Medicare Drug Coverage and the Impact on Overall Health Care Spending

By Clive Riddle, July 8, 2009

An important paper reporting on results of an NIH funded study : “The Effect of Medicare Part D on Drug and Medical Spending”was posted online last week with the New England Journal of Medicine: [Volume 361:52-61 July 2, 2009 Number 1] and authored by Yuting Zhang, Ph.D., Julie M. Donohue, Ph.D., Judith R. Lave, Ph.D., Gerald O'Donnell, M.S., and Joseph P. Newhouse, Ph.D..

The pharma industry for decades has been a proponent that appropriate prescription coverage can have a positive impact on overall health care costs. Certainly Medicare policy advocates argued the point in the debate leading up to establishment of Medicare Part D prescription coverage earlier this decade. Now that time has passed, the opportunity has arisen to examine the actual data to address this issue.

The study examined over 35,000 Medicare members from Pennsylvania’s Highmark Blue Cross Blue Shield from 2004 through 2007. The study included a control group with employer based retiree drug coverage that did not change after Part D took effect, and had $10 to $20 copayments with no spending limits or coverage gaps. Three groups were also examined that had no or limited drug coverage before Part D, and then enrolled as in Part D plan as of January 2006. One group had no previous drug coverage, and the other two had previous drug benefits with quarterly spending limit caps.

The study found that the cost of introduction of Part D benefits for those with no or very limited prior coverage was approximately offset by savings in overall health care costs, but overall health care spending did increase for those with more generous prior coverage.

In comparison to the control group, after introduction of Part D, the average total monthly drug spending was $41 higher (74% increase) for enrollees with no previous drug coverage, $27 (27% increase) higher among those with a previous $150 quarterly cap, and $13 higher among those with a previous $350 quarterly cap (11% increase.) Furthermore, overall monthly medical expenditures (excluding drugs) were $33 lower in the group with no previous coverage, $46 lower in the group with a previous $150 quarterly cap, but $30 higher in the group with a previous $350 quarterly cap.

The study concluded that “The offsetting reduction in medical spending in the two groups with the most limited previous benefits was probably due to improved medication adherence among enrollees with chronic conditions.” The study also addressed the overall health care cost increase for the group with more generous prior coverage: “Why did medical spending rise in the group with a previous $350 quarterly cap (the most generous previous coverage among the three intervention groups), as compared with the no-cap group? The additional use of prescription drugs in all three groups probably included both overuse of some drugs and underuse of others, but the proportion of the increase that was overuse may have been highest in the group with the most generous previous coverage. Our finding that the use of oral antidiabetic drugs did not change significantly in this group is consistent with this hypothesis.”

The References section at the end of the report is well worth browsing, as links to various prior studies are provided. Beyond the References provided in the report, I found two other studies that proved to be of particular interest while researching this topic:

The AARP Public Policy Institute published “How Prescription Drug Use Affects Health Care Utilization and Spending by Older Americans: A Review of the Literature” by Cindy Parks Thomas, Ph.D., Brandeis University, Schneider Institute for Health Policy, in April 2008. Key conclusions from this 57 page report include: (1) “Prescription drug coverage can produce cost offsets from reductions in non-drug services, such as hospitalizations and emergency visits.”; (2) “Studies that incorporate increased longevity into spending projections suggest that cost offsets may diminish over time.”; and (3) “Strict benefit limits of all kinds decrease prescription drug use and increase use of other medical services, including acute and long-term care services.”

Baoping Shang, and Dana P. Goldman of the RAND Corporation; National Bureau of Economic Research (NBER) published results in 2007 from their study “Prescription Drug Coverage and Elderly Medicare Spending” (with preliminary results published in 2005) that examined Medicare Supplement (Medigap) enrollees with and without prescription coverage. They found that “Medigap prescription drug coverage increases drug spending by $170 or 22%, and reduces Medicare Part A spending by $350 or 13% (in 2000 dollars). Medigap prescription drug coverage reduces Medicare Part B spending, but the estimates are not statistically significant. Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending.”

The Genormous Generic Market

By Clive Riddle, June 11, 2009

“Ginormous” is out. “Genormous” is in, at least if Pfizer is editing the Unabridged Dictionary of Pop Buzz Words, as they continue to go on record that they are pursuing generic growth. This week the Associated Press reported that Pfizer “expects to expand its offerings for generic pharmaceuticals by adding products to the business” quoting Dave Simmons, Pfizer President of Established Products. A couple of weeks ago Pfizer licensing agreements with two Indian based companies was reported as a major signal of their strategy to seek growth through generics and emerging markets.

Continued growth in generics would seem a smart recession and health reform based strategy. But generic growth has been sustained through this and the prior decade through good times as well. Let’s have a look at a few of the factors driving these Genormous numbers: 

• The Average price of generic vs. brand prescriptions: Brand: $119.51 ; Generic: $34.34 [Prescription Drug Trends, September 2008, Kaiser Family Foundation] 

• Average Rx Copay by Tier: Generic Tier $10; Preferred Tier: $26; Non Preferred Tier: $46; Fourth Tier: $75 [Kaiser Family Foundation Employer Health Benefits 2008 Annual Survey] 

• Generic Fill Rates: 65% of all prescriptions and 21% of drug sales [Prescription Drug Trends, September 2008, Kaiser Family Foundation] 

• Generic Fill Rate by $ Differential between Generic/ Preferred Brand Copay: $ 0- 5: 47.6%; $ 6-10: 49.2%; $11-15: 51.6%; $16-20: 52.6%; $21+ : 55.0% [The American Journal of Managed Care, June 2007, “Copayment Differentials and Generic Utilization” ] 

• Employer Strategies to Reduce Pharmacy Costs: #1 Mentioned response (75%) was "Promote greater use of generic drugs" (2nd highest response - 48%- was "Improve management of specialty drugs" [Mercer Survey] 

• The 2009 Survey of Health Care Consumers found that 3 in 10 consumers switched medications in the past year, with 38% of them switching to save money [Deloitte Center for Health Solutions] 

• IMS Health reports that "annual U.S. prescription sales growth of 1.3 percent in 2008, to $291 billion. Dispensed prescription volume in the U.S. grew at a 0.9 percent pace. Factors influencing the market’s slower growth in 2008 included higher demand for less-expensive generic drugs, lower new product sales, and reduced consumer demand due to the economic turndown." [IMS Annual U.S. Pharmaceutical Sales Report] 

• Under Medicare Part D, generic drugs were dispensed 88 percent of the time when generic substitutes were available [DHHS OIG, “Generic Drug Utilization In The Medicare Part D Program” November 2007]

Wasted Away in Medical Bankruptcyville: Jimmy Buffet meets Warren Buffet

by Clive Riddle, June 5, 2009

Just published this issue in the American Journal of Medicine, by David U. Himmelstein, MD et al, is: Medical Bankruptcy in the United States, 2007: Results of a National Study. Here’s what Harvard’s Doctor Himmelstein has to say about what this study means to you: “unless you're Warren Buffett, your family is just one serious illness away from bankruptcy.”

Now before you go file a legal change of name to Warren Buffet, you should know the paper’s authors are strong advocates of a particular position: a single payer health plan, and their conclusion is that health insurance in its present form will not protect you from medical bankruptcy, only Warren Buffet or a single payer plan will.

The headlines from the press releases regarding the study indicate medical bills cause 62.1% of all bankruptcies. That claim might be open to some interpretation, given 29% of debtors attributed medical bills as the reason for their bankruptcy. Here’s the table from the study that arrives at that figure:

• 29%: Debtor said medical bills were reason for bankruptcy: 29%

• Medical bills >$5000 or >10% of annual family income: 34.7%

• Mortgaged home to pay medical bills 5.7%

• Medical bill problems (any of above 3) 57.1%

• Debtor or spouse lost >2 weeks of income due to illness or became completely disabled 38.2%

• Debtor or spouse lost >2 weeks of income to care for ill family member: 6.8%

•  Income loss due to illness (either of above 2): 40.3%

• Debtor said medical problem of self or spouse was reason for bankruptcy: 32.1%

• Debtor said medical problem of other family member was reason for bankruptcy: 10.8%

• Respondents listing any of above 62.1%

But quibbling over the above that is not to take away from the seriousness of the findings they present, only to provide some disclosure to those unaware. So without digressing into an argument for or against a single payer health plan, certainly it hard to argue that various health insurance policies exist in the marketplace which leave patients seriously underinsured, and a number of these underinsured patients, in addition to the uninsured, found themselves in bankruptcy.

Thus the threat of medical bankruptcy does indeed loom over more than the uninsured population. In this recession and season of health reform, it is a very key issue. So here’s some of the other highlights from the study conducted by Doctor Himmelstein and friends from Harvard Medical School, Harvard Law School, and Ohio University and funded by the Robert Wood Johnson Foundation:

•  Demographically: 60.3% of medical bankruptcies had attended college, 66.4% had owned a home and 20% included a military veteran or active duty soldier.

• While many of the demographics are very similar, there are a few notable differences in the demographics of those experiencing medical bankruptcies vs. non-medical bankruptcies: Employment (75.5% medical vs. 85.0% non medical); market value of home ($141k vs. $159k); and a lpase in health coverage occuring sometime in the two years before bankruptcy (40% medical vs. 34% non medical)

• Primary causes of medical bankruptcies: Hospital bills 48%; drug costs (19%); doctors' bills (15%) and insurance premiums (4%). Also, for 38% of cases, lost income due to illness was a factor.

