Just Say No

By Kim Bellard, February 9, 2012

The recent flap over the recent Obama administration decision to not exempt religious organizations over rules requiring first dollar coverage of birth control leave me either bothered or bemused -- perhaps both. 

The controversy has very little to do with health policy and very much to do with the 2012 elections.  Moreover, it was entirely predictable, and it is amazing that the Administration walked right into what is becoming a big pie in its face.  However, the outrage that Catholic and some other religious leaders are expressing over being required to cover birth control in their health plans ignores one important fact.

It’s not their money.

Employers of all stripes see their health plans as a big expense and as something they have both a right and an obligation to try to manage prudently.  Acting as a prudent financial steward of the money, though, is not the same thing as imposing a particular religious belief.  In this case, the objection is, of course, that birth control is against their religious beliefs, and so should not be something they should pay for.  They’re not saying covering birth control is too expensive for their health plans or that it has adverse health consequences for people who use it.  They don’t even seem to care that the health consequences of not using it can be worse for some people.  They just don’t like it on moral grounds, and don’t want anyone using it.

The trouble is, the health plans are paid for by the employees’ money, not the employers’.  Employee benefits are part of employee compensation.  Employees have a decades-long implicit agreement with employers to receive a portion of their wages in benefits, mainly because they can receive that compensation on a tax-free basis.  But it is no more the employers’ money than, say, the money employees put into their 401k plans.

I wonder how people would be reacting if the religious organizations were saying that their employees couldn’t spend any portion of their own salaries on birth control.  I.e., they couldn’t take their wages and go off to buy birth control.  Not just that they shouldn’t, but that they couldn’t, presumably under threat of losing their job.  Would conservative politicians be rushing to support that kind of dictate?  I don’t think so, or at least I hope not.  People are pretty protective of their ability to spend their own money on the things they want.  So why should employee wages that have been retained by the employer on a pre-tax basis to finance a health plan for those employees not be able to buy medical services and supplies that employees want or need, as long as that spending was legal and medically appropriate – which birth control is.

Let’s try an equivalent thought experiment.  Let’s say the religion in question was Christian Science, and they decided that their “health plan” shouldn’t cover most hospital stays, physician visits, or prescription drugs.  Or a plan offered by an employer whose owner is a Jehovah’s Witness, and accordingly rules out covering blood transfusions in the health plan.  To make the experiment more equivalent, let’s be clear that their restrictions are not on plans offered by either church itself, but by organizations associated with those faiths and which employed many people who were of neither religion.  We probably would look askance at those faith-based exceptions, but would they actually be different in kind?

We could go a step further.  Maybe an employer isn’t satisfied just not covering abortion but also doesn’t want to include any health system or provider who provides birth control, and excludes them from their health plan network.  Maybe another employer doesn’t want any health care provider with any religious affiliation whatsoever, and excludes any such providers.  Or, to take an even more extreme example, maybe an employer doesn’t like the word “north” – for whatever reason -- and refuses to cover services by any provider with “north” in its name.   Where do we draw the line at where an employer’s idiosyncratic beliefs should be allowed to dictate its health plan rules?

One can oppose the birth control rule on other reasons more related to health policy.  You could argue, as I have and as John Cochrane did recently in the Wall Street Journal, that preventive services in general aren’t really insurance, and that covering them – particularly with no cost-sharing – is just dollar trading at best.  You could also argue – again, as I have previously done -- that the tax preference for employer-based coverage distorts the consumer market in health insurance, and inevitably invites the kind of employer tinkering with benefits that has led us to the current birth control mess.  You might also argue that birth control as preventive services stretches that term beyond its intended meaning – i.e., does it prevent disease or maintain health?  All of those are fair game for serious health policy discussions, but those are not what is driving this particular debate.

There are lots of reasons both to dislike the rule and lots of reasons to protest the protests about the rule, but it seems inevitable to me that politics will win the day and the Obama Administration will be forced to backtrack in some way.  And our crazy health system will be incrementally crazier as a result.

The Confusion in Coverage

By Kim Bellard, January 11, 2012

The more I think about our health care system, the crazier it seems. 

Let’s do a thought experiment.  You’re in an accident, and have an orthopedic surgeon fix some broken bones.  You are fortunate enough to be employed and to have health insurance from your employer, so certainly your health insurance will pay the bills, right? 

Not so fast.  Maybe the accident was work-related, in which case your workers compensation would apply.  Maybe the accident was in your car, in which case your or another driver’s auto insurance might pay.  Or maybe you fell at your neighbor’s house, in which case their homeowner’s policy might come into play.  Which type of coverage pays, how much they pay to the providers, how much you’ll have to pay, even which orthopedic surgeon you can see -- all depend on the circumstances.  One has to wonder if your eventual outcome is subject to the same lottery.

Perhaps that’s too problematic an example.  Let’s take what should be an easier example.  You get all of the recommended preventive exams.  It should be clear that those are covered by your health insurance, especially now that PPACA has specified that health plans have to cover preventive services at 100%.  Except that it doesn’t, not quite.  E.g., your preventative dental exams or vision exams aren’t covered by your health insurance.  If you are lucky, you might have dental and vision insurance that covers those exams.  Otherwise, you’re out of pocket for following the guidelines.

Adding insult to injury, if you need, say, oral surgery, you’ll probably have to figure out whether your dental or your medical insurance covers it.  Again, how much it pays, how much you pay, and which physicians you can go to depend on the answer. 

What a mess.  Then throw in the inter-insurer squabbling and coordination between the different types of insurance in situations that are overlapping or borderline.  All that adds to the costs for both payers and providers, and the frustration from consumers, providers, and payors. 

The costs of these other types of health-related insurance are not trivial.  According to the Bureau of Labor Statistics, costs for workers compensation is about 20% of health insurance costs, and about half of those workers compensation costs are for the medical component (as opposed to the disability).  The most recent National Health Expenditures (NHE) report showed “other third party payers” – which include workers compensation and a variety of other payers -- accounting for about $450 billion in 2011, almost 17% of total spending.  It’s significant.

It’s not that these other services are unimportant.  There’s a growing body of evidence linking oral health to other health conditions, highlighting the need for regular dental exams.  Vision exams are critical for spotting glaucoma or cataracts.  So why do we treat eyes and teeth differently than, say, feet or ears?  Why is periodontal disease somehow less important – often covered at only 50% in dental coverage – than diabetes, which is often correlated by gum problems?

A lot of this is due to historical accidents, if you will.  Employer-based health coverage got a big boost from the tax preference that avoided wage controls.  Medicare Parts A and B are structured to reflect then-typical Blue Cross Blue Shield plans in the 1960’s.  Medicare has struggled to evolve its design, growing ever-more complicated and adding Part D, but ending up with most recipients still adding a supplement to make coverage more comprehensive (unless the recipient chooses a more modern plan design via Medicare Advantage).  Both Medicare and employer coverage initially focused on a very medically-oriented, institutionally-based approach; both have broadened over the decades, but neither has truly revamped its approach, although the introduction of HMOs has helped force both types of coverage to include more preventive coverage. 

Medicaid does a better job than most other payers in covering a broad range of services, but actual benefits vary widely state to state and often coverage is more broad than deep (e.g., limits on hospital days or physician visits), and it requires an army of bureaucrats to determine who is eligible on any particular day.  Then we’ve got CHIP, VA, CHAMPUS, Indian Health Services and so on – each program no doubt well-intentioned but adding to the complexity of the system.  Our health system is a veritable zoo of different versions of health insurance.

