Truven Examines Scope and Drivers in Bundled Commercial Spend for Lower Joint Replacement

By Clive Riddle, March 4, 2016

Truven Health Analytics has just released a twelve page research brief:  Bundled Pricing for Total Joint Replacements in the Commercially Insured Population: Cost Variation Insights by Bundled Care Components, which follows up on their recently released eight page brief on this same topic: Geographic Variation and Cost-Driver Insights.

Truven “found that the primary drivers of cost variation for major lower joint replacement are tied to hospital cost and length of stay. For facility costs, the study attributes up to $1,944 per additional day in total cost variation. That variation is independent of professional costs. The study builds on previous research that found more than $10,000 in commercial bundled spend variation for the same surgeries based on geography.”

Truven shares these key findings:

• The increase in facility cost only (removing professional cost) for each additional day a patient is hospitalized after the procedure varies from $313 per day in the East North Central region to $1,944 per day in the Pacific region, a difference of more than $1,600.
• On average, the cost to treat a patient at a rehab facility was $10,600 per patient, versus $5,300 per patient at a skilled nursing facility, and $1,300 using home health services. And, the cost for rehab facilities varied widely by region, with the cost per patient in the Pacific totaling close to $22,500 compared with roughly $7,000 per patient in New England.
• The cost per bundle for readmissions varied from $538 in the East South Central to $918 in the West South Central division. This lower cost in the East South Central resulted from both a low rate of readmission (3.3 percent) and a low cost per discharge ($16,340).

In their most recent brief, Truven notes that “in our previous research, we estimated the marginal impact of one extra day in the hospital after a TJR to be about $880 per day across all geographic divisions.  To further analyze that finding, we used a mixed effects regression model, with fixed average professional costs, to quantify the increase in facility cost only for each additional day a patient remains hospitalized after the procedure…. The average impact varied from $313 or 1 percent of the base price per additional day in the anchor facility after initial day of hospitalization in the East North Central division, to $1,944 or 6.2 percent of the base price in the Pacific. That’s a difference of more than $1,600.”

Bob Kelley, senior research fellow, advanced analytics, at Truven Health Analytics tells us “as providers and payers begin to consider bundled payment programs for these procedures, it is increasingly important to understand the cost implications of each additional inpatient day, as well as post-acute care and readmissions. Once claims-based, actual patterns are recognized and understood, guidelines and standard best practices can be put in place to guide discharge planning and post-acute care based on patient risk for readmission and other factors contributing to a successful recovery.”

Use of Predictive Analytics in Health Care

By Claire Thayer, March 3, 2016

Healthcare payers and providers are increasingly looking for innovative strategies to leverage big data and use of predictive analytics across the organization to manage population health risks, identify claims trends, improve clinical outcomes, reduce costs, etc.  Management of all the data and integration of the systems built up over time is complex at best  - 72% of CIOs surveyed reported using more than 10 platforms or interfaces to extract data, while still relying on traditional sources: Clinical Data from EHRs (95%); Pre-adjudicated administrative, billing and financial data (91%), and post-adjudicated claims data (69%).   Given this, it’s not surprising that many payer organizations are now seriously looking to outsource their IT and analytics related projects - 93% of health plans responding to recent Black Book survey plan to do so by Q1 2017. 

These and issues pertaining to predictive analytics in health care was the focus of a recent MCOL infographoid, highlighted below:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.

Et Tu, Oscar?

By Kim Bellard, February 25, 2016

Things seem to be going well for Oscar Health, the health insurance start-up that has been wowing investors and the media since it was founded in 2012.  Forbes reports that Oscar just raised $400 million in an investment round led by Fidelity, which effectively values Oscar at about $2.7b.  So why do I fear that perhaps they are taking the wrong path?

I've previously expressed my concern that Oscar and some of its fellow health insurance start-ups might be more about repackaging than reinventing.  I'm more concerned than ever after Bloomberg reported that Oscar is adopting a new network strategy: moving to "tight, exclusive networks with hospitals."  

There's no secret why Oscar is taking this approach.  It's about cost, with the expectations that narrower networks yield cost savings Closer relationships with providers and the ability to offer lower premiums without hurting quality.  If that's what Oscar is after with its new network strategy, what's not to like?

Well, plenty.  For one, with this strategy Oscar isn't innovating; it is buying into the strategy that most other health plans are trying to adopt.  That doesn't make it a bad strategy, but playing follow-the-leaders certainly doesn't fit the cool yet disruptive image that Oscar has so carefully cultivated. 

More importantly, it is the wrong strategy.  For Oscar.  For any health plan.  It is a strategy rooted in the 1990's, if not earlier.  The argument for networks, especially narrow networks, is that health plans can drive better bargains by promising more volume to specific providers.  I don't have a problem with health plans driving hard bargains with providers, especially if those bargains are performance-based.  What I do have a problem with is forcing consumers to use those, and only those. 

I think it is great when a health plan tries to find the highest quality providers, and to get a good deal with them.  What I wish they would do, though, is say, "here's the data that demonstrates their quality, and here's how much we're willing to pay them to take care of you.  If you can find providers that are better, that's great; go to them, and we'll still pay the same as we'd pay the providers we recommend.  No hard feelings." 

In other words, let the health plan act as the concierge, not the gatekeeper.

If a consumer goes to providers who charge more than the health plan would pay their designated providers, well, there's a price for choice; consumers might have to pay extra.  On the flip side, maybe the consumer should pocket some of the savings if they manage to find less expensive providers.

This approach might sound like reference pricing, because reference pricing is a start to where I think we need to go.  I'd rather we put more effort into that than in narrowing consumer's choices.  
Noah Lang, CEO of Stride Health, told Fast Company, "Oscar is primarily a consumer experience company."  I don't think restricting choice of providers is a very good consumer experience for any health plan, and especially not for one like Oscar who prides itself on its member experience.

