From most Democrats in DC, the reform discussion to date has focused on expanding coverage, and to hell with the financial consequences. On the R side of the aisle, the chorus has wailed endlessly, uselessly, and moronically, about 'government run health plans'.

Its enough to make anyone throw up their hands and move to...any place where we can avoid watching health reform head off yet another cliff. But just when you're about to collapse in despair, something that is actually promising comes along.

An intriguing new proposal hit my inbox this morning, authored by the very-well-connected Bob Laszewski.

Bob's idea is to require all healthplans to restrain the rate of increase in health care costs to a level set by an independent board; failure to do so results in that plan losing tax-exempt status (and then rapidly going out of business). Here's the intro:

"Health plan networks made up of insurers and providers would be required to first begin to stabilize and then control their costs. Failure to do so would mean the loss of their federal tax qualification. Premiums for a non-qualified health plan would no longer be tax deductible for individuals or plan sponsors who used these unqualified plans.

The Affordability Model would create an unambiguous reason for each of the stakeholders to finally work together to get America’s health care system under control. The Health Care Affordability Model creates unavoidable incentives for health plans and their provider network partners to maintain their tax qualification."

There's a lot more to this, and Bob has thought it through carefully. And knowing Bob, he's been talking with others - influential others in key roles in DC - about this for some time. This is an elegantly simple, yet very effective way to blunt the rise in costs without alienating too many stakeholders.

There's no need for a public plan if the industry constrains costs. Healthplans will find it rather difficult to oppose Laszewski's Affordabilty Model, because by doing so they would admit they can't control costs and increase quality (tough for even marketing types to spin that...).

And there's lots of waste out there, lots of opportunities to reduce costs. (the Dartmouth Atlas has been publicizing this for two decades). Yet to date, no one has made any credible effort to do anything with all this knowledge - we know where the waste is but neither providers nor payers had any incentive to do anything about it.

The problem with the healthplan industry has been and continues to be simple - they have few incentives to restrain much less reduce costs. As costs go up, so too do their top lines, commissions for brokers, and in many cases margins. They add precious little value, acting more as network aggregators and marketing agents for providers than 'care managers'. And without any change in their incentives, private insurers are not going to impact costs.

For some reason the Republicans mindlessly continue to laud the free market, despite thirty years of evidence that private insurers can't control costs. The definition of insanity indeed.

But their Democratic colleagues are equally blind, worried way more about coverage than about long-term cost control. Frankly, the plans coming out of the HELP and Finance Committees to date are recipes for disaster.

Except for the Wyden-Bennett Healthy Americans Act, which promises to actually reduce total health care spending. The HAA was missing an 'enforcement mechanism', some way to force private insurers to get serious about cost control. Laszewski's contribution does just that.

His effort is well worth your consideration.

Posted by at 8:09 AM | Permalink | Comments (2)

is made here by AirAmerica's Sam Seder, as he responds to Sen. Olympia Snowe's (R ME) argument against the public option...

Posted by at 10:30 AM | Permalink | Comments (1)

The Senate HELP (Health Education Labor and Pensions) Committee has released the full version of their health reform bill, and pundits are applauding the cost savings scored by CBO.

In a piece published last night, Jonathan Cohn noted:

"CBO says the net outlays are around $600 billion. But that's based strictly on what's in the bill. It doesn't appear to include the cost of the Medicaid expansion...if you want the true cost of reform, you have to account for that Medicaid expansion, too. If my back-of-the-envelope calculations are correct, that puts real price tag somewhere between $1 and $1.3 trillion. Again, that's a rough guess, based on just a few conversations, although it is is more or less what the experts have predicted all along.

(On the plus side, also outside HELP's jurisdiction--and thus not part of the CBO estimate--are Medicare/Medicaid savings. Those would offset some of the price tag, even before factoring in new revenue.) "

That's good - HELP's bill is about $400 billion less expensive than the one authored in the Senate Finance Committee.

But it is still far too expensive and does not cover all Americans (leaving about 13 million without coverage, or three percent of citizens/documented workers). And most troubling it does little to reduce health care cost inflation.

The details are here; key provisions include:

- a strong public option (the Community Health Insurance Option) accessed via a health insurance exchange

- maintains current employment-based insurance system

- requires all employers (including ones with >25 workers) that don't offer heath insurance to pay a $750 annual fee per FTE ($350 per PTE) to help pay workers' health insurance costs.

(the employer mandate got a big boost yesterday from WalMart's announcement that they would support a requirement that employers provide insurance for workers)

The public option all but ensures this bill will be voted on along party lines as GOP Senators continue to hold that the public option is a non-starter. There may be a couple of cracks in the united front, as Maine Sen. Olympia Snowe signaled that she may be open to the public option.

The big difference between the trillion dollar plus cost of the Finance bill and the $600 billion for the HELP bill looks to come from the public option. While I'm not sure exactly how the public option would result in a $400 billion differential, the CBO seems confident that it would.

I'd suggest the HELP bill is best characterized as 'less unaffordable'. I don't see how we can afford either version; deficits are growing dramatically, revenues are down, and further tinkering with monetary policy looks increasingly dangerous.

The American health care problem is straightforward - we cannot afford our current system, and must reduce the rate of inflation if this country is going to have a hope in hell of competing with other developed countries who spend half what we do on health care.

A third of what we spend on health care is waste. Playing with employer contributions and public plan options amounts to deck-chair rearrangement and nothing more; they do nothing to attack that waste.

Note to Republicans - there's an opportunity staring you in the face - get serious about health reform by cutting waste instead of meme-ing on about the threat of big government. Alas, their needle seems stuck in that groove.

Posted by at 6:52 AM | Permalink | Comments (1)

Bob Laszewski has an excellent post on one of the key lessons from the Massachusetts experiment - the dangers of allowing people to buy into and drop out of coverage whenever they see fit.

Evidently a number of people are buying coverage when they need care, then dropping it when the treatment is over. This is adverse selection from the consumer perspective; they can buy coverage when they need it and insurers are forbidden to do any medical underwriting or charge different premiums.

Before someone way overreacts and says "see universal coverage will never work", understand that the issue here is very specific - the law in Mass allows this behavior. It is correctable (to a large extent) through two mechanisms:

1.) require everyone to have coverage, and

2.) prohibit members from enrolling and disenrolling except during designated times and require them to maintain enrollment with one plan for a minimum of twelve months.

And, no, the answer is not 'health status insurance'.

Posted by at 2:21 PM | Permalink | Comments (1)

There is no discussion or intention to include workers comp in any health reform package currently under consideration in Washington.

Let me be even more clear.

No one in the White House or Senate or the House or any staffer or party policy group - mo one even remotely close to the legislative process is in any way shape or form considering, contemplating, evaluating, mentioning or even thinking about workers comp. Comp is not now has never been and will not be part of any health reform program package bill or proposal.

I have no idea where this rumor is coming from, but I've talked with several folks who have heard that there is a task force working on this. If there is, they aren't located inside the Capital Beltway. Ostensibly this is part of some deal involving labor who theoretically will trade giving up on the card check program if the Feds make work comp a national program. I may well have this wrong because labor bosses would sooner give up their mothers fathers and pensions before giving up on cardcheck, much less something as inconsequential as federalizing comp.

And yes, we all know that comp was originally part of the Clinton reform package, known as Title Ten. What you may not know (and I didn't until Bob Laszewski told me) is exactly one (1) person in DC wanted Title Ten. Bill Clinton. No one else, not Ira Magaziner or Jay Rockefeller or Hillary gave two hoots about WC, but the big dog did.

