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Tag: Insurers

A Sticky Solution to a Sticky Problem

“Don’t pull the knot tight,” the philosopher Ludwig Wittgenstein once warned, “before being sure you have got hold of the right end.” Those who hope to sort out the tangle of health care spending would do well to heed his advice.

Clearly, there’s been no lack of solutions put forward since the Clintons first put health care atop the national agenda more than a decade ago. But with health care spending still rising at twice the rate of inflation, few have made any real and lasting impact.

Employers (who still pay the lion’s share of health insurance premiums here in the U.S.) know, of course, that keeping employees from getting sick in the first place—and minimizing the severity and duration of their illness when they do—is the first step in reducing this unwelcome “growth sector” of our economy. They understand, for the most part, that healthier employees equal not only lower healthcare costs but reduced absenteeism and greater productivity for the economy as a whole.

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Is the Healthcare Economy Rightsizing?

Brian KlepperMore than at any time in recent memory, powerful forces are buffeting
the health care sector. We are in

the midst of profound upheaval,
driven by
market and policy responses to the industry's long-term 
excesses
.
We can already see evidence that the dysfunction of our traditional
health system is accelerating. It also seems clear that the center
cannot hold indefinitely.


Dog Eat Dog

It is useful to remember that the health care industry's
different stakeholders are adversaries. While they clearly share a
common understanding that a wholesale meltdown is possible, there is
little real motivation for collaboration and no unity. Independent of
role, the industry as a whole has been focused on, and extremely
effective at, securing dollars from purchasers: government, employers
and individuals. But each silo within the industry has been separately
focused on growing its own slice of the health care pie. In every
niche, there are courteous conceits –
access, appropriateness, efficiency and value – reserved
for the good manners of public relations. But these are meaningful in
practice only if they do not conflict with the professional's or the
firm's economic performance.

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My forecast: a sad conclusion to the health care bubble…

Brian Klepper and David Kibbe have written a terrific piece on how and why health care is in a handbasket and wondering where it’s going. But as we ex-futurists know, there’s lots of luck required to make a good forecast.

When I met Brian five years ago he told me that the sky would fall within five years, and at the time he was trying to persuade players in the health care system to self-reform. He suggested to them that the alternative would be soon be much worse.

I said, “no no, it'll take longer (10-15 years) and the system players will never self reform”. Instead I thought “reform” would be be done to them by the government when the system hit crisis. My guess was a combination of Medicare with 5 years of baby boomers on board and a middle class with 80 million uninsured would arrive around 2012–15. And then the brown stuff would be hitting the whirly object soon after that when the Chinese wanted their money back.

As it turns out we were both wrong and both right.

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A Broker’s Lament: We Brought This On Ourselves

Sinibaldi_2
A huge segment of the American population is simply far too strapped to ever afford the premiums and costs associated with health insurance/health care as it is structured today.

It isn't the employees of government (local, county, state or federal) who will demand immediate change. It isn't the employees of institutional companies (the Motorolas, GEs, Microsofts of the country) who will demand change. It isn't those on Medicare or Medicaid or the VA who will demand change. It isn't the wealthy. It isn't the poor. And, it isn't the vast majority of health insurance agents who work with large group clients (because, while that market is becoming ever more difficult and the work more taxing, they're still selling SOMETHING to these bigger businesses and government entities).

Why don't these people see what I'm seeing? Simply because, while they are feeling the effects of the rise in health care/health insurance costs and the downturn in the economy, most of these businesses and their employees and dependents (and the affluent) have yet to have a clue about how expensive things really are (or in the case of the rich, they can still afford their out-of-pocket expenses). The agents who market to large employers are still making lots of money (I know, I rub elbows with them at my local Health Underwriters meetings once a month).

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I really don’t understand Wall Street, part 98

On the campaign trail Obama said that he would if elected cut the overpayments to Medicare Advantage plans by about $15bn a year. Once elected he confirmed that he would.

