Ten Trends to Tend to in Two Thousand Twelve

By Clive Riddle, December 1, 2011

Alliteration abounds inside the MCOLBlog crystal ball. What trends and issues will significantly shape the business of health care in 2012? The MCOLBlog crystal ball knows all, sees all, and now tells all:

  1. Supreme Court Affordable Care Act decision and presidential election will either cause chaos, or be impetus to for those waiting on sidelines to get moving

    If the Supreme Court knocks down just the Insurance mandate, a mess will ensue. If the Supreme Court knocks down the entire Affordable Care Act, supreme chaos will ensue. How to handle all the midstream programs and initiatives, how to undo some things that perhaps can’t be undone? Confusion will reign for awhile in this event, as detailed guidance won’t be handed down the same day as the court’s decision. To whatever degree stakeholders perceive the outcome of the presidential election will change - or keep - the administration, Affordable Care Act implementation activities could grind to a halt or hasten the pace. Should the Supreme Court validate the Affordable Care Act, and should the current administration be re-elected, the stakeholders who have chosen to sit on the sidelines will be pushed to get more than their toe in the water of the deep end of the pool.

  2. Attempts to dodge the bullets of Automatic Medicare Payment Cuts will consume Providers lobbying resources

    So the SuperCommittee failed. HFMA cites that as result, and barring a subsequent agreement,  “Medicare provider payments would be reduced by up to 2 percent, while Medicaid would be spared. Hospitals would likely see an estimated $63 billion in Medicare cuts through 2021, while physician reimbursements would be reduced by $25 billion, according to forecasts by the Centers for Medicare & Medicaid Services.” Conventional wisdom is that some agreement will be reached in 2012 to avert a Medicare provider disaster, but this will be at the expense of consuming the waking hours and legal & regulatory budgets of hospital, physician and related providers and their industry associations.

  3. Significant resources will be allocated towards the holy grail of reducing preventable hospital readmissions

    Purchasers, whether they be Medicare, Medicaid or Commercial, are driving the readmissions train through hospitals in the form of value based payment arrangements, compliance requirements, and other structures. Hospitals are generally onboard, but the question remains where the train is headed. Can- and will - true improvements in quality and utilization be achieved; and how will this be accomplished? A lot of money and resources will be spent by hospitals, medical groups, vendors and purchasers in this pursuit. The jury is still out on the ROI – MCOL’s own October 2011 stakeholder e-poll asked “do you feel the current level of national attention and initiatives regarding hospital readmissions will ultimately result in significant reductions in avoidable readmissions?” 40% answered yes, 49% maybe and 11% no. The same e-poll indicated “Identification and Case Management of High At-Risk Patients” as the top choice as the single most important factor in reducing overall hospital readmission rates. The problem for 2012 is in identifying the high risk patients. A recent JAMA article by Devan Kansagara MD concluded that “most current readmission risk prediction models that were designed for either comparative or clinical purposes perform poorly.”

  4. Hospital Systems will ramp up physician integration initiatives

    Many hospital systems are already at various points down this path. 2012 will see them taking steps forward, not backward, and increased traffic from new travelers. Nearly three-fourths of physicians surveyed by PwC “are already in financial relationships with hospitals, and more than half said they want to move closer financially.”

  5. The shift to Value Based Provider Payments will be in full swing

    It isn’t just about ACO payment arrangements. Value based provider payments are to officially be named the flavor of the year at all employer, health plan, government and provider network restaurants in 2012.

  6. ACO progress will occur in Commercial  health plan initiatives

    ACO development slowed in 2011 until the Medicare Shared Savings Program Final Rule was issued, and offered somewhat more favorable conditions for at least some stakeholders, and now the brakes have been lifted from a number of provider Medicare ACO initiatives. But the timetable for these programs is longer, and the real hub of ACO activity in 2012 is in commercial health plan partnerships, which continue to spring up. An increased number of commercial ventures will appear in 2012, and results (good and bad) from early adopters will become more apparent.

  7. Accelerated demise of the small physician practice

    The list of woes for a small physician practice is long, growing, and facing a number of impending deadlines and other “shoes” to drop. Pick your poison: Meaningful Use compliance; ICD-10 conversion;  increased overhead costs in an economic downturn; the specter of Medicare and other program payment cuts (see above); increased difficulties in recruiting junior partners to a small practice; increased patient expectations for ehr, patient portal and other technological capabilities; increased purchaser compliance requirements; value based provider payment arrangements that require greater infrastructure to succeed; and purchaser initiatives and market forces to drive patient populations into more integrated networks.

