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Fixing America’s Health Care Reimbursement System

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By BRIAN KLEPPER, PHD

A tempest is brewing in physician circles over how doctors are paid. But calming it will require more than just the action of physicians. It will demand the attention and influence of businesses and patient advocates who, outside the health industrial complex, bear the brunt of the nation’s skyrocketing health care costs.

Much responsibility for America’s inequitable health care payment system and its cost crisis is embedded in the informal but symbiotic relationship between the Centers for Medicare and Medicaid Services and the American Medical Association’s Relative Value System Update Committee — also known as the RUC. For two decades, the RUC, a specialist-dominated panel, has encouraged national health care reimbursement policy that financially undervalues the challenges associated with primary care’s management of complicated patients, while favoring often unnecessarily complex, costly and excessive medical services. For its part, CMS has provided mostly rubber-stamp acceptance of the RUC’s recommendations. If America’s primary care societies noisily left the RUC, they would de-legitimize the panel’s role in driving the American health system’s immense waste and pave the way for a more fair and enlightened approach to reimbursement.

As it is, though, unnecessary health care costs are sucking the life out of the American economy. Over the past 11 years, health care premium inflation has risen nearly four times as fast as the rest of the economy. Health care costs nearly double those in other developed nations have put U.S. corporations at a severe competitive disadvantage in the global marketplace.Continue reading…

The Value of a Life

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By BENJAMIN GEISLER

A recent NYTimes article on how to value a life drew almost two-hundred heavy-handed comments. It discussed how different governmental agencies such as the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA) or the Department of Transportation (DoT) place a monetary value on each life saved.

In many public policy areas, Cost-benefit Analysis (CBA) is being used to assess whether an investment in a particular area is worthwhile. CBA uses an “exchange rate” in which the consequences are monetarized.

The article mentioned the following values: The DOT value each life saved at or around $6 million 2010 USD$; $9.1 million 2010 US$ was the corresponding value of the EPA; and the FDA put a figure of $7.9 million 2010 USD$ (increased from $5 million in 2008 USD$) on eachlife saved from cancer death caused by cigarettes.

I did not know that the FDA considered efficiency measures such as money per life saved at all.

What I find fascinating is how arbitrary the approach of the different agencies can be. They could have just funded certain policies by how cheaply they can save a life up to a certain threshold (e.g. when thebudget is exhausted).

Instead, the EPA uses a methodology derived from logging industry (yes, you heard right). $1,000 worth of extra-work for the lumberjacks each year is generally accepted to save 1 in 1,000 lumberjacks. This was apprently developed by a Professor Viscusi who wrote his firstpaper on CBA as an undergrad at Harvard in the 1970s.

Other governmental agencies seem to survey citizens. In economics, this could actually be considered a valid approach if done right.

There were interesting comments by the readers. Some did not want to put any value of life. It was controversial if the value was too high or too low. One reader mentioned that the Federal Aviation Administration might have had a value of $450,000 per life in the late 1970s.Continue reading…

THCB @ HIMSS11

By JOHN IRVINE & MATTHEW HOLT

This years HIMSS drew the largest crowd in history (31,000). That should be a tip off that something is going on. That something is the national drive for health IT launched by the Obama administration with a whole boatload of ARRA stimulus money being paid out starting this year.

Health Information Exchange (HIE)

While the evolving meaningful use standards for Electronic medical records remained a logical focus for many vendors and the subject of a mindblowing number of panels, there is a sense that the conversation is moving to the world of health information exchanges (HIE). As always, there is spirited disagreement about exactly how the term of the hour should be defined (see the debate over just what exactly the term Health 2.0 means for an example of a good controversy). Is health information exchange a central database, kind of like the old Community Health Information Network. Is it a new peer to peer network, linking hospitals and health systems in a more useful and fundamentally practical way?  Or is it about a new economic model, based on the business models that go along with the free flow of clinical data. We heard the term Accountable Care Organization a lot! Or – more likely – a little bit of all of the above? See Mark Frisse’s excellent blog post on THCB for an in depth look.

Innovation

Sure, nobody has yet come up with the world changing, completely disruptive, industry transforming Facebook for doctors that some pundits had predicted, but there are signs we’re getting closer. Lots of people are trying and social network-ish features are everywhere, with vendors giving their systems the ability to communicate with the outside world. That includes some of the “traditional” EMR vendors like Allscripts that are now linking their users.Continue reading…

Health 2.0 Spring Fling–preview interviews

By Emily Ebert

At Health 2.0 we are getting very excited for the Spring Fling this March 20-21, and in preparation, we’re doing a series of interviews with some of the speakers and panelists. Below is a list of all the interviews we’re already done, and stay tuned for two more coming this week.

