Posts Tagged health insurance

Life’s a struggle then you die!!!

Posted by Mark Brenzel in For Consumers, Healthcare Reform on December 9th, 2009

The above saying usually contains a more colorful word than struggle, but the meaning is the same. In the context of health, this statement describes the human condition well. From birth to death, even the healthiest among us deal with the health consequences of aging and the demands of living that eventually results in death. The Senate Healthcare Reform Bill appears to be written based on the premise that this reality can be substantially changed (except for the ending of course) by government action.

The major goal of this bill continues to be to extend health insurance to all people living in the US. It is accepted without debate that not having health insurance is a severe health risk. The truth is actually much more complicated, but that is another discussion for another day. This bill goes far beyond simply increasing access to health insurance, however. The bill contains an almost endless list of studies, experiments, demonstration projects, and health improvement initiatives geared to making people healthier.

The following list describes some of these initiatives:
• Establishes the Center for Quality Improvement and Patient Safety to identify best practices and healthcare delivery process improvements
• Medical Homes will be funded to provide medication management services for specific patients that includes in-home services
• Funds a program to develop patient decision aids sensitive to cultural issues to help patients make the right healthcare choices for themselves
• Establishes an Office of Women’s Health to focus on how to improve healthcare for women
• Creates a National Prevention, Health Promotion, and Public Health Council to reduce incidence of preventable illness and disability (includes reduction of tobacco use, sedentary behavior, and poor nutrition)
• Funds more School-based clinics
• Provides for funds to study ways to improve oral health care
• Allows Medicare to pay for a physician visit to put together a personalized prevention plan
• Directs Secretary of HHS to determine which preventive services should be covered by Medicare without co-pays or deductibles
• Funds a tobacco cessation program for pregnant women covered by Medicaid
• Directs the Secretary to research incentives that could be implemented to change risky behaviors in the Medicaid population
• Requires manufacturers to make sure that new healthcare technology is accessible by the handicapped
• Provides funding to increase immunizations
• Requires chain restaurants to label their food with nutritional values
• Funds community centers to develop individualized wellness plans
• Requires employers to provide reasonable break times for nursing mothers
• Creates an initiative to combat childhood obesity
And many more…

Sadly, they left out my favorite health improvement idea. Studies have shown that people with pets tend to be happier and live longer. The authors of this bill should have funded a program of buying everyone a government approved pet. The good news is that this idea and any others that are left out can be added later. The bill calls for the establishment of many new Offices, Centers, and Commissions that can add new programs and initiatives as studies indicate their value.

Clearly, there was a heavy dose of academic input into this bill. Academics love to create studies and recommend courses of action that address the problems and implement the solutions identified by their studies. Obviously, the political sponsors of this healthcare bill have bought into the above academic ideas in a big way. The question is why they have done so now? The answer is embedded in the language that accompanies almost all of the health improvement initiatives. The ultimate goal is healthcare cost reduction. These collective initiatives are one of the cost reduction strategies the sponsors hope will not only pay for the cost of this entitlement, which will be much greater than projected, but also cover the ever growing government deficits caused by the Medicare and Medicaid programs. They are gambling big that healthcare costs can be driven down by preventive and wellness care. They are gambling with their political futures and perhaps the solvency of the US government.
Unfortunately, their gamble is going to fail because of the inherent immutable truth of the lead into this piece. Whatever other benefits these initiatives will generate, cost reduction will not be one of them. A simple thought experiment and real life example demonstrate this fact. Think about what would happen to the national cost of healthcare if an inexpensive cure for cancer was found tomorrow. The academic answer would be that healthcare costs would decline significantly. All the costs associated with diagnostic tests, surgery, chemotherapy, radiation therapy, and other related treatments would disappear overnight. The real answer, however, is that healthcare costs would decline in the short term and then begin to increase again until the increase swamped any savings generated by no longer providing cancer services. The reason is that anything that extends life almost certainly causes an increase in healthcare costs over time (as well as increasing the costs of non-healthcare programs like Social Security). Only the mix of healthcare services that are utilized would change assuming overall access to healthcare remains unchanged. Because cancer would no longer end people’s life prematurely, more will have to be spent on the increased incidence of other chronic diseases associated with aging such as congestive heart failure and dementia. Perhaps the best real world example of this conundrum involves cigarette smoking. It is very clear that the significant reduction in the number of people in the US who smoke cigarettes (from 37% in 1970 to 22% in 2003; a 40% reduction in the number of smokers over that time) has had no impact on the rate of inflation in the nation’s healthcare costs. Despite this reality, the federal government still publishes reports on how much cigarette smoking is costing the nation in terms of healthcare expenditures.

