Author Archives: Margo Bergman

About Margo Bergman

I am many things. I am a Ph.D. Economist with an emphasis in indivdiual behavior, experimental and compuational economics. I am a Master of Public Health in Public Health Genetics. I am a mom of two wonderful boys, the younger of whom I am lucky enough to be at home with right now.

Rural Protections!

Is that for rural areas, or against them? JOKING!

Section 3121 extended the Outpatient Hold Harmless Provision of Medicare, which protects hospitals in case they provide higher cost treatments, or in the case of rural hospitals, don’t have much ability to lower certain costs. (For one year – don’t know if it is still in effect).

Section 3122 extended some outpatient payments in a similar way for rural area labs. (For one year – don’t know if it is still in effect).

Section 3123 extended a Community Hospital Demonstration Program for 5 years (so still in effect)

Section 3124 extended the Medicare-dependent hospital program, which is exactly what it sounds like.

Section 3125 improves Medicare payments to low-volume hospitals.

Section 3126 improves the demonstration project about community health integration models in rural counties by removing restrictions on the number of counties eligible.

Section 3127 creates a study on whether Medicare payments for rural providers are sufficient.

Section 3128 corrects a previous law that forgot to put “101%” in front of “the reasonable costs” Oops!

Section 3129 extends the Medicare Rural Hospital Flexibility Program by changing the law to specifically help those hospitals prepare for changes stemming from the PPACA.

That’s it, rural folks. Enjoy!


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Are we there yet?

No kids, no we aren’t. We are approaching halfway though, so that’s something to write home about.

The next Subtitle – B – Improving Medicare for Patients and Providers. You might ask yourself, weren’t we already doing that? Apparently not.

Poor section 3101 was repealed before she even got to become enacted. And it was apparently about physician pay. Sorry docs!

Section 3102 has a really long title. Extension of the Work Geographic Floor and Revisions to the Practice Expense Geographic Adjustment Under the Medicare Physician Fee Schedule. To summarize – they are changing how much they increase the payments to physicians who live in more expensive parts of the country. And then they will study whether they are doing the right thing on that. (You’ll be happy to know that this was continued in the recent “Fiscal Cliff” law.

Section 3103 extended for 1 year the exceptions process for Medicare therapy caps. But that was until December 31, 2010. So it could be moot at this point. Same for Section 3104, the extension of payment for technological component of certain physician pathology services. And 3105 – Ambulance Add-Ons. 3106 – extension of certain payment rules for long-term care hospital services and of moratorium on the establishment of certain hospitals and facilities. That one at least got until 2012. (All extended in the “Fiscal Cliff” Bill. )

3107 – Physican Fee Schedule Mental Health Add-On, we don’t know if you are still going strong. (You are! “Fiscal Cliff” Law to the rescue.)

3108 allows Physician Assistants to order post-hospital extended-care services.

3109 exempts certain pharmacies from accreditation requirements. These are pharmacies that don’t do much Medicare billing or only provide durable medical equipment, orthotics or prosthetics. So they don’t have to provide all of the things that other Medicare pharmacies would have to.

3110 gives a special enrollment period for Medicare Part B to Disabled Tricare Beneficiaries. They are very particular about stating that this is only open to you once in a lifetime. Tricare, for those of you who don’t know, is the military health insurance.

3111 pays for Bone Density Tests.

3112 takes $22,290,000,000 out of the Medicare Improvement Fund. No explanation given there.

3113 is a demonstration project for complex laboratory testing namely gene protein expression, topographic genotyping, or a cancer chemotherapy sensitivity assay.

3114 improves access for nurse-midwife services by increasing payment from 65% to 100%. You might be wondering why Medicare pays for nurse-midwives in the first place, but you would then be reminded that Medicare covers people under 65 who have been determined to have a disability.

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Patient Care Models

Part 3 of Title III of the PPACA creates incentive for the development of new Patient Care Models. I bet you didn’t know that people already had models of how to care for you, or that perhaps they weren’t good enough. But they do – and given the GDP spent on health care in the US versus the outcomes measures, they aren’t good enough.

