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PODCAST/TECH: Jeff Rose, Health Alliant Interview

For those of you who don’t want to listen to the podcast, here’s the transcript of my conversation last week with Jeff Rose from Health Alliant.

Matthew Holt: So it’s Matthew Holt from the Health Care Blog and we are doing another podcast and this one is from Jeff Rose from Health Alliant. Jeff, thanks for taking the time to speak to me.

Jeff Rose: Thank you, it’s nice to be here.

Matthew: Well let me briefly introduce Health Alliant for those of you who don’t know it. I think pretty much without question Health Alliant has created a niche for itself in being a consulting company that is helping RHIOs get off the ground. As many of the folks that read The Health Care Blog know, we’re somewhat cynical about the prospects of RHIOs here, and full disclaimer, back I think about eleven, twelve years ago I wrote a report on something called CHINs, which were in some ways precursors to RHIOs, saying that they faced a pretty bleak future and that actually came to pass. But a lot of things are different now.So for most of this conversation I’m going to speak with Jeff about the evolution of RHIOs and what he thinks they’re doing. But to start off with I’m going to ask Jeff a little bit about Health Alliant and a little bit about his background. So Jeff, can you just tell me a little bit about what you did before you got to Health Alliant, and then a little, just a thumbnail sketch about the sort of service Health Alliant is providing and for whom.

Jeff: Yes Matthew. I’ve spent all of my career in healthcare, principally between healthcare services and information technology. I began my career in information technology for Coopers & Lybrand and then Foster Medical Corporation and from there started a company in healthcare services called NovaCare, which was a very large medical rehabilitation provider.

Matthew: Sure.

Jeff: Then I’ve been involved in other healthcare service and IT related businesses, coming on close to thirty years now.

Matthew: You sound young though [laughter], haven’t been beaten up to much by the experience. So give me a quick thumbnail of Health Alliant, what it does and also it has a somewhat unusual structure for a typical consulting company.

Jeff: Yes, we do have an unusual structure. We began as a non-profit on a mission to improve the US healthcare system. Our founders included Molly Coye, David Brailer, Blackford Middleton, Bill Bernstein and myself. And then when David Brailer went to Washington as the National Coordinator for Health Information Technology had to resign from the board, and Scott Wallace of the National Alliance for Health Information Technology came on the board. I say we began as a non-profit as recently we’ve heard from the IRS that they’re questioning whether RHIOs need to be non-profits and also whether firms that serve them need to be non-profits. So we’re in discussions with them. It’s not clear what the outcome from that will turn out to be.

Matthew: Well that’s actually non-coincidental because as you probably know there was that report out today about the role of non-profit hospitals and that’s the main question and if you go back to the – full disclosure here, I used to work for IFTF which is the organization which incubated HealthTech where Molly Coye ended up and where David Brailer was working, although I wasn’t with IFTF at that time. So IFTF is also a non-profit and was constantly walking that line between what’s a non-profit organization doing consulting for non-profits and for-profits, and there’s always a sort of question in American business about what the role of non-profits is. I think that’s an ongoing question.

Jeff: I would just say that when we started this, now four and a half years ago, it was in response to what we perceived as a market failure – a market failure in healthcare in that the costs here are significantly higher than around the world. Health status is not as good as elsewhere around the world and there’s certainly questions about the quality and access to care and so what we saw was an industry that needed different kinds of support in order to move forward, to progress. And we characterized this as a market failure, and usually when there’s a market failure either non-profits step in to fill the breach or the government acts. And so we thought this was an appropriate role for a non-profit and we weren’t trying to do this as a for-profit venture.

Continue reading…

PHARMA/POLITICS: When Democrats attack!

