The Affordable Care Act was intended to usher in a new era of competition and choice in health insurance, and at first it succeeded. But increasingly, provisions in the law are undermining competition and wiping out start-up after start-up. If something isn’t done soon, the vast majority of new insurers formed in the wake of the ACA will fail, and many old-line insurers that took the opportunity to expand and compete in the new markets will leave. It’s a classic story of unintended consequences and the difficulties of regulation.
Flush with optimism after the ACA passed, dozens of new insurers formed to take advantage of the environment created by the law. Twenty three of these were co-ops given start-up funding by the ACA. In most states the new plans only grabbed a small share of the market, but enough to put pricing pressure on larger incumbent plans. In a few states, like New York, the start-ups and other new entrants grabbed over half of the business on the exchanges.
To the surprise of many, price increases in health insurance remained low by US historical standards even as the recovery continued and people who had been without insurance were finally able to get it. How much of that modest cost trend is due to an improved competitive marketplace on the exchanges is speculation, but what is clear is that the doomsayers about the ACA were wrong. Costs did not explode, and even with higher 2016 rate increases we are not back to the bad old days (yet).
Quality is all the rage in health care these days. It rolls off the presidential tongue and is at the heart of robust targets set by Health and Human Services Secretary Sylvia Burwell. (No less than half of all Medicare payments to be quality based by the end of 2018!)
“We’re moving Medicare toward a payment model that rewards quality of care instead of quantity of care,” President Obama declared at a March 2015 summit dedicated to alternative payment models that move away from volume-based, fee-for-service payment
Industry is on the rhetorical bandwagon too. A quick search for the word quality on THCB turns up 277 entries – including “Zen and the Quest for Quality,” “An F for Quality” and the very earliest entry dated Aug. 18, 2003, “Performance-based pay in health care?”
Don’t get me wrong. We at the Alliance of Community Health Plans (ACHP) were into quality way before quality was cool. (We were there at the creation of today’s HEDIS quality measures.) So perhaps that’s why it’s a little disheartening to see policymakers slow to match the speeches with action by fixing a glitch in the pay-for-quality movement.
We all knew how this was going to go, or thought we did. Fee-for-service payment for health services was going to disappear, and be replaced by population health risk-based payment (or as some term it, “capitation”- fixed payment for each enrolled life).Hospitals and care systems invested substantial time and dollars building capacity to manage the health of populations, yet many are discovering a shortage of actual revenues for this complex new activity.Was population health a mirage, or an actual opportunity for hospitals, physicians and health systems?
The historic health reform law passed by Congress and signed by President Obama in March, 2010 was widely expected to catalyze a shift in healthcare payment from “volume to value” through multiple policy changes.The Affordable Care Act’s new health exchanges were going to double or triple the individual health insurance market, channeling tens of millions of new lives into new “narrow network” insurance products expected to evolve rapidly into full risk contracts.
In addition, the Medicare Accountable Care Organization (ACO) program created by ACA would succeed in reducing costs and quickly scale up to cover the entire non-Medicare Advantage population of beneficiaries (currently about 70% of current enrollees) and transition provider payment from one-sided to global/population based risk. Finally, seeking to avoid the looming “Cadillac tax”created by ACA, larger employers would convert their group health plans to defined contribution models to cap their health cost liability, and channel tens of millions of their employees into private exchanges which would, in turn, push them into at-risk narrow networks organized around specific provider systems.
Three Surprising Developments
Well, guess what? It is entirely possible that none of these things may actually come to pass or at least not to the degree and pace predicted.At the end of 2015, a grand total of 8.8 million people had actually paid the premiums for public exchange products, far short of the expected 21 million lives for 2016.As few as half this number may have been previously uninsured. It remains to be seen how many of the 12.7 million who enrolled in 2016’s enrollment cycle will actually pay their premiums, but the likely answer is around ten million.Public exchange enrollment has been a disappointment thus far, largely because the plans have been unattractive to those not eligible for federal subsidy.
a challenge to encourage health care organizations, designers, developers, digital tech companies and other innovators to design a medical bill that’s simpler, cleaner, and easier for patients to understand, and to improve patients’ experience of the overall medical billing process.
This is a laudable if perhaps slightly misdirected effort.
