Sigh Heard Round the World: Accountability and the ACA

By Cyndy Nayer, June 28, 2012

The tension across the US this morning was palpable, emails quieted, phones didn't jingle, 10am ET came and went, and suddenly, there it was:  The Supreme Court Upholds the Affordable Care Act's individual mandate, which allows the changes to go forward.  Later, we heard that the Roberts Court did alter the clause on mandatory expansion of Medicaid by the states who accept Federal dollars.  To be clear, the law said that if a state accepts Federal Medicaid dollars, then it was required to accept the ACA dollars and expand Medicaid; that, the Roberts Court said, was not ok, that the Federal system could not mandate behavior at the State level, which, frankly, is alignment with the known position of Justice Roberts.

So, the kids can stay on their parents' plans till they are 26, the individual mandate means a penalty on those who don't participate (it moved from a commerce clause--you have to buy-- to a tax clause--if you don't get in, you pay a penalty, a lot like not reporting your income and paying your taxes), no one will be denied insurance after 2014, the donut hole for Medicare-covered drugs closes (a savings that seniors have felt this year), state exchanges move forward.  Or, the fight might go into November and beyond with Republicans vowing to cast this law aside.

Some of the pundits are saying the country is weary of this fight.  Others are saying it's not over.  I say it just took on a new dimension:  the actual issue is jobs, the very essence of the American dream is owning a house (NYT survey June 2011:  Which is more important your job or your house?  Majority answered "House.").  By closing, even for awhile, the arguments over the ACA, we can rise up to the real problems, of which health care is a prime cause, but jobs and house are the endposts.

This is the sigh, not one of relief, but one of checking off the box that says "ACA" and refocusing on what matters:  the economy, the jobs.  Most folks understand that taxes are paid through jobs, houses are bought with jobs, health care is delivered mostly through jobs (either at the worksite or through the money earned at the worksite).  Most folks don't want that to change.  Most folks understand that the costs of the insurance have been going up, that US businesses are buckling under the weight, and, when insurance is not in place, the whole community pays in taxes for uninsured coverage in the emergency room.  Health care derails jobs, productivity, sales, activities, and taxes, which pay for police, firemen, new roads and bridges, and so much more.  So, control the health care costs, and we can actually make a dent in this job/house situation by preserving revenues for rebuilding and purchasing, preserving jobs and communities.

Today's affirmation of the individual mandate is a subtle reminder that we all have an individual responsibility to take care of our assets, including our health.  The door has been opened wider for Americans to manage their health as they manage their wealth:  we can invest in our health checkbook with better eating habits, better activity habits, better stress management habits.  The more we do individually and with our families, the more we will save in health care costs.  As we lower our risk profiles (overweight, sedentary, smoking, no prevention screenings, no immunizations, too much alcohol or pain medication, for example), the less CARE costs us and the more HEALTH we achieve.

I've mentioned before a book I wrote years ago--Lifetips:  101 Tips for Personal Health Management (that was the name the publishing house assigned to it, I didn't get to choose)--that included the concept of health-wealth portfolio, managed by the person/CEO-of-my-health, that leads to better health and wealth and performance.  It's time we revisit the concept.

In today's lexicon, 4 years after I wrote the book, the word to use is "Accountability."  We read about Accountable Care Organizations, but I  posit an innovative thought:  The Family is the Accountable Care Organization.  Every decision we make about what to eat, stepping up our activity, cutting our risky behaviors, getting the right care at the right place at the right time, affects the health and wealth and performance of the family.  Diagnosed with an acute sickness or chronic condition?  That will cost the whole family, could cut down on vacation time, or, worse, on education savings.  Need a new car?  Might have to make-do with the clunker because the medication you need has a higher co-pay.

You understand, I don't need to belabor this discussion.  What we witnessed today is the revival of our spirits as we experienced the revival of the belief in the American system:

"The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people." John Roberts, Chief Justice of the United States Supreme Court (thank you MCOL).

Any doubt we had about partisanship on the Supreme Court has been dissolved.  Justice Roberts used the rule of law to search for solutions that upheld the Congressional will, and only in the case of the state Medicaid mandate was the revision made, still leaving the law intact but one clause modified.  The headline surprised many, but the Supreme Court did was it was supposed to do:  SCOTUS was the Accountable Organization to assure the law of the land was upheld, according to the voted representaties of our government.

Now, the collective sigh must be turned to the jobs and houses.  It starts with each of become our own CEO of our self-defined Accountable Care Organization.  Our consultants in the medical community, our beneficiaries in the neighborhoods where we live, will thank us.

We can do it.  Turn our collective will to the rebuilding of our economy and our communities.  Do the best we can at managing our everyday health and watch the wealth begin to flow again.  Make small changes, track progress and stay the course, recruit others to join.

Accountability is our action, health is our goal.  Choose wisely, my friends.  Now, inhale deeply, and sigh audibly:  it's time to make America the healthiest nation in the world.

What’s Happening at MCOL – Hospital Value Based Purchasing and ACO Webinars this week!

By Claire Thayer, June 25, 2012

In October, the Centers for Medicare and Medicaid Services will launch its value-based purchasing program for hospitals. Part of the Affordable Care Act, this program is an ambitious initiative intended to improve patient outcomes by encouraging hospitals to closely follow best clinical practices.  Join Payers & Providers on Wednesday this week for an examination of what hospitals are doing to prepare for this new initiative. Register at: http://www.healthwebsummit.com/pp062712.htm

Our webinar event on Thursday focuses on Accountable Care from the perspective of Mid State Health Center.  Please join Sharon Beaty, Chief Executive Officer of Mid State Health Center on Thursday at 1PM Eastern as she provides an inside look at the environment, developmental challenges, operational issues, relevant dynamics, lessons learned and current considerations for Accountable Care with her organization. Addition details are available at: http://www.healthwebsummit.com/northaco062812.htm

The Digital Health Self-Service Counter

By Clive Riddle, June 21, 2012

So you’ve navigated the self-service checkout counter, purchasing your toilet repair kit and halogen light bulbs at your big-box hardware store; and even braved the self-service experience with your greek yogurt, arugula and asiago cheese at your grocery store. Now are you ready to do the same with your healthcare?

Accenture says you are indeed, to a point, if you can just find the checkout counter.  They have just released results of the Accenture Connected Health Pulse Survey , based on an online survey of 1,110 U.S. patients to determine the preferred channels of electronic health information and services. They found that “the vast majority of patients (90 percent) want to self-manage their healthcare leveraging technology, such as accessing medical information, refilling prescriptions and booking appointments online, but nearly half (46 percent) are unaware if their health records are available electronically.”

What’s more, as Accenture’s Kaveh Safavi, MD, JD, tells us, “patients increasingly want access to their personal medical information, anytime, anywhere. But they’re not willing to give up the option of face time with their physicians.” (85% surveyed want to be able to communicate with their doctor in person.)  So just like the grocery and hardware stores that must still provide full-service counters next to their self-checkout lines, consumers want their in-person doctors and nurses and mhealth too. Although, as an aside, who are these 15% of consumers that don’t want to be able to communicate with their doctor in person?

Here’s more consumer findings from Accenture’s survey:

• 83 % want online access to their health records
• 48 % want their doctors to manage their medical records, while 44 % prefer to manage their own
• 33 % did not know whether services such as bill pay, electronic reminders and lab results were available to them online
• 72 % want to book, change or cancel physician appointments through via  website; 68% would like to do so via a mobile device (meaning most want both)
• 88 % want to receive email reminders for preventative or follow-up care;  63% would like to receive these reminders via their mobile phone (meaning most want both)
• 76 % want the option of email consultations with doctors, 74% would like telephone consultations, including via mobile phone (meaning most want both)
• 73 % would like to use a mobile device for requesting prescription refills; 72% want to be able to use a website to do so (meaning most want both)

For more about the role of in person vs. self-service healthcare, you can check out the mHimss blog by David Lee Scher, MD in which he offers 5 reasons why mobile health apps will never replace doctors. If you just want to read the cliff notes version, we’ve summarized his list in healthsprocket.

