Fifty Years Later: Class, Children, Mental Illness, and Cancer

Fifty years ago, we already knew that there were environmental causes of chronic conditions like mental illness.  Had we taken them on as an American nation-building project with the zeal with which we have approached nation-building overseas, we would be a healthier country today. 

Will we do any better in the next half-century?

I’ve recently been reading a book written in 1969 about the 1968 Presidential campaign, called An American Melodrama.  It is a very long book about a very short political campaign by today’s standards.

Bobby Kennedy, for example, didn’t announce for the Presidency until March, and George Wallace – who won several southern states as a third-party candidate – didn’t pick his running mate until October.  Political scientists will find many parallels from that time to today.  One example: former Governor Romney was the early favorite for the Republican nomination.  (He never made it to the starting gate.)

It was a campaign and a time repeatedly rocked by violence, and worries about domestic terrorism consumed policymakers and the public.  About halfway into the book, the authors – without today’s benefit of hindsight – searched for an explanation for the tensions of those days.  They found it partially in a mental health study published in 1961.

It was entitled Mental Health in the Metropolis: The Midtown Manhattan Study (Volume 1).

The authors surveyed a sample of 1,660 adult residents of Midtown Manhattan.  They found that 23.4% of Midtown adults were impaired by mental illness, and 45.2% had at least moderate symptoms of mental illness.

These percentages are almost identical to the percentages of US residents today who have diagnosable mental illness in a given year (around one quarter of the population) and who will have a diagnosable mental illness in their lifetime (around one half of the population).

They believed that the high percentages of mental illnesses must be related in some way to the conditions in which people lived.

So they tested this belief, by identifying and measuring attributes of good mental health:

·         Freedom from disabling inner tension
·         Ease of social interaction
·         Feeling of adequacy in social roles
·         Capacity to accept deprivations and individual differences
·         Identification with ethical and moral values
·         Adaptability to stress
·         Healthy acceptance of self
·         Conservative handling of hostilities and aggressions

They divided the Midtown population into six socioeconomic groups, and found a direct relationship between class and mental health.  Only 17.5% of those in the highest socioeconomic group had symptoms of serious mental illness, versus 32.7% of those in the lowest group.

Arguably, their most important finding wasn’t just about class, however.  It was about child health.  They divided the adult population into the socioeconomic groups based on the socioeconomic status of their parents, not themselves.  In other words, the “class” measure was a measure of the impact of childhood socioeconomic status on adult mental health.

We know today that many of the preventable causes of adult mental illness are rooted in childhood, and socioeconomic status is the culprit in a variety of chronic diseases besides mental illness.

In its recent publication Cancer Facts and Figures 2011, the American Cancer Society devotes a special section to a description of socioeconomic status as a carcinogen.  Low socioeconomic status leads to a doubling of cancers among men and similar large increases in many types of cancer among women.

As public health professionals have been explaining for years, environmental factors linked to socioeconomic status – such as exposure to violence, abuse and neglect, poor diet, unsafe living conditions, lack of health insurance, limited educational opportunities, and increased risk of smoking – are among the causes of some of the most common chronic diseases in America – mental illnesses, cancers, cardiovascular disease, hypertension, and diabetes. 

We haven’t addressed these environmental factors adequately in the last fifty years, and we have no unified governmental vision for doing so now, either.

We’ve been too busy fighting endlessly about the role of our government at home and insufficiently about the role of our government overseas.

We celebrate Independence Day this weekend.  As we do, we should remember that we didn’t fight for our independence on foreign soil and we weren’t magically transported from 1776 to 2011 without anything happening in between.  We can explain why Americans today are less healthy than their counterparts in many other developed nations by taking notice of the conditions in which we live and how we got to this point.

We may know where we want to be in the future.  But if we stumble around in the present with no clear sense of our relatively recent past, we won't get there.

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Why Medicaid Cost Containment Fails To Contain Medicaid Costs

For over thirty years, states have tried and failed to contain Medicaid costs.

And if they continue to do what they’ve always done, then “more flexibility” through block grants – code words for cutting people and benefits from the programs – isn’t going to help. 

This is because the strategies they have used don’t work.  I wrote a few weeks ago about problems with some of the specifics of Florida’s Medicaid reform bill this year.  In this column, I want to add a more global perspective. 

source: US DHHS, 2007

Between 1980 and 2004, total personal health care expenditures in the United States increased by 726%.  Total Medicaid expenditures increased by 1,028%. 

That’s a pretty compelling opening argument against the four common “cost containment” strategies -- cutting provider rates; reducing the number of people eligible; eliminating chronic disease detection, prevention, and management services; and making recipients pay for services.

