Health Reform

States May Be Interested in Value-Based Payments, but Commercial Insurers Are Not

By M2|2018-05-31T15:01:26+00:00May 30th, 2018|Health Care Trends, Health Reform, Medicaid, State Health Initiatives, Uncategorized|

States May Be Interested in Value-Based Payments, but Commercial Insurers Are Not

CMS has issued the fourth of five planned annual reports on its Medicaid State Innovation Models (SIM) Initiative. Under the SIM initiative, six “test states” – Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont – have been awarded funds and are using policy levers to facilitate the creation or spread of innovative models and integrating population health and broader stakeholder perspectives into health care delivery and payment redesign models. The latest report describes the experiences of providers, health systems, consumers, payers, and state officials during the final full implementation year.

The evaluation, conducted by RTI International, working with The Urban Institute, National Academy for State Health Policy, and The Henne Group, found all six states have introduced value-based payment models (VBP models) in their Medicaid programs and are offering technical assistance to providers, social service and community-based organizations, and others to implement new delivery system models. States are also offering services, such as health IT and data analytic investment, that “enable or improve model effectiveness,” according to the Year 4 Annual Report.

However, the evaluation found “limited interest” among private payers and insurers in aligning their existing VBP models with state models. “All states struggled with effective engagement of private payers and insurers to expand VBP models beyond existing efforts and to achieve alignment across multiple payers,” the report finds. “Although private payers and insurers were willing to discuss the states’ conceptualization of VBP models, most did not make changes to the VBP models they offered to providers.”

As a result of limited interest among commercial payers, “states ultimately focused on Medicaid or state employee health plans over which they had control.”

There are several factors contributing to this lack of multi-payer alignment around common payment models, including a difference in business goals between Medicaid and commercial payers. Commercial payers in Maine, for example, reported issues related to value-based insurance design and multi-payer measure alignment; this was due to “insufficient engagement with payers” when the SIM goals were established, the report says. In addition, commercial payers in Maine are reluctant to change the design of their insurance products “in response to a single state’s recommendations,” and there is a “preference for making product design changes in response to their clients’ needs.”

If you are a business, your client’s needs come first. If a state becomes a client of an insurer, perhaps this VBP model alignment problem would be easier to solve. But other state’s experiences would indicate that is unlikely.

The RTI evaluation identified several other factors contributing to the lack of payer alignment in payment models including: the proprietary nature of information (e.g., commercial payers in Minnesota preferred not to share details on quality and utilization measures and performance reports for providers, which “limited the type of dialogue necessary to advance multi-payer payment reform”) and competitive concerns (e.g., payers that have invested in changes in payment reforms are “concerned that the returns on those investments are accruing to other parties”).

Many of these concerns are age-old problems; in the policy world, we encounter these types of issues frequently: (1) the complaint that “you didn’t engage us from the beginning;” (2) the fact that health care delivery is competitive in a capitalist market; and (3) the free rider problem.

We could add two more issues or concerns to the list above: (4) “You don’t understand clinical issues” (e.g., physicians in Arkansas felt that “state decision-makers were too far removed from daily clinical practice to understand what would work effectively”) and (5) We would have to create multiple products – e.g., products tailored to the needs of the Medicaid population vs. commercial population.

In the six test states, participation by health care practitioners in innovative models varies wildly. For example, in testing an integrated care model, the number of participating providers varied such that in Massachusetts, 10% of the Medicaid population was reached, while in Oregon, the comparable figure was 85%, as noted in the chart below (from the evaluation report):

For tests of the patient-centered medical home (PCMH) or health home model in these six states, 17% of the Medicaid population was reached in Maine, compared with 70% in Vermont and 75% in Oregon.

Engaging private payers in innovative payment models is important for health care system transformation. Given that some payers in these six test states were reluctant to change the design of their insurance products in response to a single state’s recommendations, states might consider combining forces for the purposes of designing more responsive VBP models. Another alternative is to ask insurers, along with representatives from other health care entities, consumer groups and employers to participate in system design change from the beginning of the process. VBP may lead to health cost reductions if implemented widely and well, but such achievements will be nearly impossible if entities that control so much of a population’s health care coverage choices are not involved.

Nearly Every State Engaged in Value-Based Payment Models

By M2|2018-03-14T17:37:20+00:00March 14th, 2018|Health Care Trends, Health Reform, Innovation, Medicaid, State Health Initiatives, Uncategorized|

Nearly Every State Engaged in Value-Based Payment Models

Value-based payment is not just for Medicare and private payers, states are also engaged in a multitude of value-based payment initiatives. While variation exists in the scope, leadership commitment, and resources devoted to these efforts, “more than 40 states have a state-initiated plan or strategy” to move toward value-based payment instead of fee-for-service (FFS) payment, and “almost half of those initiatives are multi-payer in scope,” according to the report by Change Healthcare, based on a national study of publicly available information compiled from May through October 2017.