•  Out-of-pocket medical costs for the bankrupting illness averaged $17,943.

• In 1981, using the same methodologies, medically-caused bankruptcies were 8% of total bankruptcies. In 2001, the figure was 46.2%

• 92% of these medical debtors had medical debts over $5,000 or 10% of pretax family income

• More than 75% of bankrupt families had some form of health insurance

The Fast and The Furious: Health Care Reform Headlines

By Clive Riddle, May 20, 2009

 

While it remains to be seen if actual health care reform prodded by the Obama Administration and Congress should be described as a fast moving car, or as “The Slow and The Serene,” but at least the rate of headlines spewing out on health reform can be considered, as in the movie title, “The Fast and The Furious.”

 

Just during this week, we’ve been bombarded with developments. Here’s a sampling of what’s come out, under the category of “Who’s going to pay for this mess?”

 

Sodas a Tempting Tax Target

New York Times, May 20, 2009

http://www.nytimes.com/2009/05/20/business/economy/20leonhardt.html?_r=2

 

Healthcare Overhaul Could Add Financial Burdens To State

Boston Globe, May 19, 2009

http://www.boston.com/...overhaul_could_add_financial_burdens_to_state/

 

New Taxes Loom to Pay for Health-Care Overhaul

Wall Street Journal, May 19, 2009

http://online.wsj.com/article/SB124269065234932563.html

 

Congress has little appetite for health care taxes

Associated Press/Google, May 18, 2009

http://www.google.com/hostednews/ap/article/...

 

Senate proposes alcohol, soda tax to fund health care plan

Politico.com May 18, 2009

http://www.politico.com/news/stories/0509/22675.html

 

Turning to the policy front here’s a sampling of headlines under the category of standing on soapboxes:

 

Baucus Message to Industry Lobbyists: 'Let the Process Work'

The Washington Post, May 20, 2009

http://voices.washingtonpost.com/health-care-reform/2009/05/baucus_tells_industry_lobbyist.html#more

 

The GOP's Health-Care Alternative

Wall Street Journal, May 20, 2009

http://online.wsj.com/article/SB124277551107536875.html

 

Republicans To Introduce Health Reform Plan That Would Establish State Health Insurance Exchanges, Provide Tax Credits

Kaiser Daily Health Policy Report, May 20, 2009

http://kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=58525

 

Senators Push for Delay of Public Health-Care Option

Bloomberg, May 19, 2009

http://www.bloomberg.com/apps/news?pid=20601103&sid=aZH_tU6TpHeM&refer=us

 

Senate Finance Committee Releases Policy Paper Describing Options To Pay for Health Overhaul

Kaiser Daily Health Policy Report, May 19, 2009

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=58507

 

Dems Unclear Where Baucus Will Side on Health Care Reform

Politico.com May 18, 2009

http://www.politico.com/news/stories/0509/22629.html

 

Finally, here’s a few entries under that category of Newton’s Third Law That Every Action has an Equal and Opposite Reaction:

 

Physician Practice Interactions with Health Plans Cost $31 Billion A Year, Equaling 6.9 Percent of All Spending For Physician And Clinical Services, New Study Finds

Robert Wood Johnson Foundation Press Release, May 20, 2009

http://www.rwjf.org/healthreform/product.jsp?id=42728

 

Health Insurers Promise ‘Meat’ to $2 Trillion Savings

[Bloomberg reports that health insurers will propose simpler billing for doctors and rewarding better-performing physicians as part of the industry’s White House pledge last week to help shave $2 trillion from U.S. medical bills over the next decade.]

Bloomberg, May 18, 2009

http://www.bloomberg.com/apps/news?pid=20601203&sid=a8evVCuupbSM&refer=insurance

 

DOJ Insurers Probe Sought By Health Care Reform Advocates

The Huffington Post, May 20, 2009

http://www.huffingtonpost.com/2009/05/20/doj-insurers-probe-sought_n_205709.html

 

Health Plans Support Competition to Benefit Consumers

AHIP Press Release, May 20, 2009

http://www.ahip.org/content/pressrelease.aspx?docid=27096

Health Reform: The Start-Up

by Clive Riddle, May 13, 2009

Health Reform, like any start-up, launched a web site ( www.healthreform.gov ) has issued fact sheets and press releases, received another round of angel funding (via the FY2010 budget) and this week announced it has hired a leadership team. Like any start-up, Health Reform has announced Strategic Alliances, this week touting voluntary commitment from six leading health care stakeholder groups to reduce health care costs.

What Health Reform now needs, like any start-up, is customers.

Here’s who the President met with this week, with each of the six stakeholders pledging help reduce health care costs by 1.5%:

• Mr. Stephen J. Ubl, President & CEO, Advanced Medical Technology Association

• Dr. J. James Rohack, M.D., President-elect, American Medical Association

•  Ms. Karen Ignagni, President & CEO, America's Health Insurance Plans

• Mr. Rich Umbdenstock, President & CEO, American Hospital Association

• Mr. Billy Tauzin, President & CEO, Pharmaceutical Research and Manufacturers of America

• Mr. Dennis Rivera, Chair, SEIU Healthcare, Service Employees International Union

The participants are now having to fend of skeptics of “voluntary” pledges. At least non were wearing any “WIN” buttons, dusted off from Gerald Fords voluntary “Whip Inflation Now” initiative in 1974.

Here’s who has been appointed by HHS Secretary Kathleen Sebelius to serve as key staff members in the new HHS Office of Health Reform:

• Jeanne Lambrew, Ph.D., Director of the HHS Office of Health Reform, was previously an associate professor at the LBJ School of Public Affairs, senior fellow at the Center for American Progress, and worked on health policy in the Clinton Administration.

• Michael Hash, Senior Advisor, will run the inter-agency process for developing specific aspects of health reform legislation, and has held senior positions at the Health Care Financing Administration (now CMS) and on the staffs of the House Energy and Commerce Committee as well as a private health policy consulting firm.

• Neera Tanden, Senior Advisor, will work on developing health care policies for HHS and the Administration, and is the former domestic policy director for the Obama-Biden campaign and policy director for the Hillary Clinton campaign.

• Linda Douglass, Director of Communications, was a traveling spokesperson for President Obama's 2008 campaign and was chief spokesperson for the Presidential Inaugural Committee 2009, and previously was managing editor for National Journal and prior to that was Chief Capitol Hill Correspondent for ABC News

• Meena Seshamani, M.D., Ph.D., Director of Policy Analysis, will coordinate the quantitative and qualitative analyses on health reform conducted throughout HHS, and was a resident physician in Otolaryngology-Head and Neck Surgery at Johns Hopkins University.

•  Caya B. Lewis, M.P.H., Director of Outreach and Public Health Policy, will coordinate HHS outreach and interaction with stakeholders on health reform, and was the Deputy Staff Director for Health for the Senate HELP committee under the chairmanship of Senator Edward M. Kennedy.

• Jennifer Cannistra, Policy Analyst and Director of Special Projects previously served as the Pennsylvania State Policy Director for the Obama campaign

• Karen Richardson, Outreach Coordinator, was previously the policy director at the Democratic National Committee (DNC).

•  Michael Halle, Special Assistant, worked for the Presidential Inaugural Committee and Obama for America

Dual Surge: Ineligible Dependents, and Dependent Eligibility Audits

by Clive Riddle, May 7, 2009

Managed Healthcare Executive Magazine, in its May Issue, quote us in an article by Tracey Walker: “Audit Reviews Keep Costs Down.”

The gist of the article is, that 5% or more of many employer’s covered members involve dependents that do not currently meet their employer’s eligibility criteria, and that eligibility audits are an effective way to reduce employer costs and exposure- directly if they are self-insured, and indirectly if they can improve their experience with their fully insured health plan.. It is noted that in the current economic climate, employer demand for such audits may be on the rise.

Our quote involved regulatory scrutiny of health plan disenrollment of such dependents:

“Employers and health plans do need to be cognizant of regulatory issues as they proceed with dependent eligibility audits. Employers would have ERISA regulatory protections from state regulators, according to Clive Riddle, president and founder of MCOL, a provider of business-to-business managed care resources. ‘But when self-funding is not involved, the health plans covering the dependents flagged in eligibility audits must be cautious in how they handle disenrollment and in particular, rescissions of any claims incurred,’ he says. States such as California have clamped down on rescission activities, and health plans have to follow very strict guidelines in numerous states when dealing with this issue.”

Mercer last month issued a release on this topic: “Mercer sees significant growth in health plan dependent eligibility audits.” Mercer pegs the percentage of ineligible dependents in a range of 3% to 8%, and the average cost of covering a dependent for plan sponsors at $1,900 per year. Thus Mercer calculates a plan sponsor with 10,000 dependents and 5% ineligible could save $950,000 annually through such an audit. It’s certainly easy to see why such audits are increasing in frequency. And of course, due to the impact of the recession with layoffs and unemployment, the number of potentially ineligible dependents continue to rise.

From a public policy standpoint, a surge in employers and health plans dropping coverage of greater numbers of dependents will of course only swell the ranks of the uninsured. One policy solution would be to mandate dependent eligibility be tied to IRS dependent status, at least up to a defined age, as opposed to the current patchwork of employer, plan and state specific criteria, which typically would disallow a 22 year old just graduated college student living at home with their parents while looking for a job.

