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Archive for March, 2009

The Public Plan Option and the Possibility of Cost Shifting

by Jaan Sidorov

Advocates for healthcare reform that includes the creation of a publically funded insurance plan seem happy that both AHIP (America’s Health Insurance Plans, the trade group that represents health insurers) and Blue Cross Blue Shield (a federation that represent 39 insurers that sport the Blues ‘brand’) have essentially offered to yield on guaranteed issue in exchange for an individual mandate. Their enthusiasm may be misplaced, unless their intent is to ultimately achieve a single payor system.

For better insight on the issue, check out Aetna’s CEO Ron William’s March 24 statement to the US Senate Health, Education, Labor and Pensions Committee. Go ahead, call the for profit insurers obstructionist, evil or the Devil’s Spawn, but when health insurers like Aetna speak, anyone interested in healthcare reform should listen. Aetna insures 36.5 million persons with $42 billion in assets with a market cap that exceeds $10 billion. It’s not easy, even for the U.S. Congress, to marginalize insurers like Aetna by simply passing a law sometime in the next six months.

What does Mr. Williams have to say? His testimony is that health insurers figured out years ago that their business is no longer about just collecting premiums and paying doctors and hospitals. Their customers are demanding additional value, such as covering medical innovations and technologies, having inclusive provider networks, promoting transparency and offering chronic disease care, wellness and prevention programs. Examples include Aetna’s $1.8 billion investments in Active Health Management and their Care Engine. And while the uninsured are a pressing problem, remember employers are successfully supporting health insurance for a whopping 177 million Americans, many of whom appear to be quite happy with the arrangement. What’s more, the rising cost of their insurance is less a function of companies like Aetna and more a function of the underlying cost of health care. Employers and insurers have been working together on this for years and have had some notable successes in improving healthcare quality, dampening cost trends, increasing consumer choice, promoting transparency and covering wellness and prevention.

And here’s a telling quote.

“An enforceable individual coverage requirement, combined with subsidies and other changes to make coverage affordable, is the best way to ensure that all Americans have continuous access to insurance coverage and high-quality health care. Since 2005, we at Aetna have been speaking out in support of an individual coverage requirement, as we believe it is the critical step for achieving universal coverage.”

So what is the link of all this to the option of a public insurance plan? If there is guaranteed issue and an individual mandate, Mr. Williams suggests a public plan option would be unnecessary. He may or may not have a point about that, but he then raises a critically important issue that has conveniently gone unmentioned by the anti-insurer cognoscenti.

A public plan would probably set provider payment rates akin to those used in Medicare and Medicaid. That’s because the government has the leverage to squeeze low pricing from providers. That in turn would force the providers to engage in even more cost shifting (estimated to already be as high as $88 billion nationwide) from the public insurance plans to the private insurance plans.

There you have it. The private insurers like Aetna don’t fear a public plan would be more ‘honest,’ ‘just,’ ‘quality driven,’ ‘administratively efficient,’ ‘cost effective’ or ‘consumer friendly.’ They think a public plan will simply build on Medicare’s and Medicaid’s long history of what amounts to government supported ‘heads I win’ (non-negotiable provider fee schedules), ‘tails you lose’ (hospitals and doctors will make up for it in the private sector) predatory pricing. That’s not keeping the private insurer’s honest, that’s crushing them.

There is a lot to be said for the private insurers’ leadership in care management programs, agile use of information technology, prevention, wellness, consumerism, novel insurance benefit designs, pay-for-performance, the medical home and the electronic record, but NONE of that will help them - even with billions in the bank - compete against that kind of cost shifting dynamic.

Or maybe that’s the intention?

New ONC Director

by jingemi

The President chose Dr. David Blumenthal to be the new Director of the Office of the National Coordinator. Dr. Blumenthal has worked with the Commonwealth Fund as well as Harvard University. He has worked with Senator Ted Kennedy. I decided to review some of Dr. Blumenthal’s writings to get some insight into his policies.

