Contributer: Paula Wade
Topic: Healthcare reform

What a difference two years makes. Remember all the fearful tales of “socialized healthcare” under the Accountable Care Act, and how it would destroy the healthcare system?

Perhaps it’s time to calmly observe that the health insurance industry is enjoying record profits, with shares of the major carriers all rated “Buy.” The reason? Health insurers, and the investment community, have figured out that they’re going to make out like bandits from healthcare reform.

Sure, they don’t like the Medical Loss Ratio rule (the one that requires them to spend 80 to 85 cents of the premium dollar on healthcare, wellness and allowed expenses). They don’t like the idea of having to insure people regardless of their health history. But they do like the idea of as many as 16 million more commercial customers. Hospitals love the idea of having more paying customers and less cost-shifting. Pharma likes the notion of near-universal coverage as well, and for good reason. All those new paying patients also make for a likely shortage of physicians, and all of a sudden doctors are being courted as never before.

In short, the American healthcare industry – blessed as it is with smart capitalists – has figured out how money can be made in this new paradigm, and has adapted.

In the two years since the ACA’s passage, healthcare providers across the country have invested millions, along with taxpayers’ millions, in electronic health information management and in new mechanisms for delivering cost-effective, quality care. Physicians, pressed to modernize their operations, have merged or affiliated with larger groups. Hospitals and health systems have consolidated and hired physicians and affiliated with groups. And while this provider concentration is troubling in some ways, it may have been inevitable. Insurers have jumped into innovative contracting and payment models, including medical homes and nascent ACOs. All in preparation for 2014.

Or not. So what happens if the U.S. Supreme Court overturns the coverage mandate in the Accountable Care Act?

The coverage mandate (the part of the ACA most vulnerable to a constitutional challenge) is arguably the critical piece of the ACA that assures that healthy people buy into the “risk pool” and make the goal of near-universal healthcare coverage actuarially tenable. Without the requirement, and if the other portions of the law were allowed to stand, healthy people could avoid buying insurance until they got sick, and the insurance system would collapse.

If that was the case, our notoriously fractious federal government would have to figure out what pieces of the ACA will survive or not, and quickly. (Keep in mind that those who want to “repeal and replace” the ACA have never said what they’d replace it with). The healthcare system, which accounts for roughly 20 percent of the gross domestic product, would be in limbo until Washington figures out what to do. Return to underwriting? Allow insurers to exclude the sick from coverage? Reinstate coverage limits?

Meanwhile, there will be nothing to stop the accelerating trend of eroding commercial health coverage by employers.

And what will happen to the dramatic transformation of healthcare delivery that has been fueled by the ACA? If big insurers like UnitedHealth and WellPoint no longer have to worry about having to cover everyone within an 80 percent MLR, are they really going to invest the time, money and energy into better primary care and management of chronic disease? Probably not. Underwriting, coverage limits and pricing are surer ways to market-pleasing profits.

Without the promise of near-universal coverage that includes people with pre-existing illness, does that shrink the potential market for prescription drugs under development now? Probably.

So as the ACA draws toward its second birthday, we’ll all get to see it through the Terrible Twos or just watch it get strangled in the cradle. Somehow, I think I know which I’d prefer.

Contributor: Paula Wade
Topic: Medical Loss Ratio

Let’s give the healthcare industry some credit here: these guys know how to make a buck. A year after all the doomsday rhetoric about healthcare reform, a look at the stock tables/reserve levels of the major US insurers shows they’re doing very well, thanks. Stock analysts are upgrading their 2011 forecasts for the sector, despite the dreaded medical loss ratio (MLR) limits that became effective January 1.

Understandably, the insurance industry opposed the idea that at least 80 percent of healthcare premiums should be spent providing healthcare or promoting wellness – some health insurance products, after all, have MLRs of 60 percent or less. But without that assurance, the health reform bill would have been mandating the purchase of what Southerners call “a pig in a poke.”

And so, the industry adjusts. The fears that some insurers would aggressively under-price have turned out to be largely unfounded. Brokers’ commissions have been adjusted in ways that seem rational. All sorts of things are construed as expense toward wellness promotion and coordination. And the MLR targets (I once heard someone joke that MLR stood for “margins look ridiculous”) are being called “manageable” by the CEOs of the major firms. In the end, those products that for actuarial reasons need to be priced with a margin greater than 80 percent will end up giving out refunds, and insurers will have to take a hard look at their SG&A costs – which is not entirely a bad thing.

Nevertheless, insurance and brokers’ groups are pushing a bill in Congress to exempt broker commissions from the MLR calculus entirely, effectively setting the MLR threshold closer to .75 – a much easier standard to meet – and removing health plans’ incentive to cut back on broker commissions. At the same time, five states are petitioning for a waiver of the MLR requirement, arguing that adhering to the limits would disrupt their insurance markets.

Sure, change is disruptive. But the sky isn’t falling.
 

