The DFL leadership's health "reform" bills contain poison pills
By Kip Sullivan, March 10, 2008

Last May, fifty-seven state legislators, all DFLers, signed on to the
Minnesota Health Act, a single-payer bill that would implement universal
health insurance within two years of the date of enactment. You might
think that a bill with the support of one-fourth of the state's 201
legislators would have influenced the DFL leadership. You would be wrong.
The DFL leaders on health policy, Sen. Linda Berglin (Minneapolis) and
Rep. Tom Huntley (Duluth), have introduced bills that tweak the current
system and, in the case of Senator Berglin's bill, move us further away
from a single-payer system. In this commentary, I will concentrate on
Senator Berglin's bill because it is the worst of the two bills. I'll
comment on Rep. Huntley's bill at a later time.

Senator Berglin's bill, SF 3099, calls for the creation of a second layer
of insurance companies beneath the current layer (dominated by Blue Cross,
Medica, and HealthPartners). It also requires the publication of report
cards on the quality of care provided by these second-layer companies as
well as by the individual clinics and hospitals. These "reforms" are to
our health care system what poison is to a sick patient. They will force
our health care system, already groaning under excessive administrative
costs, to bear even more administrative costs. They will also damage
quality of care, lead to further consolidation of our health care
industry, and destroy patient privacy.

                 IF IT QUACKS LIKE A DUCK.

SF 3099 does not state that its goal is to create a second layer of
insurance companies, but that's precisely what the bill will do. The new
layer of insurance companies will be created by language in the bill
calling for clinics and hospitals to assemble themselves into large
networks called "care systems" that will have the essential features of an
insurance company: They will be paid premiums, they will have the
equivalent of policy-holders or enrollees, and they will bear risk.

SF 3099 assiduously avoids words like "premiums" and other insurance
lingo. However, the bill does say care systems will be paid a fee per
month or year (the bill doesn't specify the time period) by the first
layer of insurance companies for each patient who enrolls with a care
system, and care systems will be legally obligated to provide all
necessary medical services to its enrollees. SF 3099 doesn't call the
payments to the care systems "premiums," but that's precisely what they'll
be. SF 3099 does not call the care system members "policy-holders" or
"enrollees," but that's precisely what they'll be.

The bill refers to the "patient populations" of care systems. That phrase,
plus the provisions in the bill making care systems "responsible" for the
"total care" of those populations, makes it clear patients will have to
enroll in care systems in advance, just as we have to sign up with
insurance companies prior to the start of calendar years now, and that
care systems will be legally responsible for providing all necessary
medical care to those "populations."

In sum, care systems will be insurance companies that won't be called
insurance companies. But they will look, walk and quack like insurance
companies.

                      NO PATIENT LEFT BEHIND

SF 3099 also calls for report cards on care systems and individual
providers (clinics and hospitals) that will cost a lot to produce, will
damage quality of care for at least some patients, and destroy what's left
of patient privacy. These report cards are supposed to serve two purposes:
They will, we are told, help Minnesotans "shop" for the best care system
and the best clinic or hospital once they are published in the media and
on the Internet; and they will serve as the basis for "pay for
performance" payment methods that will reward doctors for getting good
"grades" on the report cards and punish doctors who get "bad" grades on
the report cards.

The report cards will be prepared by an entity called the Health Care
Value Reporting Organization. This entity will apparently be a private
corporation like the Minnesota Community Measurement Project, an
organization financed by the health insurance industry (SF 3099
specifically mentions the Community Measurement Project as an acceptable
candidate). (George W. Bush is such a fan of the Community Measurement
Project that he flew out to Minnetonka two years ago to celebrate it as
the cutting edge example of the No Patient Left Behind report cards that
he thinks will solve the health care crisis.)

In order to prepare report cards, the Health Care Value Reporting
Organization is authorized to collect patient medical records from all
Minnesota clinics and hospitals as well as all patient medical records
that health plans have gotten their hands on. The Reporting Organization
will need lots of data on patients because SF 3099 instructs the Reporting
Organization to "risk adjust" the grades on report cards. "Risk
adjustment" refers to the process of adjusting "grades" on provider report
cards that take into account differences in patient health, patient
income, and other factors outside of providers' control that influence the
outcomes being measured. For example, if the quality measure is the
percent of heart disease patients who survive surgery for more than 30
days, you would want to adjust the 30-day survival rates for factors like
number of diseased coronary arteries, whether the surgery was emergency or
non-emergency, whether the patient had a normal pulse at the start of
surgery or was in shock, and so on. Those data are, by definition, medical
records data.

In short, SF 3099's call for report cards on all Minnesota providers for
all diseases known to Western medicine means the complete destruction of
patient privacy. It does no good to say that the clinics will only be
sending patient medical data to Big Brother after "patient identifiers"
have been stripped. I doubt very much all identifiers will be stripped. In
any case, some third party will have to strip the identifiers. In other
words, the de-identification process itself will violate patient privacy.