Increased and Decreased Utilization: The Recession Driven Paradox and Behavioral Economics

by Clive Riddle, April 23, 2009

Here’s two headlines from the past week:

• Thomson Reuters Study Finds More Patients Postponing Medical Care Due to Cost
• As Employers Cut Health Care Costs, Employees Increase Utilization

So how does one reconcile the Thomson Reuters report that “20 percent of U.S. households postponed or cancelled care in the past year,” with the International Foundation of Employee Benefit Plans (IFEBP) survey that found “plan participants, perhaps fearing an impending layoff, are increasing utilization of their benefits”?

It’s quite easy actually, when you overlay the employees “fearing an impending layoff” from the IFEHBP survey with this finding from the Thomson Reuters study: “the percentage of households with employer-sponsored insurance showed a notable decline since the start of the recession, declining from 59 percent in early 2008 to 54.6 percent in early 2009.” We have one sector, fueled by those without coverage, that are delaying care greatly influenced by cost concerns, and another sector, fueled by covered employees uncertain about their future employment, that are accelerating their care while they still have coverage.

Behavioral economics would kick in here as we reconcile this on-the-surface paradox. Let’s consider a few Behavioral Economics concepts:

• Status Quo (Default) Bias: People have a strong ‘status quo’ bias and often fail to take pro-active action to change the default
• Hot vs Cold States: People’s decisions under aroused or ‘hot’ states tend to be significantly different from ‘cold’ calculated decisions
• Loss Aversion: People prefer avoiding losses rather than acquiring gains. Studies suggest that losses are as much as twice as psychologically powerful as gains
• Hyperbolic Discounting: Consumption now and in the near future is preferred to consumption into the farther future; The greater the uncertainty about this future the less the preference

One could argue that the Status Quo default is to receive a service when it is prescribed by a doctor, and to not receive a service when it hasn’t been prescribed or referred by a provider. One could also argue that a person that has lost, or perceives they will lose their health coverage, is in a ‘hot state’, and that persons told by their doctor they require services are in a ‘hot state.’

We can apply these assumptions in the following table of how consumer decisions fit the two survey scenarios, along with another scenario of those lucky enough not to be worried about their health care coverage. We would imply that “self referred” means you are contemplating a service that hasn’t been prescribed, maybe triggered by some direct to consumer advertising, advice from a friend, internet research or other such information.

Service:	Lack Coverage	Fear Losing Coverage	Stable Coverage
Self referred elective potential service	Default: No service State: Hot Decision: Won’t move from default due to dollar/time loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit	Default:No service State: Hot Decision: Will move from default due to covered benefit loss aversion and hyperbolic discounting that value of covered benefit and health service today is greater than future considerations	Default: No service State: Cold Decision: Won’t move from default because there are low loss aversion considerations and value of health benefit is no greater now than in the future
Provider referred/ prescribed elective potential service	Default: Receive service State: Hot Decision: Will move from default due to dollar/time loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit	Default: Receive service Decision: Won’t move from default due to covered benefit loss aversion and value of covered benefit and health service today is greater than future considerations	Default: Receive service State: Hot (health need) Decision: Won’t move from default because there are low loss aversion considerations and value of health need is greater now than future considerations
Any service perceived or actually considered to be non-elective	Default: Receive service State: Hot Decision: Will move from default only if dollar/time loss aversion exceeds health loss aversion and hyperbolic discounting that dollar savings today is greater than future health benefit	Default: Receive service Decision: Won’t move from default due to covered benefit loss aversion, health loss aversion and value of covered benefit and health service today is greater than future considerations	Default: Receive service State: Hot (health need) Decision: Won’t move from default because of high health loss aversion and value of health need is greater now than future considerations

The Thomson Reuters Study validated that many people will postpone care for other reasons than cost, but cost has moved to the top of the list: They found that: “One in five U.S. households postponed or cancelled medical care over the past year, up from 15.9 percent in 2006 when the survey last addressed this issue. Among 2009 respondents who postponed or cancelled care, 24.1 percent said cost was the primary reason. In 2006, the primary reason cited was lack of time......The majority of postponed services (54.7 percent) were for physician visits, followed by imaging (8 percent), non-elective procedures (6.3 percent), and lab or diagnostic tests (5.7 percent).”

The full Thomson Reuters Study is available on the Thomson Reuters website.

Insider’s View on the Direction of Consumerism and Consumer Driven Plans

By Clive Riddle, April 9, 2009

The Eighth Annual Consumer Driven Web Summit was held a few weeks ago, which included a survey of the professional attendees on a couple of key questions regarding the direction of consumerism and consumer driven plans.

What is the industry insiders’ view the main components of consumerism? Last year and this year they were asked to rank five components according to the value of the component from their perspective:

• Account Based Plans (HSA/HRA/FSA)
• Price and Quality Transparency
• Retail Medicine (Convenient Care, etc)
• Web Based Consumer Patient Health Records
• Wellness Incentive Programs

Price and Quality Transparency continues to be ranked far in front of the five components being rated, and Wellness Incentive Programs continue to be ranked second. The mean score improved for Wellness Incentive Programs and for Retail Medicine, while the mean scores declined for the other three components:

Respondents were asked to rank each component 1 through 5, with 1 = highest value and 5=lowest value, and only use each ranking once; i.e. only rate one item a 1, one item a 2, etc.

Here’s the results for the past two years:

	2009	2008	2009	2009
	Mean	Mean	Median	Mode
Price and Quality Transparency	2.00	1.83	1	1
Account Based Plans (HSA/HRA/FSA)	3.08	2.97	3	2
Wellness Incentive Programs	2.65	2.86	3	3
Web Based Consumer Patient Health Records	3.70	3.63	4	4
Retail Medicine (Convenient Care, etc)	3.57	3.71	4	5

It’s interesting to see that web based consumer patient health records aren’t prioritized a little higher, given their priority in policy circles and elsewhere. It’s also interesting to see account based plans lose ground. Many pundits have already pronounced the decline and fall of the account based plan, given the direction that the Democratic congress, Obama administration, and influential policy organizations have taken.

But not so fast. Insiders seem to feel what a number of recent surveys have shown, that employer interest in account based plans in rising as a tool to address cost related issues in this economic meltdown.

Respondents were asked to predict enrollment change for such plans. Here’s how they answered: “As a result of the Recession, will Consumer Driven Plan enrollment/ market share (compared to traditional managed care plan designs):”

· Increase significantly 26.4%

· Increase somewhat 42.5%

· Not materially change 14.9%

· Decrease somewhat 11.5%

· Decrease significantly 4.6%

Thus 66.9% felt enrollment would increase as a result of the recession, while 16.1% felt enrollment would decrease.

As health care reform takes shape over the next months (or years), the economy will undoubtedly weigh large in the discussions. The pundit’s reported death of consumer driven plans may prove to be premature.

Undermining the Health Reform Agenda From Within

Bureaucrats with CMS are determined to pull the plug on a family practice program for bureaucratic reasons, devastating a local government, a local economy in the midst of a recession, an underserved health care population and the Obama Administration’s own health care reform objectives. And if that can happen in one community, it will happen in another and another, with different scenarios but the same results. The administration’s health reform agenda can be undermined from within.

The emerging Medical Home movement is an important component of the Administration’s stated health care agenda. Medical Homes are primary care driven, in an era when the shortage of primary care physicians is accelerating. Thus CMS administrative actions taken to further reduce the supply of primary care physicians is not in the interest of Medical Homes.

Family Practice residency programs not only help develop the supply of community based primary care physicians, they deliver health care services to vulnerable populations, which is again an important component of the Administration’s agenda that CMS is thus undermining.

Where is all of this taking place? As reported in the local paper, the Modesto Bee, in the March 14, 2009 article Stanislaus County doctors program loses its funding: “The Stanislaus Family Medicine Residency Program...has lost its federal funding and that has put its future in doubt. The federal Centers for Medicare and Medicaid Services not only stopped payments to Doctors Medical Center, where the residents are trained, but required the hospital to pay back $19.1 million it received for the program from 2001 to 2008. Because DMC and the county split the costs of the program, the county is on the hook for half that amount.”

A March 30, 2009 California Healthline article, California Medical Residency Program Fights CMS for Funding, elaborates:“Founded in 1935, the program was originally a general practice residency at the public county hospital. It earned family medicine accreditation in 1975. When the county hospital closed in 1997, the residency program was taken over by Doctor's Medical Center, owned by Tenet Healthcare Corporation. The residency program is a key part of the safety net where 22% of county residents rely on Medi-Cal and 16% of the population is unemployed. The 27 residents and 30 primary care doctors who serve as faculty for the program care for about 70,000 patients, handling about 230,000 patient visits annually, according to the California Academy of Family Physicians.”

So why is the plug getting pulled? California Healthline reports that “until 2006, it was business as usual with the residency program training 27 family practice physicians and billing the federal government for support through Medicare reimbursements for education....About 18 months ago, CMS attorneys began questioning the way the program was transferred from the county hospital to the new parent hospital a decade before. Marc Hartstein, deputy director of CMS' hospital and ambulatory policy group, said CMS is following rules laid out in the Balanced Budget Act of 1997. ‘That law puts caps on the numbers of residents in programs," Hartstein said, adding, "This situation arises because of those caps.’ Because Tenet's Doctors Medical Center chose not to take on the assets and liabilities of the county hospital in 1997, ‘that ended the cap that was associated with the previous hospital,’ Hartstein said. In essence, the residency program ceased to qualify for educational funding in 1997 under CMS' interpretation of the regulations. Hartstein attributed the program's funding for several years to errors by unnamed third-party administrative contractors.”

The Modesto Bee adds “when the county hospital closed almost 12 years ago, DMC's parent company, Tenet Healthcare Corp., paid the county $12 million and guaranteed care for patients in the county's indigent health program. The physician training program was transferred to DMC based on a claim that, in effect, it had merged with the county hospital. The federal government provided DMC with $115,000 in annual reimbursements for each of the 27 physician slots, but CMS officials later said they disagreed with the merger theory. The reimbursement was lowered to $75,000 per resident on the premise a new program had been created at DMC. About 18 months ago, CMS attorneys came out with a determination that the program no longer qualified for reimbursements under the Balanced Budget Act of 1997. Some of the act's rules had not been written when the previous determinations were made. CMS also demanded that Doctors Medical Center repay the funding received since 2001. ...The government has said the hospital and the county can apply for reimbursements if they close the program for a year and then reopen with a new program with new faculty, a new director and a new set of residents.”

So CMS initially signed off on the arrangement, reimbursed the program for a number of years, later ruled that the arrangement was not a merger but a new program- so they lowered their reimbursement, and subsequently decided that as a new program, it didn’t qualify for reimbursement at all, and demanded all their money back retroactively. Is it within CMS’ authority to have interpreted this differently? Is CMS’s pulling the plug helping advance their Administration’s health care agenda?Is CMS’s demand of retroactive repayment from a cash starved County government helping their Administration advance their object of economic stimulus?

Yes, No and No.

And watch out in your home town, because CMS oversees such a wide range of health care programs and services. Shuffle the deck a little, and your local community probably has some situation that could be a ticking time bomb for CMS to uncover, and blow up the Administration’s health care and economic stimulus agenda for you too.

Serious Games: Health Plans and Health Games

By Clive Riddle, March 25, 2009

Should you be playing games with your health? (Alright, maybe the correct word is “for” and not “with”, but I wanted your attention.) Nevertheless, a growing body of policy, research, health care, and health insurance organizations think you should.

The Serious Games Initiative founded at the Washington DC based Woodrow Wilson Center for International Scholars, “applies cutting edge games and game technologies to a range of public and private policy, leadership, and management issues.” The Initiative earlier this decade launched Games for Health to coalesce a community of researchers, health care professionals and game developers involved with games designed for health care applications. The organization’s Games for Health Fifth Annual Conference will be held June 11-12, 2009 in Boston.

Humana became a believer in the movement. In September 2007 , Grant Harrison, vice-president of Humana’s Integrated Consumer Experience said “giving healthcare consumers the ability to become more closely connected with the management of their health through video games is a unique way in which to accomplish Humana’s goal of helping members become both mentally and physically health.” The company stated that Humana’s Innovation Center would research and develop “the best ways to connect with consumers using game technology. In collaboration with Serious Games pioneer Digitalmill Inc., Humana is evaluating all aspects of the games for health space.”

In May 2008 they launched HG4H: Humana Games for Health, a web site for their initiative, and began forging partnerships with schools and other organizations to offer various exercise and games for health programs. HG4H has since partnered with various game developers to offer “interactive video games that provide fun physical and mental workouts and motivate healthy lifestyle choices.” HG4H has categorized their offerings into six categories: exergames, persuasive games, casual games, educational games, virtual world games and pervasive games.

Just last month, when announcing new online games added to the HG4H program, Paul Puopolo, Humana’s director of consumer innovation stated “we know that a healthier lifestyle doesn’t have to be boring and these games are a perfect way for consumers to connect health with a technology they already enjoy. With childhood obesity on the rise, games like Lunch Crunch and Bubble Trouble give kids the lessons in health they need but present the message in an entertaining way – through a little friendly competition online. We also know that baby boomers are looking for ways to keep their minds young, so games like Split Words and Entangled Objects help with cognitive functions and attention skills – exercises that so many adults need.”

Lunch Crunch? Bubble Trouble? Split Words? Entangled Objects? These don’t sound like the offerings typically announced in press releases by health plan. Trying to get to the bottom of just what’s going on here, I spoke to Laura Fay, CEO of HAPPYneuron, Inc., a developer partner with Humana. HAPPYneuron is a majority owned subsidiary of Scientific Brain Training (NYSE Euronext: MLSBT) and offers a broad range of personalized brain training workouts in multi-media formats. Scientific Brain Training was founded in 2000, and the company has had a North American presence since 2006.

For Humana, the HAPPYneuron games offered online were “designed to stimulate your attention, language, memory, planning and abstract-thinking skills” with the core targeted audience including seniors for the purpose of deferring the onset of age related brain decline. Laura told me that their Humana applications have now been up two months with public access at www.humanagames.com with five HAPPYneuron click and play games offered.

Laura shared that HAPPYneuron offers direct to consumer individual products from their web site, in addition to partnerships with organizations such as Humana. Their current and prospective partners include health plans, publications, employers, pharmaceutical companies, research organizations, educational institutions, and senior centers.

HAPPYneuron product offering include individual online memberships with “access to more than 3,000 hours of unique game play with its 34 innovative online games... designed and developed by a team of neurologists and cognitive psychologists to work the brain’s five major cognitive functions: memory, attention, language, visual/spatial and executive” and “HAPPYneuron Junior, a series of 24 online games has been developed by a group of neurologists and specifically designed for children 8 through 12 years old.” The company also offers CD/DVDs and books.

Their core offerings involve memory games providing “cognitive training fun with very diverse exercises, each one with numerous options, difficulty levels and data sets.” Laura stated an end result is to deliver a level of peer comparison, with exercise data results that provide feedback on a given exercise compared to the applicable peer group

I asked Laura what ROI can their cognitive training games offer Humana or other health care partners? She answered that “a one-point increase in cognitive activity corresponded with a 33% reduction in the risk of Alzheimer’s” and share the following cost implications (citing the Alzheimer’s Association as her source):

• 10 million Boomers will get Alzheimer’s Disease
• The average lifetime cost of care for someone with Alzheimer’s disease is $174,000
• The annual of caring for someone with Alzheimer's is $18,400 for someone with mild symptoms, $30,100 for moderate symptoms and $36,132 for severe symptoms.
• Medicare costs for beneficiaries with Alzheimer’s disease were $91 billion in 2005. Medicare costs are expected to increase by 75% to $160 billion in 2010 and to $180B by 2015

For developers such as HAPPYneuron, there’s more than fun and games at stake here in the emerging games for health sector. According to the Health eGames Market Report 2008 “iConecto estimates the Health eGaming market at approximately $7 billion during the next 12 months including the markets for brain fitness ($267M), exergaming ($6.4B+) and other Health eGames on the consumer and professional side ($250M+).”

Employers Committed to Active Employee Health Benefits for 2010

by Clive Riddle, March 9, 2009

Are employers going to shed health benefits from their employee compensation packages as the recession deepens? Last week, Hewitt Associates released results from a January 2009 employer survey, in their report: Survey Findings: Challenges for Health Care in Uncertain Times 2009.

Commenting on the survey results, Jim Winkler, Hewitt’s head of Health Management Consulting, said "in today's environment, employers are under pressure to cut health care expenses, but they realize that short term cost management tactics do not address the underlying drivers of health care cost. This leaves them with two options: making a long-term commitment to improving the health of employees and their families, or exiting health care altogether. Most companies believe that investing in the long-term health of their population is the most effective way to mitigate costs and create a more productive and engaged workforce."

However, in keeping with survey results and company headlines, Hewitt found retiree health benefits are not as sacred. While less than 1% of the 340 large employers surveyed plan to eliminate health benefits for their active populations, 13% indicated plans to eliminate benefits for their retirees next year.

Furthermore, while employers thus remain committed to offering benefits to actives, they intend to make a number of reductions and adjustments in order to cope with the economic downturn. Hewitt found that:

• 49% intend to reduce the number ofplans and options offered
• 65% plan on increasing the level of employee cost sharing with insurance premiums
• 30% intend to reduce, and 6% eliminate incentive programs; while 24% will reduce and 2% eliminate wellness programs, often just recently put in place
• Another 26% plan on reducing retiree health benefits, in addition to the 13% who will eliminate them
• 13% will reduce, and 6% eliminate health benefits for part time employees

On the other hand, despite the downturn, many employers are looking to enhance certain programs and initiatives for 2010:

• 40% will increase consumer driven plan offerings
• 33% will increase wellness programs
• 20% will increase incentive programs
• 13% will increase their overall health benefits package

Because the impact of the recession didn’t hit until the 2009 benefit year was already put into place, whatever employers are going to change as a result of the recession, their changes are coming in 2010 versus having already implemented them in 2009.

Health Care Stakeholders Weigh In On the Obama Budget

By Clive Riddle, February 27, 2009

So how do some key stakeholders view the health care implications of President Obama’s FY 2010 budget?

AHIP (America’s Health Insurance Plans) applauds the health care agenda, sort of. As the voice of the health plan industry, AHIP is compelled register very deep concerns over cutting Medicare Advantage payments to plans. Will we return to the Medicare health plan market withdrawals of a decade ago? Karen Ignagni, AHIP President, states:

“We have strongly supported recent efforts by the Administration and Congress to strengthen the health care safety net, expand coverage for kids, conduct comparative effectiveness research, and invest in health information technology. Our Board of Directors has offered a comprehensive proposal that starts with us playing a leadership role in advocating for market reforms and addresses the core issues of cost, access, and quality. Health plans will continue to be constructive participants in the health care reform discussion. We recognize that to achieve reform of this magnitude, every stakeholder group will be expected to contribute and will be challenged to innovate, perform better, and be held accountable for results.“As policymakers evaluate the entire Medicare program, including Medicare Advantage, as part of health care reform, it is vital that seniors continue to have access to the benefits and services they rely on. Medicare Advantage plans provide care coordination, disease management, and prevention programs for seniors and reward clinicians for delivering quality care to patients. Unfortunately, this proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system. A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.”

The AHA (American Hospital Association) commends the President, sort of. They are quite concerned that “half of the reserve fund would come from savings in health care programs, including proposals to bundle Medicare payments for hospital and post-acute care ($17.84 billion in savings), reduce payments to hospitals with certain readmission rates ($8.43 billion), and link a portion of inpatient hospital payment to performance on specific quality measures ($12.09 billion). The budget outline also cites the need to address physician self-referral to facilities in which they have a financial interest."

AHA President and CEO Rich Umbdenstock states, "We commend President Obama for making health reform a top priority in his budget blueprint. However, we are concerned about any cuts that would affect the work hospitals do for their communities during this economic downturn. We remain ready to work with the president and Congress to strengthen health care in America."

The AMA (American Medical Association) offers applause without the reservations in bold print. They like the rollback of planned physician Medicare payment cuts. Nancy H. Nielsen, MD, President, American Medical Association states “President Obama’s budget proposal takes a huge step forward to ensure that physicians can care for seniors by rejecting planned Medicare physician payment cuts of 40 percent over the next decade. Looming widespread physician shortages coupled with aging baby boomers highlight the urgent need for permanent Medicare physician payment system reform to preserve seniors’ access to health care. “The AMA is committed to working with the administration and Congress to develop reforms that will reward and preserve access to high-quality care for seniors and all Americans.”

AARP (the Amer) not only applauded the budget, but now tells Congress to step up and act on it. AARP CEO Bill Novelli states “We are making it clear to our leaders that they need to work with the president in a bipartisan fashion to complete the plan for reform and finance reform in a fiscally—and morally—responsible way. They must make sure that any savings from Medicare and Medicaid are dedicated to reforms that strengthen the quality, efficiency and performance of our health care system, including these critical lifeline programs.”

AARP also announced key priorities to be included in health reform legislation in 2009, including: Making affordable health care coverage options available to everyone, especially people ages 50-64 who are among the fastest growing group of uninsured; Keeping Medicare affordable by rewarding doctors and hospitals for quality rather than the quantity of care; Promoting prevention and healthy behaviors; Eliminating fraud, waste and abuse; and Improving care coordination for people with chronic conditions and helping them stay in their homes and out of institutions.

The National Business Group on Health is pleased and concerned: they are “very pleased to see such emphasis on making health care affordable for all American” but don’t like new taxes and Medicare Advantage cuts.

Helen Darling, President of the National Business Group on Health states "with respect to proposed financing schemes for health reform, we have concerns that the funding mechanism could be subject to constant political pressures. The proposed 10-year $634 billion health-care fund - paid for through new taxes and particularly cuts to Medicare Advantage beneficiaries - approximates the annual portion of health spending that is estimated to be wasteful, redundant, or even harmful. We believe there are other ample opportunities to reduce costs through eliminating overuse of services, preventing serious adverse avoidable medical errors, and combating waste. As legislation is crafted in the coming months, we strongly encourage policymakers to look at the root causes of higher health care costs and use health reform as an opportunity to make lasting structural reforms - many of which have been discussed previously by both the President and congressional leadership - that will yield long-term savings and improve patient care and safety."

So, what does your spokesperson have to say about the ten year $634 billion health care fund, and the budget?

The Path to Reform as laid out by the Commonwealth Fund

By Clive Riddle , February 19, 2009

The Commonwealth Fund Commission on a High Performance Health System today published their report, the Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, which the Commonwealth Fund in a press release distributed today bills as a proposal for “a comprehensive set of insurance, payment, and system reforms could guarantee affordable health insurance coverage, improve health outcomes, and slow the growth of health spending by $3 trillion by the end of the next decade” and “details the Commission’s recommendations for an integrated set of policies and assesses the impacts of specific policy actions from 2010 to 2020, compared to the status quo.”

The Commonwealth Fund is a major policy stakeholder organization in Washington, and has the ear of various key Democratic party health care leaders. Not that the eventual Administration or Congress reform proposal would mirror the Commonwealth Fund’s report by any means, but it has significant potential to influence the discussion, and thus bears reading.

 Here’s some projected results the report touts would be ultimately achieved via their proposed package:

• Insurance reforms would extend coverage to everyone within two years, with only 1 percent uninsured throughout the next decade. The number of uninsured, currently 48 million and estimated to increase to 61 million by 2020, would instead under the proposal decrease to 19.7 million in 2010, 6.3 million in 2011 and stabilize at 4 million for the rest of the decade
• Combined with payment and system reforms initiated in 2010, the integrated approach to reform could slow the growth of national health spending by a cumulative $3 trillion by 2020.
• Spending would still go up but at a slower rate. The U.S. is expected to spend $42 trillion on health care over the next 11 years, with spending rising 6.7 percent per year, the proposal package would lower this rate to 5.5 percent per year.

So how would such lofty results be achieved? Here’s a verbatim summary as provided in the 122 page report:

• National Health Insurance Exchange. Offers businesses and individuals a choice of private plans and a new public plan, phased in by size of firm with all eligible by 2014. Premium of the public plan would be community rated within broad age bands. Benefits are similar to the standard option in the Federal Employees Health Benefits Program. The plan would use Medicare’s claims administrative structure and reformed payment methods and rates.
• Individual Mandate. All individuals are required to obtain coverage.
• Affordability. Premiums are capped at 5 percent of income for low-income individuals and 10 percent of income for those in higher-income tax brackets.
• Shared Financial Responsibility. Employers are required to provide coverage or contribute to a trust fund. The example used in the model included 7 percent of payroll, up to $1.25 an hour.
• Medicaid/SCHIP Expansion. All individuals with incomes up to 150 percent of the federal poverty income level are eligible for Medicaid acute care benefits. Medicaid provider payment rates are raised to Medicare levels. The federal matching rate is increased to offset state costs.
• Medicare. The two-year waiting period for coverage of the disabled is eliminated. Medicare beneficiaries are offered a supplement with the same acute care benefits as in new public plan and premium affordability provisions.
• Insurance Market Reforms. Require community-rate premiums (age bands permitted) and guaranteed issue and renewal of policies. Premium and insurance information would be publicly available on the Web.
• Enhance Payment for Primary Care. Increase Medicare payments for primary care by 5 percent and apply differential updates for primary care and other care.
• Encourage Development and Spread of Patient-Centered Medical Homes. Provide payment per patient in addition to fee-for-service to practices qualified to provide patient-centered care. Reduced premiums and cost-sharing available to patients who designate a primary care practice as their medical home. Shared savings would be distributed on the basis of performance.
• Bundled Payments for Acute Care Episodes. Expand acute care payment to include services during the hospital stay and 30 days post-discharge in a global fee. The policy would be phased in, starting with inpatient services in 2010, then post-acute care in 2013, and hospital inpatient and outpatient physician care in 2016.
• Correcting Price Signals. Modify payments by: 1) slowing the rate of Medicare payment updates in geographic areas with high costs; 2) reducing prescription drug costs by having Medicare pay Medicaid prices for drugs used by dually eligible beneficiaries and determining Medicare payments for unique drugs with effective monopolies based on prices paid in other countries; and 3) resetting benchmarks for Medicare Advantage plans in each county to projected per-capita spending under traditional Medicare.
• Accelerate the Adoption and Use of Health Information Technology. Require all providers to report key health outcomes electronically by 2015 to qualify for payment updates. Provide funding to support health information networks and assistance for safety-net providers and small practices through a 1 percent assessment on insurance premiums and Medicare outlays.
• Center for Medical Effectiveness and Health Care Decision-Making. Create a mechanism to develop information on the clinical and cost-effectiveness of alternative treatment options. Fund the Center with a .05 percent assessment on insurance premiums and Medicare and Medicaid spending. Use the information in benefit designs with higher out-of-pocket costs or differential pricing depending on comparative effectiveness and include physician–patient shared decision
• Reduce Tobacco Use. Increase federal taxes on tobacco products by $2 per pack of cigarettes. Use revenues to fund public health programs and insurance expansion.
• Reduce Obesity and Alcohol Use. Establish a new tax on sugar-sweetened soft drinks of 1 cent per 12-ounces to finance state obesity prevention programs, and increase the federal excise tax on alcohol by 5 cents per 12-ounce can of beer, with proportionate increases on other alcohol products. Use funds for prevention and insurance expansion.

The Commonwealth Fund Commission on a High Performance Health System was established by the organization in 2005, to “seek opportunities to change the delivery and financing of health care to improve system performance, and to identify public and private policies and practices that would lead to those improvements. It also explores mechanisms for financing improved health insurance coverage and investment in the nation's capacity for quality improvement.”

