"Jumpers and Dumpers" in MA

I have noted in past blogs about how the experience of health care reform in Massachusetts could be a great predictor of how health care reform will play out nationally. Well a report commissioned by the MA Dep't of Insurance is not encouraging. From the Boston Herald:

The report found that as the number of individual subscribers grew from 45,900 in 2006 to 107,343 in 2008, the percentage of individuals terminating coverage within their first year also grew, from 13.8 percent in 2006 to 24.2 percent in 2008.

But overall, the state consultants at Oliver Wyman said the trend only increased insurers’ costs by less than 1.5 percent each year.

Insurers don’t necessarily agree.

Blue Cross and Blue Shield of Massachusetts executive Andrew Dreyfuss attributed the insurer’s recent losses to the trend.

“It’s not the way insurance is supposed to work,” he told the Herald this week.

With the penalty for not purchasing mandatory coverage so minimal, I can see individuals doing what is happening in Massachusetts nationally come 2014.

Mayo Clinic Study: Hospital Readmission Rate Not Affected by Follow-Up Appt's

Here is some discouraging news for those who thought making sure patients have their follow appointments after being discharged from the hospital would lower their chances of readmission and therefore save money:

Improving follow-up appointments is often considered one of the key strategies for reducing costly hospital readmissions, but a new study suggests that better discharge processes don't reduce 30-day readmission rates at all.

While previous research has found that follow-up appointments reduce readmissions for special patient populations, the latest study, which was conducted by Mayo Clinic researchers and appears in the latest Archives of Internal Medicine, examined nearly 5,000 dismissal summaries for general medicine patients discharged in 2006 from Mayo Clinic hospitals in Rochester, MN. While most (60%) patients were discharged with instructions for follow-up appointments, there was no difference in hospital readmission rates, emergency department visits, or mortality rates 30 days after the discharge.

At 180 days, those who had a follow-up appointment were actually more likely to be readmitted or have an adverse event than those who hadn't.

The results suggest that hospitals and physicians still have work to do in determining how to reduce hospital readmissions and even "call into question the concept of using readmissions as a quality indicator for the original hospitalization" because most readmissions were unrelated to the original admission, the authors said in their report.

Reducing re-hospitalization has been a major goal of CMS and the Obama administration, as well as many specialty societies, payers, and state agencies. Just this week, the New Jersey Hospital Association announced a statewide effort to reduce readmissions related to heart failure and CIGNA Corp. contracted with an East Hartford, CT, home health business to tackle the issue.

Readmissions are a big target in the healthcare industry in part because they represent what many consider to be an unnecessary driver of spiraling costs. Return visits to hospitals cost the government nearly $17 billion every year, according to a 2009 report.

Focusing on follow-up visits for patients with multiple comorbidities or longer hospital stays may be more effective than a blanket approach to follow-up care, according to the report. However, the researchers caution that more research is needed and acknowledge that the study was limited in scope and did not look into factors such as compliance with follow-up instruction.

Reducing costs in health care continues to be difficult or not as easy as it seems.

Rising HC Premiums: It's Really Not the Insurers Fault

President Obama met last week with a group of major health insurers to warn them against high premium increases. But what is often ignored or forgotten on this issue is that premium increases are often beyond the control of health insurers. Health care premiums are primarily determined by the fees HIs negotiate with doctors and hospitals. In areas where there are provider monopolies, negotiating fees is obviously more difficult for HIs and premiums there will be higher.

So until provider fees are controlled, it really is unrealistic to expect premium fees to do anything but increase. It is well documented for example that doctors in the U.S make significantly more than doctors in other countries. But beginning a discussion of reducing doctors' fees is fraught with political peril given the power of the profession's various lobbying groups.

So what is the answer? HIs need to develop new ways of paying providers that focus on the quality of care they provide not just the quantity. Pilot ACOs now in place in various places throughout the country are one possible answer. But I guess the major point of this post is that HIs are really just a popular whipping boy for this issue. People love their doctors for the most part but not their health insurance executives.

Kaiser Study: Individual Premiums Up 20%

A Kaiser Foundation study of individuals who purchased their own health insurance revealed average rate increases of 20%.

About 77% of them got a premium increase, said the Menlo Park, Calif.-based nonprofit, which surveyed 1,038 buyers of their own individual and family health insurance between March 19 and April 2.

