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

By Clive Riddle, April 9, 2009

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

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

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

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

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

Here’s the results for the past two years:

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

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

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

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

· Increase significantly 26.4%

· Increase somewhat 42.5%

· Not materially change 14.9%

· Decrease somewhat 11.5%

· Decrease significantly 4.6%

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

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

Undermining the Health Reform Agenda From Within

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

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

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

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

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

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

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

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

Yes, No and No.

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

Serious Games: Health Plans and Health Games

By Clive Riddle, March 25, 2009

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

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

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

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

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

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

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

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

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

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

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

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

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

Will WellPoint have Company?

By Clive Riddle, March 20, 2009

Managed Healthcare Executive Magazine quotes me in a short article on “WellPoint PBM business for sale” by Tracey Walker, March 13, 2009.

The article states: “According to Clive Riddle, president and founder of MCOL, a provider of business-to-business health management and managed care resources in Modesto, Calif., many large health plans have in-house PBMs, and ‘there is often intense pressure from the analyst and investor community to imitate such initiatives. It is unlikely that WellPoint will be the only plan to go down this path in the near future’.”

So we shall see if by this time next year if Wellpoint gets company from other health plans putting PBMs on the auction block.

Misdirection Can Be Fatal

by Laurie Gelb, March 17, 2009

ETHEX has initiated a retail-level recall of tablets found after the fact to have been manufactured in non-cGMP conditions. A Blues plan finally sent out a one-page masterpiece of misdirection, one that I'm confident was replicated similarly nationwide, to patients for whom one of the affected scripts was reimbursed. Unfortunately, in this case, misdirection could potentially be fatal, so a communication like this is worth delving into.

First, the letter is dated February 2009, though received in March. ETHEX PR is dated Jan. 28, so there's been a communication delay.

The salutation, despite the fact that these letters are obviously databased from PBM records, is the time-honored "Dear Valued Member." So what would cue a member that this letter, unlike several others received this quarter, should actually be read? The outer envelope holds no clue, either.

The sentence announcing the recall is in bold. That seems scary and necessitating action, doesn't it? But no.

We read that these prescriptions were no longer processed by the PBM as of January 30. If I were comparing this with recalls for cars or food, that would mean that I should take it back and get something fixed or refunded, yes?

Not here. Of course, use of the word "recall" isn't the plan's doing, but there remains the responsibility to explain it.

About halfway down the page, we read "...it is recommended that you continue to take them [the medications] in accordance with your prescriptions, as the risk of suddenly stopping needed medications may increase your risk for side effects."

Side effects -- not quite the term that most clinicians would characterize as the risk of suddenly d/c'ing nitrates or beta blockers. So this letter is presuming that the patient knows why s/he is on each medication (and remember, each of these is listed only under its full generic name). Alas, if the good ship Argo...and since the letter lists each of the recalled tabs, without specifying which one(s) were filled for the patient, it would be easy to skim this long, complex list and not see the connection. Another form letter gone astray, one might think.

But let's say the patient does recognize one of these meds. She should be thinking that she should do nothing, right? Side effects and all that. But the very next sentence advises: "Your physician is in the best position to help you slowly discontinue use of the medication..."

Wait a second. So the member is supposed to "discontinue?" That sounds like "stop?" But that logic fails when there's no mention of getting a replacement supply, because, of course, the letter is not really recommending that anyone d/c her meds. It's just saying that if you wanted to, you should let your doc in. In fact, it's not saying anything at all, but merely palming patients off on the Ethex customer service number or the MedWatch URL.

The closing: "Thank you for your attention to this matter," once again suggests that you should do something, but by this time, we're immune to confusion (and conclusions). Time to cue up the David Bowie song, "Changes."

This letter mentions five different organizations by name: the plan, its PBM, its pharmacy "consultant," ETHEX and the FDA. However, nowhere does the letter explain any of their responsibilities, roles, accountability or possible usefulness in sorting out any of the letter's contents.

Some of the recalled tabs may be over-generous with the active ingredients. Nowhere in this letter does this fact appear. What to do about refills when shortages for some of the compounds in question have been news for months is nowhere addressed (some patients have been switched over to immediate release vs. extended release metoprolol, for example). Even if the PBM is fully stocked, that reassurance is not made. Nor are terms like cGMP explained. Nor is it identified which drug(s) on the list may apply to the patient (we call it a mail merge with a form field). A single-spaced missive that fills a page, this letter raises more questions than it answers, yet it hints delicately at clinical implications.