So who has a seat at the table for the Commission. Not all major stakeholders. Integrated hospital/medical group systems, large non profit health plans, some progressive employers, and like-minded associations, policy institutions and academic institutions are well represented. For profit health plans and health care providers, non-integrated private providers, public agencies and dissimilar institutions are not. Here’s the list of the Commission members:

• James J. Mongan, M.D. (Chair), President and CEO, Partners HealthCare System, Inc.
• Maureen Bisognano, Executive Vice President and COO, Institute for Healthcare Improvement
• Christine K. Cassel, M.D., President and CEO, American Board of Internal Medicine and ABIM Foundation
• Michael Chernew, Ph.D., Professor, Department of Health Care Policy, Harvard Medical School
• Patricia Gabow, M.D., CEO, Denver Health
• Robert Galvin, M.D., Director of Global Health Care, General Electric Company
• Fernando A. Guerra, M.D., Director of Health, San Antonio Metropolitan Health District
• Glenn M. Hackbarth, J.D., Consultant
• George C. Halvorson, Chairman and CEO, Kaiser Foundation Health Plan, Inc.
• Robrrt M. Hayes, J.D., President, Medicare Rights Center
• Cleve L. Killingsworth, Chairman and CEO, Blue Cross Blue Shield of Massachusetts
• Sheila T. Leatherman, Research Professor, School of Public Health, University of North Carolina
• Gregory P. Poulsen, Senior Vice President, Intermountain Health Care
• Dallas L. Salisbury, President and CEO, Employee Benefit Research Institute
• Sandra Shewry, President and CEO, California Center for Connected Health
• Glenn D. Steele, Jr., M.D., Ph.D., President and CEO, Geisinger Health System
• Mary K. Wakefield, Ph.D., R.N., Associate Dean for Rural Health and Director, Center for Rural Health, University of North Dakota
• Alan R. Weil, J.D., Executive Director, National Academy for State Health Policy
• Steve Wetzell, Vice President, HR Policy Association

Identity Crisis: What’s in a name?

By Clive Riddle, February 12, 2009

I recently watched with bemusement as a stream of e-mails progressed through my inbox from participants in the HFMA Managed Care Forum debating what to change the name of their forum to, given the evolution of the business and the negative connotations of the term ‘managed care.’

The debate isn’t new. Significant Managed Care backlash in the media, consumer and provider community started ten years ago, and calls to re-coin the term have been continual ever since. The term “Health Plan” is often now inserted where Managed Care once resided for various publications, organizations and activities, but “Health Plan” doesn’t always fit the situation.

HMO’s aren’t so much the term of choice either, compared to a decade ago, given the decline in HMO enrollment and rise of PPO enrollment and other benefit designs. Back in the day (way back in the day) before “Managed Care” was coined, in the 1970’s the movement was often referred to as “Alternative Delivery Systems.” Eventually that term took on other meanings.

Even before Managed Care really hit backlash mode, there were calls to rename the term. CMS among other made a major effort to re-label Managed Care as “Coordinated Care.” Of course, back then CMS wasn’t CMS either. The Centers for Medicare and Medicaid Services was called HCFA (Health Care Finance Administration.) While we’re digressing, what’s up with the acronym CMS anyway? Why isn’t it CMMS? And which “M” stayed in, and which “M” got dropped? Is it the same reason that the Department of Health and Human Services some time ago dropped the “D” from DHHS and now call themselves HHS? Did the missing “D” and missing “M” get together and form the acronym for “Disease Management”?

Managed Care isn’t the only term, movement or industry continuing to experience an identity crisis. Consumer driven care is also referred to as consumer-directed care, and at the start of the decade “defined contribution health plans” was the term of choice referring to account-based plans. Of course, now many simply use the term “consumerism” to more globally encompass consumer driven initiatives, including those beyond the scope of account based plans.

Health care companies as well run into identity crisis as times change and situations evolve. Almost everyone knows that Kaiser Permanente after World War II grew out of Henry J Kaiser’s prior programs to provide prepaid clinics and care to his shipyard and steel workers. Not everyone knows that AvMed Health Plan of Florida was coined from “Aviation Medicine” when the company was formed in 1969 to provide a prepaid health system for the Miami area aviation industry.

Of course, if your first name is Clive, you’re used to identity issues. I have credit cards made out to Olive, phone calls for Cleve and Clyde and receive mail for Cline and Cliff. When I was in second grade I informed my teacher on the first day of class my correct name was Edward (my middle name) causing great confusion when I brought school friends home. Eventually I embraced my inner Clive. Clive Owens has made things a little easier, but its still an issue. Perhaps I should seek a Clive Forum and start a discussion thread on renaming the Forum. Perhaps I’ll check with the HFMA Managed Care Forum and see how things worked out for them.

The Future Ain’t What It Used to Be

By Clive Riddle, February 5, 2008

A couple of weeks ago, MCOL in conjunction with the Seventh Future Care Web Summit, conducted its annual e-poll on health care trends for the coming year and beyond. As the same three basic questions are asked each year, results have been tracked since 2003. So, given the massive change in the economy during the past twelve months, how do health care executives and other professionals feel about the future?

Answers were not that surprising to the questions: (1) which trends will have the greatest overall impact in 2009; and (2) which predicted trend is least likely to have an impact in 2009. But I was taken aback somewhat with answers to the question which stakeholders will be better off, worse off, or the same in 2009.

Comparing current answers with previous years is difficult, for the first question: "Which of the following health care business trends do you think will have the greatest overall impact in 2008?" That’s because “Effects of the Recession” was contemplated as a trend in previous years, and over half (57.3%) of respondents list that as the trend that will have the greatest impact, and I would agree with them.

Here’s a table listing responses to this question since 2003:

Trend	2009	2008	2007	2006	2005	2004	2003
Advances in health care technology	3.4%	11.8%	7.5%	16.6%	13.6%	11.9%	10.8%
Consumer Driven health plans	3.4%	13.4%	18.5.%	21.0%	22.7%	14.4%	15.1%
Compliance issues	1.1%	0.8%	3.4%	0.8%	0.9%	5.9%	18.0%
Effects of the Recession	57.3%	NA	NA	NA	NA	NA	NA
Health Care Reform Initiatives	21.3%	23.6%	11.0%	28.1%	13.6%	4.3%	N/A
Increased consumer cost sharing	9.0%	33.9%	40.4%	25.8%	38.2%	35.6%	38.8%
Disease Management initiatives	3.4%	12.6%	7.5%	3.0%	5.5%	23.7%	N/A
Other	1.1%	3.9%	11.6%	4.5%	5.5%	4.2%	17.3%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

One way to compare any of the other trends(which have been listed each year) with previous years, you need to multiply this year’s response by two, or divide pervious year’s in half, to factor in this year’s new Recession trend that was missing before. When you do that, it makes the runner-up choice (health care reform initiatives, with 21.3% in 2009) all that more prominent. While all other trends dropped to around a third of their previous levels (except compliance, which still only weighed in at 1.1%) reform stayed basically the same as last year.

So the conclusion for 2009 not surprisingly, is forget everything else, two “R’s - recession and reform, will dominate this year in health care.

When asked “which of the following predicted trends do you feel is least likely to occur or have an impact in the next two years,” respondents had little consensus regarding any particular trend. What is interesting, however, is to compare these answers to previous years.

Here’s a table listing responses to this question since 2003:

Trend	2009	2008	2007	2006	2005	2004	2003
Health Plan cost sharing will level off/slow down	11.2%	15.0%	11.0%	13.1%	19.3%	18.6%	9.5%
Major growth of Consumerism initiatives including consumer driven plans	22.5%	15.0%	17.8%	15.4%	14.7%	12.7%	18.2%
Major advances in patient/provider/plan electronic data transfer	15.7%	22.0%	14.4%	14.2%	16.5%	20.3%	20.4%
Significant National Health Care Reform Legislation will be Enacted*	21.3%	14.2%	16.4%	13.5%	22.9%	11.9%	22.6%
Premium Increases will continue to slow down	22.5%	23.6%	23.3%	30.7%	14.7%	22.9%	N/A
Further growth/adoption of disease management and wellness	6.7%	12.6%	16.4%	12.7%	11.0%	13.6%	N/A
Medicare HMO reforms	N/A	N/A	N/A	N/A	N/A	N/A	15.3%
Medicare prescription drug coverage	N/A	N/A	N/A	N/A	N/A	N/A	13.1%
Hospital Medicare Outlier Payment Reform	N/A	N/A	N/A	N/A	N/A	18.6%	9.5%
Other	0.0%	3.9%	0.7%	0.1%	0.9%	0.0%	0.7%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

As you can see, despite the significant segment that views reform as a trend with the greatest overall impact for 2009, the “doubters” have increased in the past year as well. Last year, as the election season was heating up, 14.2% felt reform would be the trend least likely to happen. This year, that number rose to 21.3%.

Also, interestingly, doubts regarding the last most significant innovation have increased. In 2008, 15.0% listed growth in consumerism as the trend least likely to occur or have an impact; that number increased to 22.5% in 2009. But optimism must be increasing for electronic data transfer. In 2008, 22.0% listed this as the least likely trend; that number decreased to 15.7% in 2009.

The conclusions to this aren’t that surprising either: 1) there are plenty of cynics mixed in with those sure that reform will take place; 2) perhaps because consumerism was politically as a Republican agenda, and now we are facing a Democratic agenda, a growing number think Consumerism initiatives will wane; and 3) given the priority the Obama team is giving electronic health records and data transfer, there is less cynicism that this will eventually happen.