  8. “Retailization” of health care will advance more than ever

    There are so many marketplace, health reform and other forces converging to fuel the” retailization” of  health care beyond its current orbit. Medicare, and increasingly – Medicaid, offer selection choices at the individual level. Public and numerous private health insurance exchange initiatives are in full swing (with private initiatives immune from any Supreme Court or election-day mood swings) that offer significant potential to drive a material portion of commercial health plan offerings into a full retail venue. Consumer driven plans still continue to grow, which nudge the health care consumer into more of a retail mode. Generic drugs (see below) are now often priced below health plan copayment levels, meaning consumer can shop on a retail basis for applicable generics regardless of health insurance restrictions. Employer and health plan continue to expand initiatives to further empower consumers, such as with wellness initiatives, or to offer new direct access choices such as on-site clinics. Furthermore, technology enhancements and expansion, via web portals, mobile pda apps, consumer ehr interfaces, and much more, continue to facilitate this retail environment.

  9. Implications of Consumers’ further embrace of generics will be far reaching

    What was innovative several years ago when Walmart introduced national flat copayment-0like retail pricing for their generics, is now mainstream with major pharmacies. Generics accounted for 78 percent of retail prescriptions in 2010, up from 63 percent in 2006. Health plan and employer initiatives to drive consumers further towards generics were taken up a number of notches by these pharmacies’ retail pricing programs. Beyond increased use of generics, there are a number of implications for 2012 and beyond. Pharmacies will continue to enhance and shift  their retail marketing efforts and channels for these package priced generics. Consumers are now increasingly purchasing their generic drugs outside of their health insurance because the price is below the cost sharing requirement (see above). This could ultimately drive even more health plan prescription benefit designs into deductibles (to pull these outside prescriptions back into the fold – as the consumer would need to meet the deductible requirement.) In the short term, the situation will cause an increasing vexing problem for providers and health plans trying to maintain a complete ehr for a patient, and prevent data loss for analytics staff trying to manage these patient populations

  10. Health Plan M&A Activities will continue to concentrate in government sector

    Many health plans are strategically trying to increase their member mix with program patients (vs commercial.) 2011 witnessed a number of such national health plan acquisitions of companies serving these populations: Cigna acquiring HealthspringAmeriGroup acquiring Health Plus (Medicaid); WellPoint acquiring CareMore; and UnitedHealthGroup acquiring XLHealth.  2012 should witness additional acquisitions, including more Medicaid in addition to Medicare. As Medicaid has a large presence of non-profit and publicly owned plans, such ventures may also be in the form of management contracts and other structures.

Managing Patient Security and Privacy on a New Data-Sharing Playground

By Claire Thayer, November 24, 2011

MCOL’s HealthcareWeb Summit announces the Managing Patient Security and Privacy on a New Data-Sharing Playground, scheduled for Wednesday, January 25th at 1PM.  Join PwC's Sarah Haflett, as she presents findings and insights from 2011 HRI research encompassing a survey of more than 600 provider, health insurer, and pharmaceutical/life sciences professionals on the privacy and security implications of the explosion of new data sources and uses in the healthcare industry; and interviews of 25 chief privacy officers (CPOs), chief information security officers (CISOs), chief information officers (CIOs), and other executives of healthcare organizations. 

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Transparent Cost Networks: A Consumer Driven Solution

By Claire Thayer, November 22, 2011

MCOL’s HealthcareWeb Summit announces the Transparent Cost Networks: A Consumer Driven Solution, scheduled for Thursday, February 9th at 1PM.  Milliman's Will Fox discusses the issues, implications and components of a transparent cost network, and the specific approach and steps involved in implementing the network.

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A Health Care “Moon Shot”

By Kim Bellard, November 15, 2011

There was a great op-ed in the New York Times a few days ago, in which Frank Moss – a former Director at M.I.T.’s Media Lab – called for a radically different approach to health care, a technology-driven approach he calls “consumer health.”  It would use technology to monitor and advise consumers about their health, with technology-based consultation with physicians or other health care professionals as appropriate.  Moss argues that not only might this approach improve health and reduce costs, but also would create significant export opportunities.  I like many of the ideas, but what I especially love is the call to be truly bold, like President Kennedy’s call to put a man on the moon in the 1960’s.  You don’t see much boldness in health care reform these days.  

There are things about Moss’s future that trouble me – it can seem a little Big Brother-ish – but the technology is, in many ways, the easy part of reforming the health care system; it is the rest of the infrastructure that stands in our way.

To that end, and on the advice of Daniel Burnham (“Make no little plans; they have no magic to stir men’s blood…”), here are sacred cows I’ll take on:

  • More consumer responsibility: for all the complaints about how expensive health care is, most consumers have been spoiled.   I.e., only 31% of covered workers have a deductible of $1,000 or more, their average copayment for a primary care physician is still only $22, and their portion of premium contributions was only 18% for single coverage/28% for family coverage (Kaiser Family Foundation).   Certainly some individuals and families are devastated by health care costs – and this is unacceptable – but the frustrating part is that the system, by and large, doesn’t reward consumers for managing their health effectively. 