Stupid me thought that this would mean people on Wall Street would listen and that this freely available information would have been priced into the stocks. After all Bob Laszewski and I have been asking each other about this for quite some time!

So did I spend the last few weeks building up a big short position in the for-profit health insurers? No, this news was well known and already reflected in the stock price.

And when Obama’s budget came out today and essentially showed that it would cut Medicare payments by about the same amount he said he would (OK the cut proposed is $17.5 bn not $15bn but close enough). So did the stocks stay flat? Err… look at the chart

Healthplans

They’re all off 10% today alone, and Humana, one of the biggest Medicare players is off 20% today and 40% for the week! Were you short? Or were you too clever—just like me?

Divided we might get somewhere, but not yet

Matthew HoltThe NY Times describes the Republican-less lobbyist meetings with Democrats that are allegedly getting 
towards a consensus on an individual mandate as the way to universal health care. Funnily enough some of those same groups (e.g. The Business Roundtable & the NFIB) appear to be lessening their commitment to the worthily named “Divided we Fail” campaign.

And then on the second page of the NY Times article there’s this:

Many businesses, crushed by soaring health costs, say they now support changes in the health care system as a way to control their costs. But in its summary of the recent discussions, Mr. Kennedy’s office said, “There was little consensus on the employers’ role.”

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Connecting the dots–Uninsured people are poor!

A bunch of random articles all hit at once on Wednesday morning. And they win the John Madden award for stating the bleedingly obvious. This is kind of  a companion piece to my rant about Friday’s NY Times article on the health industry and its political allies and adversaries sitting down to come to consensus.

Inquiry featured a worthy study. It tried to suggest that high costs “crowd out” health insurance spending.

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Frances Dare, Cisco’s optimist, and KP’s Garfield Center

From time to time we check in with my pal Frances Dare who is Cisco’s optimist about the impact that IT will have on health care (FD I’ve worked for Cisco in the past). Here’s an interview I did with her on HC IT policy last year.

Her handlers sent me this piece of video where she was interviewed about the role Cisco’s version of connected health could play in improving hospital efficiency. (Warning—you need to log in and give Cisco your email to see the video and once you get there I recommend skipping the first 3 minutes of corporate-marketing speak and wind straight onto Frances)

Meanwhile, I went on a tour last week of the Kaiser Garfield Center (which was very cool even though I haven't gotten around to writing about it yet!) and on it I was reminded about the role connectivity has to play in hospital design. As well as reaching out to the home.

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The AMA Wins a Round Against Accountability and Patient Information

On January 30th, a 3-judge DC appeals court overturned a lower court decision that would have forced public release of Medicare physician data. Writing for the majority in a split 2-1 judgment, Circuit Judge Karen LeCraft Henderson declared that

“The requested data does not serve any (freedom-of-information-related) public interest in disclosure. Accordingly, we need not balance the nonexistent public interest against every physician's substantial privacy interest in the Medicare payments he receives.”

But in a strongly worded dissent, Judge Judith Rogers, the third member of the ruling panel, found that the request by the consumer group, Consumer Checkbook, represented “a commanding and important public interest in disclosure of the data.”

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Five “Shovel-Ready” Health Care Reforms

Microsoft Health Vault’s leader Peter Neupert has a wonderful blog post that makes two important points really well. One message is that health care reform is about the outcomes, not the technology. We should think expansively about which technologies to invest in, based on the results we want to get.

The other message is the economic stimulus package is different than the reform effort. It is moving at hyper-speed through Congress, and it may be difficult for staffers and other advisors to sort through and incorporate what may seem like opposing Health IT views against a backdrop of traditional ideology and extremely forceful special interest lobbying.

Even so, there’s consistency among the health care professionals who worry about these issues all the time. Peter unexpectedly discovered that the messages of his fellow panelists from the Health Leadership Council, the National Quality Forum, the Permanente Federation and the General Accounting Office were remarkably in sync with his own testimony to the Senate Health, Education, Labor and Pensions Committee.