Hopefully, there are better strategies being considered than the ones discussed here to “bend the healthcare cost curve”. If not, the light at the end of the tunnel is a train.

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Thoughts on the Healthcare State of the Union

Posted by Hal Andrews in For Consumers, Healthcare Policy, Healthcare Reform on September 9th, 2009

I will give the President his due – he is a magnificent speaker, on par with Clinton, Reagan, Kennedy and Lincoln as one of the greatest orators in American history. However, the task before the country is to reorganize almost 20% of the United States economy in 90 days to preserve our economic stability, so extraordinary oratory is not enough. With that, a few thoughts from a healthcare businessman, not a politician, on tonight’s speeches:

  • Is it possible for Republicans to be more tone deaf than to have a cardiac surgeon from Louisiana give a response to the President’s address? Maybe they thought Dr. Kevorkian would give a rebuttal. Is malpractice reform really the best Republican idea? At best, it is a 1% solution to the issues before us. As to rationing, it already happens, even if subtle ways. Cardiac surgery is not one of those subtleties – cardiac surgeons are not famous for performing bypasses on indigent patients.
  • President Obama spoke for almost an hour and talked almost exclusively about health insurance reform. Does it concern you to think that it takes an hour tonight, in addition to most of August, to talk about insurance reform? Insurance reform is the easy issue for the American citizens – perhaps no other issue in the history of polling is so heavily slanted as it is against the insurance industry. If it takes all year to address the low-hanging fruit, how will Congress ever understand healthcare delivery? For a guess, see the first bullet above.
  • As to the insurance reform suggestions, it sure sounds poll-tested – no caps on lifetime coverage (who pays for that?), no denials for pre-existing conditions, etc. Do Congress and the White House really think that the insurance companies will fail to pass the proposed taxes and incremental costs onto the policyholders?
  • We will discuss in much more detail next week our “747 concept”. For now, we beg the White House to expand their search for examples of what is right and replicable about healthcare value. Professor Nicholas John Spykman once said, “Geography is the most fundamental factor in the foreign policy of states because it is the most permanent. Ministers come and ministers go, even dictators die, but mountain ranges stand unperturbed.” The theory of geography as destiny applies to healthcare, too, as does demography. Intermountain Healthcare has done some really innovative things, and Brent James, M.D. is well-regarded, but much of Intermountain’s success is due to a largely homogenous, if not teetotalling, population.
  • When did the cost of health insurance for Congress become the benchmark for “affordable”? Is that compared to plans for union members?
  • The President firmly stated that the public option has to be self-sustaining from premiums? History suggests how that works – lower premiums=fewer benefits. The public example is CoverTN; the private examples are often fined by insurance regulators for misleading consumers on the amount of the benefit. History also suggests that government sponsored plans are subject to lobbying for increased benefits, which usually become unfunded mandates. If the public option has to pay for itself from premiums, and Congress establishes minimum benefits, then premiums increase, right?
  • In speaking on healthcare for an hour, the President mentioned value only once.
  • In speaking on healthcare for an hour, the President never mentioned individual behavior or personal responsibility, except for the proposal to require everyone to obtain healthcare coverage like auto liability coverage. Anyone notice that was one of the three times (the others being malpractice caps and no federal funding of abortion) that the Democratic side of the chamber sat on their hands?
  • The President called out Alabama as the example of a state in which a single insurer dominating a market, with the clear inference that less payer competition is worse for Americans. The Hospital Value Index™ study suggests just the opposite of what the President stated  – higher value markets are usually characterized by less competition on the payer side, whereas lower value markets are often characterized by more competition on the payer side.
  • Finally, the President finished with a predictable appeal to Senator Kennedy’s legacy. Two things come to mind: First, watching Speaker Pelosi glowing while hearing the stirring tribute to Senator Kennedy was ironic, given that she appears to have failed to grasp his legislative genius. History suggests that Senator Kennedy would take as much ground on healthcare reform as he could get this year, and return next year to fight for more. That stands in stark contrast to Speaker Pelosi’s stance that there is no bill without a public option. Second, as to the President’s remarks regarding Senator Kennedy’s appeal to morality, if we have learned anything in this country, isn’t it that morality as the foundation for government policy is built upon sand? Wasn’t morality the underlying justification for the idiocy regarding death panels? We might be better off if both parties left morality to the church, as the separation of church and state suggests.