What is also little known is that the person who deleted Title Ten was none other than Ted Kennedy. And the Senator has not had a change of heart.

Could thus change? No.

As Sen. Ron Wyden told me several months ago, when it comes to health reform, no one wants to pick a fight with anyone they don't have to.

Will health reform meaningfully affect workers comp?

Absolutely. If - and it's a big IF - reform passes into law comp will be indirectly affected. I've written on this extensively and will be doing so again shortly.

But comp WILL NOT be part of any bill.

Posted by at 3:23 PM | Permalink | Comments (2)

I received several calls about my post a couple weeks ago regarding using peer review to manage PT.

Generally, there appears to be some confusion over the article I cited in the post - specifically about its conclusion that peer review "may have had an impact" on the number of visits.

Here are the key paragraphs:

"It seems that peer review may have had an impact - possibly by reducing the number of claims with more than 24 visits (this wasn't apparent from the article). Complicating the analysis was the underlying data; it wasn't possible to determine objectively if there were jurisdictional differences or claim severity differences (e.g. there is a very wide range of 'severity' associated with lumbago). The article noted that more severe claims were probably more likely to have peer review, but that was based on the assumption (a reasonable one in my view) that lost time claims were more likely to have requests for peer review than medical only claims...if the peer review program did result in fewer cases with more than 24 visits, how many of those were still excessive (the average number of visits for PT in comp is much lower than 24). And what was done during those visits, were the claimants 'shaked and baked' or was there actual work hardening and therapy designed to increase the patient's functionality?"

In actuality, despite a close read of the study itself there was no conclusive evidence that peer review had any impact on the number of visits.

The underlying data did not have enough detail to provide any meaningful comparisons; for example it wasn't possible to determine if a specific claim was a med only or lost time, or how severe the injury was.

And the analysis of a smaller number of claims from one large employer (reportedly UPS) was not directly comparable as the claims may have been in different jurisdiction (or more or less severe).

The net is this. It was not possible from the article to determine if peer review had any impact on duration of treatment. Yet some readers (at least a few who contacted me) drew that conclusion.

As I noted in the conclusion, "more questions were raised than answered." Here are a few:

- why was the article published if the conclusions were so...inconclusive? would it not have been more useful and interesting if some of these issues were addressed more thoroughly?

- the data was not corrected for jurisdictional variations. If that wasn't possible, I'd suggest that another data set should have been sought, as there are huge differences among and between states regarding utilization and cost of PT, as well as changes within a state due to regulatory changes (see Florida, New York, Texas and California). It could be that no other data set was available.

- the severity issue is quite important; the data were evidently not sufficiently robust to make some assessment of differences in severity. Without some measure of severity, it is impossible to make comparisons and draw conclusions about those comparisons, especially as there can be wide ranges of severity for conditions such as lumbago (one of the diagnoses featured in the report).

I applaud the author (Janet Jamieson, PhD) for her research and effort to add to our understanding of this critical issue. While it would be best to wait until all the data are in, and tested, and all follow up questions asked and answered, that's not realistic nor possible. Instead, it is usually more helpful to publish what you have, recognizing that it will likely spur additional research.

It is incumbent on those who read reports and analyses to think critically, and not read more into the results than they should.

That is a disservice to the researcher, and may well lead to inappropriate conclusions.

Posted by at 6:43 AM | Permalink | Comments (1)

There are two key takeaways from the WCIRB report on California's work comp costs (as reported by workcompcentral.com).

Medical costs are rising fast, and managed care costs are rising much faster.

Medical expenses climbed 7.9% last year, led by a ten percent increase in hospital expenses. Drug costs were up marginally while physician expense growth was flat.

Hospital costs are approaching a third of all medical expense in the Golden State and are growing despite a tighter fee schedule and all millions spent on 'medical management'.

There are two contributors to this unhappy circumstance. One is the double payment for surgical implants that occurs due to a loophole in the CA fee schedule. HSA clients report their costs for implants in California are much higher than in any other states driven by both price and more frequent usage of devices.

The second driver is the disconnect between utilization review and the bill review and payment function. As noted previously here, many UR determinations don't find their way thru the electronic labyrinth to bill review and payment.

Which is why there is so much frustration among employers forced to pay ever increasing fees for managed care services that, in many cases, do little to 'manage' claimants' care much less reduce costs.

The California reforms have done much to restrain cost growth but the individual rules and regs have often done harm as well as good. The pharmacy fee schedule and associated regs resulted in the explosion of physicians dispensing repackaged drugs at wildly inflated prices. The 24 visit cap for PT etc has resulted in too many visits for some claimants with modest injuries and too much hassle for all parties involved in complex claims. And the implant issue is exhibit one.

The stakeholders benefiting least from the reforms are the physicians.

What's wrong with this picture?

Posted by at 7:32 AM | Permalink | Comments (1)

The Senate Finance and HELP committees are working feverishly to cut the projected cost if health reform to under a hundred billion a year, submitting various and sundry ideas concepts and proposals to the CBO for scoring, hoping that some combination of service cuts and copays will enable the bills' authors to squeak in under "the trillion over ten years" bar.

Wrong question.

Have the Senators given up on the real issue, cost control? Or is that subject just too toxic, with lobbyists and interest groups lined up to attack any assault on their respective constituencies?

Instead of worrying about cutting benefits and increasing cost sharing the focus should be on a significant expansion of comparative effectiveness research and an overhaul of reimbursement to incent and motivate providers to better manage chronic conditions.

Sure there's talk about thus, and there's even a bill in the House to drop the SGR process in favor of a more rational approach to reimbursement. And I know these initiatives haven't yet gotten much credit from the CBO. My sense is that is because there isn't much in the way of teeth in the proposals to date. If and when fundamental change in these areas is proposed along with a structured implementation process, we may well see the CBO revise their estimates.

This is going to be very very difficult as many in the health care industry will get their wallets lightened. But without real, meaningful, and measurable cost reduction we can't afford universal coverage.

Posted by at 11:34 AM | Permalink | Comments (2)

The Committee for Economic Development announced earlier this month that they are endorsing the Wyden-Bennett Healthy Americans Act.

The HAA is a universal coverage, individual mandate program that delivers significant savings over the current system as well as most of the proposed reform initiatives.

The Committee is comprised of current and former business executives, including representatives from Wall Street, McKinsey, IHS Global Insight, Bausch&Lomb, Avaya, Burson Marseller, the Boston Consulting Group and others.

Notably, in a poll released yesterday by CED, sixty percent of business leaders polled agree that the current employer-based system is unsustainable.

They are right.

While my sense is a 'passable' reform bill will be based on the current system, my belief is that health coverage should not be linked to employment, as this limits portability, leads to job lock, and adds an unnecessary burden to most employers.

I'd add that the current system hasn't worked to either improve health care quality or control prices. So expecting that a 'new and improved' employment based system will do better is rather speculative.

Posted by at 8:41 PM | Permalink | Comments (2)

There are specialty managed care offerings for PT, imaging, pharmacy, home health, DME, facilities; even dental. Till now, the only type of medical spend that didn't have a custom answer had bern diagnostic lab.

That gap has now been filled.

Work comp managed care firm DiaTri (www.diatri.net) has signed a deal that provides their clients with access at deep discounts to the 5000 Quest lab facilities. The access enables payers to benefit from rates that look to be substantially under most generalist networks, and far less than fee schedule rates.

