The Continuing Saga of Long Term Care

My masters thesis was on solving how long-term care is financed in this country. All these years later the financing issue is still unresolved. One option, LTC insurance, is only held by 10% of seniors. Medicaid still funds the majority of LTC costs. This column from Kaiser Health News is a good summary of the issue:.

http://www.kaiserhealthnews.org/Columns/2010/December/122310pollack.aspx

Docs in MA Looking to Improve Patient Experience

In Massachusetts, where patient experience survey results are publicly reported, the majority of physician groups have undertaken initiatives to improve office visits for their patients, such as changing office workflow, training staff, and investing in electronic health records, according to a new Commonwealth Fund–supported study published online by the Journal of General Internal Medicine. There has been less focus, however, on efforts to enhance clinicians' interpersonal skills, which play a central role in patients' care experiences.

Isn't it amazing how things that are publicly reported actually are paid attention to by those who are effected by the results?

Why No Outrage Over Deaths Caused by Medical Errors?

Mistakes that occur in a hospital setting are the real death panels out there. Yet these unnecessary deaths garner little attention:

Just before Thanksgiving, the Times did place on the front page a New England Journal of Medicine study concluding that the death rate from medical injury had not declined since 1999. Worth noting was were the vague explanations by health care leaders as to why progress has been so slow. Additionally, the story did not even mention the HHS report, which was based on a seemingly better methodology and more recent data. Perhaps the medical editors don't read the business pages.

Completely ignored by all was a careful study released in August by the Society of Actuaries that used claims data from private insurers. Even in this younger and presumably healthier population, errors in 2008 caused more than 2,500 avoidable deaths -- not to mention more than "10 million lost days of work." (I presume this figure refers to the effect of injured workers, not dead ones.)

Looks Like 10% or More is the Definition of "Unreasonable"

From Kaiser Health News:

Health insurers seeking a rate increase of 10 percent or more in 2011 must publicly detail why the increase is needed, under proposed rules released by the Obama administration Tuesday.

In following years, the Department of Health and Human Services will adjust the specific percentage threshold for each individual state. Thresholds would vary partly because medical costs vary by state.

The proposed rules, which would affect insurance policies sold to individuals and small businesses but not large employers, result from the new health care law. Administration officials repeatedly criticized insurers for raising rates excessively during and after the long debate leading up to passage of the law in March.

http://www.kaiserhealthnews.org/Stories/2010/December/21/ratesdec21.aspx

McKinnsey Model Results on Impact of Individual Mandate

This is surprising:

McKinsey and Co., an international consulting company, estimates the number of people residually uninsured will be as high as 40 million in 2016. Dr. Robert Kocher, director of the firm's Center for U.S. Health System Reform and a former special assistant to President Barack Obama on health care, recently spoke with Kaiser Health News' Amita Parashar about the center's estimates and who might not get insured as the health law takes effect.

Massachusetts though also implemented a mandate and saw its uninsured rate drop to around 3 percent. What Lessons can be learned from the Bay State?

Massachusetts did a nice job on public education. By having the Boston Red Sox help publicize, by using a lot of different channels, they've reached much of the population that perhaps has less awareness about health care insurance and also did a great job of getting young people in. Overall they had a relatively better risk pool and better pricing than you get if they weren't as effective in that area. The plans on the exchange are also well-represented and easy to "shop" for – enrollment is quite fast and easy. I enrolled in a plan on the exchange as an experiment and was impressed at how easy and effective it was to make a choice. It narrowed the choices based on your ZIP code and various factors you put in, which made shopping simple.

Uninsured Number Almost 60 Million

According to the National Health Interview Survey as of March 2010 over 59M people did not have HI the previous 12 months. This works out to 19% of the population.

Regulators Aim to Make Comparing Policies Easier

I have personally seen how many people do not have a clue when it comes to understanding their health insurance benefits. So for regulators to develop a template that insurers will have to follow to make it easier to compare policies is a great idea:

http://www.kaiserhealthnews.org/Stories/2010/December/15/State-Insurance-Officials-Vote-Rules-Health-Policies.aspx

Low Penalties for the Individual Mandate

With all the "concern" about the individual mandate, one issue that has yet to be addressed is the low penalty for not purchasing coverage. The fines are nothing when compared to purchasing insurance through a state exchange. Here is an article that provides more detail:

http://www.kaiserhealthnews.org/Columns/2010/December/121410laszewski.aspx

So How Will HHS Define Unreasonable?

[A] mechanism in the new health care law [is] designed to give insurance companies pause before proposing such large increases. Under the law, Washington won't be able to block big increases, but it will work with states to conduct annual reviews of increases that are considered "unreasonable." And the federal government gets to define what's unreasonable. Any day now, Health and Human Services Secretary Kathleen Sebelius is expected to issue regulations spelling out how the department will define the standard and the process by which the HHS will work with states to review the increases.

This should be interesting.

State Power Over Health Care Reform

While the ACA is a piece of federal legislation whose implementation is being overseen by HHS, quite a bit of authority is up to the states:

The exchanges, which still have to be set up, are state based, as are Medicaid programs. State insurance commissioners will have a lot of power and control to set regulations on how the exchanges will work. That will make a big difference in how reform functions in the individual insurance market – where many of the uninsured are expected to get insurance.

While the overhaul sets national standards for minimum benefits that insurers must offer in the exchanges, states can augment them. States could demand that insurers meet certain criteria, such as benefits requirements, or decline to set any at all. Each state will also have to determine whether to administer the exchange itself, let a private entity do so, or decline entirely and submit to federal intervention. Additionally, the law provides states much leeway in determining what is an "unreasonable" premium increase. States could go as far as to refuse any increases without justification, or merely require justification only for severe increases, and then, perhaps, after the fact. The medical loss ratio can be changed on a state-by-state basis with approval from the Department of Health and Human Services.

MA Medical Society Expresses Concern About ACOs

As I have said before, Massachusetts is the bell weather for what the future of health care looks like under the ACA. To try to slow down medical cost increases in the state, global payments are being considered. However, the MMS has its concerns:

The society's greatest concern, according to Coombs, is the disparity among providers that would easily integrate into an ACO environment and others that lack the appropriate technology or funding to adopt the ACO framework, including a global payment system.

"We support the notion that an integrated healthcare delivery system is a good thing," she told HealthLeaders. "However, there are physicians within our membership that lack the infrastructure to be able to transition into an accountable care organization at this stage. We encourage a pluralistic compensation system to include fee-for-service, salary, and limited pilot studies that utilize global payment system."

MMS expressed additional concerns about the ACO model, saying in a statement that it remains an untested method of healthcare financing and can pose unintended consequences that can impair the physician-patient relationship.

Kaiser Study: State Capacity to Regulate HI Premiums Varies Widely

• Kaiser study: States’ abilities to regulate insurance premiums highly variable: A recent Kaiser Family Foundation study examined laws in all 50 states and interviewed state department of insurance leaders in ten to assess preparedness of states to implement health insurance premium oversight provisions of PPACA. The study conclusions were:
  • A state’s statutory authority often tells little about how rate review is actually conducted in the state… The rigor and thoroughness that states bring to rate review can vary widely, and some states had little express statutory authority to disapprove rates prior to their use.
  • In many cases, statutory authority to disapprove rates does not extend to all market participants. A number of states only require certain carriers to undergo rate review and exempt other commercial carriers.
  • Most states interviewed use a subjective standard to guide the review and approval of rates. Common standards are that rates cannot be “excessive, inadequate, or unfairly discriminatory,” or that “benefits are reasonable in relation to premiums charged.”
  • Most of the states interviewed have made little or no effort to make rate filings transparent. Generally, states require the public to physically visit the department of insurance to access the documents in a rate filing. And many states allow carriers to designate some portions of the rate filing to be “trade secret” and thus not available to the public.
  • Many states lack the capacity and resources to conduct an adequate review. Many states do not have a sufficient number of trained actuaries to review all filed rates. In addition, statutory clauses that deem a rate approved if it is not acted on within 30 or 60 days can limit a state’s ability to conduct a thorough review.

States have a long way to go on this front.

Health Promotion and Premium Costs

Here are some recent articles debating whether employee health promotion programs save money:

Private insurers may be better at controlling healthcare costs than Medicare, according to a Health Affairs study of two Texas cities. The study is a follow-up to a widely read 2009 New Yorker article by Atul Gawande that showed per-capita Medicare spending in McAllen, Texas, was 86% higher than in El Paso. Gawande used data from the Dartmouth Atlas of Health Care for the article. But that dramatic variation in spending between the two cities evaporated in the private insurance market. ... The authors suggest that private insurers have means to control costs that Medicare does not, including utilization review and disease-management programs" (Vesely, 12/7). Earlier, related KHN coverage: Texas Town - Famous For High Medicare Costs - Has Cheaper Side (Rau, 12/7).