When you read polls about distrust, mistrust and misunderstanding of the health insurance industry, remember this letter. A patient who is on a recalled med, based on the PBM's data, is sent a letter in a 8.5 x 11" envelope, signed by a PharmD. There's bold face type and mention of the FDA. It seems serious and worth reading, (well, if you get past the first sentence regarding "changes to prescription drugs in the marketplace"). But, in the end, it's not only unhelpful, it's anxiety-producing or a sedative, depending on which sentences one reads. The tone is cold, formal, impenetrable and replete with jargon. Health plan as robot? We are here.

What would the LA Times think and write about a physician who sent this letter? A hospital? What would you think? Need a plan somehow avoid any visible role in medication management beyond formulary access? The plan will certainly assume a broader role when it comes to hospitalization, surgery, medical devices, etc. and patients know this very well.

So to the Blues plan and your sisters and brothers: After the next recall, if you can't acknowledge the facts for whatever reason (and remember, there's more than one general counsel in the sea), please send your members somewhere that offers actual answers. For example, see the simple language about this recall at the Facts & Comparisons Web site: http://www.factsandcomparisons.com/News/ArticlePage.aspx?id=8294. Ironically, this para is written for HCPs, but is simpler than many of your letters to members.

And next time, don't delay. Spring for a mail merge that produces a personalized salutation and short name rx info. A member with a condition serious enough to justify a drug that you're paying for deserves personhood, not to mention the fact that you might want to converse with that person in the future. Names of drugs and people are a good start. Run your next effort by some real patients, please, and if you can't come to grips with the fact that these are sick people, you might want to think about finding a vertical with lower stakes.

Thank you for your attention to this matter.

The Challenge to Healthcare Marketing

By Lindsay Resnick. March 12, 2009

Political change, economic volatility and competitive rivalry will bring the
unexpected this year. Be prepared to aggressively track what's working (or
not) in terms of your business tactics and prepare to move quickly based on
emerging market indictors. Be agile.

Healthcare

It appears health reform is set to take off in 2009. The new administration
has made this their top domestic priority under a battle cry of "How can we
afford it.how can we afford not to" With America's aging demographic,
soaring unemployment, expanding uninsured population, and unprecedented
levels of uncompensated care, there's broad agreement on the need for major
health system overhaul. Of course, the devil's in the details.

Recessionary conditions also mean that healthcare companies that are able to
demonstrate an ability to lower costs will continue to thrive. Leading this
watch-list are those promoting medical travel, chronic care management,
limited benefit individual medical plans, and retail medicine. Personal
healthcare budgeting is shifting along with the number and complexity of
delivery choices. There's a healthcare squeeze on consumers and it will only
get tighter.

Expect to see the Health 3.0 movement continue to advance through web-based
consumer connectivity, personalized health care delivered in clinically
relevant settings, and financing mechanisms structured around
consumer-centric business models. The new digital customer will be an
activated consumer with any time-any place-any device connectivity,
supported by "information everywhere" tools. They will have the confidence
and smarts to be empowered healthcare purchasers. Be proactive.


Marketing

Making sure your business can turn it up in a downturn relies on a marketing
strategy built on data, dialogue and differentiation.

Customer segmentation allows companies to know your most profitable
customers. It enables smart marketers to define what messages and vehicles
are most effective in reaching your best prospects. Understanding
demographic, lifestyle and value-based attributes provides an important
competitive edge.

Search engines are defining brands, changing sales processes and influencing
just about everything in our lives. Newspapers, magazines, and traditional
television audiences are shrinking. They're being replaced by social
networks, wikis, blogging and online video content. It's a media insurgency,
and consumers have grabbed an important new role. They are now broadcasting
opinions, turning fads into trends, and getting information from customized
information outlets where monologues are turned into dialogues. Tomorrow's
marketers will quickly figure out how their efforts fit into the new media
revolution.

Healthcare is a price-driven, fragmented marketplace where differentiation
is king. A sustainable growth strategy takes targeted outreach, value
positioning and tactical savvy. Figure out how to articulate your value
proposition in a way that separates your company from healthcare's "sea of
sameness." Then, select in-market tactics (direct response, new media
advertising, grassroots PR, etc.) that will be most effective for getting in
front of the right people at the right time. Start a relationship with your
prospects and build a customer base of brand loyalists. Be memorable.