So, now the hard work begins. The good news is that there are 747 hospitals that are exemplars for healthcare reform, and next week, Washington will know who they are.

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The Wheelchair Chronicles, Part II

Posted by Hal Andrews in For Consumers, Healthcare Reform, Value-Based Purchasing on August 25th, 2009

Is It Worth It?® – The $39,952.80 Wheelchair

As referenced in Part I, I was a bit of a Pollyana in thinking that dealing with United would be merely difficult. In hindsight, I was wrong.

Going in to the process, I had reviewed my policy, and I knew that the benefits were limited to $2,500. It was with great trepidation that I accompanied my wife and son to the wheelchair clinic on September 15, 2008.

As you will see in the Delivery Ticket, the company that delivered the wheelchair (referred to herein as MobilityCo) said that my estimated co-pay was $0. To say that I was surprised was an understatement, but I happily signed. You will also see that the total retail price for the wheelchair was $22,466. More on that later.

In October and November 2008, United denied the claims for the wheelchair because “under the plan, notification was required but not received” and, as a result, “the patient may not be billed for the declined amount”. This would appear to be contrary to the Authorization Letter from United stating that “you have met the notification requirement and no further action is needed at this time”.

 The attached and redacted Explanation of Benefits contains the heart-warming words “This is not a bill”. You will also see on page 1 that United instructed me to “Pay your provider(s) when they bill you” a total of $24,409.34, for three separate claim numbers. On page 3, you will see that United paid $2,500, which was what I had expected. In the column titled “Originally Billed by the Provider”, you will see that the total of the three claims comes to $39,952.80.

 So, for those keeping score at home, the tally is as follows:

  • Delivery Ticket Retail Price: $22,466
  • Per the December 2008 EOB, my portion after United pays its $2,500 benefit: $24,409.34
  • Charges billed to United: $39,952.80

 The mind reels as the process of deciphering the puzzle begins. How can it be that, after United has paid $2,500 toward a Delivery Ticket retail price of $22,466, I owe $24,409.34?

As this happened during the holidays, I decided to wait until someone from MobilityCo called me to discuss how I could owe them more money after United had paid $2,500 than I did before. Imagine my surprise when they did not call in January…or February.

In March, I called MobilityCo. I spoke with three different people before being directed to a man I will call John (not his real name). I told John that the EOB from United indicated that I owed about $24,000 and inquired whether I could set up a payment plan. You can imagine my shock when John told me that I did not owe anything.

I asked John if he was sure, and he said that he was. When I asked John who else I might owe, he assured me that I did not owe anyone, including WheelChair Professionals. I had not heard of WheelChair Professionals and inquired about them. John told me that they handled the claim with United. More on that later…

 A bit perplexed, I hung up and thought, fleetingly, that I had won the equivalent of the lottery, but I still had nagging doubts. So, I called John back a few days later. Once again, John told me that I did not owe anything. On this call, John mentioned that MobilityCo had been paid about $9,000 in December, and they were happy with that. I asked again about WheelChair Professionals and whether I might owe them, and John once again assured me that I did not.

I remained perplexed, so much so that I shared the story with a couple of friends. One of them suggested that I call John back and get a copy of the invoice. As you see, the Statement shows a zero balance.

At this point, I should mention that I had not said anything to my wife about this, from the October EOB to the receipt of the invoice from MobilityCo showing a zero balance. As you might imagine, it would be awkward for a healthcare executive to explain to a spouse that the family might owe $24,409 or $0 or something in between for a wheelchair. Someone in the industry should be able to figure that out, right?

Even so, after three conversations with John and receipt of the invoice showing a zero balance, I broached the subject with my wife over dinner on a Friday in March, telling her that MobilityCo had repeatedly assured me that we owed nothing. In hindsight, I spoke too soon.

The following Monday, John called my wife at home demanding payment for the wheelchair. John then called me, demanding immediate payment of $16,758.20. I reminded John that he had told me three times in the previous 15 days that I owed nothing. He responded that United had discovered that it overpaid WheelChair Professionals and had then recouped it. In turn, WheelChair Professionals had recouped the overpayment from MobilityCo. Notice that the EOB says United had paid $2,500, but WheelChair Professionals had initially received at least $16,000 more than that.