These strategies have two things in common that lead to higher Medicaid costs – they cause patients to become sicker before getting care, and they force Medicaid to pay higher-cost providers. 

Consider the well-documented problem with cutting provider rates, a most favored state strategy.

Providers often opt out of the Medicaid program when rates are cut.  A Merritt Hawkins and Associates 15-city survey in 2009 found that only 65% of family practice physicians, 44% of orthopedic surgeons, 44% of dermatologists, and 41% of obstetrician/gynecologists accepted Medicaid.

The American Psychiatric Association reported in 2010 that 46% of psychiatrists were accepting no new Medicaid patients as of 2008, and only a third were participating fully in the program.  Also, many who do accept Medicaid patients work in community mental health clinics, not as independent practitioners. 

Paying community providers too little doesn’t keep costs down.  It just pushes patients to hospitals.  Medicaid paid for only 10% of all hospital care in 1980, but the percentage increased to 17% in 2004.

Ignoring the needs of the near-poor population is another strategy with the perverse consequence of raising Medicaid costs.

Poverty and illness go hand in hand.  People living in poverty are approximately 50% more likely to suffer from migraines, chronic back pain, chronic neck pain, and heart disease as are people who are well off. 

Yet those are the only people who often qualify for Medicaid. 

This is bad for the program, because people just above the poverty level are often uninsured.  They are around 10% less likely than those below poverty to have a variety of chronic conditions, including migraines, low back pain, heart disease, and cancer. 

But they are also one diagnosis away from poverty and Medicaid.

According to a study published earlier this year by the U.S. Library of Medicine, treatment for localized breast cancer costs the Medicaid program an average of $22,343 after twenty-four months, but the cost of advanced breast cancer averages $117,033 over the same time period. 

When the Affordable Care Act required Medicaid to cover people up to 133% of poverty in 2014, it didn’t go far enough.  200% of poverty would have been far better to reduce Medicaid costs, provided the program offered a full range of early disease detection and health maintenance services.

Though it may seem counterintuitive, covering more people with a greater range of services is the way to save Medicaid money.

Here’s an example.  A major expansion in the Medicaid long term care program in the 1980s and 1990s was saving $8 billion every year by 2004.

The expansion was to new home and community-based services, beginning in 1981.

Medicaid paid 50% of the nursing home bill in 1980, but only 44% in 2004.  It accomplished this by increasing Medicaid’s share of payments for home health care from 12% in 1980 to 32% in 2004.  Because many home health care services cost less, the overall Medicaid share of long term care payments went from 46% for of total long term care costs in 1980 to less than 41% in 2004.

If Medicaid had continued to spend the same percentages on nursing and home care in 2004 as it spent in 1980, it would have spent $73 billion on these 2004.  Its actual bill was $65 billion – not a small amount, but $8 billion per year less.

That’s a pretty big difference.  Long term care costs increased by 833% in that time frame, to $158 billion.  But Medicaid long term care costs increased by “only” 738%.

While program expansions are often seen as the culprit in Medicaid growth (the number of people on the program grew from approximately 20 million in 1980 to over 50 million in 2004), the long term care experience – where most of the money still goes – suggests something different. 

To save Medicaid money, we should do more, not less, with it, and stop pushing “cost containment” strategies that don’t contain costs.

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Veterans and Mental Illness

On a sultry June morning in our national’s capital last Friday, I visited the Vietnam Veterans Memorial. 

Scores of people moved silently along the Wall, viewing the names of the men and women who died in that war.  Some stopped and took pictures.  One group of men about my age surrounded one name for a photo.  Two young women posed in front of another, perhaps a grandfather or great uncle they never got to meet.

It is always an incredibly moving experience to visit the Wall.  It treats each of the people it memorializes with respect. There is no rank among those honored.  Officer or enlisted, rich or poor, each is given equal space and weight.

It is a form of acknowledgement and respect for which many veterans still fight.

Brave Vietnam veterans returned from Southeast Asia to educate our nation about the effects of war and violence.

I didn’t know anything about Post Traumatic Stress Disorder when I entered the Connecticut Legislature in the late 1970s.  I had only vaguely heard of “shell shock” from which some World War I and II veterans suffered.  At that time, the condition, like the way we thought of other mental illnesses, suggested some sort of stigmatizing weakness inherent in the individual.
Vietnam veterans changed our thinking.

They knew that PTSD was a real mental illness caused by violence. 

