Microsoft Health Vault’s leader Peter Neupert has a wonderful blog post that makes two important points really well. One message is that health care reform is about the outcomes, not the technology. We should think expansively about which technologies to invest in, based on the results we want to get.

The other message is the economic stimulus package is different than the reform effort. It is moving at hyper-speed through Congress, and it may be difficult for staffers and other advisors to sort through and incorporate what may seem like opposing Health IT views against a backdrop of traditional ideology and extremely forceful special interest lobbying.

Even so, there’s consistency among the health care professionals who worry about these issues all the time. Peter unexpectedly discovered that the messages of his fellow panelists from the Health Leadership Council, the National Quality Forum, the Permanente Federation and the General Accounting Office were remarkably in sync with his own testimony to the Senate Health, Education, Labor and Pensions Committee.

Congress is about to make some big moves in health care that will require immense resource expenditures but, depending on what we pay for, may or may not bear the fruits we hope for. They should move carefully. Not all health care reform has to be labyrinthine. Not all ideas must require huge cost or take years to come to fruition and gain market traction. There are relatively simple actions that are available now, and that the Obama Health Team could tackle to effect tremendously positive, immediate impacts on the system.

Of course, right now the Health IT industry is focused on the promise of a huge stimulus windfall that would be dedicated to their products. But the opportunities we describe below follow principles that have broad support among students of the health care crisis. Two would change the way we pay for health care services, tying payments to documented results. Three are based on how we pull together and make use of the data that can drive clinical and financial decisions, and they overlap, though not perfectly, in their potential. Still, if any system adjustments can be passed through policy initiatives that focus on what’s best for the common rather than the special interests, these should be among the most straightforward.

Payment
Re-Empower Primary Care
There is general agreement that primary care is in crisis, the result of years of abuse and neglect by the medical establishment and by CMS. In simple terms, the primary care/specialist ratio in the US is 30/70. In all other developed nations, its about 70/30. And our costs are roughly double theirs.

We should allow primary care physicians to do the jobs they were trained for, changing their roles from “gatekeepers” to “patient advocates and guides.” We should immediately start financially rewarding them for collaborating with specialists to manage patients throughout the full continuum of care. Keep in mind that, as the Dartmouth Atlas and other studies have made clear, most health care waste is concentrated in the sub-specialties and in inpatient settings, incentivized by a fee-for-service reimbursement system that rewards more procedures, independent of their utility.  One very thoughtful approach to invigorating primary care has been advanced by Norbert Goldfield MD and colleagues.

Of course, truly re-empowering primary care will require more than just paying primary care physicians more. Higher reimbursements will help them afford to spend more time with each patient, yes, but PCPs also need help acquiring tools that can help them better manage those patients. And they need the authority to work collaboratively with specialists. Challenging, but certainly doable and important!

Changing America’s current imbalance between primary and specialty care should drive significant downstream waste from the system, dramatically improving quality and reducing cost.

Increase the Incentives For Programs That Tie Payment To Outcomes
Projects like the CMS/Premier Hospital Quality Incentive Demonstration (HQID), in which 250 participating hospitals got 1-2 percent bonuses for achieving quality improvements, have clearly demonstrated that incentives work. The hospitals that pursued the incentives made greater strides in quality improvements than their peers who did not work toward the incentives.

But we need to make the financial incentives large enough to drive real paradigmatic change. Too many programs offer incentives that are trivial in the minds of providers. Does it make sense for physicians in small, busy practices to rework their office flows to try to meet the challenges associated with hitting targets in exchange for a 1 or 2 percent financial bump, tied to a fraction of their patient population?

Now that there’s no question that incentives work, we could easily give these programs teeth by raising the incentive antes to 15 or 20 percent, while also demanding commensurate levels of savings. And we should go in, understanding that the goal is to drive out unnecessary care, and create expectations that,  by managing better upfront, the total spend will be lower.

Data

Establish a National All-Payers Database
Data sets, including those comprised of health care claims, must be large to generate credibly useful information.

But health care is financed through many different payer streams and by many players within each stream.  Nearly all treat their data as proprietary, and information remains fragmented. So, for example, physicians rarely receive useful information on their complete pool of diabetic patients: instead, they get small slices of data from each payer, each analyzed using a different proprietary methodology. Or, we fail to accumulate adequate sample sizes to identify which treatments, interventions, drugs, devices, health plans, physicians or facility services provide the best value.

