AcCOUNTable Care? Engagement Is Not Required, Just Send Dollars

By Cyndy Nayer, August 4, 2011

It's been a long few weeks, and temperatures have not subsided.  The AC needed--the cooling off that would come with accountability throughout the stakeholders of consumers, patients, physicians, health plans, health services, pharma-device-biospecialties, etc.-- is not on the horizon.    Today, the heated up consumers have shown they have lost confidence in our economy, and the stockmarket dropped 350 points already today. The Congress is worn out from its weary negotiations, and members have recessed for 5 weeks, leaving less than 90 days for negotiations by the SuperCommittee, who will, in turn, "solve" the money crisis, we hope.  But, the money counting has begun. Does this matter to health care, employee engagement, and accountable care?  It sure does, as it reflects the impact that loss of revenue and loss of taxes will have on our ability to get health care coverage for more citizens.

Then, another stunning blow:  In an overlooked clause in the PPACA legislation, Massachusetts hospitals will recoup $275M in Medicare reimbursements, and 7 other states will also be receiving new Medicare dollars, while the rest of the states get hit for these dollar transfers.  The article, in the Associated Press, explains it this way:

Hospitals in Massachusetts will reap an annual windfall of $275 million through a loophole enshrined in the new health care law. Hospitals in most other states will get less money as a result.

Hospital association executives in other states are up in arms over the news, buried in a Medicare regulation issued Monday. It comes at a time when hospitals face more cuts under the newly signed federal debt deal.

"If I could think of a better word than outrageous, I would come up with it," said Steve Brenton, president of the Wisconsin Hospital Association.

Even Medicare says it is concerned about "manipulation" of its inpatient payment rules to create big rewards for one state at the expense of others.

Hospitals in 41 states will lose money as result of the change. The biggest loser: New York, which is out $47.5 million.

Seven states come out ahead, though none do as well as Massachusetts. Runner-up New Jersey stands to gain $54 million, or about 20 percent of the Massachusetts windfall.

President Barack Obama's health care overhaul was supposed to lead to reforms in Medicare's byzantine payment system. Critics say this latest twist will encourage hospitals and other big players to game the system in a scramble for increasingly scarce taxpayer dollars.

Hospitals are paid under a complex set of formulas for their services for Medicare recipients.  When these kinds of shifts are made, the hospitals, of course, must take the hit--unless they are in the "lucky" states.  But, as you may imagine, these less-fortunate hospitals have bills to pay, too.  So, they often raise pricing on the other national payers of health care:  the employers.  This means we can expect to see the employer-provided costs of health insurance to go up, which means employers have one of 3 alternatives:

1/ pay the increase.  But their sales are down (witness the plunging consumer spends) and their insured population (workers, families) have already absorbed100%+ increases in insurance costs over the past 10 years;

2/ pass the increase to their covered lives.  See #1 above, and note that recently Kaiser Family Foundation published research that showed that 61% of the uninsured in America are part of a family with a fulltime employee who is offered affordable health care and chooses to not take it. Passing costs to employees who choose not to take it does not make a healthier employee nor a healthier corporation.

3/ do not offer insurance.  Well, it will sure save dollars for America's employers (up to $13,700 per family in 2010).  But it certainly will not increase employee engagement in their health or performance, and it will not add to the total health improvement for employers, who are experiencing the aging and sicker workforces that have been documented over and over again.

So, Turning on the AC, as noted in my previous blog, hasn't quite worked so well in the past few weeks.  Accountable Care may well have become AcCOUNTable care, emphasis on the count.  I hope that those that received the reimbursed dollars will be able to support the only reasonable outcome:  send people to those states for the coverage they will not find in their own. Another reason for Medical Travel, but, alas, it's not about improved health.  It's about improved reimbursement, just as many have feared.

Milliman: More Room in the Medicaid Inn Needed in 2014

By Clive Riddle, July 29, 2011

Milliman’s Robert Damler and Paul Houchens have just released a white paper:  “Social Security and modified adjusted gross income: Estimated impact to Medicaid enrollment under the PPACA.”

Their abstract states “The Patient Protection and Affordable Care Act (PPACA) provides for an expansion of Medicaid eligibility for individuals who have an annual household income at or below 138% (including the 5% income exclusion) of the federal poverty level (FPL). Recent discussion has turned to individuals who may qualify for Medicaid even though their households have significant Social Security or Supplemental Security Income (SSI). Using the 2009 American Community Survey (ACS) data published by the U.S. Census Bureau, this paper explores the potential number of individuals receiving Social Security or SSI and other family members within the household who may have been excluded from the Medicaid population expansion analyses because of the differences between defining household income under the public surveys and the modified adjusted gross income (MAGI). The MAGI methodology will be used to determine eligibility for Medicaid and exchange subsidies under the PPACA.”

What this all means is Damler and Houchens have identified and quantified an additional source of potential Medicaid enrollment that had not figured into most Medicaid projections currently in use. They do caution that while their results are based on the 2009 American Community Survey, “results using other publicly available survey data or internal government resources may differ significantly.” Hence the different numbers currently in use.

But what if Damler and Houchens are right?  They conclude that “based on calculating household income with and without non-taxable Social Security and Supplemental Security Income included, we estimate from the ACS data that approximately 2.3 million additional individuals nationwide will be eligible for Medicaid beginning in 2014, because of the exclusion or partial exclusion of these income sources.”

However, Damler and Houchens note, these 2.3 million bodies didn’t just appear from nowhere.  They would have largely qualified for subsidies anyway under the state health insurance exchanges. The added cost implications are in who pays for them (state vs. federal-  and their Medicaid eligibility increases state costs according to the authors) as well as benefit design (Medicaid benefits are richer, thus the costs will be higher under the Medicaid program.)

The authors also point out that not all 2.3 million newly Medicaid eligible persons will “take up” Medicaid enrollment. They estimate 897,000 (as of 2009) currently have employer coverage and many will elect to remain under those plans. Another 86,000 have military coverage who may also retain current coverage. Less likely to stay put would be 329,000 paying for their own individual coverage or the 698,000 uninsured (these numbers add up to less than 2.3 million as they reflect the 2009 actual ACS data, before adjustment to 2014 numbers.)

Regardless,  states, HIX and Medicaid stakeholders should pay attention to the implications. The authors do provide state by state estimates in their analysis.

Hot Temperatures, Hot Rhetoric: Turn on the AC

By Cyndy Nayer, July 18, 2011

The news shows this Sunday morning focused on the debt ceiling, a concept causing higher angst and tempers across our very hot country.  Of course, a large part of the discussion is the cost of health care in the country, and the political v clinical costs of cutting benefits and resultant strains on the health care delivery system.  So, on this sunny/rainy day in southwest Florida, typical for this time of year, I began thinking about a concept and a slide that I created about 3 years ago.  As the weather here and across the country is speeding to 100+ degrees, the body screams “cool it off,” much like the body politic is screaming about the debt ceiling.  That conflict of politics, health care, and hot temperatures was actually, was the genesis of the slide, and the concept,  that I created called Turn on the AC. 

A play on words, as noted, is often how I begin to frame the “what ifs” in my thoughts.  What if we could cool off the…..for just a bit and have a conversation to reconsider some alternatives—I remember thinking just that in late 2008, as the economy tanked and my speaking engagements picked up.  At the time, I was using the frame of “7 Wonders of Health Value Innovation,” teaching the attendees at various summits how value-based benefit designs could provide relief to a stressed corporate America.  I also remember one of my colleagues telling me, “Cyndy, a little less gloom and doom.”  But that was not really what I was proposing.  Rather, I was setting up a “what if” scenario of plummeting housing market, lower tax revenues, job cuts, hospital distress due to lower disproportionate share reimbursement (this is the Medicaid reimbursement to hospitals for providing care when there is no insurance coverage), public employees losing jobs due to lower tax revenues from lower property values, and so on.

The bad news is, 3 years later, the problem has not gone away.  Now, it’s enveloped in a bigger problem called the debt ceiling.  And this blog is NOT about the debt ceiling.  I have many things to say about debt ceiling, and none of them would I like in print, except to say this game that’s going on in Washington is not helping tax revenues, corporations, working people, unemployed people, health care access, or property valuations.  Back to the subject…

The set-up was, and still is, about the uncomfortable feeling from hot weather.  Debt ceilings contribute to the hot weather feelings, but turning on the AC can help.  We need a cool-down, one in which we remember our basic focus is a healthy, engaged, high performing America.  So, with that in mind, I update “Turn on the AC.”

