Beginning in 2013, states will begin rolling out health care insurance exchanges as required by the Affordable Care Act (ACA). To this point most legislators, policymakers and health care experts have discussed the state-based and federal insurance exchange options at length. However, there is another form of insurance exchange that states are beginning to explore: the “partnership”.
In a state-federal partnership, states will divide obligations with the federal government. For this partnership model there is no requirement for a 50-50 split of labor, and the states are actually more of a facade whereby the consumers (individuals and employers) merely interact with the state. The federal government, on the other hand, will essentially perform all functions of the exchange management except customer service and plan management. Moreover, states have the choice to run either one or both of those functions. According to former head of insurance exchange planning at HHS Joel Ario, “States that choose this option are ceding the more technical aspects of exchange activity to the federal government but can retain control
of insurer oversight and consumer assistance.”
In the state-federal partnership model, the federal government will operate everything from consumer eligibility and enrollment to financial management and risk corridors. This essentially means that the federal government will take on most responsibility for the exchange, while granting states many of the perks they would receive if they had created a state-based exchange.
The CDC has noted an early and nasty start to the flu season. Perhaps their own website has caught it, because as I’m writing this, the whole thing is down. Assuming it recovers, I will insert relevant links per routine. Otherwise, I wish it well, and leave you to find your way there on your own.
It’s a bit soon to say, but the virus and the outbreak pattern at this point seem to resemble those of the 2003-2004 flu season, in which nearly 50,000 Americans died. At least two children have already died of flu complications this fall.
This is not the sort of stuff a public health physician can ignore.
So, I recently noted on LinkedIn andTwitter that I’ve been vaccinated — as I am every year — and recommend this year’s vaccine, which appears to match the prevailing viral strain quite well, to everyone else. I promptly got comments back from naysayers, including at least one self-identified microbiologist, who noted he never got vaccinated, and had “never gotten the flu.”
I believe him. But this is like that proverbial “Uncle Joe” everyone knows, who smoked three packs a day and lived to be 119. It could happen — but I wouldn’t bet the farm on it. Uncle Joe is that rare character who somehow comes away from a train crash with a minor flesh wound. The rest of us are mortal.
But there is something more fundamentally wrong with the “I’ve never gotten the flu, and therefore don’t need to be vaccinated” stance than the Uncle Joe fallacy. Let’s face it — those who were ultimately beneficiaries of smallpox or polio immunization never had smallpox or polio, either. If they ever had, it would have been too late for those vaccines to do them any good.
What will health insurance cost in 2014?
Will the new health insurance exchanges be ready on time or will the law have to be delayed?
There Will Be Sticker Shock!
First, get ready for some startling rate increases in the individual and small group health insurance marketplace due to the changes the law dictates.In a November 2009 report, the CBO estimated that premiums in the individual market would increase 10% to 13% on account of the health insurance requirements in the ACA. In the under 50 employee small group market, the CBO estimated that premiums would increase by 1% to a decrease of just 2% compared to what they would have been without the ACA. All of these differences in premium would be before income based federal subsidies are applied to anyone’s premiums.
In recent weeks, the Obama administration issued a series of proposed regulations for the health insurance market. Since then, I conducted an informal survey of a number of insurers with substantial individual and small group business. None of the people I talked to are academics or work for a think tank. None of them are in the spin business inside the Beltway. Every one of them has the responsibility for coming up with the correct rates their companies will have to charge.
Hold onto your hat.
On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays.
Politicians and pundits everywhere call for more disease prevention as a way to reduce healthcare costs. Certainly you cannot argue with the logic that “an ounce of prevention is worth a pound of cure.”
Or can you? It turns out that you can not only argue against that so-called logic, but – just as with cancer detection, which may have been done to excess in some protocols — you can mathematically prove that, at least for asthma, it takes a pound of prevention to avoid an ounce of cure.
The database of the Disease Management Purchasing Consortium Inc. (www.dismgmt.com) tracks both asthma drugs and visits to the emergency room (ER) and hospital stays associated with asthma. The average cost of an attack requiring an ER visit or inpatient stay is about $2000. The average cost to fill a prescription to prevent or recover from an asthma attack is about $100. It turns out that asthma attacks serious enough to send someone to the ER or hospital are rare indeed. In the commercially insured population, these attacks happen only about 3-4 times a year for every thousand people. (The rate is much greater for children insured by Medicaid; additional resources spent on prevention could very well be cost-effective for them.)