Oscar thinks this new approach is their future.  If so, their future may be as just another health plan.  And that'd be too bad.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Two Employee Benefit Studies Don’t Agree on Everything – But Do Agree on 52% HDHP Adoption

By Clive Riddle, February 19, 2016 

Benefitfocus has just released the “Benefitfocus State of Employee Benefits 2016,” based on benefit selection data from 700,000+ people at 500 large employers, based on actual behavioral versus self-reported data. They cite that 52 percent of large employer clients now offer high-deductible health plans (HDHPs). 

The report notes that “millennials—born between 1980 and 1989—selected HDHPs more than any other age group. However, while approximately 44 percent of employees in this group chose HDHPs, a much smaller number of these employees took full advantage of health savings accounts (HSAs.)”

In addition, the report found that their clients “should be well positioned to navigate the Cadillac tax to be levied on higher-cost health care plans in 2020 under the Affordable Care Act. Total premiums across all 2016 plans averaged $14,974 for family coverage and $6,096 for individual coverage—both well below the tax’s respective target thresholds of $27,500 and $10,200.” 

While voluntary benefits have receiving much publicity as a popular solution and offering in consumer driven plan environments, they report that “only 36 percent of large employers offered such voluntary benefits for 2016, and only 14 percent of employees actually enrolled.” 

Meanwhile, Wells Fargo Insurance  has just released their Employee Benefits Trend Study surveying 650 middle-market companies and large corporations, which painted a somewhat different picture. They found that “fifty eight percent of employers surveyed expect their medical plan costs to exceed the thresholds for the Affordable Care Act (ACA) excise tax, or “Cadillac” tax, which was originally to take effect in 2018, but has been delayed until 2020.” Their findings state that “As more employers offer high deductible health plans, the C-suite is also aware of the financial exposure that employees face with these types of plans. As a result, they are looking to mitigate those costs by offering voluntary benefits solutions (e.g. critical illness and accident insurance).” 

But the Wells Fargo survey did agree to the penny with the Benefitfocus study on one item – HDHP adoption, citing that “half of the employers in the study said they will continue to make changes to their plans either this year or in 2017 by adding a high deductible plan option (52 percent), increasing the employee contribution percentage (56 percent), or increasing co-insurance features (55 percent).

What Is the Difference Between Population Health, Community Health and Public Health?

by Clive Riddle, February 12, 2016

What Is the Difference Between Population Health, Community Health and Public Health? That is the question asked in the ThoughtLeaders Corner in this month’s issue of Population Health News. Here’s what some population health experts had to share:

Garth Graham, M.D., MPH, President of Aetna Foundation says “throughout medical school and residency, I paid close attention to my mentors in their efforts to make an impact both on the individual patient and on the broader public health level to influence health outcomes in entire communities. Today, as a cardiologist and president of the Aetna Foundation, I work every day to follow in their footsteps by looking at three distinct areas: population health, community health and public health.  When talking about population health, we are describing health and healthcare outcomes that impact a specific group of people being tracked and managed for specified health conditions. For example, at the Aetna Foundation, we’re working to bridge the health divide by paying close attention to chronic diseases, such as heart disease and diabetes, that disproportionately affect African Americans.”

Graham continues: “Community health broadens the scope, going beyond traditional health and healthcare needs to factor in the social determinants of health, such as education, employment, public safety and more. In our work with communities, we know factors such as access to information and services can have a direct impact on community health. As we look at the broader tapestry of national and state indicators, we see public health unfold beyond a specific community or group. It is the 10,000-foot view that helps us define the health of an entire nation. At the Aetna Foundation, we know that where you live can make a dramatic impact on your health. According to data from the Centers for Disease Control and Prevention (CDC), your zip code is a greater indicator of your health than your genetic code. As we work to improve health outcomes and close health divides for underserved communities in our nation, we can all contribute by sparking change—community by community, city block by city block. “ 

Alexis Pezzullo, Chief Growth Officer for DST Health Solutions offers this take: “One of the favorable consequences of the ACA’s passage has been the re-ignition of discussion around ways to enhance and sustain health in individuals, groups and populations. Stakeholders are thinking about and collaborating in various ways to improve health outcomes and address value-based utilization of healthcare resources. Not too surprisingly, the importance of public and community health efforts is becoming increasingly clear. Public health by definition is the science of protecting and improving health of entire populations, from neighborhoods to countries, through promotion of healthy lifestyles, research for disease and injury prevention and detection and control of infectious diseases.”

Pezzullo contrasts that “community health, on the other hand, is a field of public health centered on the study and enhancement of the health characteristics of biological communities. While the term can be broadly defined, community health tends to focus services, education and research on geographical areas with shared characteristics. Population health, meanwhile, is concerned with the distribution of health outcomes across a group of individuals. This field includes health outcomes, patterns of health determinants and policies and interventions that link the two. Improving ‘total’ population health requires partners across public health, healthcare organizations, community organizations and businesses. Today’s population health management necessitates innovative approaches that address the complexity involved in analyzing data, evaluating patient risk and effectively managing care. The cumulative value of these efforts has never been fully realized. As the healthcare industry seeks to optimize outcomes, changing strategies, capabilities and actions to leverage synergies across these health ecosystems is essential.            

Deborah Dorman-Rodriguez, Leader, Healthcare Practice Group, Freeborn & Peters LLP offers that “the terms population health, community health and public health are often used interchangeably even though they are somewhat distinct. Population health is now commonly used in the post-ACA environment in association with the Triple Aim of improving the quality of care, improving the health of populations and reducing the per capita cost of healthcare. David Kindig and Greg Stoddart first defined population health in 2003 as: ‘health outcomes of a group of individuals, including the distribution of such outcomes within the group.’ (Kindig D, Stoddart G. “What Is Population Health?” Am J Public Health. March 2003;93(3):380-383.)”