1.     Accountable Consumers.  At the crux of the problem of escalating health care costs is the entitlement v accountability debate within the consumer population.  Forget, for just a moment, whether insurance is involved.  Each of us has a responsibility to care for our health as the one investment that needs to be fully-funded for our lifetime.  There are some fundamentals here that should be reiterated.

a.     Set goals and write them down.  If you’ve heard me speak, you know I am quite enthusiastic about personal health records.  As a former trainer of fitness trainers/employer health strategist/chair of the Governor’s Council on Health and Fitness, the number one behavior change strategy that I proposed then and continue to enforce is “write it down, measure it daily.”  “You can’t manage what you don’t measure,” applies to corporate strategy, so but it’s a curious item that folks don’t realize the same applies to them:  you have to set goals (small, large), then measure your success in attaining them.  No exceptions.

b.     Get the preventive care that you need.  Love it or hate it, the Accountable Care Act has ingrained this into our lives now.  In the Health Value Accelerator^TM that is being deployed in many communities now, I’m seeing just how much of an “un-engagement” this is.  In many companies, particularly larger companies (over 10,000 employees), there is less than 10% participation in primary care for prevention.  Yet, there is no cheaper investment any consumer/patient/employee/mother/father/child can make:  get your physical, your immunizations, your age-appropriate screenings.

c.      Get your family involved.  If you are the health advocate for your family, share the info you are learning.  Take the kids on a walk after dinner.  In my house, it’s about encouraging my husband to exercise, so I “coax” our fabulous dog, Phoebe, to take him for walks.  Families that eat healthy and exercise tend to forestall health issues.

d.     Spread the word at work.  Share your story of success, of challenges.  Volunteer to coordinate walking groups or healthy vending snacks.  Make your voice heard on health improvement ideas. 

e.     Reward yourself.  If you are doing well on your journey, don’t reward yourself with the hot fudge sundae, but, instead, perhaps a manicure or a movie?  New walking shoes?  Even a lovely glass of wine?  Consumer-driven rewards are completely satisfying, as no one else is dictating either your behaviors or your rewards.  Step up to identifying those rewards that will keep you motivated. 

The key message here is that YOU are responsible for your health—your doctor, your counselor, your fitness trainer, your financial advisor are your consultants, not your health-owners.  You simply must assume this responsibility or be subject to the whims of the market place and latest insurance products.  If you want some semblance of normalcy in your health, own it, track it, demand it, enjoy it. 

2.     Accountable Corporations.  Business is the backbone of America.  Business provides revenue for us to buy houses, support social causes, and even campaign for elected officials.  But business that creates barriers for its employees to get health is not a healthy business.  Wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion spent in the United States, more than half of all health spending.  (PriceWaterhouseCooper)  Whether your position is that the ACA is going to help businesses or hurt businesses with its legislation, realize that every week there are new rulings, and American business cannot afford to waste one minute waiting for “final rulings.” 

Recently we all read that one consulting enterprise predicted what many of us saw as an abnormally high exit from corporate health benefits.  In our survey from the Center for Health Value Innovation (176 companies, 4 million lives), we saw no numbers that came close to this prediction, and, evidently, neither did many of the other large consulting companies.  But what we did hear last week was another challenge for American business:  new rules on the Health Insurance Exchanges said that states did not have to launch them by 2014—the date can be 2015, or perhaps beyond. 

What this means to American businesses is, once again, the heat is on, and the ball is back in your court.  There’s no time to waste in getting your employees healthy, re-engaging them in managing their health.  Value-based designs are one tool, and I don’t have to reinforce that message—it’s also in the ACA:  reduce beneficiary out-of-pocket costs for valuable services.  But take it a bit further:  consider those rewards, or incentives, that are outside of the insurance plan design.  How about a contest for movie tickets?  How about a healthy lunch for the business channel with the most people who get their flu shots or track 150 minutes of exercise in one week?  Think of games and challenges that cause an uptake in healthy behaviors, and applaud your champions.  Create a business expectation that people who work at your company are expected to manage their health and that the company respects all efforts for improved health.  Create a culture of engagement, in which employees bolster employees’ efforts at health promotion. Colleagues at Journal of Occupational and Environment Medicine, Pam Hymel MD and others, have written extensively about the link of health to corporate performance.  Build your culture of engagement so that you create accountability from the C-Suite to the receptionist and beyond.

3.     Accountable Care.  This, too, is part of the national and local change that is occurring with the ACA.  But in 2008, and even now (hard to believe that the measures are the same 3 years later), my focus was on the delivery system to deliver health as we want and measure it:  healing with less infections, less mistakes, less days absent, less avoidable pain and suffering, less use of unneeded diagnostics and treatments; care with more compassion, more time to listen, more care coordination so that people are not “on their own”; more interoperability so that records support efficient care. 

The 2008 AC slide was the genesis of the Outcomes-Based Contracting platform that has become the extension of everything value-based and patient-provider-engaging.  Identifying high performance providers and systems, creating benefits plans that guide consumers to competency and better health care, and linking these delivery system improvements to the shared rewards for all of the stakeholders, is true American engineering.  Removing friction and competition for dollars, installing competition for a “better outcome” is the foundation of accountable care.  Medical Homes, care coordination, benefits advocates who coach beneficiaries on improved behaviors and their link to lower premiums or expanded services—all of these are part of Accountable Care, but only if we hold our principles intact:  efficiency, effective care, and appropriate care delivered in a timely, competent fashion.  Self-insured employers understand the link and are searching for ways to direct contract with organizations so that, togetherm the accountability link is communicated. 

4.     Accountable Communities.  When the AC is going full-blast, when the accountable consumers support the efforts of the accountable corporations, who, in turn, provide healthcare coverage to the employees through identification and purchasing of outcomes-focused suppliers, the community at-large benefits.  Accountability grows in small increments, but its effect is felt throughout the families and corporations that benefit from the improved service lines and improved health status of the citizens.   When 1 or 3 or 7 corporations demand hospital-based performance metrics, everyone who uses that hospital benefits from the improved quality.  When 1 or 3 or 7 corporations demand to pay for disease management that builds engagement (instead of numbers of calls made to beneficiaries who may never engage), the systems for disease management change and the others in the community benefit.  When benefits coaches help employees and their families not only choose the right insurance plan but use it for full maximum value, they teach other families how to maximize their health benefits.  When few people use the emergency room for primary care, and instead use lower-cost onsite or offsite clinics or telehealth Emergency Room visits, more resources are saved for under-insured and uninsured folks—more accountability for choice leads to better use of existing resources.

What the AC focus does is create engagement across single, multiple, and varied participants in the health value supply chain.  AC shares the requirement of engagement and builds the outcome of accessible, affordable, actionable care.  AC rewards all of the engaged participants with lower costs and fuller wallets due to appropriate care at the right resource at the right time.  AC limits inappropriate use, instability in resource budgets, and insufficient funds for treatments that could have been managed more effectively and more efficiently “upstream,” when they didn’t cost so very much in dollars, pain, and stress.

So, on these hot days of summer, consider cooling down and challenging yourself and your constituents to a better outcome.  Turn up the AC, from the Accountable Consumer to the Accountable Corporation, to the Accountable Care and the Accountable Community.  Walk earlier, when it’s not so hard to breathe.  Consume more locally-grown fruits and vegetables to protect your heart on these hot days and protect the revenues in your community.  Create co-worker opportunities to learn and share improved health management techniques. 

And don't forget about that debt ceiling.  Be the Accountable Constituent and let your local and national representatives know how you feel.  It will reduce your body temperature and lower your stress levels.  We could all use that right now.

Health Insurance is Good For You (?)

Kim Bellard, July 11, 2011

Finally, a study that indicates health insurance is good for you! 

Granted, the study looked at Medicaid, for a low-income population, in a specific state, but in a time when health insurers are commonly castigated as villains, perhaps they can take some comfort in the findings.  Or perhaps not.

A brief recap of the study.  In 2008 Oregon realized it had funds to expand their Medicaid rolls (having substantially dropped them several years earlier).  They knew demand would exceed the number of slots available, so they set up a lottery that allowed potentially eligible consumers to enter; almost 80,000 did.  Researchers realized they finally had a classic study design – populations randomly selected into those who got health insurance and those who remained uninsured.  This appears to be the first such ever done when it comes to health insurance. 

The results from the first year indicate that those with health insurance did appear to benefit.  I won’t recap all the results, but some examples include that the newly insured saw doctors 35% more often, went to the hospital 30% more often, got mammograms 60% more often, and were 25 percentage points more likely to say their health was good or excellent.

Not surprisingly, they also cost 25% more.

The increased utilization may be partly an artifact of the so-called “woodwork” effect, i.e., people tend to use benefits more when they first get them (or, conversely, are about to lose them).  The researchers are continuing to mine the data, looking in particular at longer term impacts on health results.  Those extra doctor or hospital visits may or may not actually be improving health; several of my previous blogs (e.g., here) have discussed some of the overuse and errors that appear to be prevalent in the health care system. 

Earlier studies have tried to quantify the impact of health insurance, or lack thereof, have on health outcomes, such as those by the IOM or Mathematica.  Numbers like 44,000 deaths annually attributable to lack of health insurance have been claimed.  It’s not even only a matter of the uninsured not receiving services; even when they obtain services they may have worse outcomes.  Another recently released study indicates that payor status impacts mortality and morbidity for patients undergoing cardiac value operations, with privately insured patients faring better than either the uninsured or those with Medicaid.  So, any way you cut it, having insurance seems like a good thing. 