Of note:

Of the states engaged in VBP, nearly all are using patient-centered medical homes (PCMH) or health homes (HH).
For the most part, these tests are being tried in Medicaid; 31 states are testing one of these value-based approaches in Medicaid alone. In three states, they are testing at least one of the two in Medicaid and with their state employees: Oklahoma, Tennessee, and Washington. Thirteen states have multi-payer efforts: Arkansas, Colorado, Connecticut, Delaware, Idaho, Iowa, Maryland, Michigan, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.
Fourteen states have chosen the ACO model: seven in Medicaid (Illinois, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, Oregon), two in Medicaid and with state employees (Oklahoma, Washington), and five in multi-payer arrangements (Colorado, Iowa, New York, Rhode Island, Vermont).
Episodes of care (EOC) is another approach being used; currently in 12 states though some are considering it and some only use EOC in a single service area: Colorado, Maine, and South Carolina are considering EOC; New York is using it only in maternity and chronic care; Washington is using it only for total joint episodes of care.
Pay for performance is also being tried in the following 12 states: California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Iowa, Maryland, Missouri, New Hampshire, Texas, and Wisconsin.
Seven states have “little to no activity around value-based payment” (Georgia, Indiana, Louisiana, Mississippi, North Dakota, South Dakota, Wyoming).

The following map (created by M2 based on data in the Change Healthcare report) shows the details of each state’s initiatives in this area:

For a few states, testing alternative payment models is not new. Some states have been engaged in these efforts for nearly a decade. Minnesota was the first state to engage in a value-based payment approach of some sort, in 2008. Colorado and Maryland began their efforts in 2011; Oregon in 2012, Arkansas and Vermont in 2013.

States are often the leaders in testing new ideas. Alternative payment models for health care are no different. As health care costs continue to rise, and most states need to balance their budgets every year, it makes sense that finding different ways to pay for Medicaid and state employees’ health care is something nearly every state is focused on.

VBP is not dead, as evidenced by nearly all states are taking action to transition from a FFS approach to one that is focused on value. To slow health care costs, we have to stop paying for what doesn’t work. The more we can reward outcomes in health care, the more likely it is that providers and patients will make decisions based improvements in care, rather than adverse financial incentives for low-value care.

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

By M2|2018-01-03T21:04:29+00:00January 3rd, 2018|Health Reform, Innovation, Reimbursement, Uncategorized, What do we pay for and why|

Innovation Series: Gene Therapy

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

From gene therapy to a “pen” that can detect cancerous tissue in 10 seconds, we live in a time of amazing scientific breakthroughs. Advances in technology and our understanding of the genetic basis of disease are resulting in a range of innovations that hold the promise of improving our approaches to treatment – including things like new treatment options for rare diseases and improving the likelihood of success of something like cancer surgery. As we kick off 2018, I wonder what great new innovations the year will bring?

As just one example of innovation, consider the field of gene therapy: early last year the FDA approved the first gene therapy, Novartis’ Kymriah (tisagenlecleucel)‎, bringing “hope to the 3,100 people under the age of 20 in the United States who are diagnosed each year with acute lymphoblastic leukemia,” as the pharmacy benefit manager (PBM) Express Scripts describes in a recent post on its web site. Kymriah is “customized for each individual, using genetically modified versions of the patient’s own immune cells to target and kill leukemia cells.”

Gene therapies “are administered once, unlike nearly all other medications that are repeatedly taken over time,” Express Scripts notes. “And therein lies the challenge.”

The promise of gene therapy comes with a “dramatically higher price;” for example, Kymriah is priced at $475,000. Not only is this price significantly higher than more traditional types of drugs – it’s also much higher than other specialty drugs, the PBM says.

Paying for these types of breakthroughs will present challenges. “Pharmaceutical companies have a single opportunity per patient to get paid,” and “many gene therapies target extremely rare diseases, so there aren’t many patients to share the cost drug makers require to justify the expense of research, development and commercialization. The result is very high price tags,” Express Scripts says.

“The health care system isn’t set up for this type of economic model. Thus, making these therapies available to patients “requires novel collaboration,” the company says. A “new payment model” is needed, and Express Scripts is working with drug companies, policymakers, patient groups and payers on “innovative approaches to make gene therapies accessible for patients.”

For example, value-based contracting can “ensure that payers and patients aren’t on the hook when a treatment isn’t effective. Consultations involving pharma companies and payers can help set appropriate prices.” And “discussions with policymakers can help set an appropriate regulatory framework.”

“Ultimately…gene therapies will require payment and patient care systems which are as novel as the medications themselves,” Express Scripts says. “Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments. A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.”

What do all of these new and potentially lifesaving innovations mean for the health care system? As with any innovation that offers new hope for patients, there will likely be high demand, but that will have to be considered in the context of limited resources. We are witnessing significant new innovations and scientific advancement; the usual questions of access and how to pay for it will be dramatically amplified in this modern era, given the unprecedented price tags. Particularly in the case of gene therapy, this may require new types of conversations and collaborations between drug developers, payers and patients, along with new payment approaches.