Dorman-Rodriguez goes on to say that “the definition did not include the cost or provider intervention aspects of healthcare. The evolution of the term over the last 10 to 12 years indicates there is not one specific definition that is universally recognized. It appears, however, that the concept of investment/cost and provider intervention/influence is likely to be included. In contrast, the terms public health and community health have traditionally meant a focus on the improved health of a population. The WHO defines public health broadly as ‘all organized measures (whether public or private) to prevent disease, promote health and prolong life among the population as a whole.’ The CDC Foundation defines public health as being ‘concerned with protecting the health of entire populations.’ Community health is often seen as a field within public health, focusing on the health of a particular population group that has common characteristics, such as culture, work, physical traits, geography or other demographics. All three terms are likely to evolve in their respective meanings given the current emphasis on improving healthcare outcomes.”  

Finally, Neil Smiley, CEO/Founder of Loopback Analytics has this to say: “Population health is a health improvement strategy for risk-based entities, such as managed care plans, self-insured employers and accountable care organizations that are financially responsible for clinical and economic outcomes of beneficiaries under their care. Population health competencies include analytics to proactively identify individuals with shared characteristics, such as chronic conditions, payer classifications, patient demographics and other risk factors. Once a population of interest has been identified, individuals are matched with interventions to manage health risk, with a feedback loop to measure clinical and economic efficacy. “

Smiley states that “community health is defined by local geography, such as a town, city or county. Communities typically include many risk-based entities, each operating their respective population health strategies. Whereas population health is often focused on clinical interventions, community health addresses non-clinical interventions, such as social services, transportation, housing and education provided by non-profits and community-based organizations. Public health spans both risk-based entities and communities with a focus on clinical research, health policy, regulations and quality and safety standards. Public health encompasses environmental factors that can impact the health of a population, such as infectious disease control (Centers for Disease Control and Prevention), air and water quality (Environmental Protection Agency) and safety of the food supply (U.S. Food & Drug Administration). Ideally, population, community and public health initiatives work together to continuously improve healthcare delivery and outcomes. “

More information about Population Health News is available at www.PopulationHealthNews.com

How Value-Based Care Ties to Physician Performance

By Claire Thayer, January 28, 2016

A recent survey by the Deloitte Center for Health Solutions finds that over the next 10 years, physicians expect as much as 50% of their compensation will be directly tied to value-based care (VBC). Developing accountability as well as physician support are essential components of VBC payment models. The Deloitte survey highlights these key factors in protecting physicians’ financial interests:

• 61% Limits to total financial risk exposure
• 46% Equitable, performance-based distribution of bonuses from shared savings
• 43% Ability to help set performance goals

Political and technical challenges exist in accurately measuring physician performance. In measuring physician quality, the Agency for Healthcare Research and Quality points out that resolving the issues listed below is critical to getting the consistent and valid results necessary for public reporting:

• Rules for attributing patients to individual physicians
• Methods for aggregating data from different sources
• Methods for creating composite scores
• Calculation of benchmarks and assignment of peer groups for comparing physician performance
• Processes for auditing/validating results

These and other issues on how value-based care ties to physician performance were the focus of a recent MCOL infographoid, highlighted below:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.

Doing Different Differently

By Kim Bellard, January 28, 2016

I was all set to write about bacteriophages, then I realized that what appealed to me about them was as an example of attacking mainstream problems with non-mainstream solutions. So I decided to write more generally about how organizations are trying to encourage that.

Let's start with IBM. Big Blue is trying to reinvent itself as a company that uses "design thinking" to develop products and services.

Their design principles emphasize "making users your North Star," using collaborative multidisciplinary teams, "restless reinvention," and a continuous loop of "observe/reflect/make."

So far, about 10,000 employees have gone through the design bootcamp, and around 100 products have been developed using design thinking. Those are drops in the bucket for IBM, but the approach is an audacious and long overdue attempt for IBM to stay relevant in a millennium in which Apple has reminded companies about the importance of design.

Or take Microsoft. If there is any doubt that Microsoft is well on its way to doing things differently, look at the Surface Book or Surface Pro, each of which has won rave reviews. CEO Satya Nadella has been shaking things up ever since he took over two years ago.

One of Mr. Nadella's actions was to break up Microsoft's Research group, which had been kept separate from the day-to-day action. Bloomberg reports that Mr. Nadella has insisted that the research teams work hand-in-hand with the product teams to get new ideas into actual products quicker.

Mr. Nadella has emphasized, "we need to be open to new ideas, and Microsoft Research is where they will come from." This attitude led to Skype Translator becoming an actual product within three months of Mr. Nadella learning about the underlying research.

Venture capitalist Anshu Storm has a theory -- "stack fallacy" -- that he believes explains why so many big companies fail to innovate. The theory posits that many companies suffer from the "mistaken belief that it is trivial to build the layer above yours." 

He cites how Apple has built great devices but also has missed on simple apps, or IBM's classic blindspot about letting Microsoft own the OS layer that ran their PCs.

In his view, "Product management is the art of knowing what to build." The trouble is that too many companies focus on the how and not enough on the "why."

For example, think about hospitals. They're trying hard to position themselves as patient-centered health systems, but no one who has been in a hospital can believe that hospitals see patients as the customer. Hospital gowns? Waking patients up in the middle of the night to take vitals? Corridors upon winding corridors?

We need the health care experience to be less like health care and more like things we actually like. Nick de la Mare suggests that hospitals (and schools) "should be more like theme parks," and that designers should be aiming for "magical experiences."

That's the attitude we need to be taking as we try to innovate; it's not just doing more, but really rethinking the overall consumer experience. I was particularly struck by Mr. de la Mare's caution: 

The trick is to deploy technology strategically and sparingly, since new tools tend to introduce unintended complexities....A hospital patient may feel similarly overwhelmed by impersonal and bureaucratic processes that seem to serve the health care provider at their expense. Just because we have the technology to do something, doesn’t mean we should.