It took courage and strength to deliver this message to a nation not ready to hear it.  We didn’t know then that the violence of war, the violence of neighborhoods and families, and the trauma of natural disasters cause this illness.

As a result of their advocacy, the National Vietnam Veterans’ Readjustment Study (NVVRS) was conducted in 1983.

It found that a startling 830,000 Vietnam Veterans (26%) reported symptoms of PTSD, and many thousands more had other mental illnesses, such as Depression.  As the National Center for PTSD summarizes, a re-analysis of the data twenty years later suggested that up to a staggering 80% of Vietnam veterans reported at least some symptoms related to PTSD.

The Persian Gulf War introduced a new illness, Gulf War Syndrome, to our lexicon.  It is characterized by both physical and mental health problems. Only 8% of Gulf War veterans have been diagnosed with PTSD, possibly because their exposure to violence was of shorter duration.  But nearly 38%, or 263,000, Gulf War veterans sought treatment from the VA alone for illnesses and chronic conditions, many related to Gulf War Syndrome.

According to the U.S. Department of Veterans Affairs, an estimated 10% to 18% of returning Iraq and Afghanistan War veterans have PTSD, and up to 25% will have Depression.

Mental illness is as devastating in veterans as it is in any population.  According to the National Coalition on Homeless Veterans, on any given night 107,000 veterans are homeless.  76% of these men and women have behavioral health illnesses.  140,000 are imprisoned.  Half of these have mental health problems.

While I was in Washington, I attended a dinner with my wife Pam and her colleagues at Mental Health America and its affiliates around the country, at the completion of their annual conference and before the ringing of their symbolic freedom bell, forged from the chains once worn by people locked in mental institutions.  The 2011 Clifford Beers Award winner, Dr. Patricia Deegan, a survivor of schizophrenia, spoke of the courage of those who refuse to give in to the diagnosis of serious mental illness and to let it define them.

The Vietnam veterans who lobbied me had such courage, and refused to let PTSD define them.

We have fought three seemingly endless ten-year-plus wars in the last fifty years, and another one which caused significant physical and mental damage to its participants.  Millions of veterans and their families have been affected by PTSD.

Thousands of others who have been exposed to violence, terrorism, and natural disasters also share this experience.  

This should teach us an important lesson.

Mental illness doesn’t cause violence, but exposure to violence causes mental illness.

One of the things I love most about America is that although we are so diverse, we share a common purpose.   

The people whose names are on our national monuments - Washington, Lincoln, and the 58,272 on the Wall – remind us that this common purpose involves an entitlement to life, liberty, and the pursuit of happiness.

June 27 is PTSD Awareness Day.  It is a good day to remind ourselves why the bells of freedom mean so much to us all, especially the 7% of all adult Americans with PTSD.

The people whose names are on that Wall are remembered for sacrificing to give the rest of us a safer, more secure life.  They would not have forgotten those who came home with mental illness.

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We Need Foundations to Innovate in Health Care

Implementing health reform in the states is a governmental responsibility.  But Kaiser Health News reported this week that states are turning to foundations to help them with the costs of implementing these reforms. 

Financing governmental duties has not traditionally been the role of a foundation.  Governmental programs should be implemented efficiently, but asking foundations to pay for this implementation is drawing dollars away from the most important work of foundations.

This important work involves investing resources in promising initiatives that aren’t yet “government ready.”  Foundations are uniquely equipped to provide seed funding to experimental and innovative programs before they are ready for governmental action.

On the other hand, funding governmental obligations leads to two unintended consequences. 

First, it relieves governments of their obligation to justify to the public the expenditures they need to make to implement their programs.  This always seems to lead to unrealistic public expectations about how much things costs, and problems down the road with funding them.

Second, it takes limited foundation dollars away from innovation and experimentation.  Not every foundation initiative will succeed, and that’s the point.  While some fail quietly, many have changed the way we understand and address health problems in America.  Some of the best fundamentally change American society for the better. 

To name just three recent examples that illustrate this point, consider our 30 year history with HIV/AIDS, our emerging approaches to addressing the mental health epidemic, and our understanding of health disparities across populations and regions.  

The Robert Wood Johnson Foundation created the AIDS Health Services Program in 1986, five years after AIDS was first reported in the United States.  It was also the same year that President Reagan first mentioned AIDS publically.  While government responded slowly to the crisis, the RWJF initiative flourished and was responsible for enabling the Ryan White CARE Act, which wasn’t passed by Congress for four more years.  