Policy Making from a Chinese Menu

By M2|2017-11-28T01:59:48+00:00November 27th, 2017|Health care spending, Health Reform, Uncategorized, What do we pay for and why|

Policy Making from a Chinese Menu

The dueling Congressional tax plans are the latest exhibit in policy making by Chinese menu. Instead of thinking through issues and starting with the core question of: What problem are we trying to solve? –both the House and Senate have engaged in choosing their favorite items from a menu with no coherent point of view about why those singular items might come together to form a whole policy.

Merriam-Webster dictionary defines policy as “a definite course or method of action selected from among alternatives and in light of given conditions to guide and determine present and future decisions.” Choosing eggrolls, spicy kung pao chicken, house fried rice, and vegetable lo-mein for dinner is a definite course of action from among alternatives in light of the given condition that you are hungry. It might even guide future decisions not to have Chinese food for a couple days because you are ready to move on to steak or spaghetti.

I was formally trained in philosophy and debate. Clients engage my firm to think through policy issues. I’m essentially paid to argue, but not like a lawyer, more like a philosopher. We are well aware of the trade-offs policy decisions entail. Argumentation is the art of thinking through those trade-offs. The stasis theory is ingrained in my thinking and approach to issues, even now as I work with corporate clients on business issues and run my own business. Developed by the Ancient Greeks, honed by the Romans, and used for centuries hence, the four core questions of stasis theory are those most of us were taught regarding how to think about problems.

When faced with an issue, we ask: First, what are the facts, or, is there really a problem? Second, what kind of problem is it? Third, how serious is this problem, who is affected, what are the costs of solving the problem? Fourth, and finally, we ask, should we take action, who should we include in solving the problem, and what needs to happen to solve the problem?

As you can see with the fourth question, policy questions often begin with a “should” – at least in concept. Should local tax dollars be used to build parks? Should individuals be required to have automobile insurance? How should free speech be weighed against public safety? There is a method being used to determine present and future decisions. Stepping through the core questions of the stasis theory helps us as individuals, communities, and as a society think about alternatives to solving a problem, and be clear-minded about what we are not choosing, as much as what we are choosing to do.

When the government is involved, it is essential that reasoning for choices is clear. Lawrence O. Gostin, a Professor at Georgetown Law, explains, “government should justify interventions because, almost invariably, they intrude on individual rights and interests and incur economic costs.”

Commentators and tax experts are writing and speaking about the winners and losers in the tax cut passed by the House this week and the Senate bill under consideration, so if you are following the issue, you have a pretty good idea of what is in the proposals. What we have very little idea of is why. Is there really a problem? What kind of problem is it?

Will lowering the corporate tax rate for large companies fix this problem? Will raising the tax rate for small businesses who are accountants, dentists, or consultants fix this problem? Is raising the deficit an acceptable cost of solving the problem?

During this holiday season, as families and friends gather, I would ask anyone who is willing to engage in a discussion that asks as many of the four questions above as possible. Like the health bills that passed, but eventually failed to become law earlier this year, the tax proposals before us are a result of Chinese menu-style policy making. A definite course of action is being selected, but without much input or thoughtfulness about what problems we are trying to solve, the costs of solving the problem, and whether the solutions will actually work.

If we want coherent policy, that is, policy that addresses a clearly defined problem and is likely to produce the desired outcome, we need to discuss amongst ourselves, and then engage with our representatives. We elected them but they still need to know how we want them to solve these problems. Discuss, argue, engage – better policy is on us.

It’s all about the premiums, for a tiny but mighty political powerhouse

By M2|2017-10-20T04:24:21+00:00October 19th, 2017|Health Plans, Health Reform, Insurance, Uncategorized|

It’s all about the premiums, for a tiny but mighty political powerhouse

On October 17, 2017, Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) announced a bipartisan deal to “stabilize individual market premiums and provide meaningful state flexibility.” The latest “repeal and replace” proposal from Alexander/Murray came just a week after U.S. Health and Human Services (HHS) Acting Secretary Eric Hargan and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced cost-sharing reduction (CSR) payments would be “discontinued immediately based on a legal opinion from the Attorney General.” Lots and lots has already been written about the CSR policy change (I recommend Timothy Jost’s piece in Health Affairs for a brief summary of the major issues).

Professor Jost explains the CSRs succinctly:

The Affordable Care Act (ACA) requires insurers to reduce cost sharing for individuals who enroll in silver plans and have household incomes not exceeding 250 percent of the federal poverty level (FPL). These provisions reduce the out-of-pocket limit for these enrollees—particularly for those with incomes below 200 percent of poverty—and sharply reduce deductibles, coinsurance, and copayments. The reductions cost insurers around $7 billion a year currently.

