Making Sense of What’s Next for Health Reform

by Clive Riddle, January 21, 2010

What a difference a week makes! Amidst the political chaos and confusion during the past few days on status and prospects of health care reform, some prominent pundits and lawmakers are either proclaiming health reform is absolutely dead, or that there is still a viable pathway for reform, and it will pass. Both sides of the spectrum voicing such certainty right now would seem to be ‘spinning.’ Chaos and confusion should reign as we speak, because at this point either outcome is quite possible. Thus for now, one would be wise to position for a range of possibilities.

Here are some key points to consider in this “anything’s possible” phase that will undoubtedly clear up with a little time:

• The public nationally is clearly not happy with reform as proposed. The latest Wall Street Journal / NBC poll released this week tracking this issue pegged approval ratings of Obama's handling of health care at 38% approval and 55% disapproval.

• But doing nothing, and opposing everything isn’t necessarily popular either. The same WSJ/NMC poll gave Republicans an even lower approval rating for their handling of health care: 26% approval and 64% disapproval.

• Lawmakers up for reelection this year are looking to the Massachusetts Senate election as the referendum on health reform, so some Democrats may reverse course next time around with any health reform votes. But the Washington Post today makes an interesting point: “the Republican candidate rode to victory on a message more nuanced than flat-out resistance to universal health coverage: Massachusetts residents, he said, already had insurance and should not have to pay for it elsewhere.”

• President Obama has just signaled in an ABC interview that he would like Congress to revise the reform package to include core elements that would be more publicly acceptable and potentially gain support of a few Republicans: "We know that we need insurance reform, that the health insurance companies are taking advantage of people. We know that we have to have some form of cost containment because if we don't, then our budgets are going to blow up…And we know that small businesses are going to need help so that they can provide health insurance for their families. Those are the core, some of the core elements of this bill."

• The available options for the Senate and House to proceed leave no clear path, and plenty of disagreement. The President stated he doesn’t want to Senate to “jam” something through before new Massachusetts Senator Brown arrives, and Senate Majority Leader Harry Reid agreed this approach would not be taken. The option of the House adopting the Senate version of the reform bill as-is, has been floated, but House Speaker Pelosi is signaling the votes aren’t there at this time. Instead, she is looking at getting the House to pass the Senate Bill in combination with a companion clean-up bill.  The House has a year until the Senate Bill expires. The other options include a new watered down bill as the President now advocates, or an attempt to jam various components of the bill through budget reconciliation, which just requires a simple majority to pass, but also could trigger delays,  messy procedural fights with Republicans and make Democrats up for re –election skittish about potential public wrath.

Health Care Crisis and Reform: Everything Old is New Again

By Clive Riddle, October 1, 2009

As the Summer Town Hall agitation of health care reform has now wound its way into autumn, it seems darn perplexing trying to prognosticate what exactly will happen next with health reform and what exactly is the national mood at this moment.

So I thought it might be instructive to listen to the ghosts of health reform and health crisis past. I took a stroll down memory lane, sifting through Time Magazine’s archives for the past 70+ years. Along the way I found many a headline that surely must have surfaced from discussion from this summer’s town hall meetings. But it seems, both health care and Yogi Berra are experiencing déjà vu all over again.

Here’s a timeline of recycled topics from the 30’s through the 60’s:

Presidential Commission Recommends Complete Reorganization of American Medicine

December 5, 1932: “The Committee on the Costs of Medical Care finally published its recommendations for the re-organization of the practice of medicine in the U. S.” The Committee report notes that a massive number of Americans have no access to care (“38.2% of the population were getting no medical care whatsoever”) and that if the “U. S. annual sick bill were equitably spent, every inhabitant of the nation would get adequate medical attention, every person connected with the practice of medicine would earn an adequate living.” The Committee advocates large group practices, based around hospitals.

A Book on What is Wrong With Health Care and a Call for National Health Insurance

May 15, 1939: Professor Bertram Bernheim, MD of Johns Hopkins pens “a startling book, Medicine At the Crossroads.” He “sees national health insurance coming” and says that eventually “all doctors will band together and practice in clinics, and this streamlined system of medical care will in itself bring greater specialization and raise the quality of service. Once this great step is taken, he believes it will make little difference in a doctor's professional life whether the patient or the government pays the doctor's bill.”

Study on Nation’s Health Finds U.S Plagued by High Rate of Chronic Disease

January 15, 1945:  the Senate subcommittee on Wartime Health and Education after a two-year study of the state of the nation's health found that “about one U.S. citizen in six has a chronic disease or physical impairment.”

Physician’s Rebel Against Discounted Insurance Payments and Second Guessing Over Tests Ordered

December 1, 1947:” San Francisco rumbled last week with a battle over compulsory health insurance. Under fire was a medical system covering San Francisco's 12,000 municipal employees. The only governmental compulsory health insurance system in the U.S., it provides medical care in return for a small monthly fee deducted from members' pay….Because members' payments were set too low, doctors have often been paid less than the scheduled fees. Last fortnight, aroused by rebuffs of their demands for a 15% raise in fees, and by Medical Director Alexander S. Keenan's suggestion that they had needlessly pyramided costs by calling for too many laboratory tests and X rays, the doctors finally rebelled.”

Heated Debate Over Competing Proposals of Public Option vs. Private System

December 29, 1952:  “Attention has been concentrated on two rival methods…compulsory national health insurance (favored by President Truman and Federal Security Administrator Oscar Ewing, "socialized medicine," to its opponents) and the present system of private payment…..ast week the U.S. was offered a middle way. The President's Commission on the Health Needs of the Nation recommended that the U.S.: 1) put the Truman-Ewing plan on ice, 2) go all out to extend voluntary insurance plans to tens of millions not now covered, 3) let federal and state governments pay the premiums for those who cannot afford to pay them, 4) dot the nation with up-to-date medical centers where doctors would practice in groups.”

U.S. Health Care is Touted as Best in the World, But Really Isn’t

November 16, 1953: A noted physician, Boston's Dr. James Howard Means, pens a book, Doctors, People, and Government in which he states "The impulse to reform in medical public affairs comes usually from without, and resistance to it from within the majority fold of organized medicine ... It is only under the lash of public opinion that organized medicine makes any social progress” The article notes “though U.S. medicine is often touted as the best in the world, he asks, ‘Best for whom? Doctors, patients, or everybody? Certainly it is not best for everybody, else the public affairs of medicine would not have been in turmoil for the past two decades.’”

Medical Costs Rising Much Faster Then Any Other Segment of the Economy

August 27, 1956: “Medical costs have been rising faster than any other item on the cost-of-living index, according to the Bureau of Labor Statistics. A patient must now pay 25% more for treatment than in 1950, as compared to an 8% rise in the overall price index. At the same time, benefit payments from health-insurance programs are running a fifth higher this year than last.”

Physicians Having to Hire Staff Just to Deal With Insurance Paperwork and Hassles

September 8, 1957: “Health insurance, a boon to no million people in the U.S., is regarded by more and more doctors as a paper-spewing ogre. Reason: the torrent of technical information requested by insurance forms is cutting into doctors' valuable time for treating patients, leading directly to higher costs for medical care. With even minor treatment requiring detailed reports, many busy doctors find they can no longer get along with just a receptionist or nurse, are hiring a new kind of medical officeworker—the ‘insurance secretary.’”

Covering Millions of More American Will Cause a Log Jam Trying to Access Health Care

October 22, 1965: In the Article Medicare: Will It Work? fears are cited that “no one in the Administration or in the American Medical Association can be really certain as to how many aged eligibles will jam into hospitals for long-delayed, noncritical "elective" operations or other "nonessential" treatment.”

Health Insurance Industry Fights Government Insurance Proposals Only To Embrace Them After Passage

October 22, 1965: Before the health insurance lobby opposed today’s Public Option, they opposed the HMO Act of 1973, only to embrace them later. Before that, “the insurance industry was second only to the medical profession in battling the advent of medicare. For years, insurance lobbyists in Washington opposed any Government-sponsored health-insurance program. Last week the insurance industry's representatives were still active, but this time it was at the huge social-security complex on the outskirts of Baltimore, where they are negotiating with the Government to get their share of medicare. Most insurance companies now realize that medicare, far from being the disaster they once predicted, may prove to be a welcome pep pill for their industry.”