The boldest thinkers at the federal level these days seem to be Senator Wyden and Representative Ryan, with their recent proposal to reform Medicare and small business coverage.  It certainly is a dramatic change from today’s programs, but I’d really like to see us take a step back and think more deeply about what “health” is, how “insurance” can support that health, and how we ensure that all Americans – regardless of age, income level, or health status have access to both health services and the redesigned health coverage. 

E.g., we certainly want employers to have safe workplace conditions, but is it necessary to have a separate medical component to incent that, or does the disability portion, along with some liability consequences, accomplish that?  I’m not talking about the so-called “24 hour” coverage that combines health coverage and workers compensation.  This has been attempted several times, none of which have, to my knowledge, been particularly successful – in no small part because each component still had to follow the specific laws and regulations that apply to the component.  That makes true integration difficult.  I’m talking about truly engineering what health insurance is, what it should cover, and how it should pay.  Rethinking what health insurance should include would be a hard task, fraught with the prospect of undue influence from various lobbying organizations, but it’s one I wish we had leaders bold enough to attempt.

I suspect few, if any, Americans fully understand the details of the various health programs they may be covered by, much less be able to have great confidence that they can truly compare choices in them.  I’m all for competition and variation, but not in the “fine print” – the definitions, exclusions, and covered benefits.  It would greatly enhance competition to truly have a uniform structure, and it would help us accomplish modern health goals if that structure was more broadly designed.  Doing so should force us to realize that some things should be paid for via insurance and others should not. 

Sadly, even the Obama Administration seems to be backing off of the PPACA requirement for common essential benefits, in their recent decision about plans offered through the forthcoming exchanges.  They are bending to calls for state flexibility by allowing state decisions on the essential benefits, within specified parameters, but the rules don’t bode well for someone who, say, lives in one state but works in another, or someone who moves between states.  They could see very different benefits based on through which exchange they get their coverage.

Some might read the above and misread me to be advocating an all-encompassing single payor system.  Nothing could be further from the truth.  I’m hard pressed to think of any monolithic program, government or otherwise, that offers the kind of innovation and choice Americans value.  I am advocating drastically new product designs that break the existing artificial barriers to protecting and enhancing good health.  If this requires changing the applicable laws and regulations – and it would – then so be it.

Winston Churchill once famous said: “Americans can always be counted on to do the right thing…after they have exhausted all the other possibilities.”  I just wish we didn’t have to go through so many other possibilities before we decide to fundamentally rearchitect not just who finances coverage but also what “coverage” should look like.

Good News -- Bad News

By Kim Bellard, December 19, 2011

Reading several recent news stories, I’m reminded of an old joke.  A man gets a call from his doctor, who informs him he’s got the results of some tests.  The doctor tells the man there is some good news and some bad news, and asks the man which he’d like to hear first.  The man is taken aback, but – optimist that he is – asks for the good news first.  The doctor dutifully informs the man he only has 24 hours to live.  The man is stunned.  “That’s the good news?” he asks incredulously.  “What the hell is the bad news?”   Rather sheepishly, the doctor informs him, “I was supposed to call you yesterday.” 

(Slight pause here for polite laughter).   

Let’s see how this good news/bad news works in the real world.  Take, for example, a recently released a report by Float – a mobile learning consulting company – on the increasing use of mobile technology in health care.  According to their research, 80% of U.S. physicians already use smartphones and mobile apps, and over half report either already having an iPad or planning to get one in the next six months.  They cite a number of uses for mobile technology in health care, which they expect to increase rapidly. 

That’s the good news.  I’m a huge supporter of more use of technology in health care, especially mobile.  It’s great that it is becoming more mainstream.  However, it is not an unalloyed boon.  The corresponding bad news was discussed in recent reporting by The New York Times on “distracted doctoring.”  They quote Dr. Peter Papadakos, who has published an article on “electronic distraction” in Anesthesiology News, as saying, “You walk around the hospital, and what you see is not funny…My gut feeling is that lives are in danger.”  Dr. Papadokos sees medical personnel on phones, surfing the Internet, and especially on Facebook.  The Times cites another study that indicates over half of technicians who monitor bypass machines were texting or even talking during surgery, even though most acknowledged it was unsafe behavior.  The Times even found situations where surgeons were reportedly making personal phone calls during surgery, using wireless headsets.  Scary stuff. 

It’s much like texting while driving.  We know it’s not safe, we criticize other drivers we see doing it, but we’re so used to the connectivity that the technology allows that we have a hard time drawing appropriate boundaries for ourselves.  Perhaps health care needs a NTSB to warn us when we really shouldn’t be using mobile devices.   

Another good news/bad news example is a recent study by GfK Custom Research North America about the projected impact of ACA on employer health coverage.  The news reports focused on the “good” news – that the majority (56%) of employers said they are likely to continue offering coverage.  "This survey suggests that firms aren’t considering a wholesale flight from employee health care coverage as health care reform is implemented,” said Tim Nanneman, Vice President and Director of Health Insurance Research for GfK, who also added, “However, many employers are skeptical about the potential effects of health care reform.”   

Indeed, the bad news from the study was that 12% of employers already expected to drop coverage, with another third not sure what they will do.  To make things worse, slightly more than half of employers expected their costs to rise because of ACA, with only 11% under their impression their costs would go up more slowly. 

When McKinsey estimated 30% of employers would drop their coverage once the exchanges were operational, they were excoriated by the Administration and other ACA supporters.  There were some flaws in the McKinsey methodology that left it somewhat open for the criticism, yet I’m surprised that a study showing barely half of employers expect to continue coverage hardly rates a mention, or is reported as good news.   I find GfK’s results deeply troubling – although not surprising. 

Speaking of costs increasing under ACA, the final piece of good news/bad news was the recent announcement by HHS that more young adults got coverage due to ACA provisions than expected – some 2.5 million in total.  Earlier estimates had shown one million newly covered, so the Administration took some pride in this even higher estimate.   

Everything being equal, of course, getting 2.5 million more people covered is good news.   The reality, though, is that everything else isn’t equal.  The bad news is that there is a cost to this good effect.  I read the HHS press release carefully, as well as the news accounts of it, and I didn’t see mention of the cost of those additional 2.5 covered young adults.  I previously blogged on the cost of ACA’s already implemented provisions, but the thing to remember is that this expansion is a tax on employment-based insurance.   By which, of course, I mean it is compensation taken from workers’ paychecks.  That’s the bad news.  For workers with single coverage, or who have families which do not include young adults, I might be wondering why I am paying for these young adults’ coverage.   

It never made much sense to me for this provision to be Rube Goldberg-ed onto our already jury-rigged employer-based system, making employers cover not only people who are not only not employees but who also are not even dependents of workers.  But it was politically expedient to do so and hid the costs.  The Administration is kind of in a bind: either this population doesn’t cost very much, in which case the 2.5 million perhaps isn’t worth crowing about, or the costs are substantial, in which case it should be more honest about them and who is bearing those costs.  I do think we’re talking billions of dollars annually.   When HHS starts reviewing health insurance price increases, it should remember its own complicity in at least some part of those increases.  It won’t, of course. 

There are lots of calls for transparency in health care, but we need to remember this shouldn’t just be about reporting the numbers.  The truth is rarely one-sided – something hard to remember in this hyper-partisan era – and we all should look at both sides of issues.  While I’ve been writing this blog, Reps. Wyden and Ryan have come out with their Medicare proposal, and Secretary Sebelius announced the flexibility that states will get in developing essential benefits packages…now I need to go take a look at the good and bad of each of those!