                         WRONG DIAGNOSIS

What on earth could justify legislation like the provisions in SF 3099
that call for the creation of a second layer of insurance companies and a
blizzard of report cards? Like most legislation, SF 3099 does not lay out
the rationale for the bill's provisions. To get some idea of the rationale
for creating an even more Byzantine insurance industry than we already
have, and for subjecting this more Byzantine industry to No Patient Left
Behind report cards, we have to turn to the Health Care Transformation
Task Force (TTF), a commission created by the Legislature in the spring of
2007. The proposal to create a second layer of insurance companies is
based on a recommendation by the TTF in its January 2008 report to the
Legislature known as "level 3 payment reform."

The arguments for this "reform" set forth by the TTS are somewhat cryptic,
but when you decode them they turn out to be the same unfounded arguments
that have been made for the last four decades for managed care. According
to the TTF report, and according to testimony of TTF members at a House
joint committee hearing on February 28, the health care crisis is caused
by bad doctors. Bad doctors are everywhere, we are told. They are not
practicing good medicine, they are harming health, and the resulting high
prevalence of sickness in our population is the reason why American health
care costs are double those of Canada, England, France and the rest of the
industrialized world. Never mind the high administrative costs generated
by the insurance industry, never mind hospitals and clinics buying more
equipment than is necessary, never mind specialists and drug companies
charging sky-high prices, never mind fraud committed by insurance
companies and some clinics and hospitals.

Note how similar this diagnosis is to the Bush administration's diagnosis
of the crisis in our schools. The problem is bad teachers.

And what's causing all the bad doctoring, you ask? Why, it's the
fee-for-service method of paying doctors, the dominant method of paying
doctors in this country for centuries. The TTF members and other advocates
of "level 3 payment reform" can't bring themselves to come right out and
say bad doctors are the problem and the fee-for-service system is inducing
bad doctoring. They prefer much more abstract language that makes it
harder to pin them down. Here are examples of semi-cryptic statements from
the TTF report that implicate doctors and the fee-for-service system as
the primary causes of the American health care crisis:

* "The quality of health care is uneven, and it is well below the levels
that Minnesotans should expect for the money we are spending."

* "The way we pay for health care must be fundamentally changed in ways
that support improvements in quality and establish accountability for the
total cost of care."

At the February 28 House hearing, one TTF member made these
pronouncements:

* "The quality of [medical] services does not enter into what is paid";

* "Our payment system does not take into account quality"; and

* "We know quality 'varies significantly'"

You see how the game is played. The TTF and "level 3 payment reform"
advocates don't come right out and say doctors are bad and the
fee-for-service method is the culprit. Rather, they tell us "quality is
uneven" and the current "payment system does not take quality into
account." You're supposed to conclude:

* that "uneven quality" means "inferior quality,"

* that this inferior quality is induced by the "payment system" as opposed
to high drug prices, lack of insurance, the nurse shortage, overstressed
ER departments, managed care insurance companies meddling in the
doctor-patient relationship, etc.,

* and that the TTF members have a payment method up their sleeve that will
"take quality into account," and make quality "even" (please God, give us
"even" health quality).

Let's begin our analysis of these cryptic remarks with the question, How
do we know "quality is uneven"? Advocates of "level 3 payment reform"
virtually always cite one of three sources. I'll discuss their favorite
one here. According to the TTF report and to at least one of the TTF
members who testified at the February 28 hearing, we know quality is
"uneven" because the Community Measurement Project tells us so. "If you go
to the Minnesota Community Measurement Project, you see significant
differences in outcomes," this witness stated.

I urge you to go to the Web site of this organization (mnhealthcare.org)
right now and tell me if you see any evidence of "uneven quality." Just
for fun, type in "diabetes" into the box entitled "select by condition"
that appears on the first page of this Web site. Up will come a list of
dozens of Minnesota clinics and clinic-hospital networks (the future "care
systems" under Senator Berglin's bill) with percentages next to their
names. These percentages are the percent of diabetic patients "assigned"
to these clinics who have their blood sugars, blood pressure, and
cholesterol levels under control, who don't smoke, and who take aspirin
daily. You will see, for example, that only 8 percent of the diabetics
"assigned" to the Mayo Clinic make the grade on these five measures of
"quality," only 1% of the diabetics "assigned" to the MeritCare Clinic in
Cass Lake make the grade, and 15 percent of the diabetics "assigned" to
the Park Nicollet Clinic in Burnsville make the grade. (I put "assigned"
in quotes just to alert you that the way the Community Measurement Project
lumps patients into one clinic's denominator and not some other clinic's
denominator is suspect.)

