Last Thursday, the Medicare Trustees released their latest assessment of the long-term adequacy of the Trust Funds that reimburse hospitals, nursing homes, dialysis centers, physicians and prescription drugs of behalf of Medicare’s 64 million seniors and disabled adults.
The 263-page 2022 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS paints a manageable near-term picture that’s misleading. Here’s the issue: “The Trustees assume that health care spending patterns will return to pre-pandemic levels in 2024….” (p.3). As a result, the Trustees extended their solvency forecast for the Part A Hospital Trust Fund by 2 years to 2028 prompting industry insiders to breathe a sigh of relief.” Not so fast.
Medicare has two separate trust funds, the Hospital Insurance (HI) trust fund and the Supplementary Medical Insurance (SMI) trust fund. The HI trust fund pays for Medicare Part A, which covers inpatient hospital services, hospice care, and skilled nursing facility and home health services following hospital stays; SMI pays for Medicare Part B — which covers visits to doctor’s offices and other outpatient facilities — and Part D, which covers prescription drugs. The HI trust fund is financed through a payroll tax (1.45% employee + 1.45% employer or 2.90% if self-employed + additional 0.9% tax on earnings above $200,000 for single taxpayers/ $250,000 for married couples), while SMI is financed roughly 25% by beneficiary premiums and 75% by general revenues.
The six trustees of those funds, as well as of the two Social Security trust funds, include the secretaries of Labor, Treasury, and Health and Human Services, as well as the Social Security commissioner. The other two trustee positions — which are reserved for members of the public — have been vacant since 2015.
In 2021, Medicare Part A covered 63.4 million people, Part B covered 58.4 million, Part D covered 49.9 million and 43% were enrolled in Part C Medicare Advantage plans. Total expenditures in 2021 were $839.3 billion, and total income was $887.6 billion ($882.3 billion in from premiums, co-pays, et al and $5.3 billion in interest earnings). Total per capita spending was $14,056 per enrollee ($5105 for Part A, $6,860 in Part B, $2,091 in Part D).
Key Excerpts in Report:
This report is the Trustees’ 57th. Its projections are developed in two time-frames: short term (2022-2031) and long-term (2022-2096) with low cost, intermediate and high- cost assumptions scenarios for each. A careful read provides a cautionary view about future Medicare funding adequacy:
· “Medicare’s costs under current law rise steadily from their current level of 3.9%of GDP in 2021 to 6.2 %in 2046. Costs then rise more slowly before leveling off at around 6.5% in the final 25 years of the projection period. Under the illustrative alternative, projected costs would continue rising steadily throughout the projection period, reaching 6.5% of GDP in 2046 and 8.6% in 2096.” (p.6, 10, 20)
· “…the difference between Medicare’s total outlays and its dedicated financing sources is projected to exceed 45% of outlays within 7 years. “(p.8)
· Projected annual spending increases through 2096 based on demographic and CPI changes: Part A: +3.5%; SMI Part B: +3.8%, SMI Part D +4.2%, Total Medicare +3.7% (Table II C1 p.15)
· “The Trustees project that the overall participation rate for private health plans (Medicare Advantage) will continue to increase— from about 46% in 2022 to about 53% in 2031 and thereafter. (p.15, 158)
· “…the productivity adjustments to provider price updates are estimated to reduce annual HI per capita cost growth by an average of 0.7% through 2031 and 1.0% thereafter. (p.30)
· “The combination of premium and cost-sharing amounts for Parts B and D would equal about 28% of the average Social Security benefit in 2022 and would increase to an estimated 42% in 2096. (p.35)
· “HI revenues would cover only 90% of estimated expenditures in 2028 and 80% in 2046. (p.44)
· “The average complexity of hospital admissions (case mix) increased in fiscal year 2021, and it is expected to decrease in fiscal years 2022 and 2023 before increasing by 0.5% annually in fiscal years 2024 through 2031 as a result of an assumed continuation of the current trend toward treating less complicated cases in outpatient settings, ongoing changes in DRG coding, and the overall impact of new technology. (p.122)
· “..Based on these payment mechanisms, the existing demonstration and payment models, and the requirements for becoming an advanced APM qualified physician, the Trustees assume that physician participation in advanced APMs will grow from 13.5% of spending in 2020 to 100% by 2065 (p.135)
· “The ability of new delivery and payment methods to lower cost growth rates is uncertain at this time. Preliminary indications are that some of these delivery reforms have had modest levels of success in lowering costs. It is too early to tell if these reductions in spending will continue or if they will grow to the magnitude needed to align with the statutory Medicare price updates. Given these uncertainties, it will be important for policymakers to monitor the adequacy of Medicare payment rates over time to ensure beneficiary access to high-quality care. (p.191)
· “On average, annual increases in per beneficiary costs have been greater for SMI Part B than for HI during the previous five decades— by approximately 1.0%, 4.5%, 1.0%, 2.5%, and 2.6% per year in the 1970s, 1980s, 1990s, 2000s, and 2010s, respectively. The HI increase remains lower than the SMI Part B increase over the next 10 years due to lower utilization growth of HI services. (p.195)
As noted in the report’s opening section “No one knows whether future developments will, on balance, increase or decrease costs…Accordingly, the date of HI trust fund depletion could differ substantially in either direction from the 2028 intermediate estimate.” That’s an understatement.