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When Democrats attack, somehow it doesn’t convey the ferocity of the original series…but with Bush’s approval ratings going up as the price of gas comes down, the Democrats are issuing a Medicare drug report. Yup, they’ve noticed that there is both an election in November and that plenty of Part D participants are in the donut hole. And perhaps it’s about time to take the initiative back from the BS meme that “most people in Part D are happy so it must be a good thing/Republican votegetter, and the donut hole doesn’t really exist anyway.” The donut hole is the most obvious thing to go after, and the one that most seniors are concerned about, so here goes:

The analysis includes a breakdown by state showing how much more money residents would have to pay annually if they switched to a plan that had no doughnut hole. The nationwide average was $458. Residents of New Jersey would have to pay, on average, an additional $298. Residents of seven states would have to pay, on average, an additional $721. Those states are Iowa, Minnesota, Montana, North Dakota, Nebraska, South Dakota and Wyoming.”As this report shows, the opportunity to purchase plans that fill the hole is a mirage,” said Rep. Pete Stark, D-Calif. “Beneficiaries are no more able to afford expensive, full-coverage plans than minimum wage Americans are able to afford a Mercedes.”

On the other hand, they don’t seem to mention getting effective drug re-importation, even though that is banned by the legislation and over 80% of adults are in favor of it. And somehow they’ve managed to get the AP guys confused by the White House spin:

Democrats contend that one solution to filling the doughnut hole would be to let the government negotiate drug prices on behalf of beneficiaries, instead of having fragmented insurance companies doing that. Then, the government could use the savings achieved to do away with the gap. But Nelligan replied that all of the Democratic proposals that have been scored by the Congressional Budget Office had cost projections at least twice as high as the cost of the current drug benefit.

Hmm… it’s hard to imagine something costing more per benefit delivered than the current version of the Medicare Modernization Act, especially when the payoffs to employers, insurers and hospitals are counted in. And wasn’t there something about a certain government agency that already negotiates rather better on drug pricing that the Part D private plans, and yet somehow that information didn’t make it into this article? Oh yeah, there was.

HEALTH PLANS: Wellpoint backs down?

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Given that Blue Cross of California Unveils Major Initiative to Revise Rescission Policies and Procedures: in order to stop its retroactive cancellations, and that in its very own press release it quotes :

William Shernoff, an attorney representing some customers who have filed suit claiming rescission of their policies was not warranted, said the actions that Blue Cross has undertaken are appropriate and positive. "I’m impressed with the Blue Cross response to rescission concerns," Mr. Shernoff said. "Blue Cross is stepping up and acting very proactively to streamline the process and ensure fairness."

The new policies and procedures will be submitted to the Department of Managed Health Care and Department of Insurance for review and comment.

Methinks that a big out of court settlement is about to happen. Or else why would Shernoff be sounding quite so cordial. Blue Cross must be hoping that the usually tame DMHC and their not quite so tame “buddy” insurance commish John Garamendi are not going to follow up too much or too expensively.

For a view of what obfuscation may lie behind their shiny new guidelines, see over at Insureblog (yup the one blog that was supporting Blue Cross!).

I personally really hope that this is a case of a big bad insurer mending its ways. Let’s see.

TECH/HEALTH PLANS: Quick recap on PHRs and consumer health care

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Yesterday I ran a panel at Teradata’s partner conference in MickeyMouseville, FL. On the panel were Liz Dudek from Medstat, Jill Burrington-Brown from AHIMA and David Cochran from Harvard Pilgrim health plan.

Pretty interesting conversation. David is particularly fun and funny. He thinks that consumers are being driven to the CDHP and have no real interest in it. Liz thinks that PHRs based on claims are going to be introduced by many more employers this fall. Jill is out educating anyone who listens about PHRs, but we all agreed that a unified consumer view of all their data is far away.

Funnily enough I was the most optimistic—I think that PHRs will be relatively common (15–20% uptake in 5–7 years?). Harris apparently said that it’s now 7% but I don’t believe that number. But after Wellpoint and United started providing it to their members

David had an interesting parsing out of the functions being lumped in a PHR

a) Communication transactions with physicians (appointment setting, refills, online visits)b) Information relevant to individuals health (Rx, Healthwise et al)—the Information therapy piecec) Financial transactions (EOB, related accounts)d) One other that I’ve forgotten!

His point is that not all organizations can do all pieces. The physician transaction piece is tough for a health plan, but is the most popular part of the PHRs run by Group Health, Caregroup, PAMF et al. So as in much of health care, expect spotty and varied implementation.

I agree, but I think that if the plans get serious about this it’ll force the providers to get involved. We shall see.

HEALTH PLANS: More of the same bad behavior?

