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The Obamacare Shift

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By PAUL LEVY

A colleague pointed this out to me recently, and I think he has it right: While more people will have health insurance as a result of the federal health care reform act, a side effect will be to reduce the number of people insured through the employer-based insurance plans that have characterized the US health care system. These people will either be insured as individuals through the state exchanges that are to be established or, if eligible, through Medicaid. There are three aspects of economic hydraulics that are likely to lead to this result.

First, the penalty to be assessed against employers for not offering coverage — $2000 per year — is dramatically below the cost of providing insurance. If you are an employers and can save, say, $5,000 by paying $2,000, why wouldn’t you do that? And the $2000 is not even indexed to inflation, while the annual charge for an employer-sponsored plan is likely to go up over time. Hence the differential will grow every year.

In the past, the provision of a health care benefit was viewed as competitive factor in hiring and retaining a firm’s work force. But for the vast majority of businesses, that may be a less important factor than saving a few thousand dollars per employee and being able to offer a portion of those savings in higher wages and/or improving the profitability of the firm. Sure, some businesses might still want to attract workers by having their own semi-customized insurance benefit, but the power of that is likely to diminish over time.

A second factor is that the so-called “Cadillac” tax will make employer-sponsored health care even more expensive if you have a plan with generous benefits. Health coverage in excess of $10,200 for individual plans and $27,500 for family plans will be hit with a 40 percent excise tax on the amount in excess of the floor. The tax is indexed for inflation plus 1 percent.

Finally, to help avoid the excise tax, employers are going to “dumb down” plan designs by raising deductibles and co-pays. As they do so, the substantive difference between their own plans and the ones that will be offered through state exchanges or Medicaid will diminish. Even if you have a residual concern that your workers may want an employer-based plan, their desire might be diminished as you make your plan less attractive, so you lose little in competitiveness by referring them to the non-employer based plans.

There are those who believe that there was an ideological basis for this construct, that the Administration and a majority of Congress wanted people to move away from employer-based health insurance as part of an eventual movement to a federally chartered single-payer regime. Others say that it is just an natural extension of a bill that created important protections — benefit mandates, a floor for medical loss ratios, guaranteed issue, restrictions on medical underwriting — all of which act to increase the cost of insurance products.Continue reading…

Regression to the Mean

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By JOHN HALAMKA

You may have heard about the Sports Illustrated Effect, the notion that people who appear on the cover of the magazine are likely to experience bad luck, failure, or a career spiral.

Over the 30 years of my own professional life, I’ve watched many colleagues become famous, receive significant publicity, then fail to live up to the impossible expectations implied by their fame. They regress to the mean. Nature seems to favor symmetry. Things that rise slowly tend to decline slowly. Things that rise rapidly tend to drop rapidly.

Fame is usually a consequence (good or bad) of invention, innovation and accomplishment. Fame itself is generally not what motivates a person to accomplish their feats. An Olympic athlete is usually inspired because of a highly competitive spirit. An inventor is usually inspired because he/she believes there is a better way. Fame that is the consequence of a feat can affect future behavior. It can become an intoxicant and motivate someone to strive for accomplishments that keep the fame coming.

I’ve thought about my own brushes with fame.

When I was 18 and started at Stanford, I realized that my scholarships would only cover the first year of tuition. I visited the Stanford Law library, read the US tax code and wrote software for the Kaypro, Osborne 1, and CP/M computers that calculated taxes. The software shipping from my dorm room generated enough income to start a small company. When the PC was introduced, we were the first to provide such software to small businesses seeking to compute their tax obligations. By the time I was 19, I moved into the home of Frederick Terman, former Provost of Stanford, and the professor who first encouraged William Hewlett and David Packard to build audio oscillators and form a new company called HP. The story of a 19 year old running a software company and living in the basement of founder of HP was newsworthy at the time. I did interviews with Dan Rather, Larry King, and NHK TV Japan.Continue reading…

HIMSS11 Recap

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By NEIL VERSEL

“We just need to do it.”  That’s the comment I heard from a hospital CMIO on a HIMSS shuttle bus Thursday morning. He, of course, was talking about “meaningful use,” the standard by which providers will qualify for federal Electronic Health Record (EHR) subsidies. This year’s edition is the first HIMSS conference since the incentive program started in October (for hospitals) and January (for individual providers).

Yet, HIMSS11 was not all about meaningful use. “Meaningful use in some ways fell off the radar,” another CMIO said on the same bus ride. The new buzz—and source of anxiety—is about Accountable Care Organizations.

