Recalculating Health Care Spending Projections

By Claire Thayer, May 22, 2013

A new study published in the May 2013 issue of the journal Health Affairs projects that health care spending during the next 10 years will actually be as much as $770 billion below predictions. Here's an abstract from this article.

Despite earlier forecasts to the contrary, US health care spending growth has slowed in the past four years, continuing a trend that began in the early 2000s. In this article we attempt to identify why US health care spending growth has slowed, and we explore the spending implications if the trend continues for the next decade. We find that the 2007–09 recession, a one-time event, accounted for 37 percent of the slowdown between 2003 and 2012. A decline in private insurance coverage and cuts to some Medicare payment rates accounted for another 8 percent of the slowdown, leaving 55 percent of the spending slowdown unexplained. We conclude that a host of fundamental changes—including less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency—were responsible for the majority of the slowdown in spending growth. If these trends continue during 2013–22, public-sector health care spending will be as much as $770 billion less than predicted. Such lower levels of spending would have an enormous impact on the US economy and on government and household finances.

More info:

If Slow Rate Of Health Care Spending Growth Persists, Projections May Be Off By $770 Billion. David M. Cutler and Nikhil R. Sahni.

To view the Table of Contents of the current issue:


Trimtabs Applied to Health and Health Care Reform 

By Cyndy Nayer, May 21, 2013

I’ve been reviewing some of my saved quotes and notes, such as the notes on trimtabs, as the airwaves heat up with IRS, AP and all things HCR (health care reform). The road to repositioning health as the goal can be a long uphill struggle, and as I continue to speak around the country and counsel employers large and small, the strain is showing. It’s time to discuss trimtabs.

It’s certainly no secret that I’ve lived most of my life in St. Louis, home to the Missouri Botanical Gardens, a world-renowned horticultural center and leader in rainforest research and environmental change.

B Fuller, trim tabs, and geodesic dome

The centerpiece and brand of the Mo. Botanical Gardens is the Climatron, a geodesic dome, the building with the smallest footprint and the largest capacity. This is the building of Buckminster Fuller, who has built many geodesign domes, which, according to his research, is the strongest building on earth, withstanding hurricanes, tornadoes, and earthquakes. You’ll note from the picture that it resembles a honeycomb curved into a shell-like structure. The intersection of the cells means that, like a honeycomb, the physical stress on the structure is equalized across all of the cells. This I learned many years ago when the Climatron was built. Bucky understood that design signals the human intention, and his intention was to live well and leave the world better when he was gone.

Buckminster Fuller was a scientist and a man who loved sailing. He understood trimtabs as the mechanism that cause rudders to move. Trimtabs are small surfaces connected to the trailing edge of a larger structure (such as a rudder) that stabilise the boat or aircraft in a particular desired attitude without the need for the operator to constantly apply a control force. This is done by adjusting the angle of the tab relative to the larger surface. In simple terms, it means that by adjusting the trimtab, or tabs, the rudder on a boat can make a series of small adjustments with less effort than trying to push the rudder against the enormous force of the water.

In Bucky’s own words:

“Something hit me very hard once, thinking about what one little man could do. Think of the Queen Mary — the whole ship goes by and then comes the rudder. And there’s a tiny thing at the edge of the rudder called a trimtab. It’s a miniature rudder. Just moving the little trim tab builds a low pressure that pulls the rudder around. Takes almost no effort at all. So I said that the little individual can be a trimtab.”

Bucky takes the concept of trimtabs further, by noting, “Society thinks it’s going right by you, that it’s left you altogether. But if you’re doing dynamic things mentally, the fact is that you can just put your foot out like that and the whole big ship of state is going to go.” He was determined to use design to improve lives; he used the familiarity of culture to make change feel familiar, less threatening, and easily adoptable. He developed solar panels to heat the geodesic domes, and even these have morphed to many more uses, including protecting turtles where they nest. In many ways, his description of the enormity of a small bit to move the Queen Mary is the embodiment of all of his work. Each of us, in our own way, has the ability to affect the course of boats, of ocean liners, of our hometowns, and of health care in America.

I’ve had the honor and good fortune to address health plans, small businesses, and large businesses over the past few weeks, literally from coast to coast. The travel is tiresome, but the amazing need for information on patient and employee engagement, health care reform, and, most importantly, WIIFM (What’sInItForMe) is never-ending. Sharing the stage or the panel with other innovators is such a pleasure. Yet, sometimes we forget in our enthusiasm to share that those who are listening need us to slow down just a bit, walk away from the acronyms, and catch them up on what we know.