There is cool innovation going on within health care. David Chase, for example, raves about how Zoom+ (which I've written about before) has revamped the ER experience, and there is no shortage of other health care companies hoping to be disruptive (e.g., Becker's list of 30).

There is plenty of incremental innovation going on, and health care sure can use it, but I continue to be on the lookout for breath-taking innovation -- innovations that surprise, excite, and delight.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Revisiting the Health Cooperatives Morass

By Clive Riddle, January 22, 2016

A new Wall Street Journal article, Obama Administration Works to Fix Health Insurance Co-Ops, covered Andy Slavitt’s - acting CMS administrator – testimony to the Senate Finance Committee regarding how to recoup federal loans from failing co-ops, how so many co-ops failed, and what future fixes are planned for the cooperatives, including reducing funding restrictions. A graphic accompanying the article re-hashes the $1.5 billion lent to co-ops that have failed, which range from $265 million in New York to $60.6 million in Oregon. Yesterday’s edition of Inside Health Policy  reported that Slavitt has indicated risk adjustment changes proposed for 2017 may come sooner. The natural fallout from the failed and failing cooperatives continue to surface in the news. For example, this week it was announced the failed Kentucky Health Cooperative was placed in liquidation.

What CMS can do to mitigate the tenuous position the remaining cooperatives are in is news. But the bulk of current media discussion of cooperatives continues to beat the dead horse of the number of failed cooperatives, their cumulative losses and unpaid federal loans, all which was significantly covered in the fall. There was plenty of blame to go around: co-ops underpricing themselves in the market, CMS policy restricting their abilities to capitalize, CMS risk adjustment policy and congressional reduction in funding for said policy. The dead horse will continue to be beaten in the news – after all it is an election year.

But perhaps a more fundamental issue that wasn’t talked about enough was simply that start-up health plans are going to initially lose significant amounts of money in new markets even under the best of circumstances, and the start-up losses weren’t adequately budgeted, capitalized or communicated in setting stakeholder expectations.

If you’re keep tabs of the continuing status and travails of the cooperatives, two sites are worth bookmarking: U.S. Health Policy Gateway's Co-op Performance by State and the National Conference of State Legislature’s Health Insurance Purchasing Cooperatives and Alliances: State and Federal Roles.

Henry Loubet on Three Immediate Trends Impacting 2016 Healthcare

By Clive Riddle, January 15, 2016

What’s in store for 2016? Henry Loubet, Chief Strategy Officer for Keenan, tells us “The business of health care has experienced both evolution and revolution through the decades. Innovation and transformation are driving dramatic developments in the health care industry at a rapid pace these days. While the major insurers' merger and acquisition activity will draw plenty of speculation about the health care landscape, I believe there are other, more immediate trends that will influence policy and financial decisions in 2016.”

Henry Loubet

Here’s three trends Henry points to for 2016:

The 2016 Election could potentially hold transformative Affordable Care Act impacts, with a new President and approximately 470 seats in the House and Senate to be decided. We don't know who will ultimately occupy those offices or whether the partisan balance will spell the possibility of the ACA being modified or repealed. Even with a strong Republican shift, there are significant barriers to repealing a law that now provides health insurance to millions of Americans. Some elements that would be easier for Congress to change about the ACA include risk corridors reimbursement, Cadillac Tax modification or deferral, or provisions affecting Medical Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

Disruptive start ups will continue to alter how health care is delivered as more members of the Millennial generation become health care consumers and entrepreneurial purchasers. Companies like Oscar, Zenefits, and Omada Health all appeal to those who are most comfortable functioning in a connected environment. These organizations have realized growing valuations as they've acquired market share at unprecedented rates. Their approach to care access should make telemedicine more mainstream, promote adoption of wearable devices for wellness and condition management, and expand utilization of "minute clinics" and other alternative treatment venues.

Not frequently discussed, but a growing area for health care is the application of non-occupational medical, pharmacy, and wellness/condition management principles to workers' compensation. Inflationary increases in occupational medical have prompted steps toward implementing drug formularies, preferred provider networks, and wellness/population health management as risk management strategies to reduce paid claims as well as the incidence and severity of workers' compensation claims. Though maybe not in 2016, we will be monitoring whether the line between occupational and non-occupational medical becomes less distinct or eventually eliminated.

Henry’s comments originally appeared in in MCOL’s December-January 2016 issue of ThoughtLeaders

“Fateful Eight” Trends to Watch in 2016

by Clive Riddle, January 8, 2016

With apologies to Quentin Tarantino, here are a “Fateful Eight” collection of trends to watch in the business of healthcare for 2016, in no particular order:

1. Prescription drug slice of the cost pie

While the overall healthcare cost trend has been relatively fit and trim for more than a decade, prescription drug costs are consuming a growing portion of the healthcare cost pie, and threaten to send the entire cost structure back to more obese levels.  Watch for a continued shift in priorities and resources towards managing this sector. A December MCOL e-poll on managing prescription costs, co-sponsored by Keenan, found that 41% of respondents felt the prospects for managing prescription costs going forward will be somewhat difficult and challenging, and 56% felt the prospects will be very difficult and challenging. 71% would place a higher priority on dedicating new or additional resources in managing prescription costs, compared to dedicating resources to managing other components of health care costs, and another 16.5% would place the highest priority in this regard.

2. Aftermath of health plan consolidations

There really can’t be the same level of mega health plan mergers in 2016 to follow up on the 2015 Aetna-Humana; Anthem-Cigna; and Centene-HealthNet deals, because we’re running out of separate mega health plans to merge with each other. But 2016 is a key year regarding health plan mergers none the less, as regulatory review of these deals gathers steam, individual health plan markets shake out, and the merged mega plans unveil a more detailed vision of health plan life post-merger.

3. Onward march of health system m&a

But merger and acquisition activity will still flourish in 2016, on the health system side, particularly as systems continue paths towards integration as they acquire and manage more and more medical group practices.