The deal requires payers to work diligently (my words not their's) to encourage claimants to use the participating labs; payers will have to do more than just take discounts. However, the discounted rates will be applied to retro as well as prospective referrals.

DiaTri has an exclusive deal here; thus is a savvy business move for the company which has been operating in other work comp and group health niche markets.

Note: neither myself nor HSA have any professional or business relationship with DiaTri or Quest.

Posted by at 11:54 AM | Permalink | Comments (0)

That's what an airline pilot told me after he asked what I did for a living. To which I responded that France's health care system costs a lot less than ours' and delivers excellent results.

End of conversation.

I would have been happy to engage further but he wasn't. The rest of the ride in the hotel shuttle was awfully quiet.

The mis- and dis-information spread by pundits and politicians about the Democrats' plans for health reform is having its desired effect, at least on those predisposed to believe their claims. Whether the superficial 'understanding' evidenced by the captain's statement will be affected is anyone's guess but it is clear that reform opponents are ramping up their efforts to 'Harry and louise' the 2009 version of reform.

President Obama and his fellow Democrats have not done a very good job convincing Amerucan voters that they can keep the health care they have today-if they want to. The message discipline that typified Obama's campaign has been noticeably absent in the health care reform discussion; if it doesn't return and fast the chances of major reform becoming law are going to diminish by the day.

Fear is a powerful motivator, and reform's opponents have shown themselves to be masterful in its use in the public discussion.

Posted by at 10:02 AM | Permalink | Comments (6)

The feel-good talk about health reform - covering all Americans, reining in those nasty insurance companies, improving health through prevention and wellness - has all but ended, replaced by reality - as presently conceived, reform is unaffordable.

Now, PR firms are asking bloggers to encourage readers to sign petitions decrying taxation of health benefits, specialty medical societies are fighting to hold onto their high reimbursement, lobbyists for imaging companies want expanded coverage of MRIs (!?), employers are getting increasingly uneasy and budget hawks are amping up the volume.

As I've said for months, comprehensive health reform is a doubtful proposition.

Everyone wants universal coverage, but no one wants their taxes raised or their share of the pie cut.

While the latest polls indicate some willingness on the part of Americans to accept somewhat higher taxes to help fund universal coverage, on the expense side of the ledger there is precious little evidence of belt-tightening. Sure, pharma volunteers to cut $80 billion over ten years (remember the current annual health expenditure is $2.2 trillion); that's a mammoth two-tenths of one percent.

And yes, we all recall the health care/union execs who promised to cut $2 trillion from the nation's budget over ten years - and then stumbled over each other as they backpedaled away from that 'promise.

The draft of the Baucus bill is a clear indication that some of the Senators ostensibly driving the health reform process have very little appetite for taking on the health care industry; the bill is all about coverage with almost no meaningful effort at controlling cost.

And this from the Chair of the Senate Finance Committee. The bill that emerges from the HELP Committee has the weight of Senator Kennedy behind it; that said early indications are it does not exactly take the long knives to spending. Kennedy may be the best hope; in a Nixon-goes-to-China way the ailing Senator has the political weight to win cost concessions that Baucus et al are avoiding like the plague.

As Bob Laszewski has been assiduously noting, all the happy talk will amount to naught if the CBO and OMB can't find meaningful spending reductions.

Without a significant reduction in projected health care spending universal coverage is unaffordable. Fortunately OMB and the CBO are watching our pennies.

So, what could happen?

There are at least three potential results.

President Obama has proven himself capable of achieving the seemingly impossible. Think on this - which is more unlikely - America electing a black man to the Presidency or passage of health reform? Do not discount his ability to deliver.

Incremental reform has already occurred - SCHIP is but one example; there is also a bill before Congress to reform Medicare's physician reimbursement process; ending medical underwriting and requiring community rating would dramatically alter the insurance system (leaving aside the problem of community rating without universal coverage, which should be inextricably linked). Big changes in drug and device approval and reimbursement are also likely, and hospital reimbursement is already on the chopping block. In any other environment, any of these changes would be big news. Together, they make for the biggest change in health since 1964.

There remains one plan that reduces cost, covers everyone, and already has bipartisan support - the Wyden-Bennett Healthy Americans Act.

I've long supported this bill, and believe it is our best chance for meaningful reform that addresses cost and coverage.

Posted by at 6:29 AM | Permalink | Comments (4)

Details of the Senate Finance committee's draft plan for health reform were obtained yesterday by Ezra Klein (now of the Washington Post).

Here's how Ezra characterizes the draft:

"The numbers tell the story. In [the original version that was submitted to the CBO] that plan, subsidies reached 400 percent of poverty. In this plan, they've been cut to 300 percent. In that plan, Medicaid eligibility was as high as 150 percent of the poverty line. In this plan, it's 133 percent for pregnant women and children, and 100 percent for childless adults. In that plan, the "gold" coverage was 93 percent of a person's estimated expenses, and "bronze" coverage was 68 percent. In this plan, those numbers are 90 percent and 65 percent, respectively. That means people with a low-cost plan might be covered for only 65 percent of what they're likely to need.

Another way of looking at the plan is that it remains a significant step forward. Subsidies to 400 percent of poverty would be nice, but subsidies to 300 percent of poverty are far beyond anything we offer now. Coverage that protects against 65 percent of anticipated costs is better than no coverage at all. The co-op idea isn't a public plan, but with federal seed money to start new co-ops, it's a good idea on its own merits. There's an individual mandate, state-based health insurance exchanges, and a substantial health and wellness initiative. Insurers are barred from discriminating based on health history and Medicaid is sharply expanded."

Note that this is a draft version, from one committee, from one legislative body. Senator Kennedy's committee will come forward with its own bill shortly, and the bills will have to be merged/compromised into something acceptable to the House and the President.

Rather than get into the details, which are a) in draft form and b) likely to be changed before the bill emerges from the Finance Committee, here's what is missing.

An individual mandate.

To say this is disappointing is to damn it with faint praise. The commercial insurance industry has shown itself completely unable to restrain cost. As I've noted before, I'm not convinced that a public plan is a requirement - BUT - unless there are much stronger cost controls in a health reform bill, the public plan option may be the only way to control cost inflation.

Why? With an individual mandate, there are no incentives for private insurers to hold down costs.

Not true, you say, the market will.

To which I respond, what market?

As I noted in January, There's been so much consolidation in the health plan industry that many markets are dominated by one or perhaps two health plans.

In two-thirds of MSAs, one insurer had market share equal to or greater than 50 percent, and in a quarter of MSAs, one insurer had market share of at least 70 percent.

Blue Cross of Alabama has market share ranging from 67 percent in Tuscaloosa to 95 percent in Gadsden. Blue Cross of Arkansas' share goes from a low of 63 percent in Hot Springs to 97 percent in Texarkana. The two dominant health plans in Ohio have combined share ranging from 46 percent to 80 percent.

THERE IS NO FREE MARKET IN THE HEALTH INSURANCE BUSINESS.

The Finance Committee's effort is a path to financial ruin; without cost controls we're looking at a deficit creator that will make Part D's eight trillion dollar ultimate liability look paltry in comparison.

Recall that Part D relies on the private sector to provide benefits to individuals, albeit without a mandate. Well, after Part D, the largest expansion of government-assisted health care since 1964, went into effect drug manufacturers raised prices by an average of 7.4%. Why? Because they knew there was a large new customer base, eager to get drugs, that was not very concerned about cost.

The passage of Part D was a boon for big pharma, as the industry enjoyed a substantial increase in profits and revenues attributable to Part D. In 2009, the big Part D carriers raised premiums significantly; Humana by 51% and United Healthcare by 18%, with copays also on the rise.

