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Logical Fallacies in Support of Payments for Board Members of Non-Profit Health Insurers

The kerfuffle over the huge golden parachute given the departing CEO of an ostensibly non-profit Massachusetts health insurer/ managed care organization continues to evolve (see posts <a href="http://hcrenewal.blogspot.com/2011/03/massachusetts-blue-cross-blue-shield.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/03/some-dare-call-it-corruption.html">here</a>), providing some new insight into governance problems afflicting health care organizations.  One of the issues that aroused initially aroused concern was that Massachusetts Blue Cross Blue Shield paid the members of its board of trustees substantial amount, an unusual practice for a non-profit organization.  Board members who feel they owe their pay to the CEO they are supposed to be overseeing might be particularly inclined to over pay that same CEO. Nonetheless, the Boston Globe just <a href="http://www.boston.com/business/healthcare/articles/2011/03/31/two_health_insurers_boards_opt_to_keep_accepting_pay/">reported</a> that other non-profit Massachusetts health insurers were defending their payments to board members: <blockquote>The state’s second- and third-largest health insurers said yesterday their board members have decided to keep paying themselves five-figure annual fees despite objections from the state attorney general and an inquiry into directors’ compensation at nonprofit health plans.</blockquote>The rationales for these decisions were fascinating, amounting to four variations of special pleading, plus an appeal to tradition. Special pleading: Our board members are experienced and independent <blockquote>'Good governance is advanced by the recruitment and retention of experienced, independent, reasonably compensated directors,' Harvard Pilgrim said in its statement. 'In 2010, our board worked more than 2,000 hours.'</blockquote> I doubt any non-profit organization would admit to not wanting experienced, independent board members,  but very few other non-profits pay their board members. Asserting that board members of the Massachusetts insurance companies especially deserve pay because of characteristics they share with other members of other boards who are not paid amounts to <a href="http://www.nizkor.org/features/fallacies/special-pleading.html">a special pleading</a>. The second statement seems just to be a simple exaggeration, since 2000 hours a year implies that the board members work there full-time (40 hours/week * 50 weeks = 2000 hours).   Special Pleading: Our board members are skilled and experienced <blockquote>Wellesley-based Harvard Pilgrim, however, said in its statement that board members 'apply their specialized experience and skills in the areas of medicine, accounting, finance and law, to support our company and its mission. Our board serves as responsible, independent fiscal stewards for our members’ premium dollars.'</blockquote> Again, board members of all sorts of non-profit organizations could be described in similar terms. So using this as an argument for paying board members when members with the same attributes of other boards are not paid is another special pleading. Special Pleading: Our boards have great responsibility <blockquote>Tufts, based in Watertown, said its board believes there is 'an additional overlay of responsibility' for directors of a health insurance company. 'Unlike the directors of other nonprofits, they are subject to distinct regulatory considerations,' the Tufts statement said. 'Therefore, compensation for time, commitment and skill of top talent is a responsible approach for the oversight of an organization that provides health care coverage to hundreds of thousands' of members.</blockquote> Of course, boards of hospitals have their own "distinct regulatory considerations," as do boards of academic institutions  Boards of hospitals are also responsible for the health of their patients and boards of academic institutions are responsible for the education of their students. So this is a third example of a special pleading. Special Pleading: Our responsibility, our time, our effort Appeal to Tradition: Our tradition is to pay directors <blockquote>The history and tradition of nonprofit health plans is to pay [directors] in this state. These are people from various walks of life who bring a skill set. These are not political hacks. . . . It’s because of the responsibility, the time, the effort, and the work you have to put into it. It’s a lot of homework.</blockquote> It is true that the four non-profit Massachusetts health insurers all apparently did pay their board members, although in many other states, members of the boards of non-profit health insurers were not paid. But in the absence of any further argument that Massachusetts organizations were right when the others were wrong, this amounts to <a href="http://www.nizkor.org/features/fallacies/appeal-to-tradition.html">an appeal to tradition</a>.   The rest of this personal statement was again a special pleading.  Summary Board members of non-profit organizations generally are said to have three duties, as <a href="http://www.boardsource.org/Knowledge.asp?ID=3.364">per BoardSource</a>: - The Duty of Care: "a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization." - The Duty of Loyalty: "a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization." - The Duty of Obedience: "The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization." The notion that boards stewarding non-profit organizations, including health care organizations, have these core responsibilities seems to have become increasingly ignored and forgotten in an increasingly commercialized health care environment.  Simply fulfilling these duties should not be regarded as exceptional board service, and certainly not so exceptional as to require pay.  The fallacious arguments made on behalf of lucrative payments given to members of the boards of two of the more highly regarded non-profit health insurance corporations in the country indicate how low governance and stewardship of health care organizations has sunk. Again, we need governance of health care organization by people who understand their fundamental duties, who are willing to be accountable, and who put their organizations' mission ahead of personal gain.  Those who profess concern about the stewardship of health care need not go far to find examples of fundamental misconceptions about what such stewardship involves.  We need to restore core values of governance to our health care organizations.

Logical Fallacies in Support of Payments for Board Members of Non-Profit Health Insurers

The kerfuffle over the huge golden parachute given the departing CEO of an ostensibly non-profit Massachusetts health insurer/ managed care ...

