Contributer: Sheri Sellmeyer
Topic: State employee health plans

The biggest perk of state employment has always been having great benefits; many a professional has opted for a government job not for stellar pay, but for excellent health insurance and the promise of a government pension.

But that’s coming to a halt as states tighten benefit options through high deductibles, greater cost sharing, and health savings accounts. They’re also turning to wellness programs and aggressive disease management initiatives to lower healthcare costs.

The government in Nevada (ground zero for the recession) has instituted drastic benefit design changes in recent years because of increases in medical costs and the state’s budget problems. Nevada’s state employee health plan phased out its traditional PPO and switched to a high-deductible PPO ($3,800 for families). Massachusetts gave its state workers a major nudge toward cheaper, narrow-network plans by offering them a three-month premium holiday if they picked one of six limited network plans; 31 percent took the state up on that cheaper option. Connecticut also used the carrot-and-stick approach to get its state workers into a wellness program. Those who did not enroll in the Health Enhancement Program must pay an additional $100 per month in premiums and annual in-network medical deductible of up to $1,400 per family, while those who chose to participate have no deductible and pay lower costs for drugs. Almost all chose the latter.

California, North Carolina, and Georgia are among the states pushing wellness and disease management through various initiatives. California’s California Public Employees' Retirement System (CalPERS) launched an accountable care organization pilot in 2010, partnering with Blue Shield of California, Catholic Healthcare West and Hill Physicians Medical Group to better coordinate care for 41,0000 members in three counties. According to CalPERS, in just 10 months the pilot helped reduce the number of patients hospitalized for 20 days or more by 50 percent, and helped cut hospital readmissions by 17 percent, saving the state $15.5 million in healthcare costs. Another CalPERS vendor, Kaiser Foundation Health Plan, launched a wellness pilot program in 2010 for select state workers after determining that 74 percent of its CalPERS members were overweight, compared to the national average of 68 percent.

North Carolina, which has run a successful medical home program for its Medicaid population, is now offering that program to state employees in certain counties, with plans to have it statewide within a couple of years. Georgia is offering its state employees a significantly lower premium increase if they participate in a wellness program that requires them to answer monthly surveys about their activities, and get annual screenings for body mass, blood pressure, glucose and cholesterol. It doesn’t stop there: the next year, employees must show better results on the screenings or be taking steps to improve their health in order to qualify for the wellness discount.

The recession has not been kind to state government; as businesses bite the dust, so do the state taxes those businesses pay. Like other large employers, state governments are desperate to lower healthcare costs. That opens up the door for health plans and pharma to partner with cash-strapped states as they work with employees to whittle down their waist lines and manage their meds.

Contributor: April Wortham
Topic: Accountable care organizations

 Even as accountable care organizations sprout up around the country, plenty of questions remain. What will ACOs look like? Who will manage them? How much cost savings, if any, will they produce? Perhaps the only thing about ACOs that everybody can agree on is they must be provider-driven.

Well, almost everybody.

Wayne Smith, president and CEO of Nashville, Tenn.-based Community Health Systems, raised eyebrows earlier this month when he told a hometown crowd of healthcare industry executives that support for ACOs is “dying out” and the model is “more of an insurance product than anything.”

Smith argued it’s the insurance companies that like ACOs, because they’re essentially another form of capitation. Providers like CHS, with its 133 hospitals in 29 states, have to be very careful about taking on that kind of financial risk, he said.

“As far as I know, we don’t all employ actuaries,” Smith said.

The “we” in that statement is Nashville’s investor-owned healthcare industry. More than 250 healthcare companies call the city home, including 17 publicly traded companies with combined employment of nearly 390,000 and more than $60 billion in global revenue (Nashville Health Care Council). More than 430 acute-care hospitals nationwide are owned, operated or leased by Nashville-based companies, including the granddaddy of them all: HCA.

That’s not to say that every for-profit health system shares Smith’s views on ACOs. But consider this: Nearly all of the ACOs that have been announced or launched to date involve nonprofit health systems or academic medical centers with large, integrated physician groups. (A notable exception is Detroit Medical Center, a Pioneer ACO owned by Nashville-based Vanguard Health Systems.) ACOs also are location-based, encompassing a patient population that receives healthcare services from a defined group of providers hailing from a given geographic area.