On a national scale, the program is a disaster. The ultimate liability for Part D is $8 trillion, a liability that is unfunded.

This is what we can expect if Congress passes and President Obama signs into law national health reform that does not aggressively, and forcefully, address cost - a deficit explosion that will make the cost of the current bailouts look like lunch money.

Posted by at 6:54 AM | Permalink | Comments (3)

For-profit corporations are legally and ethically obligated to first deliver value to their shareholders. That obligation has enormous implications for the delivery, evaluation, and reimbursement of health care services.

The impact of this situation was brought home in the film version of Maggie Mahar's book "Money-Drive Medicine"; I attended a screening of the documentary last week in NYC.

I wasn't sure what to expect; there have been quite a few films on health care, reform, insurance and related topics recently, but none that defined the fundamental problem as clearly and cogently as MDM. Care is fragmented and disorganized, with patients not treated as humans but as discrete and separate body systems; in the film the care appears coldly mechanistic. Physicians' narrow focus on their specialty is part of the problem; this isn't to blame the docs entirely but rather to illustrate how the entire reimbursement process has bastardized health care.

With docs narrowly focused on body systems they ignore issues that affect other systems. Their very deep but quite narrow knowledge seems to stop at the outer layer of the heart tissue for cardiologists or the fluid surrounding the eye for opthalmologists. Of course the body isn't a collection of 'systems' operating independently but a marvelously interconnected and interdependent whole.

Kind of like the health care system.

Maggie's film doesn't offer a solution. Instead it reminds us that the health care system is just that. If reform is to work, it must consider the impact of change on the entire 'body'.

At the top of the list is thinking through the motivations of the players. For profit insurers and health care companies are in business to make profits for their owners. That isn't necessarily a bad thing. But it does mean patient care is of secondary importance. While insurers and hospital chains and Investors may yell 'foul', their charter requires them to work for their owners and to claim they have reordered their priorities isn't credible.

This isn't meant to infer that not for profit entities are entirely different; as the CEO of a regional hospital told me years ago; "no margin no mission".

Posted by at 11:50 AM | Permalink | Comments (0)

'Managing the Impossible', an analysis of catastrophic case management firm Paradigm's results and comparison of those results to those achieved by work comp insurers, has been sitting on the upper right corner of my desk for a couple of months now.

I've read it, re-read it, discussed it with Paradigm staffers and a couple of their clients, and started to post on this at least twice. Each time other hotter issues popped up, and this got pushed back into the corner of the desk.

This may be similar to how Paradigm has been dealt with by many in the payer community. Sure, those cat cases are important, and yes, we really need to do something about it, but hey, I have a really important meeting on the latest PeopleSoft upgrade to go to, and I really need to review the latest case closure report, and...

So the urgent takes precedence over the important. And make no mistake, catastrophic cases are very important indeed in work comp. According to an analysis by NCCI, half of all medical expenses are for 6.2% of claims.

Six percent of medical dollars are spent on 0.3% of claims. By my calculation, that's $1.8 billion annually on a very few claims. The real dollars are much larger, as cat claims account for a very large chunk of the industry's reserves.

Many payers have set up dedicated teams to handle cat claims. Staffed by senior claims reps supported by legal and medical experts, these are variously known as 'high exposure', 'large loss', or 'complex claim' units. While there's undoubtedly a lot of experience embedded in many of these units, it is simply impossible for a single payer to have the depth if expertise in specific types of cat claims that is resident in Paradigm. No insurer has seen as many TBIs, burns or spinal cord injuries; if they had they'd be long out of business.

Yet despite the demonstrated expertise and documented results of Paradigm, many claims execs refuse to objectively consider referring cat claims to Paradigm (or a similar entity).

Why?

Experience tells me some are threatened by the potential that an outside firm could actually handle a claim better than their own people. Others blindly believe (with inadequate justification) that no one outside their company could possibly do a better job.

Paradigm isn't blameless. The company has stumbled in their efforts to build a succesful sales and marketing program. At times they have been insensitive to the threat they pose to clients' entrenched processes and personnel. That said, there's no question they have far more expertise in cat claims than any single payer, and their financial model is usually compelling.

Note: Paradigm is not a consulting client and has no business relationship with HSA or myself.

Posted by at 10:39 AM | Permalink | Comments (5)

Physical therapy is one of the least understood components of work comp medical expense. This lack of understanding begins with a wide range of 'definitions' of what counts as PT - from services performed by physical therapists, to all the 97xxx procedure codes, to services billed by a PT clinic tax identification number (TIN).

Confusion continues when the widely varying state regulations are brought into focus, with states like Florida and California setting a hard-and-fast maximum number of visits ('the 24-visit rule'), while others ignore PT altogether in their medical management regs, and still other jurisdictions require payers to review and authorize PT.

Physical therapy is not a price-per-service issue, but rather a number-of-services issue. Several years ago I did an analysis for a very large self insured employer that identified several claims with more than five hundred PT visits over periods of no more than three years.

That's not a typo nor hyperbole.

Another analysis, this one for a large insurer, found over a dozen claims with more than a hundred visits over the course of a year. In both cases, there was no apparent medical necessity for the excessive visits, they were not authorized in settlement agreements, and most of the treatment records reflected massage and whirlpool treatments, repeated day after day after day.

Overutilization not only drives up medical costs, but also keeps the claimant out of work.

A recent article in the IAIABC Journal (sub req) authored by Janet Jamieson, PhD, President of the Physical Medicine Research Institute, an organization funded by PT management firm Universal SmartComp, evaluated one strategy for controlling PT visits - peer review.

Janet's been studying the work comp world for years, so I was excited to learn of her study. Janet was kind enough to clarify several questions I had after reading the article, as I couldn't determine if peer review had an impact on controlling utilization, and if so, if that impact was quantified.

It seems that peer review may have had an impact - possibly by reducing the number of claims with more than 24 visits (this wasn't apparent from the article). Complicating the analysis was the underlying data; it wasn't possible to determine objectively if there were jurisdictional differences or claim severity differences (e.g. there is a very wide range of 'severity' associated with lumbago). The article noted that more severe claims were probably more likely to have peer review, but that was based on the assumption (a reasonable one in my view) that lost time claims were more likely to have requests for peer review than medical only claims.

That begs the question - was the 'right' number of visits 24? And if the peer review program did result in fewer cases with more than 24 visits, how many of those were still excessive (the average number of visits for PT in comp is much lower than 24). And what was done during those visits, were the claimants 'shaked and baked' or was there actual work hardening and therapy designed to increase the patient's functionality?

One finding of note was that active involvement of the payer appeared to reduce the number of visits more than the possible impact of peer review itself. That is not surprising; employers with strong risk management, injury prevention, and claims management programs always get better results than those who rely on utilization review alone.

As with almost any study, more questions were raised than answered.

Posted by at 8:41 AM | Permalink | Comments (2)

The Democrats are pushing hard, very hard, to get health reform passed this year. Heck, they want to get it done this summer. And so far, the GOP's involvement has been limited to standing on the sidelines lobbing rhetorical rocks at pretty much every aspect of reform - and getting little traction in return.

That may change - if they stop repeating pollster Frank Luntz' talking points, and focus on the real issue - cost.

Today offers the GOP a chance to do just that; the CBO's scoring of Sen Kennedy's (D MA) proposal indicates it will cost over a trillion dollars over ten years and only cover 15 million more Americans. This is an initial draft bill, there is much left to do, and the final bill will likely address many of the CBO's concerns; but it does offer the GOP a chance to focus on the real issue.