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Wendell Potter on "Insurers’ Cynical Calculations on the Cost of Doing Business"

<a href="http://wendellpotter.com/2011/03/insurers%E2%80%99-cynical-calculations-on-the-cost-of-doing-business">On his blog</a>, Wendell Potter, former head of public relations for CIGNA, discussed big health insurance/ managed care organizations' attitudes toward paying financial penalties for wrong-doing: <blockquote>Having served as head of PR for two of the country’s largest health insurers — CIGNA and Humana — I know from personal experience that such fines are not widely considered newsworthy. Insurers know this, and so, annoying as being charged with breaking the law might be, they largely shrug off the fines and the threat of a day’s worth of bad publicity that occasionally accompany them. They are perfectly willing to risk being caught because they long ago realized that the fines are never severe enough to make them radically change the way they do business. Such a change would involve dealing more honestly with both their customers and the doctors who provide care to the people they insure.</blockquote> We have frequently discussed the parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> involving major health care organizations, including drug, device, biotechnology companies, and hospitals and health care systems as well as insurers and managed care organizations. We have repeatedly noted that fines or payments imposed on these organizations seem to have little deterrent effect. Now we have some documentation that this is true from someone who used to be in the belly of the beast. So I get to repeat:  we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Wendell Potter on "Insurers’ Cynical Calculations on the Cost of Doing Business"

On his blog , Wendell Potter, former head of public relations for CIGNA, discussed big health insurance/ managed care organizations' att...

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How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values"(1) just made it into a main-stream, large circulation US medical journal.  A brand new commentary in the American Journal of Medicine(2) by Supri and Malone declared: <blockquote>To explain why we have the most expensive health care system in the world and yet one of the lowest performing, we need to take a perspective that focuses on the US institution of medicine as a whole. We expose the hidden rules by which this institution operates and discuss how its powerful organizations shape, control and perpetuate this ailing system.</blockquote> The article then described the main types of large, powerful health care organizations: <blockquote>The US institution of medicine is not a single, comprehensive and cohesive system of health care. Instead, it is comprised of a myriad of large and powerful organizations, including <a href="http://hcrenewal.blogspot.com/search/label/health%20insurance">insurance companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/managed%20care%20organizations">Health Maintenance Organizations</a> (HMOs), corporate for-profit hospital chains, and <a href="http://hcrenewal.blogspot.com/search/label/pharmaceuticals">pharmaceutical companies</a>. This institutional structure is large and vast, and has over the years become ever more labyrinthine. </blockquote> Note that there are even more kinds of large and powerful health care organizations, including non-profit <a href="http://hcrenewal.blogspot.com/search/label/hospitals">hospitals</a> and <a href="http://hcrenewal.blogspot.com/search/label/hospital%20systems">hospital systems</a>, <a href="http://hcrenewal.blogspot.com/search/label/employers">employers</a> acting as payers for health care, <a href="http://hcrenewal.blogspot.com/search/label/government">government agencies</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20devices">device</a> and <a href="http://hcrenewal.blogspot.com/search/label/biotechnology">biotechnology</a> companies, <a href="http://hcrenewal.blogspot.com/search/label/Healthcare%20IT%20failure">health care information technology companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/public%20relations">public relations firms</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20education%20and%20communication%20companies">medical education and communication companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/contract%20research%20organizations">contract research organizations</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20societies">professional societies</a>, <a href="http://hcrenewal.blogspot.com/search/label/patient%20advocacy%20groups">patient advocacy groups</a>, accrediting bodies, health care charities, etc, etc, etc.  But the point is that the large organizations, not the patients, the physicians, nor the public dominate. Supri and Malone suggested that each kind of organization sets the "rules of the game," that is, the priorities important to the organization, which are very different from the core values that many of us believe ought to guide health care: <blockquote>Not only is the institutional structure large, it is dynamic, and actively creates, shapes, and maintains the institution of medicine. It does this through what we call setting the “rules of the game”; that is, by imposing the terms by which the system operates.</blockquote> For example, <blockquote>Insurance companies have set the rule 'restrict choice and coverage.' They enact this through their elaborate system of copayments and deductibles, exclusion clauses and loopholes, each designed to deter patients from claiming the health care they need, and to override physicians' medical judgment.