But merging those data across payers and making the aggregated set freely available would create the basis to identify true evidence-based best clinical and administrative results. Based on hundreds of millions or billions of records, we might be able to credibly identify which professionals, services or approaches most consistently produce the best results within value parameters. The data set would always be building, providing an always slightly-new base for answering our most difficult questions. Together with the analytical tools that are also becoming stronger and more refined, the potential is vast.

Of course, health plans, always politically formidable, might fight tooth and nail to maintain the competitive advantage they believe is inherent in their data. But health care is a special enterprise, with objectives that are ultimately rooted in the common interest, so they have no real excuse to refuse this. And health plans, like the rest of us, would gain access to much larger data sets that can be mined to advantage.

There also are precedents here. Several states have already begun to establish all-payer databases. At a June 2008 meeting, a presentation on Maine’s experience highlighted 3 fundamental, telling principles that are challenges to any effort.

1. Nobody wants to pay to develop and manage the database.
2. Nobody wants to contribute their data to the database.
3. Everyone wants the aggregated data that develops in the database.

The solution: make it a national effort, paid for by CMS, and with mandatory participation, user fees, and open access to the data.

Create Uniform Nationally Accessible Disease Registries

Many physicians have come to appreciate the value of disease registries. Registries allow clinicians to count all active patients with distinct conditions, e.g. hypertension or diabetes. They can track characteristics within a patient subset, e.g. diabetic patients on a particular medicine. They can monitor and stratify patient status and progress within each group, and generate reminders and alerts to assure guideline level care. And they can identify trends in performance and, with relative ease, get a sense of what works and what doesn’t.

Even so, many registries are still in silos, meaning that the sample sizes remain small and that the parameters that define the registries’ characteristics often vary between implementations.

What we need are freely available, Web-based registries with easy data entry and easy querying capabilities. The impact on our management of patients with chronic illness, who consume 70 percent of our health resources, would almost certainly be powerfully positive.

Release Medicare’s Physician Data
Nearly a year and a half ago, the consumer advocacy organization Consumer Checkbook sued the US. Department of Health and Human Services (HHS) for the Medicare physician data in four states and DC. HHS argued that physicians have a right to privacy, even though, in the case of Medicare and Medicaid, they are vendors taking public dollars, and even though hospitals do not enjoy the same protection from scrutiny. In August 2007, the court held with Checkbook, and on the AMA’s “advice,” HHS promptly appealed, locking up the data for the duration of the Bush Administration.

The large commercial health plans have traditionally considered their claims data proprietary and so have not made their data sets publicly available. Self-funded health plans, administered by Third Party Administrators (TPAs), develop sizable data sets but have resisted collaborating, and have also not expressed an interest in making their data available.

So for those outside the health plan community, there are few, if any, data sources with sample sizes large enough to accurately evaluate and profile physician performance. This is significant, since studies have shown that there can be profound differences, 6x-8x, in resource consumption (i.e., cost) between the least and most expensive physician (within a specialty and market) to obtain the identical outcome.

In other words, not all doctors perform equally. While more patients are paying out-of-pocket for a larger portion of care, there is still virtually no credible information to guide their physician choices.

The American people could quickly learn which physicians within a specialty and a market consistently get the best outcomes at the lowest costs if Medicare physician data were made publicly available. Releasing these data would also put pressure on physicians everywhere to understand their own numbers, and to improve if their performance values are lacking.  We see this as beneficial to the great majority of physicians who seek excellence in their work.

Smoothing the Way

American health care is a vast enterprise in which millions of professionals and hundreds of thousands of organizations vie for an ever larger portion of what has historically been an always growing resource pool. The chaos and dysfunction that has developed in health care is largely due to two system characteristics. One is the fee-for-service reimbursement system that has rewarded more rather than the right care. The other is a lack of transparency that prevents us from knowing and understanding performance, even when that performance is dangerous: what works and what does not, which approaches are high and low value, who does a good job and who does not.