Everyone agrees 2009 will be a tough year. Companies will be hard pressed to
balance budget pressures with customer acquisition and retention
expectations. Competitors will work hard to steal your customers. But, where
there are challenges there's opportunity. Keep a sharp eye on trends that
impact your business, and keep a closer eye on your customers. Keep products
and services relevant so they can withstand economic pressures. And, keep
your marketing data driven, differentiated and built around a relationship
with your customers. Of course, a little luck will go a long way! Be
innovative.

Employers Committed to Active Employee Health Benefits for 2010

by Clive Riddle, March 9, 2009

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

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

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

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

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

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

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

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

Health Care Stakeholders Weigh In On the Obama Budget

By Clive Riddle, February 27, 2009

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

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

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

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

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

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

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

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

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

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

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

The Path to Reform as laid out by the Commonwealth Fund

By Clive Riddle , February 19, 2009

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

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

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

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

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

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

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

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

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

Identity Crisis: What’s in a name?

By Clive Riddle, February 12, 2009

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

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

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

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

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

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

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

The Future Ain’t What It Used to Be

By Clive Riddle, February 5, 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2009 Winners and Losers:

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

2008 Winners and Losers:

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

2007 Winners and Losers:

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

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

The Argument for Incremental Reform

By Clive Riddle, January 22, 2009

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

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

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

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

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


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


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

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

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

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

So click the link already, and read it yourself.

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

By Clive Riddle, January 14, 2008

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

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

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

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

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

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

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

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

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

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

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

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

The new NEW DEAL

by William DeMarco, January 8, 2009

The healthcare “deal” for the near future is firming up to represent threats and opportunities for health plans and providers.

Franklin D. Roosevelt offered a “New Deal” after the Great Depression. It took 25 years after the stock market crash of 1929 and the subsequent large market crash of 1937 to begin to achieve pre 1929 levels. It worked because once people went back to the fundamentals of infrastructure repair, sharing resources and returning to the hope work brings, the economics ramped up and the vision of the nation being able to defend itself against the determined and expanding German nations and the sudden incursion of Japanese into SE Asia and eventually Pearl Harbor signaled the greatest manufacturing boom in history.

We now have before us a new President and a very deep and growing recession/depression. Every industry from housing to banks to automobiles to retail is being affected, and certainly health care insurance companies and provider organizations are feeling the tightening of capital and a large hole left in their investments as this crisis will require belt tightening. Have we learned how to do that? Is the plan the government offers going to correct all of this? It will take time. In that time we need to share resources, repair our infrastructures and recognize the fundamentals of how care management works. We apparently have not done a good job in answering the public’s question, “What is it that managed care was trying to do?”

In fact the “blueprint” discussed in the incoming HSS Secretary’s book has a very different take on what managed care was trying to do.

In reading Daschle’s book we see no mention of the early HMO movement and success still enjoyed by Greater Marshfield, Geisinger, Kaiser, Health Partners and others that established much of the industry’s PURE or Classic HMO operations and efficiency. These plans are still expanding their ideas in literature as truly integrated provider sponsored plans. (Please refer to MCOL’s managed care museum for an accurate description of the industry history.) Instead the Book goes on to say Blue Cross established the entire health industry and that what we need is a national health board similar to the Federal Reserve.

Neither is there mention of the rapid consolidation of Blue’s plans to obtain cash as for-profit entities nor a discussion on the fundamentals of the Elwood Enthoven goals of coordinated care. Their original writings and proposals to Congress emphasized quality first and price last, but insurers and third parties saw the opportunity to bring in the price and cost issue and, to this day, left most of the medical management and issues of quality as optional components when they were the core of care cost reduction. Much of coordinated care linked the providers to one another, as well as payers to one another, so there was a full integration of both delivery and financing.

This exchange of data and service value for money and time spent was focused on a highly concentrated provider-payer linkage and this is what the Value Based proposition began with and may still endure as employers become interested in managing benefits and managing benchmark sets locally that were never corrected by insurance companies.

Why would an insurance company want to have less utilization? What would they want to correct the unnecessary care, which translates to less premium and less stockholder value?

Although we can agree that the Clinton plan went down the road with little legislative input and eventually pitted the AMA and the AHA against one another, we can also agree the plan’s complexity and attempts to oversimplify the process caught many potential supporters flat footed and unable to truly defend good parts of the plan the Clintons had worked on for so many months.