Based in part on what the Senators heard from state officials in early September (see this ) the Alexander/Murray deal would continue to fund the CSRs for two years, would allow people of any age to purchase catastrophic health plans and would allow states even broader latitude to waive provisions of the Affordable Care Act (ACA) in order to lower premiums – for example, by allowing health insurers to offer products that do not cover all of the essential health benefits.

If lower priced products can’t be offered in the portion of the market that is unsubsidized, it is difficult to foresee how a bill gets through Congress. A tiny but mighty political powerhouse is fighting hard for a fix that solves a very particular problem in the current ACA structure.

It’s all about the premiums

Keep in mind, about 17 million people receive their health insurance through the ACA health exchanges (see Charles Gaba chart – aka The Psychedelic Donut – below) – approximately 5% of the American public. Of those 17 million people, 1.6 million are in Exchange plans, but do not receive a subsidy. That is, health insurance companies are not obliged to reduce their premiums or cost-sharing requirements, most likely because they make more than 250 percent of FPL – about $30,000 for a single person, or $61,500 for a family of four.

Charles Gaba’s Psychedelic Donut Chart

Florida’s 6.6%

Let’s take the example of Florida. Just before the CSR announcement from the Trump Administration, one of the state’s largest insurers, Florida Blue, said it would be raising premiums, on average, 38 percent, for the 2018 plan year. A spokesperson explained:

“So who’s the one losing in this scenario? It’s the people who don’t get a subsidy to help out. Florida Blue has about 66,000 of their 1 million Obamacare customers who would have to cover the premium increases on their own. These are people with higher incomes, many who are maybe freelancers or self-employed.

But who are those 66,000 people? In my estimation, that mighty 6.6%, and their counterparts across the U.S., are the ones who have effectively driven this policy change, and much of the “repeal and replace” demands over the past few years. Small business owners, especially tiny ones with fewer than five employees, are very focused on the issue of rising premiums and have been instrumental in communicating to their elected officials that their premiums are too high. The National Small Business Association (NSBA) 2016 Politics of Small Business Survey last year asked nearly 1,000 small business owners (47% of the respondents had five or fewer employees) what they contacted elected officials about.

What was the top issue? Controlling the costs of health care (see chart).

And amazingly, “97 percent of small-business owners say they vote regularly in national contests, compared to” only 58 percent turnout for the general election in 2012.

The Florida Blue spokesperson explained why this is such a hot-button issue for these politically-motivated, non-CSR-receiving, small business owners:

“The good news in all this: most people in Florida get private health insurance through their work. Those increases are going to be much more normal – about 8 percent on average for small companies.”

There is the whole issue in a nutshell. If you run a business or are self-employed and you make more than about $30,000 a year, you pay high premiums that jump 20, 30, 40 percent or more a year. In Florida, the average premium increase on the Exchange will be 45 percent in 2018, and the highest approved rate increase was 71 percent according to the Florida Office of Insurance Regulation. But if you buy the same insurance a slightly different way, either by becoming self-insured or becoming an employee of a bigger company, your premium increase will not be as great.

As Washington and the states continue to debate “repealing and replacing” the Affordable Care Act, keep an eye on what policy proposals mean for the politically-active small business owner. Fixes such as allowing anyone to buy catastrophic health plans (not just those under the age of 30) or allowing health insurers to sell products that offer fewer benefits will likely lower the premiums for people who buy health insurance on their own, whether tiny businesses or freelancers. Stopping payment of the CSRs won’t fix the problem small business voters are having with health care. If a proposal fixes this tiny but mighty political group’s problem with the ACA, the likelihood of passage improves immensely.

Health Care Reform Has States and Feds in Tug-of-War

By M2|2017-10-11T23:46:10+00:00October 11th, 2017|Health Reform, Uncategorized|

Health Care Reform Has States and Feds in Tug-of-War

In the past nine months, the Republican-controlled Congress have failed a couple of times to make significant changes to the Affordable Care Act (ACA) through legislation. As state policy people, we watch closely what happens in states, and right now we are paying extra close attention, because the health care financing and delivery system needs changes regardless of what Congress can achieve.

Last month, the U.S. Senate Committee on Health, Education, Labor & Pensions (HELP), led by Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA), held full committee hearings on Stabilizing Premiums and Helping Individuals in the Individual Insurance Market for 2018 in September. The committee hosted five Insurance Commissioners on September 6, 2017, and five Governors on September 7, 2017. M2 watched the hearings for clues about what states are most interested in focusing on when it comes to health reform, and what kind of support they need from the feds in order to pursue changes.