Why are we looking to create an extra layer of service to explain a very poor function, which will inevitably increase system costs? Because this is healthcare’s typical way of adding more layers and costs to an already bloated system, instead of fixing the underlying problem.
When you buy a car do you receive separate bills for the labor, motor, body, tires, glass, oil and gas, carpet, electronics, air conditioning? I know, there are a few lines – base price, options, transportation fees, dealer fees – but it’s just a few and there are not multiple bills coming from all the components.
Furthermore, this simplification greatly reduces the number of people and systems that a dealer and its suppliers need to staff for the billing and collection process.
What healthcare needs is to simplify and combine the entire billing process and function. We need to bundle pricing that is all-inclusive in advance, just like everything else we buy.
With healthcare mergers now announced seemingly every week, I’ve been giving some thought to scale: How big can/ should health systems be?
Anecdotally, I’m struck that the most impressive healthcare companies in America are super- regional players: Geissinger, Cleveland Clinic, UPMC, etc. They seem to get a lot more attention than the national players with hundreds of facilities.
Leaving aside questions like strategy (e.g. is integration of payers/doctors/hospitals the key to these successes), I’ve wondered whether regional systems are simply the right size to thrive. My suspicion is that even clever organizational structure (a topic which I wrote about last year) can’t overcome barriers that prevent large healthcare companies from innovating and thriving, particularly as companies move to risk and the business of healthcare becomes more complex. Like cellular organisms, large companies can outgrow their life support. (Interestingly, it’s actually the ratio of body volume to surface area [gas exchange, digestion, etc] that served as a constraint to organism size…)
I recently ran across a superb paper- a doctoral thesis written by Staffan Canback. Canback (who now leads the Economist Intelligence/ Canback predictive analytics consulting firm in Boston) wrote his thesis, called Limits of Firm Size: An Inquiry into Diseconomies of Scale in 2000, while a student in London. Canback argues, convincingly, that companies do become more efficient with scale, but reach a point where “diseconomies” begin to mitigate performance. This may seem intuitive: (as Canback notes, if efficiency only improved with scale then we would buy everything from one company that produces everything with great levels of efficiency). We don’t.
Josef Stalin famously said: one death is a tragedy; one million is a statistic. Perhaps 250, 000 preventable deaths from medical errors, according to an analysis by Makary and Daniel in the BMJ, maketh a Stalin.
The problem with Makary’s analysis, which also concluded that medical errors are the third leading cause of death, isn’t the method. Yes, the method is shaky. It projects medical errors from a series of thirty five patients to a country of 320 million, which is like deciding national spice tolerance on what my family eats for dinner.
The problem with Makary’s analysis isn’t that it is full of assumptions. Assumptions are inevitable in biomedical research, and abundant in health services research. Researchers of medical errors must determine whether a bad patient outcome, such as death, was avoidable. Bad outcomes lie in a spectrum between inevitability and preventability. If every death is inevitable doctors are rendered impotent, and if every death is avoidable doctors are rendered omnipotent (FWIW, I prefer omnipotence).
The Centers for Medicare & Medicaid Services’ continues to publish data from applicable manufacturers and group purchasing organizations (GPOs) about payments they make to physicians and teaching hospitals on its website. We’re pleased that the public has searched Open Payments data more than 6.3 million times. Doctors, teaching hospitals and others receiving payments or other transfers of value that are sent to us from reporting entities, should take steps to ensure that this information about you, your related research, ownership, and other financial concerns are accurate.
Doctors and teaching hospitals have the chance to review and dispute the information shared about them before we post the new and updated Open Payments data on June 30, 2016. The data we post on June 30th is now available for review through May 15, 2016. Since April 1, this is the only chance for these health care providers to dispute inaccurate or incomplete data before we post it. After that they only have until the end of the year that this financial data is published to review and dispute any payment records and how it was attributed from GPOs, drug and device manufacturers.
Any doctor or teaching hospital that wants to look at the financial information reported on them by manufacturers and GPOs can register on the Open Payments website to create an account or log if they already have an account. Visit our website for instructions and quick tips.
