Annual Census Report on Health Insurance Coverage: What Will this Report Look Like After 2014?

By Clive Riddle, September 19, 2013

The U.S. Census Bureau has just released their annual report: Income, Poverty, and Health Insurance Coverage in the United States: 2012. This year’s 88-page report was “compiled from information collected in the 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The CPS-ASEC was conducted between February-April 2013 and collected information about income and health insurance coverage during the 2012 calendar year.”

The key takeaway? “The percentage of people without health insurance coverage declined to 15.4 percent in 2012 ─ from 15.7 percent in 2011. However, the 48.0 million people without coverage in 2012 was not statistically different from the 48.6 million in 2011.”

Here’s some summary figures compiled from the report:

	2011%	2012%	2011#(mil)	2012#(mil)
Uninsured	15.7%	15.4%	48.0	48.0
Private Coverage	63.9%	63.9%	197.3	198.8
Public Coverage	32.2%	32.6%	99.5	101.5

Here’s the respective demographic from each category with the greatest improvement in percentage change in uninsured from 2012 over 2011, compiled from the report:

• Family Status: unrelated subfamilies -5.3%
• Race: Asia -1.7%
• Age: under age 25 -0.5%
• Nativity: foreign born naturalized citizen -0.9%
• Region: Midwest -0.8%
• Work Experience: Did not work at least one week -0.9%

Finally, here’s a breakdown of the percentage of the total population covered by more specific coverage categories for 2011 and 2012; the totals add up to more than 100% due to dual coverage:

	2011%	2012%
Employment based	55.1%	54.9%
Direct-purchase	9.8%	9.8%
Medicare	15.2%	15.7%
Medicaid	11.5%	11.3%
Military	4.4%	4.4%
Uninsured	15.7%	15.4%

The big question is, what will this report look like two years from now, when the 2014 data is compiled?

Canaries in the Coal Mine for Employer Coverage

Kim Bellard, September 10, 2013

Many of you have probably heard about the old practice of putting canaries in coal mines as an early detection measure for lethal gases.  If the birds started dying, it was time to get the miners out.  We may be nearing that point with employer health coverage.

Within the past few weeks, several large companies have made some interesting announcements about their health plans.  IBM and Time Warner announced that they were moving their retiree coverage to private exchanges, and in the process essentially changing their plans from a defined benefit approach to defined contribution.  They join other major corporations like GE, Caterpillar, and Dupont in such an approach. 

Retiree health coverage is a dinosaur of employee benefits, a hold-over from a time when employers could afford to be more paternalistic – partly because health coverage was far cheaper and partly because people didn’t live as long.  Among the large employers most likely to offer such retiree coverage, its prevalence has dropped from 66% to 28% over the past 25 years, according to the latest Kaiser/HRET survey.  It’s only going to decline further, faster.

The recent rise in these private exchanges offer a new way out for employers, letting them more gracefully take a step back from their provision of health benefits, and not just for retirees.  That same Kaiser/HRET survey found that, among all large employers (200+ employees), only 9% were considering offering their employee health coverage through a private exchange.  However, the number was 29% among the largest employers, those with 5,000 or more, and they tend to be the first-movers. 

Clive Riddle recently reported on the Towers Watson/NBGH annual survey, and mentioned the interest in private exchanges.   Drilling down a little more into those results, only 28% of these large employers thought it likely that employers would move to a defined contribution approach over the next five years, and only 24% expected employers to put their coverage in a private exchange in that same time period – but the plurality were neutral in their responses.  Only 24% and 30%, respectively, thought it unlikely that they’d try these approaches.  Employers were significantly less likely to say they’d take these actions with their own health plans, which may just indicate they’re simply waiting to see what other employers do, but even so 15% were considering private exchanges for 2014.

Most chilling, only 26% are very confident they’ll be offering health benefits in ten years; in 2007 the comparable number was 72%.   

The TW/NBGH survey also reported that 42% had already increased contributions for dependents relative to single coverage (with another 19% planning to do so in 2014), and 20% had implemented spousal surcharges for spouses not taking coverage from their own employers.  Another 13% had this planned for 2014.  A recent survey from Mercer reported that 6% of firms with 500 or more employees imposed such surcharges on such spouses, while another 6% took more drastic measures, excluding spouses who could obtain coverage through their own employer.

U.P.S. is an example of this strategy.  Last month it announced that it was dropping spousal coverage for its white collar workers whose spouses have an option of coverage through their own employer.  U.P.S. isn’t the first company to take this action, nor will they be the last (The University of Virginia made a similar announcement; in fact, on the same day as U.P.S. did), but they are one of the largest to go public with this action. 

Large employers have complained for decades that they shouldn’t have to subsidize other employers by covering those employers’ employees who happen to be married to one of their own employees, and that is a valid complaint.  If more large employers follow U.P.S.’s approach, as I would expect, it would shift more of the burden on smaller employers, and on the public exchanges. 

Another vulnerable target is part-time employees.  Wegman’s grocery chain recently made news by cutting back its health coverage for part time employees.  Not many firms choose to coverage part-time employees (according to the Kaiser/HRET survey, only 25%, and that was when part-time meant less than 40 hours per week, not ACA’s 30 hours).  Ever since ACA passed there has been persistent suspicion that employers would cut back employees’ hours to get them below that 30 hour per week mandate requirement to offer coverage (see some pro versus con opinions), so we’ll have to see how quickly that 25% statistic drops.  

Health Affairs’ most recent issue focuses on the implementation of ACA, under the theme “Navigating the Thorns that Await the ACA.”  It had two articles on what will happen with employer coverage under ACA.  One study, by Thomas Buchmueller and colleagues, looked at whether employers would drop health coverage.   Their conclusion was probably not to any large degree, at least in the aggregate – their predictions ranged from a decline of 1.8% to an increase of 2.9%. 

Meanwhile, a second analysis, by Daniel Austin and colleagues, analyzed the impact of increases in employer premiums would have on employer coverage and on exchange participation, and concluded that even contribution increases of as little as $100 could cause 2.25 million to switch from employer coverage to the exchanges – and cost the federal government $6.7b in increased subsidies. 

No disrespect to Dr. Buchmueller, but I’d have to lean more towards Dr. Austin’s results, and suspect that they will be, if anything, understated.

The success of employment-based health insurance has been due, in large part, to its tax preference, which allowed employers to seemingly “pay” for most of the cost of the coverage and thus assure a risk pool with a cross-section of ages, genders, and health status.  Public subsidies that will be available through the public exchanges will lessen the tax preference advantage, and the guaranteed issue of health insurance will also chip away at the “job lock” that has kept some employees in their employer plan. 

Still, it all boils down to risk pool; if there are not enough healthy people enrolled – be it through public exchanges, private exchanges, or employer plans – costs will skyrocket and the coverage will face the prospect of a death spiral. 

Employer coverage isn’t going to disappear overnight, and there may be a lengthy transition period when employers use private exchanges to distance themselves, to lock in their contribution levels, and to avoid mandate penalties.   Dependent coverage is most at risk, between the desire to not subsidize working spouses and the lack of meaningful affordability requirements for such coverage. 

Of course, ACA could be repealed or drastically revamped due to many implementation issues, but, failing that, I think employers are going to be watching each other closely in order to make sure they’re not going to be the last one to leave the party.

The Context of Y2K for Healthcare: 1999 vs. 2013

By Clive Riddle, August 22, 2013

I was surprised to see this headline pop up in my email – Will health insurance exchange launches be the 'next Y2K'? from an article in the August 12, 2013 issue of FierceHealthIT.  Intrigued, I clicked to find the article subheader warning that “Some computer experts warn of possibility of system overload.”

Further intrigued, I started googling Y2K and Health Insurance Exchanges.  On the same day, Benefitspro ran this article: IT threatens exchange enrollment which reported that “at this summer’s Colorado State Association of Health Underwriters’ annual symposium in Denver, one speaker warned the exchange launch could be the “next Y2K” — millions of Americans logging on in October might overwhelm the exchanges.”

Just below that, my search results displayed:  Y2K All Over Again. Can the Insurance Marketplaces Handle Opening Day? from the  Navix Blog (an on-line insurance brokerage company ) posted on August 5^th.

My bemusement connected with these analogies? Their references to Y2K were in the 1999 context – warning us of all the monumental problems that would unfold after the event.  The correct post-Y2K context of using the term Y2K would seem to be, referring  all the preparation that is involved for such an undertaking, not the aftermath (which by the way didn’t bring about a zombie apocalypse or the crash of modern society as we know it.)

So I googled on – there wasn’t a preponderance of current health insurance exchange references, but there were a number of references to the ICD-10 conversion and Y2K, such as Deadline ICD-10: Y2K all over again? from Health Management Technology in December 2010 and more recently - Schools beef up medical coder ranks before ‘Y2K of health care’ from the South Florida Business Journal, on February 15, 2013. All in all there were 8,120 google search results for ICD-10 combined with Y2K. But in this case, the articles mostly seemed to get the context right – the emphasis was on preparation.

Then I found where the references started crawling out of the woodwork: with the more broad-brush of Obamacare.  A whopping 1,110,000 google search results were yielded with Obamacare combined with Y2K. The specifics of these articles were all over the map: Obamacare's Y2K: Coverage for pre-existing conditions and Y2K was a Breeze Compared to State IT Prep for ObamaCare for example. The context for use of Y2K (maybe for Obamacare we could call it YOb) was a mixed bag. But the 1999 context was way too prevalent in the limited click-thrus I browsed – with a common denominator being that the political oriented rants seemed to get it wrong the most. 

It Was Those Other Guys

Kim Bellard, July 26, 2013

A fascinating study in JAMA on physician’s attitudes towards controlling costs helps illustrate the bipolar attitudes our health system tends to generate.  The study found that physicians generally believe other players in the health system have the major responsibility for controlling costs – led by the popular culprits: trial lawyers (60%), insurance companies (59%), and pharmaceutical/device manufacturers (56%).  Patients were cited by 52%.

Only 36% of the physicians cited physicians as bearing a major responsibility for controlling costs.

When I saw the latter result, I initially assumed the respondents would simply plead ignorance about costs, or at least take the 5^th, but nope: 76% agreed that they were aware of the costs of services they recommend.  Even more surprising, 73% disagree that doctors are too busy to worry about costs of tests and procedures, and 75% agree that trying to contain costs was every physician’s responsibility.  There’s a certain cognitive dissonance here that is hard to understand.

As for cost containment strategies the physicians were enthusiastic about, mom-and-apple-pie approaches dominated: promoting continuity of care (75%), the ever-popular “rooting out fraud and abuse” (70%), and chronic disease care coordination (69%).  Only 7% were in favor of eliminating fee-for-service and only 6% liked the approach of bundled payments.  I guess they haven’t gotten the memo that FFS is supposedly dying.

I was particularly disappointed that the physicians were not more enthusiastic about more empirical approaches to controlling costs, with only 51% in support of expanding access to quality and safety data and only 50% supporting head-to-head trials of competing treatments. 

Support for head-to-head trials should be much higher, based on some findings recently released by the Mayo Clinic.  The researchers reviewed ten years of articles in a “high impact” medical journal, looking both at articles studying new medical practices and ones evaluating existing treatments.  The results are disturbing: 40% of the existing treatments reviewed were no better or worse than the prior standards of care; i.e., the results recommended reversing an existing practice that was considered the current standard of care.  Only 38% reaffirmed existing practices, with the rest inconclusive.  This is medicine by ready-shoot-aim.