Investor-owned hospitals, on the other hand, are sprinkled throughout the country and oftentimes are the sole provider in the community where they are located. And while they share a corporate structure with collective administrative and purchasing power, that doesn’t necessarily translate to common clinical guidelines and coordination of care. Both are crucial elements of new payment models coming down the pike that base compensation on quality of patient care, not quantity of services provided.

So perhaps it should come as no surprise that CHS is pulling together eight of its hospitals in northeast Pennsylvania in a new network called Commonwealth Health. Affiliates of the network include InterMountain Medical Group and Physicians Health Alliance, two multispecialty groups with more than 100 physicians, as well as five home health and hospice agencies. CHS has been mum on the details, but the move is clearly designed to help the hospitals compete with nonprofit Geisinger Health System, whose integrated delivery system is considered a model for ACOs.

In the end, CHS’ top leadership may not agree with ACOs, but the company appears to be positioning itself and its hospitals to play along. Other investor-owned health systems likely will follow suit. They’ll be forced to if they want to survive in the post-reform era.

But we all know the most successful movements start from the inside, with participants who believe in the cause. And driving providers to participate in ACOs is not the same as creating ACOs that are provider-driven. Just ask the nation’s second-largest hospital company.

 

Contributer: Paula Wade
Topic: Primary care reimbursement

It was inevitable, really: insurance giant WellPoint has announced it will raise rates for primary-care providers by 10 percent and add a reimbursement code so that doctors can be paid for creating and maintaining care plans for their patients with chronic disease. Just the first step, we’re told, in a new contracting-for-care-management strategy that hopes to transition large numbers of PCPs to do medical home-style care coordination for certain types of patients.

Aetna has announced much the same thing, adding $2 to $3 to monthly physician fees for primary-care doctors whose practices are certified as patient-centered medical homes and provide care coordination, provision for 24-hour patient access, and responsibility for a patient panel. That move makes sense for Aetna, which is a second-tier player in most markets and must keep providers happy.

But now WellPoint, with its unassailably dominant market position and correspondingly low provider reimbursement rates, felt it had to offer primary- care physicians higher pay across its vast network to speed the evolution of primary-care practices away from fee-for-service.

Why spend that kind of money to raise PCP pay in areas where your Blue plans have such huge market share?

1. Beginning in 2014, health plans won’t be able to deny coverage to people just because they have diabetes or price-out unhealthy groups by charging huge premiums based on the group’s health risk profile. That inability to evade risk means that health plans will have to truly manage that risk, and a lot of that management takes place most effectively in the PCP’s office.
2. Most PCPs do not have the IT and information tools they need or the operational capacity to become “medical home”-style practitioners, and building that capacity takes time, money, and the prospect of real reward for the trouble. WellPoint can’t possibly negotiate “medical home” deals with its entire network, so this strategy attempts to create “enhanced fee-for-service” as a step toward the medical home model.
3. WellPoint has done the math, and knows both the downside risk of inaction and the upside potential (public statements are touting 20 percent savings in overall medical cost). PCP spending makes up only about 6 to 8 percent of what WellPoint spends now on medical care, so adding ten percent to that pay is not even a decent gratuity.

So what does this all mean? It means that all the medical home pilot programs just got the ultimate validation. It also means that even if the Accountable Care Act is overturned or killed by its political enemies in the future, primary healthcare has evolved on a large enough scale that strict fee-for-service reimbursement will never again be the norm.

It means that PCPs will expect to be paid for providing care coordination, and that more of them will be willing to invest in the systems and personnel to make real coordination possible. It means pharmacy compliance will be checked as a matter of routine, and utilization will go up. It means plans will be able to do even more comparative effectiveness research to measure real-world outcomes of pharmaceuticals and treatments.

It means the genie is out of the bottle.

Contributor: Laura Beerman
Topic: Health plans

On Jan. 12, 2012, Stephen Colbert of Comedy Central’s The Colbert Report announced his possible candidacy for the presidency in South Carolina. But first, he had to do one very important thing: transfer control of his super PAC to Jon Stewart.
Perhaps he was taking a page out of UnitedHealth Group’s playbook.