What's driving up costs and how much is a fair rate increase are issues of debate among regulators and insurers, said Drew Altman, Kaiser's CEO and president. “If you're being hit with a 20% increase and inflation is negligible and your wages aren't going up, that on its face is an unreasonable increase,” Mr. Altman said. “You will never convince a consumer that's a reasonable increase when wages and inflation are flat.”

About 60% of policyholders paid the higher bills, while 16% switched to a less expensive plan, according to Kaiser. Of those who changed coverage, nearly half said their new policy offered fewer benefits.

A spokesperson from AHIP explained that healthier people are dropping coverage leaving more and more sick people "in the pool" which results in higher claims costs and hence the high premium increases. This is why a mandate to purchase coverage (beginning in 2014) is needed to reduce the overall costs of premiums. As I have said before though the penalties for not obtaining coverage are so minimal many healthy people may not obtain insurance.

Health Care Productivity: Going Backward!

This is just incredible to me. Every other industry has become more productive to remain competitive except health care.

U.S. healthcare costs, which are projected to skyrocket over the next few decades, are by far the biggest driver of long-term deficits:

If you wanted to be optimistic about this, you could say that this represents a sort of opportunity. In sharp contrast to, say, France's health-care sector, our health-care sector is dramatically, joyously, wildly inefficient. We pay so much more than anyone else and get so much less that it's easy to imagine a world in which we have a drastically different health-care system that's both better than the one we have now and that's wiped out our deficit.

Austin Frakt links to a David Cutler paper today that describes just how inefficient our healthcare sector is: at the same time that, for example, the durable goods industry has been increasing its productivity by 7% per year, and retail trade by about 4% per year, healthcare has actually been going backward. It's been getting less efficient:

Cutler’s paper explains why productivity and productivity growth are low in health care and what can be done about it. He hypothesizes why we see so little innovation in health care and suggests ways to promote it. It’s a familiar set of problems (asymmetric information, inability of plans and providers to capture long-term returns on short-term investments, plan turnover, third-party payment, etc.) and solutions (bundling, provider integration, pay-for-performance, etc.).

So: we need to figure out how to make healthcare more productive. "But we don’t know for sure how best to foster it," says Frakt. "So, we first need innovation in health policy." Indeed. But go ahead and read this op-ed too for the other side of the story. Doctors need to change the way they do business, but we patients really need to change the way we do business too.

Thomson-Reuters: Ways to Reduce HC Costs

Here is yet another report on how to reduce health care expenditures in the United States. In the study (http://factsforhealthcare.com/) Thomson Reuters says that $3.6 trillion could be saved over the next 10 years by doing the following:

Encouraging everyone to manage their own health through personal behavior to prevent diseases, early detection and appropriate care for chronic diseases.

Using a simple checklist approach to prevent medical errors, which cost $50 billion to $100 billion a year. For instance, Dr. Peter Provonost at Johns Hopkins University in Baltimore estimates his checklist he uses when inserting a catheter to deliver medication, called a central line, reduced infection rates from 11% to zero. This prevented 43 infections and eight deaths and saved the hospital $2 million.

Reducing opportunities for fraud. A George Washington University report estimated that in 2007, fraud accounted for 5% to 10% of the $2.3 trillion in health care spending.

"The goal is to change the culture of fraud," the report reads, adding that while most providers submit legitimate bills, "the public and the provider community need to be better educated about how fraudulent payments directly reduce resources available to patients for legitimate and necessary health care services."

Reduce fragmentation in the delivery of care, better coordinating care among specialists and cutting administrative costs.

Create a "culture of performance improvement" that promotes the quick dissemination and adoption of best practices.

The no-brainer one of these suggestions and the easiest one to implement would be the check-list. It is mind-boggling to me that check lists are not a standard practice at every hospital in the country. Boeing started to required pilots to use one starting in the 1930s. Here we are over 70 years later and check lists are still not a common practice in hospitals.