Clive Riddle recently posted a blog that reminded us how disproportionate health expenditures are distributed, with 5% of the population accounting for about half of the spending.  The fifty percent of the population with the lowest spending accounted for only 3% of all spending.  And that, for insurance purposes, is good.  Historically, and still true in other sectors, insurance is supposed to protect against unpredictable and catastrophic losses.  Anyone can get hit by lightening, catch a rare virus, or develop cancer.  Protection for the high expenses caused by relatively rare events that are outside of the individual’s control is what insurance does best. 

Insurance doesn’t work well at all when the insureds either already are incurring expenses or know they soon will be; for example, persons with chronic conditions.  People in this situation are basically depending on the other insured people to subsidize their expenses.  The data that Clive cited in his blog also noted the persistence of high spending for persons with chronic conditions; high spenders are no longer primarily one-time catastrophic cases, but more often now involve ongoing situations.  At some point, low cost people may balk at continuing to subsidize higher cost persons who have ongoing expenses; many would argue that this is exactly what is happening already in the individual market.

Don’t get me wrong; I am all in favor of reducing financial barriers to care for low-income people.  I’m all in favor of ensuring that health expenses don’t bankrupt families.  Medicaid has many, many flaws, but in any health care system we’re likely to get there will need to be some kind of special consideration for populations on whom financial burdens of health care fall hardest.  Where I start to scratch my head is how far those special considerations need to apply.

A common perception seems to be that without essentially full or low cost coverage for services, people will not get them.  The antipathy towards high deductible or consumer-directed health plans reflect this, with critics fearful that consumers will not behave responsibly when they are accountable for the initial deductible of a few thousand dollars.  PPACA similarly added requirements for coverage without cost-sharing of various preventive services, on the premise that consumers are too irresponsible to obtain services if they bear any financial burden when obtaining them.

A little Insurance 101 might be helpful.  If 100 people are covered, and one of them is likely to incur a $100 charge, then charging an annual premium of $1 per person (plus an add-on for administrative overhead) suffices.  However, if every person was going to get, say, an annual preventive visit that cost $70, then each person will have to pay a $70 annual premium (plus the add-on for administrative overhead) to pay for that visit.   There is no insurance, simply dollar trading with a mark-up. 

For skeptics who say people are irresponsible and won’t obtain appropriate services if there is cost-sharing for them, then I would argue (and have, here) that we have a far bigger problem.  Rather than waiving any financial involvement from patients, we’d be better off figuring out how to motivate patients to take better care of themselves and how to motivate physicians to ensure their patients are doing so. 

I.e., it’s not the coverage; it’s the behavior.  Coverage is necessary but not sufficient.  Sadly, we’ve built our delivery system and much of our health behavior around what insurance pays for rather than around makes the most sense from a health outcomes standpoint.  Or perhaps we’ve built our coverage around what is easy to pay for rather than what we should pay for.   Either way, it’s a problem.

Keeping It Clean

By Laurie Gelb, July 7, 2011

Recently I became aware that my husband’s national pharmacy record contains not only his own data, but that of another patient.

The root cause: the other patient, in another state, with a different payor, was never asked to confirm his address when he picked up his meds. He has the same DOB, first and last name as my husband, though their middle initials, and, of course addresses, are different. Naturally, a "boomer" generation yields birth date clusters. Had anyone ever asked him one simple question at each pickup, “What is your address?” and compared it with the primary address on screen, I wouldn't be writing this.

Between the pharmacy that repeatedly pulled up the wrong record, me, the health plan, the Web team and the pharmacy’s HQ, there have been about 20 phone calls + a series of logins to investigate and re-separate the records of these two patients. I have participated in about half of those. I was told that “one other case” has occurred in memory, meaning probably thousands as yet undetected or unresolved.

A month since I first notified the pharmacy of the issue, the incorrect data are still mingled, though not for lack of trying. As a last resort, my husband’s record has been deleted and re-created, so far with two sets of login credentials for the new record, neither of which works.

Now the question for your EHR vendor: what automated internal validity checks are run on the data populating the record associated with a single MR number, other than obvious single-field validations like date formats? We've already seen the error rate in e-Rx. An EHR selling point is medication alerts. We would expect a pharmacy record to do as well, no? However,  for months now, no edits or alerts have popped up, though the combination of my husband and his counterpart results in a patient who has been on two macrolides, a steroid, warfarin, rx NSAID, ED drug, opiate and four antihypertensives, among other things.

So to your knowledge, do clinicians entering EHR data routinely verify anything other than name? Or do they simply presume the applicability of a paper chart that someone else pulled, or the EHR that they just opened? We certainly can’t tell ourselves that they would always spot internal inconsistencies.

No doubt accidental merges have already occurred in EHRs. And clearly the structure underlying most EHRs (if not all) would have a difficult time backing out a large quantity of data and re-associating it with a second identifier, until we really standardize import/export formats. 
And is it the clinician's job to reassign data into the appropriate records?

Certainly there are HIPAA implications as accounting of disclosures becomes more robust. With an increasingly cloud-based environment but no über-record, contradictory information will find its way into multiple databases, with little impetus or procedure for reconciliation.  I don't see the words “cleaning” or “data validation” anywhere in the PCAST HIT report, or in too many near-term HIT agendas. 

My pharmacy woes don't bode well for the far more complex EHR. As it happens, I've seen errors in every personally-verifiable EHR I've ever skimmed, including at sites used as Federal models. And if I weren’t ordering refills via mail order, I would never have seen the merge, with unforeseeable consequences.

For example, my husband wears a MedicAlert bracelet, linked to an accurate drug list. In an ER, which list would a physician believe: the one from a pharmacy, that a fully functional EHR will link in, or the “self-reported” one? But the former would be dangerously misleading, and, in fact, would also call the list of conditions on my husband’s wrist and his PHR into question. Then what?

Probability of 100% human verification in the next decade? Zero, unless you design systems that require it. Of course, there are many solutions for positive ID, from biometrics to unique credentials. All require time and money. Whose?

In the zero payment for errors mindset, as EHRs become the go-to reference, who does the cleanup and how? And why -- what are the incentives for doing so? The answers to these questions may influence your cost trend over the next few years than we yet know.

An Extreme Concentration of Expenditures

by Clive Riddle, June 30, 2011

NIHCM Foundation has released a new data brief: Understanding U.S. Health Care Spending – a fifteen page report based on analysis of data from the National Health Expenditure Accounts from CMS and the Medical Expenditure Panel Survey from AHRQ.

NICHM emphasizes that their “analyses document the extreme concentration of expenditures, with just 5 percent of the population responsible for almost half of all spending, and demonstrate the importance of rising spending for hospital and physician services as the primary drivers of expenditure growth.”

Here’s some selected data making these and other points, from their report:

• National Health Expenditures in 2009 annually averaged $8,086 and 17.6% of the GDP, compared to $4,599 and 13.8% ten years earlier in 1999.


• 84% of this spending covers personal health care services and products, including $2,471 annually for hospital care; $1,646 for physicians & clinical services;  $548 for dental & other professional services; $1,066 for home health and long term care; and $1,066 for prescription drugs and DME


• The remaining 16% ($1,289 annually) of national health spending is for public program administration, public health and investment.


• Analyzing portions of the population (civilian, non-institutionalized) and the percentage of health care expenditures they represent (using 2008 data): 15.6% of the population had no health care spending; 50% with the lowest spending accounted for only 3.1% of expenditures; while 63.6% of all spending was incurred by the top 10% of the population with the highest spending; 47.5% of spending by the top 5%; and 20.2% of spending by the top 1%.


• Put another way, the lowest 50% of the population for health care spending averaged $233 annually, while the top 50% average $7,317. The top 30% averaged $11,196; the top 10% averaged $23,992; the top 5% averaged $35,820; and the top 1% averaged $76,476


• Considering proportions of spending by age, those age 65 and up account for 3.6% of the population in the lowest 50% of spending; but 45.1% of the population in the top 5% of spending


• Regarding drivers of the change in healthcare spending from 2005 to 2009 (which totaled an average increase of $1,259 per capita during that time): hospitals accounted for 34% of the increase; physician & clinical services accounted for 18%;  home health and long term care accounted for 16%; prescription drugs and DME accounted for 14%; other spending accounted for 12%; and dental and other professional services accounted for 6%

The report concludes that “these systemic factors affect growth in both public and private health spending:”

• new medical technology


• growing rates of obesity


• fee-for-service payment incentives


• growing economic prosperity (remember the timeframe starts in 2005 and ends in 2009)


• expanding insurance coverage (Medicaid – not commercial)


• defensive medicine and more intensive use of diagnostic testing


• an aging population

Do We Really Want Better Health?

By Kim Bellard, June 20, 2011

There are times when I despair about the prospects for improving our health care system.

To illustrate, let me give some examples – two from the physicians’ standpoint, two from the patients’ standpoint – and then see what we might conclude. 