American Health Care Is Un-Organized, Inefficient, Costly and Not Always High Quality

December 1, 1967: The article Crisis of Organization states “costs for its services are rising twice as fast as the general cost of living, and are expected to keep on soaring, hospital costs to the tune of 250% by 1975, physicians' services by 160% and dental care by 100%. Yet the industry is ill-organized and inefficient, and much of the care given in hospitals is of poor quality. That is what the National Advisory Commission on Health Manpower reported to President Johnson last week.”

Health Co-ops: Checking out Group Health Cooperative

by Clive Riddle, August 20, 2009

Health Care Cooperatives are certainly getting more than 15 minutes of fame as the health reform debate intensifies. Group Health Cooperative has been perhaps the most visible and referenced example referenced in discussions from all sides. For the less initiated, what follows is a quick overview of all things GHC. Group Health Cooperative is based in Seattle, Washington, with almost 10,000 employees and serves around 550,000 members in twenty Washington counties and two counties in Northern Idaho.

Governance

As a cooperative, GHC arranges the delivery of health care benefits and services for its members as a non-profit, member controlled organization. Unlike the traditional structure of a member-owned cooperative, financial surpluses are reinvested and not distributed to the members.

Group Health is governed by an 11-person Board of Trustees of volunteer consumer members, which hires the chief executive officer and makes major policy decisions. Any member of GHC eighteen years or older is eligible to vote to elect the Board of Trustees, and to vote on bylaw changes. The GHC bylaws are available for review online. Members must register to vote, and the registration deadline just passed (August 18^th) to vote at the 2009 annual membership meeting (Oct. 17^th 2009.)

Public Board meetings begin with an open microphone session during which any GHC can address the Board directly on all matters except those related to personal health care. Some GHC medical centers also have volunteer-led Medical Center Advisory Councils that work with staff to address care and wellness issues and meet at least four times per year. The councils are open to GHC members who reside near or receive care at a respective medical center.

GHC’s President and CEO is Scott Armstrong, who has been with the organization since 1986, starting as an assistant hospital administrator. He became president and CEO in January 2005. Prior to GHC he was the assistant vice president for hospital operations at Miami Valley Hospital in Dayton, Ohio.

Provider Network

GHC care is delivered by Group Health Permanente providers (880+ physicians) at Group Health-operated medical facilities, and in outlying areas and through POS options, also through a network of almost 9,000 providers and 40+ hospitals. After five decades serving as a staff model, the physicians formed Group Health Permanente, an independent professional corporation, in 1997, which operates under exclusive contract to serve GHC. 

History and Growth

In 1946, GHC, known as Group Health Cooperative of Puget Sound, was developed, acquired a Seattle medical clinic and hospital and starting with 1947 established a group practice, prepaid health plan. Initial coverage costs involved a $100 membership fee, plus $3 per month dues for each adult family member and $1.50 per month per child up tot four, with no charge for additional children. The local King County Medical Society undertook a highly organized campaign against GHC physicians and their members, resulting in a lawsuit and 1951 State Supreme Court unanimous ruling against the anticompetitive practices of the Medical Society.

Membership by the end of the 1950’s came close to 40,000. Enrollment surpassed 100,000 in 1967. Additional medical centers were developed and service area expanded each decade. In 1977 11,000 member Tacoma's Sound Health Association was acquired, and by 1979, enrollment surpassed 275,000. In 1982, the first agreement was signed to provide care by non-Group Health physicians on Vashon and Maury islands.  In 1983, enrollment surpassed 300,000 and GHC established the Group Health Center for Health Studies; the Center for Health Promotion; and Group Health Foundation., and acquired an existing Spokane 20,000 member health plan serving Eastern Washington, which evolved by 1987 into the affiliate Group Health Northwest, consolidating services east of the Cascades. In 1990, GHC launched Group Health Options, Inc., a subsidiary, which offered the Northwest's first POS plan. In 1994, Group Health membership passed 500,000. By the late 1990s membership approached 700,000.

In 1997, a strategic alliance was formed with Kaiser Permanente’s Washington operations, creating Kaiser/Group Health, a new non-profit corporation set up to oversee Group Health Cooperative, Group Health Northwest, and Kaiser Permanente Northwest.However, at the same time, GHC deficits began mounting, and GHC began cutting back in participation in various programs and markets, causing enrollment to begin shrinking down to its current level (550,000.). Kaiser and GHC agreed to dramatically scale back their affiliation to a more simple reciprocity of provider services agreement. GHC experienced a financial turnaround at the start of the new millennium. In 2005, GHC acquired KPS Health Plan, a 62-year-old nonprofit plan based in Bremerton, WA.

Additional historical information is available at HisotryLink.org and in the GHC web site.

Current Financials

GHC yielded $2.8 billion in revenue in 2008, up from $2.6 billion in 2007, with operating expenses of $2.7 billion in 2008 and $2.6 billion in 2007. External provider network expenses (non GHC owned facilities or Group Health Permanente) comprised 50% of operating expenses. 2007 yielded a $71 million surplus primarily due to $57 million in investment income, while 2008 yielded a $9 million loss, primarily due to $60 million in investment losses. In August 2009 Standard&Poor's Ratings Services “lowered its counterparty credit, financial strength, and senior secured debt ratings on Group Health Cooperative (GHC) to 'BBB+' from 'A-'. The outlook on the counterparty credit and financial strength ratings is negative. The rating action is based on GHC's downward revision to its 2009 earnings forecast. The company is now expecting a pretax operating loss.”

Accolades

A recent Commonwealth Fund case study notes that Group Health Cooperative is structured with incentives aligned "to launch innovations and organize services in ways that make the most sense operationally and clinically." The case study highlighted attributes contributing to the organization’s success:

• Information Continuity  with EHR

•  Care Coordination and Transitions and System Accountability, including medical homes and case management

• Peer Review and Teamwork for High-Value Care, including clinical dashboards and P4P

• Continuous Innovation

• Easy Access to Appropriate Care, including same day appointments for urgent care, after hours urgent care and telephonic nurse advise linked to HER, direct specialist access, group visits and electronic visits

GHC touts that it has the "Highest Member Satisfaction among Commercial Health Plans in the Northwest Region" ranking by J.D. Power and Associates;

"Excellent" accreditation rating from the National Committee for Quality Assurance (NCQA) for the seventh year in a row; "America's Best Health Plans" rating by U.S. News & World Report and NCQA; and Highest ranked for health plan quality and prescription drug plan quality by the Centers for Medicare and Medicaid Services (CMS) Medicare Plan Comparisons.

Doubts about GHC as a nationwide model

But for all the success, these doubts have publicly surfaced regarding how realistic it would be to duplicate GHC as a nationwide model for health reform:

1. As a recent New York Times article questions, is the governance aspect of a cooperative, as advanced by many reformers, the successful attribute of GHC, or is it the integrated delivery system, which is present in non-cooperative based programs such as Kaiser?


2. Considering the infrastructure required to operate the GHC mixed delivery model that at its core is an integrated group practice, is it realistic to develop something similar from scratch for new markets in any reasonable time frame?


3. Considering GHC’s financial position is no stronger, and perhaps weaker than other major health plans around the country, what are the financial dangers in replicating their model?

Health Reform: What Should Pass or Run Out of Gas

by William DeMarco, June 25, 2009

I was asked to provide a brief answer to the following question for the current issue of MCOL’s Thought Leaders newsletter: “Which specific component of various current major health care reform proposals do you feel is most likely to be adopted before the end of the year, and which component is least likely to be adopted?"

What follows is a more thorough discussion of how we view the outcome of some key provisions that have surfaced in the national reform initiatives.

We believe the public plan and the exchange will be adopted although not in its current proposed form.

We envision Federal Board very similar to the Federal Employees Health Benefits program that governs structure, benefits levels and perhaps some consumer complaints. However we do see this Board overseeing each of the states to implement the public plan in their own fashion.

This would meet current insurance commissioner laws and interstate commerce laws for licensure and would also follow consumer protection with existing insurance departments. Such things as post claim underwriting/recessions would be outlawed nationally and the fed may require the states cap to place a on margins as there are in some states already.

The exchange is vital to distribution channels for this and other plans and would reduce and perhaps eliminate the need for brokers and brokers fees which would reduce costs by 10% or greater. Again these exchanges would need to follow state licensure laws but would be overseen by the Federal Board to make sure they meet the rules of selection, open enrollment and fair disclosure.