First, his view on Health IT seems to be balanced and reflects alot of the authorizations in the stimulus. For the record, I found most the Health IT Stimulus proposals to be balanced. I think the debate is really the time frame and the amount of money. He supports quality improvement through Health IT, promotion of interoperability, reforming medicare and medicaid to incentivize use of EMRs. He realizes that there are still alot of unknowns that need to be evaluated. So I suspect he will continue along a deliberate course for implementation. I think this is a good thing considering the amounts of money we have appropriated.

However, one item that caught my attention in one of his writing is his mention of what I call the “Internet educated” patient. He discusses the idea of how access to information online undermines the doctor’s position as subject matter expert. I think this dynamic must be explored further and I hope that Dr. Blumenthal promotes further study in this area. Such access to information is a double-edged sword. While a patient may avoid unneccessary medical attention, a patient may also not follow his/her doctor’s instruction.

Again, as I have mentioned on my blog www.healthitpolitics.com, community outreach will be key. I suspect under Dr. Blumenthal’s leadership of ONC, we will be hearing more about this.

To read a weekly wrap-up of Health IT events, go to www.healthitpolitics.com.

Health Insurance Industry to Congress: “We will drop risk rating.”

by Martin Trussell

The boundaries of the healthcare reform debate took another dimension this week as representatives of two large health insurance trade groups sent a message to Congress that said they were now willing to drop “risk rating’ of health insurance policies. The offer from America’s Health Insurance Plans (AHIP) and the Blue Cross and Blue Shield Association (BCBSA) is a potentially significant shift in the debate about overhauling the nation’s healthcare system.

It was reported in the Boston Globe that in a letter to key senators, the two insurance industry groups said their members are willing to “phase out the practice of varying premiums based on health status in the individual market” if all Americans are required to get coverage.

According to the New York Times, the trade groups stated in their letter that if Congress enacted an enforceable requirement for everyone to carry health insurance, “we could guarantee issue of coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.”

However, according the Times article, the trade groups didn’t stop there. They also said they could accept more aggressive regulation not just of their premiums, but also of their benefits, underwriting practices and other activities. Such strict regulation, they said, would make it unnecessary to create a new public insurance program offered through the federal government.

The Times pointed out that insurers remain staunchly opposed to creation of a government-run health insurance plan. But the industry’s willingness to change its rate-setting practices could make it easier for Congress to reach a consensus on legislation to overhaul health care.

This is indeed an interesting development in the positioning that is now taking place in the healthcare reform debate. Just last Friday I commented on Sen. Chuck Grassley’s (R-IA) statement indicating that erecting some form of new government benefit, which Democrats refer to as the public plan option, is a deal-breaker for Republicans. Could this concession on the part of the industry be enough to get around this hurdle to reforming healthcare?

Here’s An Idea for Health Care Reform: Let’s Make America Number 1

by Jaan Sidorov

When I’m contacted by an expert in the business of population-based health care offerings and Washington DC health care policy making, I pay attention. That’s especially if that person is Robert Stone, co-founder of Healthways and a past President of the DMAA. Bob is no stranger to the ways of being inside the beltway and has more than his fair share of health policy mojo. Bob emailed me and pointed out that he had shared his perspectives on health reform during Day 2 of the recent Disease Management Colloquium with an address titled “Changing Times, Changing Solutions.” A transcript of his comments makes for interesting reading.

Bob warns that we are headed down the same path of wrongly talking about the wrong things when it comes to health care reform. Various fixes, while creating meaningful and measurable micro improvements, have not been sufficiently robust to create the macro changes at which they were aimed. While everyone agrees – again – that reform is urgently needed, vague nostrums like “equitable,” “accessible,” “affordable,” “quality” and “transparent” abound. Each stakeholder imbues those words differently from every other stakeholder while working hard to keep their share of the health care economic pie. The result has been a sorry record of tinkering around the edges based solely on a combination of self-preservation, the prevailing political winds and whatever ideology in vogue at the time. Given the lack of any coherence, opponents to some or any elements of reform will find it easy to derail the entire process.