What’s Happening at MCOL – Newest Lists on HealthSprocket

By Claire Thayer, June 18, 2012

HealthSprocket is the home of health care lists - where users can read, post, comment and vote on health care lists of interest. Checkout healthsprocket at http://www.healthsprocket.com/ to see all lists or those categorized as: Most Viewed, Trending this Month, Featured, Top Rated, Video and Audio, Fact based, Opinion based and more! 

Here’s a look at the “Newest” lists posted over the past 2 weeks:

06/14/12	Fact Based	Benefits Realized by Leveraging the State-Level Health Information Exchange and State Deployed IT Infrastructure Outside of Federal Funded Initiatives
06/14/12	Fact Based	Number of State Health IT Laws Enacted Each Year (2007-2011)
06/14/12	Fact Based	13 Security Tips to Combat Mobile Device Threats to Healthcare
06/13/12	Fact Based	Historical Supreme Court Health Law Related Cases
06/13/12	Opinion Based	Five things you can do while waiting for the Supreme Court Affordable Care Act decision
06/13/12	Video/Audio	Who is at Risk for Medication Errors
06/13/12	Video/Audio	France 101 Healthcare
06/13/12	Video/Audio	Tips on Using Social Media in Health Care
06/11/12	Fact Based	5 Mistakes to Avoid When Measuring Wellness ROI
06/08/12	Opinion Based	10 Health Plan Communications and Marketing Professionals to Follow on Twitter
06/07/12	Fact Based	Becker's Hospital Review: 6 Trends in an Era of Consumer-Driven Healthcare
06/06/12	Fact Based	U.S.News: Best Children’s Hospitals 2012-13: The Honor Roll
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Urology
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Pulmonology
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Orthopedics
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Neurology & Neurosurgery
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Nephrology
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Neonatology
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Gastroenterology
06/06/12	Fact Based	U.S. News Top Five Best Children's Hospitals 2012-13 for Diabetes & Endocrinology

Visit healthsprocket at any time at: http://www.healthsprocket.com/.  Register to post your own lists or sign up to receive SprocketRocket, periodic emails from HealthSprocket at http://healthsprocket.com/hs/user/register.

What to Do Whilst Waiting for SCOTUS

By Clive Riddle, June 14, 2012

At times it may feel like the pending Supreme Court decision regarding the Affordable Care Act may play out like Waiting for Godot, but exercise some patience for The Decision on The Act that hopes to encourage exercise for patients, among a bazillion other things. Decision-Day will come soon enough. Too soon, for some stakeholders on one side of the fence or the other, undoubtedly.

While you’re waiting, it’s interesting, although not entirely instructive, to review the past SCOTUS cases involving various aspects of health care and health insurance law. FindLaw provides a summary of these cases, with links to each case.  A quick listing of these 15 cases is available in a healthsprocket list: Historical Supreme Court Health Law Related Cases. This accumulation of cases will be bookended by Roe v Wade in 1974, and the pending 2012 Affordable Care Act decision. In between are less-distinguished cases all being decided upon during the first decade of this century. These other cases include:  two involving health plans (Aetna and United’s PacifiCare) stemming from the managed care backlash era; three abortion related cases (in addition to Roe v Wade); two Medicaid cases (regarding provider payments and eligibility);  prescription solicitation; medical device safety claims; employer liability for mental anguish due to potential future work-related health claims; due process involving mental illness; punishment of mentally disabled criminals; physician-assisted suicide; and medical marijuana.  

You can consider the private marketplace response, back when implementation of the Act was still pending, and now when The Decision is pending. Back in the spring of 2010, “early adopter” health plans extended coverage provisions well before their required effective date. Now that the entire Act may be in jeopardy, “post-adopter” health plans have indicated they will continue to provide a number of coverage provisions in the event the Act is overturned.

You can also produce your own History Channel version of when we went through all of this before, and review the literature on the public and stakeholder controversy surrounding adoption of Medicare into law in 1965. Déjà vu – perhaps everything old is new again? One might wonder if and how the current SCOTUS might have weighed in on that.

Or you could read through a litany of papers on the implications, permutations, considerations and expectations for The Decision. RAND just released a good study on How Would Eliminating the Individual Mandate Affect Health Coverage and Premium Costs? Here’s some recent typical articles: Employers' 'plan B' if health reform is axed (CNNMoney, June 14, 2012); Health spending likely to keep rising with or without Obama's plan (Los Angeles Times, June 13, 2012); Undoing health law could have messy ripple effects (Associated Press, June 11, 2012)

Still don’t’ know what to do with idle time while impatiently waiting for SCOTUS? You can always use this healthsprocket list, offering five things you can do while waiting for the Supreme Court Affordable Care Act decision.

What’s Happening at MCOL – Thursday’s Predictive Modeling Web Summit 2012

By Claire Thayer, June 11, 2011

The 5^th Annual Predictive Modeling Web Summit, co-sponsored by Predictive Modeling News, takes place this Thursday and we hope you will plan to join us!

The Fifth Annual Predictive Modeling Web Summit features a 90 minute webinar with national experts from actuarial, hospital system and health plan perspectives that tackle the topics of risk adjustment, predicting readmissions, data mining and more.

The event also includes three downloadable pre-recorded sessions, with expert faculty addressing predictive analytics applied to member compliance and enrollment patterns; Medicaid dual eligible and dual diagnoses populations; and application of big data and prepayment analytics to address the key challenges of state health care program payment models with respect to fraud, waste and Abuse and related issues.

Webinar Agenda (Eastern times)

• 1:00 pm - 1:30 pm  Risk Adjustment and the Power of Four - Ksenia Draaghtel, ASA, MAAA, Associate Actuary, Milliman 
• 1:30 pm - 2:00 pm  Predicting Risk of Readmissions for Targeting Patient Intervention - Jill Kalman, M.D., Director, Cardiomyopathy Program, Associate Professor of Medicine, Cardiovascular Institute, Mount Sinai Medical Center; and Maria Basso Lipani, LCSW. Coordinator, PACT (Preventable Admissions Care Team) , Mount Sinai Medical Center
• 2:00 pm - 2:30 pm  Data Mining Strategies for Risk Stratification and Adjustment-- Sheila Owens Collins, MD, Vice President, Senior Medical Director, Community First Health Plan

For additional information about this event, including a description the pre-recorded sessions and more: http://www.healthwebsummit.com/pm2012.htm.

PPSA: What will come of the Physician Payments Sunshine Act?

by Clive Riddle, June 8, 2012

One of the oodles of components of the Affordable Care Act is the Physician Payments Sunshine Act, which, according to the CMS proposed rule issued 12/19/11 “would require applicable manufacturers of drugs, devices, biologicals, or medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) to report annually to the Secretary [of Health and Human Services] certain payments or transfers of value provided to physicians or teaching hospitals (‘covered recipients’). In addition, applicable manufacturers and applicable group purchasing organizations (GPOs) are required to report annually certain physician ownership or investment interests.”

Of course stakeholders and studies have come out on both sides. Various physician and pharmaceutical interest groups have invested in arguing the administration costs and burdens to be borne outweigh the potential benefits. The Archives of Internal Medicine published a Research Letter last week: Effect of Physician Payment Disclosure Laws on Prescribing describing results of study of two such state laws that did not produce intended results. Consumer interest groups have placed count-pressure to fully implement the Act, such as the Pew Prescription Project.

Perhaps in response to such conflicting pressures and 300 comments received to date, CMS last month blogged that they were delaying issuance of the Final Rule until later this year, and provided assurance that no data collection would be required before January 1, 2013.

In the midst of all this, Deloitte has just released a 28 page report: Physician Payment Sunshine Act: Physicians and life sciences companies coming to terms with transparency? The report is based on a survey conducted by Forbes Insights for Deloitte, was conducted in January and February 2012 among 110 U.S.-based physicians and 223 global executives from life sciences companies worldwide. Their findings would seem to indicate we’ll all get through this somehow.