My suspicions aroused, I asked John who had actually bought the wheelchair –MobilityCo or WheelChair Professionals? John answered that he thought that WheelChair Professionals had, but WheelChair Professionals said that MobilityCo had to buy the chair. I asked how MobilityCo could be in the wheelchair business and not know whether or not they bought the wheelchair. John answered that MobilityCo had just begun working with WheelChair Professionals and had not figured out how everything worked. So, I asked John, did MobilityCo think that they had received payment of $9000 in December to order the wheelchair and deliver it to us? After a too-long silence, John admitted that they did. No wonder, I told him, that they were so happy – getting paid $9,000 to order a wheelchair and spend 2 hours delivering it sounds like a good business.

To date, MobilityCo has received $18,500 of the $19,258.20 that they billed me (after they billed me $0) – $2,500 from United, $2,000 from MDA, and $14,000 from me. I have been blessed to have the resources to pay 95% of the bill that I received, even though that bill is different from the Delivery Ticket that I signed or the EOB detailing what I owed or the charges that WheelChair Professionals submitted to United. I have also been blessed with a platform to describe the abuses or incompetence or both (your choice) of the system in the hopes that reform might really occur.

Is It Worth It? In an economic sense, clearly not. Perhaps my experience is a twisted version of the laws of supply and demand, but it is obviously not an example of value principles operating in a market. In an emotional sense, yes. The freedom that the wheelchair gives my son is priceless to him.

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The Wheelchair Chronicles Part I

Posted by Hal Andrews in For Consumers, Healthcare Reform, Value-Based Purchasing on August 18th, 2009

Author’s note: Almost everyone agrees that, in some manner, the healthcare system needs reform. I believe that transparency is a fundamental element in meaningful and lasting healthcare reform. The thesis of the following posts is that the system is so broken that it holds hostage even its own participants. My family has authorized and encouraged the level of personal detail contained in these posts in the hope that something good can come from our experience.

Part I: Why Value Matters to Me

My oldest son has Duchenne Muscular Dystrophy (DMD). DMD is a rare and serious form of muscular dystrophy that affects only boys. DMD causes muscle cells to be unable to regulate calcium correctly, which results in their calcification and destruction. Between the ages of 11-13, the decline in muscle strength intersects with an increase in weight at puberty, at which time the boys lose the strength to walk and become wheelchair bound.

My son was fortunate to continue walking until Memorial Day weekend of 2008, after which he began to use a manual wheelchair much of the time. At that point, I started the process of ordering him an electric wheelchair.

Knowing that your child will ultimately be wheelchair-bound triggers many thoughts and emotions, one of which is the dread for the inevitable fight with the insurance company. From the time that I learned of my son’s diagnosis in 2004 until he told us that he wanted the chair, I had health insurance coverage through several plans, including a self-funded plan, HealthSpring, Blue Cross of California, and United Healthcare. Except for the self-funded plan, no plan provided coverage for more than $2,500 for a wheelchair, for which the typical retail price is over $20,000.

At the time that we ordered the wheelchair, my coverage was through United, which I anticipated would make acquiring the wheelchair very difficult. In hindsight, I was overly optimistic.

Despite being in the healthcare business for almost two decades, it took me almost one year to discover what an electric wheelchair costs. The summary version, which will be explained in detail in the following posts, is that ordering the wheelchair through United cost over 100% more than if I had bought the wheelchair with cash. In other words, being uninsured and forced to pay out-of-pocket would have saved me 50% over what I paid after using all of United’s purchasing power.

I have argued repeatedly that the only legitimate (i.e., not Beltway math) way to pay for reform is to tax the employer-sponsored benefit. That, in turn, is the only likely positive unintended consequence of healthcare reform – the “shock and awe” that is currently being focused on partisan advertisements would instead become the fuel of a consumer revolution in healthcare to usher in a value-based healthcare economy. As you will see in what follows, I think that all of us would ultimately benefit.

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Healthcare Reform: Going to the Dogs?

Posted by Hal Andrews in For Consumers, Healthcare Financing, Healthcare Policy, Healthcare Reform on August 11th, 2009

As the August recess in Washington, D.C. began, the White House and the Democratic members of Congress decided to focus on “health insurance reform” instead of “healthcare reform”. This is, of course, a political calculation driven by fear that doing nothing is untenable heading into 2010 House races. It is easy to vilify health insurers, and insurance reform is certainly important. At the same time, it is simply one component, and probably not the most important.