Foundations are also leading the way in breaking down the barriers between health care and mental health care.  Primary and behavioral health “integration” emerged as a treatment strategy in the early 1990s, nurtured along by foundation investments.  It took the federal government fifteen more years before it began to make a serious commitment to integration through passage of the Mental Health Parity Act in 2008, the Medicare Mental Health parity law in 2008, and the Affordable Care Act in 2010.

Health disparities are underreported and poorly understood.  This is because they often offer no “local angle” to a story, but can only be understood in the context of comparing one group or region to another.  Such comparisons are easily dismissed as “apples to oranges” by local policymakers.

However, a government-supported university-based study shows vast and stunning differences in the life expectancies of various racial and geographic groups in the United States that can’t be so easily dismissed. 

The complete article, authored by Christopher Murray and others, is rich in comparative data, and its conclusions are more than troubling.  Asian Americans in well-integrated counties have a life expectancy that is 15 years longer than African Americans living in urban settings sometimes just a few miles away.  Rural white Americans in the Midwest have a 7 year life expectancy advantage over rural African Americans in the south. 

Native American and African American men have life expectancies of between 60 and 70 years, but Asian American and white women living in rural areas have life expectancies well into their 80s.  These numbers are underscored by readily-available CDC data tables. 

Nevertheless, the federal government did not make a major commitment to funding specific programs aimed at tackling disparities until more than four years after this study was published.  Just recently, HHS announced its Promotores de Salud community health workers initiative, a strategy specifically designed to address health disparities in minority populations.

However, as Grantmakers in Health points out, both local and national foundations have been focused on this problem for years, leading the way by funding important initiatives looking at both populations and place as determinants of health status for many years.

At their finest, foundations lead governments to action by experimenting with differing approaches to solving emerging policy problems, and finding and promoting those that work best.

It’s government’s job to bring them to scale.  Then it can solve the underlying problems – like AIDS treatment and prevention, mental health and primary health care integration, and health disparities – it may have been too timid to address, either because it didn’t know what would work or because it didn’t know what the public would support.

Asking foundations also to take on this job of government will reduce the dollars available for innovation and experimentation.  The risk is that we miss out on finding an early solution to the next public health crisis.

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Are Healthy Infants Really Clogging our Emergency Rooms?

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A growing number of highway billboards encourage people to use hospital emergency rooms.  The ones in my area advertise pre-registration to avoid lines or shorter waiting times.

These billboards clearly aren’t targeted to people riding in the backs of ambulances, who generally aren’t ER comparison-shopping.  They’re for potential ER users who are in a position to make a choice.  That’s the “non-urgent” crowd.

The irony is that these billboards are proliferating just as state policymakers impose new charges to discourage non-urgent ER use.

Two examples from recent weeks:  Florida’s Legislature voted to impose a $100 charge on non-urgent emergency room visits by the Medicaid population.  Connecticut decided to impose a new $35 charge on state employees doing the same.

It’s important to recognize that these fees aren’t that high compared to the $500+ co-pays and deductibles in many private insurance plans.

But it’s wishful thinking that they will reduce program costs without consequence.

To justify its decision, Connecticut used the example of an unnamed state employee who had 150 ER visits in a single year.  There are a handful of such people in every state.  They’re often called ER “frequent flyers,” and health care providers generally know who they are.  Though it’s not clear how many should be admitted as inpatients instead, there’s no question that we should want to keep them from overusing the ER.

However, ER charges target too many innocent parties, and when you decide to impose them can make a huge difference in whether they discourage use, or just penalize people for guessing wrong about their emergencies.

According to the Centers for Disease Control and Prevention, we all collectively accounted for nearly 124 million emergency room visits in 2008.

At the time of triage, only 8% of all visits were considered to be non-urgent – a pretty small percentage.  The percentage wasn’t too different among payer groups.  The two groups targeted by Florida and Connecticut – Medicaid recipients and state employees with private insurance – had 9.5% and 6.3% non-urgent visits, respectively.

On the other hand, if you look at the same patients after the visit, the percentage of non-urgent visits is closer to half.

This is because apparent emergencies often turn out to be minor maladies.

Aside from injuries, people go to ERs for mostly common complaints.  Almost 4 million (or 17%) of all ER visits by children were because of fever.  Children also had 1.5 million visits related to coughs, and 1.1 million visits because of vomiting.

Non-elderly adults had 7 million visits (or over 8% of all visits) for stomach pain.  Chest pain accounted for 4.8 million visits. Back pain accounted for 2.8 million visits.

Chest pain and shortness of breath were the two most common reasons for ER visits by elders.  Each accounted for over 1.4 million visits.