When your eyes behold these figures, do you leap to the conclusion that
they reflect differences in "quality"? Do you leap to the conclusion that
the doctors in the MeritCare clinic in Cass Lake are inferior to the
doctors at Mayo, or that the doctors at Mayo are inferior to the doctors
at the Park Nicollet Clinic of Burnsville? I sure hope you don't. But
that's precisely what the TTF members and Senator Berglin want you to
believe.

The problem with those slick-looking tables at the Community Measurement
Project's Web site is that the Community Measurement Project makes no
effort to adjust the percentages for factors outside the clinics' control.
You don't have to have a PhD in anything to know that the best doctors in
the world cannot make their diabetic patients buy cholesterol-lowering
drugs like Lipitor or Zocor. They can't buy health insurance for their
uninsured patients, and they cannot guarantee that if their patients have
health insurance it will cover prescription drugs and won't have
prohibitively high deductibles. They can't hoist their poor patients out
of poverty. They can't make them literate if they're illiterate. Just as
teachers can't guarantee that the kids they teach won't come to school
hungry, so doctors cannot control all the factors that will affect their
grades on sloppy, deceptive report cards like the one the Community
Measurement Project publishes.

If one clinic has more poor, uninsured, and/or illiterate diabetics, it is
bound to look bad on report cards like the one you see at the Community
Measurement Project Web site. If the MeritCare Clinic at Cass Lake, for
example, is serving a disproportionately poor and uninsured population,
then the diabetics who show up at that clinic are far more likely to be
unable to follow their doctor's instructions. It is simply wrong to cite
the Community Measurement Project as evidence that "quality is uneven,"
or to use plainer language, that bad doctoring is rampant in Minnesota.

I believe the average, unbiased reader gets what I'm saying. But just to
drive this point home, let me use an analogy. Let's say we did a survey of
auto mechanics and automobile owners in Minnesota and determined that only
half the cars in Minnesota have had their oil changed on schedule. Would
anyone leap to the conclusion that the problem is bad auto mechanics? Of
course not. If we had the equivalent of a Community Measurement Project
report card on auto mechanics that showed that the percent of cars up to
date on their oil changes was 8% at one shop and 15% at another, would we
say "quality of car care is uneven"? Of course we wouldn't. We could
easily imagine a host of factors affecting car maintenance that has
nothing to do with the quality of auto mechanic services. But according to
the logic of the TTF and their allies, we should leap to the conclusion
that auto mechanics are the problem, and subjecting them to report cards
and a new payment method will solve the problem of "uneven car care."

I'm not arguing that quality of medical care cannot be improved. I'm
arguing that there is simply no evidence to support the claim of the
"level 3 performance report" advocates that bad quality is rampant, nor
that what bad quality there is out there is caused by the fee-for-service
payment method. And there sure as heck is no evidence that report cards
are a solution to anything that ails the Americans system. I'll comment
more about report cards in my email about Rep. Huntley's bill.

                        THE TTF'S REBUTTAL

The proponents of the "level 3 payment reforms" have argued that their
proposal does not shift risk to care systems and thereby convert them into
a second layer of insurance companies. They claim that the payments to
care systems will be risk-adjusted (using the same data the report-card
makers will be using to risk-adjust grades on report cards) so that the
premiums vary with the health status of the patients who enroll with them.
But risk adjustment methods are very crude. They predict very little of
the actual expenditures incurred by individual patients. Therefore, it is
not accurate to argue that risk adjustment leaves all the risk with the
current layer of insurance companies and shifts none to providers. Current
research on risk adjusters justifies the statement that 85 to 90 percent
of the risk will be shifted to care systems and only 10 to 15 percent of
the risk will be retained by the current layer of insurance companies.

                             SUMMARY

The TTF and Senator Berglin are urging us to adopt a horrendously
complicated and expensive "solution" to a problem that either does not
exist or is minimal compared with other problems. The evidence simply does
not support their diagnosis - that high health care costs are caused by
low-quality medical care. Because their diagnosis is wrong, their
prescription is wrong. We don't need a second layer of insurance companies
practicing managed care. We've been there, we've done that. The managed
care experiment failed. There is no point in conducting another experiment
in managed care.  And we don't need No Patient Left Behind report cards.

It would be nice of Senator Berglin and the DFL leadership would get
behind the Minnesota Health Act (Senator Berglin made a point of leaving
the committee hearing room when the Minnesota Health Act passed the Senate
health committee last month by a vote of 8 to 3). But if the DFL health
policy "leaders" can't do that, the least they can do is to do no harm.
There are a few good things in SF 3099, but they are outweighed by the
"level 3 payment reforms" and the report card provisions. If those
sections cannot be stripped out of Berglin's bill, then the entire bill
should be voted down.