So what should we do? While Newt Gingrich loves to quote Eisenhower, Bob does also, but he uses a better one: “We succeed only as we identify in life, or in war, or in anything else, a single, overriding objective, and make all other considerations bend to that one objective.” Like any seasoned healthcare executive, he knows that if you don’t measure it, it doesn’t happen. He also knows that most successful businesses have to choose a limited set of measures and manage to them. Using that compelling logic, he proposes that at some agreed to point in the future, with milestones along the way, that the objective be to make America rank #1 in the world in an overarching, comprehensive and easily understood measure of health status. If adopted, he says three things would likely result: 1) we’d meaningfully divert resources toward keeping healthy people healthy, 2) we’d see funding dedicated to helping people mitigate or eliminate the health risks associated with unhealthy lifestyle behavior choices and 3) the provision of evidence-based care to those who are ill would increase.

The concept is intriguing. It’s outcomes based. Once we know what we are ‘managing to,’ what should and should not be included in healthcare reform would become clearer. Overall health status measures are well within reach (examples are here - despite problems with how the WHO measures are collected and how they’re interpreted - and here) and can be assembled either as a single score or in a ‘dashboard.’ Once established, Congress would be paying attention to conditions like this instead of worrying about nonsense like this.

Which brings the DMCB back to Newt Gingrich and his love of Eisenhower quotes. The one he seems to favor is “If a problem cannot be solved, enlarge it.” Forcing healthcare reform to land on an overarching measure and manage to it certainly makes it considerably larger, more visible, may actually promote bipartisanship and could make our elected representatives far more accountable than they are now.

Want a copy of Bob Stone’s address? You can email him at bob[period]stoneAThealthways.com.

Walmart Stimulus Effect

by jingemi

It seems that the stimulus is starting to take effect. Walmart is now offering a simplified EMR system in conjunction with Dell and EClinical works. For $25K, a small practice can get the EMR system and maintenance for about $8000. (Check out this NY Times article: http://www.nytimes.com/2009/03/11/business/11record.html?em) For $44K, a practice can get a more advanced system. Walmart will sell these systems through Sam’s Club. Interestingly, these costs are very simiar to the EMR reimbursement rates for Medicare and Medicaid providers.

First of all, I commend Walmart. They are showing an astute sensitivity to the market environment. They have geared their product offering to government funding. Additionally, they are utilizing their reach into underserved areas to ensure that those providers will have access to EMR. Personally, I feel vindicated since I had recommended on my blog www.healthitpolitics.com that the govenrment simply subsidize the purchase of Health IT and the private sector would then figure out the contours.

However, I do want to cite two ironies. First, Walmart is often villianized yet they are leading a major innovation. Second, Walmart is known for its efficiency in managing its workforce. So job creation may not occur.

For the rest of us in Health IT, it is not the end of the road just as the adoption of the computer did not mean the end of IT but rather the beginning. Areas where the Health IT community should focus are:

-Interchange of data among providers;

-Best-practices in utilizing Health IT especially in clinical delivery to include government-mandated practices;

-population health

-community education and outreach.

So overall, this is a great development and I hope that there are similar ones to come.

Instant Stimulus

by jingemi

We have a multitude of new authorizations for Health IT in the stimulus. Last week, the President held a healthcare summit. There is the promise of major healthcare reform this year. Yet we only have a HHS Secretary has been on the job a week. Additionally, she does not bring a “healthcare-oriented” staff with her from Kansas as Daschle may have done.

So I envision alot of delay in money moving into Health IT like we anticipate. I think that those entities with pre-existing mechanisms for utilizing funds will get first priority. Now, there are several HIE scattered throughout the U.S. But I think that focus for Health IT will be Federal Community Health Centers.

I have blogged about them before. These are federal primary care clinics that provide care to underserved areas. Former President Bush was a huge proponet of this program as are many leading Democrats. This Centers have been the target of Health IT Funding in the past. At the end of 2008, these Centers received a large increase in their appropriations.