When the underlying causes of these complaints were diagnosed, the most common non-injury diagnosis was respiratory disease.  13 million people of all ages, or 10.7 percent, had this.  Over 7 million had diseases of the digestive or muscular-skeletal systems, and over 6.5 million had diseases of the nervous system. 

Though not commonly given as the reason we went to an ER in the first place, diagnoses of mental disorder accounted for just over 4 million visits – the 8^th most common diagnosis after injury.

The main culprits using ERs for non-urgent reasons are not adults, but infant children.  They don’t read billboards, but they are the only group whose non-urgent visit percentage was greater than 10% of all visits at the time of triage.

Around 381,000 U.S. ER visits by infants were non-urgent in 2008.  If it is normal for 8% of ER visits at triage to be non-urgent, then the number of excess non-urgent visits by infants was 85,100.  Florida’s share of these was around 5,000, and Connecticut’s was around 1,000.  The Florida Medicaid share and the Connecticut state employee health insurance share were even lower.

Keeping a small number of infants out of our ERs may not be good public policy.

The infant mortality rate in Connecticut is around 6 per thousand, and the infant mortality rate in Florida is around 7.  The best-in-the-world standard is around 2 per thousand.  That means that in 2008 there were statistically as many as 25 preventable deaths among Florida infants who visited ERs for non-urgent reasons, and 4 among the Connecticut infants.

Accepting 6,000 excess infant ER visits in Florida and Connecticut to try to prevent almost 30 excess infant deaths seems like a good trade-off to me.

No one questions the goal of getting frequent flyers out of ERs.  The way to do this is to require them to participate in disease management programs. 

If co-pays work to discourage everyone else from using the ER, we’re going to lose lives.

Column update: In a past column entitled A Long Term Care Win for Everyone I wrote about Florida Governor Rick Scott's decision to accept a $35.7 million federal grant for the "Money Follows the Person" program, which would have enabled people (especially young people) with disabilities to move from institutions back into their own homes.  However, it was reported recently that the Florida Legislature declined to allow the State Medicaid agency to draw down the money.  If this decision stands, it means that FL residents with disabilities will lose access to these $35.7 million, and will have to remain in more costly institution-based settings. 

If you have questions about this column, wish to have Paul Gionfriddo as a speaker at an upcoming event, or want to receive an email notice informing you when new Our Health Policy Matters columns are published, please send an email to gionfriddopaul@gmail.com.

Thanking Public Health Professionals for Longer Lives

I celebrate my birthday today.  As I enter my 59^th year on earth, I wonder who, besides my creator, I should thank.  Public health professionals are a good place to start.

If I had been born just 50 years sooner, my life expectancy would have been 47 years. 

But life expectancy grew by almost 30 years in the 20^th century.

In the last ten years, the age-adjusted death rate in the United States has decreased by another 16%.  I can expect to live as many as 20 years longer than my parents did. 

source: CDC, 2011

So what’s making the difference?

The Centers for Disease Control and Prevention (CDC) has some answers.

CDC recently released its top ten public health achievements of the last ten years, and there are some surprising accomplishments on the list. Not a single one got a headline.  In fact, the release of entire list was overshadowed by the media attention given to the humorous hook a CDC blogger used the same week to educate people about preparing for natural disasters.

The top ten achievements have come in such diverse areas as cancer prevention, maternal and child health, infectious disease control, injury prevention, and cardiovascular disease prevention.   

Together, they have lowered the death rate during a time when we are being warned that because of our short-sightedness our children may live shorter lives than we will.

Here are some of the things that have happened in the last ten years, and why:

• A 30% reduction in U.S. tuberculosis cases was the result of increased government spending on infrastructure improvements to local public health;
• A decline in smoking prevalence to just over 20% of the population was the result of the impositions of tobacco taxes and restrictions on smoking in public places;
• The government-mandated addition of folic acid to cereal grains led to a 36% reduction in infant neural tube defects, and a savings of $4.7 billion in direct medical costs;
• Safer cars, safer roads, and government-mandated seat belt use reduced the death rate from motor vehicle accidents by 26%, and the injury rate by 36%;
• The age-adjusted death rates from heart disease and stroke declined by over 35% and 31%, respectively, because of declines in the prevalence of risk factors, government regulations on quality of care and FDA approvals on new, safe medications;
• Death rates from colorectal cancer in both men and women declined by over 20% because of insurance mandates covering early detection and screening programs.

The common denominators in these remarkable improvements in our health status are the “gang of five” 21^st century government villains – higher taxes, increased regulations, more mandates, new spending, and restrictions on the irresponsible exercise of “freedom.”

With villains like these, who needs friends?