Insurance Commissioners Testifying

Five Insurance Commissioners provided testimony to the Senate HELP Committee:

AK: Lori K. Wing-Heier, Director, Alaska Division of Insurance
OK: John Doak, Commissioner, Oklahoma Department of Insurance
PA: Teresa Miller, JD, Insurance Commissioner of Pennsylvania
TN: Julie Mix McPeak, Commissioner, Tennessee Department of Commerce & Insurance
WA: Mike Kreidler, Washington State Insurance Commissioner

Governors Testifying

Five Governors provided testimony to the Senate HELP Committee:

CO: John W. Hickenlooper, Governor, Colorado (D)
MA: Charlie Baker, Governor, Massachusetts (R)
MT: Steve Bullock, Governor, Montana (D)
TN: Bill Haslam, Governor, Tennessee (R)
UT: Gary Herbert, Governor, Utah (R)

Key Themes from Insurance Commissioners’ and Governors’ Comments

Each of the Governors and Insurance Commissioners provided short testimonies, then each panel fielded questions from various members of the committee. As with many of these public events, there is a fair amount of posturing that happens. Looking past the posturing, several key themes emerged from the panel members. The Insurance Commissioners and Governors said:

Congress should fund the cost-sharing reduction (CSR) payments in order to stabilize the individual health insurance markets in the states.
The federal government should fund some sort of reinsurance program, at least for a short period of time until states can take over the function.
The Centers for Medicare & Medicaid Services (CMS) should provide states with increased flexibility and responsiveness to 1115 Medicaid waiver and 1332 State Innovation waiver requests such as:
- Faster approval times (shorten timelines to complete in 90 days);
- Flexibility in budget neutrality provisions;
- Simplify the process;
- Expand the list of what can be waived;
- Let more consumers buy catastrophic plans.
Bringing down health insurance premiums will require addressing the underlying drivers of health care costs.
Six of ten testimonies mentioned the cost of prescription drugs.

Many of these ideas are not exactly new and have been requested by both states and associations before. For example, take a look at the responses from states in January 2017 to a request for comments on health insurance markets and Medicaid from House Majority Leader, Kevin McCarthy (R-CA), as well as ideas that have been put forth by the National Governors Association Shared Priorities from the Governors’ Bipartisan Health Reform Learning Network. 13 states participated in the Learning Network (California, Delaware, Kentucky, Minnesota, Montana, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming, a mix of Rs and Ds) and recommended “Stabilization of the Private Health Insurance Market,” including the federal government fully funding the cost-sharing reductions (CSRs) and providing at least short-term funding for reinsurance (sound familiar?). The Learning Network also asked for increased state authority and flexibility to act in health insurance markets, Medicaid, payment and delivery system reform, and public health priorities, including addressing the opioid epidemic.

Of particular note, many of these comments from state officials are starting to emphasize the need not just to address the cost of insurance, but to go deeper and find ways to address the cost of health care. Trying to get people to be more healthy, and trying to get providers to accept payment for health outcomes are also not new ideas, but so many state officials talking about them as part of a state’s responsibility to her residents is a bit unique.

What happens next is likely to happen in the states, even as the Feds seem to be sending mixed messages about approving waivers for flexibility – see Iowa, Minnesota and Oklahoma news from the past few weeks for examples. We know what states want. What will they get? Stay tuned!

Is there anything about “SINGLE” we could like?

By M2|2017-10-08T11:15:04+00:00October 4th, 2017|Health care spending, Health Care Trends, Health Information Technology, Health Reform, Uncategorized|

Is there anything about “SINGLE” we could like?

As I write this, the latest version of Republican health reform has been halted. The Graham-Cassidy-Heller-Johnson bill (H.R.1628) was officially declared dead and next steps are all guesstimates.

It might be a coincidence that the bill was pulled and Senate Republican leadership decided not to bring the bill the floor for a vote just a day after CNN broadcast a debate between Sen. Bernie Sanders (D-VT), Sen. Amy Klobuchar (D-MN), Sen. Lindsay Graham (R-SC), and Sen. Bill Cassidy (R-LA) on “Obamacare”, CNN Debate Night: The Fight Over Obamacare; and a week after Sen. Sanders introduced the so-called “Medicare for All” bill on September 13.

More than once the CNN debate devolved into an argument over the Graham-Cassidy bill vs. “single payer” health care. But notably, two audience questions (one from a Republican and one from a Democrat) asked the Senate debaters to say what they would do immediately to lower the cost of premiums.

Usually the word “single” in health policy circles makes people think of “single payer.” In my opinion, there is not much possibility with the current Congress to pass a “single payer” bill that would create a nationalized health insurance and health provider system, but I do wonder if there is anything about the concept of “single” that could become policy. Here are two ideas: 1) A “single set of forms” and 2) A “single health IT system.”

“Single Set of Forms”

First, a single set of forms. Could Congress agree to pass a law that would require all insurers, payers, pharmacy benefit managers, etc. to use a standardized set of forms for everything from enrolling in a plan, to requesting a prior authorization for a prescription or medical procedure, to receiving a bill?

The concept isn’t new. Administrative simplification has been a buzzword off and on for more than a decade. Savings from reducing “billing and insurance-related” costs are substantial. A study in 2014 estimated, “A simplified financing system in the U.S. could result in cost savings exceeding $350 billion annually, nearly 15% of health care spending.”