Least likely to pass are the Comparative Economics CER legislation. Not because it is not needed but only because people do not understand yet that quality and process are uneven and in a state of flux. This means Dartmouth Atlas and Health Grades and others will do well to show distinctions in the delivery system and tiering and profiling will continue.

We believe MedPacs recommendation to move to ETGs and bundled reimbursement tied to severity follows our early concepts for integration. Many hospitals and physicians continue to fail because they cannot get the reimbursement and utilization data to track together. Given the opportunity to combine these two will support further Information technology and advance web based connections between provider’s, plans and employers.

This will create a new interest in hospitals and physicians working together to form their own product especially as the public plan forces consolidation of local plans thereby giving a handful of plans incredible bargaining power.

Provider sponsored plans have a distinct advantage in the market as the owners control the means of production. Using this bundled reimbursement we see that providers who do well can harvest their reward for their improved care outcomes and , in doing so, apply these savings to more benefits at less cost competing effectively with insurance companies that are unable to control volume and quality and therefore cannot control price.

What this means is that launching things state by state may take a year but once uninsured and underinsured have an option and small business can hire without worrying about this overhead of insurance we will see a spark in hiring and productivity. Without a public plan this will not happen and extend the recession far beyond next year. This time the recession has, and will continue to affect health care employment and this affects service quality and availability so we are truly in a historic moment in history.

William J De Marco MA CMC

De Marco and Associates

Bill.demarco@demarcohealth.com

Telling the Whole Truth

by Laurie Gelb, June 17, 2009

Watching the back-and-forth regarding “health care reform” calls to mind many untold truths – that it may not be too late to tell.

AARP’s monthly magazine has an “8 Myths About Health Care Reform” feature in the current issue that should not go unchallenged by any patient, let alone health professional. This “myth list” in fact recapitulates several red herrings propagated these days by many legislators, media outlets and influencers.

So, whatever your personal or professional position, here are a few talking points that you might consider attempting to insert into the debate before the dotted line is signed.

AARP’s “myth”	The reality
Those with insurance won’t benefit	AARP argues that new legislation will provide a safety net for those destined to lose their coverage in the future. “Just because you have health insurance today doesn’t mean you’ll have it tomorrow,” the author warns. Well, yes, that’s true, because many employers, associations and trade groups, many of whom cover people on the margins, are going to use a public plan option as an excuse to drop or limit access to their own plans. Thus, this is a self-canceling argument that skirts the stated objective of universal coverage (not to mention the somewhat paltry incremental 16M Americans gaining coverage estimated by the CBO this week).
Boomers will bankrupt Medicare	AARP points to costly technology (“think MRIs and CT scans”) and over-treatment as primary cost drivers of the current trend. Unaddressed is the difference between a scan that enables an early diagnosis and an improved prognosis, vs. a study that is not indicated, or effective vs. ineffective treatment. That private payors have been more active than Uncle Sam in identifying and addressing inappropriate care is never stated. However, it would also be helpful for payors to acknowledge that they have often ignored myriad opportunities to improve the aggregate efficacy of self care, and commit to greater action in the future (such as the decision support programs discussed in other posts).
Reform will cost us more	AARP makes the analogy between health reform and the upfront cost of an Energy Star appliance, reassuring its readers that by 2020, reform “could save us approximately $3 trillion.” Unstated is just how this might occur, though indeed you could wake up tomorrow as a British monarch. But we need to discuss the concept of annual budgets, something that most Americans understand, and the fact that Energy Star savings are quantifiable in a way that vague promises/threats about HIT, CER and (more) de facto rationing are not. Then we can begin talking about low-hanging fruit – treatments of unquestioned efficacy for the vast majority of a given patient population, to which access and adherence are suboptimal. At the same time,, fully involving privacy advocates and community clinicians, we can talk about standardizing the EHR and getting it to the point of care in a way that actually saves everyone time – and saves lives.
My access to quality care will decline	“Just because you have access to lots of doctors who prescribe lots of treatments doesn’t mean you’re getting good care,” counsels AARP. This sly truism in no way addresses the issue at hand, which is the extent to which public sector plans already inhibit access to care, if only because physicians withdraw from their networks every month. The time that docs and their staffs spend trying to eke (substandard) reimbursement from public plans is somehow omitted from this answer (and the entire AARP policy agenda). And, this week, MedPAC raised the spectre of denying coverage for “new drugs” unless they are “proven” superior to “old drugs” (not clear if safety or tolerability or convenience of dosing will count—it rarely does in the health care hells the politicians are claiming not to emulate), not to mention linking “value” of therapy to reimbursement – and AARP can continue pretending that the reform movement is “hands off” clinical and personal choice? Take a trip across the border or the ocean and see. [I’ve been in UK hospitals.] Again, AARP is only disingenuous to avoid discussion of what a clinical decision is, vs. what a political funding mechanism is.
I won’t be able to visit my favorite doc	Once again, the fact that many clinicians and facilities deny, limit or delay encounters with Medicare and Medicaid patients is nowhere stated. Instead, there’s the classic red herring reassuring readers that “clinical effectiveness research” is a good thing. Indeed, but how does that relate to physician access? It’s as if AARP shuffled the cards with the questions and threw them on top of a few “politically correct” answers.
ERs provide the uninsured with good care	AARP correctly points out an ER can’t be a medical home, and that the insured pay for part of the ER visits that result from uninsurance. But this is a straw man myth—no one is seriously suggesting that ERs substitute for insurance. The real question is, how do you get all these chronically ill people in need of monitoring access to primary care, when PCPs are already in short supply and becoming more scarce as you read this? How do you support better health decision-making across the board? How do you help a clinician at 2 am make a quick, accurate connection between the patient presenting to him and the same person who presented 500 miles away a month ago?
We can’t afford to tackle this now	AARP notes that people are delaying care and not filling rx, suggesting that reform is urgent. Indeed, no one questions that costs are soaring, nor that the current unfree unmarket is more like a bazaar. However, creating a sense of urgency doesn’t serve reformers’ objectives when basic questions like financing of the plan, contribution to the growing deficit and how clinicians and patients will be served are overlooked in the name of that urgency.
We’ll end up with socialized medicine	Quoting a RWJ researcher, AARP concludes its feature with the assurance that “we will come up with a uniquely American solution…a mixed public and private solution.” Well, most “single payor” countries count as a “mixed” solution, too, if you consider that many citizens in such countries, where possible, purchase additional private coverage because the public plans are so inadequate. As reassurance, this isn’t exactly warm and fuzzy, especially given the shortcomings of both our private and public plans. Mix them together, and you get the equivalent of goulash over jello. Moreover, AARP’s soothing words to the contrary, the signals out of Washington speak to a new willingness to consider a wide array of new controls over individual actions, from “Any Unwilling Provider” mandates to limits on therapy. “Socialized” is a buzzword, but health freedom is not. If the managed care sector doesn’t speak out – honestly and completely – about what’s good and bad about the current system, and promote proposals that address the real issue – the right person receiving the right treatment at the right time for the right duration – we may all be a good deal worse off – and poorer – a year from now.

The Fast and The Furious: Health Care Reform Headlines

By Clive Riddle, May 20, 2009

 

While it remains to be seen if actual health care reform prodded by the Obama Administration and Congress should be described as a fast moving car, or as “The Slow and The Serene,” but at least the rate of headlines spewing out on health reform can be considered, as in the movie title, “The Fast and The Furious.”

 

Just during this week, we’ve been bombarded with developments. Here’s a sampling of what’s come out, under the category of “Who’s going to pay for this mess?”

 

Sodas a Tempting Tax Target

New York Times, May 20, 2009

http://www.nytimes.com/2009/05/20/business/economy/20leonhardt.html?_r=2

 

Healthcare Overhaul Could Add Financial Burdens To State

Boston Globe, May 19, 2009

http://www.boston.com/...overhaul_could_add_financial_burdens_to_state/

 

New Taxes Loom to Pay for Health-Care Overhaul

Wall Street Journal, May 19, 2009

http://online.wsj.com/article/SB124269065234932563.html

 

Congress has little appetite for health care taxes

Associated Press/Google, May 18, 2009

http://www.google.com/hostednews/ap/article/...

