Cornelius Hogan - Senate Health and Welfare, Chair, Senator Doug Racine - 2,23,2007

Senate Health and Welfare, Chair, Senator Doug Racine

To: Senate Health and Welfare, Chair, Senator Doug Racine
From: Cornelius Hogan
Date: February 23. 2010

Re: General Critique of: Feb 16, '2010 Draft Outline of 2010 Health Reform Bill, and its Predecessor Document, 'Immediate-Term Cost Containment Options', Jan.28, 2010. Along with S.88,

Thank you for the invitation and opportunity to comment on a possible emerging health care bill. My comments are aimed at reinforcing the direction you are taking. The three documents that I'm relying on are the 'Feb 16, '2010 Draft Outline of 2010 Health Reform Bill', its predecessor document, 'Immediate-Term Cost Containment Options', Jan.28, 2010, and S.88 as submitted in the last session.

Bill Draft Framework

My first comments will be to the general order of content and hierarchy in the 1/16/10 document which has four sections to consider.

A more effective sequence might be to start the bill outline with Section III, the 'Plan to restructure...' The health care debate in Vermont has quickly reached the point where we must quickly get beyond incremental and individual programs and initiatives to the larger system strategies for the future as indicated in Sections II and III of the outline. This, in essence is important system design work which quickly needs to be put in place so that individual programs and initiatives can be placed into a larger more rational design for the delivery and financing of health care in Vermont.

Systematic Movement of Legislation Toward a Comprehensive System Design

In this regard, Section III along with a broader view and the implied design work of section II, are the headlines of any potential bill. Sections II and III present the opportunity for serious and comprehensive overdue health care system design work.

Continuing this logic, Section IV 'Reorganization of state government...' should be also be included in the spirit of the Sections II and III design focus of the bill. This would ensure the compatibility of any reorganization with the design work and assure that whatever reorganization is envisioned would be consistent with an overall system design.

This reinforces the thought that 'Acceleration of delivery system and global budgeting...' be slowed down to be included in overall design work. This is because we should not be pre-empting or pre-defining the design work yet to emerge. Any work that is as important as delivery system change, must be included as part of an overall design. To do otherwise would only further take us down the track of creating new programs which potentially would have to be unraveled as a result of good overall system design work.

Finally, the last or secondary part of this draft would be the provisions of current Section I 'Immediate cost containment options'. There is no question that we need to undertake considerable cost containment efforts consistent with current Section I, using the substantial machinery we have at hand to move toward the cost control targets. And we have to admit that these controls need to happen sooner than later. At the same time, the bill should reflect clearly that these controls and targets may be temporary in nature, in that the mechanisms envisioned may change as a result of the broader system design work.

When one reads the provisions of the January 28 draft of more detailed review of hospital and carrier expenditures, it is clear that existing control mechanisms will be employed. We need to keep the door open for the results of the system design work that could well result in very different kinds of control mechanisms, that might or might not be compatible with current control machinery, and provisions based on current control machinery.

A good example of this tension can be found in the recent report of February 12, 2010 'Administrative Cost Effectiveness of the Vermont Catamount Health Program'. In that report there is the finding that perhaps as much as one million dollars could be saved by having OVA administer the Catamount program rather than Blue Cross Blue Shield. It is very tempting to rush to conclusion about that finding by going through a process to shift that responsibility. However, a major system re-design effort could well result, for example, in not having a Catamount program, or even not having an OVA. Decisions made in the current crisis mode of runaway costs need to be placed into a larger set of health reform design strategies.

In sum, a revised outline of the draft might look like this.

Current Section III, which will subsume current Section IV. Current Section I, which would be labeled as interim until the completion of the design work inherent in current Section III.

Connected Thoughts

Plain Language

The outline of the draft is in plain language. This is refreshing because the language we use is usually insider and often intentionally complex language, such as PPO's, Blueprints, ACO's. HMO's etc. If you can keep the final bill to this standard you will have done everyone a favor. This also falls into the category of passing things we can understand. I know you would agree that there has been considerable health care legislation put on the table that few could or would fully understand.

Jumping off Cliffs

A good example is the rush to ACO's or accountable care organizations. A more common sense way to proceed is to complete a health care system design, as envisioned in the draft. That would be the time to fully consider such a broad idea. And as an aside, can anyone here offer a 20 word definition of what an ACO really is? Or who wins or loses, or how it squares with the relatively low compensation primary care docs experience in Vermont, or what kind of new paperwork it will require of docs. Until we have a larger design for health care change, and until we have answers to all the niggling questions, we should not jump off another program cliff and make the same assumptions about cost control that we did with chronic disease management, or even Catamount. Common Sense Criteria

There are some common sense criteria that need to be applied to legislation at this point in our development. Namely, the legislation should be big enough to make a difference on the cost front, and at the same time, tidy and clear enough to be controlled and managed. But most importantly there should be solid evidence for adopting any given approach. This standard has not been the hallmark of recent past program adoptions, such as Catamount and Chronic Disease Management.

On this point I'd like to speak to the current serious flirtation with what are known as ACO's. Toward that end, I offer two different views by known experts which have recently appeared in the Health Affairs discussion blog. They are 'Moving from Volume-Driven Medicine Toward Accountable Care' by McKethan and McClellan, and 'The Accountable Care Organization: Not Ready for Prime Time', by Jeff Goldsmith. All of these people are well known theorists in the field, but present decidedly different views of the possibilities.