Which so far they haven't done.

President Obama is wooing doctors, employers, politicians, health plan execs, people with a plan that builds off the current employment-based system supplemented by a public plan option. The President, and most of the Dems in Congress, strongly support reform efforts that do not eliminate the current employer-based system.

(Personally, I'd prefer to see a system that eliminates the employment linkage for reasons of portability and efficiency, and to allow employers to get out of the health insurance business, but I can't say that publicly because my good friends who are insurance brokers will blow up my house.)

Looking just a bit deeper into what looks like the bare bones of reform, it appears:

- some form of mandated coverage will become law, likely over several years;

- strict controls on medical underwriting, risk selection, rating, and benefit design will be mandated;

- some form of medical liability reform will be passed;

- physician payment will be altered to favor primary care;

- supplemental payments to insurers for Medicare Advantage will be dramatically reduced;

- pharmacy costs for Medicare and Medicaid will be slashed (either by a mandated rebate or price negotiation); and

- hospital reimbursement will be cut rather significantly.

There's no question that's a lot of 'change'.

But it is change that appears to be welcomed by Americans. For most voters (the key constituency here), there's not much in the way of wildly objectionable issues. This isn't a single payer solution, individuals won't be forced to get coverage for several years, those currently covered by a health plan at work will continue to get that coverage, docs will continue to practice and pick the insurance companies they work with and bill like they do today.

From a Kaiser Foundation poll to be released today:

“A solid majority of the American people (61 percent) continue to believe that health reform is more important than ever given the country's economic problems; sizable majorities support key elements of reform currently being debated such as employer mandates (69 percent), individual mandates (71 percent), and a public plan option (65-67 percent depending on wording)...A narrow majority of the public (53%) supported limiting future increases in how much doctors and hospitals are paid under Medicare to help pay for health reform (37% opposed)...A large majority (70%) liked the idea of insurance exchanges—tested with different descriptions—as a way to help people purchase insurance on their own.

And according to the KFF poll, a majority of Democrats (68%), Republicans (69%) and independents (75%) agreed insurance exchanges that guaranteed that “participating plans would not deny coverage to those with pre-existing conditions or charge higher premiums to those who are in poorer health” would be helpful if one had to purchase health insurance on one’s own.

I'm kind of puzzled by the way Republicans are reacting to the Democrats' strategy, reform initiatives, and tactics.

Here's how the Republican Congressional leadership reacted to President Obama's speech to the AMA yesterday.

John Boehner, D OH
"We're pleased the President has expressed rhetorical support for medical liability reform, but fact is the effect of even the strongest medical liability reforms would be negated by a government takeover of health care that raises taxes, rations care, and drives health care costs even higher."

Eric Cantor, R VA
Democrats are touting a government-run health care option that creates an unlevel playing field leading to the destruction of the private market, reducing choice and putting Washington bureaucrats in charge of family health care decisions. In addition, their approach will cost over a trillion dollars - money this country simply does not have.

"There is a growing chorus of concern about the Democrat's trillion dollar government health proposal. More campaign-style events and speeches do not give the American people the answers they need. Can Americans keep what they have if they want to? How will this Administration pay for it? Is it productive for government to restrict our doctors' ability to treat patients as they see fit? Serious questions remain unanswered, and it's time for the Administration to end the happy talk and get down to the difficult decisions ahead."

Sen. Jim DeMint R SC
"I'm working on a bill to give *every* American access to health care they can control, without forcing them into a government rationed plan" [Twitter, 6/10/09; emphasis added]

Sen. John Barrasso R WY
"Their plan is what we know doesn't work in England, doesn't work in Canada - it is a complete Washington takeover of health care."

Rather than engaging on meaningful issues, the GOP is sticking to Republican strategist Frank Luntz' talking points.

Here are examples.

"some bureaucrat puts himself between you and your doctor, denying you exactly what you need."

Wait, isn't that what happens today in the vaunted private insurance sector?

"THEY decide if you'll get the procedure you need, or if you are disqualified because the treatment is too expensive or because you are too old."

Deja vu...

reform should "protect the sacred doctor-patient relationship, and allow people to choose the personal care that suits their individual needs."

Double deja vu...

"The plan put forward by the Democrats will deny people treatments they need and make them wait to get the treatments they are allowed to receive.”

I don't see this working. Or rather, if the President continues to stick to his talking points, and if the reform bill that emerges follows the current path, the GOP will find itself arguing against a bill that exists only in their minds.

The GOP is already smarting from its label as the "Party of No". If they continue to avoid meaningful engagement, that label will get increasingly sticky.

That's bad for them, and bad for the country. The big winner is cost control. The President is finally addressing the cost issue, and his announcement that the plan will cost about a trillion dollars over ten years is the big opportunity. I don't often offer advice to the GOP, but I'd suggest that the cost issue is where they can regain their long-lost reputation as the party of fiscal restraint. As presently configured, health care reform is unaffordable. We need reform, but we need reform we can afford.

Given the GOP's proclivity towards parroting Luntz' anti-clinical guideline nonsense, this may not be possible, but the way to control costs while ensuring higher quality is to make sure patients get the right care, docs are rewarded for delivering that care, and not for providing unnecessary, expensive, and unproven care.

Instead of fighting comparative effectiveness, the GOP should embrace, strengthen, and support it as a way to hold down costs.

I don't see that happening, as they appear convinced that their future is assured by following Nancy Reagan's time tested "Just Say No".

Posted by at 7:25 AM | Permalink | Comments (3)

According to an article in the NYTimes, the answer is yes. President Obama is actively considering some form of limits on med mal lawsuits as part of his health care reform plan.

Before we get too excited about this, let's consider what is on the table, and why.

Reports indicate Obama is going to mention med mal reform in a speech to the AMA this week. The group has long advocated for limits in the form of caps on settlements and 'frivolous' lawsuits, claiming that med mal forces physicians to practice defensive medicine thereby driving up costs.

The reality is more subtle, and less problematic. A comprehensive study indicated that the cost of malpractice insurance as a percentage of total practice expenses changed little over the last 30 years, ranging from 6% to 11% of total expenses. This doesn't mean that docs in certain specialties and specific geographic areas aren't affected differently, with some faced with significantly higher costs and fewer insurer options. But these issues are largely driven not by high settlements and 'frivolous' lawsuits but rather by the mechanics and motivations of the insurance market.

In fact, when insurance premiums were soaring in the early years of this decade, awards weren't increasing at all. While premiums increased 120% from 200 to 2004, claims were flat while the insurers' incurred loss ratios (ratio of claims to premiums collected) improved by almost 25% to 51.4%.

There is ample evidence that malpractice and medical errors are much more prevalent than the number of claims filed would indicate. The vast majority of patients injured by error — perhaps 98% percent — never press legal claims.

Equally troubling, “46 percent of physicians surveyed admitted they knew of a serious medical error that had been made but did not tell authorities about it.”

And according to an exhaustive study published in the New England Journal of Medicine;

"For 3 percent of the claims, there were no verifiable medical injuries, and 37 percent did not involve errors. Most of the claims that were not associated with errors (370 of 515 [72 percent]) or injuries (31 of 37 [84 percent]) did not result in compensation; most that involved injuries due to error did (653 of 889 [73 percent]). Payment of claims not involving errors occurred less frequently than did the converse form of inaccuracy — nonpayment of claims associated with errors."