The Wall Street Journal published an article on Saturday by Theodore Dalrymple, aka Anthony Daniels, M.D., titled Man vs. Mutt. As the title suggests, Mr. Dalrymple discusses the differences in the healthcare provided to humans and canines in Great Britain. In turn, Mr. Dalrymple wonders how a National Health Service for dogs might work. As is customary for Mr. Dalrymple, the commentary is subtle, witty, and incisive.

Mr. Dalrymple’s article reminded me of my basic objection to the discussion of healthcare reform, in America. Why have the American people not been asked the fundamental question that underpins the idea of reform, namely whether we, the people, believe that the right to health care is one of the unalienable rights with which we are born?

Of course, we have never had a national conversation about whether our pets are entitled to healthcare coverage. That would be absurd, right? So what does that system look like?

In my experience, pet owners understand the costs of owning a pet, including the costs of its medical care. The price for services is transparent, payment is due at the time of service, and pet insurance is available for catastrophes. Additionally, it is taken for granted that the care will be compassionate and professional. 

So, how can it be that there is price transparency for healthcare for dogs but not their owners? Why does the government have to mandate the measurement of patient satisfaction for humans? Why is health insurance called “insurance”, when it is fundamentally not insurance?

One more key difference between the systems - it would never occur to a pet owner that the government would pay for the costs of veterinary care for the beloved family pet. With a very few exceptions, people with pets take care of them, knowing that failure to do so could result in huge costs, both financially and emotionally.

Where is that personal responsibility for ourselves? Do we really expect a system that allows absolute freedom with little or no responsibility with respect to the decisions that we make about our health? Do we expect our neighbors to pay for the poor choices that we make for ourselves? Do we think that the federal government is the best arbiter of those decisions? Do we think that would violate our Constitutional right to privacy?

I would suggest that the role of the federal government in healthcare should be limited to providing solutions for those who simply cannot afford coverage for themselves, or for those who simply cannot help their DNA. In each case, the federal government could be the insurer of last resort, with insurance in the true sense of the word – coverage against events that are unforseeable or catastrophic.

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HELP Committee Mark-up of Affordable Health Choices Act

Posted by Editor in For Consumers, Healthcare Reform on July 14th, 2009

pdf   A Strong Public Option – The Community Health Insurance Option

pdf  Shared Responsibility of Employers

pdf   Affordable Health Care for all Americans

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Healthcare Reform: The New York Times vs. The New York Times

Posted by Hal Andrews in Healthcare Reform on July 6th, 2009

On occasion, I wonder if the editorial page of The New York Times believes that its audience is comprised of the demographic that the rest of the paper touts to advertisers. With respect to healthcare issues, the Op/Ed page is in stark contrast to its healthcare team of Reed Abelson, Sheryl Gay Stolberg, Robert Pear and Jackie Calmes.

Compare the following:

  • HELP Is on the Way, an opinion piece published today by Paul Krugman, the economist and Nobel Laureate. The crux of his assertion is that the Senate HELP Committee was unfairly derided in mid-June when it released it first draft proposal; all the Senate HELP Committee had to do was finish drafting the bill, and, magically, the cost of the bill was reduced to $597B. I quote:  “The budget office says that all this would cost $597 billion over the next decade. But that doesn’t include the cost of insuring the poor and near-poor, whom HELP suggests covering via an expansion of Medicaid (which is outside the committee’s jurisdiction). Add in the cost of this expansion, and we’re probably looking at between $1 trillion and $1.3 trillion.” Oh, right, $600B for health reform that does not cover the cost of insuring the poor and the near-poor, which I thought was the point for people like Krugman. Not to worry, “much of the expense can be offset with straightforward cost-saving measures, like ending Medicare overpayments to private health insurers and reining in spending on medical procedures with no demonstrated health benefits”. I am curious whether the “serious health economists” he references think his prescription is just a little too easy; I am sure what serious healthcare executives think.
  • In contrast, the recurring feature “The Work-Up” reflects a more serious view of the issues before the country. For example, read Jackie Colmes’ article Revisions to Health Bill Are Unveiled by Democrats, which more clearly and accurately describes the Congressional Budget Office’s Analysis of the HELP Bill, or her article Obama and Congress Clash on How to Pay for Health Care. Another example is Reed Abelson’s article Insured, but Bankrupted by Health Crises, which we have posted about before.