 

Senate proposes alcohol, soda tax to fund health care plan

Politico.com May 18, 2009

http://www.politico.com/news/stories/0509/22675.html

 

Turning to the policy front here’s a sampling of headlines under the category of standing on soapboxes:

 

Baucus Message to Industry Lobbyists: 'Let the Process Work'

The Washington Post, May 20, 2009

http://voices.washingtonpost.com/health-care-reform/2009/05/baucus_tells_industry_lobbyist.html#more

 

The GOP's Health-Care Alternative

Wall Street Journal, May 20, 2009

http://online.wsj.com/article/SB124277551107536875.html

 

Republicans To Introduce Health Reform Plan That Would Establish State Health Insurance Exchanges, Provide Tax Credits

Kaiser Daily Health Policy Report, May 20, 2009

http://kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=58525

 

Senators Push for Delay of Public Health-Care Option

Bloomberg, May 19, 2009

http://www.bloomberg.com/apps/news?pid=20601103&sid=aZH_tU6TpHeM&refer=us

 

Senate Finance Committee Releases Policy Paper Describing Options To Pay for Health Overhaul

Kaiser Daily Health Policy Report, May 19, 2009

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=58507

 

Dems Unclear Where Baucus Will Side on Health Care Reform

Politico.com May 18, 2009

http://www.politico.com/news/stories/0509/22629.html

 

Finally, here’s a few entries under that category of Newton’s Third Law That Every Action has an Equal and Opposite Reaction:

 

Physician Practice Interactions with Health Plans Cost $31 Billion A Year, Equaling 6.9 Percent of All Spending For Physician And Clinical Services, New Study Finds

Robert Wood Johnson Foundation Press Release, May 20, 2009

http://www.rwjf.org/healthreform/product.jsp?id=42728

 

Health Insurers Promise ‘Meat’ to $2 Trillion Savings

[Bloomberg reports that health insurers will propose simpler billing for doctors and rewarding better-performing physicians as part of the industry’s White House pledge last week to help shave $2 trillion from U.S. medical bills over the next decade.]

Bloomberg, May 18, 2009

http://www.bloomberg.com/apps/news?pid=20601203&sid=a8evVCuupbSM&refer=insurance

 

DOJ Insurers Probe Sought By Health Care Reform Advocates

The Huffington Post, May 20, 2009

http://www.huffingtonpost.com/2009/05/20/doj-insurers-probe-sought_n_205709.html

 

Health Plans Support Competition to Benefit Consumers

AHIP Press Release, May 20, 2009

http://www.ahip.org/content/pressrelease.aspx?docid=27096

Health Reform: The Start-Up

by Clive Riddle, May 13, 2009

Health Reform, like any start-up, launched a web site ( www.healthreform.gov ) has issued fact sheets and press releases, received another round of angel funding (via the FY2010 budget) and this week announced it has hired a leadership team. Like any start-up, Health Reform has announced Strategic Alliances, this week touting voluntary commitment from six leading health care stakeholder groups to reduce health care costs.

What Health Reform now needs, like any start-up, is customers.

Here’s who the President met with this week, with each of the six stakeholders pledging help reduce health care costs by 1.5%:

• Mr. Stephen J. Ubl, President & CEO, Advanced Medical Technology Association

• Dr. J. James Rohack, M.D., President-elect, American Medical Association

•  Ms. Karen Ignagni, President & CEO, America's Health Insurance Plans

• Mr. Rich Umbdenstock, President & CEO, American Hospital Association

• Mr. Billy Tauzin, President & CEO, Pharmaceutical Research and Manufacturers of America

• Mr. Dennis Rivera, Chair, SEIU Healthcare, Service Employees International Union

The participants are now having to fend of skeptics of “voluntary” pledges. At least non were wearing any “WIN” buttons, dusted off from Gerald Fords voluntary “Whip Inflation Now” initiative in 1974.

Here’s who has been appointed by HHS Secretary Kathleen Sebelius to serve as key staff members in the new HHS Office of Health Reform:

• Jeanne Lambrew, Ph.D., Director of the HHS Office of Health Reform, was previously an associate professor at the LBJ School of Public Affairs, senior fellow at the Center for American Progress, and worked on health policy in the Clinton Administration.

• Michael Hash, Senior Advisor, will run the inter-agency process for developing specific aspects of health reform legislation, and has held senior positions at the Health Care Financing Administration (now CMS) and on the staffs of the House Energy and Commerce Committee as well as a private health policy consulting firm.

• Neera Tanden, Senior Advisor, will work on developing health care policies for HHS and the Administration, and is the former domestic policy director for the Obama-Biden campaign and policy director for the Hillary Clinton campaign.

• Linda Douglass, Director of Communications, was a traveling spokesperson for President Obama's 2008 campaign and was chief spokesperson for the Presidential Inaugural Committee 2009, and previously was managing editor for National Journal and prior to that was Chief Capitol Hill Correspondent for ABC News

• Meena Seshamani, M.D., Ph.D., Director of Policy Analysis, will coordinate the quantitative and qualitative analyses on health reform conducted throughout HHS, and was a resident physician in Otolaryngology-Head and Neck Surgery at Johns Hopkins University.

•  Caya B. Lewis, M.P.H., Director of Outreach and Public Health Policy, will coordinate HHS outreach and interaction with stakeholders on health reform, and was the Deputy Staff Director for Health for the Senate HELP committee under the chairmanship of Senator Edward M. Kennedy.

• Jennifer Cannistra, Policy Analyst and Director of Special Projects previously served as the Pennsylvania State Policy Director for the Obama campaign

• Karen Richardson, Outreach Coordinator, was previously the policy director at the Democratic National Committee (DNC).

•  Michael Halle, Special Assistant, worked for the Presidential Inaugural Committee and Obama for America

Undermining the Health Reform Agenda From Within

Bureaucrats with CMS are determined to pull the plug on a family practice program for bureaucratic reasons, devastating a local government, a local economy in the midst of a recession, an underserved health care population and the Obama Administration’s own health care reform objectives. And if that can happen in one community, it will happen in another and another, with different scenarios but the same results. The administration’s health reform agenda can be undermined from within.

The emerging Medical Home movement is an important component of the Administration’s stated health care agenda. Medical Homes are primary care driven, in an era when the shortage of primary care physicians is accelerating. Thus CMS administrative actions taken to further reduce the supply of primary care physicians is not in the interest of Medical Homes.

Family Practice residency programs not only help develop the supply of community based primary care physicians, they deliver health care services to vulnerable populations, which is again an important component of the Administration’s agenda that CMS is thus undermining.

Where is all of this taking place? As reported in the local paper, the Modesto Bee, in the March 14, 2009 article Stanislaus County doctors program loses its funding: “The Stanislaus Family Medicine Residency Program...has lost its federal funding and that has put its future in doubt. The federal Centers for Medicare and Medicaid Services not only stopped payments to Doctors Medical Center, where the residents are trained, but required the hospital to pay back $19.1 million it received for the program from 2001 to 2008. Because DMC and the county split the costs of the program, the county is on the hook for half that amount.”

A March 30, 2009 California Healthline article, California Medical Residency Program Fights CMS for Funding, elaborates:“Founded in 1935, the program was originally a general practice residency at the public county hospital. It earned family medicine accreditation in 1975. When the county hospital closed in 1997, the residency program was taken over by Doctor's Medical Center, owned by Tenet Healthcare Corporation. The residency program is a key part of the safety net where 22% of county residents rely on Medi-Cal and 16% of the population is unemployed. The 27 residents and 30 primary care doctors who serve as faculty for the program care for about 70,000 patients, handling about 230,000 patient visits annually, according to the California Academy of Family Physicians.”

So why is the plug getting pulled? California Healthline reports that “until 2006, it was business as usual with the residency program training 27 family practice physicians and billing the federal government for support through Medicare reimbursements for education....About 18 months ago, CMS attorneys began questioning the way the program was transferred from the county hospital to the new parent hospital a decade before. Marc Hartstein, deputy director of CMS' hospital and ambulatory policy group, said CMS is following rules laid out in the Balanced Budget Act of 1997. ‘That law puts caps on the numbers of residents in programs," Hartstein said, adding, "This situation arises because of those caps.’ Because Tenet's Doctors Medical Center chose not to take on the assets and liabilities of the county hospital in 1997, ‘that ended the cap that was associated with the previous hospital,’ Hartstein said. In essence, the residency program ceased to qualify for educational funding in 1997 under CMS' interpretation of the regulations. Hartstein attributed the program's funding for several years to errors by unnamed third-party administrative contractors.”