4. Private sector embrace of two ACA concepts

For all the political pushback the ACA continues to experience, its noteworthy that two ACA concepts have morphed over into the healthcare private sector with gusto.  Private health insurance exchanges and commercial accountable care arrangements have both evolved from the ACA primordial stew to become significant private sector initiatives that will play in increasing role in 2016.

5. Pay for Value Initiatives

But as significant as the rise in public and private accountable care arrangements have been, the biggest action in the provider reimbursement and care delivery arena is cast in the wider net of pay for value. While encompassing a range of type of initiatives, all things pay for value will be what to watch for in payer-provider relationships in 2016.

6. Healthcare Political Theatre

It’s a presidential election year. ACA opponents will continue pushing back on all possible fronts. While public opinion polls show the country is still quite divided on the ACA, polls also show it is slipping some in relationship to priority of other national issues.  But this won’t stop healthcare from being a featured actor in political theatre for 2016, casting ripples of uncertainty for the prognosis of the healthcare environment post-2016.

7. Quiet but big adoption progress for all things mHealth

Perhaps all the big things that can be said for the moment about mHealth have been said. While 2016 might not be the year that big new, new shiny things will be touted to change the face of healthcare forever, a more quiet revolution will take place in 2016 as more and more consumers continue to adopt various apps and technologies that are out there already, just waiting to gain traction.

8. The ever growing burden of consumer cost sharing

The ever upward spiral in the burden of consumer cost sharing is not news. Perhaps though, this growing burden might relate to the parable about the frog in the frying pan, who just sits there if the temperature is just increased one degree at a time. While things aren’t boiling over yet, the pace of marketplace and regulatory reactions to this issue should pick up in 2016.

Oh, And It Is Also An EHR

By Kim Bellard, December 18, 2015

You wouldn't -- I hope -- still drive your car while trying to read a paper map.  Hopefully you're not holding up your phone to follow directions on its screen either.  Chances are if you need directions while you are driving, you'll be listening to them via Bluetooth.  Or maybe you're just riding in a self-driving car.

But when it comes to your doctor examining you, he's usually pretty much trying to do so while fumbling with a map, namely, your health record.  And we don't like it.

A study in JAMA Internal Medicine found that patients were much more likely to rate their care as excellent when their physician didn't spend much time looking at their EHR while with them; 83% rated it as excellent, versus only 48% for patients whose doctors spent more time looking at their device's screen.  The study's authors speculate that patients may feel slighted when their doctor looks too much at the screen, or that the doctors may actually be missing important visual cues.

Indeed, a 2014 study found that physicians using EHRs during exams spent about a third of the time during patient exams looking at their screen instead of at the patient. 

As one physician told the WSJ, "I have a love-hate relationship with the computer, with the hate maybe being stronger than the love." 

The problem is that we forget that the record is not the point.  Figuring out what is wrong with a patient and what to do about it is the point.

Let's picture a different approach, one that doesn't start with paper records as its premise.  Let's start with the premise that we're trying to help the physician improve patient care by giving him/her the information they need at point of care, when they need it, but without getting in the way of the physician/patient interaction.

Let's talk virtual reality.

Picture the physician walking into the office not holding a clipboard or a computer or even a tablet.  Instead, the physician might be wearing something that looks like Google Glass or OrCam. There might be an earbud.  And there will be the health version of Siri, Cortana or OK Google, AI assistants that can pull up information based on oral requests or self-generated algorithms, transcribe oral inputs, and present information either orally or visually. 

When the physician looks at the patient, he/she sees a summary of key information -- such as diabetic, pacemaker, recent knee surgery -- overlaid on the corresponding portion of the patient's body.  Any significant changes in blood pressure, weight, and other vitals are highlighted.  The physician can call up more information by making an oral request to the AI or by using a hand gesture over a particular body part.  List of meds?  Date of that last surgery?  Immunization record?  No problem.

The physician can indicate, via voice command or hand gesture, what should be recorded.  It shouldn't take too long before an AI can recognize on its own what needs to be captured; the advances in AI learning capabilities -- like now recognizing handwriting -- are coming so quickly that this is surely feasible.

Building better EHRs is certainly possible.  Improving how physicians use them, especially when with patients, is also possible.  But it's a little like trying to make a map you can fold better while driving.  It misses the point. 

We need a whole different technology that subsumes what EHRs do while getting to the real goal: helping deliver better care to patients.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Accuracy of Health Provider Directories

By Claire Thayer, December 17, 2015

Health plans participating in the federal exchange program (think Obamacare) and Medicare will be required in 2016 to monitor and maintain online directories.  CMS online directory requirements stipulate that health plans are to communicate with their contracted providers for updates on their ability to accept new patients, changes to street address or phone number, along with any of changes affecting availability to patients.

Penalties will be assessed for inaccuracies discovered in the online provider directory – and the assessment may be steep --up to $25,000 a day, per beneficiary for Medicare Advantage plans, and up to $100 per day for those covered under the federal exchange program.

A recent study into the availability of providers in the Medicaid Managed Care program found that 43% were not participating in the Medicaid managed care plan at the listed location and could not offer appointments and 35% of providers could not be found at the location listed.

These and other issues on maintaining accurate information in provider directories was the focus of a recent MCOL infographoid, highlighted below:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.

List of Chronic Diseases for Young Adults – Add Mental Health!

By Claire Thayer, December 13, 2015

When we think about chronic conditions, we typically think about chronic diseases such as cancer, heart disease, diabetes, etc. But rarely is mental health thought of as a chronic condition. According to data in the 2014 National Survey on Drug Use and Health (NSDUH), 11.9 percent of young adults aged 18 to 25 received mental health services in the past year

It’s interesting to note that 42.3 percent of young adults who received mental health services in the past year are receiving prescription medication as their only mental health service.