The Los Angeles Times: Meanwhile, "[a]s health insurance costs rise, employers are scrambling to reduce premiums, especially now that they average $10,073 per employee, according to a survey by benefits-consulting firm Mercer. One plan of attack? Wellness programs, with companies offering employees incentives to participate. ... The idea sounds simple -- just make people healthier and insurance claims will go down. But that's more easily said than done. Human resources managers debate how much they can impose health-related requirements on employees amid concerns of privacy, overreaching and discrimination. Also, there is that pesky return-on-investment question: Does health improve quickly enough to justify the expense, especially if turnover is high?" (Von Bergen, 12/7

Aetna Continues Its Quest for Health Data Mastery

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20101207/BENEFITS02/101209920/1245

Key paragraph:

Aetna is entering the “new frontier” of information technology to help doctors and clients control costs, Chief Financial Officer Joseph Zubretsky said on Nov. 11 at an investor conference. Tuesday’s deal follows similar moves by UnitedHealth Group Inc., the biggest insurer by sales, as insurance companies diversify to cope with the U.S. health care overhaul law passed in March, said Jason Gurda, a Leerink Swann & Co. analyst in New York.

“Aetna is looking to provide a broader product offering and be heavily involved in the nuts and bolts of building and modernizing the health care system,” Mr. Gurda said in a telephone interview.

Concerns Moounting About ACOs

CQ HealthBeat: "The medical device industry told the Centers for Medicare and Medicaid Services that it's concerned about whether accountable care organizations could give providers financial incentives to hold back on needed patient care, particularly on technology. Meanwhile, insurance plan executives warned CMS officials that the ACOs could give hospitals and doctors new bargaining leverage in negotiations with insurers. Both outlined their concerns in letters sent to CMS late Friday. ... CMS officials in charge of writing the rules for the new systems are asking groups to offer input into how they should be structured" (Adams, 12/6).

The Hill Healthwatch: "The Medicare payment advisory panel is warning that accountable care organizations (ACOs), boosted by the new healthcare reform law, might face public backlash similar to what managed care organizations experienced in the 1990s. The reform law provides incentives to ACOs -- groups of providers and hospitals that coordinate efficient and quality care to a certain set of Medicare patients. ... However, prior history shows that ... some doctors who opposed the organizations helped stoke patients' fears, the Medicare Payment Advisory Commission (MedPAC) wrote in a letter to the Medicare chief last week" (Millman, 12/6).

Becker's Hospital Review: "Congress may have to create incentives for joining ACOs, such as lower out-of-pocket costs or getting a part of the savings, MedPAC wrote. The panel also recommended allowing beneficiaries to switch from an assigned primary care provider to another provider who is not in an ACO" (Page, 12/6).

HI Premiums Increases Continue to Outpace Wage Increases

Premiums for employer-sponsored family health insurance increased an average of 41 percent across states from 2003 to 2009, more than three times faster than median incomes, and Maryland's rise was among the highest, at 50%, according to a report to be released Thursday by the Commonwealth Fund. The report presents a state-by-state analysis for six years of premiums paid by employers and employees. The report "also found that deductibles rose sharply in almost all states, increasing an average of 77 percent from 2003 to 2009 in large as well as small firms

Study: HDHPs Result in Delayed Care for Low Income Families

A study of lower- and higher-income families on high deductible health plans (HDHPs, with deductibles over $2,000): lower income families were more likely to forego or delay care (57 percent) compared to higher income families (42 percent). The study found no differences in plan understanding between family groups, and did not differentiate between foregone care of little and great benefit. (Source: Kullgren, et al. November 22, 2010. “Health Care Use and Decision Making Among Lower-Income Families in High-Deductible Health Plans.” Archives of Internal Medicine. Vol. 170:21.)

More on MedPAC and ACOs

Accountable care organizations (ACOs) may help correct some of the “undesirable” financial incentives in Medicare's fee-for-service payment system, but the Centers for Medicare & Medicaid Services (CMS) should consider structuring the program so providers share financial risk with Medicare for the cost growth of their patients over an established target, according to the Medicare Payment Advisory Commission (MedPAC).

In a November 22 letter to CMS, MedPAC recommended a two-sided risk model in addition to a bonus-only model in a proposed rule establishing ACOs expected later this year from CMS. MedPAC observed, “the incentives in a bonus-only model for controlling spending are relatively weak and become weaker as the threshold is raised. This will likely be a particular concern to smaller ACOs because they may face higher thresholds. But even larger ACOs may find thresholds discouraging.”

Per MedPAC, ACO metrics could include population-based outcomes measures such as emergency room use, potentially preventable admission rates,

Humana Collaborates for ACO Pilot

Humana and a local health care system in Louisville (Norton Healthcare) have been named one of the 5 pilot ACOs in the country as selected by the Brookings Institute and Dartmouth:

http://www.healthleadersmedia.com/content/LED-259411/Norton-Healthcare-Humana-Launch-ACO-Pilot##

Key paragraph:

Norton-Humana ACO already have identified several initial areas of emphasis, including improvements in preventive screenings and tests, such as mammograms, and vaccinations, better management of chronic illnesses, such as heart failure, more effective treatment of common problems, such as back pain, use of generic drugs, and improved access to the appropriate level of care, rather than emergency department treatment.

The Brookings-Dartmouth team will evaluate the pilots to see how ACOs can impact payment reform, with the hope that a model can be replicated across the nation, building on health reform legislation which will likely make ACOs a voluntary option with Medicare participation in 2012.

MedPAC Thinks ACOs Have Potential

I have blogged quite a bit about ACOs and their potential to lower the cost and raise the quality of health care. Well it looks like MedPAC agrees w/me:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2010/Nov/November-29-2010/Accountable-Care-Organizations.aspx

Key paragraph:

The commission said in a letter to the Centers for Medicare and Medicaid Services (CMS) that in order to work, ACOs can't simply be given bonus payments if they meet goals for controlling costs and improving quality. They must also pay for some of the overruns if they exceed the spending target they are given.

HHS Provides Clarification on Health Insurance Exchanges

From HHS:

A key point: states can construct an "active purchaser" exchange that bargains with health plans for the best deal and excludes those offering lousy deals, or they can follow an "open marketplace" model that basically posts plan offerings and leaves to marketplace forces rather than regulators the process of producing good deals.

Republicans may tilt strongly toward the latter model in the many states in which they will wield greater influence over state lawmaking after the recent November elections. But Jost notes that they won't be able to pass laws requiring the open marketplace model. Rather, the exchanges themselves will have the power to make that determination, so GOP leaders would have to make sure they have enough control over the exchanges to make sure they adopt the open marketplace approach happen.

The guidance documents the various powers states will have to shape exchanges the way they want. For example, they can decide whether to make the exchange a government agency or a non-profit entity; take part in a regional exchange rather than have just their own state exchange; limit access to employer groups of 50 or less until 2016; require competitive bidding for plans; require additional benefits; extend some or all exchange-related requirements to the outside market.

The guidance document also notes what states must do under the federal law, including certifying and decertifying plans; exempting individuals from the requirement that they carry coverage; rating plans on quality; putting benefits in a standardized format to ease comparison shopping; add determining eligibility for Medicaid and the Children's Health Insurance Programs, among a number of other responsibilities.

Regarding the NAIC model act—forwarded this week by the subcommittee that drafted it to a larger NAIC committee—perhaps the most controversial issue relates to the subject of requiring benefits in addition to those to be spelled out in federal rulemaking to meet the essential benefits standards. "Consumers are concerned that the states not be encouraged to repeal mandates before the essential benefit package is in effect," Jost blogged. Additional drafting may address the concern, he said.

Jost also noted that NAIC has left open the question of whether insurers in exchanges for small employers can offer traditional group coverage. If insurers were allowed to do so, and the employer shopping at the exchange picked traditional group coverage, the employer's workers would not individually have the freedom to pick their own plan from the exchange's menu of offerings—a freedom often touted by exchange advocates as a major advantage of these marketplaces.