The five action steps outlined above would allow us to better identify the problems and opportunities in our health system, as well as the strongest solutions to drive decision-making. Then they would leverage that information to create strong incentives for the right care, organically changing the dynamics of care and reimbursement and, to the degree possible, smoothing the transition required to heal the way we supply, deliver and finance care in America.

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20 Responses for “Five “Shovel-Ready” Health Care Reforms”

  1. tcoyote says:

    This is a great list, and all these things need to be done But “shovel ready” means “Employs Lots of People by Spring”, doesn’t it? This is about generating jobs quickly that leave behind social value. Creating new primary care capacity will, unfortunately, take a very long time, even if we start tomorrow.
    There is CERTAINLY lots of consulting work here, but (except for #5) just getting the RFP’s on the street for some of these things could take the rest of the year. Full employment for consultants, for sure. . .

  2. Yes, tcoyote, your observations are dead on. Admittedly, some of these suggestions are a little more “shovel ready” than others.
    However, in the short term a primary care re-empowerment effort is about more than just creating new capacity, though that’s VERY important. It’s also about having a moderating influence on rampant downstream waste.

  3. Nate says:

    Data
    Establish a National All-Payers Database
    I have written on this a few times, there is a much easier and more efficient way to collect this data. As a payor I hate the EDI rules as dictated to us by HIPAA. First I now pay $0.40 to receive a claim from a provider and they pay nothing when it use to be the other way around. Although by law I was required to spend the money to get EDI complaint providers are not required to bill me via EDI.
    The current clearing house model is overpriced and skewed to the benefit of the provider. EDI is VERY similar to how the Fed handles ACH transactions, for under $0.10 by the way. The way we should accomplish this is;
    1. Eff 1/1/2012 CMS in conjunction with the Fed becomes the primary clearing house. Providers and Payors can contract with existing houses to act as portals or connect directly with the Fed.
    2. All Providers assigned a Nation Provider Number and all Payors a National Payor number.
    3. IRS immediately rescinds 1099 reporting and fines for payors and apologizes for the years of abusing us when providers billed us under wrong names, a beer would be appreciated.
    4. All claims are submitted through the new CMS/Fed clearing house
    5. All payments are sent through the CMS/Fed clearing house
    This would accomplish;
    1. Public health agencies have a complete view, almost real time, of all activities taking place in our system.
    2. Fraud programs could be implemented at the highest macro level, i.e. new provider gets their Medicare billing number and instantly starts submitting millions in charges with no private patients. Might be legit but someone should look into it right away not years later like current system.
    3. IRS will have the payment info they claim they need yet do nothing with
    4. Eligibility could be shared to comply with new Medicare secondary audit rules and eliminate the usury fines the bill contains.
    Aggregated data could be sold to insurers and researchers. The EDI fees would be lower then what we currently pay but fund all the additional benefits still. Doesn’t interfere with current players aggregation of their data. Not reinventing the wheel, it’s building upon a system already working successfully for decades.

  4. Dr. Pandey says:

    I have been saying for years that simply a database (EHR) is not going to make much dent in the overall cost and access. In fact, if not done properly, it could even add cost. President’s comment on 100 billion dollar for EHR is too much money. 1-2 billion may be more than enought to create a standardadized database.
    The key issue with dbs is about security. Secuity is important because we care..what is wrong people get information on your health…in the end a knowledge of how it would be misused is what we need to control and modify. Nothing is secure. For that we need legislation. (I have not figured it out yet why employers need health check before employment – drug test is understood. So you cannot discriminate based on handicapp but you are going to discriminate based on health????. Does not make sense. As for as insurance aspect is concerned. We should go for universal anyway. That will take away the whole discussion on existing condition).
    We need a standardized database that is secure and patient and doctors both have access to. I think it can be done in about 2 billion dollars or less.
    rgds
    ravi
    http://www.biproinc.com

