Tell Me the Good News Again

By Kim Bellard, February 13, 2013

This just in from CBO: federal health care spending has slowed dramatically, easing its impact on the federal deficit.  They are now projecting federal Medicare and Medicaid spending will be $200 billion lower in 2020 than they did three years ago.  And it is not just federal health spending:  according to CMS, 2011 marked the third consecutive year of relatively slow grow, increasing by 3.9%, which is modest for health care. 

Should we be breaking out the champagne to toast the victory?  Maybe not just yet. 

Economists aren’t sure if structural changes are finally taking place, or if much of the slowdown can be attributed to the recession and to consumers being more reluctant to spend any discretionary cash on health care.  There are some signs that the slowdown started before the recession, but there are conflicting signs that some portions of health spending are accelerating. 

For example, the CMS report cited increases in out-of-pocket payments as an area where spending was rising faster, but the Washington Post notes a contrary analysis by NPR’s Planet Money which suggests that the share of spending from consumer out-of-pocket payments is actually decreasing, dropping by nearly half over the last forty years.  Of course, that share is of a much large dollar amount, so the lower percentage may be of scant comfort.  Consumers probably don’t have the perception that their share is getting smaller, not with rise of high deductible plans, and some researchers, like Deloitte, would argue that the official numbers understate direct consumer spending by a wide margin.  So we don’t really know.

What everyone is waiting to see is what 2014 brings us, as several of the most significant ACA provisions – Medicaid expansion, health insurance exchanges, guaranteed issue health coverage, essential benefits, and federal subsidies for health insurance, to name a few – kick in.  None is without its problems. 

Medicaid expansion seemed like a no-brainer.  It promised to make eligibility for Medicaid much more uniform across states and between different pockets of the population, and it minimized the fiscal impact on states by the federal government picking up all the costs of the expansion in the first few years.  Some states are skeptical that the federal government is a reliable partner, and others oppose ACA on general principle, with the net effect that we still don’t have even a majority of states who have agreed to the expansion.  Without the expansion, some people won’t qualify for either Medicaid or subsidized coverage through the exchanges.  In other words, if you are the wrong kind of poor person, you may still be out of luck.

As for the exchanges (excuse me – “marketplaces,” as newly rebranded by HHS), according to Kaiser Family Foundation, as of February 12, only 18 states are planning to run their own exchange, another 6 are planning to run one in partnership with the federal government, and the remaining 27 are defaulting to a federally-run exchange.  Whether state, federal, or jointly run, if they are not already deep in the planning/building process, it’s worrisome as to whether they will be able to start online shopping for all those consumers beginning this October.  I’m not betting on a wonderful, Amazon-like experience come October.

The biggest problem with guaranteed issue and essential benefits is not the much debated controversy over contraception coverage, with its weird proposed compromise for “contraception-only” coverage, but rather is the concern that premiums could skyrocket, especially for younger people.  The combination of generally richer coverage and inclusion of people who previously could not obtain insurance, along with tighter age rating bands, may lead to doubling or even tripling of premiums for some consumers, report Politico and The Wall Street Journal.  Supporters of ACA note that the subsidies will largely offset most or even all of these increases, but disguising the true cost of things from consumers is a big part of the reason our health care system is in the mess it is in.  We should be aiming to bring down the cost of health care and health insurance, not simply offset it with other federal spending.

Last but not least, there are the subsidies themselves, which are the key to success in improving the number of people with coverage (not, as many think, the infamous mandate, which is probably too weak to force people to buy coverage they don’t want or don’t think they can afford).  The subsidies are already running into problems.  Unions fear that their health plans may become disadvantaged relative to subsidized coverage in the exchanges, and have asked the Administration to be eligible for similar subsidies, thus reopening the spending spigot.  Of course, there are a number of employer plans who could make the same request, although their political clout may not be as great as the unions. 

Employer plans face enough problems as it is, and the recent IRS rules that base “affordability under ACA guidelines solely on the cost for single coverage, not family coverage, are likely to complicate things further.  The IRS ruling spares employers from the nightmare of having to guess at a worker’s total family income, but also opens the door to employers contributing ever smaller portions towards family coverage.  We could end up with a Catch-22: rapidly shrinking employer contributions for dependent coverage make that coverage too expensive for many families, yet those same families would not be not eligible for the subsidies in the exchanges because of their eligibility for employer coverage.  I can already see the tear-jerking stories in Congressional hearings, although I’m not sure who Congress will try to pin the blame on.  Not themselves, of course.

And, of course, the sheer size of the subsidies – over $1 trillion through 2022 -- will become a tempting target for budget cuts should Congress and the Administration ever get serious about the deficit.  At the same time CBO delivered the good news about lower Medicare/Medicaid spending, they also disclosed that they were raising the estimates of the cost of the subsidy by over $200 billion over 10 years.  They also estimated that twice as many people – 7 million – will move from employer coverage to individual coverage through the exchanges.  Oh, and they also think fewer people will gain coverage through ACA at all, reducing their estimate to 27 million from their initial estimate of 32 to 34 million.  So there.