Congress is about to make some big moves in health care that will require immense resource expenditures but, depending on what we pay for, may or may not bear the fruits we hope for. They should move carefully. Not all health care reform has to be labyrinthine. Not all ideas must require huge cost or take years to come to fruition and gain market traction. There are relatively simple actions that are available now, and that the Obama Health Team could tackle to effect tremendously positive, immediate impacts on the system.

Of course, right now the Health IT industry is focused on the promise of a huge stimulus windfall that would be dedicated to their products. But the opportunities we describe below follow principles that have broad support among students of the health care crisis. Two would change the way we pay for health care services, tying payments to documented results. Three are based on how we pull together and make use of the data that can drive clinical and financial decisions, and they overlap, though not perfectly, in their potential. Still, if any system adjustments can be passed through policy initiatives that focus on what’s best for the common rather than the special interests, these should be among the most straightforward.

Payment
Re-Empower Primary Care
There is general agreement that primary care is in crisis, the result of years of abuse and neglect by the medical establishment and by CMS. In simple terms, the primary care/specialist ratio in the US is 30/70. In all other developed nations, its about 70/30. And our costs are roughly double theirs.

We should allow primary care physicians to do the jobs they were trained for, changing their roles from “gatekeepers” to “patient advocates and guides.” We should immediately start financially rewarding them for collaborating with specialists to manage patients throughout the full continuum of care. Keep in mind that, as the Dartmouth Atlas and other studies have made clear, most health care waste is concentrated in the sub-specialties and in inpatient settings, incentivized by a fee-for-service reimbursement system that rewards more procedures, independent of their utility.  One very thoughtful approach to invigorating primary care has been advanced by Norbert Goldfield MD and colleagues.

Of course, truly re-empowering primary care will require more than just paying primary care physicians more. Higher reimbursements will help them afford to spend more time with each patient, yes, but PCPs also need help acquiring tools that can help them better manage those patients. And they need the authority to work collaboratively with specialists. Challenging, but certainly doable and important!

Changing America’s current imbalance between primary and specialty care should drive significant downstream waste from the system, dramatically improving quality and reducing cost.

Increase the Incentives For Programs That Tie Payment To Outcomes
Projects like the CMS/Premier Hospital Quality Incentive Demonstration (HQID), in which 250 participating hospitals got 1-2 percent bonuses for achieving quality improvements, have clearly demonstrated that incentives work. The hospitals that pursued the incentives made greater strides in quality improvements than their peers who did not work toward the incentives.

But we need to make the financial incentives large enough to drive real paradigmatic change. Too many programs offer incentives that are trivial in the minds of providers. Does it make sense for physicians in small, busy practices to rework their office flows to try to meet the challenges associated with hitting targets in exchange for a 1 or 2 percent financial bump, tied to a fraction of their patient population?

Now that there’s no question that incentives work, we could easily give these programs teeth by raising the incentive antes to 15 or 20 percent, while also demanding commensurate levels of savings. And we should go in, understanding that the goal is to drive out unnecessary care, and create expectations that,  by managing better upfront, the total spend will be lower.

Data

Establish a National All-Payers Database
Data sets, including those comprised of health care claims, must be large to generate credibly useful information.

But health care is financed through many different payer streams and by many players within each stream.  Nearly all treat their data as proprietary, and information remains fragmented. So, for example, physicians rarely receive useful information on their complete pool of diabetic patients: instead, they get small slices of data from each payer, each analyzed using a different proprietary methodology. Or, we fail to accumulate adequate sample sizes to identify which treatments, interventions, drugs, devices, health plans, physicians or facility services provide the best value.

But merging those data across payers and making the aggregated set freely available would create the basis to identify true evidence-based best clinical and administrative results. Based on hundreds of millions or billions of records, we might be able to credibly identify which professionals, services or approaches most consistently produce the best results within value parameters. The data set would always be building, providing an always slightly-new base for answering our most difficult questions. Together with the analytical tools that are also becoming stronger and more refined, the potential is vast.