The survey indicated that, when posed the question “Are you in favor of a public, searchable database of all physician-industry relationships to be available to the public?” 54% of physicians responded “yes, as long as patients understand how to interpret the data” and another 14% went further, stating “yes, the more information patients can get, the better.”

Deloitte reported that “with about 12 months to go until the first reporting requirements under PPSA (March 2013), two-thirds (66 percent) of the life sciences executives responding ...said that their companies are either “100 percent ready” or are “50 percent done and hoping to be ready in time” for the PPSA and other new compliance requirements. Meanwhile, the majority (55 percent) of life sciences companies expect to see their HCP transparency-related compliance investments to continue to increase in 2012 and 2013. Almost half (48 percent) of these investments are expected to go into in-house training programs, 34 percent to in-house software upgrades and integration, and 25 percent to hiring new full-time employees.”

But will these new requirement ultimately achieve positive objectives? Seth Whitelaw, Director, Deloitte & Touche LLP U.S., tells us “as the survey results illustrate, physicians, the life sciences industry, and even governments are expected to expend significant time, effort, and resources complying with PPSA. Yet it is too early to tell whether the PPSA will significantly alter the landscape of provider-industry relationships.”

Deloitte cautions that “almost three-quarters (72 percent) of physicians responding to the survey believe that new regulations will not change provider-industry relationships. Moreover, despite all the efforts to comply with the new regulations, 38 percent of life sciences executives responding to the survey said that they either don’t know how, or have no plans, to use and leverage the publicly available data regarding other companies.”

What’s Happening at MCOL – Private Health Insurance Exchanges

By Claire Thayer, June 4, 2012

Our webinar event on Thursday this week (1:00 – 2:00PM Eastern) takes a look at the marketplace implications of the pending Supreme Court decision for private health insurance exchanges.

Michael Thompson, Principal with PricewaterhouseCoopers provides an overview of the current private health insurance exchange environment, and then moderates presentations and discussion from a panel of important stakeholders including:

• Kevin Kickhaefer, Head of Sales and Market Development, Bloom Health
• Ron Rowe, Vice President of Individual and Small Group Markets, Blue Cross Blue Shield of Kansas City
• Joseph R Donlan, President, ConnectedHealth
• Chini Krishnan, Founder & CEO, Getinsured.com

For additional information about this event: http://www.healthwebsummit.com/privatehix060712.htm. 

Clinical Integration: Déjà Vu All Over Again?

by Nathan S. Kaufman, June 1, 2012

Last year, the Centers for Medicare & Medicaid Services (CMS) published proposed regulations for the formation of accountable care organizations (ACOs). Release of the regulations represents the latest of many efforts by the federal government to encourage healthcare providers to become “clinically integrated” and work together to coordinate care, thus reducing the cost and improving the quality of care provided to patients.  

The Federal Trade Commission (FTC) considers physicians who work in different practices to be competitors; thus, under most circumstances, joint negotiation by independent physician practices is considered to be illegal price fixing (Casalino 2006). In a 1996 statement, the US Department of Justice and the FTC provided a new antitrust safety zone to enable independent providers who work in separate practices to jointly negotiate with payers if they are sufficiently “clinically integrated”—that is, if they have formed a network in which there is an organized process to control costs and improve the quality of care resulting from a significant investment of monetary and human capital (Casalino 2006).

According to Gosfield and Reinertsen (2010), the FTC has been “fairly unwilling to define the boundaries of clinical integration, because they wish neither to stifle innovation, nor to encourage anticompetitive behavior.” In her remarks to the American Hospital Association in April 2009, FTC Commissioner Pamela Jones Harbour (2009) stated:

The essence of clinical integration is the interdependency among health care providers. Put simply, each provider must have a vested interest in the performance of the other providers such that their financial and other incentives are closely aligned to meet common objectives.

Since the publication of the guidelines in 1996, several provider networks have been deemed to be clinically integrated by the FTC. These networks have several key common factors:

• Clinical practice guidelines or protocols to measure performance
• Information technology to monitor care
• The ability to evaluate provider performance and to act on the findings
• The willingness to share data with payers

Medicare’s Physician Group Practice (PGP) demonstration (Iglehart 2011) and mature clinically integrated networks such as Advocate Physician Partners (Shields et al. 2011) have demonstrated that clinically integrated networks have been able to improve performance for select quality indicators. Even so, there is little empirical evidence that these networks have affected the overall cost of care. Even Advocate Physician Partners, one of the most mature clinically integrated networks, notes that a number of its inferred medical cost savings “are based on the achievement of key clinical outcomes that have been demonstrated in the literature to reduce costs” (Shields et al. 2011). One must question whether networks that were developed in part  to use their market clout to negotiate premium rates with payers are able to achieve significant measurable cost savings.

Compliance with FTC legal guidelines provides no assurance that a clinically integrated network possesses the competencies to improve quality, reduce cost, or remain a viable business model over the long term. As was the case in the mid-1990s, many “first-generation” clinically integrated provider networks can be expected to delude themselves into voluntarily taking economic risk for the care they provide. Because few possess the necessary competencies and culture, many will experience financial distress or worse.

The Law of Reciprocal Economics states that one person’s cost is another person’s revenue. In order to reduce the cost of healthcare, someone has to get paid less. With hospitals and physicians accounting for over 80 percent of health insurance benefits spending (PwC Health Research Institute 2011), one must assume that in order to reduce the overall cost of care, revenues for hospitals and high-end specialists, in aggregate, will have to decline.  

Implications for Hospital Leaders

To truly impact costs, provider networks must be committed to reducing utilization of high-end services and must possess the “second-generation” clinical integration competencies that are essential to create a financially successful, sustainable provider network. These competencies include:

A common electronic health record (EHR) with point-of care protocols. In order to monitor cost and quality and coordinate care, it is essential for providers to share a common electronic record. Embedding evidence-based care plans in the EHR can encourage their use by an entire provider network. Geisinger Health System has demonstrated that compliance with care plans can be enhanced by “hardwiring” the protocols into the EHR (Paulus, Davis, and Steele 2008).

As an interim step, networks have created data warehouses to which providers submit their encounter data for analysis and reporting. Transparent reporting of accurate data in near–real time is essential if a clinically integrated network is going to reduce cost and improve quality.

Sufficient primary care capacity. The primary care office serves as the “medical home” for the patient, ensuring that the patient receives appropriate preventive care and monitoring. Given the anticipated shortage of primary care physicians, a model of care involving physician extenders—for example, physician assistants and nurse practitioners—will be essential.

Engaged physician champions. By definition, a clinically integrated network requires independent physicians to work as a team to coordinate care. The evidence from first-generation clinically integrated networks is that physicians will volunteer to surrender their autonomy only to a physician-led enterprise.

Evidence-based inpatient and outpatient care plans. The high variability in the cost and quality of care for specific diagnoses is well documented in the Dartmouth Atlas (Brownlee et al. 2011). Looking at length of stay, compliance with core measures, and readmission rates, my personal experience indicates that this high degree of variability exists within local health systems as well. To have a predictable impact on the cost and quality of care for a population of patients, it is essential that all providers use a common set of evidence-based care plans.

Proactive programmatic approaches to chronic disease. There is some empirical evidence that patients with diabetes and congestive heart failure who participate in disease management programs have better outcomes at lower costs than patients who do not participate in these formal programs (Stock et al. 2010; Russell and Chambers 1999). Home visits, telephone coaching, and web-based monitoring are components of disease management programs that can improve health status and prevent expensive hospital admissions.

Dedicated, sophisticated, mature infrastructure. In addition to the aforementioned information technology solutions, infrastructure will be needed to develop care plans, enroll and train physicians and their office staffs, design disease management programs, and report results. Most health plans possess this infrastructure. Facing a make-or-buy decision, many clinically integrated networks are exploring the prudent approach of joint venturing with one or more payers.

