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March 22, 2010


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Jenny Patterson

Bill calling it as he sees it! Fight On, and praise where it's due - Good message, Bill!

Anna Bennett Meinuk@aol.com

Well said, Mr. Peckham.

This post very concisely and personally shows why "tracking industry news and trends, in advocacy, reimbursement, politics and the provision of dialysis" is so important to all of us.

Thank you.



Once again, those "Caring Kidney" folks show what they're really all about.

Bill Peckham

The American Diabetes Association has a press release out thanking the House of Representatives for passing legislation that improves the lives of people with diabetes.

This was pretty nimble of them because as it happens they had a big advocacy day planned for today. I understand these advocacy efforts are months in the planning but you shouldn't operate in a bunker.

Well played ADA.


As a physician, I am pleased for my patients who will get better coverage for health care, but my concerns extend beyond the CKD/dialysis community.

How is approximately one half trillion dollars in medicare cuts going to help the delivery of care? (or the dialysis community?)

Where is the legislation that will protect physicians who want to practice smart, cost-conscious care from being forced into practicing defensive medicine because of the threat of lawsuits?

Who is going to pay for the extra $200+ billion dollars per year this is going to cost?

Perhaps thanks is better directed to our children and grandchildren.

Bill Peckham

Richard I'm glad you agree that this legislation will massively benefit those with CKD and those who provide our care. As far as the rest you'd have to provide some reputable analysis that explains why the Congressional Budget Office is so completely wrong.

Here's what the House says about the legislation and the Congressional Budget Office's analysis of the Cost Containment Measures (PDF):

The Senate‐passed health insurance reform bill as improved by reconciliation contains a series of strong cost containment measures. Indeed, a number of health care experts have pointed out that this bill includes every serious cost‐cutting proposal that has been put forward. Without controlling health care costs, families will continue to be burdened with higher premiums, businesses will be forced to drop coverage or lay off workers, and our national and state budgets will be fiscally unsustainable.

This legislation is fiscally responsible – ensuring not only that it is fully paid for but that it “bends the cost curve” over the long term. The Congressional Budget Office (CBO) estimates that the bill cuts the deficit by $143 billion over the next 10 years and by $1.2 trillion in the following decade. CBO also estimates that, for families, premiums for comparable coverage will be lower under reform.

Delivery system reform means making sure that the right patient gets the right treatment at the right time in the most efficient way possible. This bill includes numerous reforms in Medicare that will reward the value of care, not the volume of care. The health reform bill:

* Mandates that the Secretary of HHS adopt value‐based purchasing and payment methods for Medicare reimbursements for both physicians and hospitals.

* Creates incentives to reduce preventable hospital admissions. Under the bill, beginning in FY 2013, hospital payments will be adjusted based on the dollar value of each hospital’s percentage of potentially preventable Medicare readmissions.

* Encourages the formation of Accountable Care Organizations (ACOs) that allow hospitals and doctors to work together to manage and coordinate care and provides that these ACOs will receive a share of the savings they achieve for Medicare.

* Provides that the Secretary of HHS will develop a national pilot program encouraging hospitals, doctors, and post‐acute providers to coordinate patient care and achieve savings through “bundled payments” (under which one payment would be made for an entire episode of care).

* Creates a new demonstration program for chronically ill Medicare beneficiaries that will test payment incentives and service delivery using home‐based primary care teams.

* Creates a new Center for Medicare and Medicaid Innovation that will research, develop, test, and expand innovative payment and delivery arrangements.

In trying to get health care costs under control, it's important that we know what we're paying for. That means cracking down on waste, fraud, and abuse. The health insurance reform bill:

* Requires HHS to institute a new screening process for all providers and suppliers before granting Medicare billing privilege; and provides states with new authority to impose screening procedures on Medicaid providers.

* Requires providers and suppliers to adopt compliance programs as a condition of participating in Medicare and Medicaid.

* Eliminates wasteful overpayments to Medicare Advantage plans that increase private plan profits, not patient care.

* Increases funding for the Health Care Fraud and Abuse Control Fund to fight Medicare and Medicaid fraud.