Of course, health plans, always politically formidable, might fight tooth and nail to maintain the competitive advantage they believe is inherent in their data. But health care is a special enterprise, with objectives that are ultimately rooted in the common interest, so they have no real excuse to refuse this. And health plans, like the rest of us, would gain access to much larger data sets that can be mined to advantage.

There also are precedents here. Several states have already begun to establish all-payer databases. At a June 2008 meeting, a presentation on Maine’s experience highlighted 3 fundamental, telling principles that are challenges to any effort.

1. Nobody wants to pay to develop and manage the database.
2. Nobody wants to contribute their data to the database.
3. Everyone wants the aggregated data that develops in the database.

The solution: make it a national effort, paid for by CMS, and with mandatory participation, user fees, and open access to the data.

Create Uniform Nationally Accessible Disease Registries

Many physicians have come to appreciate the value of disease registries. Registries allow clinicians to count all active patients with distinct conditions, e.g. hypertension or diabetes. They can track characteristics within a patient subset, e.g. diabetic patients on a particular medicine. They can monitor and stratify patient status and progress within each group, and generate reminders and alerts to assure guideline level care. And they can identify trends in performance and, with relative ease, get a sense of what works and what doesn’t.

Even so, many registries are still in silos, meaning that the sample sizes remain small and that the parameters that define the registries’ characteristics often vary between implementations.

What we need are freely available, Web-based registries with easy data entry and easy querying capabilities. The impact on our management of patients with chronic illness, who consume 70 percent of our health resources, would almost certainly be powerfully positive.

Release Medicare’s Physician Data
Nearly a year and a half ago, the consumer advocacy organization Consumer Checkbook sued the US. Department of Health and Human Services (HHS) for the Medicare physician data in four states and DC. HHS argued that physicians have a right to privacy, even though, in the case of Medicare and Medicaid, they are vendors taking public dollars, and even though hospitals do not enjoy the same protection from scrutiny. In August 2007, the court held with Checkbook, and on the AMA’s “advice,” HHS promptly appealed, locking up the data for the duration of the Bush Administration.

The large commercial health plans have traditionally considered their claims data proprietary and so have not made their data sets publicly available. Self-funded health plans, administered by Third Party Administrators (TPAs), develop sizable data sets but have resisted collaborating, and have also not expressed an interest in making their data available.

So for those outside the health plan community, there are few, if any, data sources with sample sizes large enough to accurately evaluate and profile physician performance. This is significant, since studies have shown that there can be profound differences, 6x-8x, in resource consumption (i.e., cost) between the least and most expensive physician (within a specialty and market) to obtain the identical outcome.

In other words, not all doctors perform equally. While more patients are paying out-of-pocket for a larger portion of care, there is still virtually no credible information to guide their physician choices.

The American people could quickly learn which physicians within a specialty and a market consistently get the best outcomes at the lowest costs if Medicare physician data were made publicly available. Releasing these data would also put pressure on physicians everywhere to understand their own numbers, and to improve if their performance values are lacking.  We see this as beneficial to the great majority of physicians who seek excellence in their work.

Smoothing the Way

American health care is a vast enterprise in which millions of professionals and hundreds of thousands of organizations vie for an ever larger portion of what has historically been an always growing resource pool. The chaos and dysfunction that has developed in health care is largely due to two system characteristics. One is the fee-for-service reimbursement system that has rewarded more rather than the right care. The other is a lack of transparency that prevents us from knowing and understanding performance, even when that performance is dangerous: what works and what does not, which approaches are high and low value, who does a good job and who does not.

The five action steps outlined above would allow us to better identify the problems and opportunities in our health system, as well as the strongest solutions to drive decision-making. Then they would leverage that information to create strong incentives for the right care, organically changing the dynamics of care and reimbursement and, to the degree possible, smoothing the transition required to heal the way we supply, deliver and finance care in America.

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