For a million-member health plan, that might be 3000 or 4000 attacks Yet that same million-member health plan is paying for hundreds of thousands of prescriptions designed to prevent or recover from asthma attacks. Depending on the health plan, the ratio of drugs prescribed to asthma events serious enough to generate an ER or hospital claim ranges from 60-to-1 to 133-to-1. Using those statistics of $2000 per event and $100 per prescription, a health plan would pay, on average, anywhere from $6000 to $13,300 to prescribe enough incremental drugs to enough incremental people to prevent a $2000 attack.
Averages lump together people at all risk levels. Surely some of those people really are at high enough risk of an attack that they are already inhaling their drugs regularly to prevent one, and have a “rescue inhaler” nearby. By definition their risk of attack is much greater than for low-risk people. Assume, very conservatively, that low-risk patients have a risk of attack which is half that of the average patient. This means that putting most low-risk patients on drugs costs $12,000 to $26,600 for every $2000 attack prevented.
The Obama administration just released another set of regulations, the “Draft Notice of Benefit and Payment Parameters for 2014.”
Among many other things in the 373 pages, they have announced their proposed assessments to cover the cost of running the federal exchange.
In order for the feds to administer the new insurance exchanges, they have proposed a fee of 3.5% of premium on each insurance policy sold in the exchanges (page 224).
This from the Kaiser Foundation 2011 “Primer” on Medicare:
“The costs of administering the Medicare program have remained low over the years––less than 2% of program expenditures.”
Many times over the years I have heard from advocates of a single-payer Canadian-style health plan that Medicare proves the federal government can do it cheaper than the private sector and should therefore take it all over.
So much for the notion that the feds are the model of insurance efficiency.
Under the new health care law’s Minimum Loss Ratio (MLR) provisions, insurance companies are limited to no more than 20% of premiums for expenses in the small group and individual markets.
Yesterday’s New York Times headline read that “Medicare Is Faulted on Shift to Electronic Records.” The story describes an Office of Inspector General (OIG) report, released November 29, 2012, that faults the Centers for Medicare and Medicaid Services (CMS) for not providing adequate oversight of the Meaningful Use incentive program. Going after “waste, fraud, and abuse” always makes good headlines, but in this case, the story is not so simple.
For those not intimately familiar with the CMS policy, in 2009, Congress passed the Health Information Technology for Economic and Clinical Health (HITECH) Act. The program, administered through CMS and state Medicaid programs, created financial incentives for doctors (and other eligible professionals) and hospitals to adopt and “meaningfully use” a certified electronic health record (EHR). To receive financial incentives, which began to be paid in May 2011, doctors and hospitals “attest” that they have met the meaningful use requirements, providing an affirmation for which they are held legally accountable.
The process works as follows: health care providers visit a CMS website, register, and enter data demonstrating that their EHRs are “certified” and that they met each of the individual requirements for meaningful use. Then they attest that that all the data they entered is true. For example, a physician might have to report, to meet just one of the 20 meaningful use measures, how many prescriptions she wrote over the past 90 days, and how many she wrote electronically. My conversations with colleagues suggest that it can take a lot of time for providers to gather all the data they need to “attest” to meeting Meaningful Use. Then, CMS runs logic checks to ensure that the numbers entered make sense and, if there are no errors, they cut the provider a check. Through September, 2012, CMS paid out about $4 billion in incentives to 82,000 professionals and more than 1,400 hospitals.
[youtube width=”475″ height=”300″]http://www.youtube.com/watch?v=iUbfRzxNy20[/youtube]
It seems both ironic and inevitable: I won’t be getting any more “meaningful use” checks. It’s not that I didn’t qualify for the money; I saw plenty of patients on Medicare and met all of the requirements. I was paid for my first year money without much hassle. The problem I am facing is this: I am probably going to be “opting out” of Medicare, and once I do that I will cease to exist as far as HHS is concerned, and they are the ones who write the “meaningful use” checks. No existence equals no money.
This is ironic because I have gotten famous for how well I’ve used electronic medical records, have written advice for physicians trying to qualify for “meaningful use,” and am esteemed enough to be often asked for my opinion on the subject (culminating in a presentation last year for CDC public health Grand Rounds). I have spent much of the past 16 years disproving the myths that small practices couldn’t afford EMR, that EMR decreases profitability, or that they reduce quality of care. We not only could afford EMR, we flourished, using it as a tool to increase both productivity and profitability. Not to overstate the issue, but my practice (and others like it) paved the way for the existence of “meaningful use.” I don’t know if that’s a good or a bad thing.