The Modesto Bee adds “when the county hospital closed almost 12 years ago, DMC's parent company, Tenet Healthcare Corp., paid the county $12 million and guaranteed care for patients in the county's indigent health program. The physician training program was transferred to DMC based on a claim that, in effect, it had merged with the county hospital. The federal government provided DMC with $115,000 in annual reimbursements for each of the 27 physician slots, but CMS officials later said they disagreed with the merger theory. The reimbursement was lowered to $75,000 per resident on the premise a new program had been created at DMC. About 18 months ago, CMS attorneys came out with a determination that the program no longer qualified for reimbursements under the Balanced Budget Act of 1997. Some of the act's rules had not been written when the previous determinations were made. CMS also demanded that Doctors Medical Center repay the funding received since 2001. ...The government has said the hospital and the county can apply for reimbursements if they close the program for a year and then reopen with a new program with new faculty, a new director and a new set of residents.”

So CMS initially signed off on the arrangement, reimbursed the program for a number of years, later ruled that the arrangement was not a merger but a new program- so they lowered their reimbursement, and subsequently decided that as a new program, it didn’t qualify for reimbursement at all, and demanded all their money back retroactively. Is it within CMS’ authority to have interpreted this differently? Is CMS’s pulling the plug helping advance their Administration’s health care agenda?Is CMS’s demand of retroactive repayment from a cash starved County government helping their Administration advance their object of economic stimulus?

Yes, No and No.

And watch out in your home town, because CMS oversees such a wide range of health care programs and services. Shuffle the deck a little, and your local community probably has some situation that could be a ticking time bomb for CMS to uncover, and blow up the Administration’s health care and economic stimulus agenda for you too.

Health Care Stakeholders Weigh In On the Obama Budget

By Clive Riddle, February 27, 2009

So how do some key stakeholders view the health care implications of President Obama’s FY 2010 budget?

AHIP (America’s Health Insurance Plans) applauds the health care agenda, sort of. As the voice of the health plan industry, AHIP is compelled register very deep concerns over cutting Medicare Advantage payments to plans. Will we return to the Medicare health plan market withdrawals of a decade ago? Karen Ignagni, AHIP President, states:

“We have strongly supported recent efforts by the Administration and Congress to strengthen the health care safety net, expand coverage for kids, conduct comparative effectiveness research, and invest in health information technology. Our Board of Directors has offered a comprehensive proposal that starts with us playing a leadership role in advocating for market reforms and addresses the core issues of cost, access, and quality. Health plans will continue to be constructive participants in the health care reform discussion. We recognize that to achieve reform of this magnitude, every stakeholder group will be expected to contribute and will be challenged to innovate, perform better, and be held accountable for results.“As policymakers evaluate the entire Medicare program, including Medicare Advantage, as part of health care reform, it is vital that seniors continue to have access to the benefits and services they rely on. Medicare Advantage plans provide care coordination, disease management, and prevention programs for seniors and reward clinicians for delivering quality care to patients. Unfortunately, this proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system. A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.”

The AHA (American Hospital Association) commends the President, sort of. They are quite concerned that “half of the reserve fund would come from savings in health care programs, including proposals to bundle Medicare payments for hospital and post-acute care ($17.84 billion in savings), reduce payments to hospitals with certain readmission rates ($8.43 billion), and link a portion of inpatient hospital payment to performance on specific quality measures ($12.09 billion). The budget outline also cites the need to address physician self-referral to facilities in which they have a financial interest."

AHA President and CEO Rich Umbdenstock states, "We commend President Obama for making health reform a top priority in his budget blueprint. However, we are concerned about any cuts that would affect the work hospitals do for their communities during this economic downturn. We remain ready to work with the president and Congress to strengthen health care in America."

The AMA (American Medical Association) offers applause without the reservations in bold print. They like the rollback of planned physician Medicare payment cuts. Nancy H. Nielsen, MD, President, American Medical Association states “President Obama’s budget proposal takes a huge step forward to ensure that physicians can care for seniors by rejecting planned Medicare physician payment cuts of 40 percent over the next decade. Looming widespread physician shortages coupled with aging baby boomers highlight the urgent need for permanent Medicare physician payment system reform to preserve seniors’ access to health care. “The AMA is committed to working with the administration and Congress to develop reforms that will reward and preserve access to high-quality care for seniors and all Americans.”

AARP (the Amer) not only applauded the budget, but now tells Congress to step up and act on it. AARP CEO Bill Novelli states “We are making it clear to our leaders that they need to work with the president in a bipartisan fashion to complete the plan for reform and finance reform in a fiscally—and morally—responsible way. They must make sure that any savings from Medicare and Medicaid are dedicated to reforms that strengthen the quality, efficiency and performance of our health care system, including these critical lifeline programs.”

AARP also announced key priorities to be included in health reform legislation in 2009, including: Making affordable health care coverage options available to everyone, especially people ages 50-64 who are among the fastest growing group of uninsured; Keeping Medicare affordable by rewarding doctors and hospitals for quality rather than the quantity of care; Promoting prevention and healthy behaviors; Eliminating fraud, waste and abuse; and Improving care coordination for people with chronic conditions and helping them stay in their homes and out of institutions.

The National Business Group on Health is pleased and concerned: they are “very pleased to see such emphasis on making health care affordable for all American” but don’t like new taxes and Medicare Advantage cuts.

Helen Darling, President of the National Business Group on Health states "with respect to proposed financing schemes for health reform, we have concerns that the funding mechanism could be subject to constant political pressures. The proposed 10-year $634 billion health-care fund - paid for through new taxes and particularly cuts to Medicare Advantage beneficiaries - approximates the annual portion of health spending that is estimated to be wasteful, redundant, or even harmful. We believe there are other ample opportunities to reduce costs through eliminating overuse of services, preventing serious adverse avoidable medical errors, and combating waste. As legislation is crafted in the coming months, we strongly encourage policymakers to look at the root causes of higher health care costs and use health reform as an opportunity to make lasting structural reforms - many of which have been discussed previously by both the President and congressional leadership - that will yield long-term savings and improve patient care and safety."

So, what does your spokesperson have to say about the ten year $634 billion health care fund, and the budget?

The Path to Reform as laid out by the Commonwealth Fund

By Clive Riddle , February 19, 2009

The Commonwealth Fund Commission on a High Performance Health System today published their report, the Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, which the Commonwealth Fund in a press release distributed today bills as a proposal for “a comprehensive set of insurance, payment, and system reforms could guarantee affordable health insurance coverage, improve health outcomes, and slow the growth of health spending by $3 trillion by the end of the next decade” and “details the Commission’s recommendations for an integrated set of policies and assesses the impacts of specific policy actions from 2010 to 2020, compared to the status quo.”

The Commonwealth Fund is a major policy stakeholder organization in Washington, and has the ear of various key Democratic party health care leaders. Not that the eventual Administration or Congress reform proposal would mirror the Commonwealth Fund’s report by any means, but it has significant potential to influence the discussion, and thus bears reading.

 Here’s some projected results the report touts would be ultimately achieved via their proposed package:

• Insurance reforms would extend coverage to everyone within two years, with only 1 percent uninsured throughout the next decade. The number of uninsured, currently 48 million and estimated to increase to 61 million by 2020, would instead under the proposal decrease to 19.7 million in 2010, 6.3 million in 2011 and stabilize at 4 million for the rest of the decade
• Combined with payment and system reforms initiated in 2010, the integrated approach to reform could slow the growth of national health spending by a cumulative $3 trillion by 2020.
• Spending would still go up but at a slower rate. The U.S. is expected to spend $42 trillion on health care over the next 11 years, with spending rising 6.7 percent per year, the proposal package would lower this rate to 5.5 percent per year.

