The Business of Health Care

The Business of Health Care

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flying cadeuciiI like healthcare journalists. Some of my best friends are healthcare journalists. I’d rather read Larry Husten on clinical trials than the constipated editorials in peer review journals. Healthcare journalists are an important force against overdiagnosis, overtreatment, overprescription, overdoctoring and overmedicalization. They’re articulate and skeptical. But they seem to have a blind spot – overoutrage.

Overoutrage is excessive moral outrage. Outrage is excessive anger. Anger is excessive emotion. Emotion is excessive anti-reason. Overoutrage is the mother of all overdoing.

Overoutrage is the healthcare journalist’s kryptonite. These skeptical Rotweillers become credulous poodles when they see overoutrage. Overoutrage axiomatically assumes a moral high ground – for the transgression must have been severe for the outrage to occur. Overoutrage is circular reasoning without an exit. Overoutrage is more powerful than any randomized controlled trial. Much of healthcare policy, indeed civic life, is shaped by it.

A recent event highlights this phenomenon very well. NEJM’s national correspondent, Lisa Rosenbaum, wrote about a surgeon’s determined, and widely publicized, advocacy to ban morcellation, a procedure to treat uterine fibroids. Dr. Hooman Noorchashm’s wife, Amy Reed, underwent morcellation to treat uterine fibroids. Unbeknownst, she had uterine cancer, and the morcellation almost certainly worsened the prognosis by spreading the cancer beyond the uterus. Banning morcellation would be a no-brainer except that morcellation has fewer complications than open surgery for fibroids, and that the chances of undiscovered uterine cancer in a woman with fibroids are exceedingly rare.

2

The Lab test reinvented – Theranos

So I have to ask Theranos; which lab test have you reinvented?  Is it the one where you do a full blood draw and send it off to UCSF to pay way more than the amount you charged the patient?  Is there something in that business model I am not getting?  Or did you reach back to the old “I’ll make it up in volume” approach.

The Nation’s First Modern Benefits Broker – Zenefits

And you Zenefits, if your idea of “Modern Benefits Broker” is that they are not licensed to sell insurance, I think I’ll go for the pre-modern broker.Yes I know, I’ve heard it soooooo many times, all it takes is a bit of silicon valley whiz bang and the whole world will be better, take that unique bravado and creativity and apply it to healthcare, change the world.

Only one small problem; as Esther Dyson said at Health 2.0 many years ago and I’m paraphrasing from memory:

I’ll come back in two years and most of you won’t be here, why because you don’t understand healthcare.  You can build all the great systems you want, but if they don’t work in healthcare, because you don’t understand it, you’re done.

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Screen Shot 2016-01-14 at 5.45.59 PMCMS recently announced the inaugural class of Next Generation ACOs – the latest accountable care models which includes higher levels of financial risk and greater opportunity for reward than have been available within the Pioneer Model and Shared Savings Program. CMSs goal is to test whether these greater financial incentives, coupled with tools to support better patient engagement and care management, will improve health outcomes and lower costs for Medicare fee-for-service (FFS) beneficiaries.
One of the most exciting opportunities for these ACOs is the ability to leverage telehealth above and beyond what is currently permissible in fee-for-service Medicare.

Since section 1834(m) of the Social Security Act was codified well over a decade ago, telehealth has only been able to serve Medicare recipients when they got in their cars and drove to a clinical site, in a rural area of the nation. Simply translated – no homes or cities count. With the lightning speed of telehealth advancement, this structure is archaic, limiting, and frankly at this point, senseless. Now, with this Next Gen designation, these “Next Gens” will be able to offer care through telehealth technologies regardless of the patient’s location.

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flying cadeuciiOne of the more Obamacare fluent reporters just emailed me a set of questions regarding the 2016 outlook for Obamacare.

I thought I would share my responses with you:

According to early CMS data, 38% of exchange enrollees are under age 35. Is the risk pool beginning to stabilize? 

