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“You never want a serious
crisis to go to waste.”

- Rahm Emanuel, White House Chief of Staff

ALP_H_BK_0010 Timing matters. The health industry has demonstrated steadfast
resistance to reforms, but its recently diminished fortunes offer the Obama
Administration an unprecedented opportunity to achieve meaningful change. The
stakes are high, though. The Administration’s health team must not miscalculate
the industry’s goals, or waver from goals that are in the nation’s interest.
The two are very different.

Aligning the forces of reform will be the first challenge. The White House and Congressional Democrats appear to be
collaborating
to develop a unified reform design. Even so,
the effort is hardly pure. Lawmakers have been receptive to industry influence.
The non-partisan Center for Responsive Politics
reports that, in 2009, health care interests have already spent $128 million on
Congressional lobbying contributions, more than any other sector
.
The tide now turned, most of that largess has gone to Democrats.


All reform discussions acknowledge the twin goals of universal (or
expanded) coverage and controlling cost. But as the state initiatives in Massachusettsand California have shown, expanded
coverage is easier. Coverage pays for care, so the industry is delighted to
oblige. Cost reductions, though, are harder. The mechanisms that undergird
health care’s excesses are embedded in its operations, and waste is responsible
for much of its profitability.

The Obama health team already has firsthand experience with the
industry’s maneuvering. First it saw the health IT vendors’ association, HIMSS,
hijack the well-intentioned $19 billion HITECH allocations
for electronic health records
by capturing control of
the agency that specifies the certification criteria for product subsidies. Now
those funds will probably favor outdated, non-interoperable, client-server
technologies from a small number of legacy IT companies. Newer, more effective,
less costly web-based tools from hundreds of innovative firms will likely have
to base their success on market appeal, without the government’s help.

And then there was the May 14 cost backpedaling by
six major health industry associations. After apparently agreeing to voluntary
cost reductions with President Obama, they reversed, insisting they had offered
to only “ramp up savings” over an unspecified time frame. At least
one health plan is already preparing an anti-reform campaign,
similar to the
Harry and Louise ads
that helped turn public sentiment against the
Clinton health reform effort.

These developments confirm the industry’s focus on the status quo,
backed by cash and lobbying strength. The question is whether it can again
stave off reform, sealing another win at the American people’s expense.

But the industry has an Achilles heel. Its fundamentals have eroded,
potentially easing the way for operational restructuring. Consider the evidence
that commercial health plan enrollment is in freefall, as mainstream purchasers
- employers and individuals – are priced out of the coverage market.

  • AIS and Kaiser
    Family Foundation
    data show that, after reaching 180 million
    enrollees in 2005, commercial health plan enrollment has plummeted by more
    than 20 million lives (11.3%).
  • In recent discussions, health plan executives have acknowledged
    that the multiplier to estimate total covered lives from employee lives
    has fallen from 2.2 to 1.8. This 18 percent change mostly reflects kids
    whose parents’ employers have stopped subsidizing dependent coverage. It
    could represent twelve million new uninsureds, previously unaccounted for,
    and another nine million new Medicaid lives.
  • Last month the Wall Street Journal cited Wellpoint’s
    loss of 500,000 lives since December 2008, and United’s loss of 900,000 in
    the last year. Similar enrollment declines have been reported at health
    plans throughout the country, the result of a decade of premium growth at
    four times general inflation, exacerbated by a severely downturned
    economy.
  • The Congressional Budget Office
    estimates that, in 2009, seven million Americans currently enrolled in
    commercial health plans will avail themselves of the
    COBRA subsidy that was part of the American Recovery and Reinvestment Act.
    Unless the economy rebounds or Congress extends the program, many of those
    enrollees will lose coverage as well.

Premium
pays for nearly all health care products and services – from office visits to
stents – so decreasing enrollments have stressed the industry more than at any
time in memory. Ancillary issues, like drops in investment income and
anticipated payment reductions to Medicare Advantage health plans, are also
reverberating throughout the industry, compounding its financial troubles.

