What to Do Whilst Waiting for SCOTUS

By Clive Riddle, June 14, 2012

At times it may feel like the pending Supreme Court decision regarding the Affordable Care Act may play out like Waiting for Godot, but exercise some patience for The Decision on The Act that hopes to encourage exercise for patients, among a bazillion other things. Decision-Day will come soon enough. Too soon, for some stakeholders on one side of the fence or the other, undoubtedly.

While you’re waiting, it’s interesting, although not entirely instructive, to review the past SCOTUS cases involving various aspects of health care and health insurance law. FindLaw provides a summary of these cases, with links to each case.  A quick listing of these 15 cases is available in a healthsprocket list: Historical Supreme Court Health Law Related Cases. This accumulation of cases will be bookended by Roe v Wade in 1974, and the pending 2012 Affordable Care Act decision. In between are less-distinguished cases all being decided upon during the first decade of this century. These other cases include:  two involving health plans (Aetna and United’s PacifiCare) stemming from the managed care backlash era; three abortion related cases (in addition to Roe v Wade); two Medicaid cases (regarding provider payments and eligibility);  prescription solicitation; medical device safety claims; employer liability for mental anguish due to potential future work-related health claims; due process involving mental illness; punishment of mentally disabled criminals; physician-assisted suicide; and medical marijuana.  

You can consider the private marketplace response, back when implementation of the Act was still pending, and now when The Decision is pending. Back in the spring of 2010, “early adopter” health plans extended coverage provisions well before their required effective date. Now that the entire Act may be in jeopardy, “post-adopter” health plans have indicated they will continue to provide a number of coverage provisions in the event the Act is overturned.

You can also produce your own History Channel version of when we went through all of this before, and review the literature on the public and stakeholder controversy surrounding adoption of Medicare into law in 1965. Déjà vu – perhaps everything old is new again? One might wonder if and how the current SCOTUS might have weighed in on that.

Or you could read through a litany of papers on the implications, permutations, considerations and expectations for The Decision. RAND just released a good study on How Would Eliminating the Individual Mandate Affect Health Coverage and Premium Costs? Here’s some recent typical articles: Employers' 'plan B' if health reform is axed (CNNMoney, June 14, 2012); Health spending likely to keep rising with or without Obama's plan (Los Angeles Times, June 13, 2012); Undoing health law could have messy ripple effects (Associated Press, June 11, 2012)

Still don’t’ know what to do with idle time while impatiently waiting for SCOTUS? You can always use this healthsprocket list, offering five things you can do while waiting for the Supreme Court Affordable Care Act decision.


What’s Happening at MCOL – Thursday’s Predictive Modeling Web Summit 2012

By Claire Thayer, June 11, 2011

The 5th Annual Predictive Modeling Web Summit, co-sponsored by Predictive Modeling News, takes place this Thursday and we hope you will plan to join us!

The Fifth Annual Predictive Modeling Web Summit features a 90 minute webinar with national experts from actuarial, hospital system and health plan perspectives that tackle the topics of risk adjustment, predicting readmissions, data mining and more.

The event also includes three downloadable pre-recorded sessions, with expert faculty addressing predictive analytics applied to member compliance and enrollment patterns; Medicaid dual eligible and dual diagnoses populations; and application of big data and prepayment analytics to address the key challenges of state health care program payment models with respect to fraud, waste and Abuse and related issues.

Webinar Agenda (Eastern times)

  • 1:00 pm - 1:30 pm  Risk Adjustment and the Power of Four - Ksenia Draaghtel, ASA, MAAA, Associate Actuary, Milliman 
  • 1:30 pm - 2:00 pm  Predicting Risk of Readmissions for Targeting Patient Intervention - Jill Kalman, M.D., Director, Cardiomyopathy Program, Associate Professor of Medicine, Cardiovascular Institute, Mount Sinai Medical Center; and Maria Basso Lipani, LCSW. Coordinator, PACT (Preventable Admissions Care Team) , Mount Sinai Medical Center
  • 2:00 pm - 2:30 pm  Data Mining Strategies for Risk Stratification and Adjustment-- Sheila Owens Collins, MD, Vice President, Senior Medical Director, Community First Health Plan

For additional information about this event, including a description the pre-recorded sessions and more:


PPSA: What will come of the Physician Payments Sunshine Act?

by Clive Riddle, June 8, 2012

One of the oodles of components of the Affordable Care Act is the Physician Payments Sunshine Act, which, according to the CMS proposed rule issued 12/19/11 “would require applicable manufacturers of drugs, devices, biologicals, or medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) to report annually to the Secretary [of Health and Human Services] certain payments or transfers of value provided to physicians or teaching hospitals (‘covered recipients’). In addition, applicable manufacturers and applicable group purchasing organizations (GPOs) are required to report annually certain physician ownership or investment interests.”