McKinsey Study: Insureds Owe More Than Uninsureds

Who would have thought this? (https://www.mckinseyquarterly.com/Health_Care/Strategy_Analysis/The_next_wave_of_change_for_US_health_care_payments_2585):

According to our modeling of the 2010 flow of health care funds, consumers now pay more in health care costs than do employers. This cost is split among direct payment of noncovered services, out-of-pocket expenses after insurance, and the consumers’ share of premium expenses. Uncompensated care from 46 million uninsured Americans continues to be an issue, but one that will be mitigated by reform. In fact, the fastest-growing portion of bad debt stems from what insured patients fail to pay after insurers have paid their portion of medical bills. This category will likely grow as more insured patients enter the market following passage of the new health care law. For example, at one multifacility hospital system, we found that, for insured patients, “balance after insurance” is growing at 30 percent a year; for patients without insurance (those who pay for services from their own pockets), that figure is only 19 percent.

Will Health Exchanges Add High Admin Fees to Premiums?

As states develop their health insurance exchanges one of the unresolved issues is how they will become self-sufficient by 2015. Here is an article from AIS that looks at the question:

Analysts are at odds about whether health insurance exchanges being set up for individuals and small groups will result in significant premium hikes to consumers — because the entities will be required under the reform statute to handle numerous administrative functions.

John Sheils, the vice president of consulting firm The Lewin Group who conducts reform analyses, says it only stands to reason that exchanges, which are required under the reform statute to perform about a dozen functions now handled by insurers and brokers, “can’t run for free. If you’re going to have exchanges perform functions not performed today, it will increase costs.”

“It’s possible to have huge economies of scale to get 10,000 people [enrolled in a plan] at once, but the exchange would have to absorb costs and pass them on to consumer cost,” Sheils asserts to HRW. “The only argument that exchanges can save money is [when] insurers get a list of 10,000 people, and don’t have to put 10,000 together [themselves]…but the costs haven’t disappeared.”

Among its administrative duties, an exchange must enroll people for coverage — “and there’s no reason to think an exchange will sign people up for less,” he says. “It may be more expensive if the insurer still has to maintain some part of the process to sign up people. The insurance company may get a list, but still has to set people up in their system, so there’s a possibility of duplication of services.”

Exchanges Will Have Unprecedented Functions

Exchanges also must make arrangements for collecting premiums, handle premium subsidies, certify that participating health plans meet federal and state requirements, inform employers of termination of coverage, run a toll-free information line and offer a rating system that allows a comparison of plan quality and cost. “We’re talking about functions that have never been performed before,” Sheils says of some of them.

In making his argument, Sheils points to the history of a now-defunct private exchange called the Health Insurance Plan of California (later called PacAdvantage), which ended up adding 4.5% to premium costs to cover its administrative expenses. “I’m concerned it could be much higher, though,” he says. “Like processing eligibility for premium subsidies: That’s a cost that’s going to be heaped on the exchange.”

Rick Curtis, president of the Institute for Health Policy Solutions, a nonpartisan organization giving technical assistance to California and other states on exchange design, disagrees about the potential impact. “I think [administrative] functions of the exchange, other than the eligibility function, should be a wash,” he tells HRW.

Curtis contends that states’ newly created exchanges should be “considerably bigger” than was PacAdvantage because small employers will want to participate in them in order to get tax credits. The now-defunct California exchange, he notes, was for small groups, so its 4.5% premium cost add-on may not translate to individuals. He says pricing for that exchange was difficult because it couldn’t rate for health status although the outside market could do so, and there were inefficiencies and duplicative administrative efforts because only a small portion of participating small groups’ employees chose it as an option. He asserts that the Connecticut Business and Industry Association’s Health Connections exchange is a more instructive model.

Brokers represent another question mark, Sheils says. “The state can decide not to use brokers [for the exchange], and that can save them 8% [on typical small-employer group commissions] on some of these numbers,” he says. “But taking brokers out also will reduce the numbers enrolled.” Moreover, employers, who rely on brokers for various kinds of insurance beyond health, may balk at the idea of not using them, according to Sheils. He asserts that by using brokers, “You insert a layer of bureaucracy, and you’ll pay more for that bureaucracy.”

Some people may think that the exchanges will save money if they somehow regulate the industry a little more, eliminating high-cost health plans, Sheils tells HRW. “But there’s nothing more efficient about running the exchange, particularly if you’re going to keep brokers….It’s hard to see how exchanges will save costs.”

We Don't Get What We Pay for When It Comes to Health Care

Do we have the best health care system that money can buy? That is true for a small minority of Americans but it certainly not the case overall in you examine the results of a recent Commonwealth Fund survey. The survey compared the United States to 10 other industrialized countries: Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom.

While we do have centers of excellent health care, the fact is that the U.S. too often falls far behind these other industrialized nations on many measures of access, quality, efficiency and health outcomes -- despite spending more than twice what other countries spend on average, or more than $7,500 per person in 2008.

Examples:

• One-third of U.S. adults did not see a doctor when they were sick or skipped recommended medications or follow-up care because of costs -- by far the highest rate compared with the other countries and in stark contrast to low rates in the Netherlands and the United Kingdom.
• U.S. adults were more likely than those in the 10 other countries to have gone without care because of costs in the past year; to report serious problems paying medical bills; and to spend $1,000 or more out of pocket for medical care, even when insured, and to spend a lot of time on paperwork and disputes with insurers or to be surprised that their insurance did not pay as expected.
• One-fifth of U.S. adults reported serious problems paying their medical bills -- more than double the next highest country. More than a third of U.S. adults said they spent $1,000 or more in the past year on medical costs --the highest rate in the survey. Notably, it was similarly high among those insured all year.
• Only 58 percent of U.S. adults were confident they would be able to afford the care they needed -- the lowest rate in the survey. U.K., Swiss and Dutch adults were the most confident they would be able to afford needed care. This finding reflects stresses families face in the current recession, fear that they will lose their insurance if they lose their job, as well as often inadequate health insurance.

The 11 countries in the survey represent a diverse mix of insurance and coverage systems. With the exception of the United States, all of these countries achieve universal or near universal coverage of their populations with diverse systems that range from mainly public, to public supplemented by private insurance, to competition among insurers.

Profits Up for Publicly Traded Health Insurers

The country's largest health plans celebrated a strong third quarter led by results from UnitedHealth Group, WellPoint and Aetna, whose profit rose 53 percent, leading company to raise its year-end earnings forecast.

Conditions have been favorable for health plans, which realized an up-tick in investment income in recent months and benefited from lower medical loss ratios—the portion of revenue spent on medical expenses.

Health plans also appear to be reaping benefits from efforts they began several years ago to encourage members to seek more outpatient care rather than expensive in-patient services, according to Analyst Sophie Snyder of market research firm IBIS World.

"For many services, insurers [have been] reimbursing hospitals at a higher rate for ambulatory care than in-patient care," she said. "The amount they've had to pay out is slightly decreasing and likely having a greater impact than in previous years."

Next year the minimum medical loss ratios become effective. So this may be the last year of big profits for these publicly traded companies.

CRS Report on ACOs

A new Congressional Research Service (CRS) report offers clarification about accountable care organizations (ACOs) and the Medicare Shared Savings Program (PPACA Section 3022). The Congressional Budget Office (CBO) estimates that the Medicare Shared Savings Program would reduce Medicare expenditures $4.9 billion from FY 2013 through FY2019 period. Key findings in the report include:

1. Physicians will play a key role in ACO performance:
   CRS defines ACOs as collaborations that integrate groups of providers, such as physicians (particularly primary care physicians), hospitals, and others around the ability to receive shared-saving bonuses from a payer by achieving measured quality targets and demonstrating real reductions in overall spending growth for a defined population of patients. Note: CRS bases this definition on the Aaron McKethan, Mark McClellan, Elliott Fisher, et al., definition, and CRS puts emphasis on physicians’ involvement noting “physicians’ control (directly or indirectly) affects 87 percent of all personal health spending.”
   Source: Lawton Robert Burns and Ralph W. Muller, “Hospital-Physician Collaboration: Landscape of Economic Integration and Impact on Clinical Integration,” Milbank Quarterly, vol. 86, no. 3 (2008), p. 377, citing A. Sager and D. Socolar 2005. Health Costs Absorb One-Quarter of Economic Growth 2000-2005. Boston: Boston University School of Public Health
2. ACOs should be provider-led:
   According to the report, although the composition of ACOs may vary geographically, reflecting local market conditions, analysts conclude that the effort needs to be provider-led. Insurers may be involved but the CRS report suggests their role is supportive rather than primary.
3. There may be difficulties with replicating existing ACO models and market conditions will dictate optimal models:
   The report notes that ACOs have somewhat limited experience in dense urban areas, where the insured have the ability to obtain services more easily from a non-ACO provider and in large rural areas, where the ACO may be a virtual entity and there may be a limited sense of shared commitment across providers spread over a large geographic area.
4. It is not clear how savings would be distributed:
   The CRS report indicates the methodology whereby Medicare savings will be calculated and shared with ACOs remains unclear. Note: CMS is expected to provide details in the next two to three weeks.
5. The impact of ACOs depends on alignment of incentives by the right combination of providers:
   The impact of ACOs on quality improvement and cost reduction will depend on the structure of the ACO to accommodate optimal alignment (physician-hospital, primary care-specialists) and execution of medical management and health coaching of Medicare enrollees.
6. Hospitals are likely to drive ACO development:
   Building on Berenson et al. (2010) analysis, the CRS report noted that hospitals are likely to be drivers of ACO development since physicians are not inclined to share risk or collaborate effectively.