So how would such lofty results be achieved? Here’s a verbatim summary as provided in the 122 page report:

• National Health Insurance Exchange. Offers businesses and individuals a choice of private plans and a new public plan, phased in by size of firm with all eligible by 2014. Premium of the public plan would be community rated within broad age bands. Benefits are similar to the standard option in the Federal Employees Health Benefits Program. The plan would use Medicare’s claims administrative structure and reformed payment methods and rates.
• Individual Mandate. All individuals are required to obtain coverage.
• Affordability. Premiums are capped at 5 percent of income for low-income individuals and 10 percent of income for those in higher-income tax brackets.
• Shared Financial Responsibility. Employers are required to provide coverage or contribute to a trust fund. The example used in the model included 7 percent of payroll, up to $1.25 an hour.
• Medicaid/SCHIP Expansion. All individuals with incomes up to 150 percent of the federal poverty income level are eligible for Medicaid acute care benefits. Medicaid provider payment rates are raised to Medicare levels. The federal matching rate is increased to offset state costs.
• Medicare. The two-year waiting period for coverage of the disabled is eliminated. Medicare beneficiaries are offered a supplement with the same acute care benefits as in new public plan and premium affordability provisions.
• Insurance Market Reforms. Require community-rate premiums (age bands permitted) and guaranteed issue and renewal of policies. Premium and insurance information would be publicly available on the Web.
• Enhance Payment for Primary Care. Increase Medicare payments for primary care by 5 percent and apply differential updates for primary care and other care.
• Encourage Development and Spread of Patient-Centered Medical Homes. Provide payment per patient in addition to fee-for-service to practices qualified to provide patient-centered care. Reduced premiums and cost-sharing available to patients who designate a primary care practice as their medical home. Shared savings would be distributed on the basis of performance.
• Bundled Payments for Acute Care Episodes. Expand acute care payment to include services during the hospital stay and 30 days post-discharge in a global fee. The policy would be phased in, starting with inpatient services in 2010, then post-acute care in 2013, and hospital inpatient and outpatient physician care in 2016.
• Correcting Price Signals. Modify payments by: 1) slowing the rate of Medicare payment updates in geographic areas with high costs; 2) reducing prescription drug costs by having Medicare pay Medicaid prices for drugs used by dually eligible beneficiaries and determining Medicare payments for unique drugs with effective monopolies based on prices paid in other countries; and 3) resetting benchmarks for Medicare Advantage plans in each county to projected per-capita spending under traditional Medicare.
• Accelerate the Adoption and Use of Health Information Technology. Require all providers to report key health outcomes electronically by 2015 to qualify for payment updates. Provide funding to support health information networks and assistance for safety-net providers and small practices through a 1 percent assessment on insurance premiums and Medicare outlays.
• Center for Medical Effectiveness and Health Care Decision-Making. Create a mechanism to develop information on the clinical and cost-effectiveness of alternative treatment options. Fund the Center with a .05 percent assessment on insurance premiums and Medicare and Medicaid spending. Use the information in benefit designs with higher out-of-pocket costs or differential pricing depending on comparative effectiveness and include physician–patient shared decision
• Reduce Tobacco Use. Increase federal taxes on tobacco products by $2 per pack of cigarettes. Use revenues to fund public health programs and insurance expansion.
• Reduce Obesity and Alcohol Use. Establish a new tax on sugar-sweetened soft drinks of 1 cent per 12-ounces to finance state obesity prevention programs, and increase the federal excise tax on alcohol by 5 cents per 12-ounce can of beer, with proportionate increases on other alcohol products. Use funds for prevention and insurance expansion.

The Commonwealth Fund Commission on a High Performance Health System was established by the organization in 2005, to “seek opportunities to change the delivery and financing of health care to improve system performance, and to identify public and private policies and practices that would lead to those improvements. It also explores mechanisms for financing improved health insurance coverage and investment in the nation's capacity for quality improvement.”

So who has a seat at the table for the Commission. Not all major stakeholders. Integrated hospital/medical group systems, large non profit health plans, some progressive employers, and like-minded associations, policy institutions and academic institutions are well represented. For profit health plans and health care providers, non-integrated private providers, public agencies and dissimilar institutions are not. Here’s the list of the Commission members:

• James J. Mongan, M.D. (Chair), President and CEO, Partners HealthCare System, Inc.
• Maureen Bisognano, Executive Vice President and COO, Institute for Healthcare Improvement
• Christine K. Cassel, M.D., President and CEO, American Board of Internal Medicine and ABIM Foundation
• Michael Chernew, Ph.D., Professor, Department of Health Care Policy, Harvard Medical School
• Patricia Gabow, M.D., CEO, Denver Health
• Robert Galvin, M.D., Director of Global Health Care, General Electric Company
• Fernando A. Guerra, M.D., Director of Health, San Antonio Metropolitan Health District
• Glenn M. Hackbarth, J.D., Consultant
• George C. Halvorson, Chairman and CEO, Kaiser Foundation Health Plan, Inc.
• Robrrt M. Hayes, J.D., President, Medicare Rights Center
• Cleve L. Killingsworth, Chairman and CEO, Blue Cross Blue Shield of Massachusetts
• Sheila T. Leatherman, Research Professor, School of Public Health, University of North Carolina
• Gregory P. Poulsen, Senior Vice President, Intermountain Health Care
• Dallas L. Salisbury, President and CEO, Employee Benefit Research Institute
• Sandra Shewry, President and CEO, California Center for Connected Health
• Glenn D. Steele, Jr., M.D., Ph.D., President and CEO, Geisinger Health System
• Mary K. Wakefield, Ph.D., R.N., Associate Dean for Rural Health and Director, Center for Rural Health, University of North Dakota
• Alan R. Weil, J.D., Executive Director, National Academy for State Health Policy
• Steve Wetzell, Vice President, HR Policy Association

The Argument for Incremental Reform

By Clive Riddle, January 22, 2009

The New Yorker magazine, of all places, has one of the best essays on health care reform I’ve read in quite a while. I subscribe to The New Yorker, but often manage to miss anything good, being a shallow New Yorker reader, skimming as I do to browse the movie reviews and cartoons.

Fard Johnmar, President of Envision Solutions, sent me the link. I blog with Fard for ChangeNow4Health, the health care reform initiative which is currently undergoing an upgrade and transformation, hopefully like the health care system may someday soon.

So now I pass the link on to you: “Getting There From Here”, by Atul Gawande, from the current (January 26^th, 2009) issue of The New Yorker: http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?printable=true

So here’s excerpts of three key points the author makes:

1. “On the left, then, single-payer enthusiasts argue that the only coherent solution is to end private health insurance and replace it with a national insurance program. And, on the right, the free marketeers argue that the only coherent solution is to end public insurance and employer-controlled health benefits so that we can all buy our own coverage and put market forces to work. Neither side can stand the other. But both reserve special contempt for the pragmatists, who would build around the mess we have. The country has this one chance, the idealist maintains, to sweep away our inhumane, wasteful patchwork system and replace it with something new and more rational. So we should prepare for a bold overhaul, just as every other Western democracy has. True reform requires transformation at a stroke. But is this really the way it has occurred in other countries? The answer is no. And the reality of how health reform has come about elsewhere is both surprising and instructive."


2. “American health care is an appallingly patched-together ship, with rotting timbers, water leaking in, mercenaries on board, and fifteen per cent of the passengers thrown over the rails just to keep it afloat. But hundreds of millions of people depend on it. The system provides more than thirty-five million hospital stays a year, sixty-four million surgical procedures, nine hundred million office visits, three and a half billion prescriptions. It represents a sixth of our economy. There is no dry-docking health care for a few months, or even for an afternoon, while we rebuild it. Grand plans admit no possibility of mistakes or failures, or the chance to learn from them. If we get things wrong, people will die. This doesn’t mean that ambitious reform is beyond us. But we have to start with what we have.”


3. “So accepting the path-dependent nature of our health-care system—recognizing that we had better build on what we’ve got—doesn’t mean that we have to curtail our ambitions. The overarching goal of health-care reform is to establish a system that has three basic attributes. It should leave no one uncovered—medical debt must disappear as a cause of personal bankruptcy in America. It should no longer be an economic catastrophe for employers. And it should hold doctors, nurses, hospitals, drug and device companies, and insurers collectively responsible for making care better, safer, and less costly.”

Doctor Gawande makes a compelling point in the essay about the other western industrialized nations, all providers of a much more comprehensive national health care system, that belies the perception often advanced by reform advocates in either camp. These nations didn’t throw out old health care systems with the bathwater, and start from scratch. They evolved into them, based on their own unique circumstances. England and France, for example, had World War II as an intervention that led them down their current path.

Doctor Gawande warns that throwing out our system with the bathwater could be more harmful to patients and the nation, than building, albeit with a greater urgency, something new out of what we have already.

By the way, who is Doctor Gawande, you ask? Atul Gawande, MD, MPH, Associate Professor of Health Policy and Management, Harvard School of Public Health is a noted physician and author, and has just been in the news last week, co-authoring an article in the New England Journal of Medicine, “A Surgical Safety Checklist to Reduce Morbidity and Mortality in a Global Population” providing results form eight hospital pilot sites around the world. Doctor Gawande is the head of the School’s “Safe Surgery Saves Lives Study Group" which in collaboration with the World Health Organization introduced and rolled out the Safe Surgery initiative to introduce new safety checklists for surgical teams and implemented the system with the pilot hospitals.