A recent Health Affairs blog, The Forgotten Chronic Disease: Mental Health Among Teens And Young Adults, identified 5 primary barriers in obtaining needed mental health treatment:

• Stigma
• Inadequate screening by primary care providers
• Trouble finding treatment
• Failure to implement evidence-based therapies
• Slow implementation of research findings

Additional information:

The CBHSQ Report, Substance Abuse and Mental Health Services Administration (SAMHSA). December 8, 2015.

The Forgotten Chronic Disease: Mental Health Among Teens And Young Adults. Health Affairs Blog. October 1, 2015.

Mental Health Myths and Facts. MentalHealth.gov U.S. Department of Health & Human Services.

Provider Collaboration – Bundled Payments Top Survey Results for Impact on Medicaid Transformation

by Clive Riddle, December 11, 2015

MCOL has just released results from its second annual Medicaid Transformation e-poll of stakeholders interested in Medicaid transformation. Last year, when respondents were asked to a rank of topics for their impact on Medicaid Transformation, with 1 being the top rank, Provider Collaboration/Engagement and Risk Sharing virtually tied with State Medicaid Funding and ACA participation for the top spot (based on weighted average rank). This year, there was some separation between the two, with Provider Collaboration taking the top spot. Breaking down these results by category of respondents, providers definitively gave collaboration the top ranking, while purchasers and vendors/others results were more mixed.

When asked which type of provider collaboration would have the most impact, last year’s results were mixed, but this year bundled payments and other new payment models emerged as the clear top choice. Interestingly, perceived Medicaid ACO impact reduced this year from last, with providers seeing ACOs having less impact than purchasers or vendors/others.

Below are table of the results broken out by respondent category, along with 2015 and 2014 totals:

Taking an early Post ICD10 Transition Pulse from Five Surveys

by Clive Riddle, December 3, 2015

As time ticks by after the October 1st ICD10 transition, early survey results are coming in regarding the impact and implications for providers. Let’s take a look at these initial findings:

KPMG has just released results from a survey of 298 attendees of a Nov 9th ICD10 webcast for providers, which found:

• 28 percent saying the transition has been smooth
• 51 percent found “a few technical issues, but overall successful.”
• 11 percent described the transition as a “failure to operate in an ICD-10 environment.”

 Survey respondents listed challenges they see with ICD-10 as:

1. rejected medical claims
2. clinical documentation and physician education
3. reduced revenue from coding delays
4. information technology fixes

The survey found 42 percent of respondents said all of these challenges are part of ICD-10. 11 percent of claimants said they did not expect those challenges to arise.

46 percent of respondents said they were thinking of pursuing initiatives in clinical documentation improvement, revenue cycle optimization, and electronic health record and IT system optimization. 25 percent were pursuing none of those options.

Last month, Healthcare Informatics reported on a survey from Himagine Solutions that found “Large hospitals have reported a 30 to 45 percent productivity reduction on the inpatient side and a 20 to 40 percent productivity reduction on the outpatient side since implementation the ICD-10 codes.”

Also last month, the vendor Kareo announced that 99 percent of client claims submitted in the first month of the ICD-10 coding transition were successful, and 87 percent of clients have already been paid for at least one submitted claim. 11 days was the average time to payment for ICD-10 claims. Kareo also surveyed its customer base directly to gauge its experience with the transition. Based on customer responses, 57 percent of respondents considered the ICD-10 transition “easy” or “very easy.” Just three percent of respondents considered the transition “difficult,” or “very difficult.” The remaining 40 percent considered the event “moderate.”

Executive Insight reported that “in early October, Navicure, a claims management and patient payment solutions provider, only processed 50% of the medical claims processing it would've in pre-ICD-10 months, which could have been a result of providers' caution along with a mix of ICD-9 claims from the previous month. Towards the end of October, however, data showed that claims gradually increased to 90% of the pre-transition volume. Rejections, too, are staying in a manageable range rather than spiking like many healthcare experts anticipated.”

Finally, Information Management reported on a SERMO survey in which “physicians were asked if the new requirement to use ICD-10 has taken away time from patients. Two-thirds of responding doctors said yes. The poll of 1,249 physicians was conducted from November 20 to 30. Although doctors strongly indicated that the code switchover has detracted from patient care, that percentage is down significantly from a SERMO poll last month that asked members if ICD-10 was taking their time away from patient care. At that time, 86 percent said it had negatively impacted patient care while only 14 percent said it had not.”

The Prescription Drug Locomotive and the U.S Big Slice of the Global Rx Pie

by Clive Riddle, November 20, 2015

With prescription drug spending now having taken over the locomotive of the healthcare cost train, it behooves stakeholders to better get to know what lies on the tracks ahead. The IMS Institute for Healthcare Informatics has just released the 47-page report: Global Medicines Use in 2020:  Outlook and Implications in which they examine the global use of medicines and spending levels in 2020, including small and large molecules, brands and generics, those dispensed in retail pharmaceutics as well as those used in hospital or clinic settings.

IMS tells us the report “found that total global spend for pharmaceuticals will increase by $349 billion on a constant-dollar basis, compared with $182 billion during the past five years. Spending is measured at the ex-manufacturer level before adjusting for rebates, discounts, taxes and other adjustments that affect net sales received by manufacturers. The impact of these factors is estimated to reduce growth by $90 billion, or approximately 25 percent of the growth forecast through 2020.”

The report also tells as that “developed markets will contribute 63% of the spending, led by the U.S.  Original brands will represent 52% of spending and 85% of global spending will be for medicines to treat non-communicable diseases.” 

A pie chart exhibit in the report is telling in how large the U.S. slice of the medicine spending pie is projected for 2020 – 41% of global spending, with the next closest slice being the entire European Union at 13%.