For the past hundred years and more, public health has been one of our government’s crowning achievements.  It has accounted for much of the increase in life expectancy from 1900 to 2000.  It may be the reason I’m writing – and you’re reading – these words today.

In the 20^th century, the private sector did not find a cure for most cancers or cardiovascular disease.  It did not eliminate viruses and bacteria from our lives.  It did not eradicate environmental pollution, or prevent devastating climate change.  It could not even cure the common cold, though such a cure would have been worth billions to the fortunate company that did.

It did, however, develop effective drugs to manage chronic conditions, surgical techniques and treatment protocols to improve care quality, strategies for mitigating the effects of environmental contamination, and tools for unlocking the mysteries of the genetic code.  It did these things in partnership with public health, using assistance from the government. 

So why do so many state and federal policy leaders want to pull the rug out from under public health when we need it the most? A report of the National Association of County and City Health Officials (NACCHO) documents the loss of 29,000 local public health people between 2008 and 2010, and a recent news release by the Association of State and Territorial Health Officials (ASTHO) notes that federal and state funding cuts jeopardize many of the most successful public health initiatives.

Attacking public health isn’t getting governments off the backs of the people, because reality is the other way around.  Public health practitioners do the heavy lifting, carrying people on the backs of governments.

We need to celebrate our public health accomplishments – especially those of us who have lived beyond the 47 years of life we could have expected had we been born in 1900. 

We need to remember that each extra year is a gift to us, not just from our creator, but from the people who work for our governments. 

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Seven Problems With Florida's Medicaid Managed Care Reform

In my last column, I described Florida’s new Medicaid managed care and previewed a few of its implications.

In this column, I look closely at seven problems in the law.  

First, Medicaid recipients will be asked to pay $10 per month to participate in the program, and $100 for each non-emergency use of a hospital emergency room. 

This will increase Medicaid costs, not lower them.  Charging even $10 a month for Medicaid encourages people to avoid enrolling in the program until they get sick. What they don’t get is preventive care, so their care costs more. 

Half of all emergency room visits are “non-emergency,” but the patient doesn’t know this until after he or she gets the diagnosis.  For example, chest pain is sometimes indigestion, but other times, a heart attack. You don’t want someone who might be having a health crisis to delay receiving care because they don’t have $100.  If they do and guess wrong, their care will only cost the state more.

Second, Medicaid recipients will be required to share their complete medical records with the government. 

There is no reason for this, and this kind of privacy invasion isn’t popular with anyone.  We may not care when it happens to someone we don’t know, but watch how we react when it happens to mom in the nursing home. 

Third, Florida has created a Medicaid profit-sharing plan which encourages managed care companies to drive up costs in the first year and take them back in profits the second year. 

The law allows plans losing money in the first year to recoup those losses in the second year.

This creates a perverse incentive for organizations.  Because they don’t have to worry about first-year losses, they have an incentive to enroll the highest cost patients possible in order to maximize their payment rates.  If they then crack down on utilization in the second year, they can maximize their profit potential at little or no risk. 

Fourth, Florida’s plan creates a really perverse economic incentive for the state. 

The higher the profit made by a managed care company, the more the state gets back as a rebate. 

If the state has a future budget crisis, it could be tempted to manage that crisis by pressuring its managed care partners to deny or delay care to recipients – especially in the latter part of a fiscal year – to increase the amount of the rebate the state will receive.

Fifth, each plan must offer smoking cessation, substance abuse treatment, and “medically directed weight loss” programs. 

Personally, I support this.  However, when “the government starts telling us what we can and cannot eat,” a lot of small-government advocates (including some Florida legislators) claim they draw the line.

Sixth, Medicaid recipients who are found judicially or administratively to have engaged in Medicaid fraud will forfeit their Medicaid eligibility for ten years. 

This sounds fine, but what happens when an addict is found “administratively” to have engaged in fraud by pill shopping among providers?  Or when a person with mental illness is found “administratively” to have engaged in fraud by claiming phantom physical complaints?  Do we really intend to discriminate against certain people for their medical conditions?

Also, what happens when someone found to have engaged in fraud develops a high-cost condition, such as cancer, several years later?  Does this “one-strike-and-you’re-out” policy mean the state expects providers to cover the future cost of care without any reimbursement?

Seventh, Florida’s Medicaid reform re-introduces hospital rate setting. 

A generation ago, in a far more “big government-friendly” era, Medicare adopted a prospective payment system to set hospital rates.  It used “diagnosis-related groups,” or DRGs to do this, and several states used DRGs to establish hospital rate-setting systems.  While Medicare has retained and adjusted its DRG system, most other DRG-based rate setting vanished years ago.