Recently JAMA reported the results of a study by Dr. William Borden and others on the treatment of heart patients with clogged arteries, following up on their 2007 research.  That earlier research indicated that patients receiving drug therapy fared equally well as angioplasty in preventing heart attacks, and so should be tried before performing the more invasive, more costly surgical approach.  The 2007 study was widely reported on, and was expected to reduce the number of patients receiving the surgical approach.  The new research indicates that in the two years after the 2007 results were released, there was virtually no impact in the percentage of patients receiving the drug treatment approach.  Experts cite time being needed to change practice patterns as well as patient demand for the “high tech,” more immediate impact surgical approach as reasons for the modest impact.

All right, maybe that’s not the best example.  Perhaps the original study results simply hadn’t been out long enough to change practice patterns, and most likely switching to the medication approach would have significant revenue impacts on both hospitals and on vascular surgeons that might create resistance to change.  Let’s take a less controversial topic: hand washing.  This is a practice whose clinical benefits have been well known for, what, 150+ years?  Moreover, it is one whose benefits pretty much everyone -- physicians, nurses, other health care workers, and patients -- agree upon.  Despite that, the accepted wisdom is that health care professionals appropriately wash their hands less than fifty percent of the time, with some estimates as low as thirty percent.  One study indicated that the baseline rate of hand hygiene compliance was 26% in ICUs and 36% in non-ICUs…and after a year of feedback these rates increased to 37% and 51%, respectively, which is hardly cause for celebration.  Again, the problem has been well understood for years, with vigorous attempts to highlight best practices in order to improve compliance, yet the problem persists.

Patients have their own blind spots.  Take antibiotic compliance.  Antibiotics were one of the great medical advances of the 20^th century, and remain one of the leading methods of treatment for many conditions.  Unfortunately, the literature is clear that patients often are noncompliant with their prescribed programs, which can reduce their effectiveness significantly.  One study conducted a review of various other studies and found that the mean dose-taking compliance was only 71%.  Compliance was higher in once-daily regimes, falling to 51% if the dose required four daily doses.  Patients are told to take the full course, but forget to take doses or stop once their symptoms diminish.  The failure to complete a course of treatment can cause relapses and is often cited as a reason for increased antibiotic resistance.

Then there is the obesity epidemic in America.  The facts are well known: recent estimates put the incidence of obesity at a third of all adults.  That percentage is double the prevalence thirty years ago.  Obesity, of course, is associated with a number of serious health concerns, including high blood pressure, diabetes, and heart disease.  To make things worse, it is estimated that another third of adults are overweight, meaning that two-thirds of American adults have a weight problem.   The comparable figure for children is an equally startling one-third. 

Sadly, many people do not even have an accurate perception of their weight-related health risk.  A survey by Harris Interactive/HealthDay found that thirty percent of the overweight felt their weight was normal, while 70% of those considered obese thought they were merely overweight.  Interestingly, respondents to the Harris survey cited lack of exercise as the key culprit for being heavier than they should, yet pointed to surgery as the most effective weight loss method, followed by prescription drugs.  Enough said.

In previous blogs I’ve been a strong advocate of the importance of using information to help health care professionals improve their performance and to help consumers make better decisions about their choice of treatments and health care professionals.  With examples like the above, though, it seems that information is necessary but definitely not sufficient.  In each case, the “right” thing to do was fairly well established empirically, widely communicated, yet consumers and even health care professionals continued to make the “wrong” choice.  And by no means are these examples the only ones of their type in health care, or even the most egregious.  Just this week researchers reported that as many as 70,000 Americans may die of heart failure each year because they are not receiving the optimal treatments called for by accepted national guidelines. 

Between medical errors, sub-optimal care, and our own neglect of our health, it’s a wonder anyone survives the health care system.  It’s getting to the point when I’m afraid to read any more studies.

The basic problem is that behaviors are hard to change, even when given information about how that behavior should be changed.  I point to the example of car safety belts.  They were widely installed in most cars by the 1960’s, and were well understand to reduce traffic fatalities significantly, yet by the early 1980’s usage was still as low as 11%.  Today usage is up to 85% (and one could be dismayed it is “only” 85%), but it took a generation to for wearing seat belts to become the norm. 

Information is essential.  Incentives are appropriate.  Neither, even when used in combination, may be enough to change behavior until and unless the individuals in question see the need for change, and the value to themselves in making the change.  We need to do a better job of making that case.

The good news is that we can learn new behaviors when we want to – for example, almost 70% of American’s with mobile phones use them for texting (according to Comscore), a feature that barely existed ten years ago.  If we can make room in our lives for that, certainly there should be room for us to do better at improving our health and demanding better health care.  Or so I hope.

The Two Percent Solution

By Kim Bellard, June 13, 2011

Blue Shield of California recently announced that they would be limiting profits to two percent of revenue.  The move is believed to be one of the first of its kind, and is one of a series of bold positions on health reform that the company and its CEO, Bruce Bodaken, has taken over the years.  The company is even applying the limit retroactively, refunding last year’s profits over that level, some $180 million.

To be fair, Blue Shield of California has had its share of critics over the years, including criticism of recent rate increases or proposed increases and over compensation for its key executives.  The recent announcement has similarly drawn its share of skeptics, some of whom noted that California is currently considering giving the Department of Insurance the ability to reject “excessive” rate increases.  They speculate Blue Shield is trying to head off the increased oversight. 

I won’t presume to speculate on Blue Shield’s motives, and I’ve been in business long enough to know that companies have many accounting options to classify a good deal of money in ways that can help keep it from showing up as profit.  Still, I wish Mr. Bodaken had gone further.  Perhaps he should have called for a “2 percent solution” across the board for health care, or at least for its non-profit constituents. 

People love to pick on health insurers, perhaps because their premiums are one of the more visible costs to consumers in our health care system.  Health insurers often don’t make it easy to defend them, but their level of profits is probably one of the harder aspects to attack.  One economist points out that the health insurance industry ranks only 86^th in profitability, with an average profit of 3.3%.  Profits from drug manufacturers, health information services, home health care companies all dwarf those of health insurers.  Granted, that data is a couple years old, but 3-5% is a typical profit margin for health insurers. 

Contrast this with a more beloved sector of the health care system, non-profit hospitals.  Moody’s estimates that non-profit hospitals made, on average, 2.3% in 2009.  Larger hospitals fared better; the 50 largest hospitals made 3.5% on average.  The IRS took a look at non-profit hospitals a couple years ago, and found an even bigger number.  In their review, non-profit hospitals’ “excess revenues” (total revenues less expenses) averaged 5%.  Rumor has it that some large health systems in my region of the country enjoy 10% margins, and it wouldn’t surprise me if that was less rare than many people would think.  So neither Blue Shield’s 2% limit, nor even their 2010 margin of 3.1%, look out of line.

One wonders if non-profit hospitals will be bold enough to follow Blue Shield’s lead and vow to limit their margins to 2%.  One also wonders if it would make any difference.

More troubling is the kind of practice the Wall Street Journal reported on recently, regarding physician-owned distributorships, or PODs.  Essentially, PODs are a way to give physicians a cut of the revenue from medical devices that they prescribe to, or implant in, their patients.   Not surprisingly, they found, for example, surgeons tended to perform more spinal implants when they were part of such arrangements, and not always for the better health of their patients. 

The Journal has been running a periodic series on various questionable provider billing practices, using Medicare Part B claims data (which, by the way, it had to go to court in order to get access to).  Their article on the potential adverse impact of PODs has now spurred a Senate Finance Committee report and a request for the HHS Inspector General to take a closer look.  Every time I read one of these articles, I’m struck with two equally strong reactions: how much of this kind of chicanery is there, and why the hell isn’t CMS doing more to identify and combat it? 

Physician ownership of other health care entities, which now include ambulatory surgical or imaging centers, pharmacies, and even hospitals (although health reform has put a halt to the latter, at least for now), have been linked to higher utilization (e.g., see Hollingsworth).  Defenders of the practice deny such links, arguing that they actually lead to higher quality or even to lower costs, but, honestly, it must be hard to say that with a straight face. 

Ironically, it seems like the one area where physicians seem to have less desire to own are physician practices themselves, which have seen a sea change in ownership by hospitals.  Less than half of physician practices remain independent.

Maybe ACOs and/or bundled payments will solve this problem, which I would refer to as self-referral had Rep. Stark not already claimed that term (although his efforts obviously have not met with persistent success), but I’m not optimistic.  It just seems like the people figuring out how to make more money from the health care system are smarter than the people writing and enforcing the rules that try to restrict them.  Or they have better lobbyists.

To be fair, I don’t really care all that much about who owns what or even how much their profit margins are.  What I care about with health care is if I receive the right care at a reasonable price…it’s just that both of those remain fairly nebulous concepts.  In health care, more than in any other sector of the economy, I want to have confidence that the people and organizations providing services to me care more about my well-being than they do their own financial well-being.  Those don’t have to be incompatible, but how do I know when they are?

Which leads me back to Mr. Bodaken’s bold effort.  The point is that profit margins may not be the best way to evaluate health plans.  Nor are medical loss ratios.  The proof of the pudding is in the eating, and the proof of health insurance is how expensive it is, relative to the benefits.  From a societal standpoint, we want to ensure that insurers don’t get to lower premiums by unfairly denying claims, providing poor service, or cherry-picking the healthier members.  If a health insurer really achieves lower premiums because they have better deals with providers or manage the health of their members better, why should we care what their profit margin is? 