Section 3021 creates Centers of Innovation within Medicare and Medicaid. It’s important to keep in mind that we spend ~23% of the US Federal Budget on these two services (2011), and that this is estimated to double in the next 15 years. Innovation is key – and the bureaucracy of a large government is not often known for its incentive in this department. As with all innovation in health care, this center is supposed to come up with ways to make care cheaper while maintaining or increasing quality. You know, no pressure.

One interesting note is that this section explicitly calls out the idea of moving away from a fee-for-service basis to a salary one. Certainly an interesting, and likely, outcome, but also controversial. Most everything else is your current chestnut of efficiencies, best practices identification and dissemination, and team-based care.

Section 3022 creates something called a Medicare Shared Savings program. This creates accountable care organizations out of partnerships between providers, hospitals, suppliers, and other interested stakeholders. The organizations have to have a minimum of 5,000 Medicare beneficiaries. Assuming they meet the quality standards for care, if they can save money doing so, then the ACO is eligible for an unspecified share of the cost-savings.

Section 3023 pilots a program of cost bundling. This is another switch from a fee-for-service model to something called an episode of care. An example of an episode of care would be: Patient feels dizzy and short of breath, goes into the ER. Patient is determined to be having a heart attack, and has a cardiac procedure performed, spends a few days recovering in the hospital. Follow up care is then provided by the surgeon and the cardiologist. Rather than paying for every person, room, and supply individually, the hospital would receive a single payment for that person’s care for this incident, and then dole out the necessary payments to staff and suppliers. By statue, it includes 3 days before the hospitalization, the duration of the stay, and 30 days following.

Clearly this type of payment plan is a departure from the way people are used to doing things, both the patient and the provider. It requires the providers to be paid by the hospital – true in some cases, but certainly not all.

Section 3024 is a pilot program to increase home-based care and change payment structures to benefit it.

Section 3025 introduces a program to reduce hospital readmissions by creating financial incentives for the hospitals to lower them. It’s a stick, rather than a carrot, in that the hospitals will get less money for more readmissions, rather than more money for fewer readmissions.

Section 3026 creates a carrot incentive for increased community-based care transitions programs.

Section 3027 extends the Gainsharing Demonstration of the Deficit Reduction of 2005. You know exactly what that is, right? Oh, you don’t. Well, maybe I’ll tell you. Ok, Ok, I’ll tell you. Related to the Accountable Care Organizations, it is direct payments to physicians and practitioners for improving quality and efficiency. It originally ended in 2009, but is now good through at least 2013.

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Debt Ceiling Silliness

Since we didn’t drive off the ‘fiscal cliff’ we are treated to another ridiculous gambit on the part of our elected officials – the ‘debt ceiling’. For those of you not in the know, the debt ceiling is a limit placed on public borrowing, by Congress. We, and by we, I mean they, reached their current limit on December 31, 2012. Since the government currently doesn’t have enough revenue to pay its designated expenditures, it has to borrow.

A Brief Foray into Macroeconomics

Each year the Federal government has a certain amount of revenue, in the form of taxes and fees, and a certain amount of expenditures, in form of salaries, purchases, and transfer payments (things like Medicare and Social Security). If the first number is bigger than the second, the governments is said to have a surplus. If, and this is more common, the second number is bigger, then the government has a deficit. The government borrows the money to make up the deficit. The total amount of deficits minus surpluses over time is called the debt, or the national debt.

Where did the concept of the debt ceiling come from? Before 1917, every time the Congress chose to spend more than it made, it would create a statute that authorized the borrowing. This became somewhat tedious as the numbers got bigger, along with the country, so instead it choose to authorize a certain spending limit (kind of like your credit card, if it was that super awesome American Express made out of Unobtanium or something). They then had to increase the debt limit every time we, and I still meant they, went passed that. It’s also worth noting that most other countries don’t have debt limits.