My own discussions with White House press secretaries and several of the Ira Magaziner staff showed me it was understood that while the plan made sense, Congress and others were going to offer no support as they saw it as too detailed and complicated to explain and implement. By the time Harry and Louise appeared in commercials as a campaign to sell Fear Uncertainty and Doubt ( FUD) politicians and lobbyists had taken the ideas to stunning misunderstandings, the program was over and everyone returned to production driven medicine.

Now we see the out of control costs of utilization, introducing the era of “Thelma and Louise” ready to drive over a cliff into a one-size fits all program.

The Federal Health Board concept of offering several layers of authority over the workings of a complex, structurally broken system that has perverse incentives, may offer the “fresh idea” of centralizing this system of separate fiefdoms and uneven, underfunded resources, but the ultimate questions remains, “How long will this take?” The sad truth is that many forecast the number of underinsured will exceed the number of uninsured by next year.

Who will be on this board? Will politicians be at the switch again to hold back changes that need to be made because the polling data says people do not understand the true urgency of the situation? How will existing providers fit? How will insurers fit? Will consumers use the system correctly or fill EDs with the “worried well”, forcing hospitals to assure expensive 24/7 trauma care, trained professionals to take care of sore throats and colds?

The larger issue here is that while the debate over policy and funding continues from last year (SCHIP and Physician compensation to name a few), the aging population is aging faster and faster and the uninsured ranks are sure to follow.

The simple truth is there is no funding available. This means dollars to pay for this 75 billion dollar a year MOVE TO Universal Health Care will need to come out of funds that are now in place. It has been estimated one third of this cost will be paid for by funds now going to hospitals for the uninsured. The rest could come for repealing tax cuts, raising taxes or putting caps on spending.

In exchange 30 million uninsured could become insured, of which 40% would get their care paid for by employers. Another 4.5 million would trade their current private coverage for the government subsidized program of “Medicare like” benefits.

This sounds like a plan where many will be affected and, if successful, could at least straighten out the issues of coverage and some access concerns, but are we really getting to the question of “Why does this health care cost so much”?

There are some studies conducted by the Medicare demonstration project on disease management that say improving productivity will not reduce costs. Yet last week Health Partners announced 100 million dollars (will be???) saved through improved productivity of physicians and their staff.

Other proposed funding of electronic medical records and a health info technology will take time but may be part of the answer. This, along with the value base purchasing plans, will reduce office costs and allow proficient doctors to be rewarded for superior performance, but we still have this delivery system issue of how to actually shift from a production of procedures environment to a standardized cost and quality environment. The CSC report of Health Plan CEOs mentioned earlier by Clive Riddle in his opening comments on this blog, says that medical management progress will be cut with dollars going elsewhere. Are we really understanding the fundamentals of this business if we abandon this critical means to reduce premiums in favor of acquisitions or other growth options?

If health plans can change the environment to refocus their mighty databases and tiering capability in the direction of medical management, the move to a comparative economic framework will indeed reveal why this thing called health care is so expensive. If the Chronic Care models and productivity can be measured long term, we can get this efficiency and effectiveness planning that has been so long debated moving in a forward direction.

Many plans are already moving in this direction, forming cooperative models of data and guideline development to share among local competitors as is done in St. Paul and Minneapolis. Several plans are being directed by their employer coalitions to share data to get a clear understanding of what costs so much and what they can do as purchasers to redesign benefits that will change patient behavior. Five of the largest health plans in St. Louis have a good chance to do this in conjunction with their employers. If this is done, the management of populations, sick or well, young or old, can be done as well.

The alternative will be stricter underwriting and discrimination against those with illnesses who cannot qualify as individual policy holders and are liabilities to employer groups, who will look for ways to remove them from the workforce.

We see the products all moving to consumer driven and think that the days of the large networks are dead and that local networks will prevail. This means much of this action will still require LOCAL planning and leadership to create a better system of care before financing can really see a difference.

Health plans and physicians and hospitals have the incentive not to wait and see but to find ways to collaborate regionally or locally to get at the means to reduce chronic care cost s and compare the current pathways to best benchmarks ands see if productivity really can improve. Plans and Providers can help one another and, in so doing, help the national health policy efforts as many in Washington still do not understand what Health Plans do and why it is done the way it is done. Many consumers are a bit suspicious of companies that grew so fast with other people’s premiums.

To let this be tied up in a legislative contest is probably the worst outcome we can see.

Instead, local experiments and collaboration towards reducing costs and improving productivity is. We must get past the walls of competition. Pricing is not the issue. Doing the right care for the right person at the right time is. If we can do this we are doing the right thing for the customer, our patient/ member.