Check them out and catch our Spring Fling fever!

  • Rushika Fernandopulle talked with us about the challenges and rewards in creating his new healthcare delivery model, Iora Health. Listen here.
  • Preston Maring, founder of the Kaiser Permanente Farmer’s Market, talked about the evolution of the KP farmer’s market. Listen here.
  • Brian Witlin of ShopWell gave us the details on his mobile application that allows users to scan products and see how well they fit into the user’s health and wellness goals. Listen here.
  • Amy Romano of Childbirth Connection told us what she hopes to see come from the intersection of health IT and maternity care. Listen here.
  • Eric Zimmerman of RedBrick Health gave us a peek into the new social engagement platform they’ve created for the Alliance for a Healthier Minnesota. Listen here.
  • Hemi Weingarten, founder of the Fooducate app, told us how a simple barcode scan can inform and educate consumers in the grocery store. Listen here.

Want to hear more? Come see all of these speakers and more at the Health 2.0 Spring Fling this March 21-22, 2011. Sign up here!

Freeing the Data

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By JOHN HALAMKA, MD

I’m keynoting this year’s Intersystems Global Conference on the topic of “Freeing the Data” from the transactional systems we use today such as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM),  Electronic Health Records (EHR), etc.  As I’ve prepared my speech,  I’ve given a lot of thought to the evolving data needs we have in our enterprises.

In healthcare and in many other industries, it’s increasingly common for users to ask IT for tools and resources to look beyond the data we enter during the course of our daily work.   For one patient, I know the diagnosis, but what treatments were given to the last 1000 similar patients.  I know the sales today, but how do they vary over the week, the month, and the year?   Can I predict future resource needs before they happen?

In the past, such analysis typically relied on structured data, exported from transactional systems into data marts using Extract/Transform/Load (ETL) utilities, followed by analysis with Online Analytical Processing (OLAP) or Business Intelligence (BI) tools.

In a world filled with highly scalable web search engines,  increasingly capable natural language processing technologies, and practical examples of artificial intelligence/pattern recognition (think of IBM’s Jeopardy-savvy Watson as a sophisticated data mining tool), there are novel approaches to freeing the data that go beyond a single database with pre-defined hypercube rollups.   Here are my top 10 trends to watch as we increasingly free data from transactional systems.Continue reading…

Health 2.0 Spring Fling Updates

Health 2.0’s Spring Fling is just 3 weeks away. We are expecting a great crowd, so register today!

Catch expertly curated sessions with brand new themes, products debuting to the public for the first time, and discussion on compelling success stories about delivery reform, all while celebrating Spring in San Diego!

Complete agenda here

Newly Confirmed Speakers

More speakers – more perspectives – more reasons to attend Health 2.0!Continue reading…

De Tocqueville Rewrites the Affordable Care Act

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By DAVE DRANOVE

Pending Supreme Court review, the provisions of Affordable Care Act (ACA) are gradually working their way through the system. But we are still three years away from the centerpiece of the ACA – the insurance exchanges. The combination of purchase mandates, taxes, subsidies, and underwriting restrictions that govern the exchanges has never been tried and no one knows if the exchanges will work. Even the academic theorists who assembled this patchwork quilt of rules and regulations have their fingers crossed.

Given the lengthy wait between passage and full implementation of the ACA, it was inevitable that the op-ed pages would be filled with alternatives to exchanges. Some critics would scrap them in favor of some bastardized version of the status quo, leaving tens of millions uninsured. But commentators on the right and left have offered bolder ideas for expanding coverage. Some conservatives promote voucher plans. These proposals feature open enrollment periods and a few other mechanisms that will promote broad risk pools without all the other regulatory bells and whistles. Some liberals renew the call for a single payer system. Frankly, I think both of these “ideologically pure” approaches will be more successful than the mongrelized ACA.