But see, here is the thing. The debt ceiling is usually reached AFTER a budget is passed. So, Congress says, “I want to spend 2 Trillion dollars”. Everyone agrees, President signs, world keeps turning. Then, at some point, they realize, “Oops, we only made 1.5 Trillion this year!”. So they go to borrow the rest. Unless they have told themselves “No more borrowing! Live within your means!” After, of course, they already allocated their spending. So then people use it as a tool to make some vacuous point about fiscal responsibility that no elected official (with rare exceptions) has ever thought applied to themselves. And then they threaten to, or actually, shut down the government, causing regular Joes and Joettes (but not themselves, as there are provisions that ensure that the Congress is still paid if the government shuts down) to miss paychecks, and have to take on more debt themselves, national parks to close, and generally make a mess of everyone else’s life while causing no trouble for themselves.

That isn’t to say that we shouldn’t have serious and difficult conversations about what the role of government is in society, what tax rates are appropriate, what incentives should people have in a capitalistic society, and what checks on the natural tendency to self-centeredness should be in place. But having it when the clock is ticking on whether the custodian at the Submarine Force Library and Museum gets to eat next week isn’t the right way to make a complicated decision.



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Sorry for the break

I’ll have to remember that the fall doesn’t lend itself well to writing. Between all of the holidays, and the doldrums of the weather in my city, it’s hard to get motivated.

I’ve decided to try for a more realistic schedule of twice a week. The PPACA is likely to be with us for a while, so it’s probably ok to actually post, rather than trying to kill myself and not post at all.

Part 2 of Title III of the PPACA calls for a National Strategy to Improve Health Care Quality. It should be obvious that the easiest way to cut costs is to just provide substandard care. It should be equally obvious that is a ridiculous idea. Recognizing this, we must continue to improve quality while reducing cost.

Section 3011 calls for the creation of mechanisms to identify what would improve the quality of health care in the US. It also calls for improving the outcomes, efficiency and patient-centeredness of health care. It is an assumption that these things will relate positively to quality, but it seems a reasonable one.

Section 3012 creates an interagency working group on health care quality. The agencies are listed in the Act, so I won’t repeat them here, but they include everyone you would think of, like the CDC, FDA, and CMS (Medicare and Medicaid) and some agencies you probably didn’t know existed, like the Agency for HealthCare Research and Quality (a real stretch for those guys to be in on this J ) , and some you might not have thought of being involved, like the Federal Bureau of Prisons. They have been meeting since 2010, and you can find their reports here:

Section 3013 calls for the development of a measure of quality of healthcare. The measure should be based on health outcomes, management of care, quality of information and decision making, meaningful use of health technology, safety, efficiency, equity, patient experience, and innovation.

Section 3014 also discussed quality measurements. In this case, it solicits stakeholder input. Not sure why that needed its own whole section, but whatever.

Section 3015 creates a framework to collect the necessary data for these measures and then disseminate it to the public.

Not a lot of substance there, but then it was intended to create working groups. The reports those groups produced contain much more information, but I’ll let you read those yourself.

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Taking a breather

Ok – I’m wiped out on the PPACA for a while. I’ve done my best to slog through – but I need a break.

In the meantime, there are a set of economic questions that various parties have suggested I write about. One of them came to the forefront today, as part of another conversation I was having on the Interwebz. The issue is the gold standard.

When I first thought about doing a post on the gold standard, which is the idea that our currency needs a commodity of intrinsic value, specifically gold, to ensure its worth, rather than simply being made to worth something because it says so (i.e. fiat money) I thought I would have lots of evidence and complicated points to make.

But I realize that it comes down to this. If you take out the world gold and insert any of the following words (or phrases):






giant stone wheels at the bottom of the sea

or pure-bred Husky puppies

and you are still ok with this as a mechanism for ensuring the stability of our currency, then sure, maybe we can go back to the gold standard. But if you think any one of those is a crazy idea – well – then I have bad news for you. So is the gold standard.

If anyone isn’t convinced, then maybe I will do a follow-up with all the complexities included. But really – a commodity is a commodity. You can’t think one is perfect and the rest are crap. The concept, and the associated problems for an economy of 16 trillion dollars, are the same.