IOM to Deterrmine Essential Health Benefits

PPACA allows individuals and businesses to purchase health insurance directly through exchanges that will offer qualified health plans (QHP) that consumers can compare starting in 2014. QHPs vary in standardized coverage levels and have limits to patient cost-sharing. PPACA Section 1302 stipulates that QHPs will cover general categories of care including: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services including behavioral health treatment; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services including oral and vision care.

Last week, HHS announced that the Institute of Medicine (IOM) was commissioned to make recommendations on the criteria and methods for determining and updating the essential health benefits. It will review how insurers determine covered benefits and medical necessity and recommend policies and procedures to HHS on how to evaluate QHPs based on the health care needs of diverse segments of the population (including nondiscrimination based on age, disability, or expected length of life).

New Risk Pool Premiums to Drop

Initial good news but as membership increases I wonder if premiums will start to skyrocket. From the Health Affairs blog:

Premiums for new high-risk pools established under the Affordable Care Act will decrease roughly 20 percent in January in the 23 states and the District of Columbia in which the federal government operates the pools, Karen Pollitz, head of the Health and Human Services Office of Consumer Support, said at a Health Affairs media breakfast this morning.

The pools, established under the Act’s Pre-existing Condition Insurance Program, are designed as a coverage stopgap for people with pre-existing conditions until 2014, when insurers will be barred from discriminating against these Americans. Premiums are tied to market rates, and the rates will be recalculated as a result of the massive amount of insurance-industry data Pollitz’ office has gathered, much of which is available at the healthcare.gov Web site. The pools have gotten off to a markedly slow start, but “we expect we’re going to see enrollment really grow,” Pollitz said.

As head of the Office of Consumer Support within HHS’s Office of Consumer Information and Insurance Oversight (OCIIO), Pollitz has two major responsibilities: promoting transparency in private health insurance coverage, which she called the “secret sauce” to implementation of health reform, and providing direct consumer services. (The federal high-risk pools are actually run by a different division of OCIIO.) At the breakfast, Pollitz talked at length about these tasks, and Health Affairs Blog will return in more detail to her presentation in a subsequent post.

VA Report:: Better on Process But No Difference in Mortality

I have mentioned in previous posts the excellent care provided by the Veterans Administration. Well a new article shows that the VA does a better job in providing consistent care but despite this record there is no difference in its mortality rates.

A new study," published in the journal Medical Care, "shows its health outcomes are ... about like everybody else's." The VA recently highlighted the study as evidence of the quality of its system, "[h]owever, the study -- which synthesized the results of three dozen other studies that compared VA health care with care provided by non-VA providers -- concluded the VA performed well on many measures of medical care, but also found that the VA had little impact on the key question of whether the patient lived or died. ... What the latest study shows is the VA performs well on what are known as 'process' measures, whether a certain test was ordered, for example. But studies that compare health outcomes -- do patients in the VA system better or live longer? -- are equivocal".

HHS to Seek New Health Plan Data

From the Congressional Quarterly:

"The Department of Health and Human Services is working on regulations that would allow it to publish additional in-depth health insurance data, including the number of people enrolled in each insurance plan." An official at HHS said "transparency is what's needed to best help consumers understand their choices among insurance plans as the health care law is implemented." That will entail adding new data on insurance companies to www.healthcare.gov, a Web portal that already allows consumers to "compare plan premiums, benefits, and more" under the new health care law. HHS is planning to increase the number of plans included on the site to 8,000, and may include the enrollment numbers of each plan at some point in the future--currently, plans are ranked by enrollment but do not reveal the number of participants in a plan".

I am all for more data but I am not sure what the enrollment numbers will tell a prospective member. I also hope they provide info on customer satisfaction, customer service response and other factors that would be of interest to consumers.

Below is a link from the Commonwealth Fund that provides more detail:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2010/Nov/November-15-2010/HHS-Will-Seek-to-Publish-Data-on-Health-Plan-Enrollment.aspx

Data Mining: The Future of HC Insurance

http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20101111/NEWS01/101119985/1245

Encouraging Advancement for Nursing Home Care

Early in my career I was the Director of Planning at a multi-level care facility in Massachusetts that included a nursing home. While the NH provided excellent care, it was still an institution. I always have thought since then that there has to be a better way. This link describes a very promising concept in MA that provides the same level of care but in a more home-like setting:

http://www.stateline.org/live/details/story?contentId=527585

Key excerpt:

Klein’s nursing home lifestyle is also notable for what it isn’t. There's no long gray linoleum corridors with doors that open onto shared rooms with nothing but a curtain between the beds. No beeping monitors or carts full of soiled linens and no patients in wheelchairs parked in the hallways. Few rules govern when, what and where residents can eat.

The brand new facility is one of a new breed of small, homey nursing facilities cropping up around the country, thanks to state collaborations with the nursing home industry, federal regulators and advocates for the elderly and disabled. It looks like a place only wealthy families could afford, but about half of its residents get their bills paid by Medicaid, the federal-state health care program for the poor.

MS Insurance Commssioner's Take on the ACA

From the Commercial Appeal in Memphis, TN:

The top insurance official in Mississippi said Wednesday that the volume of changes under the federally mandated health care reform are "mind boggling" and partly come from "pure socialist-communist ideas."

"Some of the ideas are Republican. Some of the ideas are Democratic. Some of them are pure socialist-communist ideas," state Insurance Commissioner Mike Chaney told the Olive Branch Chamber of Commerce. "It is taking money from one class of people and giving it to another. It is a socialist system and it's not going to work."

Healh Insurers Role in the ACO

As I have noted in previous posts, Accountable Care Organizations or ACOs are being heavily promoted as a way to both increase the quality of care while at the same time lowering its costs. It is a given that ACOs will have to include at least one hospital and a group of physicians. But what about health insurers? Are they guaranteed a place at the table and if they are, what will it be?

How about facilitator? With all of the stakeholders engaged in one form or another with the health plan, the health plan has the potential to be the hub for the ACO should they adopt that role. In a comment on a blog I read recently, the author suggested that an ACO is just an “HMO on steroids”. If that is the case, the health plan is certainly at the center. Unlike the HMOs of the 1990s though, an effective ACO relies on the provider physicians to police and optimize their own work rather than the payors. In a recent article by Mr. Jamie Gooch in Managed Healthcare Executive, he believes the success of an ACO is dependent upon the partners that are engaged. He suggests starting small and working with strong partners that can advance the ‘better-care-at-lower-cost’ model. Using this crawl/walk/run scenario, partners can be selected, and the program can be clinically integrated to optimize the cooperation. Again, the health plan has the opportunity of adopting a leadership role and facilitating these relationships and subsequent outcomes to meet the overall goals of the ACO program.

Additionally, I have talked previously about the critical role of evidence-based medicine in the healthcare reform debate. If we have the information from which best practice can be established, documented and communicated, we all stand to benefit by delivering better healthcare to the patients with greater efficiency and at a lower cost. Again, the health plan can play a key role here. With their reach and access to aggregated clinical information, evidence-based data can be collected, analyzed and made available for the physician and associated clinical organizations to better administer care to the patient. Models that are continuously referenced include Geisinger[3], Mayo Clinic[4] and Intermountain Healthcare[5] – they have integrated care and have created very effective ACOs.

The health plan also stands to be at the center of the operation in that it can recruit and retain members. Gaining membership in commercial health plans is a sales function. Whether they sell to employers or to individual members, membership must be recruited and becomes part of the administrative overhead of the plan. Quasi-governmental plans like Tricare, Medicaid and others may still need to recruit membership. For many ACOs, the initial covered lives are likely to come from the employers within the ACO’s provider panel. For example, a 300 bed hospital with 400 physicians and post acute care facilities may have 5000-6000 employees. If you add dependents, a ready made 10,000 member population is available. This represents lives that likely come out of an existing health plan. This is more than enough to meet the minimum requirements of an ACO. Additional membership may be driven by the community affiliation and demonstrated outcomes.

it will be interesting to track what roles health plans play in the development of ACOs, particularly the major national carriers.