But even in the face of hemorrhaging enrollments, the health plan
sector has not visibly changed its medical management approaches. Instead, most
organizations seem to be waiting, presumably for the new revenues associated
with universal coverage. It seems likely that the health industry will campaign
for Massachusetts-type reform that forces concessions from purchasers rather
than in the ways health care is financed, delivered and supplied.

To be meaningful, though, reform must fix the three deep structural
flaws that enable the excesses that have benefited the health industry and
created the cost crisis. A specialty- rather than primary care-dominated system
promotes more expensive downstream care at the expense of less costly upstream
care. The lack of an interoperable information technology infrastructure has
created barriers to quality/cost transparency, transactional streamlining, and
science-driven decision support. And a fee-for-service reimbursement system has
encouraged more care, independent of appropriateness, rather than the right
care. Industry groups fight hard to preserve these approaches and the excesses
they produce, and to block the most obvious remedies to overspending.

Health care could be far more affordable. Experts agree that at least
one-third of all health care cost is inappropriate care or administrative
waste. As a recent White House meeting showcased,
many health care managers have attained consistent, significant savings through
innovations ranging from primary care clinics, data analytics, and Web-based
management tools to health literacy and incentive programs.

As health care financing pressures intensify, the Administration must
leverage the industry’s discomfort by making the achievement of expanded
coverage contingent on key operational reforms: re-empowered primary care, a
national technology framework for outcomes management and payment tied to
results. These are pragmatic goals that, when implemented elsewhere, have been
shown to improve quality and drive down cost. Carefully explained, they will
make sense to most Americans.

Finally, being effective with this immensely important issue will
demand that the Obama team reach out and recruit the active leadership and
support of the nation’s non-health care business leaders, the one group
csollectively more powerful than the health care lobby.

If the Administration can get the backing of influential leaders
outside health care, and if it is willing to hold out on expanded coverage
until the industry accepts changes that can rightsize cost, then we’ll have a
chance to establish affordability and sustainability in American health care.
Brian Klepper is a health care analyst, consulting with the
industry. David C. Kibbe is a Family Physician, Senior Advisor to the American Academy of Family
Physicians and a technology consultant. Their collaborative columns are
collected here.

ALP_H_BK_0010

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16 Responses for “The Health Industry’s Achilles Heel”

  1. Nate says:

    “The health industry has demonstrated steadfast resistance to reforms,”
    Not really they have resisted reforms they don’t believe will work, while at the same time presenting many of their own. It is unfair to label them anti-reform just becuase you disagree with the politics.
    “After apparently agreeing to voluntary cost reductions with President Obama,”
    THe only proof of this is Obama, it is just as apparent Obama overspoke and promised more then was agreed to, he has done it countless times on other matters. The pledge didn’t make sense to start with, it sounded like a talking point more then a thought out agreement. The parties involved have no way of reducing cost 2 trillion dollars. That’s like McDonalds claiming they are going to reduce calorie consumption by 2 trillion, unless people stop eating McDonalds has no ability to reduce anything.
    “sealing another win at the American people’s expense.”
    that is one view big brother, by not denying people services they demand to receive the industry is delaying reform at the peoples expense? If I don’t want my consumption rationed I don’t see how it is at my expense if you don’t do it. Reform is done at people’s expense.
    “commercial health plan enrollment has plummeted”
    Half of which is becuase of expansion of public plans, if SCHIP will cover your kid for free why pay premium? This migration is limited by a shortage of tax dollars to add more people to public rolls, we are already seeing efforts to reduce the public rolls and push people back to private insurance. After being sold the free insurance bill of goods they aren’t in much of a rush to oblige though.
    “Premium pays for nearly all health care products and services”
    No actually tax dollars pay for a majority of health care.
    What exactly do you want to replace fee for service with? We tried capitation and that didn’t go over very well. Congress sold capitation as payment for results, just becuase you come up with a new slick name doesn’t mean the results are going to change.
    Why no discussion of past reform? We have 50+ years of government reform efforts…funny thing is every time Ted Kennedy “fixes” the system it gets more expensive and worse.