</blockquote> Similarly, it cited the rules for managed care, "manage care," that is, "restrict utilization of health care" regardless of patients' needs; the pharmaceutical industry, "charges as much as we want, because insurance will pay;" and "corporate hospital chains ... test as much as we want, because insurance will pay." Thus it made the point that US health care now is driven by the priorities of large organizations whose interests at best may disregard and at worst may conflict with providing the best possible care for individual patients. Further, the resulting complexity is to the benefit of the large organizations: <blockquote>As each organization has created its own 'rules of the game,' the institution of medicine has grown into a complex entity that few really understand. This very complexity actually works to the advantage of the organizations that comprise the system, creating an operating environment that allows them to siphon off billions of dollars. It is one of the main reasons why the cost of health care has spiraled out of control. </blockquote> This is very important, and suggests that the system will just become more bureaucratic, complex and opaque until it finally collapses. Finally, it raised the point that the organizations collude to promote their priorities at the expense of patients' and the public's health: <blockquote>Although each organization sets their 'own rules of the game,' they are also strongly and deeply interlinked, and cooperate and collaborate to protect the system of health care that they have devised, so that it remains intact and continues to serve their own interests.</blockquote> Although  Supri and Malone did not differentiate the leadership of large organizations from the organizations themselves, we have pointed out that the top leaders of various kinds of organizations seem to think alike, becoming a sort of de facto executives' guild, with a "<a href="http://hcrenewal.blogspot.com/search/label/superclass">superclass</a>" of oligarchs at its pinnacle.  The guild may be enabled by these leaders' often <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">huge compensation</a> and other benefits and corporate arrangements that keep them shielded from the vicissitudes of daily life that patients, health care professionals, and lower level organizational employees must face.  Furthermore, the leadership of these organizations is often interlinked, for example, by leaders of one organization serving on boards of <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20directors">directors</a> or <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">trustees</a> of others. It is so nice for us at Health Care Renewal to have some company. It is a very important blow to the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> for these sorts of views to appear in a mainstream medical journal. When I interviewed a motley group of physicians and health care professionals in the early part of the 21st century, many expressed concerns about how medicine had been taken over by large organizations which did not honor its values. The article published in 2003(1) in Europe which tried to summarize their concerns probably could not have been published at that time in the US, but its publication remote from its main topic only made it more anechoic. It may be that an article published in a respected American journal will generate some more echoes. Here is hoping that Health Care Renewal can help create some such echoes.  Obviously, those who lead large organizations in health care will not be happy about that, so it is possible this article's appearance in a main-stream journal may incite some pushback, perhaps generated by the public relations machines of the large health care organizations (see <a href="http://hcrenewal.blogspot.com/2011/02/health-care-corporate-disinformation.html">this post</a> about how Wendell Potter's excellent <a href="http://wendellpotter.com/deadlyspin/">Deadly Spin</a> documented how large organizations use propaganda and disinformation to undermine viewpoints that threaten their domination.) In conclusion, I strongly support Supri and Malone's final sentiments: <blockquote>The sum of the 'rules of the game' devised by these organizations has resulted in a fragmented, haphazard and broken system of health care. Reform is long overdue, and demands root and branch transformation of the 'rules of the game' governing the US institution of medicine. This requires us to understand these rules, who is setting them, and how these rules are being used to exploit the system of medicine. Only then can we begin to heal our ailing health care system.</blockquote>Well said! But now almost 8 years since the publication of "A Cautionary Tale," we still have a long way to go. References 1.  Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Inte Med 2003; 14: 123-130.  Link <a href="http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VSB-48D4VTD-D&_user=489286&_coverDate=03%2F31%2F2003&_rdoc=1&_fmt=high&_orig=gateway&_origin=gateway&_sort=d&_docanchor=&view=c&_searchStrId=1699586911&_rerunOrigin=google&_acct=C000022678&_version=1&_urlVersion=0&_userid=489286&md5=52787b7440a81ac69b0bffe22ddbe5ff&searchtype=a">here</a>. 2.  Supri S, Malone K. On the critical list: the US institution of medicine. Am J Med 2011; 124: 192-193.  Link <a href="http://www.ncbi.nlm.nih.gov/pubmed/21396498">here</a>.