It’s that rare moment when any of us can be trimtabs to the audience, to change their course and their affect from one of powerless victim (THEY are doing this, and THEY have no idea of the kinds of hassle and money this is causing me) to one of expert seafarer, with a new and clearer eye on the horizon. I love those moments.

On the road or in the air back to home base, I have the chance to review notes and consider concepts that will help attendees and readers of this blog to manage the stress that occurs with substantive change.

  • Moving from a sick-care system to a true health care system is not easy. Neither is changing the course of the Queen Mary.
  • Moving from incentives to intrinsic behavior change is not easy. Neither is pulling lobsters behind a trawler when the wind is in your face.
  • Identifying key components of change and then enacting the changes through legislation is not easy. Neither is turning those beautiful white sails on the sailboats at the beach.
  • Finding that there were items left unconsidered, or, finding them with gaping holes or costs that were unanticipated is not easy. Neither is moving great seas out of the way in order to make it home safely.

We are on a journey for better health outcomes in this country. We are creating a platform where more people can access health insurance and, in the end, health care. We trust that by creating a wider group of engaged, healthier people, our businesses and our communities can stabilize and grow to productivity and prosperity again. And our course causes some to fear, some to claim “this is mine and cannot change,” much like the wild seas attempt to claim the sailboat.

Paramount to our efforts must be engaging folks across the spectrum of health care interventions, from exercise and purchasing healthy foods to trust in a safe-care system delivered with consideration of the patient and the family. As Dr. Toby Cosgrove, CEO of Cleveland Clinic said in an IOM post recently, “We must do everything transparently and with the patient fully engaged. We must provide value and pay for outcomes.” This is a fundamental shift in how we pay for health care; it’s new and unknown, and therefore causes tension that we may not have anticipated. But it’s the course we are on so that we can get home to health and safety.

So as I have traveled these past few months, and I’ve seen the weariness and, yes, the fear, I’ve thought about Bucky and went back to my notes that I keep for inspiration. Trimtabs are a fantastic frame for the work occurring across this country, and, if we can remain committed to getting home–creating a healthier person, healthier businesses, healthier communities–then we will have succeeded. We can identify the gaps and fill them with innovation and purpose. We can take the steps, singly or in concert, and embrace the change in course so that we can achieve our goals.

The man who designed geodesic buildings to save the environment, who invented the word “synergy,” said, “Call me Trimtab.” And R. Buckminster Fuller considered the role of trimtabs and his work (you can see a video of Bucky here and here). He thought trimtabs and the efforts each of us can contribute would lead to a better course for the better lives of all. He liked the concept so much, he had it engraved on his headstone.

B fuller gravestone trimtab


Games (Some) People Play

By Kim Bellard, May 13, 2013

I have to admit that I am a child of the television age, with movies as a close second.  I never really got into video games, like PacMan, Tetris, Mario Brothers, Call of Duty, Grand Theft Auto or even Madden NFL, and am only now belatedly becoming addicted to Angry Birds.  As I suspect is true of many of us old health care pros, I am also late to the potential revolution that video games offer for health care.  I’m glad others in the field have been paying more attention.

The video game industry is not for teenagers, and its size is shocking – it dwarfs the music industry, and, depending on which source one uses, either has surpassed or soon will surpass the movie industry.  It’s helping to drive the chip, PC, and mobile phone industries; none can afford to fail to deliver the speed and video quality that modern gamers demand.  We’re talking about a soon-to-be $70 billion industry here; still only a fraction of the health care industry, but much bigger, for example, than spending on health IT

The video game industry itself faces its own challenges; for example, the era of game consoles may be ending, as more gaming is done on mobile devices and with other options for player control.  That’s not to say the era of video games is passing, but rather that it continues to change rapidly.  Hand-held games were revolutionary when first introduced, as were game consoles, PC-based games, the Wii controller, Kinect, to name a few.  Video game companies who do not innovate can find themselves quickly left behind.  This “evolve-or-die” mindset is one that I wish was more prevalent in health care, whose attitude is more often “we know best” and/or “not too fast!”

Always looking ahead, the Robert Wood Johnson Foundation started its Games for Health project back in 2004.  They have given grants of over $9 million, and have an active conference and information sharing presence in the health/gaming intersection.  They’re not just spurring development of games and games technology, but also funding research on the games’ effectiveness through their Health Games Research program. 

The research is showing some results.  There are many reports about the health benefits of video games, such as a recent study that found video games can slow or even reverse mental decay, and a broader list of positive impacts that include motion skills, stress reduction, pain relief, vision and decision-making skills.  Apparently, both seniors and kids can benefit. 