DRGs, however, will re-appear in Florida in 2013. The legislature has directed AHCA to develop a DRG system for Medicaid.    

Here are two reasons why this won’t work as intended.  The first is that Medicaid patients are a far more diverse group that the Medicare population.  Forcing hospitals to work within pre-set DRG rates can be extraordinarily unfair to the hospitals serving the neediest and most complex of patients.

The second is that the only way hospitals can guard against DRG harm is to engage in the legal practice of “DRG creep.”  Hospitals have a financial incentive to assign the highest-paying diagnosis code possible to every patient they see.  The result?  Rates may come down, but costs will go up.

Florida’s Medicaid reform has been called transformational.  Life is full of transformations. Some last, but others fade quickly.  The new Florida law may seem like big change, but its promised benefits may soon be regarded as something of a mirage.

The Florida Medicaid Reform Law is the result of the passage of two separate bills, HB 7107 and HB 7109. Information referenced in this column can be found in the text of one of the two bills.  If you have a question about the specific location of any text, please contact the author at gionfriddopaul@gmail.com.

Florida's Disappointing Medicaid Reform

Florida’s Medicaid reform law, which takes effect on July 1, mandates the enrollment of most of Florida’s 3 million Medicaid recipients into managed care programs.  It has been called transformational, but it probably won’t deliver on its promise.

There is a lot to write about, so I’m devoting two columns to the subject – and publishing them both this week, instead of one this week and one next week. 

This column focuses on the details of the new program.  It explains how first year cost savings are unrelated to managed care, why families of nursing home residents in particular should be worried, and how a new profit motive has been built into the Medicaid program. 

My next column will focus on seven policy problems built into the new law.   

While managed care got the headline, the first-year savings in the legislation come from a 5% provider rate cut, not from managed care. 

Medicaid will still be a $20 billion+ program.  It will still consume nearly a third of the state budget, and it will still expand significantly in 2014.

By incorporating the 5% cut into the law, Florida legislators anticipated a possible rejection of the managed care program by the Department of Health and Human Services. 

HHS has problems with Florida’s approach.  Florida Senators threatened to drop out of the Medicaid program if HHS did not approve the changes, putting $11 billion at risk.  Cooler fiscal heads prevailed, and this threat was dropped from the final version.

Assuming HHS eventually agrees, the Florida Medicaid program will be divided into three parts.

One will serve mostly elderly people with long term care needs.  Another will serve families, children, and adults with chronic health and mental health conditions.  The third will serve people with developmental disabilities.

Nearly everyone in the first two groups will be required to enroll in managed care plans.  Those in the third group will not.  They will keep their current Medicaid program, but payments will be capped and a plan for restructuring it will be submitted to the Legislature by 2014.

For the other two groups, the state will be divided into 11 regions.  Between two and six managed care plans will serve each region.  There will be separate plans for the long term care group and the families and children group.   One of the plans approved for the long term care group in each region must be offered by a Long Term Care Service Provider Network, led by a long term care provider.  One of the plans approved for the families and children group in each region must be offered by a Provider Service Network, led by a hospital, public agency, or other safety net provider.

The long term care program will be fully operational by October, 2013, and will include incentives to transition as much care from nursing homes to the community as possible. 

The CARES (Comprehensive Assessment and Review for Long Term Care Services) evaluation system will be used to determine each Medicaid recipient’s level of need.  Level 1 recipients must be in a nursing home.  Level 2 recipients still living in the community must have extensive physical or mental impairment.  Level 3 recipients will have mild physical or cognitive impairments.

Payments to plans will be based on three levels of need of the patients in each plan.   

For the first year only, all nursing home patients will be protected from discharge, whether or not their level of need changes.  However, plans will receive incentive payments from AHCA for every 2% shift in their population toward community care in either the first or second year, and for 3% shifts in subsequent years.  Incentive payments will continue until no more than 35% of plan recipients are in institutional settings.

So what could happen to an elderly nursing home resident? 

After the first year, any time her level of need is determined to be less than Level 1, she could be discharged to home care whether or not she or her family agreed.

Also, a managed care company with a motive, not a family and a clinician, will decide when an Alzheimer's patient needs institutionalization.

This new Medicaid program puts a premium on profits. 

In the families and children program, most recipients will have 30 days to choose a plan.  If they don’t, they will be assigned to one.

The state will negotiate rates with plans based on a “per member per month” fee, adjusted for the region and clinical profile of the patients in the plan.  For the first two years, provider service networks will have the option of receiving traditional fee-for-service payments.