Good Article on Formation of CA Health Exchange

California is one of the first out of the gate in forming its health insurance exchange. This article is a good summary of a conference that talked about the lessons learned by CA officials:

http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2010/Nov/November-8-2010/Lessons-from-the-California-Exchange.aspx

Good summary paragraph:

So what does California's experience thus far suggest? Among the lessons from a recent forum on the subject: If possible, get outside advice to help with the highly technical process of creating an exchange; be careful how you pick its board; make it easy for the public to understand what the exchange is doing, and spur the kind of competition that is going to make premiums affordable.
On Sept. 30, California became the first state in the nation to pass a law creating an exchange under the health care overhaul law.

VA Anthem Leads the Way for Health Care Reform

The VP of PR at Anthem VA must be thrilled about this puff piece of an article:

http://www2.timesdispatch.com/business/2010/nov/07/anth07-ar-636179/

The Anthem CEO said that his company is moving away from just being a payer of claims to one that helps its members manage their health. He also talked about the need to become more efficient. The end of the article also mentions the strength of the BC/BS brand which i s going to be a huge advantage for Blues Plans as the market shifts more and more to individual coverage in the coming years.

Update on MA's Cost Control Efforts

As I have noted many times, the health care scene acts as an excellent bell weather on how health care reform will play out throughout the country, This article from the Boston Globe provides the latest update (http://www.boston.com/news/health/articles/2010/11/05/us_watching_mass_fight_on_health_costs/?rss_id=Boston.com+--+Health+news )

Interesting excerpt:

Patrick is ready to move forward with a “global payment’’ plan that is supported in principle by most of the state’s health care companies, though they have yet to agree on the elements.

The plan, in broad form, would put hospitals and doctors on an annual budget for each patient’s care. Providers would be expected to assemble into partnerships — known as accountable care organizations — to coordinate care and distribute payments. It would replace the current “fee for service’’ system in which providers are paid negotiated fees for each visit and procedure.

Your Pharmacist: The Center of Your Medical Care

I saw Walgreens present this concept at an AHIP Conference two years ago:

Walgreens will "step up investments in services to help Americans manage chronic diseases," the drugstore chain's CEO announced, because "the company wants to capitalize on what he called the 'retailization' of the nation's health care system." The pharmacy giant "increasingly has been lobbying to give pharmacists a greater role in medical care such as providing immunizations in its stores as well as establishing retail health clinics staffed by nurse practitioners." Walgreens' health professionals could help "provide certain primary medical care service amid a national shortage of primary care doctors" and assist patients in managing chronic conditions like diabetes, hypertension, and high cholesterol, the company's CEO said.

Given the predicted stress on the primary care network once ACA kicks in beginning in 2014, this actually makes some sense. Of course I am sure the AMA would disagree.

CMS Must Launch Physician Comparison Site by 1/1/11

This is a great article on the issues that CMS faces in launching its website on physician comparison (http://www.healthleadersmedia.com/page-2/PHY-258341/CMS-Under-the-Gun-to-Launch-Physician-Compare-Site). It is not going to be easy. The biggest concern continues to be risk adjustment. According to an AMA official:

"But our concern is that individual doctor level data right now is not read for prime time, especially in complex situations. The attribution of who's really responsible for that care is not worked out."

Risk adjustment is still a big problem as well. "Some elective claim submission forms are limited in the number of co-morbid conditions they'll accept. Some take 4, 6, but the patient has 10."

This is really going to be interesting.

State Mandates: Do They Increase the Cost of Health Insurance?

This article examines what effect mandates have on health insurance costs in a particular state (http://www.aishealth.com/Bnow/hbd110410.html). One health insurance executive believes that mandates add 17% to the cost of coverage in Maryland. mandates vary from 13 in Idaho to 69 in Rhode Island. The most expensive mandate is fertility coverage. Coverage for autism has also increased nationwide.

Rhode Island Hospital Payment Innovation

The Providence Journal (http://www.projo.com/news/content/LIFESPAN_BLUE_CROSS_CONTRACT_10-29-10_KVKKJMB_v17.1ebf635.html) has an interesting article on payment agreement between BCBS of RI and hospitals in the state:

Rather than paying for each procedure or each day in the hospital, Blue Cross will provide a flat fee to cover all care for a given condition. That way, the hospital doesn’t make more money if it does more tests and procedures or keeps the patient longer.

Other insurers in the state will also be making similar arrangements.

Update on State Health Exchange Funding

In another bid to help states implement the new healthcare law, the Obama administration Friday unveiled a new competitive grant program that will give five states money to develop Internet-based insurance exchanges. ... Administration officials said they hope the winning states will come up with systems that could serve as models for the remaining states. The grants follow awards of $1 million to 48 states and the District of Columbia to help set up the online market places -- Minnesota and Alaska refused the money.

I can understand Alaska returning the money but what is up w/MN?

Value Based Benefit Design: It's a Break Even Proposition

Here is the link to a major research study of a value based benefit design, specifically reduced RX copays for a major employer group: http://content.healthaffairs.org/cgi/content/full/29/3/530.
The study reveals it is a break even result though it does not take into account the benefits from reduced absenteeism and higher productivity among employees.

ACOs: Some Thoughts

I have blogged in the past about how ACOs might be a good answer to lowering health care costs and increasing quality at the same time. However there might be two factors that get in the way of this. First is that there are no penalties for missing quality targets. Given this, one could see how FFS payment would continue to be more appealing to providers. Second is that spending targets are calculated on past spending patterns so previous inefficiencies are "baked" into the calculations. Thus prospective ACOs even have an incentive to spend more before onset of the program to build up their historical spending base. Theoretically, a program that offers shared savings without any financial downside provides weak incentives for providers to change behavior.

And it looks like health insurance companies are concerned about being cut out of the picture (http://www.healthleadersmedia.com/page-2/HEP-258288/Could-Health-Plans-Derail-ACOs).
Key excerpt:

But the reality is that everyone will protect their own interests, which has health plans knocking on doors not only at the Centers for Medicare & Medicaid Services (CMS), but also at the Federal Trade Commission (FTC) and Department of Justice (DOJ), making sure they're aware that collaboration among already powerful healthcare providers under the ACO model also includes the risk collusion.

As I have said in the past, health plans owned by a provider group have the best chance of partnering to form an ACO.

The Quest for Cost Data Continues

Interesting article on California hospital costs disparity in Kaiser Health News (http://www.kaiserhealthnews.org/stories/2010/october/17/california-hospital-costs.aspx) A critical excerpt:

The hospitals haven’t made it easy for consumers to comparison shop. State law requires hospitals to reveal their charges for specific services. But those charges don’t reflect the lower negotiated rates insurers actually pay – rates hospitals usually insist be kept secret. The California Hospital Association has opposed legislation to ban such "gag clauses"; the most recent of these bills died in the state Assembly in August.

Hospitals have also resisted a four-year campaign by the Pacific Business Group on Health, a large employer coalition, and CalPERS to create a "hospital value initiative" that would allow hospital comparison based on and quality of care.

Rarely able to evaluate hospital costs and quality, patients often defer to their physicians when deciding on a hospital. Rochelle N. Doble had a seriously infected toe amputated at Sutter Delta Hospital in Antioch in 2007. Her doctor told her the bill would be about $1,400, but when she arrived at the hospital, Doble says Sutter told her it didn’t contract with her insurer and that she would be billed for the full amount—more than $5,400.

Doble, 54, says the only reason she went to Sutter was because her doctor chose it for its convenience. "His practice is in Antioch," she says. "He did it five minutes from his office."

Doble refused to pay and her account was sent to collections. In July, Sutter agreed to lower the bill to $1,400 after JustHealth, a Santa Rosa-based advocacy group, helped her protest it, according to correspondence from Sutter provided by Doble.

Stacey Wells, a Sutter spokeswoman, said the hospital couldn’t discuss Doble’s case. She said the bill for this kind of procedure would be determined by the number of hours spent in the operating room and recovery areas and charges for all supplies.

John Metz, JustHealth’s executive director, says few people bother to challenge their bills as Doble did. "Most people trust hospitals are going to treat them right," he says. "When they get these bills, they are literally impossible to understand, and people just accept them."

Given this difficulty on obtaining good info on price and quality, I think it is nearly impossible to expect consumers to make informed decisions when it comes to their health care. So what is the answer? Push subscribers to use providers in designated high performing networks.