An example of how game principles can be applied in health care is Mango Health, which turns the problem of medication management into a game, complete with rewards that can be turned into gift cards or charitable donations.  It is not the first or only such example, but is illustrative of the potential games offer.

The Entertainment Software Association, perhaps sensitive about criticism that violent videogames can have adverse impacts, prominently touts video games’ role in health care (along with family life, art, the economy, education, social issues, and the workplace – boy, these guys really are defensive, aren’t they?).  Two of the key areas it cites are in rehabilitation and in training.  For example, USC’s Institute for Creative Technologies researchers developed Jewel Mine to provide customized rehabilitation to people with a variety of neurological and physical injuries.  Other efforts use out-of-the-box gaming systems, like Wii or Xbox, to make rehab more enjoyable.  And there is an organization, Games4Rehab, that tries to tie users, developers, clinicians, and researchers together in this area.

One of the innovators in training that ESA cites is the University of Maryland Medical Center’s Advanced Simulation, Training, Research, and Innovation Center (MASTRI).  MASTRI has been working for over six years now on high tech simulation and training for health care.  Even ONC is using video games for training, as is Darpa (in their case, mobile medical training for first responders). 

One recent study found that surgeons who used the Wii – not on any specific medical games but just using standard Wii games -- outperformed their peers in laparoscopic simulators, due to improved spatial attention and hand-eye coordination.  My favorite study, though, was the one that found gamers did better at simulated surgery than medical residents.  Maybe the wrong people are doing those kinds of surgeries.

Surprisingly, payors haven’t all been late to this particular game.  Humana, in particular, was a pioneer, focusing on video games as far back as 2007.  Aetna  and United have joined the movement, and last year the Wall Street Journal summarized various insurer efforts.  One senses they’re not quite sure what they should be doing, but don’t want to get left behind.

People have coined the term “gamification” to include game-like features into non-game pursuits.  Author Jane McGonigal wrote a fascinating book called Reality Is Broken, the subtitle of which is “Why Games Make Us Better and How They Can Change the World.”  She doesn’t confine herself to video games, nor does she talk much about their applications for health care, but the mind-set she describes -- which include overcoming obstacles, rewards, collaboration, interaction, voluntary participation, and feedback -- is very much something people in health care should be incorporating more. 

The health care system does often seem like a maze, but it’s not one that most people have any fun navigating, nor one where many people emerge thinking they are winners.  This is an industry where, for example, use of outdated communications technologies like pagers waste an estimated $8.3 billion annually.  This is an industry that demanded, and is getting, hundreds of billions of dollars from the federal government to bring their medical records into the 20th century (and I mean that), largely still in siloed, mainframe EHRs that can’t talk well with each other and whose requirements for “Meaningful Use” are being delayed again.  It is not, in short, an industry that would seem an early adaptor of the lessons video games can teach.

Video games are no panacea for health care.  Not everything is a game, not everything should be approached like a game, and not everyone likes games.  Still, there are a couple of important lessons we should draw from them:

  • To each his own: for a not insignificant and growing portion of the population, games are a familiar and preferred medium.  If we want to educate, motivate, and influence behavior for that segment, game-like approaches are the way to go.  The likelihood of reaching serious gamers through, say, a telephonic disease management program would seem to be very low.  The point is not to use video games for everything for everyone, but to use the right media for the right populations.  We now have lots of options to reach people, including not just games but also social media, text, email, mobile.  The challenge to providers, health systems, and health plans is to figure out how to best use each tool for which portion(s) of the population.   
  • Take advantage of the technology and design:  Video games are in an arms race for better experience, and, as with arms races, there can be spillover benefits to other sectors.  High quality simulated images (even 3-D), on-demand, motion-sensing, multimedia, multi-person, and, above all, relentlessly interactive – all describe modern game capabilities and should be describing applications for health care, even if not used for games themselves.  Maybe health care organizations should hire fewer mainframe programmers and more game designers to work on their B2C efforts. 

Excuse me, but I better go play some games…for my health, of course!


It Depends on the Outcome: Payments for Providers – Benefits for Consumers

By Clive Riddle, May 10, 2013

Two separate studies released this week took the pulse of the outcomes-based financial landscape in healthcare at different ends of the spectrum: Availity released a sixteen-page white paper: Health Plan Readiness to Operationalize New Payment Models for providers, while the Midwest Business Group on Health released a twenty-page report: Employer Survey on Incentives, Disincentives & Outcomes-Based Incentives for employees.

The Availity study was conducted by Porter Research in the fourth quarter of 2012, involving interviews of 39 health plans. 82% of the plans consider payment reform a ‘major priority. 90% expect value-based payment models to impact their top three business objectives ( 46% expect a ‘major’ impact, while 44% anticipate ‘some’ impact.)