I mentioned that I was surprised by answers to the third question: “Which of the following stakeholders do you view as being better off, the same or worse off in the coming year?” Of course, respondents think things are going to be bad all the way around. I just thought they’d be even more negative.

While as expected, few answered “better off” for any category of stakeholder, the level that answered “same” (as opposed to “worse off”) was surprising. I would have expected a resounding “worse off” response for all categories. Even more perplexing was to when these responses were compared to previous years. The change simply wasn’t as large as I would have thought, and consumers were strangely rated in better position for 2009 versus 2008. Perhaps this is due to the specter of reform?

Here’s tables listing responses to this question, compared to the past two years:

2009 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	16.9%	14.6%	68.5%	100.0%
Employers	8.0%	25.0%	67.0%	100.0%
Physician	5.7%	40.2%	54.0%	100.0%
Hospital	3.4%	35.2%	61.4%	100.0%
Health Plans	11.5%	43.7%	44.8%	100.0%
Pharmaceutical	20.5%	44.3%	35.2%	100.0%

2008 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	6.5%	18.2%	75.3%	100.0%
Employers	20.5%	32.1%	47.4%	100.0%
Physician	46.2%	41.0%	12.8%	100.0%
Hospital	21.8%	37.2%	41.0%	100.0%
Health Plans	14.1%	35.9%	50.0%	100.0%
Pharmaceutical	49.4%	32.5%	16.9%	100.0%

2007 Winners and Losers:

By Next Year:	Better Off	Same	Worse Off	Grand Total
Consumers	7.6%	20.7%	71.7%	100.0%
Employers	19.9%	45.2%	34.9%	100.0%
Physician	46.6%	42.5%	11.0%	100.0%
Hospital	17.8%	37.0%	45.2%	100.0%
Health Plans	11.7%	41.4%	46.9%	100.0%
Pharmaceutical	38.9%	31.9%	29.2%	100.0%

Now, that the books are closed on the first month of the last year of the decade, we don’t have to speculate much more on what 2009 will bring. We can just make sure our seat restraints are locked in position, and hang on for the ride.

The Argument for Incremental Reform

By Clive Riddle, January 22, 2009

The New Yorker magazine, of all places, has one of the best essays on health care reform I’ve read in quite a while. I subscribe to The New Yorker, but often manage to miss anything good, being a shallow New Yorker reader, skimming as I do to browse the movie reviews and cartoons.

Fard Johnmar, President of Envision Solutions, sent me the link. I blog with Fard for ChangeNow4Health, the health care reform initiative which is currently undergoing an upgrade and transformation, hopefully like the health care system may someday soon.

So now I pass the link on to you: “Getting There From Here”, by Atul Gawande, from the current (January 26^th, 2009) issue of The New Yorker: http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?printable=true

So here’s excerpts of three key points the author makes:

1. “On the left, then, single-payer enthusiasts argue that the only coherent solution is to end private health insurance and replace it with a national insurance program. And, on the right, the free marketeers argue that the only coherent solution is to end public insurance and employer-controlled health benefits so that we can all buy our own coverage and put market forces to work. Neither side can stand the other. But both reserve special contempt for the pragmatists, who would build around the mess we have. The country has this one chance, the idealist maintains, to sweep away our inhumane, wasteful patchwork system and replace it with something new and more rational. So we should prepare for a bold overhaul, just as every other Western democracy has. True reform requires transformation at a stroke. But is this really the way it has occurred in other countries? The answer is no. And the reality of how health reform has come about elsewhere is both surprising and instructive."


2. “American health care is an appallingly patched-together ship, with rotting timbers, water leaking in, mercenaries on board, and fifteen per cent of the passengers thrown over the rails just to keep it afloat. But hundreds of millions of people depend on it. The system provides more than thirty-five million hospital stays a year, sixty-four million surgical procedures, nine hundred million office visits, three and a half billion prescriptions. It represents a sixth of our economy. There is no dry-docking health care for a few months, or even for an afternoon, while we rebuild it. Grand plans admit no possibility of mistakes or failures, or the chance to learn from them. If we get things wrong, people will die. This doesn’t mean that ambitious reform is beyond us. But we have to start with what we have.”


3. “So accepting the path-dependent nature of our health-care system—recognizing that we had better build on what we’ve got—doesn’t mean that we have to curtail our ambitions. The overarching goal of health-care reform is to establish a system that has three basic attributes. It should leave no one uncovered—medical debt must disappear as a cause of personal bankruptcy in America. It should no longer be an economic catastrophe for employers. And it should hold doctors, nurses, hospitals, drug and device companies, and insurers collectively responsible for making care better, safer, and less costly.”

Doctor Gawande makes a compelling point in the essay about the other western industrialized nations, all providers of a much more comprehensive national health care system, that belies the perception often advanced by reform advocates in either camp. These nations didn’t throw out old health care systems with the bathwater, and start from scratch. They evolved into them, based on their own unique circumstances. England and France, for example, had World War II as an intervention that led them down their current path.

Doctor Gawande warns that throwing out our system with the bathwater could be more harmful to patients and the nation, than building, albeit with a greater urgency, something new out of what we have already.

By the way, who is Doctor Gawande, you ask? Atul Gawande, MD, MPH, Associate Professor of Health Policy and Management, Harvard School of Public Health is a noted physician and author, and has just been in the news last week, co-authoring an article in the New England Journal of Medicine, “A Surgical Safety Checklist to Reduce Morbidity and Mortality in a Global Population” providing results form eight hospital pilot sites around the world. Doctor Gawande is the head of the School’s “Safe Surgery Saves Lives Study Group" which in collaboration with the World Health Organization introduced and rolled out the Safe Surgery initiative to introduce new safety checklists for surgical teams and implemented the system with the pilot hospitals.

So click the link already, and read it yourself.

Three Specialty Health Companies Top Health Stock Performers During Past Three Months

By Clive Riddle, January 14, 2008

It’s been three months since we came to a national realization that the economy had truly tanked, and we were already deep in the midst of a recession. So, during the past three months, what health care stocks have risen out of the ooze to distinguish themselves in this economic funk?

Looking at the Dow Jones US Health Care Providers Index, which covers a mixture of health plans, administrative organizations and actual providers (the healthcare industry excluding pharama/biotech/medical supplies/equipment), the following companies made the top ten performing stocks for the past three months (analysis courtesy of bigcharts.com):

Symbol	Company Name	PercentChange
LCAV	Lca-Vision Inc	69.31%
CHCR	Comprehensive Care Corpora...	66.67%
INMD	Integramed Amer Inc	52.48%
AUSA	Access Plans Usa Inc	44.19%
HBSC	Human Biosystems	42.86%
AGP	Amerigroup Corp	32.86%
HMSY	Hms Hldgs Corp	30.78%
CBAI	Cord Blood Amer Inc	30.00%
DYII	Dynacq Healthcare Inc	22.87%
EMS	Emergency Medical Svcs Cor...	14.91%

Examining the top three performers, it’s interesting that all three are various types of long-established specialty health companies. Conventional wisdom would be that specialty services that are more elective or discretionary, and typically not associated with high levels of insurance coverage, would be poorly positioned for a deep recession. So much for conventional wisdom.

LCA-Vision (www.lasikplus.com) has been operating since 1986 (predecessor company) providing laser vision corrective services. On their home page, you’ll find a “Special Offer- $400 Off Lasik, $0 down, 0% interest for 24 months” and a button you can click: “Free Lasik Vision Exam, a $100 value, schedule online now.”

During the third quarter 2008, the 695 employee company yielded $37,000,000 in revenue, with estimated current annual revenue at $210,000,000. They own and operate 77 LasikPlus fixed-site laser vision correction centers in the U.S. plus d a joint venture in Canada. Their centers are currently located in 59 markets in 33 states.

Comprehensive Care Corporation (www.compcare.com) has been around since 1969, initially operating CareUnit substance abuse recovery services, and now having branched out during the past 14 years to serve as a “Specialty Health Care Company dedicated to the Integration of behavioral and medical care.”

Comprehensive Care, with 270 employees, took in $8,400,000 in revenue in thte third quarter 2008, with estimated current annual revenue at $35,000,000. The company is fully accredited by NCQA, and “manages lives nationwide, providing a wide range of services to health plans and employer groups for Commercial, Medicaid, and Medicare members.”

IntegraMed America (www.integramed.com) states they are “a leading provider of specialty healthcare services in emerging, technology-focused segments. The company currently operates in two healthcare sectors, fertility care and vein treatment.” On their home page, you’ll find the logos for their two brands: Integramed Fertility Network and Vein Clinics of America.

Integramed has operated since 1985, now has 1,180+ employees and yielded $52,000,0000 in third quarter 2008 revenue, with estimated current annual revenue at $200,000,000.

The company states that their network of fertility 101 clinics perform about 25% of all in vitro fertilization (IVF) procedures nationally through 13 contracted fertility centers, located in major markets across the U.S., and via their 2007 acquisition of Vein Clinics of America, they now serve 31 locations, providing non-surgical treatment of varicose veins.

So are companies specializing in laser surgery, behavioral health and fertility/vein treatment centers, what you would have picked to head the charts during the past three months?

