Self-insured employers are beginning to take the drastic step of sending patients overseas for expensive, complex medical procedures. While there are likely just a few employers doing this now, there are several companies formed expressly to provide these services to employers. And, at least three large employers have contracted with benefits consulting house Mercer to research medical services offshoring.

The rationale behind these decisions is obvious - greatly reduced expenses. Procedures done in India or Thailand commonly cost one-tenth to one-fifth what they do here. And this is in facilities that have been likened to five-star hotels, with very high staffing ratios and round-the-clock pampering of American patients.

Hospitals, at least American ones, are not happy about this. Private-pay patients (those covered by private insurance) overpay for care, and that overpayment helps cover the cost of indigent care. As hospitals are required by law to provide care to all, they have relied on this cost-shifting to help balance the books.

Some employers are no longer willing or able to pay this hidden tax

What does this mean for you?

Another thread is being pulled from the worn fabric that is the US health care system.

Posted by Joe Paduda at 10:54 PM | Link to this post | Comments (2)

Most employers are not confident that they understand their companies' High deductible health plans (HDHP). According to a study released by Buck Consultants, only 20% of respondents said they understood their HSHPplans "very well".

Notably, 81% of respondents said the key challenge to successfully implementing these plans was employee education and understanding of the plans.

It is encouraging that employers recognize that the plans will not be successful without an educated and informed employee base; it is somewhat less encouraging that these same employers don't think they know their own plans very well.

Posted by Joe Paduda at 7:17 AM | Link to this post | Comments (2)

The premise of health insurance is simple - insureds pay insurance companies a premium with the expectation that when the insured needs medical care, it will be funded by the insurance company (subject to the policy conditions). And if the care required is really expensive, well, that's why you have insurance.

The relationship is inherently based on trust; the insured trusts the insurance company to pay the bills and the insurance company trusts the insured to pay the premiums. Actually, there's not a lot of trust on the part of the insurer, as they just cut off benefits when premium payments stop coming in. But the insureds trust the insurer to pay the bills, cover expenses, and treat them fairly.

What happens when that trust breaks down? Does it do lasting damage to the relationship between and among individuals and insurers? Absolutely.

"While deception may be tempting because it can be used to increase short-term profits for the deceiver, we find that the long-term costs of deception are very high," the researchers conclude. In other words, in long-term relationships, it pays to cooperate." This quote is from a very interesting experiment conducted by a couple Wharton Business School professors which examined the implications of deception on relationships between individuals.

Research indicates the health insurance industry ranks pretty low in terms of respecting customers, and customer respect, with 3 out of 5 respondents saying their general trust for insurance companies is "not much" or "not at all".

Moreover, polls indicate that people would be willing to pay more to see certain doctors, under certain conditions. This being the case, it is puzzling as to why HSA plan sponsors (insurance companies) aren't more forthcoming, and don't explicitly inform insureds that services rendered by providers must be "covered" under the plan definitions if the negotiated rate is going to apply. If their members are OK with paying more, then insurers should just tell them, clearly and up front, that non-covered services are going to cost whatever the provider charges.

Many health insurance executives appear to have a large blind spot when it comes to their customers' reactions to policy limits and restrictions. They don't seem to "get" that customers are not expert in parsing policy language, don't understand the intricacies of policy limits and restrictions, and get angry when they think they're being mistreated.

The net is, insurance companies may save a few bucks by not telling HDHP buyers that their negotiated discounts don't apply to non-covered services, but they will likely lose customers, and may well lose their battle against tighter regulation as a result.

What does this mean for you?

Perception is king, and customers/voters/health care consumers perceptions of insurers' practices may well result in "unintended consequences" for the insurers.

Posted by Joe Paduda at 7:21 AM | Link to this post | Comments (10)

My esteamed (pun intended) colleague and I spoke at length yesterday about a letter he received from Golden Rule (United Healthcare's subsidiary). I'm paraphrasing; here's the key points.

1. Golden Rule stated that their policy is to reprice bills for non-covered services to reflect the rate they have negotiated with the provider, and to send that information to the insured and provider.

2. It is up to the provider to determine if they will accept that amount, or if they want to balance bill the patient.

3. Here's the corker - Golden Rule stated that this policy is not disclosed to the insured in any written materials because it is contained in the contract between the provider and Golden Rule, and is confidential. Their claim is that this matter is between the insurer and the provider, as the insured is "self-insured" for that risk...

Again, neither I (an ex-insurance company executive) or anyone else I have spoken with understand this policy.