But, as fate would have it, I am leaving the practice in which I did all of this work and am starting a new practice with a different payment system. Instead of charging for office visits or tests done in my office, I am charging a monthly “subscription” fee for access to my care and to the other resources I offer. But there isn’t a Medicare code for a monthly subscription fee, and the rules of Medicare are such that, as far as I can tell, I cannot have the practice I intend to build and be listed as a Medicare provider. This is the case even if I never charge Medicare for any of my services.
Regarding my status as a Medicare provider, there are three options:
- Accept Medicare as a “participating” provider – This means that I see Medicare patients and accept what they say I will be paid. I bill CMS for my services, which are based on my “procedure codes.” My main procedure is the office visit, but I can also bill for things like immunizations, lab tests, and office procedures. The more procedures I bill for, the more I get paid, but I must justify this billing in my documentation or run the risk of being accused of fraud.
- Become a “non-Participating” Medicare provider – In this scenario, I am paid by the patient for the encounter and then they are reimbursed for what they paid me. The choice of what I bill happens the same way, and I still must set fees based on what CMS tells me (although I can bill a little bit more than I would if I was a participating provider). Billing is, once again, based on the documentation of the visit.
- “Opt out” of Medicare altogether – Opting out means that I am no longer in the Medicare database as a provider and won’t get paid by them at all. Patients are free to come to me, but they must pay what I charge, and I set my fees based on what I think is best.Continue reading…
Twenty years ago, in order to keep presidential candidate Bill Clinton’s campaign on message, James Carville hung a sign in their “war room” that read:
- Change vs. more of the same
- The economy, stupid
- Don’t forget health care
While point number two swiftly entered the national vernacular, the other two slogans have equally influenced the U.S. political landscape, especially since 2008. Four years ago, the country was on the precipice of transformation. Meaningful change was promised, and opportunities for significant, long-lasting reforms were abundant. Americans, particularly the millennial generation, turned out in record numbers to vote, and hope for the future was palpable. America, like a patient suffering from a debilitating chronic disease, seemed finally ready to put in the time and do the hard work to get healthy before that fatal heart attack occurred. After decades of procrastination, we heeded Carville and health care system overhaul became a top priority.
Pause: The State of America’s Health
Obesity prevalence increased 137 percent over 20 years, from 11.6 percent to 27.5 percent of the population. In 2008, more than one-third of children and adolescents were overweight or obese. The medical care costs of obesity in the U.S. totaled about $147 billion in 2008 dollars.
Diabetes has almost doubled in prevalence since 1996, rising from 4.4 percent to 8.7 percent of the adult population. For children, the prevalence of Type 2 diabetes increased 21 percent from 2001-2009, while Type 1 diabetes rose 23 percent. Estimated total diabetes costs in the U.S. were $174 billion in 2007.
Asthma diagnoses grew by 4.3 million from 2001 to 2009, and 9.4 percent of children currently have asthma. Asthma costs in the U.S. grew from about $53 billion in 2002 to about $56 billion in 2007.
Developmental Disabilities prevalence increased 17.1 percent over the last 12 years. The prevalence of autism increased 289.5 percent, and the prevalence of ADHD increased 33 percent. Autism alone is estimated to cost the U.S. $137 billion per year.
Obama’s most significant healthcare-related accomplishment this year may well have been his campaign’s demonstration of the effective use of analytics and behavioral insight – strategies that also offer exceptional promise for the delivery of care and the maintenance of health.
For starters, of course, there’s the widely-reported “big data” success of the Obama campaign. In unprecedented fashioned, they collected, mined, analyzed, and actioned information, microtargeting voters in a remarkably individualized fashion.
Imagine if healthcare interventions could be personalized as effectively (or pursued as passionately).
Another example: according to the NYT, the Obama campaign hired a “dream team” of behavioral psychologists to burnish their message and bring out the vote, using a range of techniques the field has developed over the years.
According to the article, the behavioral experts “said they knew of no such informal advisory committee on the Republican side.”
This idea of focusing intensively on behavior change is without question an idea whose time has come.
Earlier this year, for instance, a colleague (with similar training in medicine, molecular biology, and business) and I were surveying the biopharma landscape, and were struck by the extent to which classic biology hasn’t (yet) delivered the cures for which we had hoped; physiology turns out to be extremely complicated, and people, and communities, even more so.
We were also struck by the remarkably low adherence rates for many drugs, abysmal whether you look at this from the perspective of clinical care or commercial opportunity (imagine if Toyota lost half their cars on the way to the dealership).