How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values...

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BLOGSCAN: The Place Where the Compass Spins

The 1 Boring Old Man blog is on a roll.  Read <a href="http://1boringoldman.com/index.php/2011/03/28/compasses/">this summary post</a>, see its amazing introduction below, then peruse the <a href="http://1boringoldman.com/">main page</a> and the archives: <blockquote>At the North Pole, the magnetic compass apparently spins at random, not knowing where to point. Is it because there’s no North? or is North everywhere? That’s the way I feel about this Atypical Antipsychotic story I’ve been preoccupied with for a couple of months. It’s like everyone’s walking around with a compass that doesn’t work any more. The Pharmaceutical Companies involved have forgotten what their products are used for. Many doctors seem to have forgotten why they became doctors. Whole industries have sprung up [Clinical Research Organizations, Clinical Research Centers, Medical Writing companies, etc] without being clear about what they’re even involved in. One has to move away from it all to avoid getting caught up in the confusion and becoming as blind as the other players. Once you get far enough away, it’s tempting to forget that it’s even there, that place where the compasses don’t work anymore.</blockquote>

BLOGSCAN: The Place Where the Compass Spins

The 1 Boring Old Man blog is on a roll. Read this summary post , see its amazing introduction below, then peruse the main page and the arc...

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"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance.  The right tends to disparage all aspects of "government-run" health care, and in the case of insurance, uses the alleged faults of the two big US government health insurance programs as examples.  (Medicare is a federal government health insurance program for the elderly and disabled. Medicaid is federal-state program for the poor.)  For example, per the Associated Press <a href="http://www.businessweek.com/ap/financialnews/D9LTA0UO2.htm">via BusinessWeek</a>, from a currently prominent Republican hopeful for President, former Minnesota Governor Tim Pawlenty, <blockquote>The former Minnesota governor was the latest politician to participate in the Health Policy Grand Rounds program that Dartmouth-Hitchcock Medical Center has organized for its staff during the past two presidential campaign cycles. Using Medicare and Medicaid as examples, he criticized the notion that government-run health care will produce efficiency and said the answer lies in empowering consumers.</blockquote> Republican Congressman Darrell Issa (California) <a href="http://issa.house.gov/index.php?option=com_content&view=article&id=271:rep-darrell-issa-the-lackluster-record-of-government-run-health-care&catid=23:opinion-editorials">wrote</a> in 2010: <blockquote>an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, 'By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.' A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that.</blockquote> The left may advocate for government-run, "single-payer" insurance programs, perhaps using the alleged benefits of Medicare and Medicaid as examples. Scholarly articles about health care policy may refer to Medicaid as a government "single-payer" system.  (For example, see: Robinson JC. The commercial health insurance industry in an era of eroding employer coverage. Health Aff 2006; 25:1475-1486. Link <a href="http://content.healthaffairs.org/content/25/6/1475.short">here</a>.) In any case, I suspect most of us think of Medicaid as an example of "government-run" health care insurance, regardless of whether we believe that is a good or a bad thing. Yet the reality may be more complex. Two recent stories, one a follow-up on an old Health Care Renewal post, provide some dots to connect. Connecticut HUSKY Medicaid Program In 2007, we <a href="http://hcrenewal.blogspot.com/2007/11/health-plans-programs-cancelled-for.html">posted</a> about how the state of Connecticut was going to end participation in the HUSKY state Medicaid program for poor children by four insurance companies/ managed care organizations.  They apparently refused to provide information about payments to physicians and denial of payments for prescription drugs to the state.  The two largest organizations involved were Anthem Health Plans (a subsidiary of WellPoint), and Health Net.  At the time, we noted that this case provided an example of the lack of transparency exhibited by major health organizations. Late last year, the Connecticut Mirror <a href="http://www.ctmirror.org/story/8085/husky-managed-care-company-profits">documented </a>more criticism of the HUSKY program based on a report that showed that participating companies were making big profits from it (but perhaps not from other state Medicaid programs):  <blockquote>The three managed care companies in the state's HUSKY insurance program for low-income children and families recorded profits of $18.8 million last year, according to figures released by the state Department of Social Services. In one part of HUSKY, the insurers made margins of at least 20 percent and spent less than 72 percent of their revenues on medical care. The figures released this month drew criticism from members of the Medicaid Care Management Oversight Council, who are in the midst of considering moving HUSKY out of managed care.</blockquote> In more detail, the relevant numbers were: <blockquote>AmeriChoice, part of UnitedHealthcare, spent 62 percent of its revenue on medical care and posted a 22.9 percent profit margin in the HUSKY B program. By contrast, the federal health reform law sets minimum medical care ratios for insurers of 80 percent or 85 percent, depending on the type of plan. The provision does not apply to Medicaid plans, but was cited as a benchmark in the council's discussion. None of the insurers met those benchmarks in HUSKY B, which covers children whose family income does not qualify for Medicaid. Last year, it covered between 13,000 and 16,000 children, many whose families earned below 300 percent of the federal poverty level. Aetna spent 70.5 percent on medical care and made a 20 percent margin, while Community Health Network of Connecticut, a non-profit with far more enrollees than the other insurers, spent 71.8 percent of its revenues on medical care and made a 20.6 percent margin. Margins were lower, and medical care ratios higher, in HUSKY A, a Medicaid program that enrolled as many as 358,088 children and adults in 2009. Community Health Network reported a 95.1 percent medical care ratio and a -0.3 percent margin. AmeriChoice spent 86.3 percent of its revenue on medical care and achieved a 3.5 percent margin, while Aetna had an 83.9 percent medical care ratio and 6.5 percent margin. Overall, the medical care ratio was 90.7 percent for both HUSKY programs and all three insurers. The overall margin was 2.3 percent.</blockquote> The insurers involved defended themselves by noting to participate in HUSKY they also had to participate in another program, Charter Oak Health Plan, "on which they lose money." Last month, it looked to be the end of managed care in these Medicaid programs, again as <a href="http://www.ctmirror.org/story/11427/malloy-administration-moving-husky-out-managed-care">reported</a> by the Connecticut Mirror: <blockquote>The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people. </blockquote> This article also noted: <blockquote>In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.</blockquote> So let us deal directly with the cognitive dissonance generated by these articles. In the ongoing US health reform debate, Medicaid is usually discussed as a "government-run" health care (insurance) program. Yet these news articles from Connecticut suggest at least in that state, part of Medicaid was out-sourced to mostly large, national, for-profit health insurance companies/ managed care organizations. Furthermore, as noted just above, these corporations seemed to be mainly calling the shots in how their part of Medicaid was run. So is this "government-run" health care (insurance)? But wait, there is more.... Minnesota Medicaid Controversy Last month, the Politics in Minnesota web-site ran a <a href="http://politicsinminnesota.com/blog/2011/02/picking-the-lock-on-hmos-%E2%80%98black-box/">report</a> on an unlikely reformer: <blockquote>Dave Feinwachs is no stranger to the Capitol. For three decades he was the general counsel to the Minnesota Hospital Association. In that capacity, he negotiated with state agencies and testified regularly before legislative committees on health care issues. But early last year, Feinwachs said, he was ordered by his superiors at the hospital association not to provide any further testimony at the Capitol. The reason for the muzzle: his vocal insistence that health maintenance organizations (HMOs) should contribute money to help salvage the state’s General Assistance Medical Care program for indigent adults. Feinwachs says he abided by the prohibition on testimony before legislative committees, but apparently it was not enough to keep him in the good graces of his employer. In November he was fired as the group’s principal attorney. Feinwachs will not discuss the reason for his termination, citing potential litigation. But it almost certainly had something to do with his ongoing zealous campaign to force greater transparency and accountability on the state’s HMOs - primarily Blue Cross & Blue Shield, HealthPartners, Medica and UCare - which receive roughly $3 billion annually to run health plans for many of the state’s poorest residents.