Other studies have attempted to quantify exactly how health care providers waste administrative resources because of the multiple systems they must navigate in order to serve patients. For example, a typical physician might spend 3 to 4 hours per week interacting with health plans, other health care staff (e.g., RN/MA/LPN etc.) might spend 3 to 4 hours per physician per day, and clerical staff might spend 6 to 7 hours per physician per day interacting with health plans. Of the administrative activities involved, the majority of time spent is getting authorizations from health plans to perform services and navigating drug formularies.

A stark and oft-cited example is the Duke University hospital system that has three hospitals with 957 beds, but 1,600 billing clerks. Hard to think that a single set of forms – even if you have multiple payers – wouldn’t be a great way to save money in the U.S. health care system. Seems like “single” when it comes to “single set of forms” is an idea many people could support.

“Single” Health IT System

Second, a “single” health information technology (HIT) system might be a kind of “single” we could like in health care. Recently, the longtime CEO and president of the world-class health care delivery system Cleveland Clinic, Dr. Toby Cosgrove, appeared on Meet the Press Daily to discuss the Graham-Cassidy bill. Most of his comments were focused on ways to improve the current health care system, and one of his top ideas was to make health IT systems interoperable. He would certainly know.

A study from WestHealth Institute in 2013, The Value of Medical Device Interoperability, estimated more than $30 billion could be saved annually by making medical devices “talk to each other.” This seems obvious but the graphic below from WestHealth shows what is typical HIT in a hospital.

Sharing information from one device to another or between devices and the electronic health record (EHR) in a “consistent, predictable and reliable way” that allows clinicians to act upon the information would not only save money, it would also save lives and reduce negative outcomes. Lack of interoperability causes adverse events such as drug errors and diagnostics errors. Keep in mind that about 250,000 people die every year from medical errors. It also impedes clinicians’ abilities to prevent events such as pneumonia caused by ventilators put in at the hospital or postoperative shock.

Why does the word “single” in health care carry such negative connotations? Maybe because most parties—consumers, doctors, hospitals, and plans—don’t think a one-size-fits-all approach will work in this country to address such a wide set of needs when it comes to health care. But the downside to this stigmatization is that the word “single” has become so politically loaded that just uttering the phrase is often enough to stop a conversation that might otherwise turn into useful ideas for reforming our current health care system.

Maybe it’s time to focus on some good ideas for the word “single”—ideas that would truly benefit our large and diverse country. Administrative simplification and interoperability seem like a good place to start.

My Experience with Obamacare

By M2|2017-10-08T11:23:43+00:00September 6th, 2017|Health Reform, Uncategorized|

My Experience with Obamacare

A few weeks ago I wrote about working with patient advocates…

While my patient advocate session was focused on Medicaid, my personal experience with Obamacare is in a different health care system, if you will, because I run a “micro-business” (fewer than 10 people) and I buy an individual policy “off-Exchange.”

My income is above 400% of the Federal Poverty Level (FPL) so I don’t receive any assistance to buy the insurance, i.e., pay the premium, nor do I receive any assistance with copays, etc. (the cutoff for cost-sharing help is 200% of FPL). Personally, I feel I make enough money to pay for insurance, and I do worry about getting into a car accident or receiving a life-changing diagnosis, so I choose to buy health insurance every year.

Even still, the patchwork system that has been built is truly not designed for someone like me. I am lucky enough to have few health problems. I fill a prescription less than once a year and when I do, it’s usually for some kind of travel-related thing, like malaria prevention. I am not writing this to brag, but simply to say, I don’t “need” health insurance other than the way I “need” homeowner’s insurance. I am insuring myself against something terrible happening. If I pay $12,000 a year in premiums, I expect I will receive no value from that expense each year except peace of mind. For some people, they do “need” health insurance because they have health care needs they could not afford to manage without that insurance.

Should the person with health care needs pay more for insurance than I pay? Well, they already do, because even if we pay the same amount in monthly premiums, they certainly pay more in deductibles, copays, and any other cost-sharing than I do because they use health care services that require those payments. The essence of insurance, whether car, home, fire, or health, is that more people pay premiums than incur claims. I am buying protection against a possible eventuality. For people with health care needs, health services aren’t an eventuality, they are a reality. That’s what insurance is for.

But the other important question is whether my purchase of insurance should be tax-advantaged in some way. I mentioned above that some people are eligible to receive tax-payer supported health insurance or health care – either because they qualify for Medicaid or because they have an income low enough to allow them to buy insurance in the Exchanges.

Should my purchase of health insurance be tax advantaged because of my job status? How about because I am an employer? That may seem an odd question, but as most of this blog’s readers know, the employer-sponsored insurance (ESI) tax exclusion is the single largest tax break in the nation. It is also worth more to people who earn more income. The Tax Policy Center estimates the “ESI exclusion costs the federal government an estimated $260 billion in income and payroll taxes in 2017.” (For comparison, the mortgage interest deduction was worth about $70 billion).