  2. Actuary says:

    Nate, good comments, let me add….
    “At least one health plan is already preparing an anti-reform campaign”
    Wow. One whole plan! Aleady? I would say “finally”. Also, what do you mean by “reform”? If you mean, allow the payors to hold providers accountable via “Dartmouth Atlas”-style comparative effectiveness, then that is reform. If you mean raise taxes with no cost controls or accountability, that is most definitely not reform.
    “Health care could be far more affordable. Experts agree that at least one-third of all health care cost is inappropriate care or administrative waste.”
    Mostly inappropriate care.
    “…and if it is willing to hold out on expanded coverage until the industry accepts changes that can rightsize cost”
    By “industry”, I hope you mean the providers. The payors have been trying to “rightsize” cost only to be thwarted by legislation (written by provider lobbies).
    Also, nobody is minding the “cost” store for the Medicare and (in many cases) Medicaid populations. Perhaps the government can do some “rightsizing” here
    before they move on the other half of health care.
    “To be meaningful, though, reform must fix the three deep structural flaws that enable the excesses that have benefited the health industry and created the cost crisis. A specialty- rather than primary care-dominated system promotes more expensive downstream care at the expense of less costly upstream care.”
    Huh? The payors tried capitation, and tried to achieve a more primary-care based system. But since HMO became a four-letter word (thanks to the media for the Least Common Denomitator and anti-HMO legislation)that effort has been derailed.
    “Industry groups fight hard to preserve these approaches and the excesses they produce, and to block the most obvious remedies to overspending.”
    Be more specific, and stop tying to mislead. It certainly is NOT Health Insurance Industry groups fighting hard to preserve the causes of the high cost of health care. Just the opposite, Health Industry groups are trying (alas, without much success) to combat these approaches.

  3. Family medicine and primary care especially should not let this crisis go to waste. I don’t see how we can repair primary care in this country without the disruption of the status quo that health care reform creates. And if we don’t address and strengthen primary care then we can kiss goodbye any hope of slowing down health care costs.

  4. MD as HELL says:

    Most people are healthy. Why should they pay more for something they do not use at all themselves? To require more money is a tax! Most of the uninsured are healthy. This entire drive for “reform” is nothing more than garnering all the money in private plans to fund the federal plans so the Dems do not have to feel the political pain of ending entitlements.

  5. Anonymous says:

    From this blog post: “The Obama health team already has firsthand experience with the industry’s maneuvering. First it saw the health IT vendors’ association, HIMSS, hijack the well-intentioned $19 billion HITECH allocations for electronic health records by capturing control of the agency that specifies the certification criteria for product subsidies. Now those funds will probably favor outdated, non-interoperable, client-server technologies from a small number of legacy IT companies. Newer, more effective, less costly web-based tools from hundreds of innovative firms will likely have to base their success on market appeal, without the government’s help.”
    First of all, it’s not $19 billion, but $30+ billion that includes payback to the Feds. If you’re going to quote the information, be accurate. Second, I’ve seen no proof that HIMSS has “hijacked” the HITECH money or “captur[ed] control” of CCHIT. The Post article linked to this post does not report anything to justify this hyperbole.
    On the CCHIT website, it says the following: “Among those organizations who have publicly endorsed CCHIT are:
    •American Academy of Family Physicians (AAFP)
    •American Academy of Pediatrics (AAP) Certification Support
    American Academy of Pediatrics (AAP) Special Requirements
    •American College of Cardiology (ACC)
    •American College of Emergency Physicians (ACEP)
    •American College of Obstetricians and Gynecologists (ACOG)
    •American College of Physicians (ACP)
    •Association of Emergency Physicians (AEP)
    •American Medical Association (AMA)
    •American Osteopathic Association (AOA)
    •Medical Group Management Association (MGMA)
    •Physicians’ Foundation for Health Systems Excellence and Physicians’ Foundation for Health Systems Innovation”
    Isn’t Dr. Kibbe part of AAFP?
    Also from the CCHIT website: “The Commission was first embodied as a Limited Liability Corporation (LLC) in 2004, with capital contributions and in-kind staff support from a collaboration of three health IT associations: the American Health Information Management Association (AHIMA), the Health Information and Management Systems Society (HIMSS), and The National Alliance for Health Information Technology (Alliance).” Not just HIMSS. Which is not mentioned in the Post article or this blog.
    I don’t have any interest in CCHIT. I don’t know Mark Leavitt. But this is just unfair to say about anyone or any organization with no more support than a Post article that hardly offers proof of anything.
    I’m a fan of health reform. I think we need to fix the system. But this kind of post only hurts the credibility of those involved and does not push the discussion forward in a useful way.