Performance-based rewards and consequences. A fundamental requirement for being clinically integrated is a process for evaluating individual provider performance and acting on the findings. Positive incentives usually involve financial rewards for compliance with key metrics. It is also necessary to sanction providers for poor performance and ultimately eliminate noncompliant providers from the network.

Pilot-testing network performance with health system employees and their beneficiaries. Most health systems are self-insured, giving them significant latitude in structuring benefits and provider incentives. Reducing the use of high-end  services  by employees and their beneficiaries has an immediate positive impact on the health system’s financial performance. Only after a clinically integrated network successfully manages the care of the system’s employees should it consider taking risk for other patient populations.

Proceed with Caution

Compliance with the legal requirements for clinical integration does not guarantee that all participating providers will be better off in the long term. Many providers are forming clinically integrated networks so they can negotiate better rates. But rate pressure on health insurance premiums and the formation of narrow, low-cost networks will limit the ability of clinically integrated networks to negotiate premium rates in the future. 

To succeed over the long term, clinically integrated networks must possess the second-generation clinical integration competencies listed above. They must be flexible enough to adjust to a rapidly changing healthcare landscape, and they must truly be committed to improving measurable quality and lowering the cost of care regardless of the short-term impact on provider revenues.

Getting Started

Clinical integration requires a significant investment in both human capital and dollars. It requires:

• Strong physician leadership committed to reducing cost and improving quality
• Sophisticated, proven infrastructure, including personnel and IT similar to that existing in most health plans
•  A strong, geographically distributed base of primary care physicians
• Access to a comprehensive set of acute and postacute services.

Healthcare provider s learned in the early 1990s that if a health system does not possess the attributes and competencies necessary to succeed in a new delivery model (which at that time was capitation), it is better off seeking a partner that does, or saving its money and doing nothing.

References

Brownlee, S., J.E. Wennberg, M.J. Barry, E.S. Fisher, D.C. Goodman, and J.P.W. Bynum. 2011. “Improving Patient Decision-Making in Health Care: A 2011 Dartmouth Atlas Report Highlighting Minnesota.” [Online information; retrieved 8/24/11.] www.dartmouthatlas.org/downloads/reports/Decision_making_report_022411.pdf

Casalino, L.P. 2006. “The Federal Trade Commission, Clinical Integration, and the Organization of Physician Practice.” J. Health Politics, Policy and Law 31 (3): 569–85.

Gosfield, A.G., and J.L. Reinertsen. 2010. “Achieving Clinical Integration with Highly Engaged Physicians.” [Online information; retrieved 8/23/11.] www.reinertsengroup.com/publications/documents/True%20Clinical%20Integration%20Gosfield%20Reinertsen%202010.pdf

Harbour, P.J. 2009. “Clinical Integration: The Changing Policy Climate and What It Means for Care Coordination.” [Online information; retrieved 8/23/11.] www.ftc.gov/speeches/harbour/090427ahaclinicalintegration.pdf

Iglehart, J.K. 2011. “Assessing an ACO Prototype—Medicare’s Physician Group Practice Demonstration.” New Engl. J. Med. 364 (3): 198–200.

Paulus, R.A., K. Davis, and G. D. Steele. 2008. “Continuous Innovation in Health Care: Implications of the Geisinger Experience.” Health Affairs 27 (5): 1235–45.

PwC Health Research Institute. 2011. “Behind the Numbers: Medical Cost Trends for 2012.” [Online information; retrieved 8/24/11.] pwchealth.com/cgi-local/hregister.cgi?link=reg/behind-the-numbers-medical-cost-trends-2012.pdf

Russell, B., and D. Chambers. 1999. “Congestive Heart Failure Disease Management Program.” [Online article; retrieved 8/23/11.] www.dcmsonline.org/jax-medicine/1999journals/sept99/chf.pdf

Shields, M.C., P.H. Patel, M. Manning, and L. Sacks. 2011. “A Model for Integrating Independent Physicians into Accountable Care Organizations.” Health Affairs 30 (1): 161–72.

Stock, S., A. Drabik, G. Buscher, C. Graf, W. Ullrich, A. Gerber, K.W. Lauterbach, and M. Lungen. 2010. “German Diabetes Management Programs Improve Quality of Care and Curb Costs.” Health Affairs 29 (12): 2197–2205.

What’s Happening at MCOL – New lists posted on HealthSprocket

By Claire Thayer, May 29, 2012

Lots of new health care lists were posted on HealthSprocket during the month of May! Take a look at the Most Viewed Lists, Trending this Month, Newest lists, Top rated lists, etc.  Here are the list items posted since May 10^th.

05/24/12	Fact Based	Healthcare Informatics Top 100 Health IT Companies
05/24/12	Fact Based	Entrepreneur.com: 10 Brilliant Health Companies
05/22/12	Fact Based	Fortune 500 Ranking of Major Pharmaceutical Companies by Rank, Including Revenue (in millions)
05/22/12	Fact Based	Fortune 500 Ranking of Major Medical Facilities by Rank, Including Revenue (in millions)
05/22/12	Fact Based	Fortune 500 Ranking of Major Health Plans by Rank, Including Revenue (in millions)
05/22/12	Fact Based	The Managed Care Executive Group “TOP 10” Issues for Health Plans in 2012
05/22/12	Fact Based	GAO Recommendations to CMS to Increase Savings in Medicare Fee-for-Service and Medicare Advantage
05/17/12	Video/Audio	Paul Casale, MD, Identifies Payment Models Being Utilized in Cardiology
05/17/12	Fact Based	Most Common Barriers to Good Doctor-Patient Communication
05/17/12	Fact Based	Consumer Reasons For Using The Internet vs. Visiting Doctor
05/17/12	Opinion Based	15 Healthcare Publications, Magazines and Journals to Follow on Twitter
05/17/12	Fact Based	KLAS: Top 10 Cloud-Based EHRs
05/17/12	Fact Based	Dr. Farzad Mostashari: 5 things government can do to improve health technology
05/17/12	Fact Based	9 Leading Trends In Rx Plan Management
05/17/12	Fact Based	Mobile Health Hashtags
05/16/12	Fact Based	Mobile Megatrends 2012
05/11/12	Fact Based	Top 10 Hospitals Whose Patients Cost Medicare The Most
05/11/12	Fact Based	U.S.News & World Report: Eight Tips on How to Break into the Healthcare Industry
05/11/12	Fact Based	U.S.News & World Report: 8 Best Healthcare Jobs of 2012
05/10/12	Video/Audio	ACOs and Patient Safety: Dos and Don'ts

For more information about healthsprocket or to post your own list, visit: www.healthsprocket.com

Exchange Exchanges for What?

By Kim Bellard, May 21, 2012

Last week HHS released new guidance on their approaches for health insurance exchanges, as well as announcing $181 million in exchange establishment grants.  This brings the exchange grants to $1 billion over the last two years.  Among the states, only Alaska did not apply even for a planning grant.  (For detail on state activity, see here). 

HHS has bent over backwards to give states options for their exchanges.  The most recent guidance allows states to run the exchanges or to partner with the federal government in running them.  Of course, if a state does not act, the federal government would run an exchange on behalf of the state’s residents.  States have until November 16, 2012 to inform HHS about what type of exchange they intend.  HHS had also previously given states discretion in defining necessary benefits.  The exchanges are scheduled to go into effect as of January 1, 2014, under the provisions of the Affordable Care Act (ACA).  The interested reader can view a nice overview of the recent guidance here or read the actual guidance.

Many states are not keen on the idea of an exchange under ACA.  New Jersey Governor Christie recently vetoed a bill to set up an exchange in that state.  Other states that have recently expressed wariness about setting up exchanges include Illinois, Louisiana, Michigan. Minnesota, and South Dakota.   Curiously, Illinois and South Dakota were among the states in the most recent set of grants announced by HHS, which illustrates that taking money from the federal government is not the same as agreeing with what it wants you to do it.

