Contributor: Carolyn McMeekin
Topic: Healthcare reform, exchanges
Once upon a time in America, a worker expected to:
- Stay at the same company until he (usually it was not a woman) received a gold watch after 25 years of service
- Receive a pension upon retirement
- Be guaranteed employer-sponsored health insurance, which reimbursed physicians for services rendered and today is referred to as indemnity insurance.
Over time, many things about the above-scenario have changed. Women are no longer looked at askance for working; very few people stay with the same company for 25 years; pensions have morphed into defined contribution 401K plans; and indemnity insurance has mostly given way to managed care.
The constant: Employer-sponsored health insurance. But for how long?
A report commissioned by Congressional Republicans and released last week noted that consultants have been telling some large employers they could save money in 2014 by dropping health insurance for their employees and, instead, directing them into insurance exchanges. Further, The Wall Street Journal reported that consultant Mercer told Southwest Airlines last year that its healthcare costs under reform would total $414 million, while dropping coverage instead would cost it $111 million in penalties.
Putting aside for a moment the politics surrounding the healthcare reform package, one does have to wonder whether all employers will continue to pay for health insurance. Sure, insurance is a benefit that does attract and retain desired workers. But so were guaranteed pensions.
Most large employers insist they will continue to provide insurance once exchanges are an option in 2014, the Journal article notes. But what about those companies with lower-paid workers, where retention or skills are not as much of an issue? Are they more likely to shift workers to exchanges? Some consultants say they will because, while many smaller companies have received insurance tax credits that have decreased their health insurance costs, others that offer bare-bones or no health insurance could pay more if they increase coverage in 2014.
Reaction to last week’s report, of course, featured partisan responses, with Republicans reiterating their position that the reform law will increase costs and lead employers to drop insurance while Democrats called the report misleading and conveniently bereft of responses from businesses that said the law would not increase costs.
And so as we watch and wait and process the warnings from both sides, we can be sure of this: The only constant, really, is change. And it is not beyond the realm of possibility that employer-sponsored health insurance will go the way of pensions and gold watches.
Posted on: 4/30/2012 10:55:22 AM
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Contributor: Laura Beerman
Topic: Medicare, hospitals
As with hotels, having “heads in beds” is a central way to gauge hospital revenue. But the game is changing under healthcare reform. Medicare has stopped reimbursing for select preventable medical errors and is now turning its attention to preventable readmissions. With the advent of accountable care organizations and payment bundling, hospitals are starting to jump on the cost-control bandwagon—partnering with physicians and commercial payers as well as with CMS to generate shared savings by delivering better care. Best of all, there is evidence that these strategies are working.
They are also generating a new category of healthcare quality measures: the all-cause readmission rate. Prior to 2010, CMS began measuring readmission rates in its Medicare fee-for-service program. For 2011, the National Committee for Quality Assurance also added an all-cause readmission measure to its HEDIS measures, an evolving set of metrics that is used to accredit health plans, physicians and medical groups in the United States. And in April 2012, the National Quality Forum endorsed both of these metrics. A study published the same month, however, calls such measures into question.
Researchers at the University of California-San Francisco Medical Center reported that the all-cause measure inflated readmission rates by 25 percent in their study of 320 spinal surgery patients. In other words, one of every four cases was improperly measured as a readmission—either because it was misclassified or had actually been the result of a planned procedure. The dollar value attached to those misclassifications was more than $1 million.
These results follow other studies that criticize the accuracy of the measure. Granted, these concerns are being voiced by the very stakeholders (hospitals and health systems) that will be held accountable for preventable readmissions. But the criticism also comes at a time when hospitals will face penalties for high readmission rates.
There is no question that preventable readmissions play a role in the skyrocketing cost of healthcare, as much as $15 billion per year for Medicare beneficiaries alone by some estimates.. Keeping patients out of the hospital will be good business—and better treatment—under healthcare reform. This question is how we get there.
And whether there will be a mint on the pillow when we do.