[readers interested in a detailed and authoritative discussion of the topic should read Maggie Mahar's treatise]

OK, so the med mal monster is more of a med mal midget that casts a very long shadow when the AMA shines it's "lets make this thing look scary" light on it.

That doesn't answer the central question; Why is Obama willing to take on trial lawyers, many in his own party, and reality?

Simple - another very valuable bargaining chip. Politics is the art of making the other guy do what you want by giving him just enough so he can hold his nose and vote for your bill. Obama is seeking to kill two birds with one political stone. His openness to 'med mal reform' steals a big chunk of the AMA's thunder, and his solution - eliminating/reducing litigation/awards for physicians who follow evidence-based clinical guidelines - helps to enforce those guidelines.

Remember the battle over comparative effectiveness (CE)? The final bill was pretty watered-down as the legislative compromises necessary to get it done removed a lot of the 'enforcement' opportunities. From here it looks like the bill itself was the first part, and the 'enforcement' is going to be linked to med mal reform.

By tying med mal to physician use of evidence-based clinical guidelines, Obama is painting the physician lobby into a very tight corner, one they can't get out of without politically-untenable contortions.

UPDATE
from Peter Rousmaniere comes this link to an excellent article by Drs. Michelle Mello and Troyen Brennan about the role of medical liability reform in health care reform.

Here's an excerpt:

"create a federal "safe harbor," retaining the current process of adjudication but insulating physicians from liability if they adhered to evidence-based medical practices. For example, legislation introduced by Senator Ron Wyden (D-OR) in February would create a rebuttable presumption that care was not negligent if the physician followed accepted clinical practice guidelines.5 Similarly, physicians could be given immunity or a favorable presumption if they practiced in accordance with findings of credible comparative-effectiveness research (CER)."

Posted by at 7:05 AM | Permalink | Comments (2)

Well done, RiteAid.

Industry sources indicate RiteAid and workers comp PBM FirstScript have worked out their differences; RiteAid is again accepting FirstScript claimants.

While no one would speak on the record, reliable sources reported that the deal came together when FirstScript agreed to stop accessing group health reimbursement contracts for their claimants (in comp, patients are claimants, not members). This was the very large bone of contention that led RiteAid to boot FirstScript out of their stores several weeks ago.

This is good news - not only for FirstScript, but also for all retail pharmacy chains. As I noted in an earlier post, retail stores charge more for comp scripts because it costs them significantly more to identify the correct payer, establish eligibility, and comply with utilization review edits and processes. That's entirely reasonable and appropriate.

Price compression in the comp PBM business has driven down margins, and is likely behind the RiteAid-FirstScript 'disagreement'. As PBMs compete for business in what is a rapidly-maturing market, they make price concessions to get new deals. This drive for share has come smack up against the reality that the PBMs' cost of goods sold is pretty consistent across all PBMs; thus the ones that want to continue to slash price to gain share have to figure out another way to reduce their cost.

In violation of their contacts with the chains, some (but by no means all) PBMs have been accessing group health/Medicare contract rates.

RiteAid's tough stance has paid off for the retail giant; good for them. Now we'll see if other retail chains also do the right thing and get tough with WC PBMs that are circumventing their contract obligations.

If they do, we'll see a level - and fair - playing field for WC PBMs. If the retail chains don't get tough with the PBMs using group contracts they'll lose revenue and force the PBMs that are complying with their contracts to either lose business to the unethical PBMs or join the 'bad guys'.

Note - as mentioned ad nauseum I'd welcome a response from firstscript or their parent but my requests have been ignored.

Posted by at 8:44 AM | Permalink | Comments (0)

It's here. Almost.

At long last, health reform is no longer just an idea, a glimmer in the distance, a subject of interest only to those writing doctoral theses, policy papers, and other intellectually interesting but practically useless missives.

Dare we say it; reform is actually possible, perhaps more possible than at any time since 1964.

There are currently no fewer than six (6) health reform bills before Congress, plus about a dozen more waiting in the wings (well, maybe just a couple). Now that there's actually something concrete to review, discuss, and dissect, the experts from Health Wonk Review's editorial board have unlimbered their virtual electron microscopes, dusted off their intellectual scalpels, and fired up their mental PET scanners.

Here, laid bare for the benefit of health wonks everywhere, is the combined wisdom of the greatest minds inhabiting the wonk-o-sphere...(click here for the soundtrack, and turn those speakers up)

First, why?

For that, we asked Senator Byron Dorgan (D ND) to tell HWR's readers why he thinks now is the time to act on reform. Here's the Senator's contribution.

"After months of preparation and study, the U.S. Senate is beginning to draft health care reform legislation. The Health, Education, Labor and Pensions (HELP) Committee is writing its bill this week, and the Finance Committee is expected to begin drafting its own version of health care reform legislation next week [emphasis added].

The Senate Democratic Policy Committee (DPC), which I chair, has also just issued a new policy paper which documents the urgent need for health care reform. It lays out the facts on what the cost of inaction over the past eight years has been.

Health care reform is also economic reform. Ever-rising health care costs contribute significantly to the current economic crisis. People between jobs – and that too often means that they are also without health insurance coverage – often face potential financial catastrophe. Even people with jobs and health insurance struggle to cope with high insurance premiums, co-payments and prescription drugs.

You can view video clips of some of the first floor speeches in the health care reform debate by several of my colleagues who are working to advance health care reform in the Senate are here.

Democrats know that, for our economy to truly recover and prosper, we must help middle-class families, businesses, and federal, state, and local governments cope with skyrocketing health care costs. We are committed to enacting health reform that addresses the health care cost crisis and ensures quality, affordable health care for all Americans."

From Senators to students, HWR welcomes all. Emma Walsh-Alker asked her fellow fifth-graders why kids need health reform; their answers echo Sen. Dorgan and add their own thoughts - which are wise indeed.

The public plan option

The public plan has incited and excited all, from de facto leaders of the GOP to undergrad student debating societies. It is variously viewed as a way to ensure all Americans get good, affordable health care or a devious way for single-payer advocates to slowly but surely kill off the private insurance industry. While there are lots of opinions out there, our good friends at Health Affairs have perhaps the most comprehensive perspective from a variety of posters, guest and otherwise. We'll start out with their contributions...

Policy vet Jeff Goldsmith doesn't think the plan is worth the risk, but Joe White disagrees, arguing that there's 'dangerous' confusion about Medicare's ability to control costs.

A trio of experts want to make sure policymakers think thru the lessons we've learned from Medicare, some of them quite painful (and wildly expensive to boot).

Some wonks believe there are better alternatives to the Medicare for Everyone plan, with Hal Luft proposing one alternative, and your author proposing to use the VA system (it has better outcomes, lower costs, and happier patients than pretty much any other delivery/payer system).

And colleague and good friend Bob Laszewski thinks the public plan option may really be a well-disguised way to cut reimbursement, instead of what the country actually needs - a way to "sweat the waste out of the system".

Me? I'm thinking the Public Plan Option is a great way to distract reform's opponents from key issues, a bargaining chip to use when the Dems need a few GOP votes to pass a 'bipartisan' bill.

David Williams digs into the differences of opinion between 'experts' and the public on all things health care. His review of Drew Altman's piece provides interesting insights into the core issue of explaining/understanding/debating health reform.

A terrific companion/supporting post comes from Louise at Colorado Health Insurance Insider (one of the few bloggers actually in the health insurance brokerage business). Louise discusses the public's belief that private health insurers have profit margins over 20%...Hello, AHIP, is anyone there awake?!

