ICD-10 Web Summit: Issues for 2010

by Claire Thayer, October 30, 2009

MCOL’s Healthcare Web Summit has announced a new event that will look at the key strategic, resource, compliance and operational issues pertaining to ICD-10 implementation in 2010.  The web summit event, scheduled for Tuesday, December 1st, 2009 at 1PM Eastern, will feature Gena Misouria and Jerry D. Kneller, Health Care Services Corporation, George Mansour and Katie Kuesters Huyck, PricewaterhouseCoopers, and David MacLeod, Ph.D.,  The Trizetto Group.  The event will also feature faculty podcast recordings on: “Potentials for Loss of Data Integrity with Crosswalks,” “Case Experience from ICD-10 Conversion,” “Predictive Modeling Implications for ICD-10 Conversion,” and “The benefit of ICD-10 increased claims specificity with targeting population-based programs.” In addition, other Web Summit features will include an ICD-10 Article Library and an exclusive ICD-10 Conversion e-poll for attendees.
Detailed information is available at:


What Changes To Health Care During The Past Ten Years Have Had The Most Profound Impact

by William DeMarco, October 28, 2009

MCOL asked me to answer the following question for their current issue of their Thought Leaders e-newsletter: "As this first decade of the new millennium draws to a close, what change(s) to health care delivery, financing or structure that have occurred during the past ten years have had the most profound impact, and why?"

My abbreviated response appears in the newsletter, but what follows if my expanded thoughts on this matter.

To review the entire decade I think would fill a library of changes but to get it down to a few changes I would have to say first that moving physicians groups from the small cottage industry of one and two man practices into multi-specialty groups that share a model of care would be something few would have thought necessary or even possible.

In the days of early medicine many physicians worried more about the patients and the noble calling of medicine. There was an entrepreneurial spirit that led many practioners to brave the lack of equipment and resources using their diagnostic skills accumulated over a life time.

Teaching medicine still focuses on watch one, do one, teach one but now we have a narrower funnel of certainty we deal with trying to use diagnostic tests, many of which we are finding have a high false/ positive outcome, and relying on larger complex hospital, clinic and university centers that in the words of medical students “made medicine into a business”.

Driving much of this was a change in reimbursement when insurers and the government stepped in between the patient and the physician offering to handle the payment and coding review and many doctors thought this was great as patients often time did not pay on time if at all and now we can bill these service bureaus claims processors for more and more volume.

That allowed practices to purchase equipment that here to fore was a hospital revenue stream. When Medicare A and B separated the fight between hospitals and doctors turned into a turf war ending with hospitals buying doctors as a bonding strategy. Integration disintegrated except for many providers who owned their own health plan and therefore could control with some precision the model of care and the type of care provided.

Our physician friends and advisors often comment on their observation of new graduates being technically savvy but unwilling to be that entrepreneur to start a practice or work 7 days a week to build a following. Instead working three days a week and having family time is a priority and it often takes 2 doctors to make up one FTE.

This same outline applies for hospitals getting bigger. Hospital systems offering tertiary care even in smaller hospitals is driven to a great extent by reimbursement where more income per patient and high volumes of complex patients are the keys to success according to many managers.

Hospital networks formed to squeeze even more reimbursement out of HMOs and Insurance companies and have succeeded in many markets to chase insurers away or demand 250% above Medicare fees for specialty care as the sole commodity in a given geographic area. This morning I heard the argument that many of these community based not for profit hospitals would eventually have to become for profit in order to survive the health reform legislation. Right now 70% of our nations hospitals are not for profit and although there is a solid economic argument to take equity out of the hospitals to refinance growth and sustainability the opposing argument is that will a for profit hospital focus on the needs of the patients or the needs of the financial enterprise that the hospital would be based upon.

Many not for profit hospitals already act like for profit hospitals forcing projects to have a economic ROI but not really be able to measure their investments in Human return on investment. Do we need tertiary care in every community? Can we even staff these needs with newly minted doctors? Are we driving our own costs up by looking at revenue gain instead of expense of this care? Will our community trust us as the local hospital? Will our physician see us as part of the noble mission or just a workshop and bank?

One only needs to look at the transition of the trusted HMO movement of the early 70s when most plans were built around a community need to inject competition and offer better benefits at traditional major medical insurance plans. Then the government allowed insurers to become HMOs and also the government stopped funding HMOs so many went to the for profit side of the equation. We see more and more consolidation of Blues plans and provider based plans as premium income and utilization go opposite directions. Over time the physician and many consumers lost faith and trust for these plans as money people took the reins of these health plans and the social entrepreneurs left to build medical management and disease management companies.

Consider then the largest single issue that has followed this evolution is the trust of the patient, well or ill, the trust of the community that helped fund and support the not for profit an the fact that as insurance executives bonuses could fund the deficits of a small country that this lifecycle in medicine of moving towards a for profit mindset has eroded peoples respect for insurers perhaps the continuous move by hospitals and even for profit physician structures is not , in itself, a solution but could be the biggest change in a decade that will erode confidence in the healing profession, reduce mutual respect for the leaders of hospitals and insurance companies and stifle the very innovation we now need to carry out the re engineering of our health system to emerge as the admired system of the future.

So loss of some levels of trust is the trade off for moving to an exclusively for profit model too quickly. I fear this more than government run insurance because it is the worst form of rationing that will eventually discriminate between profitable patients and those who restrict earnings per share.