We have a long way to go before we can feel comfortable about how the health care system is changing.  The disturbing but, sadly, not surprising results of the recent study by Jaime Rosenthal and Peter Cram on the inability of consumers to obtain prices of hip replacement illustrate both the difficulty of obtaining prices for even a common surgical procedure, as well as the shockingly wide range of the prices they might be able to find.  If anyone thinks ACOs will make this better, I suggest they think again – assuming consumers will be able even find multiple ACOs near them from whom to seek competing prices, due to increasing provider consolidation.

And meanwhile we face the spectre of an explosion of health spending as baby boomers begin hitting peak health expense years, especially since they are already in worse health than their parent were at the same age, according to a recent study.  Living longer but in worse health and more demanding – not exactly a recipe for reduced health care spending in the years ahead.

I’ll go back to something I wrote a couple years ago: all health care spending ends up as revenue for someone.  Even care we might categorize as waste, unnecessary, or inappropriate counts towards some entity’s revenue.  We can make the health care system more efficient, more transparent, and more patient-centered, but at the end of the day controlling spending will mean controlling providers’ income.  To do that, one of three things has to happen: all providers end up getting less, some categories of providers fare worse than others (e.g., hospitals gain while nursing homes lose), or we start paying specific providers drastically less, or not at all. 

Personally, I think the fairest – although not the easiest -- way to control spending, and to improve the quality of care for patients, is to weed out underperforming providers, those who are delivering sub-par care (and we’re kidding ourselves if we think they don’t exist).  When we get serious about that, then maybe it will be time to start the celebration.


Who’s In: State Health Insurance Exchanges

By Cyndy Nayer, February 7, 2013

MCOL published the infographic that shows the participants (states) in health insurance exchanges (HIX), the monies invested, the managers of the exchanges, and the public v private efforts. To date:MCOL state Insur Exchanges

  • 19 states are expected to open an exchange in 2014.
  • Over $3.5 billion has been invested in 47 states (including the District of Columbia).
  • Private exchanges are developing, mostly through large consulting firms, health plans, and integrated delivery systems.
  • 56% of people polled by MCOL think that health insurance exchanges will have a significant impact on health access and affordability.
  • Update on Florida (not on the infographic): the first state to oppose the exchanges, is still considering the impact on the budget.

As health care reform spreads through the communities of the US, there is great hope that the insurance exchanges will, in a few short years, encourage more consumer-driven health management. What is happening, however, is the escalation of insurance premiums even before the uninsured are offered entry into the coverage marketplace. This will demand a much finer focus on keeping people in sync with their prevention, wellness, and chronic care management plans. It means that those who are proficient at health care purchasing–the self-insured employers–will need to keep a close communication package in place, encouraging appropriate use of services and screenings as well as attention to adherence to medical plans. Some employers have already shared that they will be offering a “step-up” insurance package to their beneficiaries, as they have reaped the rewards of value-based benefit designs and outcomes-based purchasing through the years. They believe that their commitment to a high-performing workforce will be continue, even if their employees and families enter the exchange marketplace.


ACO Directory 2013

By Claire Thayer, February 5, 2013

Need a resource on Accountable Care Organizations?  Today, HealthQuest Publishers announces the release of The Accountable Care Directory 2013. In this latest edition, you’ll find summary information for 321 selected ACOs, as well as a listing of 1,088 key persons with leadership or operational involvement with the ACO. Also included are Executive Profiles of Accountable Care executives and thought leaders, as well as indexes for easily referencing individuals and organizations included in this Directory.

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But Which Half?

By Kim Bellard, January 30, 2013

Advertising lore credits John Wanamaker, the department store magnate and marketing pioneer, with the famous quote: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”  It turns out he could have been talking about spending on health care.

The British Medical Journal, through their Clinical Evidence initiative, recently reported that they’d analyzed 3,000 medical treatments that had been studied in controlled, randomized studies.  It turns out that for half of those treatments, we have no idea how well they work.  Indeed, only about a third of the treatments were found to actually be beneficial or likely to be beneficial.  The rest are likely to be harmful.

Sadly, this does not come as a surprise.

We know we don’t know enough.  The vast number of medical treatments have never even been studied in a true clinical trial.  Worse yet, sometimes even when there is clear empirical evidence about which treatments are most effective, that information does not always sway physician behavior, or does so only very slowly (for example, see this study on the use of heart stents versus medication therapy).

There is no shortage of reports of unnecessary or even harmful care.  It’s even scarier when that care is associated with high costs.  In no particular order, one could cite recent controversies with spinal fusions, hip replacements, or chemotherapy drugs.   There can be lots of money at stake for manufacturers, drug companies, and health care providers.  That kind of money can distort the question of what is truly in the best interests of the patient.