</blockquote> So here we go again. This article suggested that Minnesota had out-sourced a very large part of its Medicaid program. Furthermore, it also appears that the state government knows little about what happens to the money it hands over: <blockquote>In the next two years, Minnesota is slated to funnel about $6 billion to the state’s HMOs to provide health care for 550,000 of the state’s poorest residents. To put that figure in perspective, it is nearly 20 percent of the state’s expected 2012-13 general fund revenues - and nearly identical to the state’s projected $6.2 billion deficit. In coming up with a solution to Minnesota’s financial crisis, Feinwachs and others believe, legislators must at least have a clear accounting of this massive pot of health care dollars. HMOs, meanwhile, are not exactly yearning for scrutiny, especially as they launch a pitch to administer even more of the state’s health care spending.</blockquote> In addition, there is reason to believe that Minnesota may be paying a significant amount for administration: <blockquote>Feinwachs believes that the administrative overhead collected by HMOs could be in the neighborhood of 16 percent. He concedes, however, that this is no more than a 'guesstimate' pieced together from the limited information that is publicly available.</blockquote> Then, there is reason to suspect that the private (and nominally not-for-profit) HMOs that Minnesota pays to run Medicaid have resisted accounting for how the money they got was spent: <blockquote>Past attempts to bolster accountability and transparency for HMOs have largely run into a brick wall. For instance, when legislators considered requiring the health plans to chip in on a plan to restore the General Assistance Medical Care program last year, they were told by officials from the Department of Human Services that such a move would be illegal. Efforts to provide more financial disclosure have been rebuffed by the argument that such information is proprietary and not subject to the state’s data practices rules. The complexity of Minnesota’s patchwork of publicly funded health care plans, which very few individuals clearly understand, has also helped forestall changes. 'We can’t let the complexity of data and information beat us down, and I think that’s what happened in the years past,' Hosch said. 'The systems almost seem like they’re deliberately complex in order to confuse us.'</blockquote> Apparently in these parlous financial times, Mr Feinwachs got some attention. Last week, the state Governor announced his willingness to dig into the results of the state's out-sourcing of Medicaid, per the Minneapolis Star-Tribune: <blockquote>It's high time that Minnesota started treating its nonprofit health plans for what they are -- some of state government's largest vendors. Reforms announced this week by Gov. Mark Dayton's office are a promising first step toward scrutinizing health plan contracts for savings and finding new ways to rein in Minnesota's soaring medical costs. Managing care for more than 500,000 low-income, disabled and elderly Minnesotans enrolled in state public health programs is a $3.1 billion-a-year business for health plans in Minnesota, with the state and federal government jointly footing the bill. Over the past decade, the state's portion of this outsourced care has increased from 5 percent to 11 percent of the state budget, according to Dayton's office. The state also has more than 249,000 people -- typically the sickest of the sick -- in a fee-for-service public program. That spending is also ripe for a cost-savings review. On Wednesday, Dayton announced plans to do what good business leaders do in difficult financial circumstances. His administration is going to start driving harder bargains with health plans. Key parts of the plan include making the contracting system more competitive, making financial information more transparent, and doing deeper auditing of plans' books to analyze administrative and medical expenses.</blockquote> So again in Minnesota, it appeared that the state had out-sourced a large proportion of its Medicaid program, covering apparently two-thirds of the state's Medicaid patients. It appears that knowledge of the out-sourcing of most of Medicaid was relatively anechoic, and that even the state's former Governor Pawlenty was unaware of it (see his comments in introduction to this post). Despite the amounts of money and the numbers of people involved, up to now the state government had apparently very little information about how billions of dollars were being spent by private, albeit nominally non-profit health insurance companies/ managed care organizations. Summary Two cases from two states suggest that some proportion of Medicaid, perhaps a very large proportion, has been out-sourced to private corporations, both nominally non-profit and for-profit. In fact, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/07/07/AR2010070703560.html">article</a> last year suggested that 70% of Medicaid patients are in managed care plans, most of which are likely out-sourced, not run by state Medicaid agencies. Our two cases above further suggest that government officials may know little about how the money given to these corporations was spent, and how the corporations managed the supposedly "government-run" health insurance. So much for the notion that the US Medicaid program is "government-run" health insurance.  Whether one believes that government bureaucrats are good or bad at running health care, it seems that most Medicaid patients' care is managed by corporate, not government bureaucrats. The likelihood that a substantial proportion of Medicaid patients actually get their health care coverage from corporations, be that non-profit or for-profit, raises some important questions. - What proportion of the government funds provided these corporations goes to health care versus administration, overhead, etc? -  What then is the proportion of all Medicaid money spent on health care versus administration, overhead, etc at the federal, state, and corporate levels? -  What proportion of the revenue of major health insurers/ managed care organizations actually comes from tax-payers via Medicaid? -  To what extent do health insurers/ managed care organizations influence clinical care through their role implementing Medicaid? -  How transparent are their finances and their implementation of Medicaid? -  How well are they supervised and regulated by national and state government? Meanwhile, it appears that there is far more overlap between government and corporate health insurance and managed care than most of us realized.  That suggests the usual debate between the foes and proponents of "government-run" health care (insurance) was vastly too simplistic.  Maybe some of those involved in the debate should have known that.    Meanwhile, the concerns I <a href="http://www.ejinme.com/article/S0953-6205%2803%2900029-3/abstract">discussed</a> in 2002 that "health care has become dominated by large, bureaucratic organizations" appear increasingly well-founded.  This domination seems to be increasingly facilitated by collaboration - or should that be collusion? - among government and private bureaucracies.  The danger, as we have repeatedly discussed, is that the leaders of these bureaucracies may feel increasing loyalty to the managers' and executives' guild, and decreasing pressure not to fulfill their own and their cronies' self-interest.  We need at least to have some frank discussions about the increasing corporatism of health care and all of society, and what to do about it.