Edited to add: 50 House points to the first person to point out which on that list above HASN’T been used before as money in an economy – at least to my knowledge.


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Title III

So – we are moving into Title III of the PPACA. If you recall, we already did Title IX, and of course Titles I and II. They are not evenly distributed.

Title III is “Improving the Quality and Efficiency of Health Care”.

The first subtitle looks at the delivery system, and the first part of the first subtitle looks at “Linking Payment to Quality Outcomes in Medicare”. Look out olds!

Section 3001 sets up hospital value-based purchasing programs. Even though the name is confusing, it basically gives money to hospitals as an incentive to improve quality in a few key areas, namely acute myocardial infarction (heart attack), heart failure, pneumonia, surgeries, and healthcare-acquired infections. After 2014, these payments will include measures of efficiency, given by the spending per beneficiary.

Section 3002 creates improvements in the physician quality reporting system. The biggest improvement is that it goes from an incentive to participate, to a penalty if you don’t. Which, I suppose, is an improvement from the government’s point of view.

Section 3003 improves the physician feedback system, used to identify issues of quality with physicians. It should be noted that these are physicians that receive money from Medicare and/or Medicaid.

Section 3004 improves quality reporting for long term care facilities.

Section 3005 discusses quality reporting for PPS-exempt cancer hospitals. PPS is the prospective payment system, which reimburses hospitals based on diagnosis codes when the patient enters the hospital. PPS-exempt hospitals, are well, exempt from that – since cancer patients may develop many more diagnoses while in the hospital. There are 11 of these in the US.

Section 3006 sets up a plan similar to 3001, only for skilled nursing facilities and home-health care agencies. You have to remember that when Medicare was set up, most of the health care of the elderly took place in a hospital. So everything is sort of set up around that idea. But that has changed in the 50+ years since Medicare was set up.

Section 3007 establishes payment modifiers for physicians based on the quality of care.

Section 3008 adjusts payments for people who acquire infections in the hospital. It reduces them by 1%. I would be interested in some experimental economics study about whether a 1% reduction was enough incentive to alter behavior.

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More Improvements! Protections! Moms! Kids! Baseball! Pie!

The next large subsection looks at improving the Medicaid and CHIP Payment and Access Commission. Not the actual payments and access, mind you, but the Commission.

Section 2801 calls for an assessment of policies on these issues. Which they did in this section, and changed some things.

That’s it.

I’m not sure that deserved its own subsection.

Moving on!

The next large subsection calls for protection for American Indians and Alaska Natives.

Section 2901 is special rules relating to Indians. It increase the poverty line level below which there is no cost-sharing to 300%, identifies the Indian Health Service as the payer of last resort for health care provided to Indians, and facilitates enrollment by including them in the Express Lane options.

Section 2902 eliminates the sunset of the clause that allowed reimbursement for Medicare Part B services furnished by certain Indian hospitals and health clinics. You get that? They were going to take that reimbursement away, and now they aren’t.

The next large subsection (which really, if you think about it, is quite the misnomer. The subsections play like they are large, but when you actually read them, they are pretty small.) is about Maternal and Child Health Services

Section 2951 creates the funding and authority for statewide needs assessments that identifies communities with higher rates of premature and low-birth weight infants, infant mortality, poverty, crime, domestic violence, high-school drop-out rates, substance abuse, unemployment, or child maltreatment. (Unfortunately, these are probably going to have a high overlap with each other). It will also look at the programs for home visitation, early childhood programs (which, btw, have been shown to make significant impact in the long run in reducing these things). It will also provide grants for increasing the number of these programs.

Section 2952 provides funds for studying, and hopefully reducing, postpartum depression. There will be studies!

Section 2953 gives the states more money for Personal Responsibility Education. This apparently discusses both abstinence and contraception’s role in reducing unintended pregnancy and sexually transmitted diseases. It does say that the information has to be medically accurate and complete.