* Establishes new penalties for submitting false data on applications, false claims for payment, or for obstructing audit investigations related to Medicare, Medicaid, and CHIP.

The reform bill contains new steps to attempt to contain costs over the long term, including:

* Establishes a 15‐member Independent Payment Advisory Board to present Congress with proposals to slow the growth of Medicare and private health care spending and improve the quality of care. The board is charged with developing recommendations about innovative ways to better control costs both in public and private health programs, while ensuring that care is improved.

* Includes a revised version of the excise tax on high‐cost health plans, including delaying the effective date of the tax from 2013 to 2018, thereby allowing all health plans additional time to become more efficient, while at the same time not impairing the tax’s ability to slow the growth of health care costs over the long term.

Benjamin Franklin was right—“An ounce of prevention is worth a pound of cure.” Prevention and wellness programs will help Americans live longer, healthier lives, and help reduce the need for more costly treatments of health conditions later in life. The reform bill:

*Eliminates patient co‐pays for preventive services in Medicare, Medicaid, and private plans.

* Establishes a Prevention and Public Health Investment Fund to provide an expanded and sustained national investment in prevention and public health.

* Authorizes HHS to award grants to eligible entities to promote individual and community health and to prevent chronic illness.

* Funds research in public health services and systems to examine best prevention practices.

The creation of Health Insurance Exchanges and insurance reforms will promote healthy competition in the market, putting downward pressure on prices. The reform bill:

* Establishes state‐based Health Insurance Exchanges, transparent marketplaces that replace today’s dysfunctional small group and individual markets, to lower administrative costs and provide incentives to insurers to maintain lower premiums in order to attract millions of Exchange enrollees.

* Includes insurance reforms and standardized benefit packages that will require insurers to compete on the basis of price and quality, not on the basis of the medical underwriting of sicker patients.

* Discourages excessive price increases by insurance companies by requiring disclosure and justification of insurance rate increases. Insurers with excessive price increases can be excluded from Exchanges, providing a strong incentive to keep premiums low.

To the specific question of Medicare Advantage which I assume you are alluding to, the first thing to know is that people with Medicare due to ESRD are specifically bared from enrolling in Medicare Part C but you want to look at it from the point of view of the average citizen so let us (PDF):

When private insurance companies first petitioned to join Medicare in the 1980s, they asserted they could provide more care for less than it costs Medicare to provide its services and agreed to be paid 5 percent less than Medicare fee‐for‐service rates to prove that point. Today, these same companies – now called Medicare Advantage (MA) plans – are paid on average 14 percent more than it costs to provide care through the traditional fee‐for‐service Medicare program. These overpayments drain the Medicare trust fund, raise premiums for all Medicare enrollees, and cost taxpayers $12 billion a year.

The proposal in the Reconciliation bill is a compromise between the House and Senate bills. Payment rates for private plans that contract with Medicare will be set to certain benchmarks that are linked to local Medicare spending. In addition:

* Payment benchmarks range from 95 percent of local Medicare spending in relatively high spending parts of the country, to 115 percent in relatively low spending areas;

* High‐quality plans that improve their enrollees’ health receive an increase in their payment;

* Plans that are more efficient and provide care for less than the maximum payment rate get to keep a rebate of anywhere from 50 to 75 percent of the difference, depending on the quality ranking of the plan. This money can be used to offer extra benefits or reduce cost sharing.

Payment rates in 2011 will simply be frozen, with no reduction in the levels from 2010. Plans will have three years to transition to the reformed payment system, with up to seven years for counties facing more significant changes. Efficient plans that offer true value will be able to adapt to these changes over the transitional period and continue to offer coverage.

Seniors will have the guarantee that their premium dollars will pay for care and not pad profit margins. The bill requires MA plans to spend at least 85 percent of their revenue on clinical services and activities that improve quality of care.

Insurance companies have protested that these reforms will hurt their ability to do business, trying to scare seniors currently enrolled in MA plans. However, the non‐partisan Congressional Budget Office disputes this ‐‐ estimating that after ten years, 9.1 million people will be enrolled in these plans. The reforms ensure that Medicare beneficiaries’ premiums are not artificially inflated to subsidize private insurance companies, and Medicare stays solvent and stable into the future.