  5. Margalit Gur-Arie says:

    Nate, providers do have to pay for EDI. The vast majority of clearinghouses are not free for providers.
    Why would the Fed and CMS become the clearinghouse for all commercial payors? Why would the tax payer spend money to service private companies that profit from the healthcare system? What exactly is the rationale? A big huge database in the sky and the prospect of payors buying and selling data sets? How is that going to benefit Joe Patient? Particularly the less than 100% healthy Joe?
    I’m afraid I agree with Dr. Pandey. Massive repositories of personal data are not conducive to privacy. Now, if we remove the commercial payors from the equation, including the profits that they extract from the system, I think we will realize enough savings (and no, I don’t have the exact number)to actually do something about improving healthcare.
    Generally speaking, I don’t see any reason to amass all that health data in one repository. A patient’s health record should be maintained at his\her Primary Care provider. In effect that would be the electronic chart. Other systems may be given access and vice versa, as needed. Interoperability will eventually happen….
    That’s how financial systems operate. Nobody is asking for, and nobody will ever agree, to have a financial data repository for all people in this country. Mega data warehouses are not very useful for anything other than data mining, and in the healthcare data warehouse all records will be identifiable. Can somebody guarantee that people are not going to suffer the consequences of this technological advancement? Be very careful what you wish for….

  6. Zach Evans says:

    Addressing the critical shortage of primary care physicians should be a top priority of any healthcare reformer. Once the shortage is address, however, patients must be reminded of the critical role that primary care physicians should play in their healthcare. One way employers can encourage this re-education process is by utilizing on-site clinics that have shown the ability to: a) improve outcomes and b) control costs. No longer reserved for large, Fortune 500 companies, on-site clinics are being successfully used to expand primary care for employers with as few as 100 employees.

  7. Nate says:

    Margalit Gur-Arie,
    That’s strange because a number of clearing houses I have spoken with said they don’t charge providers. They gave the service free to providers to build size as an incentive to get payors onboard. Guess they could have been lying but it’s a strange way to sell business, telling someone your overcharging them when you not.
    “Why would the Fed and CMS become the clearinghouse for all commercial payors?”
    ? The four reasons I listed would be a good start. If you read what I said tax payors would not be spending money, it would be covered by the per transaction charge. Maybe you don’t understand what the Fed is and what an ACH is? It was a pretty specific example. Why does the Fed service private banks that profit from the financial system?
    Since you don’t seem to have any familiarity with the US healthcare system or the financial system allow me to offer you the high school basics. The federal government and public health agencies are desperate for the data that would be contained in that data base. Ask any public health official if they would like almost real time access to all treatment happening in the country. Their eyes would glaze over a drool would start to drip from their chin. CDC would react in a very similar fashion. Next you have the IRS who for 3 decades has been thinking Doctors are not claiming huge portions of their income, to combat this they make payors send out 1099s every year, this would be a more efficient method of collecting that data. Next we have CMS who is undertaking a huge effort to reduce cost by increasing audits of private plans for individuals that should have Medicare secondary and claims they can push off to private insurers, this would be their dream scenario to have this much data and access. That’s just for starters.
    “I’m afraid I agree with Dr. Pandey. Massive repositories of personal data are not conducive to privacy.”
    This would be because you don’t know what your talking about. The Fed system is far more secure then any one bank system. Right now there are thousands of data repositories many of them with very poor oversight and control. A strong Federal clearing house would increase privacy not reduce it. Who said anything about patients health records? You don’t understand the difference between a EMR and EDI claim, they are two totally separate items.
    “Now, if we remove the commercial payors from the equation, including the profits that they extract from the system, I think we will realize enough savings (and no, I don’t have the exact number)to actually do something about improving healthcare.”
    Not having the slightest clue what this number is how can you assume there would be sufficient savings? Not knowing how our system works now why would you assume anything? I would find it really amusing if you could share with us how you would eliminate commercial payors. I hope you realize commercial payors process all the Medicare and Medicaid claims already.
    How do you think they identify past spills or releases of carcinogenic material? By identifying cancer clusters. The sooner you catch an outbreak of the plague or any horror disease the better for the population as a whole, and this is done by accumulation of vast amounts of data and mining it. Vioxx danger could have been spotted earlier if independent review of the health of users was monitored. The potential to improve the health of the country would be tremendous. Access to such a database would be one of the largest advancement in healthcare we ever have.