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance. T...

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Those Who Dismiss Healthcare (and Healthcare IT) Adverse Events Reports as Mere "Anecdotes" Have Lost - Supreme Court-Style

At my Sept. 2010 post "<a href="http://hcrenewal.blogspot.com/2010/09/dangers-of-critical-thinking-in.html" style="font-family: arial;">The Dangers of Critical Thinking in A Politicized, Irrational Culture</a>" I wrote: <blockquote style="font-family:arial;">... It's the EMR "anecdotalists" (as opposed to the "<a href="http://www.blogger.com/redir.aspx?C=dc7b9da405614c5dbab920a23075d904&URL=http%3a%2f%2fonline.wsj.com%2farticle%2fSB122910977401502369.html%3fmod%3dloomia%26loomia_si%3dt0%3aa16%3ag2%3ar3%3ac0.0175368%3ab0" target="_blank">Markopolists</a>") who say that "anecdotes" of HIT-related injury are meaningless. They deem reports of safety issues and HIT-related misadventures and risk as simply "anecdotal", and that "anecdotes don't make evidence" (or "anecdotes don't make data").</blockquote> For "anecdotes" of patient harm due to medical devices even from the most reliable of sources to be counted as "evidence" of device risk, apparently, the stories need to be blessed with Statistical Holy Water. The Holy Water must also be of a brand approved by the academic pundits. For me, this is no longer merely a professional debate. My elderly relative became one of those "anecdotes" in May last year. I address the casual, Dogbert-style, waving-of-the-hand "Bah!" dismissal of health IT harm "anecdotes" at numerous other posts as well, such as "<a href="http://hcrenewal.blogspot.com/2011/01/ehr-problems-no-theyre-merely.html" style="font-family: arial;">EHR Problems? No, They're Merely Anecdotal</a>" and "<a href="http://hcrenewal.blogspot.com/2010/09/health-it-on-anecdotalism-and.html" style="font-family: arial;">Health IT: On Anecdotalism and Totalitarianism</a>". <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC3R-neGSEVG6YHlF2_aqr3l_TIiwnLOVuprTMHik2msljNENb9cbk8yfkczzdbnzm3vXf5s1MSAybYAwwEdk4qPThRR8mDgKozEtleyGagJOM7rQY7xomFQXq1-z5nKatfhw-Fhc5m5MN/s1600/dilbert_bah.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5588746392800329890" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC3R-neGSEVG6YHlF2_aqr3l_TIiwnLOVuprTMHik2msljNENb9cbk8yfkczzdbnzm3vXf5s1MSAybYAwwEdk4qPThRR8mDgKozEtleyGagJOM7rQY7xomFQXq1-z5nKatfhw-Fhc5m5MN/s320/dilbert_bah.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 122px; height: 102px;" /></a>Bah! Your Health IT adverse events reports are anecdotes, and anecdotes don't make data! </div> In those posts I also mention how Australian informatics professor Dr. Jon Patrick had essentially hit the flaws of this argument out of the Southern hemisphere with a short editorial in the journal "Applied Clinical Informatics" entitled "<a href="http://aci.schattauer.de/en/contents/archive/issue/1124/manuscript/15463/show.html" style="font-family: arial;">The Validity of Personal Experiences in Evaluating HIT</a>." That essay is free at the link and is worth reading. Interestingly and thankfully, the "anecdotes are meaningless" crowd have now lost, and lost big - Supreme Court style. In fact, the U.S. Supreme Court has shown far more common sense than many esteemed academics and industry pundits. As noted in <a href="http://pipeline.corante.com/archives/2011/03/25/the_supreme_court_slams_big_pharma_not_exactly.php" style="font-family: arial;">this post</a> at Derek Lowe's pharmaceutical industry "In the Pipeline" blog, the company that made "Zicam", a zinc-based over-the-counter cold remedy, tried to defend shareholder suits that the company withheld case reports of Zicam causing permanent loss of smell via arguing that such reports "did not reach a level of statistical significance", i.e., were "anecdotal." The case went to the U.S. Supreme Court. The Supreme Court would have none of that argument: <blockquote>"Matrixx’s [Zicam's manufacturer - ed.] premise that statistical significance is the only reliable indication of causation is flawed. Both medical experts and the Food and Drug Administration rely on evidence other than statistically significant data to establish an inference of causation. It thus stands to reason that reasonable investors would act on such evidence. </blockquote> The full court decision is at this link: <a href="http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf" style="font-family: arial;">http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf</a> (PDF file), but a passage I consider key to this issue is as follows: <blockquote style="font-style: italic;">... We conclude that the materiality of adverse event reports cannot be reduced to a bright-line rule ... Because adverse reports can take many forms, assessing their materiality is a fact-specific inquiry, requiring consideration of their source, content, and context. </blockquote> This is common sense incarnate. It applies not just to drugs, but to medical devices, to health IT, and to other domains as well. In essence, it is saying that adverse events reports, especially repeated ones, from trustworthy sources are not to be lightly dismissed, but should serve at the very least as red flags that there may be a systemic problem requiring further investigation. One wonders how and if public healthcare IT vendors will begin disclosing "anecdotal" reports of their products causing patient harm to their own stockholders. One also wonders if the academic anecdotalists (up to the level of the chair of the <a