By Matthew Holt

We’ve been digging under the hood a little of Xerox since (much to my surprise) they started sponsoring THCB recently. The reason Xerox cares about health care is related to their purchase of ACS a couple of years back. ACS was best known for government (mostly Medicaid) claims processing but they also had a whole lot of other technologies and capabilities. One of those is actually running the Health Insurance Exchanges that are going to be in every state (or imposed on the states in 2013 if they’re not ready). Another ACS capability is working with incipient ACOs, or providers that backdoor into ACOs via Medicare Advantage or direct deals with private plans.

Last month I spoke with Michael Sandwith who runs Market Management at ACS. Why should a state or a provider use ACS to put the systems together to run health information exchanges or ACO information capture and management systems? Mike’s logic is simple–because they’ve done it before. They’re operating 7 state HIEs already and aren’t just bringing Powerpoint. And can ACOs work given the failure of PHOs in the 1990s? It all depends if we can independently manage the physicians within the system–i.e. don’t let the hospital management screw it up! Here’s the full video interview of someone who’s been there in two of the bigger health care IT challenges of the day.

HHS Secretary Kathleen Sebelius (who sat in front of me at a meeting last month–my brush with fame) is in the HuffPo writing about the benefits of the (coming) health insurance exchanges. I’m deeply disappointed that we ended up with state-based exchanges rather than the national exchange that was in the House version of the ACA, but I’ll spare you my diatribe on what States and the Senate are good for….Instead let’s focus on what the exchanges will need to do. Deliver accurate information about insurance choices to their users. That means real apples to apples comparisons of benefits, networks, out of pocket costs, etc, etc. This is all still buried on most private markets (e.g. HealthInsurance still doesn’t clearly explain max out of pocket costs–the most important number for most policies). The good news is that there won’t be any distinction between the polices sold to different business sizes and to sick and healthy people. The bad news is that when people see how little their subsidy will buy them, and that most plans will have high deductibles, the good news may get lost. But the exchanges are important advances–even if in some states they may get subverted.

For a long time Pittsburgh’s UPMC has been flexing its market power and there’s been precious little that dominant local insurer Highmark Blues could do about it. UPMC has long been accused of similar tactics to Partners in Boston and Sutter in Northern California–facing down local insurers, forcing them to pay higher prices than paid to other systems, and using aggressive tactics to crowd out competitors. Highmark has reacted by trying to keep competitors alive, and finally has gone the whole hog and bought West Penn Alleghany the only other viable hospital system in the area. It’s likely that UPMC will end its contract with Highmark when it expires next year, and we’ll see the first in a new round of battles for market share between systems. But it surely won’t be the last across the nation as more and more hospitals will fight to fill the capacity they’re building by acquiring market share. I suspect the end won’t be pretty.

AHIP is in town (as in San Francisco) and sadly that means I’m juggling the office and conference going. So altough I made the odd party I missed former Minnesota governor Tim Pawlenty (who apparently was paid $30K to speak). However, Politico’s Kate Nocera seems to think he got a bit of a tough reception from the insurer crowd which by and large is going to enjoy the ACA and has set its course on making hay from it. But whether or not repealing ACOs and the experiments with Medicare financing are really going to happen (and they’re not) I was though struck by the final quote about exchanges: ‘And Pawlenty dismissed the importance of the state exchanges the law will create to provide consumer choice. “We already have an exchange: It’s called the free market,” Pawlenty said.’ Pawlenty shows himself to be a complete idiot on the Mark Pauly scale here. (Pauly is the Wharton professor who thinks that the individual insurance market works fine because it’s more or less OK for 80% of the people in it). But doesn’t this remind you of another not-too-bright former Republican governor? Remember who said this in 2007?: “I mean, people have access to health care in America. After all, you just go to an emergency room.” Let’s hope for logic’s sake alone we don’t end up with Pawlenty in the White House, as it could be a repeat of 2001-8 all over again.

Michael Cannon from Cato doesn’t like the idea that we’re going to cover children by putting them into Medicaid. To tell the truth I don’t like it either. He points to a NEJM study that shows–in the no shit, Sherlock department–that Medicaid recipients wait longer for care. My guess is that Michael’s solution is to a) do nothing or b) give Medicaid recipients a fund to pay for their own care–a fund that real life shows us will be cut as soon as budgets get tight (and as has happened nation-wide under S-CHIP). My solution is to put those kids in the same system as everyone else. But the real politics of the US is that–for now–Medicaid expansion is the best we’re getting. As soon as it’s done we should be working to abolish Medicaid by integrating it into a rational single system so that children (and adults) do not get discriminated against in medical care simply because they chose their parents poorly.

By Matthew Holt

It’s Thursday morning. Fresh off the digital presses. It’s finally here. THCB (after a long absence) is back hosting Health Wonk Review….

Health IT Dept

We start close to home with huge news for THCB’s sister organization Health 2.0. (FD-Matthew Holt THCB’s Founder is also Co-Chairman at Health 2.0). And the news is that the world has gone crazy for Challenges, and that HHS and ONC (they of the billions for EMRs) are joining in, and funding a huge series of challenges for tech innovation in health care. Over at Health 2.0 News Matthew and Health 2.0 CEO Indu Subaiya explain Heath 2.0’s role in Investing In Innovation or i2.

And if that wasn’t enough, the entire health data wonk world is descending physically or virtually on Rockville, MD this morning for the Data-Palooza inspired by HHS’ CTO Todd Park. If you don’t know about Todd you should read this great profile by Simon Owens in The Atlantic. But THCB published Todd’s piece about the Data-Palooza (or more formally the Health Data Initiative Forum) a fraction ahead of the HHS blog, so we’re linking to it here. It includes information about what, who and how you can see it live–and if you care about health and tech and data, how can you miss it?

Of course, i2 and HDI is not all that’s been announced in tech this week. Inspired by Steve Jobs’ iCloud keynote this week in San Francisco, Dr. Jaan Sidorov at the Disease Management Care Blog ponders the healthcare potential of Apple’s ballyhooed mobile operating system.

Despite the boom over the past few years in new technologies and services targeting healthcare, many new services are not doing as well as the experts have predicted. (Note LOTS more HWR below the jump)

Continue reading…

Paul Krugman spends time today ripping Paul Ryan once more. Ryan’s plan is to limit government spending way off into the future (starting with people who are now 55) by giving them a flat Medicare voucher and then telling them to try it on for size in the individual insurance market. The joke is that there is a rational way to try to introduce some consumer-choice competition into Medicare. Essentially there are two alternatives to dealing with the mess that is Medicare. One–try to manage Medicare spending both with a global budget (the IPAB) and with specific restrictions on care that’s delivered that’s wasteful or unnecessary (via changes in FFS payment). That’s essentially the route the ACA goes. Two, give recipients a voucher that lets them choose between competing entities that can’t charge more than the value of the voucher and actually are mandated to compete on the correct things (outcomes, service, etc) like they do in Holland and in Alain Enthoven’s theories. That’s rational managed competition under a global budget, and the winners in that would look more like Kaiser and Group Cooperative than today’s insurers. Ryan’s idea is just to subsidize the dysfunctional private marketplace and to repeal the minor restrictions the ACA puts on health insurers while he does it–a sure-fire recipe for disaster.

There is of course another alternative. Just to let Medicare continue to spiral out of control on both costs and the quality of services it provides, and Ryan’s plan basically does that without a safety net