So click the link already, and read it yourself.

The new NEW DEAL

by William DeMarco, January 8, 2009

The healthcare “deal” for the near future is firming up to represent threats and opportunities for health plans and providers.

Franklin D. Roosevelt offered a “New Deal” after the Great Depression. It took 25 years after the stock market crash of 1929 and the subsequent large market crash of 1937 to begin to achieve pre 1929 levels. It worked because once people went back to the fundamentals of infrastructure repair, sharing resources and returning to the hope work brings, the economics ramped up and the vision of the nation being able to defend itself against the determined and expanding German nations and the sudden incursion of Japanese into SE Asia and eventually Pearl Harbor signaled the greatest manufacturing boom in history.

We now have before us a new President and a very deep and growing recession/depression. Every industry from housing to banks to automobiles to retail is being affected, and certainly health care insurance companies and provider organizations are feeling the tightening of capital and a large hole left in their investments as this crisis will require belt tightening. Have we learned how to do that? Is the plan the government offers going to correct all of this? It will take time. In that time we need to share resources, repair our infrastructures and recognize the fundamentals of how care management works. We apparently have not done a good job in answering the public’s question, “What is it that managed care was trying to do?”

In fact the “blueprint” discussed in the incoming HSS Secretary’s book has a very different take on what managed care was trying to do.

In reading Daschle’s book we see no mention of the early HMO movement and success still enjoyed by Greater Marshfield, Geisinger, Kaiser, Health Partners and others that established much of the industry’s PURE or Classic HMO operations and efficiency. These plans are still expanding their ideas in literature as truly integrated provider sponsored plans. (Please refer to MCOL’s managed care museum for an accurate description of the industry history.) Instead the Book goes on to say Blue Cross established the entire health industry and that what we need is a national health board similar to the Federal Reserve.

Neither is there mention of the rapid consolidation of Blue’s plans to obtain cash as for-profit entities nor a discussion on the fundamentals of the Elwood Enthoven goals of coordinated care. Their original writings and proposals to Congress emphasized quality first and price last, but insurers and third parties saw the opportunity to bring in the price and cost issue and, to this day, left most of the medical management and issues of quality as optional components when they were the core of care cost reduction. Much of coordinated care linked the providers to one another, as well as payers to one another, so there was a full integration of both delivery and financing.

This exchange of data and service value for money and time spent was focused on a highly concentrated provider-payer linkage and this is what the Value Based proposition began with and may still endure as employers become interested in managing benefits and managing benchmark sets locally that were never corrected by insurance companies.

Why would an insurance company want to have less utilization? What would they want to correct the unnecessary care, which translates to less premium and less stockholder value?

Although we can agree that the Clinton plan went down the road with little legislative input and eventually pitted the AMA and the AHA against one another, we can also agree the plan’s complexity and attempts to oversimplify the process caught many potential supporters flat footed and unable to truly defend good parts of the plan the Clintons had worked on for so many months.

My own discussions with White House press secretaries and several of the Ira Magaziner staff showed me it was understood that while the plan made sense, Congress and others were going to offer no support as they saw it as too detailed and complicated to explain and implement. By the time Harry and Louise appeared in commercials as a campaign to sell Fear Uncertainty and Doubt ( FUD) politicians and lobbyists had taken the ideas to stunning misunderstandings, the program was over and everyone returned to production driven medicine.

Now we see the out of control costs of utilization, introducing the era of “Thelma and Louise” ready to drive over a cliff into a one-size fits all program.

The Federal Health Board concept of offering several layers of authority over the workings of a complex, structurally broken system that has perverse incentives, may offer the “fresh idea” of centralizing this system of separate fiefdoms and uneven, underfunded resources, but the ultimate questions remains, “How long will this take?” The sad truth is that many forecast the number of underinsured will exceed the number of uninsured by next year.

Who will be on this board? Will politicians be at the switch again to hold back changes that need to be made because the polling data says people do not understand the true urgency of the situation? How will existing providers fit? How will insurers fit? Will consumers use the system correctly or fill EDs with the “worried well”, forcing hospitals to assure expensive 24/7 trauma care, trained professionals to take care of sore throats and colds?

The larger issue here is that while the debate over policy and funding continues from last year (SCHIP and Physician compensation to name a few), the aging population is aging faster and faster and the uninsured ranks are sure to follow.

The simple truth is there is no funding available. This means dollars to pay for this 75 billion dollar a year MOVE TO Universal Health Care will need to come out of funds that are now in place. It has been estimated one third of this cost will be paid for by funds now going to hospitals for the uninsured. The rest could come for repealing tax cuts, raising taxes or putting caps on spending.

In exchange 30 million uninsured could become insured, of which 40% would get their care paid for by employers. Another 4.5 million would trade their current private coverage for the government subsidized program of “Medicare like” benefits.

This sounds like a plan where many will be affected and, if successful, could at least straighten out the issues of coverage and some access concerns, but are we really getting to the question of “Why does this health care cost so much”?

There are some studies conducted by the Medicare demonstration project on disease management that say improving productivity will not reduce costs. Yet last week Health Partners announced 100 million dollars (will be???) saved through improved productivity of physicians and their staff.

Other proposed funding of electronic medical records and a health info technology will take time but may be part of the answer. This, along with the value base purchasing plans, will reduce office costs and allow proficient doctors to be rewarded for superior performance, but we still have this delivery system issue of how to actually shift from a production of procedures environment to a standardized cost and quality environment. The CSC report of Health Plan CEOs mentioned earlier by Clive Riddle in his opening comments on this blog, says that medical management progress will be cut with dollars going elsewhere. Are we really understanding the fundamentals of this business if we abandon this critical means to reduce premiums in favor of acquisitions or other growth options?

If health plans can change the environment to refocus their mighty databases and tiering capability in the direction of medical management, the move to a comparative economic framework will indeed reveal why this thing called health care is so expensive. If the Chronic Care models and productivity can be measured long term, we can get this efficiency and effectiveness planning that has been so long debated moving in a forward direction.

Many plans are already moving in this direction, forming cooperative models of data and guideline development to share among local competitors as is done in St. Paul and Minneapolis. Several plans are being directed by their employer coalitions to share data to get a clear understanding of what costs so much and what they can do as purchasers to redesign benefits that will change patient behavior. Five of the largest health plans in St. Louis have a good chance to do this in conjunction with their employers. If this is done, the management of populations, sick or well, young or old, can be done as well.

The alternative will be stricter underwriting and discrimination against those with illnesses who cannot qualify as individual policy holders and are liabilities to employer groups, who will look for ways to remove them from the workforce.

We see the products all moving to consumer driven and think that the days of the large networks are dead and that local networks will prevail. This means much of this action will still require LOCAL planning and leadership to create a better system of care before financing can really see a difference.

Health plans and physicians and hospitals have the incentive not to wait and see but to find ways to collaborate regionally or locally to get at the means to reduce chronic care cost s and compare the current pathways to best benchmarks ands see if productivity really can improve. Plans and Providers can help one another and, in so doing, help the national health policy efforts as many in Washington still do not understand what Health Plans do and why it is done the way it is done. Many consumers are a bit suspicious of companies that grew so fast with other people’s premiums.

To let this be tied up in a legislative contest is probably the worst outcome we can see.

Instead, local experiments and collaboration towards reducing costs and improving productivity is. We must get past the walls of competition. Pricing is not the issue. Doing the right care for the right person at the right time is. If we can do this we are doing the right thing for the customer, our patient/ member.

There will never be a better time for this change to happen.

The Future of Individual Plan Underwriting vs. Guaranteed Issue

By Clive Riddle

United Health Group betting on continued patchwork of State Regulations

An ongoing conundrum central to health coverage reform is the chicken and egg issues of health plan acceptance of individual health care coverage, mandates and guaranteed issue.

If all plans were required to accept all individual applicants for all policies (full guaranteed issue), the argument goes that significant adverse selection would occur, as only those uninsured with funds that could reliably project their actual health expenses would exceed the insurance premium costs would purchase coverage. In order to correct for this, it is argues that a mandate is required (requiring all of an applicable population to obtain/receive coverage.)