Of course stakeholders and studies have come out on both sides. Various physician and pharmaceutical interest groups have invested in arguing the administration costs and burdens to be borne outweigh the potential benefits. The Archives of Internal Medicine published a Research Letter last week: Effect of Physician Payment Disclosure Laws on Prescribing describing results of study of two such state laws that did not produce intended results. Consumer interest groups have placed count-pressure to fully implement the Act, such as the Pew Prescription Project.

Perhaps in response to such conflicting pressures and 300 comments received to date, CMS last month blogged that they were delaying issuance of the Final Rule until later this year, and provided assurance that no data collection would be required before January 1, 2013.

In the midst of all this, Deloitte has just released a 28 page report: Physician Payment Sunshine Act: Physicians and life sciences companies coming to terms with transparency? The report is based on a survey conducted by Forbes Insights for Deloitte, was conducted in January and February 2012 among 110 U.S.-based physicians and 223 global executives from life sciences companies worldwide. Their findings would seem to indicate we’ll all get through this somehow.

The survey indicated that, when posed the question “Are you in favor of a public, searchable database of all physician-industry relationships to be available to the public?” 54% of physicians responded “yes, as long as patients understand how to interpret the data” and another 14% went further, stating “yes, the more information patients can get, the better.”

Deloitte reported that “with about 12 months to go until the first reporting requirements under PPSA (March 2013), two-thirds (66 percent) of the life sciences executives responding ...said that their companies are either “100 percent ready” or are “50 percent done and hoping to be ready in time” for the PPSA and other new compliance requirements. Meanwhile, the majority (55 percent) of life sciences companies expect to see their HCP transparency-related compliance investments to continue to increase in 2012 and 2013. Almost half (48 percent) of these investments are expected to go into in-house training programs, 34 percent to in-house software upgrades and integration, and 25 percent to hiring new full-time employees.”

But will these new requirement ultimately achieve positive objectives? Seth Whitelaw, Director, Deloitte & Touche LLP U.S., tells us “as the survey results illustrate, physicians, the life sciences industry, and even governments are expected to expend significant time, effort, and resources complying with PPSA. Yet it is too early to tell whether the PPSA will significantly alter the landscape of provider-industry relationships.”

Deloitte cautions that “almost three-quarters (72 percent) of physicians responding to the survey believe that new regulations will not change provider-industry relationships. Moreover, despite all the efforts to comply with the new regulations, 38 percent of life sciences executives responding to the survey said that they either don’t know how, or have no plans, to use and leverage the publicly available data regarding other companies.”


What’s Happening at MCOL – Private Health Insurance Exchanges

By Claire Thayer, June 4, 2012

Our webinar event on Thursday this week (1:00 – 2:00PM Eastern) takes a look at the marketplace implications of the pending Supreme Court decision for private health insurance exchanges.

Michael Thompson, Principal with PricewaterhouseCoopers provides an overview of the current private health insurance exchange environment, and then moderates presentations and discussion from a panel of important stakeholders including:

  • Kevin Kickhaefer, Head of Sales and Market Development, Bloom Health
  • Ron Rowe, Vice President of Individual and Small Group Markets, Blue Cross Blue Shield of Kansas City
  • Joseph R Donlan, President, ConnectedHealth
  • Chini Krishnan, Founder & CEO,

For additional information about this event:


Clinical Integration: Déjà Vu All Over Again?

by Nathan S. Kaufman, June 1, 2012

Last year, the Centers for Medicare & Medicaid Services (CMS) published proposed regulations for the formation of accountable care organizations (ACOs). Release of the regulations represents the latest of many efforts by the federal government to encourage healthcare providers to become “clinically integrated” and work together to coordinate care, thus reducing the cost and improving the quality of care provided to patients.  