When you read these two articles, you will be struck by the tentativeness of the language. The articles are full of language such as 'envisioning', 'latest concepts', future capacity needed', 'can help us learn' and, 'seeking new approaches', as examples. Both articles are full of open questions and much of the discussion is theoretical in nature.

To this point in time, the concept of ACO's, which are integrated provider collaborations that can receive 'shared savings bonuses', are on thin ice from an evidence point of view. We need a full health care system design in which to properly place these kinds of considerations.

Indicators of Success

A related thought, which is implied in the February draft outline, is to make sure the indicators of success are spelled out and made clear. For example, fundamental indicators, such as, per capita cost, total system costs in Vermont, dollars and per cent of administrative costs avoided, and the per cent of our citizens covered are all examples of trackable and understandable to all common sense indicators. These are the ultimate and cardinal indicators of success or lack of success, and are standards that health care program development in Vermont in the recent years have not been front and center.

Question: Is there a bill on the table that could serve as a vehicle for this work?

S.88 is a bill that could serve to bring a set of health care options for Vermont to the table in a thoughtful and comprehensive way, including accommodating the kinds of suggestions that I've made here.

First, as introduced, it had pretty broad and strong support in the Senate with 15 co-sponsors. That is a good foundation for moving forward.

Following are some of the elements of the bill that are certainly consistent with discussion here today.

  • Lines 8 - 12 offers a broad enough purpose for the needed design work of providing options for moving forward. I suggest that the idea of 'design' be included in the bill's purpose. Design is an action word which is beyond study and planning.
  • The 'Findings' section of the bill, although a little out of date in reference to the cost data, certainly captures well our dilemma and impending danger.
  • Sections 401, Guidelines, and 402 Goals, are clear expressions of what generally needs to happen.
  • Sub chapter 2, Governance, although predicting some of the governance issues to be dealt with, needs to be subservient to some degree to broad design work. The 'shall' provisions of this section should not pre-empt the design work itself, as I indicated earlier. This section could be rewritten to outline the issues of governance that need to be dealt with, issues of authority, duties, and boards.
  • The board provision though, and the limitations of the kind of people who can serve, in my mind is well constructed.
  • Section 408, Integrated Systems of Care; Community Health Boards, is very specific in its prescription. The language could be a little more flexible to give the system design work more flexibility. For example, the language of 408 could include caveats such as 'community health boards will be considered, rather than mandated in the legislation.
  • Obviously the 'due' dates in Section 409 need to be updated.
  • Section 410, Budget for Package of Health Services, is one good example of a process option that could flow from a full design phase, and should be written as an option example. There are surely other options, which will need to be looked at after design on a side by side basis and then moved forward on the basis of cost, efficiency, and relationship to the aims of the overall bill.
  • Section 411, Payment Methods for Health Care, Professionals, and Hospitals, is well written in regard to considering various options.
  • Section 412, Payments Amounts. On the whole is it written in a reasonably flexible way to consider a variety of possibilities. However, immutable 'shalls' could be softened to allow for option development in the design phase.
  • Section 413, The Vermont Care Trust Fund, appears to be straightforward.
  • Section 414, Hospital Global Budgets. Although I am a promoter of hospital global budgets as a way to wring excess and unnecessary administrative costs out of the system, this section could be softened somewhat to allow the possibility of other or related techniques to arise out of a health care system design phase. In other words we need to look at all possibilities.
  • Section 415, Administration; Enrollment. This section includes quite a few important access provisions, such as qualification, and supplemental insurance and seems to fit the needs of a variety of option possibilities.
  • Section 4, Transfer of Positions seems a little premature.
  • Section 6, Appropriation, does provide some needed startup funds for a more full design phase.

  • This review of S.88, in my mind does result in a general conclusion that with moderate editing of the existing bill and integration of some of the thinking in the draft papers that we talked about earlier, that S.88 could serve as a vehicle to take a large and important step in designing a more efficient, effective, accessible, health care system for the benefit of all Vermonters.

    The Fundamental Need for a Health System

    And finally, we have learned a lot over the last 15 years or so. Our thinking has evolved from the simple solutions we envisioned in the mid 90's from adopting new programs, such as Managed Care, Dr. Dyno, VHAP, then Catamount, and Disease Management to a realization that a program focus is not good enough. We are now to the point where we all are sensing and beginning to understand the need for a true system for health care, a system that can control rising costs and bring great care to all of our citizens.

    Such as system would be a function of a design that uses a mixture and variety of cost containment, such as: global budgets, either by sector, such as hospitals, or system wide; controlling supply; setting pricing; defining intensity of service; and controlling administrative costs. Such a system has yet to be designed for Vermont. Such a system would also be a function of consciously designed financing using a variety of approaches such as: a single payer approach; a state level health service; or highly regulated multiple payers, such as is the case in Germany, for example. These are all options that need to be developed and compared.

    Almost all of the bills under consideration are taking us to these new and higher levels. You are to be complimented on that shift. But health care gravity is a powerful force, and a force, that in the blink of an eye we could find ourselves once again on the incremental path trying to meet the never ending and strong need of doing something.

    Let's take our time and do it right. Your current considerations predict that kind of thoughtful process.


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