Who's your source?


"Bundling", "efficiencies", "productivity" and rationing panels are just ways of saying that there will be less payment for the same services.

The House's opinion on their own legislation is hardly a reputable source.

From CBO's letter to speaker Pelosi dated March 20: Table 2 (Estimate of Changes in Direct Spending and Revenue) under column for year 2019 shows $51 billion reduction in Medicare FFS payments and ONLY $25 billion reduction in Medicare Advantage FFS rates and $33 billion in Medicare/Medicaid DSH and "other" payment reductions.

Table 4: "Gross cost of coverage provisions" shows a cost of $214 billion dollars just for the year 2019. This is only reduced by $42 billion by penalties on individuals, employers, excise tax on high-premium insurance plans and "other effects on tax revenues".

One half of the estimated gross cost from 2010-2019 occurs in the last 27 MONTHS of the 10 year interval (again, CBO numbers).

At the "health care summit" Paul Ryan estimated the true 10 year cost at over $2 trillion, which went unrebutted by the president (included "doc fix", double counting, full implementation of program, etc.)

CBO letter to Orrin Hatch October 9, 2009 estimates $54 billion in savings over ten years with tort reform-- where is that in this legislation?

Former CBO director op-ed column NY Times March 21, 2010 estimates additional budget deficit of $562 billion in the first 10 years once "gimmicks and budgetary games" are stripped out.

I say again-- we ought to thank our children and grandchildren.

Bill Peckham

To be clear DSEN has always considered official communication from the White House, the Congress or any federal agency to be the highest level evidence for a position. DSEN always endeavors to link and discuss primary sources. DSEN has linked and excepted directly from legislation, including HR3490.

Here's a link to the CBO communication jump page:

I don't see a letter to Pelosi dated 3/20 that Richard mentions. The one I see is dated 3/18 and the tables don't line up with what Richard posted. For instance looking at this PDF (http://www.cbo.gov/doc.cfm?index=11355&type=1 Table 2 is titled:
Table 2. Preliminary Estimate of the Effects of the Insurance Coverage Provisions of the Reconciliation Legislation Combined with H.R. 3590 as Passed by the Senate.

The table shows the year by year spending to reach the advertised cost of $940 Billion.

What is interesting is that the most recent letter is from the CBO to Rep Ryan. I think Richard will find it particularly interesting because it specifically speaks to the points he has raised (PDF http://www.cbo.gov/doc.cfm?index=11376&type=1. For instance:
The Combined Budgetary Impact of Enacting the Reconciliation Proposal, H.R. 3590, and H.R. 3961
CBO estimates that enacting H.R. 3961 together with those two bills would add $59 billion to budget deficits over the 2010–2019 period. That amount is about $10 billion less than the figure that would result from summing the effects of enacting the bills separately. The $10 billion difference occurs primarily because H.R. 3590 and the reconciliation proposal would modify how the government’s payments to Medicare Advantage plans are set. The higher payment rates for physicians that would stem from the enactment of H.R. 3961 would, under current law, result in higher payments to those plans. But the changes made by the other bills would moderate that increase.

That's not the same as 2 Trillion. Read the whole letter - it has footnotes. Other letter topics include The Budgetary Impact of Enacting the Reconciliation Proposal and H.R. 3590 Excluding Cash Flows of the Hospital Insurance Trust Fund and The Budgetary Impact of Enacting the Reconciliation Proposal and H.R. 3590 with Some Provisions Altered.


I think you misunderstood what I wrote. I did not write that the addition to the budget deficit would be $2 trillion. I wrote that the true 10 year cost is $2 trillion dollars (well over the advertised $940 billion number). That is about $548 million dollars every day!

The link you provided shows $216 billion gross cost in the year 2019 (reasonably close to what I wrote).

We ought to thank our children and grandchildren.

Bill Peckham

I'm not sure what the use is of picking individual numbers out of the CBO report - why wouldn't you look at revenue and costs together? Table 4 shows that in 2019 the legislation will generate over 300 billion to the credit side of the ledger. There's a reason these reports have summaries.