The report never mentions the value agenda, the impact of private equity-backed and strategic disruptors offering low-cost alternatives, the potential of technology-enabled self-care, regulatory changes that might constrain hospital consolidation, or cost-containment efforts by employers and insurers. It pooh-poohs the effectiveness of alternative payment models in lowering spending. It is dismissive of pressure from consumers for lower hospital prices. It is mute on the impact of drug, workforce and supply chain expenses that are decimating hospital operating margins. It assumes gradual increases in Medicare Part A funding through payroll taxes but no change to the formula. It presumes a modest increase in Medicare Advantage enrollment and negligible negative impact on hospital cost and spending. It does not reference Medicare’s obligations to state Medicaid programs. And it is absent reference to monetary policy, the cost of capital and the near-term challenge of inflation.
Health actuaries use lag indicators to assess trends about possible changes in market utilization and spending. However, pre-pandemic lag indicators are particularly suspect as a basis for this report.
It’s an interesting read, but an inadequate roadmap for strategic planning in the industry, especially for hospitals.
To zero in on its projection that the Part A Hospital Insurance trust fund will be insolvent in 2028 and face a 75-year shortfall of 0.7% to 1.6% of payroll is short-sighted. The market will respond more quickly than the Trustees recognize.
To start, the Trustees should consider filling its two vacancies with private sector experts and improve the methodology on which their projections are based. Lacking both, the 58th edition of this report will be even less credible than this one.
2022 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS June 2, 2022 www.cms.gov/files/document/2022-medicare-trustees-report
CDC: Covid cases increasing: Last week marked the eighth consecutive week of increasing COVID-19 cases in the U.S. Per the CDC:
· On average, the U.S. is reporting nearly 110,000 new cases every day, and for the seventh consecutive week, COVID-19 cases among children have also increased.
· The U.S. also continues to see an increase in the overall number of patients requiring care for COVID-19 to more than 3,500/day but nowhere near its peak.
· A total of 55.7% of Americans are currently living in a high or medium community risk county. Nearly a quarter of those people — 23.1% — are living in a high-risk community, while just under a third — 32.6% — are living in a medium risk county.
Study: cancer screening decline during pandemic: In this national survey study, between 2018 and 2020, past-year breast and cervical cancer screening prevalence declined by 6% and 11%, respectively. There was no change in past-year colorectal cancer screening prevalence, with a 7% increase in stool testing and a 16% decrease in colonoscopy.
Fedewa et al Changes in Cancer Screening in the US During the COVID-19 Pandemic JAMA Netw Open June 3, 2022;5(6):e2215490. doi:10.1001/jamanetworkopen.2022.15490
FTC challenging 2 combinations: Last week, the Federal Trade Commission filed lawsuits to block RWJ Barnabas Health’s acquisition of St. Peter’s HealthCare System in New Jersey and HCA Healthcare’s acquisition of five Steward Health Care System hospitals in Utah, regulators announced Thursday.
The proposed deal in New Jersey would give the West Orange-based not-for-profit health system a 50% market share for general acute care services in Middlesex County, according to the complaint. For-profit HCA Healthcare’s acquisition of five Steward Health Care System hospitals in Utah would reduce the number of health systems offering acute services from three to two in some markets, the FTC said.