Report findings on spending impacting U.S. costs include:

• Brand spending in developed markets will rise by $298 billion as new products are launched and as price increases are applied in the U.S., most of which will be offset by off-invoice discounts and rebates. 
• Patent expiries are expected to result in $178 billion in reduced spending on branded products, including $41 billion in savings on biologics as biosimilars become more widely adopted. 
• Many of the newest treatments are specialty medicines used to address chronic, rare or genetic diseases and yielding significant clinical value. By 2020, global spending on these medicines is expected to reach 28 percent of the total.
• More than 90 percent of U.S. medicines will be dispensed as generics by 2020. Generic medicines will continue to provide the vast majority of the prescription drug usage in the U.S., rising from 88 percent to 91-92 percent of all prescriptions dispensed by 2020. 
• Spending on medicines in the U.S. will reach $560-590 billion, a 34 percent increase in spending over 2015 on an invoice price basis. 
• While invoice price growth – which does not reflect discounts and rebates received by payers – is expected to continue at historic levels during the next five years, net price trends for protected brands will remain constrained by payers and competition, resulting in 5-7 percent annual price increases. 

Some international findings include:

• Global medicine use in 2020 will reach 4.5 trillion doses, up 24 percent from 2015.
• Most of the global increase in use of medicines over the next five years will take place in pharmerging markets, with India, China, Brazil and Indonesia representing nearly half of that growth.
• Generics, non-original branded and over the counter (OTC) products will account for 88 percent of total medicine use in pharmerging markets by 2020, and provide the greatest contribution to increased access to medicines in those countries. 
• Newer specialty medicines, which typically have low adoption rates in pharmerging countries lacking the necessary healthcare infrastructure, will represent less than one percent of the total volume in those markets.
• Global spending will grow by 29-32 percent through 2020, compared with an increase of 35 percent in the prior five years. 
• Spending levels will be driven by branded drugs primarily in developed markets, along with the greater use of generics in pharmerging markets—offset by the impact of patent expiries. 

The Impact of Inaccurate Patient Data

By Claire Thayer, November 18, 2015

Matching of patient records to the correct person is of utmost importance in terms of patient safety and quality of care, yet gets complicated when organizations share their records electronically either with different EHR platforms or across multiple healthcare systems as well as when patients use different settings to receive their care.   The Patient Identification and Matching Initiative, sponsored by the Office of the National Coordinator for Health Information Technology (ONC), focused on identifying incremental steps to help ensure the accuracy of every patient’s identity. A few of the key findings outlined in the ONC’s  Patient Identification and Matching Final Report report suggest:

• Standardized patient identifying attributes should be required in the relevant exchange transactions.
• Any changes to patient data attributes in exchange transactions should be coordinated with organizations working on parallel efforts to standardize healthcare transactions.
• Certification criteria should be introduced that require certified EHR technology (CEHRT) to capture the data attributes that would be required in the standardized patient identifying attributes.
• Certification criteria that requires CEHRT that performs patient matching to demonstrate the ability to generate and provide to end users reports that detail potential duplicate patient records should be considered.

Also referenced in the extensive 85+ page ONC report: One-fifth of CIOs surveyed by College of Healthcare Information Management Executives (CHIME) indicated that at least one patient in the last year suffered an adverse event, due to mis-matched records. While exact cost impact is hard to gauge, one health system reported that poor patient matching is associated with an operational cost of fixing a duplicate record at $60. The overall impact of inaccurate patient data was the focus of a recent MCOL infographoid, highlighted below:

 

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.

Someone Must Be On Drugs

By Kim Bellard, November 11, 2015

As is probably true for many of you, I'm busy looking at health plan open enrollment options for 2016. The past few years I've been guilty of just sticking with the same plan, so it has been too long since I've had to shop. Plus, I'm helping my mother pick her Medicare options for next year. All in all, I'm awash with health plan options.

I've got different levels of HMO, POS, and PPO options, from multiple carriers. My mother has many choices of Medicare Supplements, with Part D options, as well as Medicare Advantage options (both HMO and PPO), each from multiple health insurers.

It's not that there aren't plenty of options. It's just that, well, the options are so damn confusing.

Austin Frakt recently wrote in The New York Times about this problem. He cited a few studies specifically on point about health insurance, such as:
 

• One study found that 71% of consumers couldn't identify basic cost-sharing features;
• Less than a third of consumers in another study could correctly answer questions about their current coverage;
• Researchers found that consumers tended to choose plans labeled "gold" -- even when the researchers switched the "gold" and "bronze" designations, keeping all other plan details the same.

Many consumers tend to stick with their existing choice even when better options are available, simply because switching or even shopping is perceived as too complicated.

I'm most frustrated with prescription drug coverage. Not that long ago, the only variables were the copays for generic versus brand drugs. Now there are often five or six different tiers of coverage -- such as preferred generic, other generic, preferred brand, other brand, and "specialty" -- with different copays or coinsurance at each tier, each of which can also vary by retail versus mail order, and for "preferred pharmacies." 

Moreover, the health plan's formulary, which determines what tier a drug is in, can change at any time. Plus, as has been illustrated recently, the prices of any specific drug can change without notice, sometimes dramatically. If either of those happens to one of your drugs, say goodbye to your budget.

It's all enough to make your head spin.

The health plans would no doubt argue that their various approaches to prescription drug coverage are necessary in their efforts to control ever-rising costs for prescription drug costs. Well, they aren't working.

Prescription drug prices continue to soar, even for generic drugs. They have become a political issue, with the Senate now launching a bipartisan investigation into prescription drug pricing and the Presidential hopefuls from both parties being forced to take positions on how they would control them. For once, politicians are in sync with their constituents; the latest Kaiser Health Tracking Poll found that affordability of prescription drugs tops their priority list for Congress and the President.

I've long thought that the pharmaceutical industry was ahead of the rest of the health care industry. They were doing electronic submission of claims over forty years ago. They pushed for direct-to-consumer advertising in the late 1980's, and quickly jumped on that bandwagon. While providers only grudgingly adopted EHRs, they quickly moved to e-prescribing.  Other health providers had to move away from discounted charges twenty years ago, whereas drug companies still mostly use that approach and are only starting to tip-toe into more "value-based" approaches, as with the recent Harvard Pilgrim-Amgen deal.