href="http://healthit.hhs.gov/portal/server.pt/community/healthit_hhs_gov__onc/1200" style="font-family: arial;">Office of the National Coordinator for Health Information Technology</a> at HHS) will cease their unfettered dismissal of health IT AE reports as mere "anecdotes" and therefore let's roll out this 100% beneficent technology nationwide ASAP: <blockquote style="font-family:arial;">"Nothing [ONC has] found would give them any pause that a policy of introducing EMR's could impede patient safety." - David Blumenthal </blockquote> That sounds a bit like the refrain of the makers of Zicam. One might also wonder if the anecdotalists merely lack common sense, or are using this form of epistemological dementia to obscure conflict of interest. On a final note, my favorite comment at the aforementioned "In the Pipeline" blog story is this by anonymous commenter "<a href="http://pipeline.corante.com/archives/2011/03/25/the_supreme_court_slams_big_pharma_not_exactly.php#486785">Still Scared of Dinosaurs</a>": <blockquote>One of the most important ideas real statisticians must get into their heads is "Thou shalt not worship the 0.05 threshold". The whole concept of "statistical significance" for AEs is idiotic and the fact that Matrixx based any part of their defense on it indicates that their stupidity did not end when they named the company.</blockquote> Perhaps this Dilbert cartoon is apropos to the Supreme Court decision: <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpWvtHM2V4woNCenRHGJBsn5bL2lnegSGbsn6NLY-al4u1RXF9vsMrbkECBhDJvRAGg2DNSe298h2dNiNetm9f54jUTxDwmFFYPchyphenhyphenaKz8y8mP16rRDeGIIMIHPsg-utiJIN9ZGOjkrfS6/s1600/dogbert.gif"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5588746949773253554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpWvtHM2V4woNCenRHGJBsn5bL2lnegSGbsn6NLY-al4u1RXF9vsMrbkECBhDJvRAGg2DNSe298h2dNiNetm9f54jUTxDwmFFYPchyphenhyphenaKz8y8mP16rRDeGIIMIHPsg-utiJIN9ZGOjkrfS6/s320/dogbert.gif" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 138px; height: 135px;" /></a> -SS Addendum: I thought it appropriate to share these thoughts with the leadership of the <a href="http://www.jointcommission.org/">Joint Commission</a>, the organization that accredits healthcare organizations in the United States: <div style="direction: ltr;" id="divRpF355968"></div><blockquote><div style="direction: ltr;font-family:arial;" id="divRpF355968">From: Scot Silverstein Sent: Sunday, March 27, 2011 10:41 AM To: MGiuntoli, Anita; Chassin, Mark; Schyve, Paul; Legaspi, Shirley Cc: Ross Koppel; 'David Kreda' Subject: Re: MATRIXX INITIATIVES, INC., ET AL. v. SIRACUSANO ET AL. </div> <div> <div face="Arial" size="13px" style="direction: ltr; color: rgb(0, 0, 0);"> <div dir="ltr" style="font-family:arial;"> </div> <div dir="ltr" style="font-family:arial;"> </div> <div dir="ltr" style="font-family:arial;">Not a complaint this time [about health IT failure - ed.], but an observation. The JC has noted health IT risks in the Sentinel Events Alert "<a href="http://www.jointcommission.org/assets/1/18/SEA_42.PDF">Safely implementing health information and converging technologies</a>" of 2008. The company that made "Zicam", a zinc-based over-the-counter cold remedy, tried to defend shareholder suits that the company withheld case reports of Zicam causing permanent loss of smell via arguing that such reports "did not reach a level of statistical significance", i.e., were "anecdotal." The case went to the U.S. Supreme Court. The Supreme Court would have none of that argument: <blockquote style="font-family:arial;"> "Matrixx’s [Zicam's manufacturer] premise that statistical significance is the only reliable indication of causation is flawed. Both medical experts and the Food and Drug Administration rely on evidence other than statistically significant data to establish an inference of causation. It thus stands to reason that reasonable investors would act on such evidence. </blockquote> The full court decision is at this link: <a href="http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf" target="_blank">http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf</a> (PDF file), but a passage I consider key to this issue is as follows: <blockquote style="font-family:arial;">... Because adverse reports can take many forms, assessing their materiality is a fact-specific inquiry, requiring consideration of their source, content, and context.</blockquote> This is common sense incarnate. It applies not just to drugs, but to medical devices, to health IT, and to other domains as well. </div> <div dir="ltr" style="font-family: arial;"> </div> <div dir="ltr" face="arial">I believe JC should start to pay serious attention to "anecdotal reports" of health IT-caused patient injury, and consider reliable reporting of these events as an Accreditation standard. </div> <div dir="ltr" face="arial"> </div> <div dir="ltr" style="font-family: arial;">As I noted in my July 2009 JAMA letter to the editor "<a href="http://jama.ama-assn.org/content/302/4/382.1.extract" target="_blank">Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards</a>" in response to Koppel and Kreda's <a href="http://jama.ama-assn.org/content/301/12/1276.extract" target="_blank">JAMA article</a> on HIT industry practices, "hold harmless" and "gag" clauses must go, and be replaced with proactive reporting of healthcare IT-related "events." </div> <div style="font-family: arial;" dir="ltr"> </div> <div dir="ltr" style="font-family: arial;">Scot Silverstein</div> <div dir="ltr"> </div></div></div></blockquote>-- SS