The trial involving RWJ Barnabas Health and St. Peter’s HealthCare System is scheduled for Nov. 29. The HCA Healthcare-Steward Health Care System trial is set for Dec. 13.
Related: Last week, the FTC also announced a 2-day workshop June 14-15 “that will focus on “new approaches to enforcing the antitrust laws in the pharmaceutical industry.” The FTC published a notice in February asking for input on how PBM practices such as rebates and fees, potentially anticompetitive contracts, and attempts to steer patients toward certain pharmacies affect patients and payers. The commission received more than 23,700 submissions by the time the comment period expired Wednesday.
Pharma mergers: FTC and DOJ to explore new ways of enforcing antitrust laws EndPoints May 31, 2022 endpts.com/pharma-mergers-ftc-and-doj-to-explore-new-ways-of-enforcing-antitrust-laws
PK Note: This was predictable and will impact consolidation plans across the entire industry, especially insurers, hospitals, PBMs and medical practices: https://www.paulkeckley.com/the-keckley-report/2022/5/16/the-ftc-will-be-healthcares-biggest-headache-until-2025
New Yorker columnist: absurdist thinking on gun control debate: “In a single ten-day stretch, 44 people were murdered in mass shootings throughout the country in May—In the two deadliest of these incidents, the oldest victim was an eighty-six-year-old grandmother, who was shot in a Tops supermarket in Buffalo, New York; the youngest were nine-year-old fourth-grade students, who died in connected classrooms at Robb Elementary School, in Uvalde, Texas. In the interim, there were other mass shootings, in Indiana, Washington State, Florida, California, Louisiana, Illinois, Pennsylvania, North Carolina, and elsewhere. Less than one per cent of gun deaths in the United States are the result of mass shootings. “
The most obvious indicator of the absurdist thinking on this subject can be seen in the fact that the latest massacre happened in Texas, a state that has more than 8000 gun dealers, and where an estimated 37% of the population owns firearms. Last year, Governor Greg Abbott signed a bill that allowed most Texans to carry handguns without a license or mandatory training. This legislation did not prevent the Uvalde carnage any more than previous legislation allowing easier access to guns prevented the 2019 shooting that killed twenty-three people at an El Paso Walmart, or the 2017 attack in the town of Sutherland Springs, which took the lives of twenty-six worshippers in a rural church.”
Jelani Cobb The Atrocity of American Gun Culture New Yorker May 29, 2022www.newyorker.com/magazine/2022/06/06/the-atrocity-of-american-gun-culture
BLS Jobs Report: healthcare hiring…: Per the Bureau of Labor Statistics data released Friday: The U.S. labor market remained tight in April with U.S. employers adding 428,000 jobs and unemployment remaining at a pandemic low of 3.6%. The labor market has added more than 6.5 million jobs in the past year. Inflation rose 8.3% year-over-year in April, a 0.2% drop from March’s 40-year high, while consumer prices rose 0.3% this month compared to March’s 1.2% rise
· Healthcare added 28,300 jobs in May–down from 36,800 positions in April.
· In the last 12 months, healthcare sector has added 250,100 jobs– down 223,000 positions, about 1.3%, from February 2020.
· Hospitals added16,000 employees, physician offices added 5,800 jobs, nursing homes added 1,300 jobs in May, medical and diagnostic laboratories added 1,400 jobs and outpatient care centers added 1,100.
Bureau of Labor Statistics www.bls.gov
US Grocers see market pressure: “Grocers see Today Americans spend a smaller share of their income on food to be cooked at home—about 6%—than people in almost any other rich country. Low prices are reflected in low profit margins. At Kroger, America’s second-biggest supermarket chain, the net margin, after taxes, is about 1.2%; at Walmart, the biggest, it is 2.3%. Yet Americans are finding themselves served less and less well by their supermarkets. Food prices have risen by 11% over the past year, which is sharply more than in other rich economies. “
Why Americans are poorly served by their grocery stores The Economist June 3, 2022 www.economist.com/united-states/2022/06/02/why-americans-are-poorly-served-by-their-grocery-stores
Rand: public health officials not ready for 988 national suicide prevention hotline: Per the RAND survey:
· 51% of mental health agency directors reported that they hadn’t been involved in the development of a strategic plan for the launch of 988. Only 16% reported that they had helped develop a budget to support 988 operations.