Profits are not, in themselves, a bad thing, and I don’t understand why some people seem to think they are especially bad in health care.  It’s about demonstrating value.  After all, Apple makes close to 25% on its products, and people seem to love them.  Too bad they are not in health care (yet).  In health care, you’d need to be Sherlock Holmes to figure out what value is and how to know when you are getting it.  The 2% solution won’t do it.

Coming Down from Cyberchondria, part II

By Laurie Gelb, June 7, 2011

Actual hyperchondria, by definition, entails inappropriate self-dx and/or care-seeking (fueled by what Microsoft’s paper calls “the escalation of medical concerns”).

So what escalates concerns, whether you’re buying a car or selecting a health plan? Feeling like you’re being played by self-interested advisors. Being unable to get “a straight answer.”  Reading legal disclaimers instead of declarative sentences that apply to your situation. Looking at your organization’s health content, can you honestly deny any reasons for user frustration?

What we can foster via the social Web is appropriate self-dx and care-seeking. Let’s do our best not to conflate the two.

The danger in making any important choice has always been relying on any single information source, from your best friend in the cave to a medicine show huckster – or, today, your physician or a blog post.

Recent adherence literature gives us more reason to believe what common sense reveals, that patients who believe they receive all their disease information from physicians are less compliant. If you can’t internalize your health status by and for yourself, you can’t act on it appropriately.

Two decades past the launch of the health Web, many of its content providers still occupy one of two counterproductive positions:

1. Displays polite aloofness, with “keeping our distance” copy, stock imagery and very little to address anyone’s information gap. Syndicated, bland content meets the barest of localized/personalized functionality.
2. Genially hosts “”whatever people want to talk about.” Want to believe that whatever you have, it’s really Lyme disease? Blame your parents for all your allergies? Your headaches on your soda habit? There’s a board for you. Hosts chat boards/rooms/live chats on which spam posts, obsession with “censorship” and a few self-appointed experts constantly duel for position.

The net effect of Model 1, where people with questions get general platitudes, is to reroute them to [the more appealing] Model 2, where reason is often drowned out by the “squeaky wheels” with personal agendas other than the truth. Dr. Oz’ gradual descent from evidence-based innovation to mystical conventional medicine critic is an example, sadly enough.

How constructive is either of these models? Is there an ROI for doing anything about it? Let Dr. Oz answer from his April 26 show:

“Do drugs and surgery work? Yeah, they often work pretty well, and they have side effects... But the difference for me is a bow and arrow, a stealth approach to getting exactly what you want to get that works in you versus the ballistic missile approach that we have so often become comfortable with.”

MCOs: do you want to pay in goodwill or dollars for the implementation and/or consequences of the “stealth approach” Dr. Oz advocates here, which has included everything from reiki to a delayed immunization schedule? Or do you want to invest in worthwhile personalization of interventions with better track records – for you and members?

The fork in the road lies before you – choose wisely!

Coming Down from Cyberchondria, part I

By Laurie Gelb, June 1, 2011

In 1998, Harris Interactive came up with the above term to describe health Web information-seeking, and has been popularizing the phenomenon ever since. HI’s official definition states that this dread disease applies to hypochondriacs for whom the Web contains “too much information,” i.e. they become convinced from Googling “headache” that they have a brain tumor.

Might someone who honestly convinces herself, with or without the Internet’s help, that every headache is a tumor, demonstrate an impaired belief system in other respects? But it’s trendy to blame the Net for neuroses, just as we once convinced ourselves that allowing women to read would only breed or worsen hysteria.

According to many reports, it’s a closed circle. If you research symptoms on line, you’re diagnosing yourself. And if you’re diagnosing yourself, you’re a…no, I can’t say it.

Predictably, Microsoft published a white paper on “cyberchondria” in 2009 and recently it made TV news again as a new phenomenon. What’s the next hot ticket – hula hoops?  

So it’s OK to self-diagnose your dishwasher’s or car’s ills on line, and seek appropriate care, but not your body, because…wait a minute, what do I know about cars? Well, I’ve mastered filling up at the gas pump, and my skills at clearing a fogged windshield are unmatched. But neglecting my car can’t kill anybody, right? Oh, hold on…

Can we draw a line that includes reasonable presumptive dx? When your members think they have a simple headache that’s not life-threatening, most of them pop two NSAID tabs. That’s totally appropriate self care. Do you want patients to rush to their docs for simple headaches so you won’t judge them as cyberchondriacs? Or because you just did?

Self-diagnosis and care, to a point, relieve strain on our overcrowded system, produce cost-effective outcomes and improve health status. We spend a lot of money on decision support to help patients understand that point –and rightly so.

In 2011, asserting that the Web fuels hypochondria is akin to lambasting the existence of motor vehicles for encouraging speeders. Like it or not, the health Web is not the pool room south of downtown that respectable people shun. It is the commons of your world. If you want another planet, I hear Mars is lovely in the spring.

We miss opportunities to play a win/win role in millions of health-related explorations that can and should improve care and outcomes – and on which any rational sufferer will embark -- when we glibly apply the language of disease and switch the burden of proving “appropriate” exploration to the user – while at the same time preaching minimalist self-care. If you’re concerned with the reliability of what’s out there for member consumption,  don’t shoot the messenger, improve the landscape.

Results from Health Plan Contracting e-Poll: Value Based Payment Models

By Clive Riddle, May 25, 2011

With respect to contracting opportunities, insiders say that value based and newer payment models continue to offer the most promise, analytics advances are this year’s darlings, and ACOs hold less hope.

Meanwhile, insiders think cost pressures from the economic downturn are even more of a challenge than last year, and they’re not quite as concerned about market consolidation as they were a year ago.

In conjunction with the 2011 Health Plan Contracting Web Summit, MCOL conducted an e-poll on contracting issues. Participants were asked “what are the greatest opportunities from a contracting perspective” and “what are the greatest challenges from a contracting perspective” in addition to if their organization is a provider, plan or other. These same questions were asked in conjunction with last year’s Health Plan Contracting Web Summit, allowing for comparison to last year’s results.

Here’s a summary of e-poll results for the past two years:

Greatest Opportunities	2011	2010
Emergence of value based and newer payment models	29.6%	26.7%
Advancements in analytics capabilities	19.4%	7.5%
Increased covered population due to health reform	13.9%	17.5%
Consumer engagement initiatives	12.0%	10.8%
Advancements in electronic health records and transactions	10.2%	16.7%
Formation of Accountable Care Organizations	7.4%	16.7%
Potential growth in patient centered medical homes	3.7%	3.3%
Other	3.7%	0.8%
Total	100.0%	100.0%

Greatest Challenges	2011	2010
Cost pressures due to economic downturn	33.3%	28.1%
Increased mix of government program vs. commercial covered populations	16.7%	14.9%
Issues related to new health reform provisions	15.7%	14.1%
Increased complexities of benefit design	11.1%	8.3%
Other	8.3%	4.1%
Continued market consolidation	7.4%	14.1%
Consumer engagement Initiatives	6.5%	9.9%
ICD-10 transition	0.9%	6.6%
Total	100.0%	100.0%

Here are the top two responses for 2011 broken down by type of organizational category:

Top Response
Provider	Emergence of value based & other applicable newer payment models (26.4%)
Purchaser	Emergence of value based & other applicable newer payment models (38.7%)
Vendor/Other	Emergence of value based & other applicable newer payment models (25%)

2nd Highest Response
Provider	Advancements in analytics capabilities (24.5%)
Purchaser	Increased covered population due to health reform (22.6%)
Vendor/Other	Tie: Analytics and ACOs (20.8%)

What, Us Measure?

By Kim Bellard, May 18, 2011

I read with some interest an article in the Wall Street Journal outlining Wellpoint’s new approach to hospital payments, in which future payment increases would be tied to performance on 51 quality measures.  As interesting as that is in itself, what fascinated me even more was the reaction of Chip Kahn, the President of the Federation of American Hospitals.  Mr. Kahn did not appear too excited about the approach.  As he told the Journal: “We don’t have good outcomes measures yet.”

I don’t mean to take a shot at Chip Kahn or the Federation.  They are strong advocates for their members.  To its credit, the Federation has actively been involved in quality efforts for many years, including the Hospital Quality Alliance.  But, seriously – we pay hospitals some $800 billion per year, and we don’t have good outcome measures yet?  What are we waiting for?

A recent study by the Beryl Institute, whose mission is to improve the patient experience, indicated that 31% of hospital executives listed quality/patient safely as their organization’s top priority over the next three years, followed by 21% who cited patient experience/satisfaction.  The Beryl Institute seems to view this as good news, and I suppose it is good that no other single priority topped these two, but I have to wonder: so, almost half of respondents did think something else was their top priority?  