Doctor Pricing Data: The Quest Continues

We have heard consistently that American consumers are too isolated from the true cost of their health care and therefore do not ask if the suggested treatment is necessary or priced appropriately. The NY Times today has an article on the latest development to provide consumers access to doctors' fees (http://dealbook.blogs.nytimes.com/2010/06/11/bringing-comparison-shopping-to-the-doctors-office/?scp=1&sq=doctor%20pricing&st=Search). A company named Castlight Health, which is a joint venture various venture capitalists and the Cleveland Clinic, is now offering pricing information gleaned from insurance company EOBs. Well while information on pricing is certainly good, what about quality? From the article:

Gastlight plans to add quality measurements to its price information. There are already several providers of that information, though there is no standard set of quality measurements in medicine. But even with quality ratings, there are many procedures for which Castlight’s service is not applicable. Someone suffering a heart attack is not going to check the Web before calling the ambulance, and a patient who discovers he needs emergency brain surgery is likely to prioritize quality above all else.

So they plan to add it in the future. Right now then in my opinion the data they will be providing on cost is essentially useless.

MA health Insurers Report Losses

Here is some news that will make health insurers throughout the country a little nervous:

Major health plans serving the Massachusetts Connector all reported net losses in the first quarter of 2010: Harvard Pilgrim Health Care ($27 million), BCBS of Mass. ($65 million), Tufts Health Plan ($52 million) and Fallon Community Health Plan ($8.5 million).

As I noted in previous posts, the premium requests by these same insurers were denied by the MA DOI earlier this year. Obviously if these losses continue, some if not all of these insurers will pull their products from the Connector.

Health care is extremely expensive in Massachusetts. Reform there solved the problem of the uninsured but has yet to slow down the high cost of care there.

Massachusetts Consumers: Health Care Prices of No Great Concern

Here is a summary of a recent poll in Massachusetts via the Boston Globe:

The latest edition of an annual health care poll conducted by Mass Insight suggests most people don’t find the price they pay for health coverage to be a serious problem. The poll, which will be officially released next week, also shows a large majority of people don’t want to give up anything when it comes to health coverage or the freedom to choose whom they see for medical help.

“While there’s increasing concern about costs, the majority of people still don’t see health premiums and prescription drug costs as enough of a burden to cause them to support reforms that might change their habits,’’ said William Guenther, president of Mass Insight, a public policy research and consulting firm in Boston.

About one in every three people surveyed in April described health care premiums as a serious problem and many of them — 21 percent of the 500 people questioned by phone — described the financial burden as “very big.’’

But that leaves two out of every three people surveyed who considered health care costs to be less pressing. One in every four said health insurance premiums were “not a burden at all.’’

A majority of people polled said they disapproved of limiting coverage for high-cost and experimental treatments as well as policies that limit coverage for prescription drugs. A whopping 80 percent were against limiting consumer choice of doctors and hospitals.

Most survey respondents had opposed the same restrictions in the past two years, but the percentages of people against each of those ideas increased in April.

Fifty-six percent said they did not believe state government had a strategy to keep the health care system financially stable in the latest poll. But about the same percentage of respondents have answered that question the same way for the past seven years.

Of the 500 people interviewed, I wonder how many were paying for their own coverage through and individual product? I would guess by the results not very many. And keep in mind this poll took place in Massachusetts which has some of the highest health care costs in the country.

Aetna: We Need to Contain Costs

For years I have said managed care companies are misnamed since hardly any of them really focus on doing just that. Given the impending changes of health care reform (e.g. mandated medical loss ratios) managing care and therefore costs will be imperative. Aetna is one large carrier that understands this. For years the company has invested hundreds of millions of dollars in "data mining" to help them identify members who need certain kinds of preventive care to lessen the chances of the condition worsening. This of course would be a win both for the company and for the member and their employer. Aetna is still on this course according to the WSJ:

"Aetna M&A strategy includes investment in businesses that can help manage medical costs and quality, [Aetna chief executive Ronald A. Williams] said, noting that the health overhaul is designed to expand access to health coverage yet doesn't address affordability. ... As the new overhaul goes into effect, Aetna expects to continue to 'earn an appropriate profit,' which will allow the company to make investments aimed at lowering medical costs and improving quality, 'and make certain that we're delivering both value for our customers as well as value to you, the shareholders of Aetna stock,' he said" .

While I commend Aetna for this strategy I learned recently from an industry source that the company has yet to prove to large employer groups that the data mining has/will save them money. It is because of this lack of proof that large national accounts have switched from Aetna back to Blue Cross and Blue Shield Plans because of their superior provider discounts. These discounts produce discernable savings immediately versus ones that will or may occur in two years or more.