This is why I am intrigued by a bill that is flying under the radar screen in Congress. This bill, which has the support of President Obama, would allow states to implement their own rules for expanding health insurance coverage. If the bill provides enough carrots in the form of tax subsidies (that would have otherwise funded the ACA exchanges), then several states might just play along. If that happens, we would have a golden opportunity to discover the strengths and weaknesses of alternative approaches. Unfortunately, I suspect that this legislation will not give states enough time to act or enough money to make it worth their while, and the vast majority of states will leave the problem of financing and implementing health reform to the feds.Continue reading…

The Insanity of Health Care Pricing, aka Alice in Medical Land

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By DAVID E. WILLIAMS

One of the interesting things I learned in business school is that not only is it typical for a business to earn 80 percent of its profits from 20 percent of its customers, but that 75 percent of its customers may represent 120 percent of its profit. In other words, not only are some customers more profitable than others, but a fair fraction of the customer base is unprofitable. This kind of pattern is evident in a normal (i.e., non-health care) business. The main drivers are usually cost of customer acquisition and cost to serve. For example, some customers demand a lot more service than others and some customers that cost a lot to bring on only buy once. Price is usually a secondary factor, with more powerful or shrewder customers negotiating discounts.

Once businesses understand their true costs and profitability by customer segment they can take steps to improve profitability. For example, if customers recruited through advertising on Facebook are unprofitable, the company can advertise elsewhere. If some customers use a lot of service, the company can start charging for service explicitly.

Health care is a lot weirder than that, as Ambulance-Bill Chasing in the Sunday Boston Globe Magazine illustrates. A non-health care person wrote about how he tried to understand the bills for his mother’s ambulance rides to and from the hospital. The more he dug, the more bewildered he became:

As a reporter, I’m used to dealing with complex material, but this drive down one of the countless, curvy roads that merge into the Health Cost Superhighway left me both more informed and more confused. Maybe it really is easier to remain clueless and indifferent about our medical bills. The alternative, as a friend who has spent decades in the health care trenches told me, is “to be clueless and terrified.”Continue reading…

Laboratories of Democracy, Part 2

By MERRILL GOOZNER

Experimentation in how states would move toward universal health care coverage was written into the DNA of the Affordable Care Act. The law allowed any state to petition for a waiver that would enable it to enact its own brand of reform — including versions that did not include an individual mandate to purchase coverage or penalize employers who didn’t provide it – as long as their plans met the basic criteria of the law in terms of covering most people, providing comprehensive coverage, being affordable, and not increasing the federal deficit.

President Obama yesterday offered to move up the date for states that want to pursue their own visions of reform from 2017 to 2014. Stories in today’s press billed this as an effort by the administration to assuage conservative critics who’ve filed suit against the law and governors from both political parties who fear its economic impact. Medicaid expansion accounts for about half of the newly covered people under reform. Even with the feds picking up 90 percent of the tab, many states in today’s fiscal environment are wary of any new obligations — even one where they’re only on the hook for 10 percent.

As I wrote last month, leaving states to implement reform provides Americans with a classic example of federalism in action, one that may or may not lead to a common system across the U.S. In the early part of the 20th century, states began setting up unemployment and workers compensation insurance systems. The former became a shared federal-state responsibility with common features across the U.S. The latter remained unique to each state. Ohio, for instance, has a single-payer workers compensation system and insurance companies are prohibited from selling policies in the state.Continue reading…

HIMSS11: Setting Expectations

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By JOHN MOORE

Over a 1,000 exhibitors, some 30,000+ attendees and I come away from HIMSS, again, thinking is this all there is? Where is the innovation that the Obama administration i.e., Sec. Sebellius and Dr. Blumenthal both touted in their less than inspiring keynotes on Wednesday morn? Maybe I had my blinders on, maybe I was looking in the wrong places but honestly, outside of the expected, we now have an iPad App for that type of innovation where nearly every EHR vendor has an iPad App for the EHR, or will be realeasing such this year, I just didn’t see anything that really caught my attention. But then again, looking over my posts from previous HIMSS (this was my fourth), maybe my expectations need a serious reset and it would be wise of me to read this post next year before I get on the plane to Las Vegas and HIMSS’12.

Prior to HIMSS I participated in a webinar put on by mobihealthnews (BTW, Brian at mobi has a good article on some of those mobile apps being rolled out at HIMSS this year). My role in this webinar was to give an overview of what one might expect at HIMSS’11. Having weathered the last two HIMSS and the major hype in ’09 about Meaningful Use and ’10 when HIEs were all the rage, this year I predicted that the big hype would be around ACOs. Much to my surprise such was not the case.

The reason was quite simple and two-fold.Continue reading…

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