Provider Pricing: The Elephant in the Room

Most everyone agrees we spend too much on health care in this country with poor results. One of the main reasons for this high cost is what we pay providers for their services. And this may just get worse in the future as more and more providers consolidate and exert hteir power when negotiating fees. From the Health Affairs blog:

A growing imbalance between payers and providers. As MacGillis notes, the market imbalance between payers and providers may be getting worse due to increasing provider market and consolidation, a phenomenon that has been discussed by other Health Affairs authors. For example, in an April 2010 Health Affairs article focusing on market conditions in California, Robert Berenson, Paul Ginsburg, and Nicole Kemper wrote that “providers’ growing market power to negotiate higher payment rates from private insurers is the ‘elephant in the room’ that is rarely mentioned.” The authors warned that, unless precautions are taken, the Affordable Care Act’s push toward “accountable care organizations” and other integrated care models could increase prices:

If accountable care organizations lead to more integrated provider groups that are able to exert market power in negotiations—both by encouraging providers to join organizations and by expanding the proportion of patients for whom provider groups can negotiate rates—private insurers could wind up paying more, even if care is delivered more efficiently.

Republicans, who seem poised to make big gains in next week’s elections, have argued for shifting more power in health care decision making, and more risk, to consumers. That would “only make the fundamental imbalance of information, power, and expertise” in favor of providers even worse, Vladeck said in his presentation at the Health Affairs event.

Berenson, Ginsburg, and Kemper concluded: “Unless market mechanisms can be found to discipline providers’ use of their growing market power, it seems inevitable that policy makers will need to turn to regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting.” In the September-October 2009 Health Affairs issue, Robert Murray, executive director of the Maryland Health Services Cost Review Commission, wrote that had the state’s all-payer rate-setting system for hospitals been adopted nationwide, it might have saved $1.8 trillion over three decades.

The Polls and Health Care Reform

From the New Republic:

Polling on health care reform remains as reliable as ever, which means that you shouldn't consider it particularly reliable. Voters have mixed feelings and few actually understand what it's in the law, which means answers depend a lot on how the survey firms word their questions.

But the polls do provide some insights. And they've consistently undermined the claim that Americans are clamoring to scrap the Affordable Care Act because it tries to do too much.

The latest evidence comes from the new Associated Press-GfK poll, which Greg Sargent flagged on Friday. In the survey, 32 percent of registered voters responding said they wanted to repeal the law completely while another 9 percent said they wanted to revise the law so it did less. But 39 percent said they wanted to revise the law so it did more and 18 percent said they wanted to leave it as is. Opinion tips more towards scaling the law back if you consider only likely voters, but even then only 37 percent want repeal and less than 50 percent want to scale the law back at all.

Put it together with polling that shows Americans overwhelmingly favor the individual elements of health care reform--like guarantees of coverage for people with pre-existing conditions--and it's hard to make a credible argument that most Americans want repeal. As Steve Benen, who also noticed these new results, says

I wonder what the discourse would be like if equal attention were paid to those who want even more ambitious health care reforms as compared to those who think the Affordable Care Act some sort of secret communist plot.

Good Series of Posts on HC Quality

Defining quality is the "holy grail" in health care. Here is a series of posts looking at it in the US:

http://theincidentaleconomist.com/how-do-we-rate-the-quality-of-the-us-health-care-system-introduction/

Two surprising findings: Japan is more CT and MRI crazy than we are. Also the US does not have an inordinate amount of specialists.

Anthem Premium Increases in Connecticut

CT regulators have come under criticism from HHS for approving premium increases of up to 39% by Anthem for their various individual plans. In response the CT regulators said they thoroughly reviewed the requests and said that the increases were justified as Anthem made benefit changes to comply with the PPACA. Specifically:

In his letter, Sullivan noted that because of some provisions of the federal reform law, insurers had to raise several of their benefits to be in compliance. This, he wrote, was a contributing factor to the premium increases. He cited as an example one of Anthem’s prescription drug benefits that previously had a maximum limit of $500 annually and now has been raised to $750,000 to be in compliance with the reform law. According to Sullivan, this hike alone will result in a nearly 23% cost increase for that plan.

Another Call for Pricing Transparency

The leader of the St. Louis Business Group on Health makes yet another plea for pricing transparency: http://www.commonwealthfund.org/Content/Blog/2010/Oct/Time-to-Unmask-the-Price-Differences-in-Health-Care.aspx

While pricing transparency would help consumers make better choices, what is really needed is for health insurers to identify high performing providers and then through benefit incentives "push" their members to use them. Expecting consumers to make cost and quality decisions on their own is not just realistic.

Subrogation: Health Insurers Need to Give It More Attention

Good article on the latest developments in subrogation that could lead to increased recoveries:

http://www.aishealth.com/Bnow/hbd102510.html

Great Idea for Malpractice Reform

Peter Orszag's proposal for medical-malpractice reform is pretty clever. As I read it, in fact, it's not primarily a malpractice-reform proposal at all. It's a proposal for spreading evidence-based medicine through a vehicle that conservatives and doctors find congenial.

Quick background here: "Right now, health care is more evidence-free than you might think," Orszag writes. "And even where evidence-based clinical guidelines exist, research suggests that doctors follow them only about half of the time. One estimate suggests that it takes 17 years on average to incorporate new research findings into widespread practice." And that gets to Orszag's broader take on controlling costs in health care: If we can get doctors to stop doing the stuff we don't need, we can control costs without rationing in a way that harms anybody's care.

Of course, defining the stuff we don't need is more difficult than it sounds. And when evidence-based medicine became something Democrats wanted to do, Republicans decided it was something they opposed. Using research to decide what works and what doesn't is rationing, you know.

Orszag sees medical-malpractice reform as a way to get around this debate. Instead of protecting doctors from lawsuits by capping damages or limiting the ability of plaintiffs to sue, you could protect them by charging the American Medical Association or the Institute of Medicine with creating standard lists of best practices and then providing immunity to doctors who can show they followed them. That's easier said than done, but if you could manage it, it would give doctors a reason to follow the best practices and, in theory, drive down overall health-care costs. That would be much more effective than just attacking malpractice suits, which aren't a large contributor to spending and are often quite warranted.

Personal Responsibility for Health

During the debate over health care reform much of the focus was on how we needed to reduce the amount of unnecessary care in this country. Estimates of this "wasted" care are has high as 33% which comes out to over $800B! To reduce this waste a major recommendation has been to change the way providers are reimbursed, that is to shift away from fee for service structure to a global payment one. While I agree this is necessary, there also needs to be a focus on an individual's own responsibility for taking care of him or herself.

Is it right for someone who exercises five days a week, eats right, doesn’t drink or smoke to pay the same health insurance premium or pay taxes in universal health care for someone who can afford to chain smoke, eat out, drink a six-pack every other day yet can’t afford to pay for health insurance?

Of course, this is an example of two extremes. Unhealthy lifestyles receive little to no scrutiny but are detrimental when speaking about health care reform. In an ideal world, health care would be used for those with unpreventable conditions such as age, genetic conditions, etc. Health care reform cannot supplant the personal responsibility to care for ones self.

I’m not advocating a “no” vote for universal health care coverage. I’m saying that for it to work and be cost effective, we need to simply re-examine our life choices to decrease our hospital visits from costly preventable conditions.

During this tough economy, where many people cannot afford health insurance, universal health care is necessary to fulfill our basic ethical promise to help our fellow man, but we must first take personal responsibility in caring for our own bodies.

Study: HC Costs for Insurers Increasing Faster than for Medicare

For the 12-month period ending in August, the average per-capita cost of health care services covered by commercial health insurance plans, which include self-funded employer plans, climbed 8.66%. That compares with an average increase of 5.08% for patients covered by the traditional Medicare program, according to S&P Healthcare Indices, which Standard & Poor’s Corp. developed in consultation with Health Index Advisors, a joint Aon Hewitt Inc. and Milliman Inc. venture.

The biggest difference in cost increases between patients covered by Medicare and commercial health care plans were for hospital services. In that same 12-month measuring period, hospital costs for patients enrolled in commercial health care plans rose an average of 9.66%, nearly double the 4.48% increase for Medicare patients.

NCQA Study of Health Care Plan Spending: More is Not Better

The NCQA released results from a study of health care plan spending and found that you "don't get what you pay for." his conclusion emerged from the organization's 2010 State of Health Care Quality report that analyzed performance measures from more than 1,000 plans providing coverage to nearly 120 million Americans to determine the overall quality of American healthcare.

By comparing quality measures with what NCQA calls Relative Resource Use data—an evaluation of how extensively plans within a certain region leverage healthcare resources relative to the populations they serve—NCQA was ultimately afforded a glimpse into the value a health plan offers. In fact, it determined that more use of resources, such as inpatient bed days or procedures, is actually often associated with poorer quality, translating into a bad value for consumers and employers.