Those Who Dismiss Healthcare (and Healthcare IT) Adverse Events Reports as Mere "Anecdotes" Have Lost - Supreme Court-Style

At my Sept. 2010 post " T he Dangers of Critical Thinking in A Politicized, Irrational Culture " I wrote: ... It's the EMR ...

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The Institute of Medicine Releases Reports on Practice Guidelines and Systematic Reviews Which Generate Few Echoes

Two days ago, the prestigious US Institute of Medicine <a href="http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=13058">released </a>two reports on important health care issues, clinical practice guidelines and systematic reviews.  <a href="http://iom.edu/Reports/2011/Finding-What-Works-in-Health-Care-Standards-for-Systematic-Reviews.aspx">Systematic reviews</a> of the relevant clinical research have been advocated by evidence-based medicine proponents as the appropriate basis for clinical and policy decisions.  <a href="http://iom.edu/Reports/2011/Clinical-Practice-Guidelines-We-Can-Trust.aspx">Clinical practice guidelines</a> have been advocated by many health researchers, policy makers, and clinicians as the best way to encapsulate the evidence to inform clinical and policy decision making.  Both reports suggested series of standards for how systematic reviews and clinical practice guidelines should be developed.  These topics are of general importance to clinicians, health services researchers, and health policy makers.  The <a href="http://www.iom.edu/">Institute of Medicine</a>, part of the US National Academy of Sciences, is one of the most authoritative sources of opinion on medicine and health care.  Therefore, one would think that these reports would have gotten wide notice, and would hardly required Health Care Renewal to create some echoes. However, a Google News search today produced only six "hits" relevant to these reports, including the original press release.  All are in specialized medical/ health care news outlets.  None are in the national media, and none are from major medical/ professional journals or societies.  Let me suggest a theory about why these two major reports have generated so few echoes so far.  Let me quote from the <a href="http://iom.edu/~/media/Files/Report%20Files/2011/Clinical-Practice-Guidelines-We-Can-Trust/Clinical%20Practice%20Guidelines%202011%20Report%20Brief.pdf">summary</a> of the report on clinical practice guidelines: <blockquote>Most guidelines used today suffer from shortcomings in development. Dubious trust in guidelines is the result of many factors, including failure to represent a variety of disciplines in guideline development groups, lack of transparency in how recommendations are derived and rated, and omission of a thorough external review process. To be trustworthy, clinical practice guidelines should: • Be based on a systematic review of the existing evidence; • Be developed by a knowledgeable, multidisciplinary panel of experts and representatives from key affected groups; • Consider important patient subgroups and patient preferences, as appropriate; • Be based on an explicit and transparent process that minimizes distortions, biases, and conflicts of interest; • Provide a clear explanation of the logical relationships between alternative care options and health outcomes, and provide ratings of both the quality of evidence and the strength of recommendations; and • Be reconsidered and revised as appropriate when important new evidence warrants modifications of recommendations. Additionally, as reflected in the committee’s standards for developing trustworthy clinical practice guidelines, guideline development groups optimally comprise members without conflict of interest. The committee recognizes that in some circumstances, a guideline development group may not be able to perform its work without members who have conflicts of interest—for example, relevant clinical specialists who receive a substantial portion of their incomes from services pertinent to the guideline. Therefore, the committee specifies that members of the guideline development group who have a conflict of interest should not represent more than a minority of the group.</blockquote> So it seems that the report on clinical practice guidelines emphasized two issues highly relevant to Health Care Renewal, the need for <a href="http://hcrenewal.blogspot.com/search/label/transparency">transparency</a> in guideline development, and the need to avoid <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> affecting the development process. The two first <a href="http://iom.edu/~/media/Files/Report%20Files/2011/Clinical-Practice-Guidelines-We-Can-Trust/Clinical%20Practice%20Guidelines%202011%20Insert.pdf">standards</a> for guidelines are about transparency and minimization of conflicts of interest.  Similarly, the report on systematic reviews also included fairly tough <a href="http://www.iom.edu/~/media/Files/Report%20Files/2011/Finding-What-Works-in-Health-Care-Standards-for-Systematic-Reviews/Standards%20for%20Systematic%20Review%202010%20Insert.pdf">standards</a> to minimize conflicts of interest. We on Health Care Renewal go on and on about the need to maximize transparency in health care, and particularly in health care leadership and governance, and about the need to disassemble the now pervasive web of conflicts of interest that has entangled health care.  However, as we know, these are not popular topics among the leadership of health care, which includes many individuals who have greatly benefited from lack of transparency and pervasive conflicts of interest.  We know these topics make these leaders, and many of those who report to, or work or associate with them very uncomfortable. So unfortunately, I am not surprised that the two new and likely authoritative reports from the Institute of Medicine, despite that organization's prestige, have started off relatively <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  It also unfortunately likely that they will remain relatively anechoic.  In 2009, the IOM issued an authoritative <a href="http://www.iom.edu/Reports/2009/Conflict-of-Interest-in-Medical-Research-Education-and-Practice.aspx">report on conflicts of interest</a> in medicine and health care which suggested fairly tough standards to decrease such conflicts and their influence (also see post <a href="http://hcrenewal.blogspot.com/2010/12/health-professionals-for-new-century.html">here</a>).  Since 2009, I just found 53 citations to that report in the medical literature using the ISI Web of Science, for a rate of 27/year.  In 1999, the IOM issued a report on medical errors, "To Err is Human."  Since then, it has received 1374 citations, a rate of 115/year.  As we noted above, the topic of conflicts of interest seems to make the powers that be in health care very uncomfortable.  In contrast, "To Err is Human" was widely interpreted to mean that physicians make a lot of dangerous errors, and the best way to decrease them is to impose more controls by bureaucrats, managers, and executives (even if that was not its intent).  Thus, that report could be twisted to fit the talking points of the powers that be, and hence has been anything but anechoic. So while Health Care Renewal is hardly a powerful tool for creating publicity, I thought we should try to get the word out about the new IOM reports on clinical practice guidelines and systematic reviews.  Every little bit helps. Meanwhile, the deathly quiet reception these reports have gotten so far emphasizes the need to combat the anechoic effect.  As long as the powers that be can command billions of dollars to influence the health care conversation through their marketing, public relations, and lobbying departments, expect the discussion not to question what they do, and how they benefit from the status quo to the financial and health detriment of patients and the population. We will not be able to truly reform health care until we can speak openly about what threatens health care values and what needs to be done about these threats.

The Institute of Medicine Releases Reports on Practice Guidelines and Systematic Reviews Which Generate Few Echoes

Two days ago, the prestigious US Institute of Medicine released two reports on important health care issues, clinical practice guidelines an...

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