Of course, much of the resistance is ideological, with Republican legislators and/or Governors doing what they can to offer resistance to ACA in an election year.   It’s too bad that exchanges are caught up in that fight, because there are good reasons to see them as important components of the health care system with or without ACA.

The two operational exchanges in the country – Utah and Massachusetts – predate ACA, and were set up for distinctly different ideological reasons.  Massachusetts, of course, had its own health reform bill, including a mandate for coverage, while Utah was seeking to facilitate coverage for uninsured but employed individuals.  As might be expected by the political make-up of each state, the Massachusetts exchange has a more regulated approach, and the Utah exchange a more free market approach, which only demonstrates that health reform solutions can cover the political spectrum. 

Even more interesting is that the private sector is interested in the exchange concept as well.  On one level, shopping sites such as ehealthinsurance are a type of exchange.  ehealthinsurance has been providing a consolidated online shopping experience for health insurance for over a decade, and are a leading source of sales for many carriers.  They’re even licensing their underlying technology, such as to power a private exchange for Blue Cross Blue Shield of Minnesota.  That exchange supports a defined contribution plan that employers can use to give their employees more choices.  The Minnesota Blues may have felt pressure from competitor Medica, which announced its own private exchange earlier this year.  The Medica exchange is powered by Bloom Health, which itself was acquired last fall by Wellpoint, HCSC (the holding company for Blues plans in Illinois, Texas, New Mexico, and Oklahoma), and Blue Cross Blue Shield of Michigan.   Obviously those large Blue plans see a big future in exchanges.

Other Blue plans are joining the movement, including Highmark (with Array Health) and Blue Cross Blue Shield of Kansas City.  Of course, it’s not only the Blues that see a new world in private exchanges.  Companies such as Liazon or ConnectedHealth started out aiming to assist consumers in selecting health insurance, but now are reorienting themselves to an exchange approach.  Consulting firms such as Aon Hewitt and Towers see themselves in the exchange business, because even their larger customers – even self-funded ones -- are interested in that approach.  Towers just purchased Extend Health, which claims to be the largest private Medicare insurance exchange.     

Let’s face it: employer-based coverage may have seen its heyday, regardless of what happens to ACA.  A recent survey by GfK Custom Research found only 56% of employers are sure they would keep offering coverage once ACA fully kicks in; 12% said they would drop coverage, and almost a third did not know what they will do.  CBO recently estimated only a small – 3 to 5 million people – loss in employment-based coverage due to ACA.  Time will tell how large the effect is, but it’s a safe bet that the number is going down, not up.  EBRI’s analysis of Census data suggest that the percentage of people with employer coverage has steadily declined over the past decade, dropping from 69% to 59% from 2000 to 2010.  Those numbers reflect both a shift in jobs into industries less likely to provide coverage and employers finding offering coverage increasingly too costly, and neither of those trends is going away, regardless of ACA’s fate.  There is going to be more directly purchased individual coverage. 

Exchanges – private or public, through an employer defined contribution approach or for individual coverage – should help consumers by providing more choices, facilitating meaningful comparison of choices, and simplifying enrollment.  What’s not to like?  

When you come to think about it, the tax preference for employer-based coverage is nice, but it may increasingly rankle more consumers to have their employer dictate not only what options they have but also what specific treatments, diagnoses, or procedures are covered – as the recent contraception mess highlighted.   I have previously written on these negative aspects of the employment-based system.  Shouldn’t we all have broad choices, with easy comparisons? 

The bitter partisan feuds over ACA and the American Recovery and Reinvestment Act (which included HITECH) obfuscate some of the good ideas contained in them.  I have a hard time seeing a future of our health care system (absent single payor) that does not include:

• provider structures similar to ACOs;
• payment approaches based on value-based purchasing;
• increased health IT, such as EHRs and health information exchanges;
• health insurance exchanges.

Those genies may be out of the bottle, as both the public sector and the private sector are pursuing these concepts aggressively, and neither is likely to stop even if ACA is struck down or repealed.  It would be fitting, and perhaps ironic, if the fruits of these approaches end up being ACA’s true legacy.  

What’s Happening at MCOL – Webinar events on Wednesday and Thursday this week

By Claire Thayer, May 21, 2012

Last year, CMS unveiled the Pioneer ACO program to spur growth of Accountable Care Organizations prior to the full implementation of the Medicare Shared Savings program. These organizations are pioneers in the sense that they have already embarked on organized care practices and have some of the needed infrastructure in place and are therefore leading the way for others. Please join Milliman's Jill Van Den Bos on Wednesday this week as she addresses the elements of the Pioneer ACO model, the components of financial risk and cost drivers involved and strategies to identify interventions and opportunities.

On Thursday this week, our webinar explores the future of California’s healthcare districts. The decades immediately after World War Two saw the creation of public healthcare districts in California that provided a framework for a burgeoning system of community and rural hospitals. Today, the purpose of these hospital districts is being questioned. Join Michael A. Dowell, partner in the law firm of Hinshaw & Culbertson LLP, Walter Kopp, president of Medical Management Services, Inc. and Cleo Burtley, manager with The Camden Group on May 24, 2012 at 10 a.m. Pacific as they explore the future of California’s healthcare districts.

To learn more about these and other upcoming Healthcare Web Summit events, visit:  http://www.healthwebsummit.com/ or call MCOL's at 209.577.4888. 

Contracting Web Summit e-Poll Results

By Clive Riddle, May 18, 2012

Survey results are now available from the Contracting e-poll held in conjunction with HealthcareWebSummit’s 2012 Contracting Web Summit, which provide a measure of stakeholder contracting views and priorities, with comparisons to previous year’s answers.

Participants were asked to respond to three items:

1.  Please categorize your organization. Purchaser; Provider; or Vendor/Other

2.  What are the greatest opportunities from a contracting perspective?

3.  What are the greatest challenges from a contracting perspective?

Responses to Greatest Opportunity by Year:

• Advancements in analytics capabilities: 18.5% (2012); 19.4% (2011); 7.5% (2010)
• Advancements in EHRs & transactions: 7.4% (2012); 10.2% (2011); 16.7% (2010)
• Consumer engagement initiatives: 7.4% (2012); 12.0% (2011); 10.8% (2010)
• Emergence of value based/newer payment models: 29.6% (2012); 29.6% (2011); 26.7% (2010)
• Formation of ACOs: 8.6% (2012); 7.4% (2011); 16.7% (2010)
• Increased covered population due to health reform: 18.5% (2012); 13.9% (2011); 17.5% (2010)
• Potential growth in medical homes: 7.4% (2012); 3.7% (2011); 0.8% (2010)
• Other: 2.5% (2012); 3.7% (2011); 3.3% (2010)

Responses to Greatest Challenge by Year:

• Consumer engagement Initiatives: 8.6% (2012); 6.5% (2011); 9.9% (2010)
• Continued market consolidation: 13.6% (2012); 7.4% (2011); 14.1% (2010)
• Cost pressures due to economic downturn: 21.0% (2012); 33.3% (2011); 28.1% (2010)
• ICD-10 transition: 7.4% (2012); 0.9% (2011); 6.6% (2010)
• Increased complexities of benefit design: 12.3% (2012); 11.1% (2011); 8.3% (2010)
• Increased mix of government vs. commercial covered populations: 14.8% (2012); 16.7% (2011); 14.9% (2010)
• Issues related to health reform provisions: 17.3% (2012); 15.7% (2011); 14.1% (2010)
• Other: 4.9% (2012); 8.3% (2011): 4.1% (2010)

For the third year in a row, a plurality of respondents thought that the emergence of value based and other applicable newer payment models was the greatest opportunity from a contracting perspective, with 29.6% of respondents answering this way. In 2011, the same percent of respondents agreed that this was the greatest opportunity which was three percentage points greater than in 2010.