Based on this pre-existing infrastructure, I think the Health IT Community should focus on the Federal Community Health Centers. They will require IT support since in-house support is probably unlikely. They will rely on vendors a great deal since these Centers would be unlikely to develop their own systems. Finally, they will need analysis support. Congress will want to see evaluations of quality improvement and cost-effective treatements for the poor.

I think that the Federal Community Centers will lead the way in Health IT implementation and the Health IT community should be prepared.

Kennedy’s Health Could have Key Role in Healthcare Reform Passage.

by Martin Trussell

This past week I was in Washington DC to attend the 28th ECFC Annual Meeting. The conference attracted employers, third party administrators, and others who are involved in providing or administering flexible benefits programs which include: flexible spending accounts, Section 125 plans, health reimbursement arrangements, dependent care accounts, health savings accounts and more. On Thursday we made a trip to Capitol Hill where we had the chance to meet with staffers representing one Democratic and two Republican lawmakers. We also heard from Sen. Ted Kennedy’s chief healthcare policy advisor, former CMS director, Tom Scully, and former Sen. Bob Dole, among others. They all agreed on one thing: the current healthcare system is not working and needs to be fixed. They also agreed that this is the best chance Washington has had in years to reform the healthcare system. And, they all expressed the desire to preserve the existing employer-based system, and for the legislative process to be inclusive and bi-partisan. Furthermore, there was agreement about the problems that are afflicting the system, namely, access, affordability and quality were themes that echoed throughout the day. I also sensed a universal desire to get it right, and to make healthcare an economically sustainable proposition for the government, employers, and individuals. The steaks are huge.

There was also a great deal of agreement about who the players will be. President Obama, of course, has a major role in what will unfold. The very afternoon that we were attending meetings on The Hill, the president was conducting a White House summit on health care to underscore importance of this issue and to call for dialogue and participation from all the stakeholders.

Key players in the Senate include Chuck Grassley (R-IA) for his role as a member of the Senate Finance Committee, Max Baucus (D-MT), Chairman of the Finance Committee and the author of a white paper on healthcare reform, “Call to Action: Health Reform 2009“, and of course, Ted Kennedy (D-MA) , a long-time advocate for healthcare reform. It has been widely acknowledged that Kennedy’s team has been meeting with various healthcare stakeholders for the last seven months in an attempt to build consensus on a program to achieve healthcare reform. John McDonaugh, Kennedy’s chief healthcare policy advisor told us that he expected there would be committee mark-ups on Kennedy’s bill during May and June and that the bill would be on the floor of the Senate prior to the July 4th recess.

The House has been a little slower to get out of the gate with regard to health care reform. In this chamber, the experts we heard from expect a “top down” approach to writing legislation. That means the House will catch up very quickly with the Senate and will soon introduce its own health reform legislation. Heading this effort will be Pete Stark, (D-CA), a senior member of the powerful Ways and Means Committee, and currently the Chairman of its Health Subcommittee. Joining him will be Henry Waxman (D-CA), Chairman of the Committee on Oversight and Government Reform, the principal investigative committee in the House. And also, from California, and also a Democrat, House Speaker Nancy Pelosi.

Kennedy staffer, John McDonough, spent some time with us laying out the basic issues that the Kennedy team has identified as being key to reform. They are:

  • Coverage - McDonough said that there needs to be a systematic change to the way that individual healthcare insurance is marketed. He talked about eliminating individual underwriting, marketing policies through “connectors” like those being used in Massachusetts, and an individual mandate requiring everyone to be covered in some way.
  • Delivery System Reform - This area deals with how healthcare providers are paid, ramping up primary care, the management of chronic care, Health IT, price transparency, and comparative effectiveness.
  • Prevention/wellness and finance fill out the basic issues being discussed.