HxRefactored, the conference put on jointly by Health 2.0 & Mad*Pow about technology & design in health care, draws a relatively small crowd–participants numbered in the hundreds, not the tens of thousands found at some health conferences. So I asked a leading health IT expert, Shahid Shah, why he invests so much effort in coming and make presentations to HxRefactored each year. He answered, “This is the only health IT event that covers not just the digital aspects, but the entire healthcare experience, focused on developers and designers who are building solutions. It goes beyond platitudes, cheerleading, and hand waving and gets into actionable advice that engineers need to know to build complex systems that will actually get used.”
And that really shows the key influence provided by design, broadly defined. You can get as “meta” as you want and stay within the field of design:
Worried whether your staff will adapt to and use a new IT system? Success with that is a design goal.
Determined not to let an IT system “get in the way,” but to ensure it enhances relationship-building with patients? Definitely a matter of design.
Eager to make innovation a standard kind of thinking throughout your institution? Designers with the proper combination of support and independence can get you there.
Reflecting the sweep of design itself, sessions at HxRefactored varied from chronicling the path to successful designs, to describing the contributions technologies make, to recommending strategies for getting designs adopted.
Design as a way of Life
A hoary shibboleth of design is that practitioners must seek out users and collaborate tightly with them. A more pointed statement of that principle is to turn all users into designers. This means not flying in to do a design, collecting your pay, and taking off again. Instead, designers hang out in the hallways to meet people, cajole users into joining creativity workshops, and–with teeth gritted–attend committee meetings.
Comprehensive engagement came up from the start of the conference, as when Adam Connor in his keynote pointed out that isolated researcher can’t transfer their insights automatically to others in the organization–everyone in the organization must participate in user research. He also pointed out that no system makes sense except when one views the larger environment of which it is a part.
The CTO of HHS, Susannah Fox, in her inspiring keynote, said “Technology is a Trojan Horse for change…We say interoperability and open data, but we mean culture change.” Design, for her, must recognize people without power, which currently includes most patients and their caregivers.
Fox championed Maker-style innovation at the grassroots, such as promoted in the famous work of Eric von Hippel at MIT. Hundreds of people are making custom prosthetics, for instance. She also mentioned that a very useful sleeve to keep an IV firmly in a child’s skin was designed by a parent. Similarly, patients could improve their medical devices, but manufacturers deny patients access to their own device-generated information, and prohibit patients from making changes. Patients who lack access to research labs and academic libraries are finding the information online to improve their experiences. Fox didn’t describe the risks and downsides of these practices, but I found that acceptable because the risks and downsides are cited all too often to throw up barriers to competition and innovation.
Zika is all over the news. Zika is surely dangerous, but it has its limitations and is likely to be well contained. However, its greater significance extends beyond any current spread. Instead, it exemplifies the crucial emerging trend of a novel infectious agent that has swiftly become a global threat.
The common phrase, ‘this time is different’, is almost always wrong. Yet, our modern circumstances are distinctly unlike any previous era. Humans possess a unique ability for rapid travel and we choose to journey with our favorite pets and plants. This unprecedented degree of mobility extends across every planetary habitat. Further yet, it now occurs during a phase of a rapidly shifting climate. Certainly, species migration or global climate change are not new but it is only in this present moment that these factors can amplify through instantaneous global travel in a singular manner.
In fact, the results of this unusual conjunction are already apparent. For example, Zika’s advance across Europe and to the Americas has been extremely rapid. This is such an extraordinary event that at the beginning of this year, the World Health Organization declared Zika a global emergency in recognition of its rapid spread from continent to continent. Its rising incidence mirrors our prior concerns about the global scope of other recent epidemics such as Ebola or SARS.
(Disclaimer:I contributed an article to the April issue of Health Affairs and was involved in one element of the Consumer Reports piece.)
Among observations in the Health Affairs papers:
Star-based provider ratings, summarized information (instead of details) and well known signifiers of quality such as blue ribbons work best to compel consumers to both pay attention and make wise choices among health plans and providers.
Getting consumers to consider quality and cost (and the concept of value) remains a challenge.A survey of some 2,000 people found that most don’t think cost and quality of care are necessarily related. That’s good and bad.Good because previously published research indicated that most people leaned to believing that higher price means better quality. Bad because the new survey signals that people are still disconnected from pursuing value in health care by consciously choosing lower-cost/high-quality providers.Continue reading…