The healthcare world is waiting nervously for HHS to release its proposed ACO regulations. HHS Secretary Kathleen Sebelius was on hand for a keynote address Wednesday morning, but gave no hint of when the regs might come. Instead, Sebelius and departing national health IT coordinator Dr. David Blumenthal mostly stuck to their general stump speeches, perhaps not wanting to stir up political controversy in this time of divided government.

In some ways, Blumenthal’s presence at HIMSS was notable for something he didn’t show up for. Deputy National Coordinator Dr. Farzad Mostashari, likely to be the interim coordinator when Blumenthal returns to Harvard in April, led the ONC town hall on Tuesday. Mostashari caused some seismic ripples through much of the vendor community on Monday by saying that ONC will be working with the National Institute for Standards and Technology and other organizations in the next six months to find ways to measure EHR usability, and that usability likely will be part of Stage 2 meaningful use, starting in 2013.Continue reading…

GE Healthcare @ HIMSS11

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Matthew spoke with GE Healthcare IT’s SVP and General Manager of eHealth, Earl Jones, about the health IT giant’s strategies.



The Power of a Network: Health Information Exchanges

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By JACK BUXBAUM

The idea behind a network is that it grows stronger as more participants join it. A basic example is a cell phone provider that allows its members to make free calls to other members – the policy becomes more valuable as more people join the network.

Health Information Exchanges (HIEs) work on the same principle – networks connecting electronic health record (EHR) systems, pharmacies, Medicaid Management Information Systems, etc. The idea is sound, but the information shared is only as valuable as the number of participants and the quality of the data and resources.

Interconnectivity and interaction among providers can potentially do so much to raise the standard of patient care that it’s important we do all we can to facilitate participation in HIEs. With that said, we must recognize that it takes time to build quality and we want to make sure we’re getting it right.Continue reading…

HITECH in High Gear

By DAVID BLUMENTHAL, MD

We’ve known for years that health information technology can improve health care. But until recently, the implementation rate among providers has been low, except for a few early adopters.

In the last two years, however, there has been a significant upward inflection in the adoption rate. For primary care providers, adoption of a basic EHR increased by half from 19.8 percent in 2008 to 29.6 percent in 2010.

And with HITECH Act programs now in full swing, it looks clear that adoption and use of health information technology will go into high gear. Already, 81 percent of hospitals and 41 percent of office physicians are saying they intend to achieve meaningful use of EHRs and qualify for Medicare and Medicaid incentive payments.

A recent edition of the American Journal of Managed Care (AJMC) helps us understand why the accelerated move to EHRs is so important. This special issue devoted to health information technology presents perspectives on health IT from a wide range of stakeholders—providers, policymakers, and patients. Contributors include representatives of private companies and public agencies, managed care organizations and academic medical centers, medical educators and a medical student—confirmation that the potential of health IT is compelling for a broad spectrum of Americans.Continue reading…

Is Economic Credentialing A Tool for Primary Care to Lead ACOs?

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By VINCE KURAITIS, JD

Is economic credentialing — the use of economic factors such as loyalty and utilization rates in the physician credentialing process — a potential tool for primary care physicians to lead ACOs?   and reestablish the vitality of primary care in American health care?

Keith Wright and Gregory Drutchas’ incisive article Economic Credentialing: A Prescription To Secure Shared Savings Under Accountable Care provides useful history and context about economic credentialing:

For many years, the use of economic factors by hospitals in making medical staff credentialing decisions has been the subject of much discussion and debate among physicians, groups such as the American Medical Association (AMA), healthcare providers, payors, and attorneys….the implementation of healthcare reform is likely to bring the debate over economic credentialing to the forefront once again.

While economic credentialing has been talked about a lot, it’s rarely been used.

The controversy over economic credentialing arises again with ACO’s…and this time the answer might be different — and opportunistic for primary care.Continue reading…

A Family Physician’s Manifesto

By PAUL M. FISCHER, MD

As a third-year medical student in 1977, I joined the American Academy of Family Physicians (AAFP).  In those culturally tumultuous years, it was a way to declare my belief that America needed physicians who cared for the whole person, family and community. It was also a declaration that, in choosing the primary care path in a field ripe with tempting medical specialties, money was not my primary goal.

For much of my 33-year membership, I have considered the AAFP to be “my” organization. However, there is a time when one must step back and declare independence from organizations that have lost touch with their members.  The AAFP does much that supports my day-to-day life as a busy family doctor, but for 33 years, its leadership has failed to fix the central problem for primary care in America: poor reimbursement.

I deal every day with complicated health problems of complex patients who are insured by companies singularly focused on limiting even the smallest cost.  In return for managing these patients, which often involves critical and life-or-death decisions, I am paid by Medicare 60% less per hour than is a dermatologist, who, for the most part, treats trivial disease that involves no nighttime emergencies and little intellectual challenge.Continue reading…

Jonathan Bush @HIMSS11

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We caught up with always outspoken athenahealth CEO Jonathan Bush backstage in Orlando.