Plans will be able to take up to 8.5% in profits, and the state will be their silent business partner. 

Here’s how this works.  Plans can retain the first 5% of total income received as a profit.  They can make another 1% if they exceed state quality measures.  They capture 2.5% of the next 5% of profit.  The rest goes to the state.  After that, all profits go to the state.

Plans are protected from losses in the first year.  The law allows them to subtract those losses from income during the second year.  A plan losing 5% in the first year will be allowed up to 13.5% in profits in the second year.

Is creating a profit motive for safety net health care really such a good idea?

The Florida Medicaid Reform Law is the result of the passage of two separate bills, HB 7107 and HB 7109. Information referenced in this column can be found in the text of one of the two bills.  If you have a question about the specific location of any text, please contact the author at gionfriddopaul@gmail.com.

Sharing the Pain in Florida?

There were more than a few sighs of relief when Florida House and Senate members came to an agreement on health and human budgets this week.

There was also some welcome news. 

But not everyone is happy, and there will still be plenty of pain to go around.  People like me won’t feel it, but millions of others will.

First, let’s get to the good news. 

After weeks of uncertainty, funding for adult mental health services will not be eliminated or cut.  Senate and House leaders, led by Rep. Denise Grimsley, came to the conclusion that asking people with mental illness to shoulder this much more pain this year was just too much.  This is a tremendous relief to everyone affected by mental illness.  Though we may not be able to quantify “things that don’t happen,” we know that legislators saved many people from harm, and prevented scores of crises down the road.

The Medicaid “medically needy” and “aged and disabled” programs in Florida also remain intact.  If they had been eliminated, over 81,000 elders and people with disabilities would have been left with no more health care and no money.  These are all people either living in poverty already or who have monthly incomes too high to qualify for Medicaid – even though they have no savings and have to spend most of their income on medical care.    

Legislators deserve credit for making these choices in the face of surprisingly strong headwinds.

Now let’s get to some of the bad news.

Hospitals will take a 12% cut in state Medicaid payments, and nursing homes will take a 6.5% hit (on top of a 10.5% cut this year).  Home care providers will also be cut.

It’s always a little easier to cut from providers than it is to cut from people, but these cuts to providers affect real people, too.

For example, many hospitals already lose a lot of money providing care to the Medicaid population because reimbursement rates are low.  There are only two ways they can absorb another 12% reduction in payments.  Either hospitals will be forced to cut back on services to everyone, or private health insurance rates will have to increase to offset the reduction.

Nursing homes are often the last home many people with chronic illnesses will experience in life.  60% of nursing home residents rely on Medicaid to pay some or all of their bills, making Medicaid the largest payer of nursing home care.  Cutting Medicaid rates another 6.5% means further constraining care for some of our oldest, sickest citizens.

People relying on home and community based services as an alternative to nursing home care also weren’t spared.  The compromise appears to reduce funding for home-based services by over $36 million, by reducing provider rates by 4%.

Medicaid managed care will also move forward.  This is an unsettling prospect for many.  It will mean months of testy negotiation with a federal government that will be reluctant to approve Florida’s waiver.  If Florida reaches a compromise with HHS, it will then mean years of transition to a managed care program that could still result in less care for almost 3 million Floridians.

In commenting on proposed cuts before the final votes were cast, a State Senator noted that “everyone is going to have to share in the pain.”

But is that what really happens in this budget?

It doesn’t look like I’ll be feeling any pain when this Florida state budget gets put to bed.  My health insurance will be there when I need it, my physician will still make enough money to cover his cost when he treats me, and I probably won’t need hospital or nursing care this year.

Looking at the bigger budget picture, my youngest son graduated from our local public high school a couple of years ago, so I won’t feel the effects of school funding cuts.  My daughter is in an out-of-state university, so I won’t notice the tuition increases here in Florida.  My mother died a decade ago in Connecticut, so she won’t be affected by cuts to a Medicaid program that allowed her to live her final years in the comfort of her own home.

For me and people like me, there are $308 million in tax relief in this budget - far less than the $2 billion the Governor wanted.  Some of it may even lower my property taxes again.  They have already been cut by 41% this year – largely because of the odd methods we have of determining the taxable value of property in this state.

It’s nice to know that I won’t have to live with any pain this year.  While I’m grateful that some people with mental illness and impoverished elders won’t either, I can’t help thinking at least a little about those who will – and wonder why.

If you have any questions about the column, or to receive a weekly email notifying you when new Our Health Policy Matters columns are published, please contact gionfriddopaul@gmail.com.