The Federal Trade Commission (FTC) considers physicians who work in different practices to be competitors; thus, under most circumstances, joint negotiation by independent physician practices is considered to be illegal price fixing (Casalino 2006). In a 1996 statement, the US Department of Justice and the FTC provided a new antitrust safety zone to enable independent providers who work in separate practices to jointly negotiate with payers if they are sufficiently “clinically integrated”—that is, if they have formed a network in which there is an organized process to control costs and improve the quality of care resulting from a significant investment of monetary and human capital (Casalino 2006).

According to Gosfield and Reinertsen (2010), the FTC has been “fairly unwilling to define the boundaries of clinical integration, because they wish neither to stifle innovation, nor to encourage anticompetitive behavior.” In her remarks to the American Hospital Association in April 2009, FTC Commissioner Pamela Jones Harbour (2009) stated:

The essence of clinical integration is the interdependency among health care providers. Put simply, each provider must have a vested interest in the performance of the other providers such that their financial and other incentives are closely aligned to meet common objectives.

Since the publication of the guidelines in 1996, several provider networks have been deemed to be clinically integrated by the FTC. These networks have several key common factors:

  • Clinical practice guidelines or protocols to measure performance
  • Information technology to monitor care
  • The ability to evaluate provider performance and to act on the findings
  • The willingness to share data with payers

Medicare’s Physician Group Practice (PGP) demonstration (Iglehart 2011) and mature clinically integrated networks such as Advocate Physician Partners (Shields et al. 2011) have demonstrated that clinically integrated networks have been able to improve performance for select quality indicators. Even so, there is little empirical evidence that these networks have affected the overall cost of care. Even Advocate Physician Partners, one of the most mature clinically integrated networks, notes that a number of its inferred medical cost savings “are based on the achievement of key clinical outcomes that have been demonstrated in the literature to reduce costs” (Shields et al. 2011). One must question whether networks that were developed in part  to use their market clout to negotiate premium rates with payers are able to achieve significant measurable cost savings.

Compliance with FTC legal guidelines provides no assurance that a clinically integrated network possesses the competencies to improve quality, reduce cost, or remain a viable business model over the long term. As was the case in the mid-1990s, many “first-generation” clinically integrated provider networks can be expected to delude themselves into voluntarily taking economic risk for the care they provide. Because few possess the necessary competencies and culture, many will experience financial distress or worse.

The Law of Reciprocal Economics states that one person’s cost is another person’s revenue. In order to reduce the cost of healthcare, someone has to get paid less. With hospitals and physicians accounting for over 80 percent of health insurance benefits spending (PwC Health Research Institute 2011), one must assume that in order to reduce the overall cost of care, revenues for hospitals and high-end specialists, in aggregate, will have to decline.  

Implications for Hospital Leaders

To truly impact costs, provider networks must be committed to reducing utilization of high-end services and must possess the “second-generation” clinical integration competencies that are essential to create a financially successful, sustainable provider network. These competencies include:

A common electronic health record (EHR) with point-of care protocols. In order to monitor cost and quality and coordinate care, it is essential for providers to share a common electronic record. Embedding evidence-based care plans in the EHR can encourage their use by an entire provider network. Geisinger Health System has demonstrated that compliance with care plans can be enhanced by “hardwiring” the protocols into the EHR (Paulus, Davis, and Steele 2008).

As an interim step, networks have created data warehouses to which providers submit their encounter data for analysis and reporting. Transparent reporting of accurate data in near–real time is essential if a clinically integrated network is going to reduce cost and improve quality.

Sufficient primary care capacity. The primary care office serves as the “medical home” for the patient, ensuring that the patient receives appropriate preventive care and monitoring. Given the anticipated shortage of primary care physicians, a model of care involving physician extenders—for example, physician assistants and nurse practitioners—will be essential.

Engaged physician champions. By definition, a clinically integrated network requires independent physicians to work as a team to coordinate care. The evidence from first-generation clinically integrated networks is that physicians will volunteer to surrender their autonomy only to a physician-led enterprise.

Evidence-based inpatient and outpatient care plans. The high variability in the cost and quality of care for specific diagnoses is well documented in the Dartmouth Atlas (Brownlee et al. 2011). Looking at length of stay, compliance with core measures, and readmission rates, my personal experience indicates that this high degree of variability exists within local health systems as well. To have a predictable impact on the cost and quality of care for a population of patients, it is essential that all providers use a common set of evidence-based care plans.