  8. Nate,
    Maybe you could tone down your insufferable and idiotic “I’m the only one who has any understanding of how health care works” attitude.
    This blog is a forum that caters primarily to health care professionals, most of whom are exquisitely familiar with health care market dynamics and operational mechanics. We try to adhere to the rules of civilized discourse. If we all loudly pointed out what a moron you seem to be each time you make a ridiculous assertion, we’d have no time for anything else.
    The rest of us would appreciate it if you’d conduct yourself accordingly, and show all participants courtesy and respect, whether or not you agree with their point of view. Feel free to disagree, but maintain a professional demeanor.
    Thanks.

  9. botetourt says:

    Well said, BK

  10. Nate says:

    Opinions are to be respected, misinformation does not deserve the same. I respectively reply to opinions. When someone makes claims that are patently false that is a different story.
    What is the correct response when a group of people perpetrate a lie in order to mislead the public into supporting their political cause? When people claim Insurance companies are making double digit profits or, as Margalit said, eliminating them could fund the solution to all of our problems they are not sharing an opinion they are telling a lie. This information is not obscure or hard to find, you can quickly look up a carriers’ profit margin on Yahoo Finance and see exactly what they make. What respect does kind society dictate I show a statement the author didn’t even respect enough to get right? Is it your beliefs facts are negotiable and to be made up as fits your narrative?
    The debate on Healthcare Reform has been going on for decades, with negative success in my opinion, mainly because it has been completely dishonest and political. On the rare occasion someone does make an earnest attempt to at improvement the effort is killed with misinformation and propaganda. Your average citizen, educated by 15 second sound bites, sob stories, and politicians lacks even a grain of truth, let alone the knowledge to make an informed opinion.
    Is this how you like seeing our country ran? Life and death decisions made without accurate information and based on every changing opinion polls of a public mislead?
    I always find it interesting when one attacks the messenger instead of the message. Was anything I said inaccurate? I’m sorry your perception of my attitude doesn’t give credit to the many brilliant post and comments on this blog. There are numerous contributors with an excellent understanding of the subject. What do you suggest for handling of the others? Maybe instead of attacking me you could share the proper civilized manner for rebutting someone spreading wrong information? Better yet you could have lead by example on how to engage on proper civilized discourse, I’m guessing it doesn’t include idiotic and moron?
    To take something positive away maybe you could clarify for all the readers that insurance companies don’t make 20% margins, Medicare is not more efficient, and taking the profit out of the system, what ever that means besides being non practicable wouldn’t work when they are the same companies that manage our single payor systems. If you spent half the effort correcting rampant misnomers as you did my social skills this wouldn’t be an issue to start with…and we might actually achieve some desired results. This is all about results isn’t it?
    I’ll show more respect going forward and hope to see the same for the facts.

  11. Regarding “Re-empower primary care”. I certainly agree that emphasizing and retraining primary care physicians to accept a broader ‘wellness patient advocate’ role should be rewarded. Some of the current physician imbalance and ‘gatekeeper’ mentality however has arisen due to the lifestyle and protectionism pursuits of primary care practitioners.
    In our community for example the motivation for re-assuming the ‘master of my patient’ role for primary care physicians is greatly diminished. Many offices close early with messages to go to the ED for problems, inpatients are managed by hospitalists and easy access to competent specialists and imaging now allows their use as the primary default diagnostic tool to answer basic clinical questions. Hence cost is run-up immensely at the expense of lifestyle and responsibility.
    Fiscally rewarding competent providers who rely on sound clinical skill, judgment and patient advocacy should be strongly supported regardless of specialty vs primary. It requires long hours and hard work.
    Additionally, many sub-specialists should step-up to the plate to offer their skill with comprehensive disease management,not just procedures and follow-up. As a vascular surgeon/specialist, my ideal practice will involve risk factor management, lipid-DM-Htn control, wound care, rehab. etc…with a majority of patients receiving these treatments rather than stents and bypass.
    Excellent review of reform issues. Thanks

  12. Nate,
    Many people visit this site. They have wide differences in ideology as well as different depths of knowledge about differnet health care disciplines. (My guess is that you’re a lot less fluent about, say, health care supply chain, care delivery and IT issues than you are about coverage.) As you are well aware, health care is vast, most of us have deep knowledge about our home areas, while we may be less so in other areas.
    In my experience in this forum, people may be misinformed from time to time, but deceit is rare. When someone does misrepresent the facts, intentionally or not, it is enough to call them on it and supply the facts with the source. Nearly all our readers will register the correction and move on. There is never reason for belligerence.
    I used the language I did to get your attention. I appreciate that you understand our concerns.
    As for my attention to your social skills vs health care issues, if you type my name into THCB’s search box, I think you’ll find that I’ve spent at least equal energy, maybe more, trying to provide insight into the system’s problems and how to address them.
    Thanks again for your time.