Here's where it really gets unpleasant. UHC, and other insurance companies, sell health plans to employers where the employer is liable for the first $25,000, $100,000, or other level of risk. Beyond that, UHC is "on the hook" for the claims expense. Moreover, employees insured through these plans who receive "non-covered" services from UHC-contracted providers usually get the benefit of the negotiated reimbursement rates.

Colleague suggested, and I agree, that this inconsistency is troubling. And not likely to make individuals, or supporters of consumer-directed health care, very happy.

I'm amazed at the blithe ignorance exhibited by insurance companies. Do they think individuals will not be upset about this? Do they think this will engender warm feelings of brand loyalty? Or do they think this will somehow endear them to their providers, even if it angers their policyholders?

Who's the customer here?

Posted by Joe Paduda at 7:50 AM | Link to this post | Comments (9)

Here's the latest on my Colleague's battle with his/her health plan over accessing their negotiated rate for non-covered care. While the health plan (United Healthcare/Golden Rule) promised to respond, the customer service folks had not resolved the question by the end of last week. So, s/he is still waiting.

The contention of Colleague is that since the marketing materials and policy did not state that UHC's negotiated rates did not apply to these services, and in fact stated that one of the advantages of the plan was that access, the marketing materials are misleading at best.

Meanwhile, Hank Stern and Bob Vineyard at InsureBlog invested a considerable amount of time investigating this, and have written an excellent synopsis of the situation and the insurer's perspectives. Hank and Bob also asked insurance companies to explain why they would adopt a policy that is so obviously consumer unfriendly; as of yesterday they are still waiting for a response...

The net from InsureBlog is that the insurance companies reprice the services to reflect their negotiated rates, but it is up to the provider to determine if they will accept that rate . So, the health plan informs the consumer what their cost could be, and the provider then says "nope, you've got to pay the full boat".

Boy is this dumb. The consumer is now "educated"; they know what they could pay, and they also know that they have to pay the higher rate. Result - really angry consumers, who feel they have been bait-and-switched. Yes, the insurance companies are technically within their rights to do this, as are providers, but this will undoubtedly stoke the anger of voters, an anger that may well be directed at both offending parties.

Posted by Joe Paduda at 7:51 AM | Link to this post | Comments (2)

Health Affairs' article comparing the health status of Americans and Canadians doesn't break new ground nor shatter any perceptions, at least not any perceptions held by informed folks. Tops among the popular misconceptions about the Canadian health care system is the old saw that people have to wait forever for care, with the unstated resulting negative impact on health.

Well, 11% of Canadians do think they have unmet medical needs, primarily because they have to wait too long for care in some instances. In contrast, 13% of Americans have unmet needs, primarily due to cost.

A few more factoids to ponder -

--Most respondents in both countries are in good very good or excellent health, although a few more Canadians enjoy this status (88% v US' 85%)

--31% of the poorest Americans considered themselves to be in fair or poor health compared to 23% of Canadians.

--Canadians and Americans exhibited similar results regarding access to physician services.

The statistics come from the Joint Canada/US Survey of Health, a joint effort of the National Center for Helath Statistics in the US and Canada's Statistics Canada; sample sizes are large and the methodology robust.

When one considers that we Americans are paying 50% more for health care than our northern neighbors, it's hard to see what we get for our dollars.

Posted by Joe Paduda at 6:15 AM | Link to this post | Comments (4)

My firm's third annual survey of prescription drug management in workers comp has been completed, and here are a few of the findings.

1. Drug costs increased slightly more than 10% last year, a "decrease in the rate of increase" over prior years.

2. Respondents, which ranged from small regional payers to the largest national insurers, are getting more sophisticated about drugs and drug management. This is evidenced by respondents' increasing focus on clinical management programs; access to more and better data about their programs and results thereof; and greater attention on utilization vs. price.

3. Third party billers continue to frustrate payers, with almost 90% viewing TPBs as problematic. Concerns included reduced data quality, increased administrative problems and workload, and increased costs.

4. Drug repackaging is also high on respondents' lists of problems, with particular emphasis on the California situation and physician dispensing.

A copy of the survey report can be obtained by emailing me at jpaduda@healthstrategyassoc.com

Posted by Joe Paduda at 9:42 AM | Link to this post

A study released by the Mayo Clinic, reports that there is far too much money spent on end-of-life care. The study is paralleled by a newly released Dartmouth study , reports that indicates Medicare spent about $40 billion more than it should have on end of life care, due to the inefficiencies of many hospitals.

By any accounting, that's a lot of cash. Enough, in fact, to provide coverage to a substantial number of Americans presently without health insurance.

While it can be argued that one does not know when a person's life is ending within six months, it can't be argued that some hospitals are much more efficient than others. And this inefficiency is costing taxpayers, employers, and individuals billions of dollars.