I am well aware of the historic difference between reporting and editorials, and I hope that the difference between the two is easily distinguishable in this blog. Even so, healthcare reform is too important for Nobel Prize winning economists to use those credentials to make glib policy arguments. Americans, and particularly the uninsured, deserve better.

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Why Value in Healthcare is Important

Posted by Hal Andrews in For Consumers, Healthcare Reform, Value-Based Purchasing on July 3rd, 2009

In the June 30 edition of The New York Times, Reed Abelson wrote an article entitled Insured, but Bankrupted by Health Crises. The article focused on the story of an individual forced into bankruptcy based on costs that were not reimbursed under his “limited benefit” policy.

As someone who lives daily on the precipice of medical bankruptcy, I know very well that “limited benefit” policies are just one example of the problem. Healthcare is personal to all of us, of course, and I know that everyone has at least one compelling example of how the healthcare system, broadly defined, has failed them.

In my case, my oldest child has Duchenne Muscular Dystrophy (DMD), the most severe form of the many muscular dystrophies. In most cases, DMD is an inherited condition, with the mother as a carrier of the genetic mutation. Boys have a 50-50% chance of inheriting the gene, and girls have a 50-50% chance of becoming a carrier.

DMD is terminal, with an average life expectancy of 19 or 20. To date, there is no cure, and the general progression results in boys being confined to a wheelchair by age 12 or 13. While the boys are “up”, as we refer to it, the only therapies are physical therapy and a steroid regimen to maintain muscle strength as long as possible. Once the boys are “down”, they are relegated to a wheelchair for the rest of their lives. Ultimately, they succumb to the atrophy of the heart or the lung.

You might think that the rarity of the condition would be accounted for in the actuarial tables, and that standard health insurance policies, as opposed to “limited benefit” policies, would cover DMD. Sadly, that is not the case. As a result, I live daily with the words of the Keith Urban song, “But for the grace of God go I”.

Since we learned of our son’s condition, we have been covered under five separate insurance plans: once by United, three times by Blue Cross Blue Shield plans, and once by HealthSpring. Of those five plans, none paid more than $2,500 toward an electric wheelchair, the list (i.e. chargemaster) price for which is north of $50,000. Of those five plans, one did not pay for any physical therapy, while the other four capped the number of visits between 20-24 per year. Of the four plans that provided physical therapy, all of them paid the provider a percentage of charges. Our provider charged $400 per hour. Since we have an HSA, we used our deductible very quickly.

So, why value and not just quality? For many things in healthcare, quality is a given, while for other things, it is “the only thing”. For us, physical therapy consisted of stretches and limited physical activity, my favorite example of which was Wii bowling. Is quality is a key factor to evaluate in playing the Wii? Is It Worth It® to pay $400 an hour to have your child play a Wii?

For you, maybe the relevant example is a blood draw, or an ankle x-ray, or a throat swab for strep – quality should be, and usually is, assumed in those examples. In such a case, the other elements of value, such as price, efficiency, convenience, access, and experience, should be the determining factors in choice. On the other hand, if you need brain surgery, quality is probably the dominant factor in your decision, and price, if you have insurance, the least.

The issue for America at this point in history is that there are relatively few brain surgeries and an abundance of blood draws and ankle x-rays and throat swabs. We can afford to pay premium prices for premium services, but we cannot and should not pay premium prices for commodities. Our goal is to help people figure out the difference between commodities and premium services, and everything in between.

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Healthcare Reform or BBRA 97 Redux?

Posted by Hal Andrews in Healthcare Policy, Healthcare Reform on July 2nd, 2009

As reported earlier today by Roll Call and as set forth in the CBO’s Estimate of the Cost of  Senate HELP Bill, the Congressional Budget Office has scored the cost of the Senate HELP Committee’s mark-up of the proposed Affordable Health Choices Act at $611B, a significant decrease from the $1T estimate on June 15.  

Based on the CBO’s letter, the “savings” result primarily from (a) reducing the threshold for subsidies for families and individuals under health insurance exchanges from 500% to 400% of the federal poverty level, and (b) reducing the amount of the subsidies for those who qualify.

What has not changed from the June 15 CBO estimate to today’s estimate is that a substantial number of Americans would remain uninsured. The most favorable year under the revised bill is 2016, when “only” 32M people would remain uninsured.