The next most prevalent answers to what was the greatest opportunity were advancements in analytics capabilities and increased covered population due to health reform. For both of these options, 18.5% of respondents answered this way. These responses had been the second and third most prevalent answers in 2011 as well, however, advancements in analytics capabilities was chosen by 19.4% of respondents and increased covered populations due to health reform was chosen by 13.9%.

The remaining answers to what were the greatest opportunities from a contracting perspective (not including other which was chosen by 2.5% of respondents) were chosen by a similar percent of respondents, all of which were within one percentage point of 8%.

When broken down by respondent category there were some variations. While those who categorized their organizations as purchaser or vendors/others followed the overall trend of designating the emergence of value based and other applicable newer payment models as the greatest opportunity from a contracting perspective, providers were split on what the greatest opportunity was between the emergence of value based payment models and increased covered population due to health reform both of which garnered 25% of respondents in that category.

The biggest variation among respondent category was on the response to whether advancements in analytics capabilities was the greatest opportunity from a contracting perspective. Overall, 18% of respondents thought that this was the greatest opportunity. Purchasers were the most likely to answer this way with 30.4% of those respondents choosing this as the greatest opportunity. Respondents categorizing themselves as vendor/other were the least likely to respond this way with only 7.1% believing it as the greatest opportunity.

Just as with the greatest opportunity, the respondent’s choice for the greatest challenge carried over a three year trend with a plurality of respondents signaling that cost pressures due to economic downturn was the greatest challenge with 21% of respondents answering this way. This was a much smaller plurality than in previous years and was only 3.7 percentage points greater than the next most common answer for what the greatest challenge was; issues related to new health reform provisions.

The rest of the options for what the greatest challenges are from a contracting perspective are (excluding other) all fell within ten percentage points of each other. 8.6% of respondents chose consumer engagement Initiatives, 13.6% chose continued market consolidation, 7.4% chose ICD-10 transition, 12.3% chose increased complexities of benefit design, and 14.8% chose increased mix of government program vs. commercial covered populations as the greatest challenge.

Looking at responses year over year, most answers ticked slightly up in 2012 compared with 2011 and 2010 with two exceptions; cost pressures due to economic downturn, which dropped 12.3 percentage points from 2011, and increased mix of government program vs. commercial covered populations, which dropped almost 2 percentage points from 2011.

What’s Happening at MCOL – New Silver Companion e-newsletter subscription for MCOL Silver and Gold members

By Claire Thayer, May 14, 2012

MCOL Silver and Gold members now have the option to designate a Silver Companion e-newsletter subscriber who will also receive the entire package of e-newsletters sent to MCOL paid members.

The MCOL Silver Companion e-newsletter subscription may be offered to a valued colleague, favorite client, or even your home or other personal e-mail address. The recipient of the Silver Companion e-newsletter subscription will be eligible to receive the same MCOL discounts as the MCOL Silver or Gold member, including 50% off HealthcareWebSummit registration fees and 10% off other MCOL products.

To learn more about MCOL Memberships and the Silver Companion e-newsletter subscription value added benefit, visit:  http://www.mcol.com/suminfo.htm or call MCOL's at 209.577.4888.

Guy D'Andrea on Pitfalls and Practical Solutions with Shared Savings

By Clive Riddle, May 10, 2012

Guy D’ Andrea, Managing Partner at Discern Consulting, was one of the featured speakers in this week’s Contracting Web Summit 2012, and spoke on  Shared Savings: Pitfalls and Practical Solutions.

For those who need a refresher in what Shared Savings are all about, Guy summarized these core concepts:

• Retrospective calculation of provider’s cost savings (usually relative to overall trend) for a defined population
• Provider is eligible to receive some percentage of the savings as an incentive payment
• Usually (but not always) a “one-way” risk arrangement
• Can include some prospective, fixed payment (essentially a pre-payment for expected savings)

Shared Savings, of course, are a centerpiece of accountable care and medical home initiatives. But stakeholders do run into pitfalls as they try to come to agreement, and implement such arrangements. Before moving on to discuss building a payment model for shared savings with readmissions, Mr. D’Andrea discussed these pitfalls and some general potential solutions.

The prospective payment is a sticking payment. Guy notes that providers will always want the maximum possible prospective payment, since it is “risk-free” revenue.  Payers will want to delay payments until savings are achieved.” His solution: “treat prospective payments as an investment, and discount expected savings to present value.”

Then the argument comes up that is more difficult for high-performing providers to generate savings, because they tend to get penalized for having already done well, leaving less room for future improvements. His solution: “use a ‘blended’ model, in which the target budget is set using a combination of the provider’s own cost history, and that of the peer group.”

Next  comes the concern that  a provider’s experience, particularly when the population isn’t large enough to adequately spread the risk, will be influenced more by luck with outliers than factors under the provider’s control. The D’Abdrea solutions: (1) Establish minimum population sizes and savings rates;  (2) Tie payments to performance on clinical process measures; and (3) Exclude “random, rare, and expensive” events from cost of care calculations.

Lastly,  he addresses the concern of sustainability: he notes that “if savings are a “one-time” event, providers may be worse off financially in the long-run than if they saved nothing (especially for integrated systems).” His solutions: (A) Use a multi-year model that partially credits providers with savings in earlier years; and (B) In the long-term, seek to evolve from shared savings to “two-tailed risk” payment models, such as bundled payment or global capitation.

What’s Happening at MCOL – HealthcareWebSummit events hosting two Webinars

By Claire Thayer, May 7, 2012

Concerned about hospital readmissions? On Wednesday this week, Drs. Joe Gifford and Robert Herr from Regence Group and Dr. Brian Wolf from BCBS Rhode Island provide a Medical Director's perspective on aspects of their current approaches to drive accountability by reducing unnecessary hospital readmissions.  Understand the critical need to develop the expertise and repository of attributed data tracking for re-hospitalization rates by hospital and provider groups.

On Thursday this week, we’re pleased to host The Third Annual Health Plan Contracting Web Summit which will address how contracting stakeholders should position themselves for 2012 and beyond.

Agenda for Thursday’s (May 10) live webinar (Eastern times):

• 1:00 pm - 1:30 pm Current Trends in Value-Based Contracting, by Terri L. Welter, Principal, ECG Management Consultants, Inc. 
• 1:30 pm - 2:00 pm  Evaluating Bundled Payment Contracting - Kathryn V. Fitch, RN, MEd, Principal, Healthcare Management Consultant, Milliman
• 2:00 pm - 2:30 pm  Financial Incentives Model for Minimizing Readmissions-- Guy D'Andrea, President and Founder, Discern Consulting

Pre-Recorded Presentations in Windows Media Video format with audio and synchronized slide advancement:

• ACO Capitation 101: Understanding Medicare ACOs’ Real Potential to Influence Patterns of Care, by William A. MacBain, MPS, Senior Vice President, Gorman Health Group
• Transparent Cost Networks, a Consumer Driven Solution, by Will Fox, Principal and Consulting Actuary, Milliman
• Additional Presentation by William DeMarco, President and CEO, Pendulum HealthCare Development Corporation
• Plus other Web Summit features including a Contracting Article Library, and an exclusive Contracting e-poll

For these and other upcoming events: http://www.healthwebsummit.com/

A Practical Roadmap for the Perilous Journey from a Culture of Entitlement to a Culture of Accountability

By Nate Kaufman, May 4, 2012

In a culture of entitlement there is the belief that one deserves certain rewards, rights and privileges based on tradition or past achievements. In contrast, in a culture of accountability rewards, rights and privileges are only earned based on the merits of one’s current behaviors and actions. The transition from a culture of entitlement to a culture of accountability is a perilous journey for rights and privileges are no longer automatic, the ‘entitled party’ usually feels disappointed, angry, or mistreated.

A culture of entitlement is deeply embedded in the US healthcare system: patients believe they are entitled to state of the art care regardless of their unhealthy lifestyle; physicians believe they are entitled to a high degree of clinical autonomy and historical levels of compensation; hospitals believe they are entitled to be reimbursed at the highest rates in the world regardless of their inefficiencies or the results they produce; and suppliers e.g., insurance and pharmaceutical companies believe they are entitled to high margins regardless of the value they provide to the system.