Ken Terry argues that the focus on the public plan could kill any chance that a reform bill will pass.

Brian Klepper and David Kibbe urge the administration's Health Reform Team to take notice of the health industry's Achilles Heel in their planning. They make the case that universal coverage should be off the table unless the industry relents on specific aspects of current business models.

The Benjamins...

This is going to be really really expensive, so expensive that it will be unaffordable from the get go. That's my interpretation from reading a post from the actual, real live insurance real world's InsureBlog. Bob Vineyard takes Sen Baucus to task; "Baucus proposes tax subsidies for those making up to roughly $88,000 per year for a family of 4. Isn't that just about everyone?"

Merrill Goozner's post is a terrific synopsis of "where's the money going to come from." He discusses cost reductions, potential tax revenues and sources thereof, and concludes with thoughts on the potential impact of raising taxes on the middle class.

Michael Tanner over at the Cato Institute makes the rather compelling point in his post that the current proposals do precious little to address costs. Tanner's point is a valid one; cost control requires saying 'no', and so far no one's even whispering the word.

RIchard Eskow reminds us that any reform plan must address the huge impact of health care costs on the middle class; he notes that almost two-thirds of bankruptcies in 2007 were caused by medical problems.

Anthony Wright expands on Richard's trenchant observation, noting "people expect health coverage to prevent them from going into bankruptcy. If it doesn't do that, then it doesn't deserve to be called coverage."

Reform's impact on hospitals, docs, and others

Brady Augustine has an intriguing post about the knuckleheaded way hospital and their advocates have responded to health reform, drawing parallels to the auto industry. He contends that instead of hiding behind lobbyists and legislative protection (like the Big Three did for so many years) they should get their rears in gear and actually try to make themselves better.

DrRich (his name, not his economic status) laments the downtrodden status of the primary care provider, putting it in historical context, describing CMS' impact on PCPs, and taking on the American College of Physicians' support of a bill before Congress that, among other things, "renders nurse practitioners as full-fledged primary care providers".

'Ill and Uninsured in Illinois' makes DrRich's case - maybe better than he does, with her/his post on why retail clinics aren't the answer for the medically underserved.

Adam Fein sees more consolidation among PBMs (pharmacy benefit managers) in the future; he makes a compelling case.

And from our good friend Jon Coppleman comes this comparison - If health care is the proverbial 800 pound gorilla, then the medical portion of workers comp is a 15 pound Maine Coon cat. Jon wonders whether health care reform will crush workers’ compensation.

The MassExperiment or, is that lighthouse working?

Pro- and O-pponents of national health reform can find much in the Massachusetts experiment to support their respective positions, but those in neither camp can provide the most Mass-based insight. Here goes.

Relative newcomer Tinker Ready's video-rich post on a Boston-based debate between single payer and mandated insurance, as well as a meeting between single-payer advocate Dr Steffie Woolhandler and Senator Max Baucus (D MT) (Bet that was fun...) gives readers interested in learning lots about Mass just what they need.

David Harlow's post identifies the holy trinity of reform - quality, access, and cost, noting that in Massachusetts they began with access. He opines that President Obama should back off his apparent goal to get all three done at once.

Not strictly Mass-related, but definitely Harlow-related is the post from Walter Jessen at HighlightHealth. Jessen observes that a recent study shows Americans value access to providers as their "most essential and highest valued health priorities."

Newly-minted Ph.D Economist Jason Shafrin (congratulations, Jason) has studied the impact of Massachusetts' health reform on waiting times. His data indicate it takes longer to see a primary doc and some specialists, but less time to get into a cardiologist these days.

Hold on a second, says Joanne Kenen; the USAToday study used by Jason has a lot of other data about waiting times in lots of other towns here in the US of A. Joanne's review presents a decidedly mixed picture - both of Mass and many other cities. The top stat is this - over the last four years, the average wait across the US to see a doc for nonemergent care more than doubled - from 8.6 to 21 days.

(These last two posts are but one example of why the blog-o-sphere is so great)

The Politick-ing

Ya gotta love Jaan Sidorov! Really, ya gotta! His post dismantles the various signatories to the now-infamous 'Dear Mr President, we'll save $2 trillion' letter. Here's an appetizer: "Representing the medical device and remote monitoring industry, this group [AdvaMed] promises that overuse of their technology will reduce overuse of other medical care."

Not to be outdone Glenn Laffel MD PhD at the difficultly-named Pizaazz recommends Sens Baucus and Kennedy caucus, and do it quickly, before they are forced to settle their differences on the White House hoops court. (my money's on the skinny black guy...)

Maggie Mahar's posts are always relevant and precise; she knows of what she speaks. Maggie's coverage of Sen Jay Rockefeller's (D WV) bill to greatly expand MedPac's power to and reduce Congress' role in determining Medicare benefits is a prime example. Few are following this, but it could well be the key to controlling Medicare's costs in the future.

Jonathan Cohn has the scoop on the meeting wherein President Obama voiced support for Rockefeller's bill.

The always-interesting American Spectator has an insider's view of GOP Senators' perspectives on yesterday's release of 'the Kennedy bill'. Snippet - "Enzi was "very disappointed" with the release of the Kennedy bill, and said the senator feels that all the time Republicans spent talking to Democrats may have been in vain since the majority wasn't listening to them."

Not sure where it goes but it definitely deserves mention

HWR has been around for more than three years, and Roy Poses MD has been one of the reasons for that longevity and credibility. Roy is one of the blog-o-sphere's most perceptive industry watchdogs, and his current post is no exception.

Don't change that channel!

Health reform will be leading the headlines for the summer and well into the fall. And Health Wonk Review will keep you informed, educated, and up to date with the best of the blog-o-sphere.

Jason Shafrin hosts the next edition of HWR at Healthcare Economist; his perspective and expertise will undoubtedly make the June 24 edition one of the best.

Posted by at 12:38 PM | Permalink | Comments (5)

The public plan is a non-negotiable for some in Congress, a nice to have for others, a bargaining chip for still others, and anathema to the rest. There aren't two distinct blocs; rather there are a spectrum of views. This is critical to understanding the 'role' of the public plan in the process.

My sense is that - as far as the key players (Baucus, Obama) view it, the public plan is something of a trojan horse; try as I might I can't see an overwhelmingly compelling reason to make the public plan option mandatory.

However, it is vitally important to Waxman and Kennedy and Stark, all key players in the debate, and to all of the Republicans except possibly the Senators from Maine.

This sets it up beautifully as a bargaining chip; the Obama/Baucus faction can use Waxman/Kennedy/Stark to get the GOP to make big concessions in return for a watered-down public plan option.

Myself, I don't see the public plan as critical to reform, or perhaps more accurately it is not nearly as important as comparative effectiveness with teeth and reimbursement reform and taxing health benefits. That's the important stuff.

While comparative effectiveness was part of the 'stimulus' bill, it was downplayed, perhaps to mute criticism from those who see it as a thinly-disguised rationing tool.

Help is on the way. The Patient-Centered Outcomes Research Act of 2009 was introduced earlier this week by Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Budget Committee Chairman Kent Conrad (D-ND). according to the press release, it would create a private, nonprofit corporation, the Patient-Centered Outcomes Research Institute, to "generate scientific evidence and new information on how diseases, disorders and other health conditions can be treated to achieve the best clinical outcome for patients...Research would be conducted by trusted public and private organizations approved by the Institute’s diverse board of directors, which would include practicing doctors, patients, pharmaceutical and biotechnology makers."