    We don’t want to punish people who have high health costs simply because of what is, essentially, an accident – whether that be genetic, physical calamity, or unexpected exposure to infections, to name a few.  Regardless of what their health status is or how it got that way, we do want to reward people who actively take efforts to maintain and improve their health.  Various wellness programs – typically employer-based – attempt to do this, but their ability to monitor, intervene, and reward has historically been fairly limited.  With the new technological tools that are or soon will be available, we will be in a much better position to actually observe desired behaviors – and we should use those to strongly reward individuals who actively exhibit those behaviors.  If auto insurance companies can base rates on monitored safe driving patterns (see, for example, this), why wouldn’t we want the same kind of rewards in health insurance?  Lower premiums, real-time lower cost-sharing, and/or actual monetary rewards are all be options that should be used.  Consumers who do not take appropriate actions, or who do not choose to be monitored, need to be willing to bear the financial consequences of those decisions.

  • End employer-based coverage: Employer-based coverage has been the dominant form of health coverage in the U.S. since the 1940’s.  Employers have pushed insurance companies into many of the innovations of the past thirty years, such as care management, more aggressive provider contracting, an emphasis on quality and outcomes, and more focus on wellness.  In many ways, it has been the employers – particularly large, self-funded employers -- who have been the leaders in innovation.  That being said, employers can also be blamed for ending community-based premiums, for “job lock,” and for creating such a myriad of distinct benefit plans that few consumers or providers can understand them, much less compare.   

    There are a few reasons why ending employer-based coverage will or should happen.  One is the money.  The tax preference for employer contributions to health coverage remains one of the largest federal tax preferences.  With our soaring budget deficits, it is only a matter of time before this preference is eliminated or sharply reduced – the so-called “Cadillac-plan” tax in ACA is just the start.  The second is the existence of a viable alternative.  Currently, there are many barriers to widespread adoption of individual health insurance, but once ACA’s exchanges and prohibition of medical underwriting go into effect in 2014 (unless the law is repealed or does not survive its various legal challenges), obtaining individual coverage will become much more attractive.  Indeed, McKinsey estimated 30% of employers would drop their coverage once the exchanges become operational (although this estimate was not without skeptics).   Personally, I wonder why the number is as low as 30%.  Third and finally, in the kind of monitored world that Moss calls for – which is already starting to happen – there will be increasing privacy concerns about what information one’s employer has access to.  We’ve already seen employers making employees pay more in premiums based on participation in various screenings or wellness programs, and even prohibitions against certain types of non-job behaviors (e.g., smoking).  With the kind of monitoring Moss discusses, the type and amount of potential data becomes much more personal.  At some point, consumers are going to rebel about their employer’s oversight of their lives.

  • Reform medical education & licensure:  With the much lamented trend towards specialty and sub-specialty, by the time a physician gets into practice much of his initial training may be out-of-date, not to mention his/her having spent a small fortune.   Victor Fucks has eloquently argued for more distinct yet faster approaches to training, and that is the kind of fresh approach we should be considering.  I would go even further.  As a layman, the distinction between allopathic and osteopathic medicine has always been murky to me.  Throw in chiropractic, podiatric, acupuncture, nurse practitioners, and the array of health care practitioners begins to look like something from the 19th century medicine.  One is surprised that phrenology is no longer on the list of extant medical professions.  We need a Flexner Report for the 21st century, not focused just on allopathic training but on medical education period.  Blow it up and start fresh, with a comprehensive, empirically based approach, based on validated medical practices rather than on historical professional silos, and with different end points based on type of practitioner.

    As for licensure, I’ve previous blogged about the seeming ineffectiveness of state medical boards and on issues relating to licensure’s impact on telehealth.  Public Citizen’s analysis indicates fewer than half of physicians who suffered clinical practice actions also had state licensing actions.   It leads one to wonder: whose interest is the current system serving?  If we can monitor individuals in real time and advise them on better health behavior, certainly we should be able to do the same for physicians, and to use data to make better decisions about which health care professionals are practicing appropriately.  Licensure shouldn’t be based on reputation, state of residency, old boy networks, fear of impact on malpractice suits, or other constraints that aren’t keenly focused on better patient care.  It should be based on ongoing, proven performance.  We can do better. 

I could go on with this list of reforms – and I may in future blogs – but I’ll stop for now.  Each of the above changes would be a monumental task in itself, with many interest groups heavily entrenched in the status quo.  Still, to use another oft-quoted line – if not us, who?  If not now, when?



Webinar Event: Midwest: Healthcare Environment in 2012

By Claire Thayer, November 10, 2011

This event is Co-sponsored by Payers & Providers.  The year 2011 seems to be accelerating to its conclusion, but before it ends we want to contemplate what is coming over the horizon for 2012.  Join us on Dec. 9 as we convene a forecasting session with several of the Midwest’s foremost experts on how the private healthcare marketplace will be developing in the near future. It promises to be a lively hour!

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