New treatments fared better, with only 17% failing to improve upon existing practices.  I suppose I should be comforted by that result, but it just makes me wonder if the discredited practices ended up being used anyway (especially if they resulted in higher revenue).  

Another recent survey of physicians – this one by Wolters Kluwer Health – didn’t paint a better picture than the JAMA study.  For one thing, 34% reported that it was somewhat or very likely that they’d leave their practice in the near future.  The respondents found it challenging to manage shifting reimbursement models with payors (91%) as well as their practice’s financial management (90%); as a result, 88% reported it challenging to spend enough time with patients.  Improving patient care was seen as further down their list of challenges (78%, but with the lowest result for being seen as very challenging -- only 20%). 

These physicians do think that HIT is making progress in having an impact on ensuring patient safety and in improving quality of care (both 55%), but are more skeptical that it is making progress in improving ease of use (56% disagree) or managing costs (63%). 

In terms of areas of focus for the next 3-5 years, 48% listed improving practice efficiency, 34% planned to explore different business models, while only 14% were focused on public reporting of quality metrics and only 11% wanted to concentrate on patient safety.  To be fair, 31% did hope to adopt technology to improve clinical decision-making/evidence-based medicine. 

One likes to think that it truly isn’t all about the money, but it’s also easy to be cynical about this.  The Washington Post recently wrote about how an AMA committee is driving Medicare reimbursement decisions, using some questionable assumptions.  The Post asserts that some of the committee’s assumptions grossly exaggerate the time involved in procedures, such as for colonoscopies.   The assumptions can be as 100% higher than actual time and effort. 

The Post also notes that the committee is seven times more likely to raise time estimates than to lower them, in apparent contradiction to presumed technology and productivity advances.  Despite the billions of dollars at stake, CMS only uses “six to eight” people to review the recommendations, and none of them are devoted full-time, in contrast to the “hundreds” of people the AMA and specialty societies use to develop their recommendations.

Former Medicare chief Tom Scully is quoted as saying, “The concept of having the AMA run the process of fixing prices for Medicare was crazy from the beginning.  It was a fundamental mistake.”  The Harvard researcher who originally developed the RBRVS point system, William Hsiao, says, “The AMA fought very hard to take over this updating process.  I said this had to be done by an impartial group of people.  This is highly political.”

The AMA committee’s recommendations do not directly result in higher payments, nor is it likely that most individual physicians are aware of the assumptions embedded in their payment rates, but the process is another illustration at how no one is minding the store.

I would be remiss if I failed to mention the IOM’s new report “Variation in Health Care Spending: Target Decision Making, Not Geography.”  They were asked to investigate since Congress has been considering shifting money from high-cost areas of the country to lower cost ones.  Somewhat surprisingly, IOM did not support that tactic.  They reaffirmed that geographic spending differences do exist, for both Medicare and private insurance, and that there is essentially no correlation between quality and spending.  However, they did not support geography-based reimbursement models, finding that the geography is not the issue.

For Medicare, they found that higher spending differences were most associated with post-acute care, and to acute care only to a lesser extent; indeed, post-acute care differences accounted for 73% of Medicare’s geographic spending differences.  For private insurance, spending differences were due to price markups rather than utilization differences.

The IOM’s main conclusion is in the subhead of their report’s title: “Target Decision Making, Not Geography.”  Now if only we could figure out who is making the decisions.   The physicians don’t think it’s them; the government is delegating theirs to special interests and lobbyists; the payors can’t negotiate tough enough with the provider systems (especially now that those systems continue to consolidate); the provider systems – well, they’re terrified that the physicians will stop generating all that revenue for them. 

We can continue to pin the tail on new culprits, but we need to get past blame.  I’m naïve enough to think that there aren’t many villains here (although there are, allegedly, some), but it boils down to too many involved parties not being willing to be accountable for their actions.

When it comes to increasing value – not just controlling health care costs but also improving quality – in our health care system, I think of words of the always wise Benjamin Franklin: we must all hang together, or assuredly we shall all hang separately.

CMS Pronouncements on Pioneer ACO Results and 2014 HIX Premiums

By Clive Riddle, July 18, 2013

This week CMS announced results from the first performance year of the Pioneer Accountable Care Organization (ACO) Model, along with a new report that finds premiums in the Health Insurance Marketplace will be nearly 20 percent lower in 2014 than previously expected.

Here are the Pioneer ACO results that CMS is touting:

• Costs for the more than 669,000 beneficiaries aligned to Pioneer ACOs grew by only 0.3 percent in 2012 where as costs for similar beneficiaries grew by 0.8 percent in the same period.
• 13 out of 32 pioneer ACOs produced shared savings with CMS, generating a gross savings of $87.6 million in 2012 and saving nearly $33 million for Medicare
•  Pioneer ACOs earned over $76 million in compensation.
• Only 2 Pioneer ACOs had shared losses totaling approximately $4.0 million.
• All 32 Pioneer ACOs successfully reported quality measures and achieved the maximum reporting rate for the first performance year, with all earning incentive payments. 
• Overall, Pioneer ACOs performed better than published rates in fee-for-service Medicare for all 15 clinical quality measures for which comparable data are available.
• 25 of 32 Pioneer ACOs generated lower risk-adjusted readmission rates for their aligned beneficiaries than the benchmark rate for all Medicare fee-for-service beneficiaries.
• The median rate among Pioneer ACOs on blood pressure control among beneficiaries with diabetes was 68 percent compared to the comparison value of 55 percent as measured in adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001. 
•  Pioneer ACOs performed better on clinical quality measures that assess low density lipoprotein (LDL) control for patients with diabetes. The median rate among Pioneer ACOs for LDO control among beneficiaries with diabetes was 57 percent compared to 48 percent in an adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001.
• Pioneer ACOs were rated higher by ACO beneficiaries on all four patient experience measures relative to the 2011 Medicare fee-for-service results.

CMS did disclose that seven Pioneer ACOs that did not produce savings intend to switch to the Medicare Shared Savings Program, and two Pioneer ACOs have indicated their intent to leave the program. 

The Wall Street Journal  didn’t interpret these results as rosily as did CMS. Here is the WSJ take, from their July 16^th article Mixed Results in Health Pilot Plan: “All of the 32 health systems in the so-called Pioneer Accountable Care Organization program improved patient care on quality measures such as cancer screenings and controlling blood pressure, according to data to be released Tuesday by the Centers for Medicare and Medicaid Services. But only 18 of the 32 managed to lower costs for the Medicare patients they treated—a major goal of the effort. Two hospitals lost money on the program in the first year. Seven have notified CMS that they intend to move to another program where they will face less financial risk. Two others have indicated they intend to leave the program,”

On the Health Insurance Marketplace front, CMS touted findings from a just released twelve-page ASPE Issue Brief: Market Competition Works: Proposed Silver Premiums in the 2014 Individual and Small

Group Markets Are Nearly 20% Lower than Expected. CMS notes the report found that:

• In the 11 states (including the District of Columbia) that have made information available for the individual market, proposed premiums for 2014 are on average 18 percent lower than HHS’ estimate of 2014 individual market premiums derived from CBO publications.
• In the six states that have made information available in the small group market, proposed premiums are estimated to be on average 18 percent lower than the premium a small employer would pay for similar coverage without the Affordable Care Act.
• Preliminary premiums appear to be affordable even for young men. For example, in Los Angeles - the county with the largest number of uninsured Americans in the nation - the lowest cost silver plan in 2014 for a 25-year-old individual costs $174 per month without a tax credit, $34 per month for an individual whose income is $17,235, and a catastrophic plan can be purchased for $117 per month for an individual.

Here a chart provided in the ASPE report, comparing the ASPE premium estimate for Individual Silver premiums compared to actual premiums for applicable states:

Hiding in Plain Sight

by Kim Bellard, June 18, 2013

I saw two recent articles in The New York Times recently that I thought merited further discussion.  One attracted a fair amount of attention, the second not quite as much.  They deal with the high prices in the U.S. health system and the trend towards provider consolidation, respectively.  Both problems are well known, yet they describe continue to get worse, not better.  

The first article – The $2.7 Trillion Medical Bill: How Colonoscopies Explain Why the U.S. Leads the World in Health Expenditures – focuses on the wacky world of charges and overuse of expensive procedures, especially as they relate to colonoscopies.  It will come as no surprise to anyone who has been paying attention, but their analysis indicated that charges for the procedure varied dramatically between providers, and were much higher than in other countries.  The U.S. also does them more commonly than many other countries, preferring the expensive surgical approach to other screening options.  

The boom in the number of colonoscopies has been great for gastroenterologists, anesthesiologists, and surgical centers; for patients, perhaps not so much.  The article’s discussion of how many gastroenterologists have invested in surgical centers to reap more of the profits from the procedure is disturbing, and they are far from the only specialty to have discovered this financial gimmick.  It’s part of what drives our health care bill.  

The article notes that insured patients typically shrug off the inflated charges, since their insurance has negotiated rates that are far lower, but, of course, uninsured patients get stuck with the full bill, kind of like having to pay those absurd prices on the back of hotel room doors.  Arbitrary and inconsistent as charges may seem, they’ve nonetheless helped lead to “allowed charges” that are still much higher than anywhere else in the world.  We all end up paying for the costs, of course, through higher insurance rates or as taxpayers.  

Meanwhile, the second article – Health Care’s Overlooked Cost Factor – centers on market consolidation, particularly through mergers of health systems.  It starts off with the FTC’s first successful antitrust case against a hospital merger since 1990 (!!), blocking the merger of two neighboring Chicago hospitals.  A victory of sorts, but the case was done post-merger and it is not at all clear that the ruling actually rolled back pricing with the payors to the levels they would have been sans merger.  

Earlier this year the FTC did move to block the acquisition of Idaho’s largest physician group by its largest hospital provider, so perhaps they’re starting to wake up to the problem.  With all the health system merger activity in the past 10-15 years, these isolated victories lead one to wonder why the FTC has been so asleep at the wheel. 

The article cites research by Gaynor and Town, done for the Robert Wood Johnson Foundation last year, which concluded that hospital consolidation generally raises prices, often dramatically, and that physician-hospital consolidation has not led to improved quality or reduced costs.  Their research is not the first to reach these conclusions, and of course the American Hospital Association has a different perspective.  Earlier this month they released a report that which indicated that only about 10% of hospitals have been involved in a merger in the past five years, that most mergers aren’t happening in concentrated markets, and don’t necessarily result in higher prices.  Uh-huh.  

AHIP was quick to rebut the recent study’s conclusions. 

These are well-known problems.  The insight on prices goes back at least ten years to Gerry Anderson’s Health Affairs famous article “It’s the Prices, Stupid.”  Steve Brill wrote a similar article in Time (“Why Medical Bills Are Killing Us”) earlier this year.  The state of California and the Commonwealth of Massachusetts have both publically been concerned about the consolidation issue, and there was the great quote from consultant Robert Murray: “Finally the evidence is catching up with the reality that we have a humongous monopoly problem in health care.”  Even I’ve previously written on both prices and market consolidation.  So, no, these shouldn’t catch anyone by surprise. 