Contributor: Sheri Sellmeyer
Topic: Accountable Care Organizations

The joke around healthcare conferences these days is that accountable care organizations are like unicorns – everyone has heard of them, but nobody has seen one. Almost every week we hear of a new ACO being formed, as physicians and hospitals team up to prepare for this new reimbursement model, scheduled to debut in 2012. The goal of ACOs is to better coordinate care for an assigned group of patients, and reward hospitals and physicians for doing so. It sounds sort of like HMOs, except that insurers aren’t necessarily in the mix, and at least initially, ACOs aren’t taking on full risk. ACOs must include at least one hospital, 50 physicians and 5,000 Medicare fee-for-service beneficiaries, but beyond that, the concept gets fairly fuzzy.

The Centers for Medicare & Medicaid Services is scheduled to issue ACO rules any day now, which presumably will give the organizations clear guidelines on structure and operations. But in the meantime, look no further than several integrated healthcare systems to see what the federal government has in mind: Geisinger Health System, the Mayo Clinic, the Cleveland Clinic, Kaiser Permanente and Scott & White Healthcare. These are provider-owned systems touted for coordinating care across specialties and running more efficient operations than other hospitals. They employ their own physicians, have electronic medical records, and are already deeply involved in comparative effectiveness research and quality initiatives. In the case of Geisinger, Kaiser and Scott & White, they also own their own health plans. These are the players that will have the advantage when ACOs get underway – although judging from the number of ACO wannabees, they will have lots of competition.
 


 

Contributor: Sheri Sellmeyer
Topic: Electronic Medical Records

One piece of the healthcare reform law that Republicans and Democrats agree on is the need for computerized health records—to give doctors better, more complete information and reduce the chance of medical errors. In my lifetime (a relatively healthy one), I’ve seen at least a dozen doctors, had two surgeries, visited a few specialists and, judging by the box of expired meds in my bathroom closet, had scores of prescriptions. But not a single healthcare provider I’ve visited could give you more than a fragment of my medical history, because my records are scattered across Kansas, Texas, Germany, North Carolina and Tennessee.

Not so for my new cats, Paco and Taco. They have their own electronic medical records set up through our veterinarian. When I call up Paco’s records, I see that he’s overdue for his parasite prevention meds, intestinal parasite screening and deworming #3, and his semi-annual health maintenance checkup should be this month. Also, thanks to Paco’s EMR, I can map out the next few years’ appointments: I know that he will need an EKG and his blood pressure checked in August 2017 (by that time he will be 7 – entering kitty middle age).

My husband thinks this is ridiculous. (“Enough! We don’t go for six-month checkups. Why should the cats?”) I won’t argue the merits of giving a cat an EKG, and I know that my veterinarian’s goal, besides keeping me up to speed on Paco and Taco, is to upsell me additional services. Therein lies the real carrot for moving healthcare providers to digital patient records—giving them a financial incentive to share information. New York Times writer Steve Lohr notes that doctors and hospitals see value in holding patients’ information – “a patient is, among other things, a financial asset.” He quotes Dr. David Blumenthal, the Obama administration’s national coordinator for health information technology, who says that insurers will have to pay for providers to share information or penalize them if they don’t. “Information exchange has to be a business goal, rather than a competitive threat, for this to work.”

Besides the business goal, insurers should pitch what’s in the best interest of all the stakeholders—a system that empowers doctors and patients to make better choices and generates data across populations to analyze what treatments are most effective. Just like we do for Taco and Paco. 


 

Contributor: Jane DuBose
Topic: Medical Homes

Recently, the National Committe for Quality Assurance confirmed what many of us suspected: there’s been a dramatic increase in the number of primary-care clinicians who are part of patient-centered medical homes. The NCQA counted 7,700 at the end of 2010—a 3,400% increase since 2008.

While that’s good news for nearly every part of healthcare delivery, the bad news is that there could be as many as 325,000 primary-care physicians who are not NCQA certified. That means there are a whole lot of (medical) homeless Americans.

As I consider friends and family living throughout the United States, I can’t think of one of them who’s actually in a medical home. I can think of several sick and aging aunts and uncles who need to be in one.

Clearly, there are PCPs who are coordinating care, focusing on chronically ill patients and using electronic medical records to improve the health of their patients, without going to the expense of the NCQA designation. And there are thousands of PCPs who won’t be part of a PCMH because their practices are too small or they don’t have the attention of a payer to help fund it.

The American Academy of Family Physicians tested this hypothesis and recruited 36 mostly, small independent practices to transform into PCMHs in 2006. Their conclusions are outlined in a recent article in The journal Health Affairs. While the study says that “highly motivated” practices can implement many of the components of a PCMH, it takes time to do so – more than the two years in the demonstration.

The practices succeeded in changing processes, such as same-day appointments and improved patient access to lab records. More difficult was changing the very model in which PCPs practice – one doctor and one patient in an examining room. “New ways of thinking about primary care will need to emphasize working within more collaborative teams and using multiple channels of care, such as telemedicine, e-visits and group visits,” the study says.

So not only will it take time, the medical home model may require physicians to change the way they approach medicine. The cynic in me thinks that might take at least a generation.

Payers are pouring unprecedented bonuses into incentives for primary-care practices to become PCMHs. The movement represents a good start to slowing down medical cost inflation and coordinating care. If enough data becomes available proving the worth of medical homes, look for insurers and government to step up incentives to pull the larger universe of PCPs into medical homes.