  13. Nate says:

    Point taken and I guess it never hurts to give someone a second or third chance to acknowledge their mistake, then make them cry if they fail to. I would disagree on peoples responce to correction, I use to be much more even keeled about debate, it was years of watching the same people make the same claims and never admitting they where wrong when I came to the conculsion a strong slap works better then a kind request.
    I am also highly disappointed that inteligent people are so lazy about debate and the issue in general. I feel this is a major issue that will effect the nation for the remainder of it’s existance. We are not debating what to have for lunch here. If your going to respond to a an articulated proposal or idea with a comment like eliminating insurance carrier profit would pay for X I don’t think it’s asking to much you know what carrier profit and X are. I learn a ton listening to what experts in supply chain and IT say and would find it insulting to say I can buy an asprin at Walgreens for $0.05 thus my hospital shouldn’t charge more then that. If I am going to particiapte in discussion I feel I am obligated to first educate myself on that subject. If it’s a post on a matter I don’t know I’ll read it, take away what I can, and not engage in the discussion, something I think more people need to consider.
    Thank you for the reminder though that civility does play a major role in educating people.

  14. Hello Nate,
    Everybody makes mistakes; your statement that providers do not pay for EDI was a mistake. I did not see a need to challenge your knowledge and/or integrity. I assumed it was an honest mistake and just pointed it out to you.
    I know you represent the commercial payors and I am a believer in universal healthcare. I believe health care is a right, not a commodity. So we disagree…. People disagree all the time. That’s what makes discussions interesting.
    I never said that recovering the commercial payors profits will solve all our problems, but the several Billion dollars saved per year would certainly help.
    I never said that the profit rate is 20%. Now that you mentioned that, I do remember reading that UHC spends a bit more than 80% on providing care. I guess the remainder is the average 1 billion in quarterly profits, and I am aware that it is 36% lower than usual for 2008.
    I may not know the difference between EDI and EMR, but I do know that claim data, which contains diagnoses, is used by payors for risk management calculations along with prescription data. Here’s another one that needs to go away – risk management. (I am sure this opinion is the final proof that I know nothing about healthcare…)

  15. Nate says:

    What do providers pay for EDI? I have looked for reliable data and only see discussions about pricing not what they actually are charged. I have had numerous clearing houses say they eithr give it to physicians for free or heavily discounted so they can build outgoing volume.
    I have seen a number of doctors and adminsitrators on here anyone care to share what you pay for outgoing EDI? CMS was hitting us for $0.75 I believe for Medicare Secondary claims and Emdeon was about $0.40 I think.
    This came up when discussing our liability for claims that aren’t ours. It has improved with some filtering on the clearing house side but initially if a provider sent us bills for a group that wasn’t ours we still had to pay. Some would also rebill us a week after the initial bill. So we asked how can provider offices afford to rebill so frequently and bill the wrong payor. We where told they didn’t pay, most got it for free. If they are paying then the $0.40 I am being charged is even worse.
    If we did implement Universal Care who would process the claims? I never understood the distinction when Universal Care advocates say we need to eliminate the commercial payors and go Medicare for All or single payor. It’s commerical payors that process all those claims, who do you expect to process the claims if you get your way?
    I wouldn’t call HC a commodity but I don’t beleive you can provide it as a right with no personal responsibility. If HC was a right then your saying any other person has unlimited rights to the fruits of my labor. Do you think every citizen is entitled to unlimited healthcare? What about any person living in the country at the time? If you don’t believe unlimited HC is a right then how much are we entitled to? Are we entitled to access to care or the actual care? Thinking HC is a right is a slogan not a policy. Do I have a right to an endless supply of aderal and daily massage therapy, if so I might join you.
    “Now, if we remove the commercial payors from the equation, including the profits that they extract from the system, I think we will realize enough savings (and no, I don’t have the exact number)to actually do something about improving healthcare.”
    How much ball park do you think would be saved? what would replace them? How do you account for the increase in administrative expense under government plans? Do you offset savings from carrier profits with loses from fraud and waste? At 20% overhead including taxes and complainace private insurance spends $700 per members. Medicare loses around $600 to waste and fraud. Carrier profits are around $210 per year per member, Medicare loses almost three times that. The science isn’t perfect but why would you not expect to lose 3x what you save? Would you eliminate secondary plans? Majority of Medicare enrolles and particiapnts in other Universal systems have additional coverage provided through commerical payors. We wouldn’t be eliminating then just reducing their role, this equals less savings, if there where any at all.
    “but I do know that claim data, which contains diagnoses, is used by payors for risk management calculations along with prescription data. Here’s another one that needs to go away – risk management.”
    I’ll kindly point out that Medicare and every Universal Plan in the world also uses Risk Management. You have to have actuaries predict future liabilities for planning purposes. You also use that information to lower cost and ration care, look at Britian and how they determine what Drugs they will cover. A number of Universal systems use Risk Management to determine the cost per additional period of life, if it is over a determined limit they don’t cover the drug or treatment.
    What is this Universal system with no commercial payors or risk management you envision? It’s hard to discuss concepts and their benefits and/or drawbacks with vague ideas… maybe there is some solution there and we just need to fill in these holes?