“Adverse events” – injuries caused by medical errors -- have been one of the open secrets in the health care system, and a recent study indicated that the problem may be as much as ten times worse than thought – impacting up to one third of hospitalized patients.   With those kinds of problems, if I ran a hospital, I might not want to track outcomes either, or at least not report them.

Wellpoint isn’t alone in targeting hospital quality.  Many health plans have implemented some version of pay-for-performance, although they tend to be paid as incentives rather than core to reimbursement.  Last month CMS announced the final rules for its Value Based Purchasing Program, which begins in 2012.  Medicare will also pay based on performance, initially as incentives but rapidly moving to reductions for hospitals that do not perform well.  The CMS measures are oriented towards process and patient satisfaction indicators, whereas 55% of Wellpoint’s measures are based on health outcomes, 35% on patient safety measures, and 10% on patient satisfaction.

Of course, quality measures are not just a problem for hospital performance.  Hospital quality measures are more evolved than physician quality measures, and both are far ahead of other parts of the health care system.  As Kenneth Kizer, founder of the National Quality Forum (NQF), said: “There are many areas of medicine where there simply are no measures – or there are, but they aren’t as good as they should be.” 

There certainly is no shortage of organizations working on the issue.  In addition to NQF, one could cite The Leapfrog Group, NCQA, CMS, the Physician Consortium for Performance Improvement, and several medical specialty associations, among others.   Still, the sense from the provider community seems to be that we’re not quite there, certainly not to the point where consumers should be making judgments based on the various indicators, nor having reimbursements materially impacted by performance on the measures.  They like the measures to be voluntary, although the recent CMS report on the Physician Reporting Quality System indicate only one in five health care professionals who are eligible to participate actually do – and only slightly more than half of those earned satisfactory scores which merited bonuses. 

It’s too bad, because it appears that the “standard” measures that consumers tend to look at to evaluate physicians, such as education or board certification, don’t appear to actually distinguish quality performance very well, according to a study by Rachel Reid and colleagues.  As the authors concluded:  “Few characteristics of individual physicians were associated with higher performance on measures of quality, and observed associations were small in magnitude. Publicly available characteristics of individual physicians are poor proxies for performance on clinical quality measures.”

Similarly, a study by Lauren Nicholas and colleagues published last fall indicated that the “process” measures currently reported by CMS on its Hospital Compare website don’t correlate with actual patient outcomes, such as mortality rates or surgical complications. 

How in the world did we get to the point of spending so much money on health care without even being able to measure if we’re doing it well?

I’ve complained about the lack of data in health care in previous blogs (such as in Gambling on Health Care), but it still disturbs me.  Maybe when – or if – we get to a world of electronic medical records and fully realized health information exchange we’ll have a better job of getting the right data; that is the point of “meaningful use.”  Still, I go back to another quote from Kenneth Kizer: “Nothing makes a performance measure better than when it starts being used.”  We need to start using the existing measures more now.

Putting performance data out there is half the battle, and I applaud the many people and organizations working to make that happen, hopefully sooner rather than later.  The other half of the battle – and one that, frankly, worries me even more -- is getting people to use it.

2011 Predictive Modeling Priorities

by Clive Riddle, May 12, 2011

The Predictive Modeling Web Summit and Predictive Modeling News jointly sponsored a survey of health plan and healthcare professionals conducted by MCOL on “Prioritizing Predictive Modeling Activities.” Participants typically have a more active interest in predictive modeling. This survey has been previously conducted since 2008, allowing the current results to be compared to previous responses.

Participants were asked to respond to two items:

1. Please categorize your organization.
2. Suppose you had to prioritize how an organization could spend its funds on predictive modeling initiatives involving health benefits, and you were given a list of 10 items to prioritize. How would you rank them? (1= highest priority / 10 = lowest priority; rank them 1 through 10).

The items to rank were as follows, with their abbreviated version, referred to subsequently, indicated in parentheses: 

• Identification of High-Risk Patients for Care Management (Identify)
• Plan Design Development (Design)
• Fraud Prevention (Fraud)
• Treatment Guideline Development (Guideline)
• Provider Profiling for Network Development (Profiling)
• Provider Payment Rate and Restructuring (Payment) *[worded differently in previous years]
• Premium Rate Development (Premium)
• Medicare / Medicaid Population Financial Modeling (Medicare)
• Target Marketing Based on Customer / Prospect Risk Scores (Marketing)
• Formulary Development (Formulary)

Here’s what the survey found:

• In 2011, 56.8% of respondents listed Indentify as their number one priority, compared to 51.5% in 2008
• For 2008 through 2011, while there was variation by respondent category for all other items, Identification of High-Risk Patients had the top average priority ranking, and was the mode for the number one priority with all three categories (payer, provider and vendor).
• The next-highest priority mode in 2011 was Treatment Guideline Development, but by category had a mode of 2 for providers & vendors and a mode of 6 for payers..
• Treatment Guidelines and Provider Profiling had significantly higher priority modes in 2011 than in the past while Target Marketing had a much lower priority mode in 2011 than in past years.

The average ranking by item for this year and in 2008 is as follows:

Item	2011	2008
Identify	2.30	2.54
Guideline	4.25	4.75
Design	4.63	4.25
Profiling	4.84	5.16
Payment*	4.86	5.41
Medicare	4.92	5.71
Marketing	5.26	5.84
Premium	5.87	5.59
Fraud	5.93	N/A
Formulary	6.07	6.35

n= 81 in 2011; 88 in 2008

Designing the Perfect ACO

By Kim Bellard, May 4, 2011

Accountable Care Organizations (ACOs) are supposed to be the way forward in improving our health care system.  CMS has recently released proposed rules around Medicare ACOs that help detail the requirements, with Medicare getting ready to start making funds available for ACOs as early as 2012.  The private sector is expected to follow in Medicare’s footsteps with their own versions of ACOs.

Since ACOs hold the prospect of being the new delivery system for many or even most Americans, I wanted to propose my own wish list for what I hope will be true of the ACO experience:

• I want to go to an ACO physician knowing something meaningful about him or her.  Not just the standard medical school/board certification/professional designation information, but facts that give me insight into actual (and recent) performance.  I.e., what is the profile of the patients he/she sees?  How well do patients with chronic conditions receive the recommended set of services?  For physicians doing procedures, how many do they do, and what are their outcomes?   Perhaps most importantly, what do patients report about their experiences with this physician?  And not just current patients, but also former patients; e.g., are they former patients due to no continued need, or due to a bad experience?
• I think it is entirely fair that better-performing physicians get paid more, whether by me (via my cost-sharing) and/or by the ACO/insurer.  In fact, I think it is downright dangerous if that does not happen.  If everyone gets paid the same, the more likely it is that everyone performs the same, and I want my physicians striving to be the best.
• I want the physician to have my medical records readily available – not just from prior encounters with him/her, but including all the relevant information from all of my recent encounters with the health care system.  E.g., tests, imaging, prescriptions, reports from other physicians (primary care or specialists).  Presumably this speaks to a unified electronic health record -- permission-based, of course.  He/she needs to know the whole picture, and I don’t want to keep trying to accurately fill out the same or similar forms each time I see a provider.
• I want access to my health records.  Not in the same language and format as the physician sees them, but based on the same information, yet in a consumer-friendly version that helps make my health history understandable and actionable, so I can do my best to maintain and improve my health.  I should be able to provide my own input into the records, some of which would be purely for myself and some of which could provide additional insight for my physician(s).  After all, when it comes to reporting my own health, who better?
• I want the physician to be reminded of any medically indicated actions for me; e.g., am I not refilling my prescriptions, is it time for a preventive test or procedure, were there concerns from prior visits that should be followed up on?   Physicians are generally very smart people, but the data are pretty clear that many patients are not getting all of the recommended services and oversight.  We shouldn’t rely solely on the physician’s memory to help remind them what should be happening, and when, with me.   For that matter, I want to be reminded as well.
• I want to know that the physician is not acting solely on his/her own for my treatment, that there is some effective peer review in the ACO that monitors the care he/she is providing, and actively provides feedback.  It’s not about suspecting the physician is doing a bad job; it’s about instilling an attitude of always wanting to do things better.  Measurement and feedback loops are Quality Improvement 101.  Physicians are notoriously independent, but that is not an attitude that leads to strong QI.
• I want to make sure my physician and I use the most efficient mechanisms to communicate.  Sometimes he/she needs to see me in person and “lay on the hands,” but many issues can be handled through other mechanisms like texting, email or video.  How and where we communicate shouldn’t be driven by insurance reimbursement concerns, but by what is most time-effective and medically appropriate.
• I want my physician to help coordinate any other testing/treatment I need.  E.g., not just refer me to another physician or imaging center, but help arrange the visit.  And I certainly expect that I would not need to tell that referred provider why I am there or to recount my history all over again.  They should have access to my records, know what the plan is for me and their role in it, and when they finish make sure everyone involved has most updated information about me.
• I want to have a single bill.  I understand, although I don’t like, that in our health care system lots of entities seem to come out of the woodwork when there is billing to be done, but an ACO should be able to consolidate all that into a clear, unified bill covering anyone they’ve gotten involved in my care.  I hate getting bills from health care professionals or entities I’ve never heard and/or for services that I wasn’t sure I’d had.  And I don’t want to be billed until they’ve worked everything out with the insurance carrier.
• I want reassurance that the professionals treating me don’t simply get paid by doing more things to me, or get paid the same regardless of how well they treat me.  I don’t think either a fee-for-service or a salaried approach is inherently evil; both need to be coupled by rewards for getting good outcomes and penalties for poor outcomes, which include providing unnecessary or inappropriate care.  To be fair, though, physicians shouldn’t be penalized if I am non-compliant or remain passive about taking active efforts to maintain or improve my health.  Splitting those hairs is going to be tricky.

The good news is that none of these are unachievable even in the current health care system.  One can probably find a few integrated delivery systems that already accomplish many of these goals.  The bad news, of course, is that none are doing all of these, and most consumers don’t have access to a delivery system that does even a majority of them.  That’s assuming we can get agreement on how to accomplish them, particularly measurement of and reporting on physician performance.  We have a long way to go...

Voluntary Benefits: Pet Health Insurance

By Clive Riddle, April 27, 2011

The lack of an Affordable Care Act for Pets hasn’t held back the pet health insurance industry. Voluntary benefits in general enjoy popularity with larger employers, who can offer a discounted perk without paying for it. While the recession bit into sales for pet plans and other voluntary benefits as discretionary income and the number of eligible employees took a dip, the outlook for pet health plans remains strong.

Veterinary Pet Insurance (VPI), the nation's oldest and largest provider of pet health insurance, just issued a statement that during 2010 “the company added nearly 400 large companies and associations to the list of more than 2,200 groups that offer pet insurance as a voluntary employee benefit. The addition of these group accounts made VPI Pet Insurance available at a discount to a record 13 million people for the year.”

Under the voluntary benefit agreements, employees receive a 5% discount on insurance premiums, and many may pay via a payroll deduction.

Deana Single, director of group accounts for VPI tells us "when it comes to health insurance benefits, many companies are having to deliver bad news. These costs are continually increasing for many companies and their employees. Fortunately, VPI Pet Insurance can be added to a company's benefits package at no cost to the business."

VPI listed national firms that added their voluntary benefit in 2010 included: Kohl's Corporation; Morgan Stanley; Hewlett-Packard Company; BMW North America, Inc.; McDonald's Corporation; The Boeing Company; Quiksilver, Inc.; and American Eagle Outfitters, Inc. VPI notes that “at the end of 2010, one out of every five Fortune 500 companies offered VPI Pet Insurance as a voluntary employee benefit.”

Laura Bennett’s Embrace Pet Insurance Blog on Pet Business Trends 2011 cites that national pet insurance “gross written premiums (GWP) reached $290 million in 2009 and are projected to reach $327 million (12% growth) at the end of 2010. The three largest pet insurance companies in the US, Veterinary Pet Insurance, Hartville Group, and Pet Health Inc, together representing 78% of the market, will show modest growth of 5.5% in 2010 compared to 16.5% in 2008. The remaining companies will report growth of 47% in 2010 compared to 82% in 2008.”

Laura predicts that “overall premium growth in 2011 will be pulled in two directions. Two factors will drag down GWP growth: the slower growth of the top three pet insurers as they work to offset a more mature book of business; as well as the inevitable decline in sales and renewals from 30% (and higher) premium increases that are being implemented by some of the younger, faster growing companies.”  Her overall assessment of the pet market? “Pet-related spending in 2011 will show an increase over 2010 levels but not at the robust rates we saw prior to the recession.”

Thus for voluntary pet insurance, and other voluntary benefits, the increased popularity from employers clears one hurdle, but the individual purchase hurdle still remains an obstacle that only an improved economy might fully remedy.

Researching the Real

By Laurie Gelb, April 25, 2011

While the rest of the social Web is constantly redesigning itself based on user context and needs, the health Web lags. Personalization, filtering, sorting, non-linear exploration and other “Web-standard” capabilities on sites like Amazon is lacking as yet.

Why?

One possible reason is that surveys of health Web users commonly manifest a “how much” obsession, neglecting the who, when, where, what, how and why. This creates misleading constructs for action, which we will continue to explore in future posts.

Let’s examine on just one question that Pew asks [not picking on Pew, just that its survey is widely quoted]:

Q32 Overall, who do you think is more helpful when you need... [INSERT FIRST ITEM] – health professionals like doctors and nurses, OR other sources, such as fellow patients, friends and family?  And who is more helpful when you need... [INSERT NEXT ITEM; RANDOMIZE]?  AS NECESSARY: Professional sources like doctors and nurses, OR other sources, such as such as fellow patients, friends and family?  

a. An accurate medical diagnosis

b. Emotional support in dealing with a health issue

c. Practical advice for coping with day-to-day health situations 

d. Information about alternative treatments

e. Information about prescription drugs

f. A quick remedy for an everyday health issue

g. A recommendation for a doctor or specialist 

h. A recommendation for a hospital or other medical facility

1 Professional sources

2 Other sources

3 (VOL) Both equally

8 (DO NOT READ) Don’t know

9 (DO NOT READ) Refused

Beyond the ambiguity ("day to day health situation") and heterogeneity in some of these question items (you might have a different process for researching someone/ somewhere to remove an ingrown toenail vs. a CABG), we can summarize the problem here with two words: false dichotomy. 

How actionable can these answers be, even when tracked over time? The answer items are all binary, they relate to categories rather than actual resources and the unaided “both equally” option is a copout/source of social bias rather than a reality. 

What Pew could be asking:           

Have you or anyone whom you help make health decisions, such as a family member, ever faced  [specific situation]?

[if yes]

How recently did you or someone you care for face [specific situation]?

These decisions never stop [they don't, for someone w/ chronic illness/injury, often neglected in these surveys but also often your high utilizers]

Dealing with that now

Within the last month

A month or two ago

A few months ago

About a year ago

More than a year ago

When situation X most recently arose, from which of the following did you receive information before making a final decision? Please check all that apply. [randomize order w/ selected anchors]

• Your or the patient's physician
• A staff member in that physician's office or clinic
• A brochure or video in a physician's office or clinic
• The Internet
• A magazine or newsletter
• TV or radio program
• Friend or family member who works in health care
• Friend or family member who does not work in health care
• Other (please specify)

Often, we then zoom in on that recent situation and dissect how well the search process (or lack thereof) worked out in terms of needs vs. outcomes.

What else can we ask Web users, that we don’t know the answers to, that we can actually use to design stronger decision support?  An example…when we look at choices that are being made NOW – which we will need to branch into – we can find out:

• Who helps whom (for example, what percentage of the sample is currently influencing (1) health decisions on a child’s behalf (2) health decisions on an adult’s behalf other than themselves. This and the next item will aid subgroup analysis/tracking.
• Is the current decision process around self-care or accepting a professional’s recommendation?
• Where/how do they think they need to research, if anything before making or accepting a choice?
• If the decision process is ending, is it by choice or necessity?
• How well do they think they are succeeding in getting what they need? This is categorical like in real life -- not at all to it's done.
• What else do they need to know, that they do not yet? This can be structured, open-ended or both.
• What are the barriers to getting what they think they need? (e.g. not enough time, not sure how to search, overwhelmed with info, didn't have long enough chat w/ doc, not sure if insurance will cover…)

Does this sound really nitpicking? It’s really no worse than the research process we go through for cereal or paint – just that instead of keying on the purchase process, we are keying on information-seeking. User-driven branching and filtering moves the respondent through quickly. BUT – we should never assume prework. If I walk into CVS like a robot and walk out with my default OTC analgesic, you should know that as well.

It's always a worthy goal to keep your information specific, your verbs active and your sentences short. If you wouldn't say it, apart from legal disclaimers, why write it? 

Strategic Opportunity Index…On The Rise

By Lindsay Resnick, April 18, 2011

“Strategic planning is worthless, unless there is first a strategic vision.” (J. Naisbitt)

In healthcare and insurance, like many other industries navigating today’s economic and political woes, the future belongs to those best able to manage in markets characterized by intense competitive rivalry, continuous regulatory disruption, and information empowered consumers.

Developing a well-honed strategic vision works to anticipate change, focus on competitive threats, and assess long-term business implications. To be effective, it’s essential that your vision draws on sophisticated customer insight. The goal is to take an organization where it needs to be by creating a roadmap on how to get there.

At its core, a sustainable strategic vision is built around an effort that allows management to look deep within the organization, ask & answer tough questions, and make informed decisions about strategic options. The following questions provide a strategy “stress test” to help refine your planning process starting at the intersection of three key business drivers: competitors, customers and company.