The report also had advice for health plans on what they can do to create better value for their members. Among other measures, improvements in the following areas will affect RRU scores:

1. Plan design and copays: Are copays set at levels that encourage preventive care? How does the plan design encourage employees to select cost-effective providers?

2. Appropriate levels of care: What are the recommended care standards for the most frequent chronic conditions? How is compliance monitored, and how well do providers meet expectations?

3. Overall utilization management: Are utilization trends monitored by provider and by patient details such as age, gender and chronic condition? What happens when outliers are identified?

4. Local practice patterns: How does the health plan monitor providers' practice patterns and encourage providers to adopt cost-effective techniques?

5. Use of technology: What are the standards of use, and how are they monitored? How does the plan instruct providers about appropriate use?

RRU improvements also could be facilitated by encouraging high-volume providers to enhance continuity of care by creating incentives to adopt patient centered medical home (PCMH) and accountability care organization (ACO) care delivery models.

ACOs in Massachusetts: An Update

As I have said frequently, tracking the latest developments in Massachusetts is very likely a good bell weather on how how health care reform will play out in the rest of the country. Here is the latest from the medical director of Health Integrated on his company's plans to become an ACO in the next five years:

The strategic plan includes centralization of the full range of medical services. This goal was to be accomplished by:

• Increasing provider accountability and consumer education
• Rewarding physicians for delivering high quality care
• Providing incentives for efficient, appropriate care
• Structuring the care continuum to align incentives for all participants
• Integrating existing CHA ACO elements

In order to drive this kind of change, a new payment model was required. This new model had several priorities regarding payment and incentives, many of which are aligned with our previous discussions concerning successful ACOs. These have included:

• Alignment of all stakeholder financial interests including improved outcomes in patient health and expenses
• Creation of a global payment structure
• Preparation to accommodate an all-payor system

The development of strategic partnerships will be important. These could be with other private payors, like NH for example. Massachusetts has already adopted and implemented this innovative healthcare reform model. In doing so, they are leading the nation in healthcare reform. As you may have also experienced, consolidation of the industry is already beginning and relationships with providers, particularly the tertiary care institutions in the state, are necessary. Additionally, the development of select provider networks is desirable and possible. As the state of Massachusetts is already moving toward global payments, this must continue to be a priority.

Within the managed care plan, Network Health brings specific competencies to the partnership including:

• Data
• Care management
• Cultural transformation support
• Existing provider network

The Patient Centered Medical Home (PCMH), is expected to be a strategic tool for both care delivery and effectiveness. The PCMH is expected to be the vehicle to accomplish many tasks including the improvement in:

• Preventive care
• Primary care
• Care coordination and management
• Access
• Patient/care team relationships
• Patient experience
• Consumer involvement
• Identification and management of high risk populations
• Payment structures

In conclusion, Dr. Yeracaris summarizes that although the journey to becoming a high-performance ACO is complex, health plans, specifically those that are provider-sponsored can play an important role in assisting providers with the transition. It is encouraging to see that global payment arrangements and primary care medical homes offer significant theoretical opportunities to improve care and truly “bend the cost curve”, but the thesis has yet to be proven.

On a closing note, it should be noted that the prediction of 5 yrs. for the complete formation of this ACO shows how difficult and complex this task is and makes one wonder if their formation will take as long in other parts of the country.

Update on Health Insurance Exchanges: Oregon's Strategy

Oregon has decided that its exchange will not be an arm of the state but independent:

http://health.newamerica.net/blogmain

Health Insurers: We Need More Time to Meet MLR Requirements

AHIP is asking for more time through a transition period (perhaps up to 2014) to enable many of its member carriers to meet the 80 and 85 MLR ratios required by the ACA. Those who do not meet these requirements will have to issue rebates to their members (see my earlier posts about the Blues Plan in NC). Implementation of this requirement can also be problematic because as many as 17 state insurance commissioners may be new to their offices come January 1st.

The NAIC meets in Orlando this week to approve the regulations for the new MLRs. For more details please click on this link: http://money.cnn.com/2010/10/15/news/economy/health_care_MLR_vote_impact/

The large carriers will have no problem meeting these new standards. It will be the smaller ones that have the issues. If these carriers leave the market Like Principal did it will mean that the big carriers have less competition. On the other hand the new MLR requirements will force the carriers to be more efficient which is a good thing.

UHC Proposes Joint Medicare/Medicaid Program

This makes senses:

UnitedHealth Group Inc. is proposing a managed-care plan for dual recipients of Medicare and Medicaid. The insurer said the plan would "save as much as $1.62 trillion in the U.S. over 25 years," Bloomberg reports. "Almost 9 million Americans receive coverage from both Medicare, the U.S. health plan for the elderly and disabled, and the Medicaid program for the poor. UnitedHealth proposed in a report today to combine benefits of the programs into a single plan to better coordinate patient care. ... Such a change would increase the number of government beneficiaries on UnitedHealth's rolls, [Simon Stevens, executive vice president of UnitedHealth] said, without providing a specific estimate. ... The current payment structure creates a 'tangled web of responsibilities between Medicaid and Medicare' because each program covers different expenses, medical providers must bill separate programs, and no one is accountable for tracking the care patients receive or how much is spent, UnitedHealth said in its report. Providing Medicare and Medicaid benefits through a single insurance plan would simplify coordination of care among doctors, hospitals, nursing homes and other providers and would save money by eliminating inefficiencies, the report says"

Tax Credits Act as Disincentive for Costs

Interesting take on the tax credits that will be issued to help individuals afford coverage under the ACA:

http://www.healthleadersmedia.com/page-1/LED-257781/Tax-Credit-Hides-True-Cost-of-Healthcare

New Federal Board on Compartive Effectiveness

From the Washington Post:

Reports on a new entity: the Board of Governors of the Patient Centered Outcomes Research Institute. "If you're not familiar with the board, you're not alone. Created by the health-care overhaul law, it's one of the newest and least known panels in government. But the work of its 21 members, if successful, could increase the public's knowledge of medical treatments for everything from attention deficit and hyperactivity disorder to cancer. And it could dramatically change how you discuss treatments with your doctor when the law is fully implemented in 2014." Tasked with helping patients, doctors and purchasers make informed decisions on quality and health care effectiveness, the board will "direct the institute's researchers to examine mounds of comparative effective research undertaken by schools, hospitals and medical companies to study the benefits and detriments of medical treatments".

This Board is one of the major tools in reducing the cost of health care. It amazes me that we still really do not know what the best ways to treat certain diseases are. And when we learn what is, that it takes 18 yrs for it to become stand practice. This Board shouls really move things along hopefully.

Commonwealth Fund Report:: ACA Will Improve Health Access

A new report says that by 2014 as many as 12.1 million now-uninsured young adults — of an estimated 14.8 million – may get some kind of subsidized coverage under provisions of the new health-care overhaul law.

The Commonwealth Fund issue brief says 7.2 million young adults could gain health coverage under Medicaid, which is expanding under the health law, and that 4.9 million may receive subsidized private coverage under the new insurance exchanges. Those provisions don’t kick in until 2014.

Another million young adults are expected to be covered by their parents’ health policies between now and 2014, as a result of the now-in-effect provision requiring plans to cover adult children up to age 26.

About 30% of the 32 million additional people expected to come into the insurance fold as a result of various health-law provisions are between the ages of 19 and 29, the brief says.

Congressional Study: Big 4 HIs Denied 1 in 7 Applicants

From the WSJ:

The four largest for-profit health insurers in the U.S. -- Aetna Inc., Humana Inc., UnitedHealth Group Inc., and WellPoint Inc. -- "on average denied policies to one out of every seven applicants based on their prior medical history," according to a congressional investigative report released yesterday by Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, and Rep. Bart Stupak (D-Mich.). The carriers collectively denied coverage to more than 651,000 people from 2007 to 2009 due to pre-existing conditions. "While most Americans have coverage through their employer or Medicare, an estimated 15.7 million adults under age 65 received coverage through an individual policy as of 2008, the congressional report said. Those are the customers who can be denied coverage because they have a past illness." Under the new healthcare reform law, insurers will no longer be able to deny coverage on the basis of pre-existing conditions beginning in 2014 (Adamy, 10/13). Bloomberg: "Insurers agreed to end denials for pre-existing conditions early in the health-care debate last year, said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the industry's trade group in Washington. Until all consumers are required to buy health insurance, the coverage restrictions are needed to keep people from gaming the system, he said. 'In the current individual market, applicants undergo an underwriting process to discourage people from purchasing coverage only after they need medical services, which drives up costs for all policyholders,' Zirkelbach said.

I thought the ratio was surprisingly low.