  16. Well, Nate as you can imagine I do not have a solution to this mess that just needs some holes filled in. No one person does. It will take many experts, credible research and lots of planning to achieve that. However, here are some points for thought:
    1) Our healthcare system has tremendous bureaucracy expenditures. Some evaluations go as high as 30%. Most of this overhead is due to the thousands of different insurance plans, each with its own marketing, paperwork, enrollment, premiums, and rules and regulations. In addition there are CEO salaries (some with 8 digits), and profits of commercial payors. There are estimates out there that the commercial overhead is somewhere between 15% and 25%. Medicare, by contrast operates at a 3% overhead and we all know that their efficiency is well positioned for improvement. Even if we are able to cut all this in half, since no one needs to decide who gets care and who doesn’t, we will realize savings of a couple hundred billion per year, or more.
    2) Comparing per capita Medicare expenditure to commercials is not really a good comparison, since the Medicare population is older and sicker. Of course their care costs more.
    3) More savings – A single payor has tremendous negotiation power. Drugs would be cheaper. VA already does that.
    4) And more savings – People will seek care sooner if the fear of medical bills is not there, making conditions such as hypertension and diabetes cheaper to manage.
    5) Yes, the additional demand for care will increase costs, but the above savings should cover this increase.
    6) What should be covered? Take one of your nice, comprehensive good plans that pays for hospital, doctor visits, prescriptions, mental health services, nursing home care, rehab, home care, eye care and dental care – that’s what I have in mind. No, massage therapy will not be included, sorry :-)
    7) The one main rule is that private coverage for same benefits should not exist. By allowing the wealthy to opt out, we will be creating poor coverage for poor people. If the wealthy must suffer the same coverage, they will do the best they can to make sure it is indeed good coverage. Since this is universal coverage, the healthy pay for the sick. If private payors are allowed to cherry pick the healthy, the public health system, caring for the very sick will fail.
    These are just thoughts. Many people share them and probably even more people oppose them, either on merit or thinking this is some sort of socialist scheme. We need public debate. We need to crunch numbers and make some though decisions that are in the national best interest. This may be different than this or other private interest.
    I am glad that we are having this conversation.
    As to the clearinghouses charges to providers, it’s about $100 per provider per month for unlimited claims, ERA and real time eligibility (I sign the checks every month). Not as much as they charge you, but it’s significant for a small office.