This culture of entitlement has driven per capita healthcare spending in the US to twice what our “peer countries spend on healthcare (commonwealth fund.) It has driven healthcare costs to a point where neither the public nor private sectors can continue to absorb the historical rate of cost growth. And it has called the question as to whether the U.S. healthcare system is creating sufficient value, i.e., outputs per unit cost.

In recent years, data on the value created by the US healthcare system has become more available and the early numbers are not good. According to McKinsey, “In 2006, the United States spent $2.1 Trillion on healthcare, more than twice what the nation spent on food and more than China’s citizens consumed for all goods and services. In addition, adjusting for economics, health status etc, the US spent $650 Billion more on health care than expected base on comparison to peer countries.  Hospital and physician care accounted for almost 85% of the spending above expected levels, with drugs, health administration and insurance comprising the remained components of excess spending.

The primary driver of this excessive cost appears to be the salaries and revenues of providers and suppliers. For example, McKinsey estimates that for inpatient care, “Revenue per equivalent admission” accounts for $54 Billion in excess costs compared to peer countries. This is driven in part by the cost of nurses who are paid 36% more than their peers in other countries. Drug prices are 50% higher in the US than in other developed countries. Based on a multiple of per capita GDP, primary care physicians in the US are paid 46% more than physicians in peer countries and US specialists are paid 67% more than their peers. It is no wonder that the global fee for a normal delivery in the US is twice that of most peer countries (international federation of health plans 2010)

Given the relatively high investment in “input costs” one would expect a commensurate benefit in outcomes; however this does not appear to be the case. According to the Commonwealth Fund Study:

The U.S. health system is the most expensive in the world, but comparative analyses consistently show the United States underperforms relative to other countries on most dimensions of performance.

Data on life expectancy vs. cost by country is further evidence that the outcomes produced by the US healthcare system are not commensurate with the investment.

Finally, the high variability in care raises questions as to whether everyone is getting appropriate care:

1. The rate of mastectomy vs. lumpectomy in North Carolina varied from .4 per 1000 Medicare Beneficiaries in the Wilson HSA to 2.7 in the Goldsboro HSA (Dartmouth)
2. The rate of Coronary Artery Bypass Surgery ranged from 8.9 per 1000 in McAllen to 1.9 per 1000 in Pueblo CO. (Dartmouth)
3. Non-radiologist self referrers of medical imaging are 2.48 times more likely to order imaging than clinicians with no financial interest in imaging equipment
4. 53 percent of the heart attack patients underwent a procedure to restore blood flow to the heart through a blocked artery that caused a heart attack more than 24 hours earlier despite clinical practice guidelines recommending against it.

The often quoted disparity in the per capita cost of care of Medicare patients in McAllen vs. El Paso has raised many eyebrows. Recent research from Franzini et. Al. shows that while per capita Medicare spending was 86% higher in McAllen than in El Paso, the per capita  spending for Blue Cross patients in McAllen was actually 7% less than in McAllen. The authors concluded that their study is “consistent with Gawande’s finding that our healthcare system can create a “culture of money, – increasing the use of profitable Medicare services when there is [unconstrained] diagnostic and procedural discretion and clinical latitude.” 

In a recent study of ‘value’ of healthcare services in Massachusetts conducted by the Attorney General, it was found that the difference in prices paid by insurers to its lowest paid physician group vs. highest paid exceeded 145% and the difference in hospital payments exceeded 170%.  The Attorney concluded that this wide variation in the payments made by health insurers to providers is not adequately explained by differences in quality, complexity of services or their characteristics that might justify variation in prices. “Instead prices reflect the relative market leverage of health insurers and health care providers.”

In his recent speech to the American College of Surgeons, Senator Mark Kirk (R-Ill) summarized the government’s position on the current healthcare system when he stated that “every group that relies on federal funding should expect a 10% to 20% drop in that funding.”  When Dr. L.D. Britt, President of the ACS, warned that such cuts could send some healthcare providers into a "tailspin," Kirk replied that “the tailspin is the U.S. economy. There is a new audience at play," Kirk said, referring to U.S. creditors. "The judgments they render, they are swift and severe.”

Shifts in culture are painful but if not recognized, and managed they can be terminal for an organization. Through the implementation of value based purchasing, reduced reimbursement, data transparency health systems are being steered on a perilous journey from entitlement to accountability. The healthcare literature is overflowing with tactics and strategies that sound great on paper and/or may be working in Cleveland or Chicago or Rochester MN after decades of trial and error, however there is little evidence that these proposed solutions will work in most healthcare communities in a reasonably short time frame. Michael Porter provides excellent advice on how to increase the value of the healthcare. He notes that:

“Improving performance and accountability depends on having shared goals that unite stakeholders

In healthcare, the absence of clarity about goals has led to divergent approaches, gaming the system and slow progress in performance improvement

Rigorous, disciplined measurement is the best way to drive progress”

The following are practical steps that a health system can implement to begin the long journey of transformation.

1) Conduct regular briefings for the board members, physicians, employees and the community on the structural changes in healthcare occurring at the local, state and federal level

2) Designate a group of physician leader to be the clinical transformation task force. Use this group as a sounding board and to lead implementation efforts

3) Develop accountability measures for every specialty and hospital department. Initially this data should be blinded but designate a time in the future when all results will be transparent. Note: the health plans and the government have already begun publishing an ever increasing amount of un-blinded outcome data by hospital and physician.

4) The Chief Medical Officer or his/her should actively manage the performance of hospital-based physicians.

5) Select a few high volume Medicare DRGs and initiate a process for designing care to improve cost and quality and reduce readmissions. Pick a redesign methodology health systems are using LEAN. Consider a bundled payment demonstration if the health system and physicians share a common vision for decreasing cost and improving quality (and probably getting paid less per unit of service than under fee for service)

6) ACO-Caveat Emptor --buyer beware. Webster defines ‘risk’ as “hazard, danger, peril; exposure to loss, injury or destruction.” While it is true that there is a theoretical opportunity to make more money by doing less, we learned in the mid-nineties that organizations that take the financial risk for the health of the population can end up much worse off than if they did nothing. After decades of successfully taking risk in California it is clear that the critical competencies needed to successfully take risk include:

a.  Physicians that share a common electronic health record system,
b. A culture focused on reducing utilization of hospitals and high end interventions,
c. A strong base of primary care physicians,
d. Selective use of specialists based on the efficiency of the care they provide, and
e. Robust, mature infrastructure.

Since most of the health systems do not possess these competencies they should limit their exposure to risk and test these competencies on the employee population of the health system. If a health system wants to be in the Medicare risk business consider joint venturing a Medicare Advantage Plan with a local payer.

7)      Finally, every journey requires a roadmap and every health system needs to define its strategic direction, a.k.a. “true north.” To maximize performance under the traditional model most health systems strategic behavior can be  characterized as:

Operating a financially strong health system by maximizing revenues through pricing and volume growth, the provision of a broad range of services and meeting the individual clinical and financial needs of each physician

                The new “true north” is clear:

To operate a financially strong, high functioning health system that consistently achieves optimal measureable value, i.e., outcomes/cost, for every patient.

                Define your ‘true north,’ and begin the journey by taking practical, incremental steps described above. Enjoy the ride! 