There will never be a better time for this change to happen.

Medical Home: Consumerism Delivered

By Lindsay Resnick, January 5, 2009

Consumer Directed Healthcare can be defined as health benefit plans that put consumers and their providers at the center of health care decision-making, giving them greater discretion and power over benefit dollars and medical care choices. These plans often include increased cost-sharing wrapped around an HSA, decision support tools to evaluate choices, “health coaches” to encourage care management, and incentives to promote healthy lifestyles. Rather than shielding consumers, CDH plans engage them directly.

CDH is based on “patient centeredness” which, as defined by the Institute of Medicine, refers to health care that establishes a partnership among practitioners, patients and their families to ensure that decisions respect patients’ wants, needs and preferences; and ensure they have access to education and support to make decisions and participate in their own care.

Consumer Directed Healthcare and patient centeredness has given rise to the next “hot trend” in healthcare - the medical home. A medical home is not a house, clinic or hospital, but rather an approach to providing comprehensive primary care. A medical home is defined as primary care that is accessible, continuous, comprehensive, family-centric, compassionate, and culturally effective.

A “whole person” orientation to healthcare delivery is at the core of the medical home. A personal physician is responsible for providing all the patient’s healthcare needs. Care is coordinated across all components of the patient’s healthcare community - hospitals, specialty physicians, pharmacists, social services, home health, nursing homes, and ancillary providers. And, it includes a vision of care for all stages of life, acute and chronic, wellness and prevention, and end-of-life. The medical home was introduced in 1967 by the American Academy of Pediatrics. Most recently, several professional medical organizations joined the AAP to redefine the basic tenets of the Patient Centered Medical Home:

Personal Relationship: Each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care.

Team Approach: The personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing patient care.

Comprehensive: The personal physician is responsible for providing for all the patient’s health care needs at all stages of life or taking responsibility for appropriately arranging care with other qualified professionals.

Coordination: Care is coordinated and integrated across all domains of the health care system, facilitated by registries, information technology, and health information exchange to assure that patients get the indicated care when and where they want it.

Quality and Safety: This includes using electronic medical records and technology to provide decision-support for evidence-based treatments.

Expanded Access: Enhanced access to care available through systems such as open scheduling, expanded hours and new options for communication between patients and physicians.

Added Value: Payment that appropriately recognizes the added value provided to patients who have a Patient-Centered Medical Home.

The medical home is the next step toward true healthcare consumerism. With 45% of the U. S. population having a chronic medical condition accounting for $3 out of every $4 spent on healthcare, coordinated care delivery supported by a team-oriented medical management plan-of-action is a direction worth pursuing.

The Great Recession: as seen by Health Plan Executives

by Clive Riddle

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

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

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

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

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

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

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

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

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

Personal Health Records: The Hot Consumerism Tool

By Lindsay Resnick

Consumer Directed Healthcare (CDH) is past the tipping point. Employers, employees, payers and providers have embraced these free market style health benefit plans that put consumers in the center of deciding where, when, and from whom they receive care---the customer now has more skin in the game. CDH success means changing the way people think about and deal with their healthcare choices. It takes practical decision support tools, credible information and increased connectivity throughout the healthcare system. Now, the newest consumer trend is allowing individuals and families to maintain their own online health records.
Personal Health Records (PHRs) enable consumers to have easy access to their health history and clinical make-up in order to manage benefit and medical decisions. It gives consumers more knowledge and control over their health information. In essence, it creates a smarter, better informed healthcare customer. PHRs allow an individual to enter and record personal medical information such as medical history, prescriptions, examination results, office visit tracking and, lab and diagnostic test results. Based on PHR functionality, consumers can input or scan images, charts, graphs, and print reports.
The result is a PHR that provides an accurate, up-to-date summary of a person’s health status and medical history. The information is secured online and only accessible by the individual or, medical professionals with approved authorization, at the PHR owner’s discretion. In addition to a standalone, consumer-driven PHR, other models are emerging that take a more integrated approach allowing information to be input through other, secure sources such as physicians, pharmacists, home care and even linked-in claims data.
In a predominately paper-driven medical record world, online PHRs bring the portability and connectivity that make reliable information available, quickly. The result can be lifesaving in emergency situations, help avoid harmful medication interactions, reduce unnecessary tests and properly prepare consumers with the context to ask the “right” questions. Most importantly, PHRs give consumers the control they need to make informed, confident decisions.
Internet-based Personal Health Records are rapidly emerging. In a State of the Union address, the President called for every American to have one in ten years. This year, Microsoft launched HealthVault and, Google Health is testing its own PHR. It is estimated that there are more than 200 PHR products available in the market with a wide range of functionality, level of integration and “cool” features.
With consumers well on the way to being the centerpiece in the future of healthcare benefit and medical decision-making, PHRs will continue to grow in popularity and acceptance. A recent Markle Foundation survey shows that almost 80% of the public believes PHRs would provide significant benefits to individuals in managing their health, although many (57%) express concern over privacy and security of their information. PHRs are here to stay. They represent another step in healthcare’s technological movement built around content, community, commerce and connectivity.