  6. One can hardly fault CCHIT for developing criteria designed to assess the vast majority of the EHRs on the market at the time it was commissioned.
    And CCHIT’s attempts to reorganize its criteria in response to the ARRA (as illustrated in its recently released Concise Guide) show just how much thought has gone into development of its original criteria. Few would argue that the categories listed in that Concise Guide reflect anything less than an excellent, comprehensive array of standards against which all EMRs should be judged.
    That said, there has been quite a bit of innovation in the EHR field recently, including web-based EHRs which offer improved interoperability at a much lower cost. One such entity is Practice Fusion (www.practicefusion.com), a company I’m proud to work for.
    The problem for the innovators lies not in the broad outline of the CCHIT criteria, but in the details underlying them. Simply put, the criteria are cumbersome and don’t apply very well to the new development environment in which we operate.
    That said, Practice Fusion is confident that David Blumenthal and the folks he’s appointed to his advisory committees over at ONCHIT will respond appropriately to these challenges by assuring that new EHR certification criteria, as revised by CCHIT or as promulgated by alternative certification agencies, will foster innovation while assuring the quality and cost-effectiveness of care. Bet on it.

  7. Deron S. says:

    The Medicare rate in my geographic region for a sick visit of average intensity (CPT 99213) is $59.37. I’m thinking we need to realign the RVU values to get that up to at least $80. That would allow physicians to spend more time with patients and make better diagnosis and treatment decisions. It wouldn’t cost a dime to make that happen because we need to pull RVUs from the most abused procedures anyway.
    There you have it, an inexpensive reform solution. Didn’t require any injection of taxpayer money. Oh wait, forgot about those lobbyists…

  8. Nate says:

    As an example of how Liberal reform has nothing to do with actually fixing the problem we received notice today from our trade association that Kennedy’s HELP draft bill contained language that would kill self funding for plans with under 250 members.
    First they don’t even define what a member is, if COngress really cared about reform they would pass laws that actually defined what they were talking about.
    Most importantly self funded plans are FAR more efficient then a fully insured plan with a carrier. Self funded plans spend less then half as much on overhead and compete with Medicare for efficiency…minus all the fraud and waste…they are without question the most efficient health plans in America. How in the world does forcing employers out of low cost, highly efficient plans, back into fully insured carrier plans fix anything?
    I can think of only two reasons Kenned even considered this;
    1. bargaining chip with the insurance carriers, roll over and support our reform and we’ll force a significant segment of the market back into your high cost plans.
    or
    2. Favor to the States to increase State Premium tax, self funded plans don’t pay premium tax on the claims they pay unlike when they are fully insured, this saves 1-5% depending on the state.
    Neither of these are in any way beneficial to reform and lowering cost. We are assured it was removed from the final bill but things do have a way of slipping back in under the cover of dark. The fact this was even considered shows reform has nothing to do with fixing healthcare. In the middle of such a crisis how do counter productive measures like this even get considered?

  9. Tom Leith says:

    Deron S. writes:
    > I’m thinking we need to realign the RVU values to get
    > [CPT 99213] up to at least $80. That would allow
    > physicians to spend more time with patients and make
    > better diagnosis and treatment decisions.
    OK, I’m a LITTLE bit of a tyro at these E&M codes but if you need more time don’t you just take it and bill 99214? I’m told a doc gets looked at askance if he bills “too many” 99214s but if you need 35 minutes to deal with (say) a geriatric patient the code’s there, isn’t it? What’s the problem?
    t

  10. Tom, time is not a factor in E&M coding unless you can show that over 50% of the visit time was dedicated to counseling. That is not usually the case.
    The whole system is beyond inappropriate…..