Many experts cite greater transparency as an important way to attack prices, and there are numerous companies purporting to provide consumers transparency tools.  Indeed, a recent report from the Aite Group claims transparency itself will be a $3 billion industry by 2016 – up from $540 million in 2012.  Of course, someone – i.e., consumers – ultimately will pay for that increase.  Only in the American health care system does creating a business to provide information on prices lead to greater costs for the system, as to date the data is inconclusive at best that consumers will actually change their behavior based on transparency information.  And in a consolidated market they may find few options to price shop even if they want to. 

We need more competition, and we need it on the right things, like value.  I’m not sure any of the metrics we use now are going to get us there anytime soon.  Some claim that this is the era of “Big Data,” and its application in health care will provide revolutionary insights.  McKinsey & Company issued a report that says use of Big Data in health cae could save $450 billion a year.  Do a search on Big Data in health care and you’ll find a plethora of eager companies, from behemoths like IBM to upstarts that specialize in health care, like Explorys,  GNS Healthcare, or Health Catalyst, to name a few.  Hidden in the morass of health care data, it appears, are gems. 

Much has been made of the recent scandal over the NSA pulling unimaginable reams of data from telephone and internet records, and using their Big Data capabilities to mine it – hopefully only to detect terrorists.  Meanwhile, when I read articles like the one Bloomberg News recently reported about how one Chicago hospital has literally been cutting patients’ throats – e.g., performing tracheotomies -- unnecessarily to increase revenues, I kind of wish we did have some Big Brother looking at the data better.  

In a series of articles over two years ago the Wall Street Journal showed (see here or here) the kinds of fraud can be detected through proper analysis of the Medicare claims data – and it makes one wonder why CMS hasn’t done the same.  Perhaps now that the Wall Street Journal has forced CMS to release Medicare claims data on individual doctors someone else can detect this kind of abuse on an ongoing basis.  That data is still not freely available, but at least the door is open wider.  

Some say pricing can be addressed via greater transparency, others want more bundled payments, and yet others like reference pricing, which essentially limits payor liability to a fee schedule.  I’m old enough to remember when health insurance often had set fee schedules, with charges above those scheduled amounts the patient’s problem, and I don’t recall people being too crazy about them.  On the other hand, costs were a lot lower, so maybe there is something there, just as we’re also going back to the old idea of big upfront deductibles.  

Personally I think the source problem is that we’ve allowed our pricing structures to become so complex, so piecemeal, and so jargon-filled that no consumer – and few professionals – can really be expected to understand them, much less shop based on them.  Step one has to be to greatly, greatly simplify how we price health care services. 

One of my pet peeves in health care are those financial responsibility forms providers try to get everyone to sign upfront.  They say, essentially: we don’t know exactly what we’ll do to you, or how much it will cost, and we may get some other people to do some other things to you too, and we don’t know what that will cost either, but whatever is done to you and however much it costs, you are obligated to pay.  I’m no contract lawyer, but that sure doesn’t seem like an enforceable contact to me, given the vast asymmetries.  I’d sure love to see the ACLU or Public Citizen or maybe even AHIP take this on in court.  Pricing would get a whole lot more rational if there had to be more upfront disclosure and agreement. 

As for the market consolidation, if health systems are going to create monopolies or virtual monopolies, they may need to be treated more like public utilities, facing rate and spending review.  I’d hate for that to happen, and much prefer that we reimagine the role of these capital-intensive structures.  Why do these big buildings with all those beds and all that equipment still make sense in the 21^st century?  Can they be reinvented with something that allows more competition?  I offered one conceptual approach some time ago, but would welcome other proposals to address the issue. 

There is a lot of “reform” happening in health care these days, but if they just end up incorporating these two structural problems I doubt we’re going to actually see much real improvement to our health care system.

Infographic: Chronic Care is a Team Sport

By Cyndy Nayer, June 13, 2013

Chronic care is a long-term management strategy, and it requires a focus on outcomes, especially in reimbursement for the team of providers that manage the complex conditions. Diabetes, hypertension and high cholesterol get a lot of attention, but there are more, such as depression, cancer, arthritis. While the ACA will attempt to manage the escalation of premiums, it requires a team effort to manage chronic care. Lifestyle, treatment adherence, and regular primary care visits are a must. Value-based designs will work to get better engagement from the beneficiaries, but the plan sponsors, especially the employers, must pay close attention through regular data reporting, coordinated care, and communication across all of the team members, including the patient and his/her family. Chronic care is a team effort, and to be a member of the winning team, coaches and players must be headed for the same goals!

For more blog posts by Cyndy Nayer, visit www.cyndynayer.com/category/cyndys-voice/

A response to Friedman and Obamacare Innovation Surprise

By Cyndy Nayer, June 4, 2013

Thomas Friedman posted a column in Sunday’s NYT that highlights the surprise in technology innovation as a result of Obamacare. But one example needs an update, so I, serial disrupter will now step out and argue with a journalist that I adore.  Mr. Friedman, because a system or a provider has an electronic medical record does not ipso facto mean that info can be shared and care coordinated.  If my provider is at one hospital system, but I also use another provider or system, and each use a different IT platform, they can’t talk, and I can’t get coordinated care.

This is an important fact and one that needed to be addressed before the billions of dollars were invested.   Mind you, I agree with the investments (that will anger a few of my followers), as they came exactly at the right time and place:  the intersection of health care and the economic downturn that put a lot of very smart people out of work and out of health care coverage.  We needed that influx of dollars to invigorate the geniuses to update the platform that was crushing us in health care.  You know the platform, even if you can’t name it, by the tag line:  ”our legacy systems don’t talk to each other.”  I’ve been hearing that phrase since the early 1990′s, and iPhones, iClouds, twitter, facebook and more were not even thought of at that time.  If I can get my iTunes anywhere in the world why can’t I….but I digress.

If we had required some interoperability standards BEFORE the money was awarded, we would be much further along today.  Because we supported the information expansion but didn’t consider the accountability standards for the health care delivery system nor the consumerism (read as “people must make purchasing decisions”) that would be required, people cannot get their data.  In fact, it’s been 3.5 years now since Obamacare came to be, and despite blue buttons or pink buttons, my medical record is incorrect, hasn’t been corrected in 6 weeks, and it has implications for my personal health that, if I need care soon, could have dire consequences.  Even the care provider’s information maven says my info is incorrect.  But no corrections have been made and, of course, I don’t have access to put in patient notes, either.

If we considered what would be required of folks across the country, and many of us do travel across our great land, then we would have known that our data must move with us.  We have a model like that in our country:  the veterans administration data travels with the soldier wherever he or she is stationed.  That simple process would have made accessibility so much easier without destroying “proprietary rules” of innovation companies, insurance companies, and health systems.  In other words, we did so much right from the tech and economic recovery side, but we forgot the people who will, ultimately, bear the brunt of the fallout in choices.

I chose a well-respected provider and health system.  They are part of a national leader in medical technology.  So the system did “patient-centered” without considering “patient inclusive” and that’s not ok.

It’s hard to catch the cow once she is out of the pen, I’m told (never caught a cow).  Probably applies to the innovation rocket ship we launched.  But humanity is calling to be injected into this scenario.  You can’t hold me accountable if I can’t get the data–I’m shooting blanks and so is the system without my input.  Data is just data without me and my story, or you and yours, told with accuracy.

So hurrah for the innovation injection, which, in fact, is mirroring what happened with NASA and national innovation in the 60′s and 70′s.  Now, include me.

Obamacare’s Other Surprise – NYTimes.com.

Trimtabs Applied to Health and Health Care Reform

By Cyndy Nayer, May 21, 2013

I’ve been reviewing some of my saved quotes and notes, such as the notes on trimtabs, as the airwaves heat up with IRS, AP and all things HCR (health care reform). The road to repositioning health as the goal can be a long uphill struggle, and as I continue to speak around the country and counsel employers large and small, the strain is showing. It’s time to discuss trimtabs.

It’s certainly no secret that I’ve lived most of my life in St. Louis, home to the Missouri Botanical Gardens, a world-renowned horticultural center and leader in rainforest research and environmental change.

The centerpiece and brand of the Mo. Botanical Gardens is the Climatron, a geodesic dome, the building with the smallest footprint and the largest capacity. This is the building of Buckminster Fuller, who has built many geodesign domes, which, according to his research, is the strongest building on earth, withstanding hurricanes, tornadoes, and earthquakes. You’ll note from the picture that it resembles a honeycomb curved into a shell-like structure. The intersection of the cells means that, like a honeycomb, the physical stress on the structure is equalized across all of the cells. This I learned many years ago when the Climatron was built. Bucky understood that design signals the human intention, and his intention was to live well and leave the world better when he was gone.

Buckminster Fuller was a scientist and a man who loved sailing. He understood trimtabs as the mechanism that cause rudders to move. Trimtabs are small surfaces connected to the trailing edge of a larger structure (such as a rudder) that stabilise the boat or aircraft in a particular desired attitude without the need for the operator to constantly apply a control force. This is done by adjusting the angle of the tab relative to the larger surface. In simple terms, it means that by adjusting the trimtab, or tabs, the rudder on a boat can make a series of small adjustments with less effort than trying to push the rudder against the enormous force of the water.

In Bucky’s own words:

“Something hit me very hard once, thinking about what one little man could do. Think of the Queen Mary — the whole ship goes by and then comes the rudder. And there’s a tiny thing at the edge of the rudder called a trimtab. It’s a miniature rudder. Just moving the little trim tab builds a low pressure that pulls the rudder around. Takes almost no effort at all. So I said that the little individual can be a trimtab.”

Bucky takes the concept of trimtabs further, by noting, “Society thinks it’s going right by you, that it’s left you altogether. But if you’re doing dynamic things mentally, the fact is that you can just put your foot out like that and the whole big ship of state is going to go.” He was determined to use design to improve lives; he used the familiarity of culture to make change feel familiar, less threatening, and easily adoptable. He developed solar panels to heat the geodesic domes, and even these have morphed to many more uses, including protecting turtles where they nest. In many ways, his description of the enormity of a small bit to move the Queen Mary is the embodiment of all of his work. Each of us, in our own way, has the ability to affect the course of boats, of ocean liners, of our hometowns, and of health care in America.

I’ve had the honor and good fortune to address health plans, small businesses, and large businesses over the past few weeks, literally from coast to coast. The travel is tiresome, but the amazing need for information on patient and employee engagement, health care reform, and, most importantly, WIIFM (What’sInItForMe) is never-ending. Sharing the stage or the panel with other innovators is such a pleasure. Yet, sometimes we forget in our enthusiasm to share that those who are listening need us to slow down just a bit, walk away from the acronyms, and catch them up on what we know.

It’s that rare moment when any of us can be trimtabs to the audience, to change their course and their affect from one of powerless victim (THEY are doing this, and THEY have no idea of the kinds of hassle and money this is causing me) to one of expert seafarer, with a new and clearer eye on the horizon. I love those moments.

On the road or in the air back to home base, I have the chance to review notes and consider concepts that will help attendees and readers of this blog to manage the stress that occurs with substantive change.