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This article, Sick but Insured? Think Again by Lisa Girion at the Los Angeles Times is why she’s been slow to respond to my email about the AHIP quote from last week. No matter. It’s the same meme about California health insurers retrosprctively cancelling sick people’s insurance on very flimsy grounds.

What I can’t tell is if this is a new story or just a human interest piece on the same issue. Wellpoint’s Blue Cross unit is already in deep “discussions” with both the patients’ legal team and the state’s DMHC from the cases reported earlier this year. There were reports that California’s Blue Shield (not related to Wellpoint or Blue Cross) is also being examined, and the story features them doing the same thing. By the way, if you look carefully at the comments from the AHIP piece last week, you’ll see that Pacificare/United is accused of the same thing too.

So it’s safe to say that everyone is at it. And it’s therefore safe to say that the individual market sucks.

 

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HEALTH PLANS/PBMs: Employers are dumb and therefore get punked

• 5

I couldn’t write about this yesterday because I spent the day hanging out in airports, but plenty of people emailed me about Barbara Martinez of the WSJ and her continued journey into the seemy side of employer benefits. As I’ve mentioned before Martinez is the best investigative journalist working in health care, and she consistently shines her large flashlight on some of the murkier goings-on in the health plan and PBM world. Yesterday she had two articles (one of the front page). The first looked at the scummy practice of consultants providing advice about which health plan to use. And just like in the Marsh & Mclennan scandal in New York, yet again the consultant/broker allegedly working for the employer is instead in the pay of the insurer. The only difference here is that the insurer was willingly colluding with the consultant rather than in the M&M case apparently extorted by them, but that’s a fine, fine line. And of course, true to many of its recent business practices the main insurer she finds involved is UnitedHealth Group—while most of the consultants involved are small regional outlets. Pity this poor Ohio school district:

Payments to a consultant are at issue in an Ohio case involving the South-Western City School District, which encompasses suburbs southwest of Columbus in the central part of the state. In 1996 the district hired Joseph James & Associates of Dublin, Ohio, to help it choose a health insurer. The district had fired its previous consultant after learning he had financial ties to health insurers. Superintendent Kirk Hamilton says the district made clear that it expected Joseph James not to take money from district health-care vendors. “We wanted to make sure the people representing us were solely working in our best interest,” he says.

Each time the health-insurance contract came up for bidding in subsequent years, Joseph James managed the process. Each time, UnitedHealth won the business. Over 10 years, the district paid the consulting firm about $380,000 for its services. Earlier this year, Dr. Hamilton discovered that Joseph James also was getting paid by UnitedHealth. The district quickly sued both the consultant and the insurer in Franklin County Common Pleas Court. Documents filed in the suit showed that Joseph James was receiving 1% of premium dollars paid by the district. The consultant received more than $645,000 from UnitedHealth from 1999 to 2004 for bringing in the district’s business, according to the documents. Joseph James, in court filings, says it became eligible for the bonus as part of a “recognition program” by UnitedHealth rewarding its “overall contributions.”

But she doesn’t stop there. In particular in the PBM world, she also notes that several of the big benefits consultants are also working both sides of the street—helping the PBM with pricing while auditing them for their clients. Mercer, Hewitt et al brush off the allegations by saying that the work is from different business units and there’s no conflict of interest. That’s not a bad argument. Until of course little incidents like this crop up:

Joseph Sawicki Jr., the comptroller of Suffolk County on Long Island, N.Y., discovered the ties between consultants and PBMs after the county sought a routine audit of its PBM, Express Scripts Inc., in 2003. The county hired Mercer for the job. Mr. Sawicki says officials didn’t realize at first that Mercer also serves as Express Scripts’s employee-benefits consultant and had other consulting arrangements with the PBM. Mercer says it did disclose the ties.

Mr. Sawicki wasn’t happy with the audit’s results, which initially found that Express Scripts had overbilled the county by more than $1.1 million but later suggested that the overbilling amounted to only $14,000. Mercer charged the county $93,000. Mr. Sawicki withheld half the payment and asked Mercer to return the half it already had received, saying he doesn’t pay for “shoddy” work. A spokeswoman for Mercer, Stephanie Poe, says Mercer made clear its initial estimate was likely to be reduced and it did a good job on the audit although it wasn’t allowed to complete its work. The dispute over the $93,000 is unresolved.