  11. Deron S. says:

    Tom – Margalit is correct. I just used a level 3 as an example. The entire E&M series should be increased to place the appropriate value on cognitive services. I’ve had docs admit to me that in order to keep the schedule on time, they would order tests or refer patients to another specialist, just to get the patient out the door.

  12. Tom Leith says:

    > time is not a factor in E&M coding unless you can
    > show that over 50% of the visit time was dedicated
    > to counseling.
    I’m very sympathetic to the view that cognitive services (all of primary care) is undervalued by the RBRVU schedule and its design, but I don’t think this particular characterization is quite true.
    Detailed examinations and medical decision making of moderate complexity take TIME which is WHY there are different levels for office visits. It is therefore misleading to say “time is not a factor in E&M coding”. The code takes account of time by taking account of the “stuff” that is done (and documented).
    My understanding of the 50% thing is something like this: “If you’re not doing enough Hx, Dx, and Rx “stuff” to justify the next higher level but you’re spending time teaching/counseling the patient in excess of what’s normally expected, document the fact and code appropriately.”
    > The whole system is beyond inappropriate…..
    Yep. I think the main mistake was to try to fit E&M into a sort of “procedural” model where you say “for an established patient, take a problem-focused Hx, examine one body part, make one Rx and that’s a 99212 which we’ll pay $50 on.” On the surface this seems OK, but when people finally go see a doc because some particular problem got annoying enough for them to take time off work, the patients are not so well-focused as this model implies: they want to talk about what they saw on TV last week about this or that new medicine, whether they should be eating less ice cream, that kind of thing. In practice the “procedural” model doesn’t work very well. And so it forces docs into a sort of “transactional” approach that just annoys everyone.
    On the flip side, how does the insurer keep from paying for nice discussions about politics or golf? This is where I have a lot of sympathy for Nate’s point: office visits are not be insurable events. If you want to spend $200/hr to talk about golf, that’s fine if it is your money. But not otherwise. BTW, this would tend to reduce documentation requirements for payment.
    Deron S. writes
    > I’ve had docs admit to me that in order to
    > keep the schedule on time
    Ummmmmmm…. Isn’t this a management/scheduling problem rather than a reimbursement problem? It sounds like whomever is managing these practices have got things backwards: they have taken the sort of processes implied by medical-coder-training courses as some sort of ideal and forced it on docs. It needn’t be this way and docs should reassert control. Or hire smarter managers, which is another way of saying the same thing. I have volunteered for this job in the past, but evidently haven’t been sufficiently indoctrinated into the beyond inappropriate system to qualify. And of course I want more than $20/hr.
    t

  13. Deron S. says:

    Tom – I’m sensing a little bitterness. If I struck a nerve with you, I apologize because that wasn’t my intention. However, your Ummm paragraph bears no resemblance to how medical groups operate today. I will take the blame because I don’t think I articulated very well. Scheduling and management has nothing to do with my point. If physicians had more time to spend with patients without taking a big hit to their income, they would most likely order fewer tests and referrals to other specialists. They would be able to fully utilize their training and diagnostic skills to treat patients. Today’s system simply doesn’t allow them to do that.
    By the way, the $20/hr comment was pretty far out in left field. What does that have to do with the discussion??

  14. Tom Leith says:

    Deron S. writes:
    > If I struck a nerve with you, I apologize
    > because that wasn’t my intention.
    No, no, no, you didn’t do anything. I’ll find you in private e-mail…
    t

  15. I know I’m coming in ten days later, but let me ask a question.
    Why aren’t any of you (commenters) even MENTIONING whether the job is getting done?
    I have news for you: it’s not. Millions and millions of people not getting care, the situation getting worse, and what I seem to see is people discussing endorsements and costs. (And, sometimes more than anything, discussing the discussions.)
    It kind of feels like a building’s on fire and people are burning to death, and this blog often contains people who are sitting at home writing about approaches to the fire. While the fire gets worse and coverage is reduced!
    So, what am I missing? (I mean that sincerely; I presume I might well be missing something.)
    And if I’m not missing anything, then what chance do we have of making any difference?

  16. The medical services are necessary for all people regardless of their age. It is always appropriate to a medical check in which we can realize our health and best of all, prevention

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