  17. Nate says:

    Margalit,
    “Medicare, by contrast operates at a 3% overhead”
    This is one of, if not the largest, myths in healthcare reform. The first fallacy is performing the comparison in percentages to start with. You can’t compare the administrative efficiency of two systems when one has a $3500 base and the other well over $6000. When I mail a letter it cost me $0.42, the post office charges Medicare the same. If we where both to mail 1000 letters it would cost each of us $420.00 That equates to me spending 12% of my revenue on mailings but Medicare only spending 7% of its. Is Medicare more efficient then me? No they just have a higher base, this applies to salary, the largest expense in claims processing, office space, software and just about every other expense. It is an extremely misleading argument and not at all accurate.
    Second the 3% figure you cite often refers to what the Medicare intermediaries get paid, these are the commercial payors you want to get rid of. What’s not included is CMS’s budget, the equivalent of an insurance companies management, marketing, and actuarial staff. Congressional salaries and staff, the equivalent of CEOs and upper management, building expenses, and borrowing/financing cost.
    For an accurate comparison read Medicare’s Hidden Administrative Costs: A Comparison of Medicare and the Private Sector by Merrill Matthews. Their study claims Medicare actual cost is 5.2%(of a much higher number) and private insurance is 8.9% or 16.7% with commission, premium tax, and profit. Those of self funded plans are even with Medicare. I can administer a self funded plan for the same or less them Medicare on it’s best day.
    Medicare also doesn’t cover nearly as much as private plans. They do a fraction of the admin and can dictate the way providers bill them. Medicare is exempt from expensive administrative burdens pertaining to regulation, Medicare never had to mail COBRA and HIPAA notices and defend themselves from a lawsuit.
    This is an example of the statements that drive me nuts, not speaking directly to you but this has been debunked countless times but is still used daily as justification for replacing private insurance. This doesn’t even take into account the fraud rate that is so much higher under Medicare. If I paid everything that came in the door I could process claims for a fraction of the cost.
    There is not one penny in savings by moving administration to Medicare style system, really your just changing the side of the building the insurance company would process the claims on. Your also taking billions in Premium tax away from the states that would need to be made up.
    2. Their benefits also cover a fraction of what private insurance does. I would not compare the plans on this basis because of that and many other reasons.
    3. Generics in America are cheaper then those in many single payor systems. Medicare has the lowest negotiated rates per service but poor management means providers just perform more services. The lowest rate doesn’t always lead to the lowest overall cost. It also doesn’t account for the drugs that might not be developed if the possibility of extraordinary riches did not exist. Before I responded to this I was reading about light activated cancer treatments for liver and brain cancer triggered by a little LED they poke through your skin. A doctor in his garage with initial funding from an ex Microsoft employee is developing it. Without the potential reward it most likely never would have happened. The government has ultimate negotiating power for most things it buys but every month you her about them being overcharged and ripped off. How long until congress is setting drug reimbursements based on contributions?
    4. People will seek care for long toe nails if they don’t have to worry about medical bills. Providers will gladly play coding games to get it covered. Shannon Brownlee estimated $500 billion in treatment is unnecessary. We already have a major issue with excessive care and people are suggesting we make it even more affordable, this is by far the largest shortcoming in our present day system, over utilization waste more money then every other problem combined.
    5. There is no above savings only increased cost.
    6. eye care and dental care are not efficient coverages. Any system you have will include overhead. That means anything paid by the healthcare system instead of the patient has higher cost then what the patient could purchase it for directly. An example of this would be empty gas tank insurance, you know your tank is going to go empty so paying 120% of the price of gas, or even 105% to have someone else pay the bill is just a waste of money. This applies to low deductibles and co-pays as well, anything you know you will have should not be insured. Mental Health is another mess, since they passed the mental health parity act the number of mental conditions grew a substantial number I can’t remember.(but I still get the aderal)
    7. (opinion) This country has reached a point where being poor can be very comfortable. There are millions of people content to live off the success of the wealthy and other workers. Our present welfare systems have allowed entire families and multiple generations of families to never contribute anything to the nation. The natural evolution of this phenomenon is 50% plus 1 will live off the work of the 50% -1. This does not lead to good outcomes. It use to be hunger and other needs motivated people to work, now it just motivates them to vote every couple years.
    OMG $100 and that’s it. Wow that just created a whole new level of bitterness. That would explain why a provider can bill the wrong office or rebill every week. I think the number one priority in reform should be for doctors to start paying their own EDI fees. What you save in paper and postage would be considerable. I actually saw that number a few places but it didn’t make any since, how can you have a flat rate it would allow for to much abuse.
    This has been a very enjoyable conversation, after the common ground was found

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