Unhappy Campers: Physicians and Health Reform

By Clive Riddle, December 15, 2011

The Deloitte Center for Health Solutions released their latest study this week: Physician perspectives about health care reform and the future of the medical profession.

Paul Keckley, Ph.D., the Center's Executive Director tells us "the data confirms that physicians are resistant to reform and are frustrated with the direction of the profession. Understanding the view of the physician is fundamental to any attempt to change the health care model – this is the person prescribing the medicine, ordering the test and performing the surgery."

While Deloitte concludes physicians are not happy campers in this respect, it should be noted their positions are not that different than many other stakeholder groups.

Their findings are based on a survey commissioned by Deloitte of 501 physicians obtained as a random sample from the AMA database, with responses weighted by years in practice according to gender, region and practice specialty to match AMA demographics.

The 40 page report paints the following picture:

• Physicians gave the U.S. health system a grade as follows: A - 8%; B 27%; C - 45%; D 15% and F - 5%. Older physicians rates the system higher (40% over age 60 gave an A or B grade compared to 29% for under age 39.) Midwestern physicians also rated the system higher (44% gave an A or B; compared to 29% in the Northeast.)

• 71% say they are somewhat informed about the Affordable care Act while 23% say they are very informed

• 44% feel the Act is a good start, 44% feel it is a step in the wrong direction; and 12% don't know

• "Consumer behavior such as unhealthy lifestyles that can lead to obesity" was the most often cited factor influencing overall health care costs (multiple answers allowed - with 94% citing this factor) followed by "defensive medicine" (91%) and "Insurance company administrative costs" (89%)

• "Increased government managed care programs for Medicare and Medicaid" was the most often cited expected result of the Act (multiple answers allowed with 85% citing this result) followed by "Increased "wait times for primary care appointments due to lack of providers" (83%) and "fewer uninsured (77%)

• 73% believe there is a high likelihood ERs could be overwhelmed if PCP visit slots are full due to changes in the health care reform law

• 13% of physicians felt very engaged in the health reform debate and 44% felt somewhat engaged

• 78% of physicians say they would be comfortable if the model for liability reform involved a separate medical court system with binding arbitration and victims’ fund

• 4% believe their income will increase next year as a result of health reform; 48% believe their income will decrease

• "An administrative role (i.e., Chief Medical Officer, Chief Executive Officer, etc.) in a large health care delivery system" was cited most often as the ideal practice setting (multiple answers allowed with 70% citing this setting) followed by "concierge medicine practice that does not take insurance" (64%) and "large integrated health system that owns its own health insurance plan, hospitals and medical practices" (60&). The settings at the bottom of the list were employer based clinics (19%) and retail clinics (21%).

Employer Positions on Health Reform: Measuring a Moving Target

By Clive Riddle, December 8, 2011

A multitude of studies continue to measure and monitor employer reactions to health reform. The big question typically included in surveys has to do with the employers likelihood of continuing to provide group health coverage. Findings have not been altogether consistent, some studies like McKinsey’s estimate earlier estimated 30% of employers would drop coverage once Health Insurance Exchanges became available, while others estimate a far lower number.

Gfk Custom Research North America this week released findings from such a study (surveying 502 private sector companies) that seems to land in the middle ground, and thus might be a reasonable assessment of employer’s current state of mind. Here’s what Gfk found overall:

• 56% of employers surveyed are likely to continue to offer employer-sponsored health insurance after health care reform is fully enacted
• 12% of benefits decision-makers say they would be very or somewhat likely to drop coverage
• 32% are unsure what they will do

But the important thing to emphasize when bandying about such numbers is the size of the employers surveyed. Gfk notes that “only four percent of decision-makers surveyed from those companies with 500 or more employees considering terminating coverage completely. In addition, decision-makers who say they are familiar with health care reform are less likely to foresee their dropping coverage (7 percent, versus 15 percent among those not familiar).”

In fact, given that HIXs (Health Insurance Exchanges) are being designed to target small businesses in addition to individuals, it is not a bad thing – and one should expect – that employers in that sector would be considering dropping their own group coverage in favor of the exchanges.

The survey also found that employers don’t believe reform will save anyone money:

• 11% believe costs of health benefits will increase more slowly than if no reform had passed
• 51% think costs will increase more rapidly because of reform.
• 38% are not sure about the effect of health reform on future costs.

Thoughts on the Medicare Shared Savings Program Final Rule

By Bill DeMarco, October 31, 2011

The dynamics of the new final Medicare Shared Savings regulations are re-igniting interest by many who had passed this by because the proposed regulations were overwhelming.

Several associations including AHA, AMA and AGPA who were skeptics in reviewing the proposed regulations have come out publically and see some potential here. We see the upside opportunity being improved putting more on the physician plate to better plan for startup costs and see the reduction on the number of indicators to be reported making the medical management requirement a bit more realistic. Dropping EMR requirement has been a good decision by CMS as this was a burden for many physician networks.

Finally, the concern over attribution looks like it has been replaced with a more solid assignment process of patients so physicians know who they are accountable for. Several points that are missed in these comments are:

1) Value based purchasing and all that it has become is the over arching goral of this shared savings process and we see that for private or public payers that this is a good framework to start with.

2) This is truly a BIG opportunity for Primary care to band together and manage at a higher level both clinical care improvements and financial integration of their practices in a manner that makes care delivery scalable.

3  This ACO evolution gives health plans and physician something positive to discuss with the knowledge by most plans that if the providers should become dissatisfied they, the physicians, may start their own plan.

More, Please

By Kim Bellard, October 2, 2011

Private health plans – everyone’s favorite scapegoat – are getting rolled.  They might as well get used to it.

Kaiser Family Foundation released its annual Kaiser/HRET Health Benefits Survey, which showed that health insurance costs increased 9% for family coverage – over $15,000 per family annually.  This compares to last year’s more promising 3%.  Single coverage was up by an equally daunting 8%.

What struck me was Kaiser’s estimate that health care reform accounted for 1-2 percentage points of the increase.  It’s a good thing for the Administration, then, that the overall increase was as large as it was, so that the effects of health reform couldn’t be blamed for a larger share of the private sector health spending increases.  Whether that proportion is one-ninth or one-third of the total, though, it’s still a lot of money.  Private health insurance expenditures are on the order of $850 billion, so that 1-2% increase is a cool $8.5 - $17 billion hidden tax increase annually.  And it’s only starting. 

Just a few days ago, there were various news reports trumpeting the success of Affordable Care Act (ACA) in getting more young adults coverage, via the requirement to cover dependent children up to age 26.  Both the CDC and Gallop released findings validating the increase in coverage, estimated at some 900,000 more young people with health insurance.  But insuring these young adults has a cost.  The Kaiser study reported 20% of firms have covered young adults due to the law, an estimated 2.3 million adult children.  The difference between the 900,000 and the 2.3 million suggests a majority of those adult children might have obtained coverage on their own rather than through their parent’s insurance.  If I were an employer trying to cover my health insurance costs, I might be kind of mad about that.

Kaiser also reports that the ACA impacts are just starting to be felt.  Seventy-two percent of employers still had “grandfathered” plans, which have not yet been fully subject to ACA requirements.  Among those requirements are coverage for specified preventive care services without deductibles or cost-sharing.  Last month we saw one shoe drop in this regard, when HHS announced the list of services considered preventive for women’s health.  The services include not just birth control, but also, among others, HIV screening and counseling, breastfeeding support and supplies, and domestic violence screening and counseling – all very worthwhile services, but not all ones traditionally seen as either preventive in nature or covered by health insurance.  Then again, the federal government is requiring the private sector to pick up the costs, so serving political or social justice goals becomes part of the equation.  The Wall Street Journal reports that Catholic organizations are, not surprisingly, already upset with the requirements about contraception, and it will be interesting to see how special interests play out against other special interests in achieving ACA’s goals.