Most providers that I know continue to take a wait-and-see approach on this front. I believe that the continuing skepticism over the implementation of a public plan is likely to reinforce this stance. In turn, I continue to believe that the provider community remains at substantial risk, but not where they think.

There is just not a way to implement a true “public option” and remain budget neutral without taxing employer-sponsored healthcare, and even Senator Baucus has clearly indicated that he will not cross the unions on that issue. Assuming that the Senate Republicans and 2-3 moderate Democrats hold fast against a “public option” and that the CBO continues to provide unbiased analysis, it seems likely that the “public option” will fail, especially if the most robust bill leaves more than 30M people uninsured.

As such, it is very possible that comprehensive healthcare reform will fail but payment reforms will become law. Said another way, it appears to me that the providers may make real and permanent sacrifices, while other stakeholders will be minimally harmed.

Perhaps I am overly cynical, but I think it is a little too convenient that the CBO has scored the cost of the Senate HELP bill at precisely the amount of reimbursement cuts that President Obama has proposed for providers. For those who lived through BBRA 97, it will hurt twice as bad.

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Value-Based Purchasing and the House Tri-Committee Bill

Posted by Hal Andrews in Healthcare Policy, Healthcare Reform on June 27th, 2009

Unlike the Senate Finance Committee, whose ideas on Value-Based Purchasing (VBP) are very clear and consistently focused on payment incentives to providers, the House Tri-Committee takes a more roundabout way to integrating value concepts into healthcare reform. The House Tri-Committee draft broadly implements VBP concepts in three initiatives: health insurance, quality-based reductions in payment, and additional provider quality reporting initiatives.

VBP and Health Insurance Option. The House plan authorizes the Secretary of HHS to “utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option. The payment mechanisms and policies under this section may include patient-centered medical home and other care management payments, accountable care organizations, value-based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.”

In addition, the Secretary is required to “design and implement the payment mechanisms and policies under this section in a manner that…promotes care that is integrated, patient centered, quality, and efficient.” In the Data Advantage Hospital Value Index™, we evaluate care on the axes of quality, affordability, efficiency, and patient satisfaction.

The House plan also introduces the concept of value and quality based payments for Medicare Advantage (MA) plans. By ranking MA plans based on the quality and value that the MA plans deliver on behalf of their members, MA plans will effectively be forced to be more selective in establishing provider networks, which will in turn reinforce other value-based purchasing reforms.

Finally, the House plan explicitly encourages the public health insurance option to use  “high value services” through the implementation of “cost sharing and payment rates to encourage the use of services that promote health and value.”

Quality-Based Reductions in Payment. The House plan contains provisions to adjust payments to hospitals for excess readmissions beginning October 1, 2010. In addition, the House plan contemplates comprehensive payment reform, i.e. bundling, for post-acute care service providers (SNF, LTAC, IRF, hospital-based outpatient rehabilitation facilities and home health)

Additional Provider Quality Initiatives. The House plan contains numerous initiatives to increase quality measurement and reporting, including:

  • Integration of physician quality reporting and EHR reporting
  • New requirements for ASCs to submit cost reports and data on quality and health care associated infections
  • Establishment of National Priorities for Performance Improvement – goal is to develop national consensus standard for measuring the performance and improvement of population health or of institutional providers of services, physicians and other practitioners

Under the National Priorities for Performance Improvement, the AHRQ is instructed to enter into agreements with “qualified entities” to develop quality measures for delivery of health care services. Among other things, the quality measures must be designed to assess patient experience and patient engagement, the safety, effectiveness and timeliness of care, and efficiency and resource use. In other words, what the Hospital Value Index™ measures.

Another proposal is to establish the Center for Quality Improvement headed by the Director of AHRQ. Until the Center is fully operational, the Director of the AHRQ is instructed to focus in on healthcare-associated infections, including nursing homes and outpatient settings; hospital and outpatient perioperative safety; improved quality in hospital ED, especially in identification of sepsis.

Finally, the House plan proposes the establishment of an Assistant Secretary for Health Information to collect, report and publish statistics on key health indicators.

In summary, the House Tri-Committee plan proposes to introduce VBP concepts in both health insurance coverage and healthcare services. While not as obvious as the Senate Finance Committee initiatives, the House initiatives may effectively be more far-reaching.

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