The county didn’t pursue any refunds from Express Scripts in connection with the billing Mercer had audited. It then hired another auditor to review Express Scripts’s billing in subsequent years. That review led to a settlement in which Express Scripts paid the county $865,000. A spokesman for Express Scripts said the company has saved “millions of dollars” for Suffolk County. He declined to comment on the settlement.

The second Martinez article asks even more about an area she’s been following as long as THCB has, the role of PBMs in “adding value” to their clients. Or Not. She highlights the work of a consultant called Pharmaceutical Strategies Group which actually gets openly paid by the PBM on a per member basis for handling its clients contracts. 

Mr. Watson says clients are getting their money’s worth. “If you paid us $500,000 and we saved you $50 million, how do you feel about the $500,000?” he asks. In an emailed statement, the carpenters’ union concurred with Mr. Watson’s analysis, saying it expects to save more than $30 million under its new prescription-drug program and is “extremely satisfied” with it.One blue-chip client of Pharmaceutical Strategies is Exelon Corp., an electric utility in Chicago with 17,000 employees. A 2003 internal document from a consulting firm later purchased by Pharmaceutical Strategies says the firm received revenue of $629,012 from a PBM, Caremark Rx Inc., of Nashville, Tenn., in connection with the Exelon business. The document doesn’t specify a time period. Exelon’s head of health benefits, Carole Schecter, says the company ended the arrangement last year and now pays Pharmaceutical Strategies directly. The company declined to discuss its reason for the change, and Caremark declined to comment.

Last year I tried to get a very savvy major Fortune 100 CEO to tell me what he thought of PBMs, and he told me that they were run by smart people and must be doing something right but couldn’t say quite what. Given that he’s one of the better ones, I’m quite prepared to believe that the carpenters et al are a couple of 2 by 4s short of a full load on this issue. Of course the really smart employers (and there aren’t many of them) have kicked out the PBMs altogether. University of Michigan is the poster child.

But as long as most employers don’t look too closely at their PBMs or their health plans — and the value they bring, then we can expect Martinez to stay very busy!

HEALTH PLANS: Is medical cost trend headed down again?

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Aetna seems to think so. Last week Aetna shares rose after comments on medical costs. Of course this could be a blip given that last quarter the stock fell on a higher than expected medical loss ratio. But assuming that it’s not, given that overall premium increases are a little lower this year, this means either that Aetna has gotten a-hold of its spending a little better than expected, or that it’s done a better job underwriting and getting rid of its poorer risks. Given its history in this regard, I wonder which?

TECH: Search engines revving up–Healia review

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Got a press briefing from Healia, which is a new search engine focusing on health care. Their goals is to improve the quality and personalization level of the search, and cut out the spam results.

The approach is well thought out. Their engine also allows filtering by age/race/reading level/gender via a column on the left. They automatically behind the scenes assess quality by looking at the documents to
assess the page (rank by both relevancy and quality), and they assign it something called Healia’s Quality
Index Score. Finally they detect the general semantics of the
search term–drug searches will include dosages and side effects.

None of this makes much sense without using it, so you should go test drive it. You’ll see that results for standard medical terms bring back results from a more "authoritative" bunch of sites than a standard Google search, and if you search on specific disease terms (like diabetes) you get a series of tabs that divide the response up into categories like prevention, treatment, etc. You can also turn on or off the filters on the left that give you another range of result choices  or vary the font size right from the top.

So far the VA has licensed the technology, and they’re going both the licensing and portal rout. At the moment it’s small with only a few employees, but they’ve clearly done a lot of formal usability testing and lots of research and thinking about what would be  useful health search engine.
Healia’s founder is Tom Eng, Chairman. Craig Husa is the CEO. Marcos Athanasoulis who runs their tech of happens to be an old friend of mine and I used to work with his wife Monika, but I didn’t realize he was on board until this call!I’ll hopefully soon be getting a look at another major new search engine for health care, Healthline, (for which Enoch Choi appears to be blogging) shortly. But clearly in the post Google IPO world, there is now interest in figuring out the future of  consumer web search for health care once again.