Proactive programmatic approaches to chronic disease. There is some empirical evidence that patients with diabetes and congestive heart failure who participate in disease management programs have better outcomes at lower costs than patients who do not participate in these formal programs (Stock et al. 2010; Russell and Chambers 1999). Home visits, telephone coaching, and web-based monitoring are components of disease management programs that can improve health status and prevent expensive hospital admissions.

Dedicated, sophisticated, mature infrastructure. In addition to the aforementioned information technology solutions, infrastructure will be needed to develop care plans, enroll and train physicians and their office staffs, design disease management programs, and report results. Most health plans possess this infrastructure. Facing a make-or-buy decision, many clinically integrated networks are exploring the prudent approach of joint venturing with one or more payers.

Performance-based rewards and consequences. A fundamental requirement for being clinically integrated is a process for evaluating individual provider performance and acting on the findings. Positive incentives usually involve financial rewards for compliance with key metrics. It is also necessary to sanction providers for poor performance and ultimately eliminate noncompliant providers from the network.

Pilot-testing network performance with health system employees and their beneficiaries. Most health systems are self-insured, giving them significant latitude in structuring benefits and provider incentives. Reducing the use of high-end  services  by employees and their beneficiaries has an immediate positive impact on the health system’s financial performance. Only after a clinically integrated network successfully manages the care of the system’s employees should it consider taking risk for other patient populations.

Proceed with Caution

Compliance with the legal requirements for clinical integration does not guarantee that all participating providers will be better off in the long term. Many providers are forming clinically integrated networks so they can negotiate better rates. But rate pressure on health insurance premiums and the formation of narrow, low-cost networks will limit the ability of clinically integrated networks to negotiate premium rates in the future. 

To succeed over the long term, clinically integrated networks must possess the second-generation clinical integration competencies listed above. They must be flexible enough to adjust to a rapidly changing healthcare landscape, and they must truly be committed to improving measurable quality and lowering the cost of care regardless of the short-term impact on provider revenues.

Getting Started

Clinical integration requires a significant investment in both human capital and dollars. It requires:

  • Strong physician leadership committed to reducing cost and improving quality
  • Sophisticated, proven infrastructure, including personnel and IT similar to that existing in most health plans
  •  A strong, geographically distributed base of primary care physicians
  • Access to a comprehensive set of acute and postacute services.

Healthcare provider s learned in the early 1990s that if a health system does not possess the attributes and competencies necessary to succeed in a new delivery model (which at that time was capitation), it is better off seeking a partner that does, or saving its money and doing nothing.


Brownlee, S., J.E. Wennberg, M.J. Barry, E.S. Fisher, D.C. Goodman, and J.P.W. Bynum. 2011. “Improving Patient Decision-Making in Health Care: A 2011 Dartmouth Atlas Report Highlighting Minnesota.” [Online information; retrieved 8/24/11.]

Casalino, L.P. 2006. “The Federal Trade Commission, Clinical Integration, and the Organization of Physician Practice.” J. Health Politics, Policy and Law 31 (3): 569–85.

Gosfield, A.G., and J.L. Reinertsen. 2010. “Achieving Clinical Integration with Highly Engaged Physicians.” [Online information; retrieved 8/23/11.]

Harbour, P.J. 2009. “Clinical Integration: The Changing Policy Climate and What It Means for Care Coordination.” [Online information; retrieved 8/23/11.]

Iglehart, J.K. 2011. “Assessing an ACO Prototype—Medicare’s Physician Group Practice Demonstration.” New Engl. J. Med. 364 (3): 198–200.

Paulus, R.A., K. Davis, and G. D. Steele. 2008. “Continuous Innovation in Health Care: Implications of the Geisinger Experience.” Health Affairs 27 (5): 1235–45.

PwC Health Research Institute. 2011. “Behind the Numbers: Medical Cost Trends for 2012.” [Online information; retrieved 8/24/11.]

Russell, B., and D. Chambers. 1999. “Congestive Heart Failure Disease Management Program.” [Online article; retrieved 8/23/11.]

Shields, M.C., P.H. Patel, M. Manning, and L. Sacks. 2011. “A Model for Integrating Independent Physicians into Accountable Care Organizations.” Health Affairs 30 (1): 161–72.

Stock, S., A. Drabik, G. Buscher, C. Graf, W. Ullrich, A. Gerber, K.W. Lauterbach, and M. Lungen. 2010. “German Diabetes Management Programs Improve Quality of Care and Curb Costs.” Health Affairs 29 (12): 21972205.