• Moving from a sick-care system to a true health care system is not easy. Neither is changing the course of the Queen Mary.
• Moving from incentives to intrinsic behavior change is not easy. Neither is pulling lobsters behind a trawler when the wind is in your face.
• Identifying key components of change and then enacting the changes through legislation is not easy. Neither is turning those beautiful white sails on the sailboats at the beach.
• Finding that there were items left unconsidered, or, finding them with gaping holes or costs that were unanticipated is not easy. Neither is moving great seas out of the way in order to make it home safely.

We are on a journey for better health outcomes in this country. We are creating a platform where more people can access health insurance and, in the end, health care. We trust that by creating a wider group of engaged, healthier people, our businesses and our communities can stabilize and grow to productivity and prosperity again. And our course causes some to fear, some to claim “this is mine and cannot change,” much like the wild seas attempt to claim the sailboat.

Paramount to our efforts must be engaging folks across the spectrum of health care interventions, from exercise and purchasing healthy foods to trust in a safe-care system delivered with consideration of the patient and the family. As Dr. Toby Cosgrove, CEO of Cleveland Clinic said in an IOM post recently, “We must do everything transparently and with the patient fully engaged. We must provide value and pay for outcomes.” This is a fundamental shift in how we pay for health care; it’s new and unknown, and therefore causes tension that we may not have anticipated. But it’s the course we are on so that we can get home to health and safety.

So as I have traveled these past few months, and I’ve seen the weariness and, yes, the fear, I’ve thought about Bucky and went back to my notes that I keep for inspiration. Trimtabs are a fantastic frame for the work occurring across this country, and, if we can remain committed to getting home–creating a healthier person, healthier businesses, healthier communities–then we will have succeeded. We can identify the gaps and fill them with innovation and purpose. We can take the steps, singly or in concert, and embrace the change in course so that we can achieve our goals.

The man who designed geodesic buildings to save the environment, who invented the word “synergy,” said, “Call me Trimtab.” And R. Buckminster Fuller considered the role of trimtabs and his work (you can see a video of Bucky here and here). He thought trimtabs and the efforts each of us can contribute would lead to a better course for the better lives of all. He liked the concept so much, he had it engraved on his headstone.

Anchors Aweigh!

By Clive Riddle, May2, 2013

In MCOL’s current issue of ThoughtLeaders, the question was asked “Which provision of the Affordable Care Act do you feel has had the greatest degree of success thus far with regard to implementation and achieving its objectives?”

The sage, and always insightful Peter Kongstvedt, MD, provided a response with an intro that demands repeating in part here, because it is that good:

Peter opens his reply with: “The answer to this or any other question must always be preceded with a question: Who’s asking? In other words, how successful or effective something is depends on who is defining success or effectiveness. The following table illustrates this:”

Person	Thing	Effectiveness
Drunk Don, drowning after diving into a pool	Inflated inner tube	Life-saving, thank God
	Gallon of water	No thanks, I take mine neat
	200 pound anchor	Is this a case of Murder?
Desert Pete, far from civilization without his mule or canteen	Inflated inner tube	In the desert? Useless
	Gallon of water	Life-saving, thank God
	200 pound anchor	In the desert? Worse than useless
Yachtsman Biff on his unmoored sloop, foundering off the lee shore of a rocky isle	Inflated inner tube	May need it if can’t anchor yacht
	Gallon of water	May need if need to abandon ship
	200 pound anchor	Life-saving, thank God

The wisdom of Peter’s anchor analogy is not only humorous, it is quite profound.  We all need to keep Drunk Don, Desert Pete and Yachtsman Biff in mind as we tackle the spectrum of healthcare issues stretching out from here to the horizon, with the understanding that whether we’re talking about reform policy issues, readmissions management, health plan marketing segmentation, performance analytics, wellness incentives, and on and on…. the needs, solutions, outcomes and metrics are not one size fits all. Populations, geography, situational scenarios..they all matter.

Peter expanded on his ThoughtLeaders response in his own blog, which is highly recommended reading. I urge you to click now and check out the KvedtBlog from PR Kongstvedt Company!

Boston: Coincidences, Complexity, Continuity, Care

By Cyndy Nayer, April 25, 2013

America's Freedoms Are Our Vulnerabilities

There is no doubt that the terrorism of the Boston Marathon 2013 was heart-stopping, heart-rending, and a cruel reminder that America's freedoms are also our vulnerabilities.  It's also a bit ironic that, because of a family emergency, both of my daughters had flown down to our house and were with us when the bombs went off.  Why is this important enough for me to mention here?  Because if my older daughter hadn't come down to help, she would have been exactly at the finish line where the bomb went off. Coincidence?

I don't believe in coincidences.

The week, and the socialmediasphere, have been resplendent with coincidences, the most poignant of which was the story of the couple who both were in the health care provider space, both came to cheer the runners of the marathon, both had a portion of their left legs blown off in the explosion.  They were separated by the blast, and they remain separated in different hospitals, but they are recovering and they are talking by phone to each other (see below for how you can help).

Who were the terrorists, what was their motivation, what will happen to the survivor, I have to leave to the sleuths and judicial systems to discover and decide.  My work is to uncover the learnings that we can all ingest to fortify our health promotion and business recovery.  Here are some thoughts.

1.  Boston has terrific hospitals, prepared for trauma management.  I've managed many fitness events, and, of course, a key component was the clinical staff onsite.  They volunteered their time for running injuries, dehydration, and the sort.  Some of them on April 15 had seen combat duty in Afghanistan and Iraq, and they were able to flip into mash-unit mode quickly.  All of the injured who made it to the hospitals have survived, albeit many have much rehabilitation to work through.

2.  Boston has moxie and motivation.  Bostonions have been described recently as gritty, defiant, and strong, and this makes great sense since this is the birthplace of the American Revolution--the shot heard round the world--and of the freedoms that would coalesce into the US Constitution.  When the explosions came, the runners ran INTO the crowds to help those who were hurt, ran to the hospitals to give blood (another 2.5 miles after their 26.2 mile run), and reached out to one another.  They may fight like family, but when the pressure is on, Boston is one big supportive family. For more on the grittiness of Bostonians, and a chuckle, click here to see Colbert's Report for April 16, one day after the bombs.  

3.  Boston finishes what it starts. Samuel Adams (not the beer, but the revolutionary) said, “Nil desperandum, Never Despair. That is a motto for you and me. All are not dead; and where there is a spark of patriotic fire, we will rekindle it.” There were people around the nation, and now, around the world (London) running races for Boston over the past 10 days, and there will be more.  There are calls for boosting the economy and taking Boylston Street back--it opened today--and for helping those who were locked out of their homes and businesses for these days.  This is the Boston that warned of the Red Coats, rode the Freedom Trail, waited 86 years for the Red Sox pennant.  When folks were hurt, people did what they could:  one woman baked oatmeal chocolate chip cookies for the police/troopers/FBI/ATF, etc. to eat when the 2nd suspect was arrested.  Grit and defiance demand food, too, after all.

4.  Boston wears its patriotism and small-town love proudly.    Read this excerpt from one of the London marathoners, who also ran in Boston:

“I had a hard day out here,” said Neynens, who wore a 2013 Boston Marathon hat during his London run and finished in 2:48:09. “I was hurting, but obviously I was not hurting near as much as the injuries that I saw, people who lost their legs. I finished for all those people who were hurt and those people who couldn’t finish last Monday...

There was a banner we passed around Mile 25 that said, ‘Run if you can. Walk if you must. But finish for Boston.’ That meant a lot to everybody. It was great to see the support of everybody out there for the runners and for Boston."

 There were lessons for health, healthcare, and healthcare reform, too.

1.  Interoperability of electronic medical records could have been a problem.  In the marathon were runners and family-watchers from around the world.  What if there were a diabetic runner who, because of the bombings, was delayed in his/her sugar control?  There are so many other "what ifs" that the message is clear:  we need to quickly find a way to make these EMR-EHR-PHR talk to one another for the safety and security of the providers, patients, and communities.  We cannot afford to waste time finding a knowledgeable relative when life hangs in the balance.  [I wrote about this lack of interoperability in my post "EHR Is Speechless"].  There is no magic about data, the rules engines can be preserved as proprietary to each company, but the data must be accessible.

2.  Teamwork. Who will ever forget the masses of security forces closing in on the final suspect?  Or the video of the Chief of Police of Watertown MA saying his troops were never trained on counterterrorism, so they just did what was they thought was right?    Those of us riveted to the scenes will remember the ATF, FBI, fire departments, EMT, Boston police, State Troopers, and so many more.  But how many noticed that hot food was brought by the NY-NJ Port Authorities?  How many could ever forget the cheers and singing and clapping by the Watertown citizens when the ambulances and security cars crept slowly back into the city?  Now, imagine those kinds of teamwork in communities of care, with warm "handoffs" from primary care (Watertown police) to specialists (BPD, ATF, FBI, MA troopers) to recovery and long-term care (Red Cross, Boston Globe, and so many other watch-dogs and care providers).  Everyone had their job and new exactly what they had to do.

3.  Continuity and safety.  Recently I saved an article on the rates of hospital infections in the US compared globally, sent to me from my colleagues at MCOL.com.  Because of the trauma training, the warm handoffs, and the sense of accountability, continuity is a given in Boston.  It's the accountability that will guard the injured, the fallen and the recovery.  There's a new sense of "we share in this," and it's this sense that carry Boston through.  That's the real message of accountability:  we all own at least a portion of the problem, whether it's economic recovery or health promotion, and we all have a responsibility to step up to manage our community better.

Of course, in the land of the Red Sox, with the frame of David Ortiz' opening moments in Fenway Park, and the surprise visit from Neil Diamond to lead Sweet Caroline, the poignant moments caused tears and love and hugs.  For us who weren't in Fenway, or Boston, or Watertown, I treasure the picture that went viral on twitter and other social outlets:

 I don't think there are any coincidences.  I abhor terror, bloodshed, violence.  But these moments that I've called out remind me, and I hope all of us, of the goodness of people.  Who could possibly convey it better than Fred Rogers?  We needed to hear his words, "Look for the helpers," right then, right at that moment.  It opened our hearts and made us feel safe again, and we spotted more helpers and lavished praise, because we all needed to heal.

And then Boston Daughter (who had returned to Boston) sent me an email and a picture that she took, the one that starts this blog post, the site that amazed and tore and then opened her heart.  She told me she couldn't sleep, walked to the memorial Monday morning at 5am to pay her respects, and left her pink running shoes because she wanted to be part of the healing, too.

If you want to be one of the helpers, here are two ideas for you for donations.  There are many more, I simply had intersections with each of these here:

If you, like me and my Boston daughter, are an avid fitness participant, then you may want to make a purchase at @unitedwestride UnitedWeStride will donate all the proceeds from the purchase AND AN ADDITIONAL DOLLAR

@JetBlue  I audaciously sent a tweet on 4.22 to @JetBlue asking for serious discounts to Boston so we could boost the economy--I'm betting others did, too. On 4.23 I received an email with serious discounts.  Help those most affected by the Boston tragedy through The One Fund Boston, and JetBlue will match up to $100K. http://www.jetbluegives.org

 I hope peace comes to those who mourn and to those who heal.  I hope strength comes to our leaders and our protectors.  I hope our communities come together for health.

Sebelius Says

By Kim Bellard, April 16, 2013

If I was HHS Secretary Kathleen Sebelius, I think I’d be asking for a pay raise, or maybe a (verbal) flak jacket.  Of course, there’s probably no money for them.

Sebelius is front and center for any developments with ACA, and she has been a very visible spokesperson for the controversial legislation.  I don’t know whether she actually believes all the things she says, or is just a loyal soldier for the Obama Administration.  Either way, the news about ACA seems like a slow drip of continued bad news, and I fear that the news is going to keep getting worse before it gets better.

Latest up was the request, included in the Administration’s 2014 budget, for an additional $1.5 billion to run the health insurance exchanges for the 26 states who have opted to have the federal government run their exchanges, plus another seven that are to be jointly run.  That’s far more than had been originally expected, which means much more work for HHS.  Congress refused a similar request for just under $1 billion last year, and is likely to view this request equally skeptically.  

In testimony before the House Ways and Means Committee last Friday, Secretary Sebelius vowed that the exchanges will be up and running by the October 1 deadline, but admitted there’s no backup plan in case she’s wrong.  Presumably she’s lined up someone to blame in case she’s wrong.

Curiously, even though far fewer states are planning to run their own exchanges, HHS expects their grants to those states to be more than twice as much as they estimated last year – some $4.4 billion instead of the earlier $2 billion.  HHS doesn’t need to ask Congress for this money, but the increase certainly raises eyebrows.  Twice as much for half as many states?

The Washington Post recently pointed out that, even though ACA is arguably the signature accomplishment of the Obama Administration, the President’s recent budget proposal doesn’t do anything to spell out its expected costs.  They are spread out through the budget and not always cleared spelled out.  Cynics might argue that the budget deliberately obfuscates the costs to avoid drawing attention to how much they are.  CBO had recently estimated, for example, that the subsidies are now expected to be much more expensive than originally forecast.  Some of that is because health insurance premiums are expected to be higher than expected – the Administration had promised they would drop due to ACA, something Secretary Sebelius now acknowledges isn’t going to be the case.

The Administration has already started to cut corners on how the exchanges will operate.  They recently announced that employees of small employers who get coverage from the exchange will not initially get options of health plans; they will be limited to a single option.  I’ll be waiting for the other shoes to start dropping about what else they will be cutting back on.  Maybe they can start with their complicated application… 

Then there is Medicaid expansion, which is not going well at all.  I’d previously written on this, and the situation isn’t getting better.  The Arkansas approach, which relies on purchasing private insurance, was seen to be a potential solution for wavering states, but the Arkansas House recently failed to approve the approach.  Similarly, in Ohio, Gov. Kasich faces rebellion from his own party on his support for their version of expansion.  The number of states who have not opted to expand Medicaid should, ironically, hold down the projected federal spending, but it is not clear how the Administration is scoring the impact of those states’ reluctance.

ACA used employer coverage as a continued cornerstone for source of coverage – remember “if you like your health plan, you will be able to keep your health plan”? – but that cornerstone is weakening.  The Robert Wood Johnson Foundation recently detailed what has long been known: employer coverage has declined drastically over the past few years, dropping 10 percentage points nationwide from 1999/2000 to 2010/2011.   Some states saw even worse results, led by Michigan with a 15.2% decline.  And that was before ACA’s biggest impacts. 

Optimists are pointing out that there is no sign yet of employers planning to drop coverage or cutting back on full time hours to avoid their 2014 mandate requirements, but I think their optimism is premature.  Even if 70% of benefit professionals say their companies would “definitely will” keep health coverage, as cited by the International Foundation of Employee Benefit Plans survey, that number is still alarmingly low, and those same professionals are coming to be more pessimistic about how much ACA has been increasing their costs. 

Similarly, quoting the recent Minneapolis Federal Reserve survey results -- which indicated 89% of employers hadn’t shifted full-time employees to part-time – as good news seems slightly Orwellian.  Eleven percent is a lot for something that hasn’t happened yet, and the Fed notes that the 89% didn’t exactly say they wouldn’t in the future. 

When one adds up the various things that are becoming visible problems about ACA, the list starts to get long.  For example, the tax on employer plans, the medical device tax, and the affordability test for large employers’ contributions to dependent coverage have all come under fire in the past few months.  And let’s not forget that the Class Act was the first part of ACA to go, with Secretary Sebelius killing it back in fall of 2011. 

According to Kaiser Family Foundation’s latest survey, three years after the passage, over half of Americans report they don’t understand how ACA will impact them, and a plurality still oppose the law.  One wonders how many members of Congress who supported ACA originally would still vote for it if they had a second chance. 

One way or the other, we’re going to put putting increasing numbers of people in the exchanges in 2014 and beyond, which will increase the strain on them and will increase the cost of subsidies.  Maybe that’s not so bad, but we better go into 2014 with our eyes open about the difficulties the system may face.  No matter what Secretary Sebelius says.

If Kaiser Is Not the Answer, What Is the Question?

by Kim Bellard, March 28, 2013

The New York Times recently published an interesting article, “The Face of Future Health Care,” that raised questions about whether even a model like Kaiser is delivering what we need to reform our health care system.  It’s the old “be careful what you wish for…” dilemma.

After all, Kaiser could be considered a prototype for what ACA wanted when it created Accountable Care Organizations (ACOs).  It is a fully integrated hospital-physician organization, delivering care and managing risk with salaried physicians and other health care practitioners, and its own hospitals.  Hospitals all over the country are rushing to build their own versions, buying up physician practices at a record pace – one survey indicated that 52% would do so this year, while another predicted 75% of physicians would be so employed by 2014.

Kaiser may not have been the first integrated delivery system, nor are they the only one, but they certainly are the largest and have been around for decades.  With all those decades, though, one would expect they would be dramatically lower in cost, and that is not generally the case.  San Francisco public radio station KQED did a report “Why Isn’t Kaiser Less Expensive?” last spring.  In their report, critics accuse Kaiser of shadow-pricing, while Kaiser’s CEO George Halvorson insists they don’t and are usually at least 10% cheaper.  That’s nothing to brag about: with even 1% lower annual trend, they should have gotten 10% cheaper in these early years of the 21^st century alone.

All this is not to pick at Kaiser.  I have long admired models like Kaiser, Geisinger Health System, Group Health Cooperative of Puget Sound, Intermountain Healthcare, or The Mayo Clinic.  It just seems intuitively obvious that like an integrated system, without the same incentives to overtreat that are pervasive elsewhere, should produce better results.  Each of the systems has been fairly successful in their core markets, although less so the further away from home they get, yet none are delivering radically different cost or quality results than other providers.

And, really, why should they?  They only have to be a little better each year than their competition.  The new mantra in health care is “value-based purchasing,” but we’re a long way from there.  The Catalyst for Payment Reform reports that only 11% of payments to doctors and hospitals are based on performance, while the Commonwealth Fund reports that less than 1% of health insurance premiums was spent on quality improvement in 2011.  This is disappointing but hardly surprising.  Most purchasers are buying with essentially house money; that is, someone else’s money. 

The biggest sources of health coverage are Medicaid, Medicare, and employer-sponsored health insurance.  The persons covered under all of these are largely shielded from the true cost of that coverage.  Medicaid is funded entirely by taxes, Medicare is also largely tax-funded, even when considering beneficiaries’ lifetime contributions, and, of course, employer coverage has the tax preference.  The “tax expenditure” for employer health insurance is, by far, the largest such expenditure – more than twice as large as the mortgage deduction, for example.  It’s all just compensation to employers; money “contributed” to employee benefits is simply money not spent on employee wages.  The tax preference helps shield employees from how much is being spent on their behalf, and it creates a huge disparity with people buying individual coverage, who receive no tax break.

ACA doesn’t equalize the tax preference, but it does introduce a vast set of new subsidies for individual coverage.  The Society of Actuaries has recently reported that individual premiums may be 32% higher due to ACA, joining the chorus of warnings about what may start happening in 2014.  Even HHS Secretary Sebelius now acknowledges they may be higher, but notes that the new subsidies will offset much of these.  While I think it is good public policy for more people to be covered and for economically disadvantaged people to get assistance in making coverage affordable, I worry greatly about creating a large new class of people sheltered from the true cost of health insurance.  It’s making a bad situation much, much worse.

Steve Brill has gotten much deserved attention for his lengthy and insight Time article “Why Medical Bills Are Killing Us.”  Brill painstaking walks through the crazy world of health care prices, especially their inconsistency between payors.  Some have used his work to call for single payor or other rate-setting, while I would argue that the system is a symptom of what happens when no one is paying enough attention to prices.

Frankly, I question whether the ACO/integrated delivery system is going to be the solution to our health care mess.  Hospitals are like factories: full of capital-intensive equipment and expensive to operate unless run at capacity.  Yet they aren’t really run like modern factories in terms of management practices, as a recent study in JAMA pointed out.  Similarly, physicians and other health care providers have some definite income expectations and fixed overhead obligations. 

All too often, combining hospitals and other providers in integrated delivery systems may be more about consolidating market power or assuring current revenue levels than about improving the cost and quality of the care for patients.  One AEI scholar recently pointed to the “humongous monopoly problem in health care,” and that’s with ACOs still in an early stage.  AEI is not the first to cite this issue, as I’ve written about previously, but I still don’t think enough attention is being paid.

We’re moving quickly to a health care system that features geographic provider monopolies or cartels, consumers too shielded from costs, and a regulatory environment that creates larger barriers to entry for new competitors in either delivery or financing of care.  That’s the perfect storm for a disaster. 

For radically different results, we’ll need radically different approaches.  Clayton Christian wrote about disruptive innovation in health care over ten years ago, and yet we’re still waiting to see it.  It may mean breaking the health/medical connection that HMOs led us to try to integrate in health coverage, giving consumers more fiscal accountability for the former while still protecting them from catastrophic expenses that can result from intensive medical interventions.  It should mean putting more of the data and technology – like mobile apps -- in the consumers’ hands, as advocated by people like Eric Topl (The Creative Destruction of Medicine) or Joe Flowers, and using that data to measure performance and help prescribe treatment. 

We’ve had a very paternalistic health care system, with health care experts telling us what care we need and other experts choosing coverage for us.  Let’s hope we can change that.  We need consumers engaged, taking responsibility, and demanding accountability from providers.  We need new types of competitors, using 21^st century technology and science, to help consumers manage and finance their health needs.

We have to make sure that legislation and regulations focus on what’s best for the patient, not necessarily for existing health system entities, in order to help ensure we don’t stifle innovation (e.g., FDA regulation of mHealth).  The facts that traditional Medicare benefit design is still largely based on 1960’s Blue Cross Blue Shield designs, or that, generally speaking, you can’t use telemedicine to consult with an expert physician in a different state due to licensing or coverage restrictions, amply illustrate the problem. 

Whatever the future health system looks like, it won’t look like what we have today.  Dinosaurs were remarkable effective for hundreds of millions of years, but the environment dramatically changed and they became extinct.  A lot of the dinosaurs that have historically been the basis for our health care system will become extinct in the new health care environment, or evolve beyond recognition.  As with evolution, it will be messy, proceed with many false starts, and produce unexpected winners.

Personally, I can’t wait to see what the future looks like.

Medicaid Is Different…Isn’t It?

By Kim Bellard, March 14, 2013

Let’s be honest: since its inception, Medicaid has been the unwanted stepchild of the health care system.  It serves a diverse set of populations that other public and private programs have historically ignored, its health outcomes are no better and possibly worse than not having insurance at all, its payments to providers generally rank lowest of all payors, and its coverage varies widely between states and all-too-often is skimpy despite its broad coverage requirements.  And yet ACA wants to pour more people into this creaky vessel, sweetened by the inducement of increased subsidies to the states for the first few years. 

Some states are thinking there has to be a better way.

Supporters of ACA are crowing about the fact some prominent Republican governors, such as Arizona Gov. Jan Brewer or New Jersey Gov. Chris Christie, have come out in support of expanding their Medicaid programs as allowed by ACA (with a nudge from the Supreme Court).  They should be looking harder at states like Arkansas and Ohio.

Arkansas asked CMS if they could use the expansion dollars to fund buying private insurance, in the exchanges, for its Medicaid population.  No just the newly eligible population, mind you – the entire eligible population.  Much to some experts’ surprise, CMS approved this approach, citing premium support flexibility allowed by ACA and previous laws.  This approach still has to be approved by the Arkansas legislature, which so far has been receptive. 

Other states are not far behind.  Ohio, whose Republican Gov. John Kasich drew national headlines by supporting the expansion, is proposing a hybrid model that would put only the newly eligible population into private insurance via the exchanges, so that anyone over 100% of the federal poverty level can get coverage there.    

Wisconsin has an even more unusual twist.  Its Medicaid coverage already covers many residents over 100% of the poverty level, but is frozen to new adult enrollees due to budget issues.  Gov. Rick Walker wants a trade-off: Wisconsin would cover everyone under 100% of poverty in its Medicaid program, while anyone above that – including those now eligible for Medicaid – would get coverage (and subsidies) through the exchanges.  Connecticut is considering a similar move.

States like Florida are watching closely.  Its Governor, Rick Scott, shocked supporters by reversing his position and coming out in favor of the expansion.  The Florida legislature was not too thrilled about this seeming support for Obamacare, but finds the Arkansas approach intriguing.  Florida had already moved to putting its Medicaid enrollees in managed Medicaid plans, so the Arkansas approach is a closer fit philosophically.

In theory, CMS can approve such approaches if the cost and the coverage are comparable, but early indications are that they are taking a liberal (or would that be conservative?) interpretation of those requirements.  The Kaiser Family Foundation just released a brief outlining the various requirements and options for the premium assistance model, in case anyone is that deeply interested.  Some pundits think that if the Arkansas approach is implemented, that approach will spread quickly.

Two things I liked about ACA – and they may be the only two things – were that it ensured anyone could get coverage and that all of the lowest income people had subsidized coverage.  The way it did so, though, made an already complicated situation worse.

Consider a person scraping by just under the poverty level.  They now manage to get Medicaid coverage, with its limited cadre of participating providers and specific set of benefits.  That coverage is increasingly likely to be delivered through a private managed Medicaid plan.  Then they get a raise and start making enough money to get above 138% of FPL – so they are off Medicaid, and have to switch to another insurer through the exchange, with some public subsidies to help defray the cost.  They probably will lose some benefits, such dental or vision, but also probably would have a much broader set of providers from whom they can get care.  Then maybe they get a new job, whose employer offers health benefits.  They lose their exchange coverage, as well as the subsidies, and there’s no guarantee that the employer coverage will either be as good as the exchange coverage or that the employer subsidies will be anywhere close to the exchange’s subsidies (especially for dependent coverage).  If they lose that job, well, it may be back to the Medicaid coverage.

Honestly, Rube Goldberg would have enjoyed this set-up.

A recent analysis by HealthPocket suggests that less than 2% of health plans meet the recently released essential benefit standards.  I suspect that many of those plans may have been individual policies rather than plans offered by large employers, but ACA requirements like pediatric dental and vision are virtually never offered by even the best health plans (although may be available via accompanying dental or vision coverage).  It is not clear to me why someone who earns 137% of poverty should get dental and vision for all family members, while someone who earns 139% and lacks employer coverage gets only the pediatric coverage for children, and someone with employer coverage may lack those benefits entirely.  Is this coverage important or not?

I’m not advocating that all plans should include full dental and vision, but, come on, this jumping back and forth between sources of coverage/type of benefits/amount of premium subsidy is crazy. 

We have to remember that Medicaid really serves three distinct populations (as illustrated by this nice Kaiser Family Foundation graphic): the poor (some of them, anyway), the elderly needing custodial care, and individuals with severe disabilities.  Most of the spending goes to the latter two populations.  Maybe we should be thinking of splitting out the ongoing care support aspects of the program from the more traditional health insurance components of the program.  That would allow for a much more seamless source of coverage and care. 

When I read that the supposedly simplified, one-step application process may require a 21 page application, it feels like the canary dying in the coal mine: I fear the whole thing is going to crumble under its complexity.  I don’t know if the Arkansas approach of putting everyone in the exchange will end up being implemented, or if it would prove to be actuarially equivalent, but it makes a lot more sense to me than the patchwork quilt of coverage ACA sets in motion.

Involved But Not Committed

By Kim Bellard, February 28, 2013

There’s an old joke about the difference between bacon and eggs: the chicken is involved, but the pig is committed.  Perhaps the problem in health care is that when it comes to being engaged in our own health, most of us are chicken.  Maybe the wrong people have been cooking.

Patient engagement -- along with its many synonyms, such as shared decision-making or consumer-directed care – continues to be a favorite strategy for many health pundits.  I am biased towards it myself, although exactly what it means, or will mean in the future, is not entirely clear.

The prestigious journal Health Affairs recently devoted an entire issue to the topic.  In one study, Judith Hibbert and colleagues reported that patient activation scores help predict costs: lower activation levels were tied to higher costs, even after adjusting for risk.  A separate study, also by Hibbert, reviewed the literature and concluded that patients with higher activation levels had better health outcomes and care experiences, although the evidence was more inconclusive about the effect on costs. 

The trick, of course, is how to “activate” patients – is it all self-motivation, or can providers and other third parties (such as employers) encourage it?

One common method to influence patient engagement is an employer wellness program.  A recent National Business Group on Health survey reports that almost 90% of employers offer wellness-based incentives, spending an average of over $500 per employee on the programs.  Employers are getting tough too: 15% directly tie health plan eligibility to a health activity such as taking a risk assessment or biometric screening.  Almost two-thirds already tie employee contributions to completing such activities.  And 41% include, or plan to include, outcomes-based measures (e.g., lowering blood pressure) as part of the program.

Another strategy employers are using is increased employee cost-sharing, such as in consumer-directed health plans (CDHPs).  Critics accuse them of simply shifting costs to employees, but there are plenty of studies that indicate they may actually change employee behavior and help control costs.  For example, Cigna recently claimed that their CDHP members improved their health risk profile 12% while their health cost trend was 13% lower than traditional members.  Cigna CDHP members were also more likely to take health risk assessments, to use cost and quality tools, to choose generic drugs, and to seek preventive care. 

Consumers may be starting to take cost into account, but they don’t like it.  A study by Sommers, et. alia, reported on focus groups of insured patients.  The focus groups indicated that patients don’t like cost considerations to be part of health care decisions, and revealed that several stereotypes remain all-too-common, including that more expensive care is better care, and choosing more expensive care is some sort of victory over insurance companies (not realizing that, in the end, they and other insureds pay for that care).  Patients still don’t really know how to weigh risk versus cost. 

We treat health care costs much like we treat the deficit: costs come from other people, cuts should come from other people, other people should pay, and, oh-by-the-way, let’s think about it tomorrow.  That has to change. 

One thing that offers new hope for patient engagement is that the options for it have never been broader or more robust – mobile, electronic records, telemedicine, and social media, to name a few.

There are estimated 40,000 mobile health apps.  It seems you can get an app to do just about anything you can think of, plus many things you probably hadn’t.  The health apps vary widely not only in purpose but also in audience and quality.  A company called Happtique has just introduced a certification for health apps that will hopefully give consumers a better comfort about which apps to use, or for physicians to know which to recommend to patients.  They see the program not as a rating mechanism but as kind of like a Good Housekeeping seal of approval, assuring that at least a set of minimum standards have been met.  This could spur adoption.

It does appear that physicians are joining the mobile revolution, according to CompTIA.  Their recent survey indicated that one in five physicians is using a medical or health-related app daily, and 62% expect to be regular users with a year.  The trick will be how they incorporate them into their practice, for patient care and/or patient engagement.

EHR/PHRs provide yet another option to engage consumers.  To date, consumer adoption of PHRs have been disappointing, to say the least – even when they are available.  A recent study by Ritu Agarwal and colleagues, aptly titled “If We Offer it, Will They Accept?”, explores this issue and concludes that use depends on a number of factors – not just existing consumer preferences but also satisfaction with the patient-provider relationship, provider support for patient use of the PHR, and specific communication strategies to encourage use.  HITECH funding and “meaningful use” requirements may drive availability of patient EHRs, but persuading patients to use them will require some effort.

Telemedicine seems be exploding, both in terms of easing of regulation and in terms of payor coverage, so it is not surprising that there are a plethora of companies making their mark in this space.  These include American Well, Cardiocom, HealthSpot, NowClinic, or Virtuwell, to name just a few.  These may not provide your personal physician, but they offer physician expertise at your convenience – 24/7, from your house or even mobile device, not restricted to a physician’s hours.  That’s got to help improve patient engagement.

The IOM just hosted a workshop on partnering with patients, and one of the conclusions was that physicians and health systems need help in developing those skills, plus they may need additional incentives to engage in the kind of dialogue patient engagement requires (why am I not surprised?).  When you think about it, though, relying on physicians, or even nurses, to drive patient engagement doesn’t seem realistic.  We can spend time and resources on training them, but we still face the barrier of the projected shortages in both professions (physician, nurse), especially with the baby boomers just starting to crash the Medicare barrier.  Primary care providers may just be too scarce, especially in rural and other already underserved areas.  Not everyone agrees with these dire forecasts, but the point remains, though: the health professional to patient ratio doesn’t scale well into an era of higher patient engagement.

And maybe it doesn’t need to.  Maybe it really is up to us as patients to take responsibility.  Fortunately, we still don’t have to go it alone.

Social media, for example, may not even rely on a provider-patient model.  Health care providers are still trying to figure out social media.  An infographic by Demi & Cooper advertising/DC Interactive Group suggests that only 26% of hospitals use social media (most commonly Facebook), while over 80% of individuals 18-24, and 45% of those 45-54, would share health information via social media.  Meanwhile, Patientslikeme has been breaking new ground for social media use in health care for many years now, using patient-to-patient expertise and experience.  We’re only begun to scratch the surface of what patient engagement looks like in a social media world.

Artificial intelligence could be the real game changer in patient engagement.  IBM has made a big bet on AI in health care via Watson, and a recent study from Indiana University reaffirms that use of AI has the potential to both improve outcomes and lower costs.  Widely available health content on the Internet started this ball rolling, but health care professionals start to look like just another option – a preferred option, to be sure, but no longer the only option – to getting health information, advice, perhaps even diagnoses.  And I’ll have to save discussion of robotic surgery for another blog…

We’re already got a mobile stethoscope app, remote monitoring options for conditions like diabetes or blood pressure, medication and other reminder apps, and increasing ability for AI to evaluate and diagnose.  Who needs health coaches or even physicians to drive patient engagement?  Maybe in the not-too-distant future the model for patient engagement will increasing look like patients simply using their mobile devices: i.e., when Siri marries Watson.

At the end of the day, the person who has to be committed to patient engagement has to be the patient.

Tell Me the Good News Again

By Kim Bellard, February 13, 2013

This just in from CBO: federal health care spending has slowed dramatically, easing its impact on the federal deficit.  They are now projecting federal Medicare and Medicaid spending will be $200 billion lower in 2020 than they did three years ago.  And it is not just federal health spending:  according to CMS, 2011 marked the third consecutive year of relatively slow grow, increasing by 3.9%, which is modest for health care. 

Should we be breaking out the champagne to toast the victory?  Maybe not just yet. 

Economists aren’t sure if structural changes are finally taking place, or if much of the slowdown can be attributed to the recession and to consumers being more reluctant to spend any discretionary cash on health care.  There are some signs that the slowdown started before the recession, but there are conflicting signs that some portions of health spending are accelerating. 

For example, the CMS report cited increases in out-of-pocket payments as an area where spending was rising faster, but the Washington Post notes a contrary analysis by NPR’s Planet Money which suggests that the share of spending from consumer out-of-pocket payments is actually decreasing, dropping by nearly half over the last forty years.  Of course, that share is of a much large dollar amount, so the lower percentage may be of scant comfort.  Consumers probably don’t have the perception that their share is getting smaller, not with rise of high deductible plans, and some researchers, like Deloitte, would argue that the official numbers understate direct consumer spending by a wide margin.  So we don’t really know.

What everyone is waiting to see is what 2014 brings us, as several of the most significant ACA provisions – Medicaid expansion, health insurance exchanges, guaranteed issue health coverage, essential benefits, and federal subsidies for health insurance, to name a few – kick in.  None is without its problems. 

Medicaid expansion seemed like a no-brainer.  It promised to make eligibility for Medicaid much more uniform across states and between different pockets of the population, and it minimized the fiscal impact on states by the federal government picking up all the costs of the expansion in the first few years.  Some states are skeptical that the federal government is a reliable partner, and others oppose ACA on general principle, with the net effect that we still don’t have even a majority of states who have agreed to the expansion.  Without the expansion, some people won’t qualify for either Medicaid or subsidized coverage through the exchanges.  In other words, if you are the wrong kind of poor person, you may still be out of luck.

As for the exchanges (excuse me – “marketplaces,” as newly rebranded by HHS), according to Kaiser Family Foundation, as of February 12, only 18 states are planning to run their own exchange, another 6 are planning to run one in partnership with the federal government, and the remaining 27 are defaulting to a federally-run exchange.  Whether state, federal, or jointly run, if they are not already deep in the planning/building process, it’s worrisome as to whether they will be able to start online shopping for all those consumers beginning this October.  I’m not betting on a wonderful, Amazon-like experience come October.

The biggest problem with guaranteed issue and essential benefits is not the much debated controversy over contraception coverage, with its weird proposed compromise for “contraception-only” coverage, but rather is the concern that premiums could skyrocket, especially for younger people.  The combination of generally richer coverage and inclusion of people who previously could not obtain insurance, along with tighter age rating bands, may lead to doubling or even tripling of premiums for some consumers, report Politico and The Wall Street Journal.  Supporters of ACA note that the subsidies will largely offset most or even all of these increases, but disguising the true cost of things from consumers is a big part of the reason our health care system is in the mess it is in.  We should be aiming to bring down the cost of health care and health insurance, not simply offset it with other federal spending.

Last but not least, there are the subsidies themselves, which are the key to success in improving the number of people with coverage (not, as many think, the infamous mandate, which is probably too weak to force people to buy coverage they don’t want or don’t think they can afford).  The subsidies are already running into problems.  Unions fear that their health plans may become disadvantaged relative to subsidized coverage in the exchanges, and have asked the Administration to be eligible for similar subsidies, thus reopening the spending spigot.  Of course, there are a number of employer plans who could make the same request, although their political clout may not be as great as the unions. 

Employer plans face enough problems as it is, and the recent IRS rules that base “affordability under ACA guidelines solely on the cost for single coverage, not family coverage, are likely to complicate things further.  The IRS ruling spares employers from the nightmare of having to guess at a worker’s total family income, but also opens the door to employers contributing ever smaller portions towards family coverage.  We could end up with a Catch-22: rapidly shrinking employer contributions for dependent coverage make that coverage too expensive for many families, yet those same families would not be not eligible for the subsidies in the exchanges because of their eligibility for employer coverage.  I can already see the tear-jerking stories in Congressional hearings, although I’m not sure who Congress will try to pin the blame on.  Not themselves, of course.

And, of course, the sheer size of the subsidies – over $1 trillion through 2022 -- will become a tempting target for budget cuts should Congress and the Administration ever get serious about the deficit.  At the same time CBO delivered the good news about lower Medicare/Medicaid spending, they also disclosed that they were raising the estimates of the cost of the subsidy by over $200 billion over 10 years.  They also estimated that twice as many people – 7 million – will move from employer coverage to individual coverage through the exchanges.  Oh, and they also think fewer people will gain coverage through ACA at all, reducing their estimate to 27 million from their initial estimate of 32 to 34 million.  So there.

We have a long way to go before we can feel comfortable about how the health care system is changing.  The disturbing but, sadly, not surprising results of the recent study by Jaime Rosenthal and Peter Cram on the inability of consumers to obtain prices of hip replacement illustrate both the difficulty of obtaining prices for even a common surgical procedure, as well as the shockingly wide range of the prices they might be able to find.  If anyone thinks ACOs will make this better, I suggest they think again – assuming consumers will be able even find multiple ACOs near them from whom to seek competing prices, due to increasing provider consolidation.

And meanwhile we face the spectre of an explosion of health spending as baby boomers begin hitting peak health expense years, especially since they are already in worse health than their parent were at the same age, according to a recent study.  Living longer but in worse health and more demanding – not exactly a recipe for reduced health care spending in the years ahead.

I’ll go back to something I wrote a couple years ago: all health care spending ends up as revenue for someone.  Even care we might categorize as waste, unnecessary, or inappropriate counts towards some entity’s revenue.  We can make the health care system more efficient, more transparent, and more patient-centered, but at the end of the day controlling spending will mean controlling providers’ income.  To do that, one of three things has to happen: all providers end up getting less, some categories of providers fare worse than others (e.g., hospitals gain while nursing homes lose), or we start paying specific providers drastically less, or not at all. 

Personally, I think the fairest – although not the easiest -- way to control spending, and to improve the quality of care for patients, is to weed out underperforming providers, those who are delivering sub-par care (and we’re kidding ourselves if we think they don’t exist).  When we get serious about that, then maybe it will be time to start the celebration.

Who’s In: State Health Insurance Exchanges

By Cyndy Nayer, February 7, 2013

MCOL published the infographic that shows the participants (states) in health insurance exchanges (HIX), the monies invested, the managers of the exchanges, and the public v private efforts. To date:

• 19 states are expected to open an exchange in 2014.
• Over $3.5 billion has been invested in 47 states (including the District of Columbia).
• Private exchanges are developing, mostly through large consulting firms, health plans, and integrated delivery systems.
• 56% of people polled by MCOL think that health insurance exchanges will have a significant impact on health access and affordability.
• Update on Florida (not on the infographic): the first state to oppose the exchanges, is still considering the impact on the budget.

As health care reform spreads through the communities of the US, there is great hope that the insurance exchanges will, in a few short years, encourage more consumer-driven health management. What is happening, however, is the escalation of insurance premiums even before the uninsured are offered entry into the coverage marketplace. This will demand a much finer focus on keeping people in sync with their prevention, wellness, and chronic care management plans. It means that those who are proficient at health care purchasing–the self-insured employers–will need to keep a close communication package in place, encouraging appropriate use of services and screenings as well as attention to adherence to medical plans. Some employers have already shared that they will be offering a “step-up” insurance package to their beneficiaries, as they have reaped the rewards of value-based benefit designs and outcomes-based purchasing through the years. They believe that their commitment to a high-performing workforce will be continue, even if their employees and families enter the exchange marketplace.

Should We Spell ACO “CRM”?

By Kim Bellard, January 15, 2013

CMS released a list of 106 more ACOs, bringing the total of approved ACOs to over 250.  On the list there were some familiar names, and many organizations sponsored by familiar types of organizations.  It reminds me of how NFL coaches who get fired almost always get hired by another team – here’s a shout out to you, Norv Turner! – despite their demonstrated lack of success.  As the old saying goes, if you keep doing what you’ve been doing, why would you expect anything to be different? 

Don’t get me wrong; I hope ACOs prove successful.  I hope they help reform our health care system into a more integrated, cost-effective system that is centered around the patient.  Still, I wish we’d see some ACOs sponsored by organizations with more non-traditional orientations – an American Well or an athenahealth, for example.  And definitely wake me up when an ACO asks a company like Salesforce.com to help them.

Most of the approved ACOs are driven by hospitals or physicians, which should come as no surprise.  They’ve always been the center of our health care system, and will remain integral to it.  I was pleased to see, though, that Walgreens is also dipping its toes in these waters, leading three of the recently approved ACOs.  Walgreens’ ACOs may not prove any more successful than other ACOs, and will obviously still rely on hospital and physician partners, but at least they come at the problem with a much more retail orientation. 

ACOs are focusing on clinical integration, care management, financial risk management – really, all the things providers should have been doing all along but which they haven’t done such a great job at.  I’m wondering, though, if they are like the guy who only has a hammer, and thus sees all problems as nails.  Maybe instead of a care management problem, we have a CRM problem. 

CRM, for those not used to non-healthcare jargon, is “customer relationship management.”  It has many definitions and many applications, but at the risk of oversimplifying I’ll boil it down to this: knowing your customer, and using that knowledge to drive all interactions with that customer.  In health care (ACO), of course, the customer would be the patient. 

Here’s a set of things that would be true in a truly CRM-driven organization:

• A singular focus on earning and keeping customer loyalty;

• A customer database that can be accessed as needed throughout the organization;

• Each contact with the customer – at every touchpoint, with every representative of the organization – is informed by the existing information about the customer, and then becomes a source of new information about the customer;

• Contacts with the customer trigger rules-based algorithms that tailor what the organization wants stressed during the encounter, based on perceived (or expressed) needs and anticipated benefit to that customer – reminders, messages, additional services, etc.; 

• Contacts include both ones initiated by the customer and proactive ones initiated by the organization, with outgoing contacts being specifically targeted as to timing, purpose, type of media, and from whom;

• Contacts are, to the extent possible, tailored to customer preferences – e.g., physical visit versus virtual, mail/email/text/phone communication.

Now ask yourself: how many of the 250+ ACOs are likely to have all of these?  Most of these?  Any of these?  I have to admit that I’m not optimistic.  I mean – how many ACOs have an ACO-wide contact system?  How many ACOs even have a patient portal, especially one that incorporates both clinical and administrative information, from all ACO providers?    How many ACOs are even thinking about these kinds of things?