CODA: Meanwhile. Tommy Thompson is pitching new health care software. It’s a self diagnosis tool. May well be very clever n’all, but I dont think it’s going to find a self-pay market at $30 a year. I might though be wrong!

AND: Another sorta health-specific search engine that’s supposed to help you find insurers and doctors that was called Healthia (not that that was confusing it with Healthline or Healia in anyway!) has changed it’s name to Vimo.

QUALITY/HOSPITALS: Odd hospital stay ratings–only the good get mentioned?

• 1

In a vox populi column the SF Chronicle asked readers, How would you rate your last hospital stay? Funnily enough in every case when they had a good experience they mentioned the name of the hospital. If they had a bad experience, they didn’t call out its name.

Do people with bad experiences really tend to keep quiet about who did the dirty on them? Or is the Chronicle scared of pissing off advertisers? We report, you decide!

HEALTH PLANS: The individual insurance market sucks; did I just catch AHIP in yet another lie?

• 16

You’re not exactly surprised are you? A Commonwealth Fund Study Says Individual Insurance Too Costly

The overwhelming majority — 89% — of working-age adults who shopped for health coverage in the individual market over the last three years were rejected for health reasons or found it too expensive <SNIP> Coverage was not affordable for 58% of the applicants, and 21% who had a medical condition were turned down, charged a higher premium or sold a policy that excluded the existing problem from coverage, the report said.

But don’t worry—that bastion of pure unadulterated research AHIP has its own study:

America’s Health Insurance Plans, an industry group, took issue with the study and its methodology — a telephone survey of more than 4,000 consumers — saying their impressions were not as reliable as the trade organization’s survey of insurance companies last year. The group also pointed out that its survey showed that 16 million people had individual health insurance and that the policies they purchased were more affordable than the Commonwealth report suggested and with richer benefits than employer-sponsored coverage.

Are they really saying that “individual health insurance policies are more affordable” AND have“richer benefits than employer-sponsored coverage.” Even on an acid trip there’s no way that Karen Ignagni and her lackeys can keep those two thoughts in their head at the same time without smoke coming out of their ears. I mean I know they’re well versed in lying but that one is about as stupid as possible. If only because by definition the distribution costs of selling individual policies massively exceed those of group policies. If they’re “more affordable,” it’s because their benefits are lower. And yes the benefits of most individual policies are worse than those of group policies, and most of them are consequently cheaper on an absolute dollar basis. But on a “dollar per benefit” scale they cost more. . Just one tiny study from Gabel and co in 2002 proving this is here

And that’s not even counting the fact that insurers underwrite the crap out of the individual market. AHIP’s own release confirms that  “Of those applicants offered coverage in the individual market, more than three-quarters received their requested coverage at standard rates, while 22 percent were offered full coverage at higher initial premiums.  Only 1 percent of offers included a coverage exception for a specified condition.” In other words the 20% of people who were potentially sick were underwritten. Duh! (And of course they don’t count people who were completely rejected, so their not bothering with the relevant denominator).

But back to the LA Times article. Please, please tell me AHIP’s being misquoted (and to be fair their own press release doesn’t quite say what the Post says they say), and that they meant “or” not “and”? Well let’s see—in a riposte to the paper I linked to in the previous paragraph which suggested that the individual market was poor value in Health Affairs back in 2002, this was written:

Administrative expenses are much higher for individually purchased insurance. Since each dollar of health insurance protection costs more in the individual market, it is not surprising that consumers in that market buy less of it

This is logical. It also would appear to completely agree with my point and rubbish the quote from the AHIP lackey research director in the LA Times. So who came up with this powerful and insightful analysis? It was Donald A. Young and Thomas F. Wildsmith. And who were they?

Donald Young is president and Thomas Wildsmith is a policy research actuary at the Health Insurance Association of America in Washington, D.C.

HIAA merged with GHAA to form AHIP shortly after that was published. Pity they didn’t bring their research team with them. At least they had some vague standards of honesty when they debated their corner back then.

CODA: By the way, I’m not exactly thrilled with any study done on the individual market. Even the massive RAND one in California had several flaws as I pointed out here, but no one in their right mind should trust anything AHIP says on the subject.

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