ACOs Show Promise

A critical component of controlling health care costs is moving away from the present fee for service payment structure which promotes unnecessary care in many cases. One proposed solution to FFS payments are Accountable Care Organizations which will provide care for a "pre-paid" fee and also will be rewarded with additional payments if certain quality measures are met. What is the latest with ACOs? According to Mark McClellan, former, CMS head, they show promise:

For the past four years, he said ACO programs have shown improvements in quality and many lead to lower costs. While there are some technical issues that must be addressed, he said, "It seems like a promising foundation for future work," McClellan said.

"One of my first experiences at CMS, I started hearing about integrated provider groups and independent practioners trying to do things to improve quality—like having nurse practioners in disease management, and pharmacists [following up] on medication adherence. They showed me the numbers and these things were actually working. Unfortunately they were getting killed on Medicare reimbursement fees." At that point, CMS embarked on ACO pilot programs, he said.

How well insurers partner with ACOs will be critical for the industry's success in the coming years.

PSA Testing a Waste of Time

There is an amazing op-ed piece in the NY times regarding PSA testing by the man who invented it, Richard Ablin.

In an editorial in today's NYTimes, Richard Ablin, who discovered PSA (the enzyme that is the target of the test), publicly disavowed the test, calling it a "hugely expensive public health disaster". He went on to detail the statistics: "American men have a 16 percent lifetime chance of receiving a diagnosis of prostate cancer, but only a 3 percent chance of dying from it. That's because the majority of prostate cancers grow slowly. In other words, men lucky enough to reach old age are much more likely to die with prostate cancer than to die of it." [emphasis added]

The cost of prostate hysteria comes to about $3 billion a year for the tests, plus the pain and discomfort and sexual dysfunction - and cost - of men treated unnecessarily.

One study found "1410 men would need to be screened and 48 additional cases of prostate cancer would need to be treated to prevent one death from prostate cancer."

Another study found "94% of the cancers detected with the routine PSA blood test would not cause death before the age of 85."

PSA testing is the perfect example of unnecessary care in this country.

One Week Later: Reflections on the HC Summit

There obviously has been a great deal written about the 7.5 hr. HC summit held last Thursday. Obama to no one's surprise displayed an incredible knowledge of the issues. But I was surprised by a few things. First, many Republicans repeatedly mentioned how poll after poll showed people were against HC reform. While this is true, why didn't the President or other Dems mention that a Kaiser poll showed that HC reform rose in popularity when people were informed about its specific provisions (e.g., out-lawing pre-existing conditions exclusions)?

And while all agreed that the cost of care needed to be controlled and that 30% of prescribed care in this country was unnecessary, no one talked specifically about what needed to be done. As I have mentioned in previous posts, moving away from a fee-for-service reimbursement system would be the Number 1 way to reduce costs. The Dems legislation calls for funding of pilot accountable care organizations under Medicare or ACOs. ACOs would likely be a consortium of providers who agree to care for a minimum of 5,000 patients for a pre-determined fee. Many details need to be worked out but I think ACOs are likely our best chance for cost of care control. More to come about them in future posts.

PWC Report on What Employers Want from Health Insurers

Price Waterhouse Coopers released a survey last week of what large and small group insurers want from health insurers which is available on their website. In short employers value technology and wellness but want better ways to engage employees and manage costs. Satisfaction from large employers dropped 5% from 2008 while satisfaction from small employers (surprisingly) held steady. Key recommendations include:

• Look beyond the provider discount strategy.
• Assist in the coordination of care.
• Educate the employer and employee about their health coverage.

In short, employers are looking for health insurers to take a much more active role in controlling costs. One way to show this would be to actively approach providers regarding episode based payment pilots. Episode based payments raise an incredible amount of issues but just sitting on the sidelines I don't think is an option. Health plans who have strong relationships with the provider community have an edge on this development because it will take an incredible amount of trust to successfully implement.

What Do Health Insurers Do Now?

No matter what happens in the next few weeks to health care reform, health insurers will still need to focus on controlling costs and engaging members. The increasing cost for health insurance will continue to squeeze employers so those health insurers who show they can manage care not just cost will be successful.

Being a Successful Health Insurer

With the impending passing of health care reform, it is now apparent that future health care plans will need a new set of skills to be successful. Instead of being good at screening out and pricing risk accurately, health plans are going to need to be good at managing and improving the lives of those people they cover. And with the individual market growing in the next 5-10 years, health insurers will have to change their perspective from being a wholesaler (selling to employers) to that of a retailer (selling to individuals). This means a greater emphasis on the customer service experience which will bring changes in how they interact with their members through websites, written correspondence and phone calls. It also means that a company's brand will continue to grow in importance. Who do I think will successfully make this transition? I will discuss this in future posts.

The Senate House Compromise

There have been numerous articles written about the differences between the Senate and House bills. Many policy analysts agree that the Senate version will dominate in the final bill. One change I would like to see is the effective date of many of the provisions which should be earlier than 2014. Also, I think the penalties for not getting coverage need to be more severe as they are presently in the House bill. This will lessen the chance of adverse selection for health insurers. Right now health insurance lobbyists are busy fighting the premium tax. It will be interesting to see how effective they are in getting this lowered or eliminated.