Blues Plans and Reform

In an earlier post I mentioned that the Blues Plan in NC had to refund $156 M to its members that have individual coverage based on the new MER requirements for such coverage. What about other Plans and reform? Here is a summary:

• Meanwhile, some Blues plans and other insurers have withdrawn from child-only coverage, citing issues with reform provisions related to pre-existing condition exclusions. The insurers said they no long would sell such policies as of Sept. 23, when they may no longer reject applicants up to age 19 based on pre-existing conditions. In Colorado, for example, WellPoint, Inc.’s Anthem unit and several other carriers, including Aetna Inc., CIGNA Corp., Humana Inc. and UnitedHealth Group’s Golden Rule Insurance Co. subsidiary, said they would drop new sales of child-only policies while continuing to cover current child-only enrollees and to accept children with pre-existing conditions in new family policies. Insurers in several other states also reported that they would withdraw child-only products.Under rules issued in June that take effect for plan years beginning on or after Sept. 23, 2010, insurers may no longer exclude pre-existing conditions from coverage for enrollees under the age of 19. In an effort to address concerns regarding adverse selection, HHS issued guidance July 27 authorizing insurers to restrict enrollment of children under age 19 “to specific open-enrollment periods,” if permitted by state law. But the open-enrollment period must apply to healthy as well as sick children, while the insurers — and some state insurance commissioners, preferred to allow acceptance of healthy children year-round. HHS signaled that it would try to adjust open-enrollment periods to address the risk of adverse selection, but no deal had been reached by press time.
  

• Meanwhile, insurers in several states blamed reform for premium rate hikes. The Rhode Island Blues plan, for example, reportedly told customers it would raise premiums by a few percentage points on top of already approved rate hikes to account for additional benefits mandated by the reform law. BCBSRI and other Rhode Island insurers that planned to impose similar rate hikes came under fire from Insurance Commissioner Christopher Koller. In a Sept. 9 letter to chief executives at the state’s three largest insurers, Koller said that any changes to approved premium rates “as a result of PPACA [i.e., the reform law] will be considered material and an exception to the OHIC’s previous decision….They may not to be applied in quotes to customers unless and until approved by this office.” The insurers also must submit “analysis supporting the additional premium rate charge anticipated for each contemplated change and why it should cause average rates to increase by more than the amount approved.” BCBSRI spokesperson Kimberly Reingold told The AIS Report that “the guidelines under federal health care reform will add cost to employers and we currently are working with them to understand the specific impact to premiums, which will vary based upon benefits selected by each employer. Every time an employer changes their coverage, or we are mandated to cover new services…rates are adjusted.” She added that “those rates could be anywhere from 1.8% to 3% more depending upon plan design.”

NY VNA Study: Home Visits Reduce Hospitilaztion Rates

Well you have to consider the source here but this study(http://www.healthleadersmedia.com/page-2/TEC-257573/Predictive-Modeling-May-Reduce-Hospitalizations) seems very positive. Key article takeaway:

Preliminary analyses from their investigation revealed that patients who received physical therapy were 37% less likely to be hospitalized compared with patients who did not receive physical therapy services."

What Employees Will Find at OE This Year

This is a good article (http://www.kaiserhealthnews.org/Features/Insuring-Your-Health/open-insurance-season.aspx) on open enrollment issues this year. It notes that family coverage has increase 12% over last year and with employees picking up more and more of the cost of their coverage, paychecks will be smaller for many next year.

It also notes how more and more employers will offer incentives for healthy activities such as an health assessment.

Despite Patient Interest Few Doctors Use Email

The Center for Studying Health System Change released a report (http://www.hschange.org/CONTENT/1159/)that showed less than 7% of physicians use email to communicate with their patients. Why is this figure so low? Lack of reimbursement was cited as one of the issues. What a surprise

Aetna Study: Account Funded Plans Save Money

Aetna just released a five year study that showed customers who replaced their previous plan options with an Aetna HealthFund (AHF) Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA) experienced lower annual cost trends over five years, producing savings of nearly $18 million per 10,000 members.

While this obviously is positive news for supporters of this kind of coverage, this article (http://www.sacbee.com/2010/10/04/3077647/price-comparisons-nearly-impossible.html) does a good job of showing how difficult it still is for consumers to obtain medical procedure cost information. Until easy to understand and easy to obtain medical cost and quality information is available, it will be hard for these types of plan to dominate the marketplace.

Good Article on Mini Med Plans

The NY Times (http://www.nytimes.com/2010/10/06/business/economy/06leonhardt.html?_r=1&ref=business) has a good overview of mini-med plans and how they do not fit in the future of health insurance once the Affordable Care Act kicks. Last week it was major news that McDonald's was ready to drop such coverage for their employees. The benefit limits for these plans was either $2,000 or $10,000/yr. The article noted this really was not coverage since a major procedure would easily pass either amount.

Mini med plans really are not a good alternative to standard HC insurance. However as the article notes, standard HC coverage is too expensive for most people to afford. In 2014 both the mandate for HC coverage and subsidies to help pay for the premiums kick in. Until then, people will have to muddle through with either no coverage or mini med coverage which is really not a good scenario.

More Updates on Health Insurance Exchanges.

From various sources:

NAIC publishes draft legislation for comment
Monday, the National Association of Insurance Commissioners (NAIC) published its draft model legislation to assist states in establishing insurance exchanges by January, 2014. Under PPACA and the NAIC draft legislation, a state may establish an exchange within or outside of state government or a combination of the two. NAIC will accept comments until October 6.

HHS awards grants to assess data requirements
Thursday, HHS awarded $1 million grants to 48 states and DC to assist in preparation for health exchanges infrastructure. The initial funds will be used to assess information and data requirements in each state.

California accelerates exchange timetable
Thursday, Gov. Arnold Schwarzenegger (R) signed two bills that will make California the first state to establish a health insurance exchange per PPACA (Utah, Massachusetts had exchanges pre-PPACA). The exchange will create a web-based insurance plan marketplace for residents, offering standardized and detailed information about available plans, as well as a toll-free hotline to help consumers understand their options. Approximately 8.3 million Californians are expected to be eligible for coverage through the exchange. The program is expected to bring as much as $10 billion in subsidies for the state over ten years. An independent, five-member board will oversee the California exchange with responsibility for naming insurers that will participate, eligibility, and enrollment processes.

Congressional Research Service report: Can state exchanges prohibit plan participation?
According to the Congressional Research Service (CRS) analysis of PPACA, a state exchange could deny participation by every plan submitting certification if the exchange were to determine that every plan is not in the “interest of plan participation.” However, CRS analysts concluded the HHS Secretary could use her authority to prevent such a scenario.

The Challenges of Creating Health Insurance Exchanges

The Commonwealth Fund has just released a report (http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2010/Sep/Health-Insurance-Exchanges-and-the-Affordable-Care-Act.aspx) on the eight difficult issues that have to be resolved in the creation of health insurance exchanges.

Of the eight issues, the most important one is guarding against adverse selection. If the exchanges only attract the least healthy risks, they certainly will fail. Therefore it is imperative that the same kinds of policies be offered both in and outside of the exchange to guard against this.

Massachusetts and the Movement Towards Developing Global Payments

I have blogged in the past about how health care reforms efforts in MA are a good harbinger of what the rest if the country will face in the next few years as the ACO is enacted. While reform efforts in MA increased access as hoped, costs have continued to sky rocket. Earlier this year the MA DOI denied rate health insurance company premium increases for both the individual and small group markets saying they were too high. HIs took the state to court saying the denials were illegal. Both parties reached a compromise that allowed an average increase of 12%. This settlement of course did nothing to address the issue of increasing medical costs.

One of the major reasons health care costs have continued to grow is the reimbursement system for providers, fee-for-service. Simply put providers are rewarded for how much health care they provide so over utilization results. A change in the reimbursement structure is therefore required that would reward providers for the quality of the care they provide. One such alternative is a global payment which would be given to an ACO responsible for the care of its members.

Both state and HI officials have been working on establishing such a system. So what is the latest in the state?

Dr. Judy Ann Bigby, secretary of health and human services for Massachusetts heads a working group of state officials and healthcare executives tasked with doing just that. They met this month to begin drafting a payment reform plan.

Some private insurers in the Bay State are already trying out global payments for the care of chronic conditions such as diabetes and high blood pressure. Blue Cross Blue Shield of Massachusetts, which covers three million Mass. residents, has moved 32% of its HMO business to global payments. Tufts Health Plan says that 20% of its business, mostly through its Medicare Advantage program, is contracted on a global payments basis, according to the Boston Business Journal.

This is going to be a long slog but it will be interesting to see where things go and what lessons can be learned for the rest of the country.