1. How are you different from competitors…comparative market advantages/disadvantages?
2. Are you leveraging a sustainable Dominant Selling Idea that delivers customer value?
3. How are you selecting new markets, products and services?
4. Who are your top five competitors and why do you beat them…why do you lose?
5. Have you developed proprietary insights and translated them into actionable strategy?
6. Are you ahead of competitive trends and industry best practices?
7. Where’s the customer in the marketing mix…product, price, promotion, and place?
8. Have you identified and/or neutralized uncertainty in the decision process?
9. Is there cross-management buy-in and commitment to addressing the future?
10. Are you managing institutional bias to facilitate diversification and innovation?
11. Is there a willingness to invest in execution…talent, capital, operations and distribution?
12. Is strategy translated into an action plan…scenario planning, timing and accountability?

Smart companies are raising their “opportunity index” by thinking about their business in ways that look very different from today’s enterprise. They are embracing a strategic planning process that openly challenges leadership across the organization in order to pinpoint future direction—make data-driven decisions, embrace customer centric thinking, adjust business assumptions, and act with deliberate speed. After all, strategic vision represents the futurity of today’s decisions.

Cartoons for Health Care Professionals

by Clive Riddle, April 15, 2011

As a child I recall looking forward to Saturday mornings, filling a bowl full of cereal and sugar before my parents were awake, and plopping down in front of the television to view an endless parade of my favorite cartoon characters.

Now, anyone involved in the business of health care can sort of re-experience this feeling (bowl of cereal and sugar optional) by consulting YouTube and browsing through an increasing stream of short animated features created to for the professional.

Of course you’ll have to wade through an even larger river of health care animation created by the masses to comment on health care reform, politics and hospital visits. But here are some recent mainstream efforts at delivering health care business information in a new format, often with a dose of humor:

Milliman calls the stars of their animated features “Droids” and offers three items so far in their Healthcare Town Hall:

• Droids discuss health insurance rate setting process
• Droids discuss cost shifting
• Droids discuss individual mandate

Jeremy Engdahl at Milliman says they’ve “been exploring how animation can help educate people on misunderstood components of the health system in general and health care reform in particular.” He notes the videos have been peer reviewed by actuaries and are backed by published Milliman research.

Kaiser Family Foundation recently released Health Reform Hits Main Street which comes with the following description: “Confused about how the new health reform law really works? This short, animated movie -- featuring the ‘YouToons’ -- explains the problems with the current health care system, the changes that are happening now, and the big changes coming in 2014. Written and produced by the Kaiser Family Foundation. Narrated by Cokie Roberts, a news commentator for ABC News and NPR and a member of Kaiser's Board of Trustees.”

Accountable Care Organizations have perhaps been the topic of the greatest number of health care business animations. Leading the pack in viewership, with 77,000+ views,  is a piece by CenturaHealth entitled In Search of an Accountable Care Organization (ACO) which the hospital organization describes as: “Clueless health care executive tries to learn about accountable care organizations in the age of health care reform.”

The Disease Management Care Blog has a YouTube Channel featuring several animated pieces including “Setting Up An Accountable Care Organization” and “Disease management saves money.”

Alan Genicoff, MD JD who offers a Law Doc blog has a YouTube Channel which includes the “healthcare fraud cartoon parody: The Medicare RAC audit” in which we’re told to “watch Dr Abel squirm as the Medicare RAC auditor takes him to task about possible overbilling of Medicare.”

And of course I’d be remiss if I didn’t mention that MCOL has entered the fray, and features a number of animated pieces in it YouTube Channel: MCOLdotcom.

Now, does anyone remember the words to the theme song from Scooby Doo or the Banana Splits?

Life in the Web: What Page Are You On? (part II)

By Laurie Gelb, April 8, 2011

In our last installment, a typically-networked physician was driven to distraction by his patients’ reliance on the Internet for personalized health advice, and an MCO director struggled to understand why her network’s disease management materials were failing to influence member behavior.

Both might benefit from a better understanding of how, when, where and why members of the lay public utilize online medical resources. These questions have seemingly been the subject of much research. However, surveys have primarily focused on scope -- “how much”—rather than the deconstruction of how and why.

To put the question another way, what does the social Web (an umbrella term for social networks/the Web/mobile media) offer that a physician’s appointment or disease management brochure doesn’t?

Unlimited time and bandwidth. The ability to filter and search, with the hope of greater personalization. Diverse opinions. Colorful, unequivocal language. Identification of and interaction with trusted resources on demand 24/7 from any Internet-connected device. Hyperlinks to explore more quickly and less linearly. Ability to go from structured resources like encyclopedias to Facebook and back again. Social bookmarking that eliminates the need to “start from scratch.” If you have two more hours, we can keep going.

To what extent has research into health Web use helped us to better utilize the physician’s medical expertise and communication skills to design better health information portals and tools? Apply the MCO director’s knowledge of demography, utilization and trends?

Not so much.

And to what extent are social Web-savvy content developers in charge of creating health advice on the Net, self-help tools or member disease management communiqués?

Not so much.

Now, going back to our Net-savvy physician – how much money has gone into e-prescribing, clinical tools, formulary references that he uses every day…as compared with the resources that a patient would use? How much connectivity is there between MedicAlert or  Microsoft HealthVault and the answers patients get to their health questions on the Net?

Not so much.

In short, content and tool developers have pretty much failed to bridge the gaps between what their masters (us) want to convey and where their so-called audiences want to be. Is it surprising that people don’t particularly want to be “herded” into a maze for which they write none of the rules, that they would rather be setting the terms of engagement?

Yes, the process of accessing information, care and reimbursement for said care is currently perceived as adversarial. And battles lines are being drawn…from the receptionist’s window and business office to your Web site and shiny new brochures. And no one else gives a flip about your communication strategy. Most agendas read, “Pay less, get more and never have to say ‘I’m sorry.’”

So now what? If you want to play to win (i.e. to improve the odds that someone receives optimal care), you need to gather and then use some intel, some real insights, not the pablum of yesteryear. We’ll discuss how to do this, next time.

Fidelity on Retiree Future Health Care Costs and HSA Participation

By Clive Riddle, April 1, 2011

Fidelity Investments tells us that the total amount a couple just entering retirement needs to have saved for their future health care costs dropped this year from past estimates, due to one-time savings from health reform. Fidelity also tells us that HSAs are a recommended vehicle to help fund these required costs, and almost all their HSA account holders rolled over some account balance from 2010 to 2011 to save for these costs.

Fideltiy this week released their annual estimate of future health care costs for retired couples. Last week, Fidelity released findings on their study on how Fidelity HSA participants are using their accounts. The two topics overlap, as HSA participation is of course, a recommended strategy by Fidelity for persons preparing for retirement.

Fidelity cited their recent survey that indicated 68% of pre-retirees “said the cost of medical care in retirement is one of their three biggest financial concerns (outliving savings and inflation were the other worries).”

Fidelity now estimates “a 65-year-old couple retiring this year will need $230,0001  to pay for medical expenses throughout retirement, not including nursing-home care.  This represents an 8 percent decline from last year, when the estimate was $250,000” and costs increased 4.2% over 2009 costs.

Previously, the estimate has increased an average of 6 percent annually since the initial calculation of $160,000 in 2002. Fidelity indicates the “$20,000 decline in the estimate from last year was driven by Medicare changes contained in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, both signed into law in 2010.  These changes, which reduced out-of -pocket expenses for prescription drugs for many seniors, resulted in the reduced estimate.” The health reform changes include a required 50% discount on brand name drugs that are applied to beneficiaries “donut hole” benefit level, and ultimately phases out the donut hole by 2020.

Brad Kimler, EVP of Fidelity’s Benefits Consulting business tells us “while the savings generated through the health care reform laws is a welcome relief to many seniors, it should be considered a one-time adjustment, at least for the time being. Today’s workers still face the prospect of significant medical expenses in retirement and must begin to include those costs in their retirement plan strategies. Looking forward over the next few years, Americans should expect health care expenses to continue to increase annually due to a number of factors including higher costs for medical services, the introduction of new technology and an increased utilization of health care services like diagnostic testing,”

The Fidelity Retiree Health Care Costs Estimate “assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program Medicare.  The calculation takes into account cost sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance).  It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare.  The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.”

Fidelity, in commenting on their retiree health benefit cost estimate, hold out HSAs as a recommended savings tool. William Applegate, VP, HSA products for Fidelity Investments tells us “the continuing rise of health care costs combined with health care reform really drove the adoption of HSA-qualified health plans  by employers last year and thus the growth of HSAs. As for participants, it is clear that many are using the health-savings product to help manage not only their current medical expenses but also plan for future expenses, with nearly all participants carrying some balance over to the following year.”

Fidelity’s analysis of their 74,000 HSA participant accounts indicated the following patterns and behaviors:

• On average, HSA participants had contributions of $2,620 made to their accounts in 2010  including their own contributions and employer contributions.  
• 17% of  participants contributed, through both their own and employer contributions, more than $5,000 to their account in 2010
• 46% of participants had contributions of $2,500 or more in 2010
• 36% of participants used more than 90 percent of their annual HSA contribution on qualified medical expense reimbursements,
• 40% of participants used between 10 percent and 90 percent of their HSA contributions and carried over the rest.
• 24% of participants used less than 10 percent of their annual contributions and invested the balances for future health expenses.
• Overall, 95% of participants carried over some balance from year to year