What’s Happening at MCOL – May 2012 edition of MCOL Monthly

By Claire Thayer, May 1, 2012

The May 2012 edition of MCOL Monthly is now available for MCOL paid members.  MCOL Monthly is an e-magazine in Adobe Acrobat format with easy to print and read MCOL authored articles and features from the past month's e-newsletters and web site. The table of contents for the May edition of MCOL Monthly is provided below for a quick peek at this months’ edition:

      Trends... CBO Medicare Expenditure and Enrollment Projections, 2011-2020

      Data-Map...Estimated Total Annual Rebate for Exceeding Minimum MLR

      Thought-Leaders...Decline in patient utilization metrics since onset of recession

      Tips.... In getting the most out of your MCOL membership

      Blog...Guest Blog from Sander Domaszewicz on Decline in Utilization Metrics

      Blog...The Price Is (Not) Right

      Blog...DME: A Modest Proposal

      Blog...Preparing for the End of the Healthcare Bubble

      Blog...A Different Way to Fix Medicare

      Blog...Changing Economics in an Era of Healthcare Reform

      Tidbits...Medicare Annual Trustees Report: Some Data Snapshots

      Tidbits...Healthcare Social Media is Too Tiny says PwC

      Tidbits...Employers and Behavioral Health Management

      Tidbits...Prescriptions Drugs in 2011

      Factoids...Selected Factoids

      HealthSprocket...Selected Lists

      Announcements

      Quoted 

Learn more about MCOL memberships at: http://www.mcol.com/online.htm. 

Guest Blog from Sander Domaszewicz on Decline in Utilization Metrics

By Clive Riddle, April 30, 2012

Sander Domaszewicz is a Principal with Mercer well-versed in employer and employee health benefit issues, and is a noted national speaker on topics related to this arena. Recently, MCOL’s ThoughtLeaders publication asked it’s panel about the recently observed trends regarding a dip in various utilization metrics. We didn’t connect with Sander in time to ask him this question for the current issue of ThoughtLeaders, but I asked him if he wouldn’t mind doing a short guest blog with his thoughts on the issue.

Question: A number of recent studies have indicated a modest decline in several key patient utilization metrics since the onset of the great recession. Will a long-term change result, or will utilization increase as the economy improves – and what are the implications?

Sander Domaszewicz, Principal, Mercer:

Many of the plan sponsors we work with are busy moving forward with strategies that will right-size utilization now and in the future, making sure that their workforce gets the care they need at a good value, and no more.  Some of the most powerful efforts in this area started to blossom during the great recession, and our expectation is that long-term change will result. 

Employers' focus has shifted to almost equal attention now being given to both the Demand-side and the Supply-side of the care consumption equation.  On the Demand-side, employers are investing in keeping healthy folks healthy and keeping illnesses well-managed for those that have chronic conditions.  This Demand-side aligns with "wellness" or "health management" initiatives and is trying to reduce the demand for health care services in the first place.  If the Demand-side of the intervention breaks down, employers are also addressing the Supply-side of the care utilization equation.  So if people do need to seek health care services, let's make sure we get them the right care, at the right time, from the right provider, for the right price, with the right outcome.  In other words, how can we get the most total value for the health dollar spent.  Consumer-directed health plans, centers of excellence, narrow networks, patient-centered medical homes, ACOs, medical travel, telemedicine, retail/onsite clinics, and other interventions all have Supply-side impact.

Both the private and the public sector purchasers of health services are working diligently to optimize necessary utilization and prevent unnecessary utilization, so better control over time may be more achievable now than at any time in the past.

The Price Is (Not) Right

By Kim Bellard, April 25, 2012

I noticed several recent articles and studies about some of the problems caused by the crazy ways we price care in our health system.  If they made a reality show about it, it’d be less The Price Is Right than it would be Survivor. 

Let’s start with a study published in the Archives of Internal Medicine, titled “Health Care as a Market Good?  Appendicitis as a Case Study.”  The authors studied costs for treatment of acute appendicitis, looking at data in California hospitals.  One might assume a fairly small range of cost for this, given that the treatment options are not wide.  They found that costs varied from $1,500 to $183,000; the patient who cost $183,000 admittedly had cancer, but received no treatment for cancer for the stay in question.  Dr. Renee Hsia, the lead researcher, told The New York Times, “There’s no rhyme or reason for how patients are charged or how hospitals come up with charges.  There’s no other industry where you get charged 100 times the same amount, or 121 times, for the same product.”

Indeed. 

Of course, when patients have insurance and go in-network, they usually don’t get exposed to most of the impact of this variation, although increased cost-sharing even for in-network services still makes this an issue.  For uninsured patients, or patients who go out-of-network, it can be much worse.  The Minnesota Department of Health recently alleged consumer protection abuses of a company – Accretive Health -- hired by hospitals to ensure patient bill collection.  According to the report, the company used “boiler-room-style sales atmospheres'' at Fairview's seven hospitals using collection quotas, cash inducements and in-house competitions to squeeze cash from patients before they were treated.”   The practices addressed deductible, coinsurance or other patient responsibilities, either from the current services (yet to be rendered) or from prior unpaid bills.  I wonder if they at least were specific about how much the patients would owe.  I also wonder if they add treatment for the high blood pressure or twisted arms caused by the strong-arming to the list of services. 

Not surprisingly, this problem isn’t limited to Minnesota or to Accretive Health.  For example, the Charlotte Observer and the News and Observer of Raleigh investigated how area hospitals were suing patients to collect debts.  The newspapers found North Carolina hospitals filed such suits over 40,000 times for the five years ending in 2010.  The majority of lawsuits came from two systems, both of which are non-profit.  The investigation notes that some of the hospitals in question made sizeable earnings over the same period, despite their non-profit status, and found numerous instances where the hospitals did a poor job of determining if the patients qualified for programs that would assist with their bills.  It’s tough to get sick, especially when your health care provider slaps a lien on your house for charges that you had no way of predicting in advance.

Then there is what has happened with Fair Health.  This is the database that was set up to settle New York’s 2009 dispute with Ingenix about how that company established “usual and customary” charges, as used by many health insurers around the country to set payment limits on out-of-network services.  It seems that many insurers have decided to adopt a different methodology to calculate out-of-network liabilities, based on a percentage above the Medicare payment levels.  New York regulators believe that many New Yorkers are ending up owing more under the new methodology, even though insurers pay anywhere from 140 to 285 percent of Medicare rates.  It’s not entirely surprising that insurers have adopted the new approach, given that Fair Health wasn’t actually up and running until last year and the Medicare rates are much more predictable than the approach based on “usual and customary.”   I suppose it is possible that Medicare payment levels truly are that low, or that some providers truly deserve payment levels several multiples over what Medicare would pay, but both seem doubtful.  One would think that, say, 200 percent of Medicare payment rates would be sufficient as a payment level, but maybe the patient is getting an appendectomy in California. 

It boils down to some usual culprits:

• Provider charges aren’t subject to competition.  They can calculate them in virtually any way they want, at whatever level they choose, because their payor customers negotiate more realistic levels and their retail customers usually aren’t told charges in advance.  Virtually no one is shopping services based on price.  It’s crazy that the most vulnerable patients are the ones most likely to be subject to these entirely arbitrary and often unrealistic prices.
  
• The data are hard to find and often not very useful.  Many health plans have versions of price or quality data, and there are a variety of state and federal requirements for providers’ posting of some prices.  Be that as it may, consumers usually don’t have a good idea about what set of services they’ll receive, much less how much they will cost.  And it’s not just consumers who are ignorant; physicians are often in the dark about how much things cost as well (see, for example, Sehgal and Gorman).  Many providers probably have some idea of their costs for the services they most frequently provide, but I’m willing to bet that few have any accurate idea about the costs in the rest of the health care supply chain their patients will go through.  Think Apple doesn’t know the prices throughout their supply chain?
  
• Consumers don’t care enough.  The vast majority of consumers – even those in consumer-directed plans – still don’t seek out cost or quality information, even when it is available (see, for example, EBRI’s Consumer Engagement Survey).  Consumers also don’t necessarily make great decisions even when they get data – for example, Hibbard, et al. found that when just shown costs, consumers still thought higher cost would translate into higher quality.  The researchers found that the cost data needed to be paired with easier to understand quality of data for consumers to make better choices.
  

Perhaps they should make a health care version of The Price Is Right after all.  It might be amusing to watch various participants in the health care system try to guess how much things cost.  Then, again, it might just prove boring, because I doubt anyone would “win.”