It’s too soon to know if the pool is beginning to stabilize. First, the administration’s announcement that 38% of the pool is below age 35 is disingenuous. They are counting all of the children that show up on the rolls with their families. They did not give us the far more important age 18-to-35 number.

Second, the overall subsidy eligible exchange penetration stood at about 35% at the end of 2015. Ideally, Obamacare needs to about double its penetration of the eligible to assure a balanced pool of the sick and the healthy.

Then of course, we always see these big enrollment numbers being announced by the administration only to see the block shrink dramatically by year-end.

So, it will really be a year before all of the dust settles on the 2016 enrollment and we really know what the claim levels are relative to the premiums being charged.

If rates increase too much in 2017, will those young people jump ship?

I worry more about the really poor take-up rates for the healthy people who have not signed up in the 200% of federal poverty level and above brackets than I worry about the percentage of the young who have signed up. Way too much emphasis is put on this age 18-to-35 statistic. Yes, they are more often healthy but under Obamacare the youngest pay one-third the premium of the oldest. We really need the healthy to sign up in much bigger numbers, that have so far been holding out, more than we need the young.

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For a few years I’ve been fantasizing about what a healthcare insurance/ delivery mutual would look like.  I’ve yet to see one but I like the idea a lot.

Here’s the idea behind a mutual:  A mutual structure means that the company is owned by its clients or policyholders.  Since a mutual’s customers are also its owners, they get to share in any surpluses though they are mostly reinvested in the business.

Wikipedia has a nice writeup on the fundamentals of mutuals:

A mutual exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organization or society. A mutual is therefore owned by, and run for the benefit of, its members – it has no external shareholders to pay in the form of dividends, and as such does not usually seek to maximize and make large profits or capital gains. Mutuals exist for the members to benefit from the services they provide and often do not pay income tax.

Mutual structures are most common in the banking (credit unions) and insurance industries.   The main advantage to mutuals, as compared to public or privately held businesses is that they avoid the “principal-agent” problem (where the company’s desire to serve itself and the customer are at odds).

In a mutual, customer and owner are one.

Mutuals have been around for a few hundred years:  “friendly societies” have been active in the UK and the US for a couple hundred years.  Friendly Societies… were the original form of social network, where a group of people contributed to a mutual fund, to then receive benefits at a time of need.

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Today, two AHRQ-sponsored studies were released that conclude that the Affordable Care Act (ACA) has not reduced the availability of full-time work or the work incentive for low-wage workers.

In the first study, researchers examined the effects of the requirement in the ACA for employers to provide health coverage to employees working at least 30 hours a week or pay a penalty. Using data from the Census Bureau’s Current Population Survey, an interview of approximately 60,000 households monthly, researchers did not find increases in the frequency of working either 25-29 hours weekly or fewer than 25 hours weekly in 2013, 2014 or the first half of 2015. Researchers also did not find a reduction in 2014 or 2015 in the frequency of working 30-34 hours, further demonstrating that employers have not reduced employee work hours below the 30-hour threshold to avoid the requirement to provide coverage.

In the second study, researchers assessed the impact of the expansion of Medicaid coverage on low-wage workers by analyzing job loss, job switching, and full- versus part-time status. Based also on data from the Census Bureau’s Current Population Survey, researchers compared states that had not expanded the program to states that have done so. The researchers found no statistically significant changes in labor market behavior as a result of Medicaid expansion, contrary to claims that the law would substantially reduce labor supply.

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Screen Shot 2015-11-22 at 9.38.05 AMI know it’s not always about me (my ex-wife was quite clear on that point), but I was deeply saddened to see one of the Blues – specifically, Blue Cross of Tennessee — descending into the fabricated-wellness-outcomes abyss.

By way of background, regular readers of this irregular column and/or www.theysaidwhat.net have seen multitudinous examples of vendors telling lies that any fifth-grader could see through. Perhaps the best two examples on this site are Staywell and Mercer reporting mathematically impossible savings for British Petroleum and Health Fitness Corporation admitting they lied about saving the lives of cancer victims in Nebraska.