Easy Answers Make Poor Gifts

By Laurie Gelb

A new political era is upon us, and the red herrings that should be frolicking in the wild somehow never left the boardroom.

You’ve heard them all. Members are lazy slugs. Docs are mercenaries with stethoscopes. Pharmas suck the last dollar out of destitute Part D recipients. Often, the pharmacy chains come out best in this narrative – their low generic pricing is actually both market-driven and good for adherence. But improved outcomes are unlikely to be driven in large part by CVS or Walgreens in the current regulatory environment. So what’s next?

Recently, I’ve explored scores of managed care and health system Web sites as a strategist and competition judge. As I’ve pointed and clicked across this year’s domains of top-tier AMCs and health plans, I’ve reflected on my MCOL presentations of the last few years.

Many of us preach the need for customized decision support that validates the complexity and importance of stakeholder choices. Yet the health Web on evidence in 2008 continues to propagate the false dichotomies of idiot vs. expert, with information accessible through clunky largely static pages, with only the most rudimentary support for critical decisions like choosing a physician or evaluating the urgency [often confused with indications] for surgery.

If all you care about in selecting a doc is gender, languages spoken and hospital affiliations, you’re in the right place. If Flash first-reads displaying ethnically diverse docs and patients are your idea of immersive storyline, Google “hospital” or “health plan” and go to town. If your idea of a surgical consult on the Web is a pretty graphic and a few FAQs, welcome to the Net. But don’t we spend a lot of offline ink telling members that they need to ask much more probing questions?

Has Revolution Health and/or HealthGrades provided a quantum leap here? Hardly. Rate-a-doc portals? These probably eliminate some docs from consideration lists, but there’s scant evidence that they are helping distinguish the incompetent from the competent. The “rate a drug” racket probably does more for the raters than the readers.

Finally, hospital rankings and mortality stats, flawed in so many obvious ways, also divert attention from the notion of physician selection as a starting point, not to mention the idea of a medical home. Yes, the data quality is improving, but the support for the right ways to use it is not!

Instead of directly addressing patient and caregiver reasons for fear, loathing and denial of clinical realities (such as very few placebo-equivalent drugs or no-risk surgeries), content developers often seem to think that simply acknowledging the existence of these phenomena solves the problem. The proposition that “I’m OK, you’re OK, disease is OK” is in danger of replacing actual decision support in the health digisphere. With a President-elect who admits incomplete smoking cessation but exercises diligently, might we have a teachable moment here?

As for rational consideration of potential health decisions, the mass media’s tendency to discuss competing risks using anything but anecdotal evidence has increasingly obscured the differences between population-level statistics and individual considerations. And judging from the conflict-of-interest stories sprouting like mushrooms, no one at an academic medical center ever took money from pharma or device manufacturers till recently (NOT!) Another walk away from the real, toward the valley of oversimplification.
Disease is a real entity, with disability and death possibilities for everyone every day “We’re never promised tomorrow,” as Chief Daniels noted during one of his Polonius moments on Hill Street Blues. At the very least, addressing unpleasant facts so as to minimize risks entails the willingness to believe that decision-making can entail choosing among suboptimal choices. When members lose sight of the complexity, the effort, the costs of acquiring and acting on the best information, we’re only letting them kid themselves.

Baby talk is maybe talk. “Eat less simple sugar today! You can do it!” Passive voice is well, passive.
How honest, precise and strong are your communications?

The Future of Individual Plan Underwriting vs. Guaranteed Issue

By Clive Riddle

United Health Group betting on continued patchwork of State Regulations

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

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

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

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

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

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

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

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

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

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

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

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

What can we deduce about Deductibles?

By Clive Riddle

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

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

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

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

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

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