So despite my income and work status, I am eligible for tax-advantaged health insurance after all! But the patchwork nature of the U.S. health insurance system rears its ugly head again because it turns out, it’s cheaper for me to buy health insurance in the individual market (and to help my employees do the same), than it is for me to buy in the small group market. The choice is to access the tax deduction, but pay more for insurance for me and everyone in my company, or buy a plan in the individual market and pay less.

As ZaneBenefits explains, “for the majority of small groups, individual health insurance is more affordable than group health insurance because of the size of the risk pool…With a group health insurance plan if one employee has a baby, a surgery, or is diagnosed with a chronic illness, [the business is] likely to see a large premium rate increase at annual renewal time.”

Part of the debate about repealing and replacing Obamacare concerns patients with high health care needs who could lose access to care, as we have blogged about previously. However, part of the debate is also about the premium increases being seen by small businesses (and other entities as well). Members of the National Federation of Independent Business (NFIB), which represents small businesses, “have reported “The Cost of Healthcare” as the #1 problem for small businesses in Small Business Problems & Priorities since 1986.”

To be graphic, it has led to this:

The chart above from the Society for Health Resource Managers (SHRM) shows the stability of health insurance offering rates by large employers, compared to four smaller employer sizes. Notably, the smallest employer size (10 employees or fewer) represented by the black line at the bottom of the chart, has decreased by the largest percentage (36%).

My personal experience of Obamacare is a mixed bag. On the one hand, because of Obamacare it is much easier for me to buy insurance for myself as a small business owner than it was before the law passed. On the other hand, as an employer, the regulatory burden of and cost of trying to provide insurance coverage to my employees has proven to be too much for our small company to handle. Even with Obamacare, we, as a small business, are at a fundamental disadvantage when it comes to offering support for employees who want to buy health insurance.

Small businesses, defined by the Small Business Administration as those with fewer than 500 employees, comprise 99.7% of firms with paid employees, and employ 48% of private sector employees. Paying more attention to what needs to be fixed in Obamacare based on the needs of small businesses, in addition to focusing on the needs of those with serious health care needs, could lead us to more productive solutions than have been on offer recently.

There are multiple health insurance systems operating in the U.S. We either have to agree we are only going to try to tackle a couple of pieces, or we have to be more transparent about what happens if we make changes to the system that benefit someone like me (low health care needs, high premiums) or to benefit someone like the patient advocates (high health care needs, supported by tax dollars). I wouldn’t mind a little more attention being paid to small business concerns either!

Health Care Innovation is Hurtling Forward, Despite Policy Uncertainty

By M2|2017-10-08T11:32:37+00:00July 21st, 2017|Health Care Trends, Health Information Technology, Health Reform, Uncategorized|

Health Care Innovation is Hurtling Forward, Despite Policy Uncertainty

Yes, Washington, D.C. has been tied in knots for months over the future of Obamacare. Or more specifically, how and whether the federal government should pay for health insurance for certain consumers. In the meantime, health care innovation is hurtling forward as evidenced by investments and operational commitments by health care companies.

Digital Health Investments

StartUp Health’s 2017 Global Digital Health Funding Mid-Year Report compiles seed, venture, corporate venture, and private equity funding for the period January 1 through June 30, 2017 and shows 2017 investing in digital health “has already surpassed previous years in overall funding.” The second quarter of 2017 was the biggest ever, and that single quarter accounted for more money invested than total annual funding for 2010 and 2011 combined. In the first half of 2017, more than 300 digital health deals were inked, worth more than $6 billion.

CHART: Digital Health Funding 2010-2017 (YTD) from StartUp Health

Many of the digital health funding supports innovative ways of delivering health care.

For example, CareDox is a company focused on helping public school health programs be more efficient. More than 50 million students are served by school health care clinics in the U.S., making it one of the largest medical networks in the country. Innovating this front line of health care for kids could improve both the health care children receive and the coordination of care between schools, medical professionals, and parents.

One of the largest investments has been for GRAIL, a big data/analytics company that has received nearly $1 billion since its inception. GRAIL was started by Jeff Huber, who may not be a household name to health policy wonks, but I can guarantee you use something he’s built. Jeff was a senior engineering leader at Google who spearheaded the harnessing of massive data sets to create Google Ads, Apps, and Maps. After those projects, but just before starting GRAIL, he was working on big data at Google Life Sciences as part of Google X (aka The Moonshot Factory). Jeff’s vision is to combine “science, technology, and clinical studies to reveal cancer at its beginnings. To detect cancer early, when it can be cured.”

Being a glass half-full type of person, I get very excited to read about all the new health care ideas out there being turned into businesses. I’m just covering a few in this blog, but if you want to see a more detailed list, mobihealthnews covered the 81 digital health funding deals for Q2 2017.

Health Insurer Innovation

Several health insurers also announced innovative approaches recently (which we will cover more in upcoming blogs) indicating to me, that while big health policy issues are still up in the air, businesses need to keep providing services and coming up with new products to maintain current customers and win over new ones.