For example, the health plan industry, through America’s Health Insurance Plans (AHIP) have just proposed guaranteed issue in exchange for a mandate, stating in a press release: “Health plans propose guaranteed coverage for people with pre-existing medical conditions in conjunction with an enforceable individual coverage mandate. To help working families afford coverage, advanceable and refundable tax credits should be available, phasing out as income approaches 400 percent of the federal poverty line. Right now, in most states, individuals can be turned down by insurance plans when they apply for individual health plan coverage, if they do not satisfy the plan’s underwriting criteria. The only sure way for an individual to get coverage is to live in one of the few states with guaranteed issue, or obtain employment where group health plan coverage is offered.” (Refer to AHIP December 3rd, 2008 Press Release: Health Plans Offer Comprehensive Reform Proposal.)

But will a health care reform package include such a mandate that extends to the individual, non-group market, particularly in the current economic climate? The Obama reform proposal had focused on employer mandates.

In the current group environment, employees and dependents whose group coverage is ending can self-purchase continuing coverage to maintain their group policy benefits, at 102% of the cost of their group policy under provisions originally set forth under COBRA continuation of benefits regulations, but this coverage is generally limited from 18 to 36 months, depending on the circumstances (refer to http://www.cms.hhs.gov/COBRAContinuationofCov/ for details on COBRA continuation of coverage provisions).

Also in the current environment, guaranteed issue for all individuals just in Maine, Massachusetts, New Jersey, New York and Vermont. Washington provides guaranteed issue for some classes of individuals, and of course many states have incremental provisions extending coverage provisions. (refer to Kaiser Family Foundation StateHealthFacts.org for a summary of Individual Market Guaranteed Issue.)

So the question is, assuming health care coverage reform isn’t so far-sweeping that the individual market is removed due to full universal non-group based coverage, will the future of individual health plan coverage involve:

A. Federal Guaranteed Issue With Some Type of Coverage Mandates
B. Federal Guaranteed Issue Without Mandates
C. Continued Patchwork of State Regulations

United Health Group is betting on the latter, and now selling the right to Guaranteed Issue to qualified prospects. They have announced in a December 4th press release and as reported in the New York Times (refer to the Times December 2nd, 2008 article, UnitedHealth to Insure the Right to Insurance ) that UnitedHealth has unveiled “a ‘first of its kind’ product: the right to buy an individual health policy at some point in the future even if you become sick. Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own.”

United states that “with Continuity, consumers only need to go through the medical underwriting process once, at the time of application. Once they are approved, their coverage is guaranteed when they need it regardless of any medical conditions that may have developed in the meantime...With Continuity, consumers can choose from a wide range of health plans, deductibles and optional benefits including traditional health insurance plans, health savings account plans and lower-cost high deductible plans. Once the plan is approved and issued, the Continuity rider gives policyholders the option to leave the plan deactivated while covered by group insurance or activate the plan when they lose or voluntarily leave group health insurance coverage because of early retirement, job loss or simply because the employer no longer offers health benefits.”

The Times reports the cost for holding the Continuity Guarantee is 20% of a standard individual premium, and is subject to underwriting before the Guarantee is issued. On the surface, it is difficult to imagine a large market for United’s Continuity product at such a steep price, given that COBRA is available as an interim stopgap for those with group coverage. The Times quotes a broker who states “I think it’s got very, very limited application.”

However, United’s innovation does open the door to variations on this theme that could have more widespread appeal, if in fact, federal requirements for guaranteed issue do not materialize. Health Plan competition for group coverage could result in rider provisions for no-cost or low-cost individual coverage guarantees, as part of the group policy, so that the employer can advertise improved continuation of coverage or portability in the event employees lose their group eligibility for whatever reason. That type of product could have widespread interest in the group market.

The Relationship Between Premium Increases and Reform

The Relationship Between Premium Increases and Reform

Never mind that PriceWaterhouseCoopers recently issued a study indicating the medical costs increases that health plans bear will further decelerate for 2008. Hewitt Associates just issued projections that initial premium increases quoted by the plans to employers will spike upwards for 2008. If indeed premiums increases reverse the trend of the past four years and accelerate again, such movement will in turn accelerate reform initiatives and market changes.

Lets take a step back and look at the premium pricing and underwriting cycle. Under this historical model, plans are driven by cyclical market share and premium price competitive behavior. There are periods where premium increases are significant, then decline, and then rapidly increase again. Here’s how the cycle works:

• During profitable periods: a) plans want to expand market share; b) they start to lower price to do so; c) other plans match lower prices to keep pace and not lose share; d) price wars similar to airline fare wars erupt and multi year contracts develop.
• Then a downswing develops: a) due to insulation of provider contract capitation and discounts and the time lag on fee for service claims, considerable time elapses before financial pressures are fully visible from the lowered premiums; b) due to multi-year contracts and price pressures nothing much can be done about the problem as it becomes apparent.
• A period of significant losses then occurs: finally enough of the market is losing money so that several major players break rank and begin increasing rates and everyone else follows suite.
• Finally there is a return to profits: the premium increases continue until profits are being generated, and the cycle begins anew.

However, with the new century, health plan economic behavior appears to have changed to some degree:

• Plans are now somewhat less driven by long-term market share
• Plans are now somewhat more driven by short-term bottom line profitability
• Plans are more willing to exit unprofitable markets and product lines
• Plan consolidation has occurred due to closures of failing plans, market exits and acquisition of plans.
• Premium competition has somewhat diminished because of all the above.

This doesn’t mean that the premium pricing cycle has disappeared. It does mean the down part of the cycle will be less pronounced due to reduced premium competition. Here’s how the cycle looks graphically:

Source: MCOL Managed Care Fact Sheets

Now let's correspond a little history of some major reform and market movements in the past twenty years to this premium increase graph. You will notice each of these major market movements correspond with shifts in the premium trends:

1. PPO marketshare diminished, and HMOs became the mainstream employer health plan option in the late 1980s as the vehicle to address double digit rate increases nearing 20%
2. HMO tight utilization controls, provider capitation arrangements and deeper discounted contracts rapidly increased in scope as HMOs gained marketshare clout in the first half of the 1990s, and health plans required cost savings to counter significant premium price competition. Pressure for health care reform erodes after 1993 as premium increases rapidly delerate.
3. Significant Managed care backlash emerged from providers, media and consumers in the late 1990s, causing a relaxation of utilization controls, a very large reduction of capitation programs and reduction of provider discounts. PPO enrollment again accelerated due to the backlash, and premium increased as resulting costs increased.
4. Consumer driven health plans and greater consumer cost sharing emerged with the new decade as cost increases reached double digit levels. the number of uninsured reach peak levels and pressures for reform increase.

So now plot the next points on the graphs fro 2008 - 2010. Will they continue downward or climb back upward. If they continue to decelerate, we would predict diminished enthusiasm for significant health care reform, and for movement to consumer driven plans. If they start accelerating, a fire should be lit under greater pressures for reform, as well as consumer driven programs. Of course, the reform movement and consumer driven movement will most likely be at odds in the direction they intend to take us, but momentum they may both well have in that scenario.

So the question is, what happens next? Will health plans keep decelerating their premium increases, as the PwC medical cost study would cause us to believe, or will premium increases accelerate, as the Hewitt analysis indicates?

The PwC study: "Behind the numbers Healthcare cost trends for 2008" from the PricewaterhouseCoopers' Health Research Institute, released this June 2007 is available at http://pwchealth.com/cgi-local/hregister.cgi?link=reg/numbers2008.pdf. The following is the PwC expected Medical Cost Trends for 2007 and 2008:

	2007	2008
PPOs	11.9%	9.9%
HMO/POS/EPO	11.8%	9.9%
Consumer Driven	10.7%	7.4%

The Hewitt Associates analysis can be reviewed in their June 28, 2007 press release "HMOs Propose Highest Rate Increases in Four Years, According to Hewitt Analysis" at http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/Newsroom/PressReleaseDetail.aspx?cid=4159 . Overall, Hewitt projects these initial 2008 rates increases to average 14.1%, compared with 11.7% in 2007 and 12.4 % for 2006. How different are the final plan rates? Hewitt notes that after plan changes, negotiations and terminations, 2007 average HMO rates increased by 8.2%. If that same differential held for 2008, final 2008 rate increases would be around 9.9%, which if you round it, does bring us back to double digits even for the final numbers.

So, let's spin the premium rate wheel of fortune and see if we're headed into pressures for change or status quo as we inch along towards the election year.