Posted on: 4/27/2012 8:58:11 AM
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The original fear of accountable care organizations was that they would turn into monoliths, with healthcare within a particular metro area dominated by two or three companies, each one a Gordian knot of payers, providers and hospital facilities. What we are seeing now are smaller, physician-led ACOs dotting the country, more grass-roots than trickle down. With many health systems shunning CMS-approved ACO projects, does this mean the end of accountable care as envisioned by the Affordable Care Act?
The conventional thinking had been that for ACOs to take off, hospitals must get on board. ACOs are collections of medical providers paid to care for a group of patients, instead of being reimbursed for each service provided to each patient. They share in savings if they reduce the cost of care and improve quality. A year ago, when the early draft rules for accountable care organizations started to emerge, there was a lot of hand-wringing about what hospitals would think, and how the rules were too onerous. Later in the fall, when the more relaxed final rules were issued, hospitals in general still didn’t bite.
There has been the presumption that this rejection by hospitals spelled doom for the ACO model, because hospitals were viewed as the natural leaders for these endeavors. They had the organization, the capital, the payer arrangements, the infrastructure, the branding. But hospitals were also adverse to risk, and some health systems have had a tough time convincing physicians that the hospital has their best interests in mind.
In Florida, for instance, while health systems such as BayCare in Tampa, Orlando Health and Baptist Health South Florida are employing physicians to lay the foundation for ACOs, physician groups are leading the charge into the model, reflecting a national trend. There are three Shared Savings ACOs in the Sunshine State (Florida Physicians Trust in Winter Park, Primary Partners in Central Florida, and West Florida ACO), all comprised of independent physicians. The state’s lone Pioneer ACO (JSA Healthcare in Tampa) is an independent physician group as well. Health systems in Florida, on the other hand, have been largely quiet on the matter.
A practice like JSA already had significant experience with electronic medical records and Medicare Advantage going in, both useful for getting into the ACO model. While hospitals may be reticent about risk, physician groups that have already contracted with, and reaped the rewards of, Medicare Advantage plans see opportunity. Particularly in south Florida, where per-member, per-month reimbursement for managed Medicare is extremely generous, practices have made a lot of money by taking on some risk and demonstrating that they meet quality and efficiency standards.
EMR and MA experience is good, but the catalyst for physician-led ACOs may be distrust between physicians and large health systems. The efforts by large health systems throughout the state to get more physicians on board have been met with suspicion by the medical community. Physicians are extremely skeptical of health system bureaucracy, especially in states like Florida and Texas, where powerful physician lobbies foster an independent streak in the medical community. Instead of hooking up with hospitals, many practices are banding together to form single-specialty “super-groups.” By staying independent of hospitals, these super-groups can be perpetual free agents, with hospitals vying for their services. This dynamic is particularly true in competitive hospital environments like Dallas, Tampa, Miami and Houston.
This is not to say that health system s have entirely eschewed the ACO model; changing reimbursement models dictate more coordination of providers. Advocate Health Care in Chicago, Banner Health in Phoenix, and OhioHealth in Columbus are just a few of the major health systems that are heavily invested in an ACO or something very similar. But these hospital-led ACOs, often confined to highly consolidated markets, may prove to be the exception to the rule.
Which brings us to the question: why did we think that health systems were going to be the tentpole for the ACO model? Expensive hospital stays are what you want to avoid if you are employing a shared savings model. As commercial health plans such as Aetna, UnitedHealth and WellPoint have recently demonstrated, if you want to coordinate care and efficiency, the incentives need to be directed to the physician. Shifts in the standard reimbursement model toward greater coordination of care, with incentives for cost efficiency and higher quality, are here to stay, regardless of the Supreme Court’s ruling on Obamacare. Indeed, the larger health systems may be waiting for a ruling before going whole hog into ACOs. But for innovation in the ACO, and a clue to where the model is moving, keep an eye on physician groups.