Many employers, payors, and researchers have been pushing for “evidence-based medicine” for many years now.  EBM focuses on making sure that treatments have appropriate research to support their effectiveness, and in getting the word out about such treatments.  One of the many initiatives from ACA was the Patient-Centered Outcomes Research Institute, which is charged with conducting research to provide such evidence and funded by a $1 head tax on people covered by insurers.  And, of course, AHRQ probably is wondering why we need a new organization to focus on EBM, given their many efforts on effectiveness.

In time, this may all become much easier, as more patient data become electronic and more connected, and we can make more use of computing power to track what truly happens to patients under various courses of treatments.  I mentioned a couple examples of this in my last blog, citing Optum/Mayo’s new initiative and meta-research studies in lieu of clinical trials.  Another example comes from Archimedes Inc., a firm founded by David Eddy, who was one of the early pioneers of evidenced-based medicine.  Archimedes claims to use its advanced mathematics and computing prowess “to run clinically realistic virtual trials on any population and create compelling evidence to make decisions in health and economic outcomes research, policy creation, clinical trial design, and performance improvement.”  Apparently HHS thinks they can, as it hired Archimedes last year.

Most physicians I know are very bright, care very much about their patients, and work hard to stay current on the medical literature.  Unfortunately, the latter is virtually impossible to do, given the sheer volume of that literature.  Even when there are clear results about which treatment is truly the most effective, the research doesn’t usually come with a guide as to how physicians can implement the associated changes to their practice routines.  It’s as much of a question of change management as it is the evidence to make the change.

It would seem that the situation is tailor-made for clinical decision support tools, which seek to provide clinicians with information on treatment options, potential outcomes, and possible contra-indications at point-of-care.  Unfortunately, we may not quite be ready for them.

Last summer The Annals of Internal Medicine published a study on clinical decision support systems by Bright, et. al.  They did a meta-analysis of studies on CDSSs, and found ample evidence of their efficacy in improving process measures, but sparse results on their impact on clinical or economic outcomes.  Whether this is due to the limitations of the underlying studies, the CDSSs themselves, or how they were used by clinicians is unclear. 

Similarly, KLAS Research recently released results of their survey of health care providers on their satisfaction with clinical decision support tools.  The results cited a general level of frustration, especially due to lack of integration with EHRs and “alert fatigue” caused by ineffective targeting of alerts. 

Worst yet, according to new research from the University of Missouri, patients don’t seem to trust treatment recommendations from physicians who use CDSSs, believing them to be less capable than physicians who make decisions unaided.  Patients don’t even like it when physicians consult with other physicians before making a recommendation!  They think their doctor should know everything.  I blame television for this – on medical shows like Grey’s Anatomy or House physicians pull up the most obscure diagnoses and treatments strictly from memory, without ever having to consult any reference materials.  Nobody’s memory is that good. 

Clinical decision support systems aren’t going to replace doctors; they are simply tools to aid health care professionals, much as a stethoscope or a thermometer does.  One can imagine a future where CDSSs -- and EHRs -- fit seamlessly into patient visits, providing real-time, interactive information while with the patient.  The line between evaluation, documentation, and clinical decision support should blur, in order to more accurately diagnosis patients and determine the best course of treatment.  

In the meantime, it’s somewhat of a crapshoot.

A recent study by Deloitte indicates that 62% of Americans believe that, in fact, over 50% of U.S. health spending is wasted, which is up from the already high 51% in 2009.  The message about necessary spending may be getting out, but consumers may be getting the wrong idea – only 18% thought the problem was not using evidence-based treatments, versus 69% who blame fraud and abuse in the payment system.  In other words, the problem can be blamed on greedy crooks, not on well-meaning health care providers.  Defensive medicine and unnecessary paperwork were each also cited by about a third of respondents. 

I agree that fraud, defensive medicine, and inefficient administration contribute cause us to spend money we shouldn’t, and each should be addressed, but I suspect more of unnecessary spending comes from well-intentioned treatments that aren’t really best for the patients.  As professionals, health care providers should be more stringent about basing their treatment recommendations on evidence that truly supports them.  More importantly, as the people whose health is going to be impacted by those treatments, it’s incumbent on us to demand that evidence.

Maybe one day we’ll have Star Trek’s tricorder to non-invasively diagnosis or even Star Trek Voyager’s holographic doctor to treat.  Maybe someday nanobots will fix all our ills without our even being aware of their work.  All that is in the future.  For right now I’d settle for simply being able to know the odds that a recommended treatment will actually benefit me.


Mercer introduces new Mercer Marketplace

By Claire Thayer, January 28, 2013

Mercer now offers employers and their employees’ access to a new private benefits exchange, Mercer Marketplace.  The Mercer Marketplace includes over 20 types of benefits, allowing employees to construct a personalized portfolio with traditional core benefits as well as optional voluntary benefits. The new exchange includes qualified benefit designs available from multiple insurance providers. In addition, Mercer Marketplace can facilitate, but does not require, a move to a defined contribution funding.

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