It’s going to be very tempting – too tempting – as ACA moves forward, for more special interest groups to lobby to get their services covered at no cost-sharing to the consumers.  No cost-sharing to consumers, of course, doesn’t mean no cost; it all has to get paid for somehow, and it all adds up.  We’ve been down that road with state mandates for health insurance, except that under ACA there are no jurisdictional escape routes for employers or health plans. 

Critics of health insurers, of whom there is no shortage, blame the 9% increase on health insurers trying to make their money before they are required to hit the loss ratio and disclosure requirements of AAPCA.  Those critics might want to note that Kaiser also reports that 60% of covered workers are in self-insured plans, so their argument loses much of its force, as these firms have no incentive to raise their costs any higher than necessary.  Self-insured or not, employers provide the vast majority of private health insurance, and they are struggling to afford it.  They are not an endless piggybank to be used for political purposes. 

The only “good” news about ACA I’ve seen lately is that the Administration is finally being forced to be more honest about the CLASS long term care program.  Skeptics of this program, including me, argued that the program was not structured to be sustainable. It was included as a tribute to Senator Ted Kennedy and as a way to count the program’s initial years’ premiums as revenue in the bill’s cost – rather than reserving them to pay for promised benefits.  Now it appears that HHS may try to not implement the program, having gotten rid of the actuary assigned to work on it and reportedly planning to close down the CLASS Office.   I feel bad for the people who might have benefited from CLASS, but as a taxpayer I’m relieved that we might not have jumped off this particular cliff yet.  

It remains to be seen if the 9% increase in costs is an aberration or the start of an ominous trend.  As the various ACA changes more fully impose direct costs on private health plans, and as providers continue to cost-shift to private payors due to worsening Medicare and Medicaid payment shortfalls, the prospects for holding costs down are grim.

Bad as they are, the cost increases could be worse.  Consumer Reports found that 48% of consumers are skimping on prescription drugs or other forms of medical care, up from 39% last year.  Presumably costs might be higher if patients didn’t “skimp” on health care, which included delaying a doctor’s visit or declining a test.  Of course, this concern about “skimping” on health care should be counterbalanced by questioning whether all of the recommended care was needed.  A recent study found that 42% of primary care physicians think their patients get too much medical care, driven in part by malpractice concerns and ordering tests rather than spending more time with patients (see my previous blog on addressing this).  They thought sub-specialists were even worse in this regard; 61% thought sub-specialists provided too much care.

The fact of the matter is that we still don’t know how to tell what care is needed and what isn’t, and ACA hasn’t helped accomplish that.  Yet.

Perhaps HHS will get the ACO regs right, and ACOs will flourish.  Perhaps EMRs and meaningful use will quickly yield the desired paybacks.  Perhaps the exchanges will be a boon for consumers and health plans alike.  Perhaps, perhaps, perhaps; the big problem with ACA was that it focused primarily on how health insurance is financed, not on making structural changes to how we deliver and pay for health care.  Until we do the latter – health plans, better open your wallets (and by “your wallets,” I mean “spend our money…”)!

AcCOUNTable Care? Engagement Is Not Required, Just Send Dollars

By Cyndy Nayer, August 4, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Milliman: More Room in the Medicaid Inn Needed in 2014

By Clive Riddle, July 29, 2011

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

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

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

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

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

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

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

Hot Temperatures, Hot Rhetoric: Turn on the AC

By Cyndy Nayer, July 18, 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Designing the Perfect ACO

By Kim Bellard, May 4, 2011

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

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

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

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

Gore Someone Else’s Ox, Please

By Kim Bellard, March 24, 2011

News flash: health care spending is out of control. 

Sadly, this is nothing new.  It’s been “out of control” for decades.  If we are serious about controlling health care spending -- and I’m not sure we are yet -- we may need to think not just about on what services the money is spent but also about to whom it is paid.

The facts are fairly well known.  U.S. national health expenditures were estimated to be $2.5 trillion in 2009, which consumed 17.6% of Gross Domestic Product (GDP).  Another decade and health spending may account for one-fifth of the national economy.  The spending is a source of concern in itself, but it is especially so when compared to other industrialized nations.  We spend over double per capita of the average of the other OECD countries, and the country with the next highest percentage of its economy devoted to health care is France, which looks miserly by comparison at 11%.

The truly scary thing is that, despite our runaway health spending, there is ample data that we are often not getting all the services we should, and that the tens of millions of uninsured do not get as much health care as insured persons do.  Just think how much worse the spending problem might be if those problems were solved.

Last year’s federal health care reform vowed to slow the increase in spending, although the specific mechanisms for this remain murky.  Several states are taking the lead in trying to attack the problem.  For example, the state of Washington is using a Health Technology Assessment Program (HTA) to determine which services the state will cover in its program for state employees, as well as for Medicaid and worker’s compensation.  HTA tries to use effectiveness research to determine which services are cost-effective, and it is the “cost” portion of that which has raised some controversy.   Meanwhile, Arizona has eliminated coverage for several types of transplants as one of its efforts to control Medicaid spending; two patients are reported to have died as a result.   Of course, many other states are following the more typical pattern of simply slashing Medicaid reimbursement rates further.

The problem is a hard one, and it is not at all obvious what the solution might be.  In 2007 the Congressional Research Service did an in-depth study of our health care spending relative to other countries, and the report had some counter-intuitive results.  It’s not that we have too many hospital beds, nor spend too many days in the hospital.  It’s not even that we have too many doctors nor visit them too often.  On all those measures, we rank fairly low compared to other OECD countries, despite spending much more per capita on hospital and physician services.  About the only area where the U.S. seemed to clearly use more services than other OECD countries was in imaging, specifically for CT scanners and MRI…but even then we are lower than Japan, which still manages to spend much less than we do. 

CRS concluded much as Gerry Anderson and his colleagues did a few years earlier in their well known Health Affairs article: “It’s the Prices, Stupid.”  Simply put, we pay much more per unit of service, and health care professionals – at least physicians – earn much more in the U.S. than almost anywhere else. 

Many pundits point to fixing our costly malpractice system, reducing administrative overhead, and generally cutting out “waste” as the way forward.  Indeed, PwC estimated that $1.2 trillion of the $2.4 trillion in spending was wasteful.  As evidenced above in Washington and Arizona, though, “waste” is not so easy to identify.  Reformers are forgetting one key truth: one person’s waste is another person’s income.

Let’s think about spending.  The money spent on health care goes somewhere, to someone.  It doesn’t disappear down a black hole and vanish.  It ends up as revenue for a variety of entities in the complex health system ecosystem, such as doctors, hospitals, pharmacies, nursing homes, home health agencies, labs, imaging centers, and health insurers/administrators.  Controlling health care spending means some of those entities will collect less revenue than they would have collected otherwise, and that’s the rub. 

Maybe we don’t need as many specialists, or maybe don’t need to pay them as much.  Maybe more generic drugs could be used, or maybe we could pay less for brand drugs.  Maybe insurers’ medical loss ratios should be higher, or maybe we could curtail their premium increases.  Maybe spending on diabetes and bariatric surgery would go down if we identified people at risk earlier.  Maybe.  But none of the entities currently receiving the money for any of these examples will be keen to have their revenue go down.

To be sure, reduced revenue does not necessarily mean reduced income/profit.  There certainly are huge inefficiencies in our health care system, and pressure on revenues should, in a capitalism system, result in more efficient competitors.  But those pressures in that capitalism system should also result in some of the affected entities not surviving, and when it comes to health care, we don’t seem too keen on that. 

Competition should spur innovation and better value for consumers, but those are hard to accomplish.  It’s easier for at-risk organizations to fight for the status quo, at least for oneself.  It seems that every type of health care entity has its own trade association which vociferously advocates for its interests, including payment rates and eligibility of its services.  And the threat of reducing services usually alarms current recipients of those services, who are sure they not only need them but are entitled to them.  No one wants to have the dreaded R-word invoked, and yet no health care provider wants to take a pay cut.  It’s the irresistible force of health care demand against the immoveable limit of health care budgets. 

The hard fact is that whenever health care spending finally gets under control, as it inevitably must, there will either be fewer health care providers or those providers will be getting less money – or both.  The danger we face is that the reductions will be arbitrary and/or across the board.  We should be able to do better than that.  There’s nothing inherently wrong with specific health care providers making a lot of money.  One would want health care providers who deliver high quality, effective care to their patients to do well financially.  On the other hand, though, it is ludicrous to be paying the same to providers who are not doing well for their patients, whether that is not delivering appropriate treatment, making medical errors, or simply not getting good results.  It’s even silly to be paying “average” providers the same as high performing ones, yet we do this millions of times every day.  Right now, of course, it’s virtually impossible to tell which providers are which.  Where’s the data, where is the proof, and why don’t they – or we – seem to care?

Reform should mean making sure competition is based on delivering demonstrably better care and services, not on factors like geographic dominance, better lobbyists, or the simple inertia of not wanting to harm “my” doctor/hospital/pharmacy/etc.  Face it: there is going to have to be some goring, so we better make sure it is done to the right metaphorical oxen.

2010 National Healthcare Quality & Disparities Reports

Clive Riddle, March 4, 2011

HHS’ Agency for Healthcare Research and Quality (AHRQ) has just issued the 2010 National Healthcare Quality Report and National Healthcare Disparities Report. The reports are published annually, as mandated by Congress since 2003.

AHRQ tells us the “reports show trends by measuring health care quality for the Nation using a group of credible core measures. The data are based on more than 200 health care measures categorized in several areas of quality: effectiveness, patient safety, timeliness, patient-centeredness, care coordination, efficiency, health system infrastructure, and access.”

AHRQ summarizes the report findings as indicating “that few disparities in quality of care are getting smaller, and almost no disparities in access to care are getting smaller. Overall, blacks, American Indians and Alaska Natives received worse care than whites for about 40 percent of core measures. Asians received worse care than whites for about 20 percent of core measures. And Hispanics received worse care than whites for about 60 percent of core measures. Poor people received worse care than high-income people for about 80 percent of core measures. Of the 22 measures of access to health care services tracked in the reports, about 60 percent did not show improvement, and 40 percent worsened. On average, Americans report barriers to care one-fifth of the time, ranging from 3 percent of people saying they were unable to get or had to delay getting prescription medications to 60 percent of people saying their usual provider did not have office hours on weekends or nights. Among disparities in core access measures, only one—the gap between Asians and whites in the percentage of adults who reported having a specific source of ongoing care—showed a reduction.”

My impression of the state of things is evidenced in a section header entitled: “Quality Is Improving; Access and Disparities Are Not Improving.” The report states found that “across all 179 measures of health care quality tracked in the reports, almost two-thirds showed improvement. However, median rate of change was only 2.3% per year. Access is not improving. Across the 22 measures of health care access tracked in the reports, about 60% did not show improvement and 40% were headed in the wrong direction.”

Of course, patterns of care are regional, not national. The report found that “while every State was in the top 10% for some measure and was part of a benchmark, States in the New England (CT, MA, ME, NH, RI, VT) and Pacific (AK, CA, HI, OR, WA) census divisions were benchmark States most often and States in the East North Central (IL, IN, MI, OH, WI), East South Central (AL, KY, MS, TN), and West South Central (AR, LA, OK, TX) divisions were benchmark States less often.

The full 205 page National Healthcare Quality Report addresses: Effectiveness of Care, Patient Safety, Timeliness of Care, Patient Centeredness, Care Coordination, Efficiency of Care, Health System Infrastructure and Access to Health Care. The full 248 page National Healthcare Disparities Report addresses the same topic plus a section on Priority Populations. There is considerable overlap in the content of the two companion reports.

The reports are definitely worth some clicks to check them out.

Entrepreneurship Trumps Bureaucracy

by Lindsay Resnick, February 4, 2011

Health care reform has thrust many industry stakeholders into survival mode. With the Patient Protection and Affordable Care Act (PPACA) in place as an enabling foundation, “new rules” are set to be written. And it will be a harsh set of rules indeed – minimum loss ratios, elimination of risk selection tools, benefit plan grandfathering, strict rate management, government run benefit exchanges, and for Medicare plans, reduced payments. And add to the mix a cadillac plan tax, insurance company assessments, and yes, even a tanning tax.

Predictions are running rampant about mass product-line exits, reduced competition due to consolidation, and distribution channel collapse.  Will these new regulations be the demise of health insurance industry and its stakeholders or, will change create opportunity?

Or put another way….can entrepreneurial spirit triumph over bureaucracy?

No one has a crystal ball but history shows us that success in transformative, threatened markets requires an ability to think and plan strategically: anticipate and absorb change, generate disruptive ideas, and act with deliberate, sequenced speed. It’s the way entrepreneurs manage through obstacles and capture opportunity.

From mega health insurance companies to small brokerage agencies, the process begins when leaders seek answers to tough questions. It means lasering-in on an organization's "reason for being" and then expanding outward to scrutinize core competencies, identify comparative market advantages, dissect customer perceptions, and determine strategic sustainability. Use this three-step approach:

BASELINE – Readiness gauge of where you stand today and what’s needs to be retooled in order to deal with shifting markets and exploit new opportunities.

TOMORROW – Scenarios and options for extending your company’s “reason for being” in a reformed market landscape. This is the “vision thing” that serves as the lifeblood of every entrepreneur.

ROADMAP – Select and prioritize specific, tangible opportunities; design a structured approach to optimize results, and; formulate an actionable, measurable business plan.

This introspective approach will undoubtedly call into question your most basic operating assumptions. It will challenge institutional bias and force debate around longstanding approaches to your markets. That’s OK. It will also yield a renewed focus on where your company needs to be in the future and lay the groundwork for navigating how to get there.

The objective is to put in motion a Health Care Reform change management process that fosters informed judgments. It will assist you to see the futurity of today’s decisions. The result will prove that entrepreneurship trumps bureaucracy.

Saying No to Choice

Kim Bellard, January 6, 2011

I read one of the most astounding articles last week.  It appears that the Ohio Board of Pharmacy doesn’t think much of consumers opting to shop pharmacies.  In rules that went into effective January 1, Ohio consumers will only be permitted to transfer prescriptions once a year, except for transfers within a pharmacy chain using a centralized computer system.

The Board’s rationale is that transfers can result in errors, thus making the new rules a patient safety issue.  They also note that these rules are more consistent with DEA rules on transfers of prescriptions for controlled substances.  Critics of the rule suspect that pharmacists did not like the time and paperwork associated with the transfers, much less the competition brought about by various retailers offering discounts or other incentives for such transfers. 

Consumers can switch pharmacies within the same pharmacy chain or can obtain new prescriptions from their doctors in order to go to a new pharmacy.  Staying within one pharmacy chain may miss the point of the consumer’s desire for a change, while forcing the doctor to write a new prescription simply shifts the burden to the physician, and also makes it more difficult for PBMs and insurers to monitor utilization.  And it’s not just price-conscious consumers who may be impacted; snowbirds, college students, or other individuals who have more than one residence during the year may also be out of luck. 

So much for being consumer-focused.  Rather than focusing on true patient-safety solutions like better ways to electronically enable such transfers, the Board of Pharmacy is just telling consumers “too bad.”  We should keep in mind that pharmacy has long been the envy of the rest of the health care world due to its decades-long ability to get online claims, benefits, and eligibility information.  One would like to think they could solve something like prescription transfers in a more elegant manner.  It strikes me a little like when the mobile phone companies used to tell consumers they’d have to change phone numbers if they switched carriers.  I’m sure there were some record-keeping headaches with transferring phone numbers to a competitor as well, but somehow the phone companies survived once they were forced to allow the transfers.  Telling patients they can’t take their prescriptions elsewhere just seems paternalistic; pharmacists should worry more about why consumers want to take their business elsewhere and then address those reasons.

Can anyone imagine something like this happening in any industry other than health care?  Historically, consumers have consistently rated pharmacists as one of the most trusted type of health care providers, such as in a recent Gallop survey.  It’s hard to see how this action will help pharmacists continue to earn that level of trust.  The Board of Pharmacy comes off more like a Soviet Board of Central Planning, and our health care system once again reveals that it doesn’t quite grasp the concept of consumer-focused. 

Meanwhile, the New York Times reports that drug companies are using coupons and co-payment cards to reduce the effective cost of brand names for consumers (although not to PBMs or insurers).  Consumers have been following the money these past few years, especially since more have copayments or coinsurance that encourage use of less expensive drugs, and the result has been an increase in generic drug use.  No wonder consumers are changing pharmacies.  With the coupons, consumers can get brand names as cheap or cheaper than generic, so from their point-of-view, why not?  It’s not surprising that the drug manufacturers are fighting back to regain market share, nor is it surprising that we have yet another perverse financial incentive for health care consumers. 

One wonders how the Board of Pharmacy will react to the coupons.

Still, perhaps lacking a regulatory option that pharmacists in Ohio had, some health care providers are finding their own way to limit choice.  The past fifteen years have seen waves of consolidation in hospital markets, creating effective or actual monopolies for hospital care in many markets.  According to William Vogt, Ph.D. of the RAND Corporation, 90% of the U.S. lives in “highly concentrated” hospital markets, and that hospital consolidation raises hospital prices.   The Robert Wood Johnson Foundation raised concerns about this back in 2003, noting both the trend and the impact on costs, and the trend hasn’t stopped since then.  It doesn’t even have to be a true monopoly.  Last year the Massachusetts Attorney General found that health insurers paid significantly more to hospitals and physicians with market leverage than can be accounted for by quality of care, severity of illness of patients served, or cost to deliver the care for these institutions.   These “must have” provider systems are able to dictate contractual arrangements with insurers that help assure better financial results for their system, but also help drive up the overall cost of health care and health insurance in those markets. 

Health care reform in 2010 created the specter of even greater consolidation, such as reported by Bloomberg and others.  To have even greater control of the health care delivery system, hospitals are also acquiring physician practices.  As reported by the Wall Street Journal, 55% of practices are now owned by hospitals, up from 30% five years ago.  It doesn’t take too much imagination to envision some markets where, for all intents and purposes, there comes to be only one monolithic health system, including doctors, hospitals, labs, imaging, and other services.  It could make cable service look like a hotbed of competition.

More horizontal and vertical integration may indeed be good in many cases.  Increased clinical integration between providers is going to be necessary to improve care.  The need for increased investments in Health Information Technology (HIT) is likely to be costly and is more affordable for larger organizations.  These reasons certainly provide some solid rationale for more consolidation and integration.   However, the risk is that we’ll get the reduced choice without offsetting improvements in cost-effectiveness and quality.  The goal shouldn’t just be “bigger,” it needs to truly be “better.”

Consumers should have choices in health care, as in anything else.   Reforms in the health care system should encourage competition and consumer choice, and should help make those choices be based on measurably better performance, both clinical and financial.  We should be saying “no” to actions that don’t serve that purpose. 

The Insurance Mandate Conundrum

by Clive Riddle, December 9, 2010

Harris Interactive has just released results from a poll, in conjunction with Health Day, taken post-election that measures current public opinion of health care reform  (the survey involved 2,019 adult respondents online between November 19-23.)

In Harris Interactive’s words, “Americans remain deeply divided over the nation's new health-care reform package.” Certainly a plurality (40%) want to repeal all or much of the legislation. But just as polls consistently show that while American’s hate Congress in general, they typically support their own congressman; this poll indicates much of the specifics of health care reform are rated much higher than the package in general.

Humphrey Taylor, chairman of The Harris Poll, tells us "many Americans want to repeal the bill not because they dislike the specifics, but because they feel it is an expensive expansion of an already big government…. Pluralities want to repeal all or most of the law, but want to keep much of what's in it…. it's easy to believe all the bad things about the law if you don't know what's in it."

Expanding on that last point, Sara Collins, vice president for Affordable Health Insurance at The Commonwealth Fund, tells us "I think this suggests that as the public becomes more familiar with the law and how it will benefit them and their families, support will probably climb. There's just a lag while immediate provisions are rolling out like young adult coverage."

But here’s the rub: the public really, really doesn’t like the insurance mandate provision, and time probably won’t improve opinion in that area. So if the a Republican House feels pressure to take some action regarding health reform, given the unlikelihood of pushing through an outright repeal through a Democratic Senate or overcoming the President’s veto, their point of attack would be the insurance mandate.

Yet the mandate is the one provision that helps the more publicly popular provisions, such as guaranteed issue and adult dependent coverage, pencil out a little better (by decreasing adverse selection) for the health plan industry that in many cases lobbied for the Republican party in November. So the party that health plans wished for may cause them to remember the phrase, be careful what you wish for.

Here are some of the poll results by the numbers:

• 40 percent of adults wanting to repeal all or most of the legislation;  31 percent favor keeping all or most of the reforms; 29 percent aren't sure what should be done.
• 57% oppose the insurance mandate and only 19 percent support it
• Two-thirds of respondents like guaranteed issue provision (prohibiting denial of coverage to people with pre-existing medical conditions.)
• 60% want to keep the provision for tax credits so small businesses can afford coverage for employees. 
• 55% like provision allowing children to stay on their parents' insurance plans until they are 26. 
• Just over half of respondents support the idea of new insurance exchanges where people can shop for insurance.
• 81% believe reform will it result in higher taxes, could lead to rationing of health care (74%), and reduce the quality of care they will receive (77%).

No to Apple Pie and Free Preventive Care

By Kim Bellard, October 28, 2010

Much has been made about the recently effective provisions of the Patient Protection and Affordable Care Act that require health insurance plans to cover many preventive services without cost-sharing.  Increasing the use of preventive services, and removing financial barriers that might prevent people from using them, are the kinds of things that most people – in both political parties -- seem to automatically approve of.  It’s practically un-American not to favor the idea.

Well, I’m as patriotic as the next person, I love my mom, but I don’t like apple pie and I don’t think free preventive care is necessarily a good idea.

While some studies over the years have found that increased use of certain preventive services is cost-effective, the evidence is neither universal nor entirely clear-cut.   For example, Joshua T. Cohen, PhD. and his colleagues raised this question in an article in The New England Journal of Medicine, and concluded that many preventive measures are not cost-effective.  They urged that care be taken to target cost-effective measures, which the new law purports to do, by focusing on “evidence-based preventive services.”  Still, not everyone is persuaded that even this focus will deliver intended savings; for example, the American Academy of Actuaries raised several good points in their response to the Interim Final Rules promulgated by HHS last summer.  Ambiguity about interpretation, over treatment, and cost-shifting to preventive service coding are cited as examples of potential problems that could have the result of increasing costs.  

I’m not going to try to argue on either side of that particular debate; I’ll leave that for the researchers, actuaries, and other number-crunchers.  My skepticism is whether making access to these services without cost-sharing via health insurance is good public policy. 

In their background on the new preventive care rules, HHS says that Americans only use preventive services at about half the recommended rate, citing a study by McGlynn, et. al.  However, as best I can tell, that study talked about recommended care on a number of fronts, and did not cite financial barriers as the key problem.  The McGlynn study is indeed very troubling, but it left me wondering why physicians were not doing a better job giving their patients recommended care, not why patients were failing to show up for it. 

Preventive care is something that most Americans should be able to afford.  If it is too expensive for at least middle class Americans to pay for directly, then we have an even bigger problem, because paying for it via health insurance is still going to require that middle class to pay for it, along with everything else insurance covers.  I get frustrated when policymakers and pundits seem to think employers and insurance companies pay for health insurance with “their own” money.  These entities aren’t like the federal government, which can print money and/or borrow money from China.  It is a poorly understood truism that insured people pay for insurance; the insurance companies essentially redistribute the money from people who don’t use services to those who do.  Money for employer-based health insurance is coming out of workers’ paychecks; they just don’t always realize it.

That’s the basis of the problem.  We are getting further and further divorced from the cost of health care.  Health care is scary because no one knows if tomorrow they’ll get hit by a bus or feel a cancerous lump, and be faced with bills that are hundreds of thousands or even millions of dollars.  That’s why people have historically bought insurance: to protect against unforeseen and potentially catastrophic expenses.  

Preventive care isn’t like that.  The expenses are not usually huge, nor are they unpredictable.  These should be budgetable expenses, like scheduled maintenance for one’s car.  Yes, there are lower income people for whom even these expenses are unaffordable and who do need financial assistance in paying for them, but removing the apparent financial obligation from everyone as a way to solve that problem is not only overkill but expensive overkill.  Health insurance is not a good vehicle for income redistribution; it is a mechanism to redistribute money to people using services from people not using services.

I also have to wonder: if preventive visits are so important, why aren’t we including dental check-ups or eye exams?  Certainly the same arguments used to justify medical preventive visits should apply here too, especially given the increasingly accepted linkage between oral and overall health.   I say that with a wary eye to the slippery slope we’re already on; whatever preventive services will be covered initially, one has to strongly suspect that it will only be the beginning.  There is not much political will to take away a benefit once given, so services are likely to only be added to the list, not removed if/when new data comes out to challenge the efficacy of the service.  If you don’t agree, just ask Jerry Brown about the wisdom of questioning the efficacy of mammograms…

The oft-used argument is that preventive visits will pay off in the long run, although – as the studies cited above indicate – that is not always the case.  The argument posits that making it “free” now will incent people to obtain the care.  The hidden premise to this argument is that people don’t view preventive care as being of value unless it is free.  I.e., they are not smart enough to take care of themselves and won’t take the right actions for their best long-term health.  Well, in a country with 33% obesity rates and 20% smoking rates, that does appear to be a valid argument – but I’m skeptical that those people are going to be motivated to act in that interest simply by removing cost-sharing for their annual exam either.  

I hate to sound like a Grinch by not supporting “free” preventive visits, but they’re not truly free.  To me, the core issue is how to make people care about taking care of themselves, with part of that including getting appropriate care.  Call me a cynic, call me uninformed, but giving away “free” preventive care seems more like just bread and circuses for the masses compared to the underlying problem of motivating people to be responsible for their health and well-being.

196 Pages of the Patient’s Bill of Rights

by Clive Riddle, June 24, 2010

This week, HHS, Department of Labor, and Department of The Treasury issued regulations to implement the Patient’s Bill of Rights referenced under the Patient Protection and Affordable Care Act.  A Fact Sheet summarizing these regulations was posted on healthreform.gov.   The 196 page Interim Final Rules have already been posted and the Federal Register will post the Rules on Monday (June 28^th.

President Obama remarked on the status of the Act, and the new Bill of Rights, in a White House Event, noting “The Departments of Health and Human Services, Labor and Treasury are issuing new regulations under the Affordable Care Act that will put an end to some of the worst practices in the insurance industry, and put in place the strongest consumer protections in our history -- finally, what amounts to a true Patient’s Bill of Rights. This long-overdue step has one overriding focus, and that’s looking out for the American consumer.  It’s not punitive.  As I said when I met with the insurance executives, it’s not meant to punish insurance companies.  They provide a critical service.  They employ large numbers of Americans.   And in fact, once this reform is fully implemented a few years from now, America’s private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers.  We want them to take advantage of that competition.”

As implementing regulations from the Act, there is no new policy here, just the creation of the document set forth in the Act with operational details. So in reading a summary of the Bill of Rights, you will certainly get déjà’ vu because all this was well covered in highlights of provisions of the Act itself.  Of course, the fun will be pouring through the 196 pages of details.

Never the less, here is a summary of what the detailed regulations address: Effective on or after September 23: insurance companies are barred from:

1. Imposing pre-existing condition exclusions on children
2. Rescinding or taking away coverage based on an unintentional mistake on an application
3. Setting lifetime limits on coverage
4. Restricting use of annual limits on coverage.
5. Restricting choice of the primary care doctor or pediatrician within a plan’s provider network
6. Requiring a referral for women to can see an OB-GYN
7. Requiring prior approval before seeking emergency care at a hospital outside the plan’s network.

(Items 5-7 apply to plans that are not grandfathered as defined in the regulations)

The Impact of Accountable Care Organizations During the Next Few Years

by William J DeMarco, April 27, 2010

I was asked to address the following question for the current issue of MCOL’s Thought Leaders newsletter: "How large of an impact will the emergence of Accountable Care Organizations have during the next few years, and what are some of the implications we might expect as a result?”  

I supplied a brief summary statement for Thought Leaders. Here are my expanded thoughts on this topic:

We believe that ACOs will have a tremendous impact on lowering costs and improving quality long term because these initiatives will be operated at the local level and therefore make quality improvement an ongoing process versus a short term discount approach to value improvement.

The concept of having local providers competing as integrated systems has long been a scholarly supported and business researched model that theoretically should work. The problem has always been in the reimbursement at the practice level. Money and care delivery have been separated from the care coordination making payment a barrier versus the bridge it should be to better patient management.

We have spent millions of dollars as health plans, medical groups, and hospitals to come up with reporting systems that are just now yielding some patterns of care that we know offer positive solutions in the area of chronic care and general prevention.  However, the savings from this more effective care outcome has always gone to the payers. The providers, patients, and most employers never really see these savings in the form of better benefits or lower premium costs so there has never been an incentive for physicians and hospitals to work together to better coordinate inpatient and outpatient care.

We think that the bundled payment opportunities will change this and, as Medicare continues to reduce or flatten its fee increases, bundled payments will become more attractive.

By having risked adjusted patient care guidelines tied to payments for hospital, physician and drug costs for each episode of care, well planned care management protocols will yield a margin IN ADDITION to billed charges to Medicare.  Therefore, there may be a way for many providers to actually see Medicare revenue start to come closer to commercial revenue.

Managed care companies handling commercial payers would also have an interest in seeing hospitals and physicians work together to improve everything from coding to clinical outcomes in order to secure a share of the savings created by their innovation and discipline. There is talk that delegated models of medical management as seen in Florida and California may offer an even more lucrative opportunity to participate by taking 85% of premiums through global or bundled payment structures. This would represent an outsourcing of medical management to hospitals and physicians who, we have always thought, should explore this as a business opportunity to leverage care AND management of care. Health plans and insurance companies would pay a nominal fee to have this management done, but that would only enhance the ability of the caregivers to hire navigators to assist people within and outside the care system so discharges are followed up and preventive services explored before admissions.

The ACO structure will truly be following the integrated care guidelines to improve care with an incentive versus just avoiding anti trust issues. Perhaps we will see different physician driven governance and locally based quality and utilization feedback to physicians and hospital staff whose compensation is dependent upon not just delivering more services but delivering more of the right services at the right levels within the delivery system. We reaffirm this point by saying if physician are incented to deliver top quality and share the savings but the hospital staff operates business as usual to load beds and get paid based upon gross revenue, we have created a monster in terms of two factions in the delivery system going in opposite directions. This happened under early bundled and capitation payments where doctors were starting to see serious gains in income while the hospital’s losses were mounting due to reduced lengths of stay.

Finally, the long term impact here will be collaboration between hospitals in an area where they were competing against one another in a small market. The larger delivery system and its primary care referral system offer great coverage of a larger Medicare and commercial population. This allows PCPs and specialty practices to grow and align better benchmarks and communication with other MSO services that share expense and allows a network of small practices to operate as a large multi-speciliaty group practice. This group without walls can achieve some of the economies of scale but would need to be linked by Health Information Exchange making patient records, ordering of tests, and recommending follow-up care more efficient than much of the paperwork and patient chasing by phone done now.

Assuming the demonstration projects give CMS some good feedback on key performance indicators and that many hospitals and physicians arrive at the conclusion that indeed there is an opportunity to perform better and be paid better under this ACO framework, we would say the government’s estimate of savings from ACO development is largely understated.  The costs curve will bend regionally which will create even more savings than projected for Medicare.

Even now states are talking about ACOs for Medicaid and some employer coalitions are attempting to encourage ACOs around centers of excellence to push providers to compete more on quality and less on discounts.  We have told these large, self funded employers that they need to stop being passive players in the health insurance arena and take an active interest in designing benefits that offer incentives to patients who see the ACO aligned doctors versus the non aligned doctors, who may be part of a discount network but have no real accountability when it comes to performance. Then the employer or health plan must also offer some sort of shared savings plan to continue to incent doctors and hospitals to improve quality and outcomes. This additional amount shared from savings costs employers and health plans nothing more than what they normally pay, but it opens the door to seeing waste removed from the system permanently and better coordination of services for the employee. This levels off premiums and reduces employee out of pocket costs.

We are excited about the ACO opportunity.  While there will be a large education process needed to implement these approaches in some markets, most agree this beats the alternative of price controls and further mandates on payers and providers.

Health Plan “Early Adopters” for Extended Dependent Care Coverage

by Clive Riddle, April 22, 2010

The bandwagon started rolling at full steam this week for major health plans to allow applicable dependent coverage up to age 26 in advance of the September 23^rd, 2010 effective date provided in The Patient Protection and Affordable Care Act.

HHS has been in communication with a number of major plans for purposes of stimulating such an initiative. On Monday, April 19^th during the day, UnitedHealthcare and WellPoint issued releases regarding their new policy in this regard. HHS Secretary Kathleen Sebelius issued a statement discussing the initiative, and acknowledging the two health plans.

Monday evening Humana issued their release in this regard, and the Blue Cross Blue Shield Association issued a release on Tuesday committing the entire association of Blues plans. It’s interesting to note the WellPoint’s statement came ahead, and wasn’t coordinated with announcement of the BCBS Association policy. HHS Secretary Kathleen Sebelius issued a follow-up statement on Tuesday acknowledging Humana, the BCBS association and Kaiser Permanente. Kaiser has not issued a formal public statement in this regard, but made a general commitment to HHS and has acknowledged their position with the media.

On Wednesday the 21^st, Aetna issued a statement announcing their plan to extend coverage, without providing specific details. CIGNA has not yet issued a statement. Local and regional plans (other than BCBS plans) generally have not yet issued such statements, due to the fact the initial HHS outreach was to national plans, and more to the point in a number of regions because state laws already require dependent coverage until age 26 or higher.

Regarding the varying state dependent coverage requirements, one example, as the Dayton Daily News reminds readers is that "in Ohio, that age will rise to 28 on July 1, under the provisions in the two-year budget state lawmakers approved last year." The National Conference of State Legislatures (NCSL), in a web page dedicated to the state-by-state coverage issue on this topic, provides a summary of various state initiatives to address this issue, that started all the way back in 1994, when "Utah become the first state to enact legislation allowing coverage for unmarried dependents to continue up to age 26, regardless of school enrollment status." New Jersey enacted legislation extending dependent coverage to age 31 in 2006 and the NCSL notes that now "at least 30 states have now enacted similar legislation to extend dependent coverage regardless of enrollment in school." (NCSL provides a state by state table in their web site.) The Robert Wood Johnson Foundation also provides a web site dedicated to State Coverage Initiatives that summarized Dependent Coverage provisions.

Regarding the details of the national plans extension of dependent coverage (with links to their statements):

• UnitedHealthcare’s change is effective immediately. They state “this extension of coverage applies to college students who currently are covered under their parents' fully-insured health plan offered through UnitedHealthcare. Individual family health plans through UnitedHealthcare's Golden Rule business already allow all dependents to stay on the plan until age 26 and enrollees do not need to take any action.”

• Humana’s change is also effective immediately, and they note “the decision by Humana directly impacts the adult children of members who are enrolled in Humana’s fully insured lines of business. (Children of members enrolled in a HumanaOne individual health plan have already been able to remain on their parents’ or guardians’ coverage until age 26.) Humana is also encouraging large employers who self-fund their coverage with Humana to extend coverage to the adult children of their employees who would otherwise lose their coverage this year.”

• WellPoint’s policy will take effect June 1^st. They state that at that time “WellPoint's affiliated health plans will automatically retain these young individuals on their parents' policies in both fully insured group and individual health plans. Our self insured clients and members will have the option of not offering this extended coverage.”

• The BCBS Association policy is also tied to June 1^st, but further equivocates that the extension is only definite for individual plans, and that they will make the option available to their employer groups, as they state “every Blue Cross and Blue Shield company has agreed to allow covered individuals under age 26 to remain on their parents' individual health insurance policies effective June 1. We will offer this extension of coverage to our employer accounts for their members.”

• Aetna for now is at the stage where they are “working with their customers” to develop a policy: “We understand that young adults are concerned about potential gaps in health care coverage. We are working with our customers to allow young adults to remain on their parents' plan until the dependent coverage requirements of the Patient Protection and Affordable Care Act go into effect later this year. We believe this is in the best interests of our members and is in keeping with the spirit of the health reform law.”

• Kaiser was cited in USA Today as planning “to extend coverage before September to consumers who have individual policies and is in discussions with employer groups about their policies. Details are still being worked out, ‘but our intent is to avoid an interruption in coverage for them,’ spokesman Chris Stenrud said.”