Section 2954 restores funding for abstinence-only sex education at least through the year 2014. $50,000,000 a year.

Section 2955 is important, but relevant only to a small portion of the population. The title pretty much says it all – “Inclusion of information about the importance of having a health care power of attorney in transition planning for children aging out of foster care and independent living programs“.

Ok – so there was no baseball, and there was no pie. But we did manage to make it 1/3rd through the PPACA! That’s right. 1/3rd. I’ll keep pressing on, you keep reading!

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Back on Track

We are back on track, discussing the improvement of Medicaid for both patients and providers.

Section 2701 sets up an adult health quality measurement process, complete with reports! The details of the quality measurements are not set forth here, but will be the first task undertaken by these people.

Section 2702 is a little weird. It identifies states that prohibit payments under Medicaid for health-care acquired conditions and then doesn’t pay the states for those conditions as well. So if you get sick, and whatever care you get leads to preventable condition, your provider won’t be paid for your initial care. The incentives there are a little weird – enough doctors don’t take Medicaid patients as it is and this seems like it would increase that number. I guess we will have to see.

Section 2703 allows the state to create “care homes” for chronic conditions. These aren’t physical homes, but rather designated care teams that can coordinate between multiple providers, and potentially improve health.

Section 2704 provides money to test out the use of bundled payments for hospitalization. That is, if you go into the hospital, they would get a single payment, no matter how much that “care episode” cost. Presumably this would create an incentive to improve quality of care.

Section 2705 tests out another type of payment system – a global capitated system, rather than fee-for-service – specifically for large safety-net type hospitals.

Section 2706 introduces the accountable care organization, similar to the care homes in section 2703, for pediatric care.

Section 2707 is another demonstration project, such as 2703, 2704, 2705, and 2706. This one is for private hospitals for psychiatric care.

Tomorrow – more improvements!

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Skipping Ahead 2

Ok – so now that you have given your brain a break, we can finish up.

Section 9009 was originally something else, and given the dynamic nature of these bills, I don’t know what it used to be. But now it is a fee of the producers of Medical Devices. Eyeglasses, Contact Lenses, Hearing Aids, and other retail goods are exempt. So your pacemaker, your artificial heart, your bionic knee, etc, is included. The fee, which is actually a tax, is 2.3%.

Any student of economics will tell you that while this tax was placed on the producer, the fact that these are goods that are highly inelastic, possibly even perfectly elastic, means that you can expect that most, if not all, of that tax will be passed on to you, the consumer.

Section 9010 puts a fee on health insurance providers. It’s that crazy kind of fee in the previous post, although with different numbers. Here, you could expect that not all the cost will be passed onto you, because there is some choice in health insurance plans, although not that much.

Section 9011 calls for a report on the effect of all this on the cost of Veteran health care, especially with regards to the medical devices and prescription drugs that they just taxed.

Section 9012 eliminates the ability to deduct expenses allocable to the Medicare Part D (prescription drug) benefit.

Section 9013 increases the percentage of income above which your medical expenses must be to deduct them from 7.5% to 10%, starting after 2012.

Section 9014 eliminates the deductibility of remuneration paid by health insurance providers to employees over $500,000. That was a terrible sentence, but that means if they pay their CEO $650,000, the $150,000 above $500,000 isn’t deductible. Why that is limited to just health insurers, I don’t know.

Section 9015 increases taxes by 0.9% for wages over $250,000 (joint return) in the FICA portion of your taxes. For those of you who don’t know, FICA is what funds Medicare and Social Security. This applies only to wages.

Section 9016 applies specifically to Blue Cross and Blue Shield organizations, and says that the special deductions that are applied in section 833 of Internal Revenue Code of 1986 doesn’t apply if said organization spends less than 85% of its revenue on clinical care.

Section 9017 was going to be a 10% excise tax on cosmetic surgery, but due to a later amendment, now applies only to tanning.

Ok – so there you go – that’s the Revenue offsets for the PPACA. I hope you feel super informed now! Back to our regularly scheduled Section 2701 tomorrow.

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