An innovative example of a company combining digital health innovation with health insurance is Bright Health. A Minneapolis-based health insurance company launched in 2016 by former UnitedHealthcare CEO, Bob Sheehy and two partners, Bright Health will be selling plans in the individual market in 2018 in select geographies, including Colorado. The company just landed $160 million in venture capital based on this thinking from one of their investors:

“We’re thrilled to continue our partnership with Bright Health to disrupt a complicated industry where consumers are demanding change and leading health systems are hungry to deliver.”

The innovation Bright Health is offering is the selection of a sole health system as a deep partner in a state, and to use apps and other tech tools to attract consumers. In Colorado, Bright Health has chosen to partner with Centura Health to deliver care to its members. While health policy types might bemoan this type of “ultra-narrow” network, time will tell if consumers prefer to trade less choice for lower premiums.

Watching big picture policy debates, it’s easy to forget that investors and companies across the U.S. are coming up with all kinds of new ways to serve health care customers. The dust will eventually settle (I think!) on whether 2017 is the year to change Obamacare, but in the meantime innovation is hurtling forward which is much better way to see what the future of health care looks like in the U.S.

The Future of Medicaid – Implications for Patients and Action for Advocates

By M2|2017-10-08T11:36:02+00:00July 13th, 2017|Health Reform, Medicaid, Uncategorized|

The Future of Medicaid – Implications for Patients and Action for Advocates

I had the privilege of talking with nearly 100 patient advocates recently about the Medicaid proposals under consideration in the House and Senate bills aiming to “repeal and replace” Obamacare. As part of a webinar series hosted by the Patient Advocacy Leaders Summit (PALS), a national initiative convened by The AIDS Institute, I presented ideas for ways patient advocates could continue to work on behalf of themselves and their members to communicate with elected officials and policymakers about the importance of Medicaid to their access to health care.

PALS introduced the webinar as follows:

“As Congress and the Administration continue to move toward efforts to repeal and replace The Affordable Care Act, Medicaid has emerged as one of THE major points of contention, with its future being widely debated. Revamping Medicaid would affect access to health care and services for millions, who represent some of the most vulnerable populations.

Both the House bill, The American Health Care Act (passed May 4), and the Senate Republican’s proposal, The Better Care Reconciliation Act of 2017 (released June 22), aim to reduce federal health care spending and cap Medicaid while shifting greater responsibility to the states. Both plans will cause millions of Americans to go without coverage and struggle with health care bills.

Our speakers will share their perspectives and insights regarding the future of Medicaid, implications for patients and what you as an advocate can do to make a difference as Medicaid, and our entire health care system, is being transformed.”

Alongside co-presenters, Candace DeMatteis, the Policy Director of Partnership to Fight Chronic Disease (PFCD) and Matt Salo, the Executive Director of the National Association of Medicaid Directors (NAMD), we underscored three central themes:

Real people, with serious health care needs, will lose access to care;
People who rely on Medicaid are people you know or encounter in your daily life; and
Familiarity with Medicaid, through real-life stories, helps everyone understand how the program provides health care to those who need it most.

Real people will lose access to health care

Of the people who will be directly affected by the proposed reforms, many have serious health care needs. As we have explained in previous blogs, health care costs in the U.S. are highly concentrated. In 2012, the top 1% of spenders accounted for 22.7% of all U.S. health care expenditures, the top 5% of spenders accounted for 50% of expenditures, and the bottom 50% of spenders accounted for less than 3% of expenditures.

Medicaid has similarly concentrated health care costs. For example, as DeMatteis explained, people eligible for both Medicare and Medicaid (the “duals”), are 13% of Medicaid enrollees, but account for about 35% of program costs.

People who rely on Medicaid are people you know

Most people either know someone on Medicaid or have a frequent encounter with someone who relies on the program. Families USA created infographics providing examples of the types of people we all interact with who might benefit from the Medicaid expansion. Below is a portion of their infographic for Florida which clearly shows retail sales clerks, fast food workers, hotel desk clerks, library assistants and taxi drivers as just a few of the types of working adults whose income is low enough for them to qualify for Medicaid.

Familiarity with Medicaid and real-life stories are key

Salo, even with all of his deep expertise in the details of Medicaid, reminded patient advocates, and all of us what matters when talking about Medicaid. “You need to put a face on it,” he explained. In order to be effective advocates for patients as enormous Medicaid changes are being considered, it is essential to make this about real people, with real health care stories (sometimes horror stories!).

DeMatteis reminded the group of the “power of the anecdote,” to counter myths and false narratives, especially around who benefits from Obamacare.

My tips for advocates were similarly focused. To change people’s minds and to write better policy, we need to always keep in mind that this is about real people, first and foremost, with real health care needs. We built this system because a patient needed actual health care services. Let’s make sure that in our efforts to get rid of what isn’t working in Obamacare, we don’t throw the patient out with the repeal bathwater.

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