As you might have noticed, Matthew has been a little preoccupied lately. He and Indu are putting the finishing touches on the Health 2.0 conference. This meeting will be 4 times the size they originally conceived, with content that describes a good portion of how health care will undoubtedly be shaped in the future. I’ll be there, typing furiously, trying to capture the blow by blow for THCB.
In any case, while Matt’s energies are elsewhere, I thought I’d float a topic that’s been on my mind recently.
Senator Clinton plans to roll out her health plan tomorrow, but in the roll-up last week she pointedly singled out the health plans as a big part of the problem.
"I intend to dramatically rein in the influence of the
insurance companies. They have worked to the
detriment of our economy and of our health-care system."
There has been a lot of discussion and progress lately on the transparency of doctor and hospital pricing and performance. But health plans are also very important, costly system players. What about the transparency of their pricing and performance? At this point, nearly all health plan costs and performance are opaque to the purchasers who buy coverage and to the vendors whose services they broker.
Many organizations are now publicly reporting hospital quality. And if the court ruling isn’t overturned this coming week, CMS will turn over physician claims data sets
from 4 states and DC to the advocacy organization Consumers’ Checkbook,
which has pledged to make the refined information a publicly-accessible
resource. (The sets will be purged of patient-specific data.)
As provider performance levels become clearer, there is every
indication that health plans will focus on pegging payment levels to
them. This is a prospect that has many doctors uneasy about the motives
and methods of those analyzing cost and performance.
Just because you’re paranoid, though, it doesn’t mean they’re not
out to get you. While its ridiculous to dismiss health care analytics
out of hand – the tools I’ve seen are, for the most part, superb – it
is not foolish to suspect that health plans, who are just as much into
the business of making money as everyone else in health care, don’t
occasionally spin their information to advantage. Bring up the topic of
health plan negotiations with any doctor or hospital executive, and be
prepared to get an earful on this topic.
The enmity is palpable. Whle they’re not exactly the most objective or balanced group themselves, the AMA published a 2007 update to its study of health insurance in America, concluding that
"physicians across the country have virtually no
bargaining power with dominant health insurers and health
insurers are in a position to exert monopsony power,
that is, the power to lower the price paid for services below the price
that would prevail in a competitive market…Because the managed care contracts between physicians and health
insurers impact so many aspects of the patient-physician relationship,
the severe imbalance in bargaining power demonstrated by this study is
an urgent matter that must be addressed by policymakers."
The family physicians took a more pro-active approach. In October
2005, the American Academy of Family Physicians’ (AAFP) Congress of
Delegates passed a resolution calling on the organization to develop a
"national clearinghouse for the purpose of collecting data
regarding undesirable business practices of health care insurance
companies and use the information to identify trends and to develop
effective policy to promote fair payment for physician services."
In a just published Medscape survey article, the journal Family Practice Management
teamed with AAFP to ask family doctors to rate health plan business
practices. As you might expect, the news wasn’t good. There were 32
most commonly rated plans. The average rating was a C-, with doctors
assigning the best grades, a C average, for "timeliness of payments,"
"member eligibility and benefits information," and "the payer’s Web
site." When it came to "the contracting process," the plans got Ds, on
average. It’s worth mentioning, I suppose, that the plans that got the
best ratings, each earning a C+, were at Blue Cross and Blue Shield of
Florida (here in my hometown of Jacksonville), Regence Blue Cross/Blue
Shield in Washington and Oregon, and MVP Health Plan in the Northeast.
The deeper problems, of course, are that physicians haven’t
collaborated as a group to leverage their clinical and financial data,
and so don’t have an independent data source on cost and performance.
The data they use to contract with is most often provided to them by
their adversaries, the health plans. They remain dis-united and
uninformed, the worst possible position when it comes time to negotiate
health plan contracts. And, of course, the health plans, as a rule,
haven’t shown much interest in helping the physicians find a more level
On the other side of the health plan business, purchasers have an
equally difficult time dealing with the plans. Michael Moore’s Sicko presented evidence that many insurance companies spend their time not paying for claims (and that they should all be abolished). But a provocative piece in last month’s Forbes, Slicko,
argues that the plans do exactly the opposite, paying for many
unnecessary and inappropriate procedures. Since the health plans make a
percentage of the total cost, this piece argues that they drive cost up
as much as possible.
There are now well-developed tools to accurately assess health plan
performance and begin to hold them accountable. An evidenced-based
developed by the National Business Coalition on Health, "makes it
possible to both define vendor performance expectations and to evaluate
About a year ago, the Florida Health Care Coalition
conducted an interesting study of the performance of different Florida
health plans. Some of the plans didn’t fare so well and, after the Miami Herald published a writeup,
I received irate calls asking why I would have said this study was
important. The answer was that the coalition had used the eValue8
methodology, which I knew to be credible. I told the reporter that this
was a good approach without knowing what the results were.
We won’t make meaningful headway to stabilize the cost explosion or
the other problems of the health care crisis until we start have real
purchasing decision-support tools for all the industry’s vendors. If
we’re going to have a private sector health system that responds to the
market forces we claim to believe in, then the companies that provide
those services must be accountable through transparent pricing and
performance. The companies would prefer we just rely on them to do the
right thing, of course, but only an innocent should buy that argument
at this stage of the game.
There are many related issues, but here’s an important, timely one.
If health plan operations aren’t transparent, then Pay-for-Performance
can’t possibly work. If health plans change the reimbursement
incentives from FFS (being rewarded for providing more services) to P4P
(being rewarded for providing only the right services), they will
almost certainly drive down unnecessarily untilization and cost. But if
we, the providers or the purchasers, can’t see what the results of
those incentive changes are, how do we know how much was saved, and
whether any of it was shared with the doctors and hospitals who
produced the savings, or returned in the form of lower premiums to
While Senator Clinton may be a little unfair in picking only on the
health plans, she is probably correct from a political perspective.
Getting change that matters will absolutely require the same level of
health plan transparency as the plans are now demanding of the
It will also require transparency in the drug, device and supply
chain sectors which now consume close to 40% of all health care dollars.
There’s just one thing to remember. It’s relatively easy to pick on
the doctors and the hospitals. They’re fragmented and their influence
is modest. But when we start demanding that health plans, drug
companies and device companies be accountable, we’ll see what kind of
influence can really be marshaled by the health care industry.