In its bid to dominate healthcare as we know it—and as we may cease to recognize it come 2014—UnitedHealth Group now consists of two “market-facing business platforms”: UnitedHealthcare, the nation’s largest insurer based on revenue, and Optum, its technology-driven health services business.

Six months ago, in response to UnitedHealth’s second-quarter 2011 earnings call, Forbes analyst John Graham remarked: “Much of Optum's revenue comes from other payers, that is, UNH's [UnitedHealthcare] competitors. For how long will they be happy to pay their competitor to feed its fastest-growing business?”

That growth continues. In its fourth-quarter earnings call on Jan. 19, UnitedHealth Group CEO Stephen J. Helmsley reported 2011 revenue growth of 21 percent for Optum and 8 percent for UnitedHealthcare, stating: “What we hope you are sensing is that UnitedHealthcare and Optum are distinct yet powerfully complementary business platforms” followed by the not-so-distinct things that they do share, including “common relationships enterprise-wide, from regulators to care providers, the government, and other benefit sponsors in pharma, both as customer and as supplier.”

Helmsley continued, “UnitedHealthcare is one of the most prolific health data producers in the country. Optum is expert at translating data into information that can be used to analyze costs and performance, compare clinical effectiveness, execute predictive modeling and provide decision-making information to consumers, care providers, other payers and the government.”

The amassing of data by the right hand complemented by the left hand’s expertise at translating such data for critical financial decisions takes us back to the original question: Just how high is the firewall between UnitedHealthcare and Optum? Some of UnitedHealth’s competitors are asking the same question and making big moves regardless of the answer.

After UnitedHealth subsidiary OptumHealth announced plans to acquire Monarch HealthCare—a large, influential medical group in Los Angeles and Orange counties—two Blue plans wasted little time responding. Anthem Blue Cross decided it was time to end its accountable care organization with Monarch, while Blue Shield of California decided to terminate its HMO contract with Monarch altogether.

It is clear that neither competitor wants to take its chances with the UnitedHealth-Optum bro-mance. After all, Michelangelo showed us more than five centuries ago just how much is riding on a tiny separation between a right hand and a left.

 

Contributer: Joel Peyton
Topic: Medicare

Here’s a question for Medicare: When will the Centers for Medicare and Medicaid Services (CMS) throw away the old hammer and chisel of fee for service and exchange them for some of the modern tools that most Medicare Advantage (MA) plans have been using for years to improve the health of the chronically ill?

Those include nurse case managers and medication therapy management (not exactly rocket science). But original Medicare seems stuck in the Stone Age when it comes to managing care.

A new study released by Health Affairs highlights these differences and provides further evidence that managed care is more effective than original Medicare for the chronically ill. The study analyzed 36,000 MA enrollees on an XLHealth Corporation chronic special needs plan in 2010. The enrollees had at least one diabetic diagnosis code on a hospital or physician claim, had been on the plan for at least 12 months, and were residents of Arkansas, Georgia, Missouri, Texas or South Carolina.

The study compared XLHealth member data with 2009 fee-for-service (FFS) Medicare member data (2010 FFS data wasn’t available). It determined that diabetic XLHealth Chronic Condition Special Needs Plans members had 19 percent less inpatient hospitalization and 7 percent more primary-care visits compared to FFS Medicare patients.

The results are not surprising since most MA carriers have used disease management programs, medication therapy management programs, and case managers for years. These tools can target and track the patients that need the most attention. Targeted member interventions by plans can result in better drug adherence, fewer adverse drug interactions and more primary care, which in turn results in fewer emergency room or hospital visits. Original Medicare, on the other hand, generally does not have any type of intervention programs in place for chronically ill members except for several demonstration projects that are limited in size and scope.

MA plans have an added incentive to improve healthcare quality among members because of the Star Ratings system, which provides reimbursement bonuses to plans that receive good overall quality ratings. It may be that innovative payment model arrangements such as bundled payments and accountable care organizations can help inject much needed reform in the outdated FFS Medicare system.

Perhaps the best thing for CMS to do, in the light of more demand for better healthcare quality and lower cost, is to study how MA plans like XLHealth have helped improve the health of chronically ill members and reduced the number of expensive medical claims. Then maybe original Medicare can finally emerge from the Stone Age.