Conflicts Of Interest In Guideline Development: A Dirty Little Secret Gets Aired Again

By DAVID WILLIAMS

An Archives of Internal Medicine article (Conflicts of Interest in Cardiovascular Clinical Practice Guidelines) is getting a lot of notice this month. In essence, many of the physicians who develop guideline that influence practice patterns and payment decisions have conflicts. The authors recommend only allowing those without conflicts to write the guidelines.

This isn’t a new issue. In 2006 I wrote a piece (Another dirty little secret is out in the open) and am reposting it below because it’s timely:

A year ago in Time to deal with medicine’s dirty little secrets?, I wrote about a variety of practices that are relatively well-known in the health care field but would be shocking to outsiders. Industry often takes the blame for “aggressive marketing tactics,” and no doubt some of that is deserved. But physicians are also culpable.

The open secrets include the ghostwriting of journal articles by industry sponsors, physicians and academic medical centers holding ownership stakes in companies whose products they are researching, the clinical role sometimes played by orthopedic sales reps, and perhaps the most egregious example: physicians who set guidelines having financial relationships with the companies that benefit from how those guidelines are set.

Now we have a new example, which is even more serious than usual. A recent New England Journal of Medicine article blames Eli Lilly for overzealous promotion of Xigris. According to the Boston Globe:

Eli Lilly and Co. funded medical guidelines created for the treatment of [sepsis] in an effort to boost sales of a drug with questionable benefits. The allegation was made by senior scientists at the National Institutes of Health. [They] said Lilly tried to shape the guidelines for use of the drug Xigris by sponsoring a three-pronged marketing campaign

The first two phases are by now almost standard practice in the industry:

  1. Lilly paid a task force to spread the word that hospitals were rationing Xigris because of its cost, which forced docs “to decide who would live and who would die”
  2. Lilly “orchestrated” the development of practice guidelines to treat sepsis that called for early use of Xigris (an example of the phenomenon I have described before)

But then Lilly allegedly took a third step, which was a little shocking even to me:

Now, Lilly is sponsoring lobbying efforts to turn the guidelines into quality standards. Hospitals that follow such quality measures receive higher payment from insurers.

What’s happening here? Basically, an influential group of doctors is being lazy and greedy, and Lilly is enabling their behavior. The doctors put their fingers in the cookie jar and Lilly keeps restocking it. The public is paying for the cookies –in the form of higher product sales and sub-optimal health care– and should get fed up!

I have no problem with companies using legal means to promote their products, even if their tactics are “aggressive.” They owe it to their shareholders to maximize return on investment. But it isn’t in their long-term interest to push things as far as the medical profession often lets them.

Industry leans on the reputations of individual physicians (aka “key opinion leaders”), medical societies (aka guideline writers), and journals to legitimize their marketing messages. It’s up to the medical profession to scrutinize industry claims and issue independent guidelines and quality standards. Sometimes these claims hold up and deserve to be propagated. Sometimes they don’t. If the docs and journals don’t do their jobs they deserve to lose credibility.

It’s hard to know the extent to which medical guidelines are already corrupted. The situation is a bit like the incident when the Chinese President’s plane was refitted. In the process of fixing up the plane someone inserted a bunch of listening devices (presumably at no extra charge). When the Chinese checked out the plane and realized it was bugged they had to rip the whole thing up. That’s something like what is going on within the major payers. They’ve stopped treating journal articles and guidelines as objective and have started doing their own analyses. But do we really want to leave health care decisions just to them?

Here’s some free advice to the different players in health care:

  • Industry: Feel free to market your products and services aggressively, but don’t take things too far. If you do you’ll end up killing the goose that lays the golden eggs. No one will trust doctors, guidelines or journals anymore
  • Physicians: Remember that pharma and device companies are not stupid. If they spend money supporting your research or sending you to conferences or sponsoring continuing medical education it’s because they expect to get a return on their investment. It’s awfully hard to remain objective in such instances. Your job is to adopt the best medical practices and put the patient first –sometimes that requires expensive new treatments and sometimes old, cheap standbys are better
  • Payers: Go ahead and challenge the objectivity of journal articles and guidelines. On the other hand, don’t pretend that low cost is always synonymous with best treatment. Expect physicians to keep you in line on that.
  • Patients: You need to look out for yourself. Find a good, honest physician. Take a look at who’s sponsoring the educational materials you receive. Ask your physician about alternative treatments and do some research yourself
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