That doesn’t mean value based payments are mainstream today.  Just 20% say value-based models

support more than half of their businesses today.  But 40% predict that in three years, value-based models will support more than half of their businesses; and nearly 60% forecast that more than half of their business will be supported by value-based payment models in the next five years. And, of those, 60% are at least mid-way through implementation.

While the ACA uses Medicare as a primary tool to promote provider payment reform, the marketplace seems to be focusing health plans even more on the commercial side. More than 75% say they are focusing value-based payment efforts on their Employer Group plans, compared to 54%  for Medicare plans  and 46% and 44% citing Medicaid plans and Individual plans..

Availity noted that “transitioning to payment models that base compensation on outcomes requires physicians and health plans to exchange new kinds of information – different than what is required under today’s predominant fee-for-service arrangements. 90% of health plans agree that automating the exchange of ‘new’ information required under value-based payments is critical to success, with 85% saying the highest value will come from real-time exchange, though less than half have real-time capabilities.”

Meanwhile, the Midwest Business Group on Health employee incentive study was conducted during April 2013, with responses from 94 self-funded employers that represented multiple industries and locations around the US.  They found that “80% of responding employers are utilizing some form of incentives, with 41% using or planning to use outcomes-based incentives to increase engagement and participation as well as motivate healthy behaviors in employer-sponsored programs.”

Here MBGH findings from the study regarding outcomes-based Incentives:

  • Employers responded that 13% are already offering outcomes-based incentives and 28% are planning to launch programs over the next one to two years, while 40% indicated interest, but need more information.
  • Of those currently offering outcomes-based programs, 54% tie incentives to both outcomes-based measures (i.e. meeting specific targets such as BMI of 25) and improvements in outcomes (i.e. percentage decrease in BMI), versus one or the other.
  • Onsite clinical screening programs are used by 94% of employers as the way to capture biometrics with the top measurements being: 86% blood pressure, 81% BMI, 73% cholesterol, 68% glucose, and A1c and waist circumference tied at 59% each.
  • Employers said that 18% are experiencing participation levels of over 90% for outcomes-based programs; while the majority (60%) is experiencing participating levels of 40 to 80 percent.
  • Employers indicate that 98% of employee feedback is “somewhat positive” to “very positive.”
  • Degree of difficulty is notable with 95% of employers finding some level of difficulty in implementing an outcomes-based program.

Also, MBGH shared this data regarding the overall offering of incentives/disincentives:

  • Of the 18% of employers who reported not offering incentives or disincentives, 53% indicated the reason was that it was not part of their corporate culture and 47% are not sure it works.
  • For those employers offering incentives, 62% reduce premiums, 38% use gift cards and 35% offer merchandise.
  • Of those employers that use disincentives, 43% increase employee share of premiums for non-compliance and 14% have higher plan deductibles or out of pocket fees.
  • Activities that most employers’ incented included biometric screenings (70%) and health risk assessments (78%), with the greatest disincentive (78%) being used for tobacco use.
  • The monetary value of incentives programs varies widely, with $250-500 for 27% of those offering programs, $100-250 for 22% of employers and $500-1,000 for another 22% of companies.
  • Employers indicated that 71% found their incentive strategy was “very successful” or “successful” and 45% viewed their disincentive strategy as “very successful” or “successful.”
  • With the Affordable Care Act (ACA) in 2014 allowing employers to increase their incentives from 20 to 30 percent of total coverage, almost 67% said they are “very likely” or “likely” to do so and almost 36% are “not very likely” or “not likely.” For tobacco users, the ACA allows employers to increase the value from 20 to 50 percent, with employers indicating 48% “very likely” to “likely” and 52% “not very likely” to “likely.”

CMS Releases hospital specific charges for more than 3,000 hospitals

By Claire Thayer, May 8, 2013

Today, CMS announced the release of hospital-specific charges for the more than 3,000 U.S. hospitals that receive Medicare Inpatient Prospective Payment System (IPPS) payments for the top 100 most frequently billed discharges, paid under Medicare based on a rate per discharge using the Medicare Severity Diagnosis Related Group (MS-DRG) for Fiscal Year (FY) 2011. These DRGs represent almost 7 million discharges or 60 percent of total Medicare IPPS discharges.

For these DRGs, average charges and average Medicare payments are calculated at the individual hospital level. Users will be able to make comparisons between the amount charged by individual hospitals within local markets, and nationwide, for services that might be furnished in connection with a particular inpatient stay.

Access reports from here: