Entries in Benefits & Premiums (26)


Put Your Money Where Your Scalpel Is

By Kim Bellard, September 22, 2014

I propose taking value-based purchasing from the payor-provider contractual backroom and putting it in the health plan benefit design, where consumers directly see and are impacted by it.

One of the most troubling things about our health care system is the lack of accountability. Providers get paid pretty much regardless of how patients actually fare under their care, and often even if demonstrable errors are committed.

Patients don't get a pass when it comes to blame either.  They don't often take good care of themselves, they don't always follow instructions, and they sometimes opt for high risk and/or unproven procedures with limited chance of success.

The mantra to combat all this is "value-based purchasing," a phrase whose meaning, like beauty, is largely in the eye of the beholder.  In theory, it involves adding performance-based financial incentives to payment arrangements, and may also include bundled payments, shared savings programspay-for-performance, or even penalties.

Frankly, I think none of these go far enough, nor do they adequately involve the patients.

I want to accomplish a few things with my proposed plan design approach.  One, I want to more directly relate provider payment to patient outcome -- not in the aggregate, as many incentive programs try to do, but at individual patient level.  Second, I want to reduce how much other health plan subscribers have to subsidize care that is of little benefit.  And third, I want to stop rewarding providers for care that has little or no positive impact.<

The following chart outlines how these might be accomplished (assume the "base" plan design was 80/20):

  Percent of Allowable Charges:  
  Insurer Patient Provider    
Condition much improved 100 25 0   50%
Condition a little better 80 20 0   25%
Condition no better 60 15 0   10%
Condition a little worse 40 10 0   10%
Condition much worse     -100   5%
  Total Weighted Costs    
  80 20 -5    

In other words, a surgical procedure whose allowable charges were $10,000 would pay the provider $12,500 (125%) if things went really well for the patient, only $7,500 (75%) if the patient was no better after it -- and the provider would actually owe the patient $10,000 if he/she ended up much worse after the surgery.  Providers would not be able to balance bill patients for any of the reductions.

If I've done my math right, with the assumed prevalence rates shown above, the payouts are revenue neutral for payors (weighted cost of 80) and patients (weighted cost of 20), prior to the provider payback. 

Health plans and providers who want to test this approach would probably want to do at least a year of data collection so they can fine-tune the final payment levels for the different stages, based on the measured prevalences.  I think we might be surprised by what we'd learn.

There is good evidence that direct engagement by physicians can boost patient use of portals, and I can't

think of anything that would give physicians more incentive to do so than directly tying their payments to such use. 

Ideally, I'd like to see this approach applied not just to the surgeon's fees, but to bundled payments including the hospital/facility and any ancillary providers.  The more providers who have a direct financial stake in the actual outcome, the better.

What we need is a surgical practice and/or health system that has enough confidence in its outcomes to bet on it, and a health plan (or self-funded employer plan) who are willing to take not just the financial risk but also the risk of how to communicate the approach to members.

The question is -- is anyone bold enough to try?

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting


That's Not the Way I Always Heard It Should Be

by Kim Bellard, March 11, 2014

Now that the initial open enrollment period under ACA is drawing to a close, we’re starting to hear more about how the enrollment is going, and the news is not encouraging.

The Administration has touted that 4 million have gotten coverage through the exchanges – still several million short of their goals – but they claim to not know much about whether ACA’s impact on the uninsured rate.  Fortunately, outside organizations are helping to fill in some of the gaps. 

The McKinsey Center for U.S. Health System Reform released the results of their individual market enrollment survey, with results from February 2014.  Only 27% of those who had obtained new coverage in 2014 reported having been previously uninsured.  Even more discouraging, only 10% percent of all previously uninsured now reported having coverage.  The faint sign of hope in the numbers is that both numbers are up sharply from previous surveys – 11% and 3%, respectively – but I doubt anyone who supported ACA’s passage thought they were signing up for only helping 10% of the uninsured.

Adding insult to injury, only three-quarters of those with new coverage reported actually having paid their premium, confirming reports that health insurers had warned about.  And that percentage was only 53% among the previously uninsured, which does not inspire much confidence that they will remain insured for very long.

Perceived affordability remains the key barrier to buying coverage, even though 80% of those citing it were actually eligible for subsides, a crucial fact that two-thirds were unaware of.

One glimmer of good news is that Gallup reports that the uninsured rate has, in fact, dropped, down to 15.9% (versus 17.1% in 4Q 2013).  To be fair, though, their results showed spikes in late 2013, and the 1Q 2014 results are on par with 1Q 2013 and 1Q 2011.  Coverage through an employer dropped two percentage points from 4Q 2013, while both individual coverage and coverage through Medicaid were up by slightly under 1%.  

The Urban Institute released their own survey results on ACA enrollment, conducted in December 2013.  Among all adults 18-64, 12% reported having looked for information on health plans in the marketplace (Orwellian for “exchanges”), with another 17% planning to do so.  More significantly, among the uninsured still only 19% had looked, another 33% thought they would look – and 23% had not heard about the marketplaces.  The comparable numbers for those below 138% of the federal poverty level were 13%, 25%, and 27%, respectively, highlighting that the most vulnerable groups are not getting the message.

The picture isn’t really rosy anywhere.  The people who were already in the individual market continue to be buffeted by changes in the rules of the road.  For example, there is Administration’s executive decision to allow subsidies for policies purchased outside the marketplaces, in recognition that some consumers may have been too frustrated by the marketplace websites to buy from them. 

Then there is the “bare bones plans” mess.  After the uproar last fall about people having to lose their health plans because they didn’t meet ACA minimum standards, the Administration belated announced a one year delay in the enforcement of those standards, and has just extended that delay for yet another year, potentially meaning they won’t apply until 2016.   

It’s anyone’s guess about what has happened with premiums in the individual market.  A recent analysis by the Robert Wood Johnson Foundation in selected states found (with the exception of Alabama) more competitive markets and premiums, while a report from the Manhattan Institute last fall found an average increase of 41% (much due to benefit changes), and a study by the presumably objective Society of Actuaries last spring also expected significant increases, especially for younger consumers.

Any employer with a health plan or 401k plan – or any state Medicaid director – could have warned us that voluntary enrollment typically leaves lots of eligible people not taking action..  We should have taken the approach many 401k plans have adopted – “automatic enrollment.” Driven by disappointing participation in 401k plans, the federal law was changed to allow employers to automatically enroll employees in their 401k plan, with a default contribution rate.  Employees could still opt-out, or change the default contribution level, but employers have found that participation rates are higher and average contribution rates are higher under this approach.  What’s not to like?

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting


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.”

Getting Healthy

By Cyndy Nayer, April 1, 2013

In January 2013, US News published a report on why Americans aren’t healthier and gave us the concept of a health lag.  In fact, the gap between America’s health status and that of other industrialized nations is a 30-year trajectory of lower outcomes.

Last week, Modern Healthcare published a review of Kaiser Family Foundation findings in which the highest hospital readmissions were directly correlated to the unhealthiest counties in the US.

On the same day as the MH-KFF release, I was privileged to receive a tweet on patient engagement that highlighted the blog of Gilles Frydman  on PatientDriven.org, which highlights the real engagement and outcomes of patients who seek to understand their conditions and treatment by conversing with others.  The point here is in the definition of engagement, per the blog, “An engaged patient is someone deeply involved in the scientific understanding of their disease, fully aware at all times of the entire spectrum of available therapeutic options. It requires a set of learning, cognitive and psycho-social tools that can only be acquired by conversing often with a real network of peers who are similarly involved in this complex endeavor. 

This, says the author, is exactly opposite of the current definition of patient engagement as used by HIT, care professionals, benefits personnel, and service providers:  “the engagement flows from the various professional stakeholders of the health care system to the patients. It is a direct extension of the concept of consumer engagement.”

It’s exactly the discussion I am most involved in, most of the time, in which the (choose one) doctor/ IT developer/ hospital administrator/ national thought leader talks about patient engagement as the patient behaving according to the “guidance” he/she is provided.  But what if the guidance reaches the patient at the same time she is dealing with her teenager who had a car accident, or her husband who may lose his job? What if the “guidance” is a follow-up visit or test, but the office isn’t open late when she is off work? What if the “guidance” is the purchase of a pharmaceutical that she either can’t afford or that may cause side effects for her?  What if she simply didn’t understand the instructions or, three months later, is feeling better and stops the medication or falls off her nutrition plan?

Unfortunately, the problem here is that the engagement and persistence (which, by definition is part of engagement) did not occur because people have other parts to their lives than the body parts with issues.  They have financial needs, emotional needs, social needs, even transportation needs that interfere with engagement. While the most-influential people in the patient’s life, according to surveys, is the clinical “face” (doctors, pharmacists, nurses, etc.), these people do not follow the patient everywhere, and others in her sphere of influence take precedence.

Emergency department visits drop when medical practices extend hours. There are examples of patient engagement strategies that work and that translate directly to saved dollars.  In surveying more than 9,500 people with steady sources of care, the Center for Studying Health System Change focused its results on 1,470 individuals who had tried to contact their primary care practices after normal business hours in the past year. The study, published online in Health Affairs on Dec. 12, found that nearly 21% had difficulties reaching their physicians after hours, and those who reported more difficulty accessing after hours had higher rates of emergency department use (37.7%  and higher rates of unmet medical needs (13.7%).

As I’m on my relentless pursuit of solutions that deliver better health outcomes, I have to  emphasize this, re-emphasize it, and then state it many times more.  Those who doubted the power of value-based benefit design or outcomes-based clauses did not fully understand the suite of services and, what I call surround-sound messaging, that is necessary for patient engagement in health.

We cannot be paternalistic, nor maternalistic, in making health the end goal.  We have to meet people where they are and stop treating body parts separately (you know, hypertension over there and depression over here and diabetes…).  We have not only organize in patient-centric efforts but, perhaps more importantly, in patient-driven circles.  This is the success of the senior-citizen breakfasts that promote Medicare health plans, of the breast-health discussions that occur in churches and hair salons, and of the Dr. Oz and Dr. Phils of the world who reach through social media (including TV) to their audiences.

Transparency will only matter if the patient is seeking healthcare.  If, instead, she is seeking a carpool for her kids or the money for rent, then transparency of treatments may not be as meaningful, if it’s on the radar at all.  ”Entitlement programs,” as Medicare and Medicaid are increasing called, cause splits in peer groups and often in the same family, pitting seniors against young working adults in the “subsidy” allotment.

These are not directly related to the delivery of treatment from the health system, but they are distractions to the patient decisions.  If the incentives to the prescriber are different than the incentives to the patient, the patient will more often seek the treatment recommended by the doctor, as this is the trusted relationship.  In survey after survey for many years, the clinician advice trumps the insurance benefit advice, yes, but it also relieves the patient of asking price or quality or convenience questions of the physician.  To this point, in my March 15 2013 I sent out the Health Affairs link to the Kaiser study showing that consumers do not want to be responsible for their healthcare costs, and they don’t want their doctors to be responsible, either.  

If we want to close the health valley that we are in, if we want to use the amazing healthcare resources in our country wisely and widely for all of us, then we have to stop this narrow focus of hospital v doctor v benefit plan v pharmaceutical manager v insurance and get back to the basics:  making healthcare understandable, actionable, and most of all, relevant WITH the patient not TO the patient.  Patient engagement IS the holy grail for healthcare and health improvement.  But it can’t be done around the patient, it must be done with the patient fully present and asking questions and envisioning the future of his or her health.  If he or she can’t see it, he or she can’t achieve it.


High Deductible PPO Plans Versus CDHPs

By Clive Riddle, March 8, 2013

United Benefit Advisors has just released results of their annual health plan survey, with responses from 11,711 employers sponsoring 17,905 health plans nationwide, with results applicable for small to midsize companies. The survey includes a focus on Consumer Driven Health Plan (CDHP) vs. PPO comparisons of premiums, deductibles and enrollment. Their study found that “Consumer-driven health plans (CDHPs) -- high-deductible health plans (HDHPs) often paired with health savings accounts (HSAs) or health reimbursement accounts (HRAs) -- are not achieving long-term savings greater than what would be reached by raising the deductible on traditional PPOs.”

Unlike most national large employer benefit consulting firms, UBA – whose survey concentrated on smaller firms – is not bullish on account based plans, and would rather place their bets on straight PPO plans with a higher deductible. Although one could argue, it might be easy to make a stripped down high deductible PPO health plan yield immediate lower costs than a CDHP that has account administration costs, up-front wellness benefits and other bells and whistles. That doesn’t necessarily mean the PPO HDHP would be the best long term solution for an employer’s and employee’s objectives, unless immediate premium costs is the only concern.

UBA CEI Thom Mangan tells us “Employers are turning to CDHPs as a cost-cutting solution against the relentless upward spiral of health care costs. However, our research shows that small-to midsize businesses in particular, who may be considering these plans may first want to consider increasing the deductible on the plans they already have to achieve the same initial savings. Or, prior to implementing a CDHP plan, employers should build a culture of health and wellness in their workplace that drives employee behavior towards quality, low cost medical care and prescription drugs.”

Here’s some of the data UBA has shared from their findings:

  • Nearly 60 percent of the 11,711 employers surveyed said they plan to offer a CDHP in the next five years
  • PPOs remain the dominant plan type with 61.7 percent of U.S. employee enrollment
  • The greatest savings of a PPO over a CDHP was achieved with a deductible of $2,000-$2,999, where PPO cost per employee was $7,811 and CDHP was $8,859, a savings of $1,000 per employee.
  • Savings created by CDHPs over the plans they were replacing or HSA, averaged 1.75 percent in 2012, a significant reduction from prior years.
  • Enrollment also decreased to 15.6 percent (a 1.8 percent decrease from 2011), and nationwide enrollment among employers with 1,000 or more employees dropped substantially from 15.9 percent in 2011 to 11.3 percent in 2012.
  • The area of the country that has seen the biggest increase in CDHP growth is Minnesota, which saw the percent of employees enrolled in CDHPs increase from 15.5 percent in 2010 to 37.1 percent in 2012, a rate 18.4 percent higher than the national average in those same years.
  • Other areas with rapid CDHP growth include Indiana, Virginia and the Northeast region. The only western state to see CDHP popularity increase was Oregon, where percent of employees enrolled in CDHPs increased from 12 percent in 2010 to 20.3 percent in 2012.
  • Overall, CDHP enrollment in the west is the lowest in the country with only 7.7 percent of employees covered, a slight increase from 7 percent in 2011 and 4.6 percent in 2010. HMOs account for 31.3 percent of the market in the west.