· About 85% reported that there was a mental health emergency hotline or call center operating in their jurisdiction, although fewer than one-half of those hotlines were reported as part of the
· 55% of places with hotlines had staff trained to interact with children and adolescents, but fewer than half had training to interact with other special populations like people experiencing homelessness or LGBTQ individuals.
Preparedness for 988 Throughout the United States RAND June 2, 2022 www.rand.org
AMA opposes mandatory opioid use disorder training for physicians: The bill, the Medication Access and Training Expansion Act, requires that doctors complete a one-time, 8-hour training course on treating patients with opioid and other substance use disorders as a condition of being able to prescribe controlled substances. The AMA argues that “a one-time training mandate for substance use disorders, no matter how well-intentioned, will not have a meaningful impact on reducing drug-related overdose.” The AMA has a longstanding position against mandatory education programs for physicians preferring oversight by state licensing agencies controlled by physicians.
American Medical Association www.ama.org
EHR prompts increase clinician adherence: This cluster randomized clinical trial involving 309 clinicians in 43 primary care clinics found that providing direct access to a PDMP tool from the EHR increased PDMP queries by 60% compared with clinicians in control clinics who did not have EHR-integrated access.
Neprash et al Effect of Integrating Access to a Prescription Drug Monitoring Program Within the Electronic Health Record on the Frequency of Queries by Primary Care Clinicians A Cluster Randomized Clinical Trial JAMA Health Forum June 5,2022;3(6):e221852. doi:10.1001/jamahealthforum.2022.1852
Study: disciplinary actions against physicians decreased: Researchers analyzed actions against physician licenses owing to substance use and psychological health vs physical health between 2004 and 2020. Findings:
· Overall, 5032 actions were taken against the licenses of US physicians between 2004 and 2020 were related to substance use (3841 [76.3%]), psychological impairment (577 [11.5%]), or physical impairment (614 [12.2%]).
· Despite a peak in 2011, actions related to substance use declined in frequency between 2004 and 2020 per calendar-year from 5.6 to 1.6 actions per 10 000 physicians.
· Actions related to psychological impairment slightly decreased between 2004 and 2020 from 0.8 to 0.2 actions per 10 000 physicians. Frequency of actions related to physical impairment also slightly decreased between 2004 and 2020 per calendar- year from 0.7 to 0.2 actions per 10 000 physicians.
Rotenstein et al Patterns in Actions Against Physician Licenses Related to Substance Use and Psychological or Physical Impairment in the US From 2004 to 2020 JAMA Health Forum. June 3, 2022;3(6):e221163. doi:10.1001/jamahealthforum.2022.1163
U.N. Report: 2.5 billion need assistive devices: Based on self-reported survey data collected by the World Health Organization (WHO):
· 31% of the global population (and about two-thirds of the global population aged 60 years or older) need assistive products, including eyeglasses. When eyeglasses are excluded, roughly 11% of people globally (900 million) need assistive products other than or in addition to eyeglasses.
· Because of aging populations and disabilities related to an increasing prevalence of noncommunicable diseases globally, the number of people who will need 1 or more assistive products is likely to increase to 3.5 billion by 2050.
World Health Organization & United Nations Children’s Fund (UNICEF). (2022). Global report on assistive technology. World Health Organization. https://apps.who.int/iris/handle/10665/354357. License: CC BY-NC-SA 3.0 IGO
McKinsey: Employers expanding voluntary benefits: Per McKinsey’s 2021 survey of 1,640 employer-benefits decision makers, released last week:
· 78% of respondents reported they offer at least one voluntary benefit to support employee well-being, enrich core benefit plans, and attract new employees. Among nonmedical benefits, employers perceive dental, vision, and short-term disability as most important.
· 32% of employers offer a high-deductible health plans (HDHPs)—up from 17% in 2011: 28% of their employees have enrolled in an HDHP. Employer satisfaction with HDHPs increased by 20 to 56% from 2018 to 2021.
Employers look to expand health benefits while managing medical costs McKinsey May 25, 2022www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/employers-look-to-expand-health-benefits-while-managing-medical-costs
Fair Health: Telehealth use down in March: In March 2022, telehealth utilization, as measured by telehealth’s share of all medical claim lines, fell nationally for the second straight month per FAIR Health’s Monthly Telehealth Regional Tracker. Following a drop of 9.3 % in February, telehealth utilization decreased 6.1 % in March, declining from 4.9 % of all medical claim lines in February to 4.6 % in March.
Monthly Telehealth Regional Tracker www.fairhealth.org/states-by-the-numbers/telehealth
Study: telehealth use in pandemic higher in disadvantaged populations: Background: Anticipating a growing need for health care during the COVID-19 pandemic, the Centers for Medicare and Medicaid Services expanded telemedicine coverage in the United States on March 6, 2020. Analysis:
Before the waiver, 0.42% of patients had at least one outpatient telemedicine visit, with no significant differences between people residing in the most versus the least disadvantaged neighborhoods. With the waiver, 9.97% of patients had at least one outpatient telemedicine visit, with the highest odds of utilization seen for people residing in the most disadvantaged neighborhoods.
Bose et al Medicare Beneficiaries In Disadvantaged Neighborhoods Increased Telemedicine Use During The COVID-19 Pandemic Health Affairs May 2022https://doi.org/10.1377/hlthaff.2021.01706
WSJ Poll: Majority favor keeping Roe v. Wade: Per the WSJ-NORC poll:
· 68% of respondents said they wouldn’t like to see the court completely overturn Roe, while 30% said they support that move.
· On banning abortion after 15 weeks of pregnancy, 34% of respondents were in support, 43% were in opposition and 21% said they neither supported nor opposed such a move.
· 57% of respondents said a woman should be able to obtain a legal abortion if she wants it for any reason, the highest share since NORC began asking the question every few years starting in 1977.
Upholding Roe v. Wade Is Supported by Most Americans, WSJ Poll Finds June 2, 2022 www.wsj.com/articles/upholding-roe-v-wade-is-supported-by-most-americans-wsj-poll-finds
AHIP survey: No Surprises Act (NSA) prevented 2 million bills in Jan-Feb: NSA passed December 27, 2022. Findings: “0.23% of all commercial claims were NSA-eligible. Using past data on the total number of claims processed by commercial health plans, we estimate that there were more than 2 million NSA-eligible claims in commercial markets during the first two months of 2022.”
More Than 2 Million Surprise Bills Avoided During January-February 2022 www.ahip.org
Marketplace subsidies important in midterm election: The American Rescue Plan Act of 2021 included temporary expansion of subsidies to lower the cost of plans sold on the Affordable Care Act exchange ends Jan. 1. Nearly all of the 13 million people receiving the federal subsidies would see their premiums rise—on average by 53%.
Democrats Push to Extend Health-Insurance Subsidies Ahead of Midterms Wall Street Journal May 31, 2022 www.wsj.com/articles/democrats-push-to-extend-health-insurance-subsidies-ahead-of-midterms
KFF: Insurers owe $1 billion in rebates: Background: The Medical Loss Ratio (MLR) provision of the Affordable Care Act (ACA) limits the amount of premium income that insurers can keep for administration, marketing, and profits. Insurers that fail to meet the applicable MLR threshold are required to pay back excess profits or margins in the form of rebates to their enrollees.
Researchers estimate insurers will issue a total of about $1 billion in MLR rebates across all commercial markets in 2022: Insurers in the individual market–$603 million, small group market– $275 million and million large group market–$168 million.
Kaiser Family Foundation June 1, 2022 www.kff.org/private-insurance/issue-brief/data-note-2022-medical-loss-ratio-rebates
Study: Medicaid expansion associated with increased outpatient use: Researchers analyzed whether the ACA Medicaid expansion to working-age adults was associated with increased Medicaid enrollment and health care use among older adults with low income with and without chronic condition limitations. Findings:
“In this cross-sectional study of 7153 US adults 65 years or older with low income, ACA Medicaid expansion was associated with significant increases in the likelihood of Medicaid enrollment and outpatient health care use among those with chronic condition limitations. No associations were found between ACA Medicaid expansion and Medicaid enrollment and health care use among those without such limitations.”
McInerney et al Association of Medicaid Expansion With Medicaid Enrollment and Health Care Use Among Older Adults With Low Income and Chronic Condition Limitations JAMA Health Forum. June 3, 2022;3(6):e221373. doi:10.1001/jamahealthforum.2022.1373