The Great Recession: as seen by Health Plan Executives

by Clive Riddle

There have been a number of depressions in the American economy since the days of Alexander Hamilton. We only refer to one as the “Great Depression,” and it seems joined at the hip with an entire decade (the 1930’s.) There have been a wide number and range of recessions in American history. It’s hard to know how today this one will fully play out, but it feels different. Perhaps we’ll move on from calling our current situation the “Current Financial Crisis” and we’ll end up calling this the “Great Recession.”

CSC yesterday released results from their November 2008 survey of 30 senior executives representing 26 health plans, with their report "Insuring the Future: Health Plans Respond to the Financial Crisis." Here’s what they found was going on in the minds of our health plan executives relating to whatever you want to call our economic mess; the following is a summary of the questions asked, survey results, and our comments:

• “Compared to 2001 – 2002, how will the current economic downturn impact your organization?” 73% answered “Bigger Impact; 13% said “About the Same” and 13% answered “Smaller Impact”, “No Impact” or “No Opinion.” [so three-fourths might agree with calling this a Great Recession.]

• “Which indicator does your organization use to predict and plan for the effects of overall economic changes?” 69% mentioned unemployment; 55% mentioned health care inflation; 31% mentioned investment performance and the answers tailed off from there [makes sense- employment drives membership, inflation drives the medical loss ration, and investment income is the difference between profit and a loss for many plans.]

• “What is your organization’s response to the downturn?” 48% will implement cost-cutting projects; 41% will implement revenue enhancing projects; and14% will lay off staff. [Revenue enhancement is going to be a challenge in this economic climate if premium increases are what they have in mind. We would project a drastic reduction in negotiated premium increases, let alone benefit buy-downs that will reduce revenue.]

• “How has the downturn affected demand for your products?” Regarding enrollment, 48% anticipate an increase in individual product enrollment vs. 10% projecting a decrease; while 45% predict a decrease in group sales compared to 7% projecting an increase [what are these 7% smoking, or maybe they just think their going to steal away competitors market share?]; and 69% project an increase in government program enrollment compared to 14% predicting a decrease. Relating to employer group renewals, 54% anticipate a decrease in small business renewals, and 31% project decreases in large group renewals [so the small group market will make significant cuts in providing coverage or eligibility, driving the individual and government program increases, and the group market will continue to diminish in size as it has this throughout this decade.]

• Also regarding the demand for product type, 67% see an increase in demand for Consumer Driven plans compared to 5% anticipating a decrease, compared to 29% increase/24% decrease for PPOs and 43% increase/14% decrease for HMOs. [So consumer driven plans, which many pundits have seen as an endangered species with the new Democratic administration and congress may still have some legs due to the impact of this recession, and HMOs may make a comeback from the managed care backlash starting ten years ago, as a stronger tool to stabilize costs.]

• “How will the economic downturn affect other business partners?” 73% anticipate cashflow/solvency problems with provider networks, and 54% predict network stability problems relating to access and availability. [As provider networks serve multiple plans, you can have a reverse supply chain problem compared to the auto industry. With autos, a collapse of the manufacturers can bring down the supply chain. Here a collapse of the provider network supply chain could wreak havoc with the health plans.]

Of course, how one sees the economic situation depends upon one’s personal stake and position at the time. The joke goes, a definition of a recession is when you lose your job. The definition of a depression is when I lose my job.

The Future of Individual Plan Underwriting vs. Guaranteed Issue

By Clive Riddle

United Health Group betting on continued patchwork of State Regulations

An ongoing conundrum central to health coverage reform is the chicken and egg issues of health plan acceptance of individual health care coverage, mandates and guaranteed issue.

If all plans were required to accept all individual applicants for all policies (full guaranteed issue), the argument goes that significant adverse selection would occur, as only those uninsured with funds that could reliably project their actual health expenses would exceed the insurance premium costs would purchase coverage. In order to correct for this, it is argues that a mandate is required (requiring all of an applicable population to obtain/receive coverage.)

For example, the health plan industry, through America’s Health Insurance Plans (AHIP) have just proposed guaranteed issue in exchange for a mandate, stating in a press release: “Health plans propose guaranteed coverage for people with pre-existing medical conditions in conjunction with an enforceable individual coverage mandate. To help working families afford coverage, advanceable and refundable tax credits should be available, phasing out as income approaches 400 percent of the federal poverty line. Right now, in most states, individuals can be turned down by insurance plans when they apply for individual health plan coverage, if they do not satisfy the plan’s underwriting criteria. The only sure way for an individual to get coverage is to live in one of the few states with guaranteed issue, or obtain employment where group health plan coverage is offered.” (Refer to AHIP December 3rd, 2008 Press Release: Health Plans Offer Comprehensive Reform Proposal.)

But will a health care reform package include such a mandate that extends to the individual, non-group market, particularly in the current economic climate? The Obama reform proposal had focused on employer mandates.

In the current group environment, employees and dependents whose group coverage is ending can self-purchase continuing coverage to maintain their group policy benefits, at 102% of the cost of their group policy under provisions originally set forth under COBRA continuation of benefits regulations, but this coverage is generally limited from 18 to 36 months, depending on the circumstances (refer to http://www.cms.hhs.gov/COBRAContinuationofCov/ for details on COBRA continuation of coverage provisions).

Also in the current environment, guaranteed issue for all individuals just in Maine, Massachusetts, New Jersey, New York and Vermont. Washington provides guaranteed issue for some classes of individuals, and of course many states have incremental provisions extending coverage provisions. (refer to Kaiser Family Foundation StateHealthFacts.org for a summary of Individual Market Guaranteed Issue.)

So the question is, assuming health care coverage reform isn’t so far-sweeping that the individual market is removed due to full universal non-group based coverage, will the future of individual health plan coverage involve:

A. Federal Guaranteed Issue With Some Type of Coverage Mandates
B. Federal Guaranteed Issue Without Mandates
C. Continued Patchwork of State Regulations

United Health Group is betting on the latter, and now selling the right to Guaranteed Issue to qualified prospects. They have announced in a December 4th press release and as reported in the New York Times (refer to the Times December 2nd, 2008 article, UnitedHealth to Insure the Right to Insurance ) that UnitedHealth has unveiled “a ‘first of its kind’ product: the right to buy an individual health policy at some point in the future even if you become sick. Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own.”

United states that “with Continuity, consumers only need to go through the medical underwriting process once, at the time of application. Once they are approved, their coverage is guaranteed when they need it regardless of any medical conditions that may have developed in the meantime...With Continuity, consumers can choose from a wide range of health plans, deductibles and optional benefits including traditional health insurance plans, health savings account plans and lower-cost high deductible plans. Once the plan is approved and issued, the Continuity rider gives policyholders the option to leave the plan deactivated while covered by group insurance or activate the plan when they lose or voluntarily leave group health insurance coverage because of early retirement, job loss or simply because the employer no longer offers health benefits.”

The Times reports the cost for holding the Continuity Guarantee is 20% of a standard individual premium, and is subject to underwriting before the Guarantee is issued. On the surface, it is difficult to imagine a large market for United’s Continuity product at such a steep price, given that COBRA is available as an interim stopgap for those with group coverage. The Times quotes a broker who states “I think it’s got very, very limited application.”

However, United’s innovation does open the door to variations on this theme that could have more widespread appeal, if in fact, federal requirements for guaranteed issue do not materialize. Health Plan competition for group coverage could result in rider provisions for no-cost or low-cost individual coverage guarantees, as part of the group policy, so that the employer can advertise improved continuation of coverage or portability in the event employees lose their group eligibility for whatever reason. That type of product could have widespread interest in the group market.

What can we deduce about Deductibles?

By Clive Riddle

Mercer’s Study finds the median individual deductible jumps to $1,000

Mercer just released results from their 2008 National Survey of Employer-Sponsored Health Plans, with headlines declaring “$1,000 health plan deductible was the norm in 2008.” And this was just for traditional PPO plans, not counting consumer driven high deductible health plans. And this was the median figure, not the mean which is more susceptible to skewing upwards given the wide range of benefit design out there. And this was for individual, not family coverage.

Certainly the ongoing increase of consumer cost sharing built into plan design, and the growth in consumer driven high deductible health plans that has paved the way for the trend and acceptance in higher deductibles in traditional PPO plans as well. As Blaine Bos, of Mercer tell us, “The introduction of the HSA may have changed employers’ thinking on just how high a deductible can go without causing employees to revolt. Raising the deductible has become the fallback for employers faced with cost increases they can’t handle. It’s the easiest way to reduce cost without taking more out of every employee’s paycheck.”

But not so fast, there’s a little more to the deductible story than just $1,000 individual deductibles. Deductible amounts are quite different for small versus large employers. Mercer found the median deductible for large employers is just $300. Other surveys have borne this out as well. The Kaiser Family Foundatio/HRET Employer Health Benefits Annual Survey yielded lower deductible amounts for traditional PPOs, but with the same separation by size: a mean of $560 overall, but $917 for small employers and $413 for large employers.

It also shouldn’t be glossed over that the KFF/HRET study found the mean deductible at $560, a far cry from $1,000. Too bad KFF didn’t share what the median was, but they report the following distribution: 52% under $500; 30% $500 to $999; 13% $1,000-1,999; and 4% $2,000+.

The trend for first dollar coverage of wellness and certain value-based benefits should be noted as well. While deductibles are rising fast, more employers are adopting plans designs with first dollar coverage for specific wellness and "value based" items. This at least make a larger deductible a little more palatable, and allows plan design to influence desired objectives.