This has been tried several times before; grey hairs out there will remember the old Agency for Health Care Policy and Research (AHCPR) (now AHRQ) and the Patient Outcomes Research Team program. AHCPR was rendered all but powerless by defunding during the mid-nineteen nineties, driven in part by virulent attacks on the agency's work by several physician groups.

AHCPR's all-but-demise was partially its own fault, as early guidelines were viewed as weak and ineffective by some, and the development process itself drew fire from the Office of Technology Assessment. In fairness, this was the first real large-scale effort to develop and promulgate clinical guidelines, so it should have come as no surprise that the initial effort was not exactly perfect.

If the bill becomes law, Rockefeller's Patient-Centered Outcomes Research Institute has a lot of history to learn from, a different political climate in which to develop, and a mandate to make a meaningful difference.

It is also our only chance to restrain cost growth in Medicare.

Posted by at 8:02 AM | Permalink | Comments (0)

Earlier this week the NYTimes' Robert Pear did a piece that delved into the Dartmouth Atlas of Healthcare, one of my all-time favorite publications. The Atlas, and the research that spawned it, provides a clear and detailed picture of the cottage industry that is American health care; practice patterns vary wildly and widely.

As just one example, the rate of back surgeries for Medicare members is five times higher in Fort Myers than in Miami, while the hip fracture repair rate is essentially identical. And no, it's not because the population is different or sicker, it is because that's just the way medicine is practiced in those two areas.

Well, despite the terrific, well-respected, and well-regarded research behind the Atlas, the NYT got this one wrong, citing some folks who claimed that it is inaccurate, biased, or just plain wrong.

Author Robert Pear is usually one of the best in sorting thru the chaff to find the wheat, but he quoted several individuals without comment, even when the quotes were flat-out wrong. Pear failed to refute critics, even when it would have taken precious little research to do so.

Here are a couple examples:

“There is too much uncertainty about the Dartmouth study to use it as a basis for public policy,” said Senator John Kerry, Democrat of Massachusetts. “Researchers can’t explain why some areas of the country spend more on health care than others. There are many reasons spending could vary: higher costs of living, sicker people or more teaching hospitals.”

Wrong, Senator. Absolutely, flat-out, incontrovertibly wrong.

There is almost no uncertainty about the study and little confusion about why spending is different. It isn't sicker people, and the issue of cost of living and excess hospital costs are discussed in detail - and corrected for - in the Atlas. The Mayo Clinic among other excellent providers delivers great care for a lot less money than hospitals in your state, and there are wide variations in hospital admission patterns between New Haven and Boston - patients are admitted far more often for COPD in Boston than in New Haven. That's just practice pattern variation, for no reason other than 'that's the way we do it' in Boston.

And this.

"Dr. Michael L. Langberg, senior vice president of Cedars-Sinai Medical Center in Los Angeles, is among the critics.

“The statement that Medicare costs can be cut by 30 percent has been repeated so many times that it has come to be viewed as a proven fact by some,” Dr. Langberg said in a recent letter to the Senate Finance Committee. “It is not a fact. It is a gross oversimplification of an untested theory.”

Dr. Langberg endorsed the goal of covering the uninsured, but said, “We do not believe that rushing to make large cuts in Medicare payments to hospitals is the right way to fund that coverage.”

Good to see that automatic kneejerk response is still functioning. There is no question, none, that much of US health care spending is wasted on unproven procedures, hospitalization of patients that could be treated on an outpatient basis, and for devices and drugs with minimal positive impact on health.

Maggie Mahar does a much more in-depth dismantling the disappointing reporting/writing/editing by the Times here.

Posted by at 11:49 AM | Permalink | Comments (1)

With the release by the Ways and Means Committee of the first House health reform bill , the debate is about to get much louder and more strident. The 'bill' is more of an outline than anything else, although it's a pretty detailed outline.

It is also very much a 'moderate' plan, one that has the fingerprints of the House Blue Dog Democrats all over it.

Notable by their absence from the bill is any mention of a Medicare-based public plan option or employer mandate. This doesn't mean the Democrats are abandoning either option; rather it indicates a willingness on the part of Baucus, Waxman, Kennedy et al to work with Senate Republicans on compromise language in an effort to gain some GOP support.

Key components of the bills now up for debate include:

- maintains current employment-based insurance structure; employers can keep their plans

- calls for a "public health insurance option [that is] self-sustaining and competes on a "level field" with private insurers"

- an insurance exchange enabling insurers and small businesses to evaluate and select from a list of private insurance options

- prohibits medical underwriting, exclusion of coverage for pre-existing conditions, and rating based on gender, health status, or occupation with some allowances for age rating

- subsidizes coverage on a sliding scale for individuals and families with income up to 400% of the Federal poverty level (family coverage today would amount to 14% of income at that level).

- exempts small, low-wage firms and provides a small business tax credit for those providing health coverage.

-eliminates the Medicare Sustainable Growth Rate formula (used to determine physician compensation) and increases reimbursement for primary care providers

What's not there is more telling than what is.

There's precious little discussion of how to pay for this, and specifically whether employer premiums will be taxable and if so to what extent.

As I've been saying for months, it's about the money. Expanding coverage without tough cost controls (note - NOT price controls - that's very different) is a road to financial ruin. With their recent focus on the cost of the Recovery Bill and apparent strategy to take on the Democrats and the President on the issue of government debt and spending, the GOP has served notice that they will miss no chance to accuse the Dems of profligate spending.

Good for them; the 'oversight' is certainly appropriate and necessary, as the most important part of health reform is cost containment.

Posted by at 7:52 AM | Permalink | Comments (1)

Those of us with plenty of gray (or silver) hair have not been surprised by the significant increase in medical expense in California since the implementation of reform several years ago. What has been surprising is that it has taken this long for medical inflation to 'present'.

Medical costs are the primary reason premiums are headed back up, but before we get too excited, let's remember that work comp premiums plummeted over the last few years, dropping to almost-unprecedented levels. Carriers rushed into the state, new insurers started up, and existing carriers sought to write even more business. The result was a very competitive market, and a dramatic drop in employers' workers comp costs.

The market has turned; the insurance rating board is looking for a rate increase of almost 24%, driven in large part by the increase in medical expense.

In a recent hearing before the state's insurance commissioner, two problems became apparent - one obvious and the other much less so.

The obvious problem is the rapid rise in medical expense in California. According to a recent release by CWCI, their analysis shows "significant increases in California workers' comp medical payments since AY 2005, with amounts paid for treatment, pharmaceuticals and durable medical equipment...all on the rise."

The less obvious problem is the lack of understanding on the part of most insurers, TPAs, and other payers about the factors driving up medical expense. This ignorance is demonstrated by their continued reliance on medical management techniques and tools that are not only ineffective but I would argue are likely contributing to the increase in costs.

As reported in WorkCompCentral (subscription required);

"Despite the fact that self-insured employers such as Safeway and the University of California reported much smaller medical cost increases than commercial insurers, they pointed out that their medical networks have helped reduce much of their exposure to cost drivers because of the quality of their physicians [emphasis added], and their ability to encourage claimants to seek treatment within their medical networks and avoid litigation."

Big generalist networks do not reduce comp medical expense because the incentives are all wrong and they contain too many docs who can't spell workers comp.

What does this mean for you?

Until and unless payers figure this out and stop talking about doing something and actually start doing that 'something' medical costs are going to continue to rocket up, and so will employers' premiums.

Posted by at 9:29 AM | Permalink | Comments (3)