And the backroom rebate deals between drug manufacturers and payors put a lie to any claim that at least drug pricing is transparent.

It's not only prescription drug coverage that is increasingly complicated, what with narrow networks, gatekeepers, different copays for different types of medical services, bundled pricing, or numerous other gimmicks used in health plan designs.  The collateral damage in the ongoing payor-provider arms race is consumer understanding. 

Making things more complicated for consumers is not the answer.

In typical fashion, the health care industry has tried to address the confusion by creating a new industry that doesn't actually solve the problem but does manage to introduce new costs. Many enrollment sites --the Medicare plan finder, public exchanges, private exchanges, broker sites like ehealth, or health insurer sites -- offer tools that purport to estimate your costs under your various health plan options. Yet consumers still don't understand their options.

We keep treating health care as a multi-party arrangement between providers/health plans/employers/government/consumers, which is why everything ends up so complicated. Drug company rebates or medical device manufacturers' payments to providers are prime examples of the kind of insider trading that goes on. It's usually the consumers that come last. And that's the problem.

I think back to 1990's cell phone plans. Consumers never knew what their next bill would bring, between peak/non-peak minutes and the infamous roaming charges. No one liked it, no one understood it, and for several years no one did anything about it. Then AT&T came out with a flat rate plan that essentially said, "we'll worry about all those for you," and soon all carriers had to adopt a version of it.

I keep hoping for that kind of breakthrough with health insurance.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Juggling Risk

By Cathy Eddy, Health Plan Alliance, November 4, 2015

The insurance industry is based on managing risk. Health insurance has managed medical costs for years. With the Affordable Care Act, the federal government has set a minimum target for the medical loss ratio at 80-85%.

But managing risk has become so much more challenging for the health care industry than just managing medical claims. We are now juggling lots of types of risk at the same time. We are hoping not to drop the ball on any of these or it could mean losing millions of dollars or even going out of business. The number of Co-ops that have closed this year is a clear indication of just how hard it is to do business in the public exchanges.

Here are the types of risk that health plans are now simultaneously juggling:

• Risk adjustment
• ORSA
• Risk Corridors
• Value-based reimbursement
• Bundled payments
• Upside risk and maybe downside risk
• Cyber Risk
• Business interruption and disaster recovery
• Key employee risk

And the Alliance health plans are right in the middle of these challenges. As we are planning our programming for 2016, we are looking at ways to share how plans are trying to align with providers to be successful.

During 2016, the Alliance will expand its membership to include health systems that our members identify. We will discuss their strategic priorities, build informational profiles on these systems and develop our meeting agendas to focus on the areas where our health plans intersect with the providers. We hope that health systems will take advantage of the content at these meetings:

• April 13-14  Clinical Integration and Payer/Provider Partnerships
• June 7:  Board and Governance Strategic Issues and Performance
• June 8-9: Health System/Health Plan Strategic Alignment
• Sept 28-30 Care Management/Care Coordination
• Oct 19-20: Managing Risk Reimbursement Arrangements
• Dec 6-8 Managing Populations with Data

We will also be collaborating with other organizations that are working with providers to serve as a resource for content. Many providers have indicated an interest in taking on more risk and either starting up a health plan or working with partners to offer a private label plan in their market. We would like to leverage the Alliance’s 20 years of experience in the provider-sponsored health plan space to help those providers that are entering or reentering the health plan business.

As the rest of the insurance industry consolidates into a few very large players, we’d like to see integrated delivery system with health plans and those independent health plans working closely with providers be able to offer a viable option to the other types of health insurers.

And to be successful, our plans and health systems will need to juggle all types of risk collaboratively.

A Definitive Study and Reference Resource on Healthcare Cost and Utilization

By Clive Riddle, October 30, 2015

The Health Care Cost Institute (HCCI) has just released its free 26-page 2014 Health Care Cost and Utilization Report, and 92-page Appendix, which provide a definitive examination of detailed U.S. health care cost and utilization component line items and demographics. Their study – as with other major cost studies released this year – put a lot of focus on increases in prescription drug prices.

They found the costs increased 3.4 percent in 2014, with overall utilization decreasing somewhat, while prices for all categories of services rose.  Average spending per person was $4,967, up $163, including out-of-pocket spending of $810 that grew 2.2%.

With prescription costs standing out, they note that “despite a nearly 16 percent decrease in use of brand prescriptions, spending on these prescriptions jumped by $45 per capita in 2014—an increase four times larger than in 2013. Much of this increase was due to use of high-priced Hepatitis C drugs Olysio, Sovaldi, and Harvoni, which became available starting in late 2013.”

Here’s some other key findings:

• “In 2014, the largest decline in use (-2.7%) was for acute admissions, which fell by 1 admission per 1,000 individuals. The smallest decline in use (-0.9%) was for outpatient visits, which fell by 3 visits per 1,000 individuals.”
• “The smallest average price increase was for professional services (3.1%), an increase of $3 per service. The largest average price increase was for acute inpatient admissions (4.6%), an increase of $831 per admission.”
• “Spending out of pocket on acute inpatient admissions (–$1) and on brand (–$9) and generic (–$4) prescriptions decreased by $14 per capita in 2014 compared to the previous year, while spending out of pocket on outpatient ($16) and professional ($15) services increased by a total of $31 per capita in 2014.”
• “Every year between 2010 and 2014, out-of-pocket spending was higher by women than by men. This difference grew every year, reaching $237 in 2014.”
• “The difference in spending between the oldest and youngest age groups studied increased every year studied: from $6,281 in 2010 to $6,806 in 2014. In 2014, spending was $2,660 for children ages 0-18 and $9,466 for pre-Medicare adults, ages 55-64.”