Accelerated and Deferred Strategic Maintenance

By Clive Riddle, October 22, 2009

As the Great Recession kicked in, two phenomena were documented in a number of studies: 1) accelerated utilization of services from employees and dependents with their existing health plan coverage, due to impending loss of coverage from layoffs or fear of potential loss; and 2) deferred maintenance with health care services by the uninsured, underinsured and those with broader coverage that sill involved material cost sharing.

Now impending national health care reform may be bringing about similar polar trends regarding strategic actions and resources deployed by all types of health care organizations: A) Accelerated steps taken by those organizations concerned that their applicable activities might be curtailed or inhibited post-reform; and B) Deferred activity by health care organizations that have adopted a “wait and see” philosophy until specifics of reform become tangible and apparent.

As opposed to consumer health care behavior derived from the Great Recession, which can by more readily quantified through survey and other research findings, such organizational behavior is evidenced only anecdotally.

But start networking with those involved in the business of health care, and it is difficult to escape a mounting sense of such anecdotes, particularly regarding deferred strategic maintenance. Now everyone loves a good reason to procrastinate, and “waiting until we see the specifics of what reform shakes out” has become a great reason de jour for executives to say no to requests for everything from planning meetings, conference attendance, capital purchases, programming changes, product development, and promotional campaigns.

Of course there are those who aren’t afraid of possibly spinning some wheels and take some risks in order to “hit the ground running.” But a combination of recession driven economic pressures that inhibit strategic initiatives, combined with the temptation to avoid the risks and unrewarded costs of spinning wheels, seem to motivate a growing number of health care organizations to defer their Strategic Maintenance for another day. So the question is, how soon is that Day going to be?


Comparing HDHP, HMO and PPO Value based on Employer Benefit Survey Data

By Clive Riddle, October 7, 2009

The Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009 was released a couple of weeks ago.  The annual survey is a must read for any professional interested in employer health benefit issues and is packed with data.

I thought it would be interesting to use the data to compare the value of HDHPs to HMOs and PPOs, realizing of course for any individual’s actual situation, you’d need to compare specific benefit and premium parameters of specific plans. Also, this doesn’t take into consideration if there were any employer contribution to an HRA or HSA account in conjunction with the HDHP, or tax advantaged employee contributions were made to the account. But the survey data can still provide an overall sense of the industry-wide value of each plan type on the basis of premium and deductible comparisons.

Here’s ratios of single premium by plan type, compiled from the survey data.

HMO Premiums 1.011
PPO Premiums   1.020
POS Premiums   1.002
HDHP Premium 0.826
Overall Average 1.000 ($402 per month)

So based on the survey data does the HDHP premium, at 82.6% of the overall average premium, justify itself when the deductible cost sharing is taken into account? Let’s compare, based on single premium and deductible data.

HMOs: The survey data indicates that 84% of HMOs have no deductible requirement, and that those who do have an average of a $699 annual deductible. This yields a weighted average (16% * $699) of a $111.84 deductible for all HMOs. The survey data indicates that the average HDHP deductible is $1,838. Thus the net annual difference in deductibles is $1,726.16.

For simplicity, assuming that the HMO and HDHP copay/coinsurance requirements, benefit limitations and maximums after the deductible is met are in the same ballpark (which of course often isn’t the case) we’ll compare the value of an HMO to HDHPs solely on premium versus deductible differential.

The total annual difference in premiums based on the survey data is $892 ($4,878 annual HMO premium versus $3,986 HDHP premium). If you were to consume the entire HDHP deductible amount, the HMO would save you $834 (the deductible difference of $1,726 less the premium difference of $892.

But another way of looking at it is the HDHP would save you $892 if your total annual health expenditures for the year were less than $111.84 (the average HMO deductible amount.) Assuming an equivalent coinsurance rate of 18% after the deductible is met, meaning that 82 cents of each dollar consumed after $111.84 (the HMO avg deductible) would be reduced from the $892 savings for the HDHP. This means that once you spent an additional $1,087.80 ($892 divided by 82%) the savings stop. This equates to total annual health claims of $1,199.64 ($1,087.80 + the $111.84 avg HMO deductible.)

So you’d have to gamble that your annual health claims would costs less $1,200, or 65% of the HDHP deductible requirement in order for the HDHP to save you any money compared to an HMO.

Traditional PPOs: Using the same methodology, the survey data indicates that 26% of PPOs have no deductible requirement, and those who do have an average $634 deductible, yielding a weighted average $469 deductible for all PPOs, and an annual net difference of $1,368.84 compared to the HDHP deductible. The total annual difference is premiums based on the survey data is $936 (the PPO annual premium is $4,922).

So if you were to consume the entire HDHP premium, the PPO would save you $432.84  ($1,368.84 less $936). The HDHP would save you $936 if your total annual health expenditures for the year were less than $469 (the average PPO deductible amount.) Assuming an equivalent coinsurance rate of 18% after the deductible is met, meaning that 82 cents of each dollar consumed after $469 (the PPO avg deductible) would be reduced from the $936 savings for the HDHP. This means that once you spent an additional $1,141.46 ($936 divided by 82%) the savings stop. This equates to total annual health claims of $1,610.46 ($1141.46 + the $469 avg HMO deductible.)

So you’d have to gamble that your annual health claims would costs less $1,610, or 87.5% of the HDHP deductible requirement in order for the HDHP to save you any money compared to a traditional PPO.


Health Care Crisis and Reform: Everything Old is New Again

By Clive Riddle, October 1, 2009

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

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

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

Presidential Commission Recommends Complete Reorganization of American Medicine

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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