Posted on: 4/25/2012 9:44:46 AM
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Looking for doubts about the viability of medical homes? Check out the February 2012 issue of The American Journal of Managed Car
e. Looking for affirmation of medical homes? Check out the March 2012 issue of The American Journal of Managed Care
Nobody said that change was going to be easy. The U.S. healthcare system is a big ship to turn around, and both articles in AJMC make valid points about medical homes, which have been billed as the best approach to delivering better healthcare. Medical homes are a way of organizing care so that a primary-care physician works with a team of professionals to coordinate a patient’s care. The team can include a nurse practitioner, dietitian, social worker, pharmacist and specialists, with all having easy access to medical records and a system set up to reinforce the best treatment for the chronically ill.
Just about every state has some kind of medical home pilot underway, sponsored by commercial insurers, Medicaid programs, physician groups and others, and some of these have been around for a number of years. So it seems logical that enough data would be available to determine whether these programs are saving money.
But according to the article published in the February AJMC, few studies over the past decade provided rigorous quantitative evaluation of medical homes. Out of 498 studies done from January 2000 to September 2010, only 14 were deemed adequate for review by the AJMC authors. In order to be included in the study, the evaluations had to examine programs that included at least three of five key patient-centered medical home components, and they had to include a quantitative study of outcomes.
The conclusion of researchers was that much more rigorous evaluations are needed to definitively assess medical homes.
A much more optimistic assessment appeared in AJMC a month later, though, in an evaluation of Geisinger Health System’s medical home program, called the ProvenHealth Navigator. This study looked at 43 primary-care clinics converted into ProvenHealth Navigator sites between 2006 and 2010. It found that total cumulative cost savings were 7.1 percent when accounting for effects from prescription drug coverage, and savings were 4.3 percent using the model that does not include prescription drug coverage interaction effects. The study indicated that the Geisinger program had not yet exceeded the break-even point in return on investment. But its conclusion was that patient-centered medical homes “can lead to significant and sustainable cost savings over time.”
The less-optimistic AJMC piece from February wisely points out that “a number of promising healthcare interventions have been shown not to actually work when evaluated using rigorous methods.” It gives the example of how telephonic disease management was found to be ineffective in randomized trials, but these trials pointed the way to better, more-focused disease management programs with in-person contact. Similarly, programs like Geisinger’s could point the way to medical homes that start repairing our fragmented, inefficient healthcare system.
Posted on: 4/19/2012 10:26:26 AM
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2012 may well be the year that the pharmacy benefits management business takes a dramatic turn into new territory. Five years ago, small health-plan-owned PBMs such as Regence Rx and FutureScripts were part of a crowded field of competitors.
Today, it’s not so crowded, particularly with the April 18 announcement that SXC Health Solutions plans to purchase competitor Catalyst Rx for $4.4 billion. The merger of the two midsize PBMs would create a company with some $13 billion in annual revenue and annual script volume of some 200 million.
Over the past few months, companies like SXC, Catalyst, Prime Therapeutics, MedImpact and others have snagged significant contracts (although they’ve lost their share, too) because of the upheaval in the market, namely the newly minted merger of Express Scripts and Medco.
That merger, which federal regulators approved in early April 2012, creates a mega PBM with a 1.73-billion prescription claim volume, versus 775 million for its next-biggest competitor, CVS Caremark. Two of the three federal regulators who signed off on the ESI/Medco deal said they believed there was enough competition to ease anti-trust concerns.
That’s quite possibly true, but the landscape is changing dramatically. Within a year, the market may be divided into three or four big players: ESI/Medco, competing for large-group and health plan business; Prime Therapeutics, representing most of the Blue Cross Blue Shield covered lives; SXC/Catalyst, specializing in fee-for-service Medicaid; and CVS Caremark, competing for all of the above, but also the only one of the group with its own pharmacy chain.
Each of the PBMs essentially does the same work as the others: assembling a pharmacy network, negotiating with manufacturers for the best prices on drugs, and trying to keep consumers compliant with their drugs. But there have been distinguishing factors, such as SXC’s technology prowess, that set the players apart from one another.
With every public-sector group and private business scraping for all the savings they can get, we can expect an active PBM procurement season and more contract changes. In an industry led by the Big 2 rather than the Big 3, the-everybody-else category also just got smaller
Posted on: 4/18/2012 4:38:36 PM
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