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Paul Levy 1This has been my week to discuss networks (Internet and electricity), but I would be remiss if I didn’t spend a few moments on the networks that are most likely to rob us of personal choice and increase costs: Health care networks.

Wait, didn’t President Obama promise us that the new health care law would preserve choice for us? Didn’t he promise us lower costs?  Well, in spite of much good that the law accomplished in terms of providing access to health insurance, these are two areas that have gone awry. For a variety of reasons–most of which have little to do with providing you with better care–the hospital world has grown more centralized. It’s done so to reduce competition and get better rates from insurance companies. It’s done so to create larger risk pools of patients under the “rate reform” that incorporates more bundled and capitated payments. It’s done so to keep you as a captive customer for your health care needs. It’s been aided and abetted by electronic health record companies that find a mutual advantage with their hospital colleagues in minimizing the ability of your EHR to be easily transferable to other health systems. As I’ve noted, we truly have created “business cost structures in search of revenue streams,” rather than a vibrantly competitive system focused on increasing quality and satisfaction and lowering costs.

Many people don’t even know they are part of a health care network until they discover its limitations. It might be that the insurance product they bought has different rates for in-network doctors and facilities from out-of-network doctors and facilities. It might be that their primary care physician subtly or not so subtly directs them to specialists in his or her network because they share in the financial reward of eliminating “leakage” to other systems. It might be that they discover that an MRI or other image taken in one health system cannot be transferred electronically to another, perhaps necessitating a second image and its accompanying cost.

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jk-wallDonald Trump has been screaming about premiums going up this year for Obamacare health insurance policies.

But he should see what happens when they go down.

That’s what has happened in Indiana, where average premiums for 2016 health coverage on the Obamacare exchange is 12.6 percent lower than in 2015.

Because of that figure, journalists have declared Indiana the big winner, since premiums are rising by 10.2 percent on average across the country.

They could not be more wrong.

That’s because falling premiums are causing the size of the Obamacare tax credits to fall even faster in Indiana. And since 87 percent of Indiana’s exchange buyers this year received a tax credit, smaller tax credits will make the out-of-pocket cost far higher for those Hoosiers.

How much more? According to my analysis of insurer’s filing with the Indiana Department of Insurance, 30 percent, 60 percent, 90 percent and even 180 percent increases will be common for Hoosiers buying Silver plans for 2016, depending on their age and incomes.

Imagine what critics of Obamacare would be saying about those figures?

This topsy-turvy system is due to the convoluted system the Affordable Care Act set up to determine the size of tax credits in each state.

4

Devon HerrickA recent New York Times article profiled a pair of ultra-expensive pain medications designed to go easy on the stomach. Common pain relievers, like aspirin, ibuprofen and naproxen are prone to irritate the stomach if taken repeatedly throughout the day. A newer class of pain medication, called cox-2 inhibitors, are the preferred pain relievers for those who cannot take nonsteroidal anti-inflammatory drugs (NSAIDs) on a long term basis. Celecoxib, the generic version of Celebrex, is now available at a cost of about $2 per tablet, but that can add up to about $700 to $1000 per year.

More than a decade ago researchers found that taking heartburn medications with common NSAIDs could mimic the benefits of the costly cox-2 inhibitors. However, the study found (at that time) combining heartburn medications and NSAIDS would not deliver any cost savings due to the high price of prescription heartburn treatments. A lot has changed in the years since the study. The costly proton pump inhibitors for heartburn are now available over the counter (OTC) for $0.31 cents to $0.60 cents apiece. The drugs mentioned in the Times article, Duexis and Vimovo, are based on the premise of combining NSAIDs with heartburn medications.

The catch? Each drug costs more than $1,500 for only a month’s supply. The cost per tablet is $17 and $25 respectively. Why so much? That’s a good question that doesn’t have a logical answer. Although nearly 90 percent of the drugs Americans take are inexpensive generics, a small segment – about 1 percent of all drugs prescribed – falls into a category known as “specialty drugs”.