Also I don't understand the argument that the physician fix is some new thing that has to be accounted for right now. I started this blog on 12/26/07; nine days later on 1/4/08 I wrote my first post on that mentioned the physician fix http://www.billpeckham.com/from_the_sharp_end_of_the/2008/01/remebering-the.html. This issue has been a fixture of the legislative process for the last decade. Since the last century. Why should health insurance reform need to account for permanently fixing this perennial issue?

The Congressional Budget Office has a history of underestimating cost savings in Medicare reform. What evidence is there that they've over estimated this time?

They're saying this legislation saves money for the children ... as well as gives them access to insurance.

Bill Peckham

A note about large numbers. We're talking about changing how 940 BILLION is spent over 10 years on a healthcare sector that will cost something like 40 TRILLION or more over that same period.

To put this in dollar terms that our minds can comprehend (I can't really comprehend a billion dollars, let alone a trillion) it's as if you are saying that over next 10 years you'll spend $9,400 differently, out of $400,000 you expect to spend.

In the tenth year, 2019, each day you expect to be spending $5.91 differently.


Last post as I see we are not getting anywhere on analyzing the CBO numbers. My point in picking out one year was to show how deceptive the "summary" numbers (advertised by advocates) are. A few points:

Careful reading of the letter to Rep. Ryan from the CBO supports my position (from page 4):

"Thus, the legislation's effects on the rest of the budget... would amount to a net INCREASE in federal deficits of $260 billion over the same period."

A clearer explanation of the tricks used to make the numbers look good is in the former CBO's NY Times op-ed http://www.nytimes.com/2010/03/21/opinion/21holtz-eakin.html (I apologize if my attempt at including the link does not work, I am not a "blogger"). The take home message is "the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out."

There is a long history of underestimating the cost of new health care entitlements, from Medicare and the ESRD program in the 1960's to the Massachusetts health care reform of recent vintage.

Getting to your original point, I think the lack of enthusiasm for this legislation is not over the benefits it gives to some, but over the dishonest way it was created and forced through Congress in a highly partisan and irregular way against the will of the people (at least as documented by pollsters). For myself, I am deeply saddened over the burden it will put on my children.

Bill Peckham

DSEN has tracked this legislation since January 2009. This legislation is pretty close to what was campaigned on by the President and by the Democratic Congressional caucus. There was a year long debate, every blogger, every legislator, every voter it seems had their say. HR 3490 passed the Senate with 60 votes. It passed the House through the normal order.

What exactly was irregular or duplicitous about what happened?

You didn't answer why the decade long problem with pending Medicare physician reimbursement cuts have to be included in the reckoning of HR3490, which is the source of the budget deficit number.

One final thought - the polls never showed the will of the people was being subverted. Only when opposition from the right and left were conflated did a majority oppose the legislation. Funny how starting today the polls will be meaningless.

Thea Samit

I am 79 years old and with CKD. Recently it has worstened some, but i still feel well, work, am active. However, my time for dialysis may come.

My doctor has told me that he will be not be allowed to start dialysis on anyone age 85 or older, as decred in the new health reform law.

Furthermore, I have read that I will not be allowed to start it privately if Medicare is no longer permitted to start someone at that age, and I am 85 or older if and when I need it.

Is this true? It sounds awful. Sort of like age related genocide!

Bill Peckham

It is not true that those over 85 will not be allowed to start dialysis. There is nothing in the law that even suggests such a thing. There is nothing in the law that directs a different standard of care based on age.

I have no idea why your doctor would say that, he is completely wrong.

Thea Samit

That is good to know. It may be a rumor he has heard from other doctors; there is a lot of that going around. This doctor is an excellent physician but could still be wrong about the non medical end of a brand new bill. Thanks so much for the correction.

roberta mikles

Bill, thanks for presenting the 'real' facts. There is so much in such a large document and so many rumors or misbeliefs either coming from the far left or far right..... and, still much talk on the streets with everyday people about the 'death panel' which does NOT exist. People need to not listen to others who are not educated in this area as it only puts more fuel into an already lit fire. This increases the fear that many people are experiencing. Again, thanks for continuing to be on top so that we, your readers, can continue to learn
Roberta Mikles RN
Patient Safety Advocate

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