A physician in an ACO with a strong CRM platform would be up-to-date on what is happening with his/her patients, based on their own interactions, interactions the patients have had with other ACO providers, and even results of, say, home monitoring, especially for at-risk or chronically ill patients.  They’d be alerted immediately of an ER visit, potential adverse drug interactions, or test results from throughout the ACO.  Now we’re talking care management.

A recent report from Rand casts concern about how easy achieving any of this is likely to be for ACOs.  The report admits that HIT has fallen short on its promise, in large part because the various systems are neither interconnected nor easy to use, sad though that is to report.  It’s hard to do CRM with those kinds of barriers. 

Still, HIT provides so much promise for improving the health care system, in ways we’re only beginning to figure out.  For example, Optum and Mayo just announced Optum Labs, a collaboration that will pool their data and technology assets, with the goal to drive long term improvements to delivery and quality of care.  They’re not alone in this approach, with The New York Times recently reporting on researchers who plan to use electronic medical records to do medical research faster and more inexpensively.  HIT allows us to use data in ways paper records never could.

We’re in the era of Big Data, and the possibilities are as yet largely untapped.  CRM lives on robust data and targeted use of it.

I was also encouraged by an article by Linda Green and colleagues, which argues that our concerns about a physician shortage can be addressed by using alternative approaches towards delivering care, including “team” approaches, technological solutions and physician extenders.  The past does not have to be the future in terms about how patient care is delivered.  If anyone doubts that, they should read the recent survey by Harris Interactive about the use of retail clinics: some 27% of American adults have used such a clinic in the past year, up from only 7% in 2008.  Give consumers faster, easier options for care, and they will take advantage of them.

Of course, those options are not just bricks and mortar.  It should come as no surprise that the Internet plays an important role.  The Pew Research Center reports that 35% of U.S. adults have gone online to try to self-diagnose, which sometimes results in visits to providers and other times allows them to manage on their own.  Sixteen percent of online health information users have tried to find others on line with similar conditions, and 30% of internet users have consulted online reviews or rankings of health services or treatments.  Information is power, and more of that power is going to consumers.

Or take InTouch Health, which just won FDA approval for its “remote presence robot” that uses telemedicine to take care coordination to new levels.  Telemedicine is no longer exactly new, but FDA approval is a big deal.  Telemedicine promises – or threatens, depending on how one looks at it – to redefine what it means for providers to be available, and which providers.  Distance becomes less of a consideration.

Then there is the “mHealth” revolution.  Deloitte just issued their latest mHealth report, and sees a bright future: they expect some $305b in industry productivity gains over the next 10 years from mHealth solutions.  That’s a heck of a lot more than CMS forecasts ACOs may save, and it suggests that ACOs who aren’t incorporating a broad suite of mHealth and other technological solutions will do so at their own risk. 

At the end of the day, it’s not about these various slick technological solutions.  They just give us more options.  It is about doing the right thing at the right time in the right way for the right person.  If that’s not what CRM is for, I don’t know what is.  If that’s also not what we want from our health care system, again, I don’t know what is.

CRM is not easy to do, and it is rarely an all-or-nothing approach.  Even in the best case a CRM strategy can take years to implement, building incrementally.  It takes a committed, long term strategy to succeed with CRM.  And, as I see it, an ACO without a CRM strategy may not have a viable strategy at all.

And You Thought Health Care Was Bad

By Kim Bellard, January 7, 2013

I’ve been thinking a lot of our educational system lately.  It may be the only part of our economy that makes me feel any better about our health care system.

Now, let me preface my remarks by admitting that whatever experience and expertise I may have with health care, I can’t claim the same for education (except as a student long ago).  Still, education and health care are two areas that most Americans feel very strongly about, recognizing that they are crucial for the well-being of the populace and of the country.  We should all care about what’s happening in both.  Unfortunately, we seem to have blinders on about how well either is performing.

The heath care statistics are perhaps better known.  I’ve covered some of these in previous entries, and won’t repeat all of them here.  In short, we spend way too much – far more than any other country – yet do not score at all well on most international comparisons of mortality or morbidity.  Whatever that extra spending is buying us, it does not appear to be better health.

The picture for education is surprisingly (and depressingly) similar.  We spend far more per pupil than other countries (although, unlike with health care, we’re not the highest as a percent of GDP), as reported by OECD.  Yet we aren’t getting good value for that spending, as our performance is at best middling compared to other countries (see, for example, the USC Rossier School of Education and The George Washington University).  And, according to a report from the Harvard Kennedy School recently, we’re not only scoring poorly but also we’re not gaining any ground on better performing educational systems in other countries.  In a global economy, that’s a race to the bottom, especially since some of our worst scores are in critical areas like math and science.

Most Americans might acknowledge that there are large parts of the public – especially the poor -- for whom both the health care and the education systems are failing, but the statistics for both systems indicate we’re all paying a premium for, at best, average performance.  That’s a sucker bet.

This caused me to start thinking about the ways in which the two sectors are similar.  Here are a few that strike me:

• Who Pays: Both sectors rely heavily on public spending.  Health care is roughly half public spending (even ignoring the “tax expenditure” for employer-based health insurance), while in education the public spending is much higher – over 70% for all levels and closer to 90% for pre-collegiate.  People may not be as vigilant about what they are getting when they think the government is providing the service as with services they buy directly.  However, most other countries have even higher proportions of public spending in both sectors.

• Local:  Most health care and most education is received “close to home.”  It’s certainly possible to get either health care or an education far away from home (as often happens with college), but that tends to be the exception; people tend to stick with what they know rather than seeking the best available.

• Variability: The Dartmouth Atlas has been preaching for decades about the variation in health care throughout the U.S., for reasons not explained by population differences but simply due to local practice patterns.  The variability of performance in the education system between states and between schools within the same state show a similar wide range of variability (indeed, the Harvard report indicated more variability between states within the U.S. as between the U.S. and other countries).  It’s possible to find the best care or the best education in the world within the U.S., but there is a certain geographic randomness to that which is very troubling.

• IT Transformation: Ironically, both health care and education were early adopters for IT – but for primarily for billing and administration, not for care delivery or teaching, respectively.  This is starting to change.  Health care has relied heavily on technology, such as MRIs or laser surgery, and the federal government is spending billions to encourage adoption of EHRs.  In the educational system, many classrooms are making good use of computers, even sometimes replacing textbooks with laptops or tablets.  Still, one would have to say that IT has not yet had the kind of dramatic impact on what the average doctor or teacher do every day as what workers in many other industries have seen, because they have not been forced to fundamentally reengineer their processes.

• Guild Mentality: For many, many decades both teachers and many types of health care practitioners – doctors, pharmacists, dentists, nurses – have generally been viewed with great respect by the public.  Unfortunately, those professions have had a tendency to incorporate the attitude that people outside their profession are not qualified to evaluate their performance.  This no doubt contributed both to the local variability and lack of IT transformation mentioned above.  Teachers have the added protection of unions that serve to further insulate them from outside pressure on performance, while doctors, pharmacists, and dentists have the strong barrier to entry of their advanced education and licensure requirements. 

• Lack of measurement: Historically, neither field paid much attention to measurement and certainly not to quantitative feedback loops for improvement.  Good teaching, like good health care, was seen as hard to define, especially since the full consequences of deficits in either may not fully emerge for years.  As a result, it’s been hard at best, and impossible in many cases, for consumers to view performance results to find the best teachers/schools or doctors/hospitals.  This is starting to change, such as through Meaningful Use requirements in health care and testing standards of No Child Left Behind/Race to the Top in education, but we have a long way to go before the average person can get actionable information on where and from whom to get the best education or health care. 

• Not Rewarding Excellence: For the past thirty or so years, both public and private payors have moved away from paying based on charges and more on using predetermined fee schedules. This had the (hopefully) unintended effect of rewarding health care providers for average, not actual, performance.   Similarly, in education, teachers’ compensation was largely driven by tenure; the longer one had taught, the more they were paid.  In neither sector was excellence rewarded or poor performance punished.  Health care is now creeping towards “value-based purchasing” and education towards various forms of pay for performance, but the new systems are not widespread nor do they generally comprise a significant portion of compensation.

One might expect that the professions involved would be leading the charge to measure and improve performance, and to reward excellence, but by and large that has not generally been the case.  In his recent book Class Warfare: Inside the Fight to Fix America’s Schools, Steven Brill noted a mentality where teachers’ unions treated criticism of any teacher as criticism of every teacher, and it struck me that the same is all-too-true for health care professionals as well.  We have to get away from that.  The fact is that there are better teachers and worse teachers, better schools and worse schools; better doctors and worse doctors, better hospitals and worse hospitals.  It is crazy that we as purchasers of these services are not demanding not only to know which are which, but also demanding the ability to take our children/ourselves – and our money -- to the best practitioners. 

Measuring quality in either health care or education is, indeed, hard to do, but better performance from both systems is absolutely critical.  We’ve not going to emerge from the 21^st century with the kind of country we expect unless we demand better performance.  Anyone want to bet which system reforms the fastest?

Post-Election Health Reform: The Future Is Now

By Lindsay Resnick, November 7, 2012

A year from now you may wish you had started today.

The major hurdles to healthcare reform’s Affordable Care Act – June’s Supreme Court decision and re-election of Barack Obama – are now history. Obamacare is here to stay. While obstacles and legislative fixes lie ahead (regulatory definitions, implementation timelines, funding appropriations), advancing a strategy of “repeal & replace” is now off the table. Expect political wrangling to shift focus to more pressing issues facing the country such as sequestration, budget reconciliation, tax cuts, and 2014 mid-term elections.

For health plans the next 14-months will be an intense period of preparation, planning and positioning. Today’s health insurance marketplace: 154 million employer-based, 14 million individually purchased, 47 million Medicaid, 49 million Medicare, and 49 million uninsured – will see profound change. New operating rules—State/Federal Exchanges, premium subsidies, elimination of pre-existing condition restrictions, rating limitations, Medicaid expansion, tax assessments—demand new thinking!

Confidence is the feeling you have before you understand the situation.

A winning health reform strategy starts by knowing your customers (and potential customers) better than your competitors. It means a data-driven direct-to-consumer approach to maximize reform’s opportunities and buffer risks…whether playing defense to protect your membership base, or setting-up a marketplace offensive to claim your fair share of new customers with a short-term land grab under current rules, and then starting 2014 in a position of strength.

Why? With product standardization, regulatory constraints and price transparency leveling the playing field and neutralizing brands, health insurers need to refresh their approach to customer acquisition and retention. The center of power is rapidly shifting into the hands of the customer. Millions of consumers will be shopping for coverage and migrating between market segments. They’ll be talking about you, price checking you, and recommending you…or not. Tomorrow’s customers will have a wide-ranging choice, and they will determine your value. Forward thinking marketers are making sure existing and prospective customers are engaged in their health care decision-making as they seek support from branded, personalized resources delivered by trusted local partners. 

First movers may sometimes fail, but last movers don't survive.

Based on a health plan’s core customer segments, product portfolio range, and distribution channel mix every Plan needs to design a customized, strategically sound approach to survive, and thrive as Obamacare advances through its implementation phases (see attached). The clock is ticking.

To compete in the new customer-centric healthcare retail game, success will come from taking a 360° view of your customer, differentiating your brand position, moving from a B2B to direct-to-consumer marketing orientation, distribution outlet “retailization”, and most importantly, developing an actionable framework to serve as the roadmap for your health reform enterprise plan.