McDonough also said that his team wants to achieve tax equity for individuals who buy their own insurance and that they preferred one individual insurance market as opposed to high risk pools for people with serious medical issues. Furthermore, he noted that there would be no “fundamental surgery” done to ERISA in the Kennedy plan, but did say that the existing employer tax exclusion for the cost of providing health insurance is “on the table.”

Republicans we spoke with also agreed about the need for reform. Andy Chasin, Health Policy Counsel for the Senate Republican Policy Committee said that republicans acknowledged that the healthcare system is not working and needs to be fixed. He pointed to the stress being placed on families to pay for health care as well as the burden on state and federal budgets. Chasin noted that 32% of state budgets now go to paying for Medicare, and that this is the single most important way to control the federal budget for the long term.

Having agreed that healthcare reform is needed, Chasin laid out, from the republican perspective, the key principles they would like included in any new proposals.

  • Private competition - Not government-run, like a proposed government program that will competed with employer plans and ultimately drive people from employer plans.
  • Affordable options - Baseline programs need to be reasonable and include lower cost options like HSAs.
  • Paid for and Sustainable
  • No new taxes on small businesses
  • No expansion of unsustainable entitlement programs

Now that both sides have agreed for the need to reform healthcare and have laid out their basic issues and principles it is time to get down to the details. Staffers, especially those working for the republican lawmakers, asked us detailed questions about employer tax exclusion and how it might be capped to free up funding to allow for the tax code to be equalized for individual insurance buyers. By the questions we were asked it seems like they were searching for places where compromises can be made as program is negotiated.

There is no doubt that this kind of political give-and-take will continue over the next couple of months as each party attempts to achieve their interests in the reform legislation. Likewise various interest groups ranging from healthcare providers to health insurers, to unions, to employers, to pharmaceutical companies will all be looking for a plan that will preserve their vested interests in the system.

Tom Scully, who served as the head of CMS in the recent Bush administration, is a veteran of political fights having guided much healthcare legislation over the past two decades including the legislation that became Medicare Advantage. Now, in private life, Scully is free to speak more frankly about the political process without fear of upsetting the opposition.

In remarks that he made to our group at the close of our meetings on Capitol Hill, Scully talked about how it was a mistake that the Clinton’s did not introduce their reform plan during the first year of Mr. Clinton’s first term. By the second year of the term when the legislation was finally delivered in the form of a fully developed plan, the honeymoon was over and mid-term elections were fast approaching.

Scully was also candid in saying that Sen. Kennedy’s health could play a pivotal role in enacting proposed legislation. He noted that the mental health parity legislation had stagnated in Congress for years, but was quickly passed last year to honor long-time advocate of such reform, Pete Domenici.

With Kennedy’s precarious health condition, Scully suggested that healthcare legislation bearing his name could be quickly enacted this year. I would not be surprised if this prediction came true.

Study Finds More Spending Leads to Higher Quality Care

by John Goodman

John Goodman is the president of the National Center for Policy Analysis

Based on broad measures of health system quality and performance, states with more total health spending per capita have better-quality care. This fact contrasts with a previous finding that states with higher Medicare spending per enrollee have poorer-quality care.

One more reason to come to this blog: odds are, you won’t hear about this study anywhere else. [gated, but with abstract]

The Meaning of Meaningful Use

by jingemi

It is amazing what the potential of one phrase can contain. In the stimulus, the phrase of “meaningful use” is used. Bascially, meaningful use defines what is it means for a healthcare provider to be considered a user of Health IT. The stimulus bill discusses meaningful use in very general terms and gives the HHS Secretary discretion in providing further guidance. Medicaid and Medicare providers must meet the criteria for meaningful use in order to receive incentives.

All of this makes sense. We need some sort of definition so that providers to not simply acquire Health IT but not use it. However, the debate will occur over the exact definitions. I am sure that like any regulation, all different interest groups will have opinions. Perhaps, meaningful use will become a very easy thing with which to comply, enabled by technology. Or maybe it will require re-engineerings and certification of medical office processes.

We do not know. But all of us in the Health IT Field should carefully track this regulation.