincere – worse, like you really were trying to pull one over on old people but got caught.

The good news is that this issue stays on a boil only if Republicans let it. If you strike a deal with Obama over Medicare – by, say, raising the age when benefits begin in exchange for an increase in the debt limit – your liability drops. Even without a deal, Ryan’s legislation is dead in the Senate. It will be hard for Democrats to spend the next year yelling about Medicare if nobody is doing anything about it in Washington.

So am I telling you to change the subject for the next year while the issue dies down?

No. You need to spend a lot of time over the next year talking to your constituents about Medicare. Hold town halls, lots of them. If no one brings up Medicare because it’s dropped out of the news, you bring it up. Explain why the plan is necessary and defend it against criticisms. Make it clear that people in or near retirement will be left alone, and that seniors who are poor or in bad health will get more federal support.

Good advice, and there’s more of it there. Read it and share.

SOURCE: Bloomberg

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)