The Mayo Clinic study found that a substantial portion of Intensive Care Unit patients were the elderly with terminal conditions. ICUs are notoriously (and appropriately) expensive, require high staffing levels and very sophisticated equipment, and are expressly designed to help really sick people get better. That does not make much sense for many elderly with chronic, life-ending conditions.

The Dartmouth study, which was authored in part by John Wennberg (one of the most insightful people in health care), recommends that terminally ill patients be treated outside of acute care facilities. This seems to be common sense; acute care hospitals are, by definition, set up for handling acute conditions - trauma, childbirth, orthopedics, heart attacks, etc. Terminal illnesses are not acute conditions, and therefore should be treated in a facility or setting that is chronic-care oriented.

This is one of those apparently simple solutions that can save billions of dollars while improving quality of care and end of life experience, and is likely to be acceptable to individuals of all political stripes and inclinations.

Sign me up.

Posted by Joe Paduda at 7:21 AM | Link to this post | Comments (2)

HSA plans do not require contracted providers to accept the health plan's negotiated rates when members receive non-covered care. That's what I've learned about the coverage policies of United/Golden Rule, Coventry, Assurant, CIGNA, Aetna, Humana and a couple of the Anthem Blues.

Quoting Hank Stern of InsureBlog, "In Ohio (and, as far as I know everywhere else), individual (as opposed to group) plans exclude normal childbirth. So someone covered under a HDHP would not get the negotiated rate for any pre-natal care..."(or the actual childbirth, or any associated expenses).

Hmmm, I wonder the rate of "complications" experienced by moms covered under HSA plans is higher than one would expect... But I digress.

The key here is what is covered, and what is not. To find that out, ask for a specific list of covered and excluded items from the broker and/or the health plan. And ask if services that are paid out of the HSA, but appear to be covered, fall under the provider's contracted rates.

Why would you do this? Because the contracted rates are likely less than half the "retail" rate.

As to why a health plan would do this; not require their providers to accept contracted rates, that's a mystery to me. As a couple ofcommenters have noted, if the insureds pay the higher rate, they are going to pierce their deductible layer much faster, thereby incurring claims expense and costing the health plan money. To say nothing of the consumer backlash when people find out their coverage through a national plan does not give them better rates.

I'm really surprised that health plans would do this, and do very little to educate their customers about this pervasive policy (nowhere on any website did I see this policy referenced). It makes little sense from a consumer marketing perspective, is likely to alienate customers, looks very short-sighted, and flies in the face of their touted desire to provide consumers with more education and make them better health care buyers.

Did the health plans think consumers wouldn't figure this out? And be angry when they did?

Thanks much to Hank, my "colleague", and several other un-named and un-nameable industry sources.

Posted by Joe Paduda at 5:54 AM | Link to this post | Comments (8)

Prof. Regina Herzlinger, a well-known advocate of consumer-driven health care and professor at Harvard Business School, has come out in favor of a plan proposed by South Carolina Gov. Mark Sanford that would add choice to the state's Medicaid program.

According to Dr. H, "Every recipient would obtain catastrophic and preventive coverage as well as a personal health account (PHA). Enrollees could then use their PHA funds to pay for a consumer-driven option of a traditional Medicaid hospital insurance, along with a doctor of their choice; a managed care policy, with its deductibles and copayment; or a network group of local physicians." OK, sounds reasonable.

She then goes on to say:

(Critics) "believe that Medicaid recipients will overwhelmingly choose the consumer-driven opportunities. But when consumer-driven plans are offered along with other health insurance choices, they are not necessarily the most popular. A 2005 Kaiser Family Foundation survey, for example, found that when enrollees were offered other insurance plans, only about 7 to 15 percent went the consumer-driven route. They also contend that Medicaid enrollees are too poorly educated and lack access to sources of information like the Internet. Although these sources are depicted as high tech, much of what patients learn actually comes from the phone and face-to-face interactions."

I'm not sure what to make of this. Is Dr. H's contention that critics need not worry because most Medicaid beneficiaries won't pick consumer-drive plans? Or is it that Medicaid folks, despite their lower educational level, will grasp health care information as quickly and completely as privately insured people? Or both?

I'm not disagreeing with Dr. H, I'm just not sure where she's going with this.

I am somewhat confounded by her later assertions in the same article that individuals with chronic conditions covered under consumer-directed plans did a better job complying with treatment, testing, and preventive care directions than individuals in non-consumer-directed plans. Methinks the good doctor confuses a statistical relationship with a causal one.

Back in the day, HMOs recruited members by offering health club memberships, knowing that individuals who were already using clubs and those committed to/interested in improving their health status would join up, incur few claims, and therefore the net expense would be considerably less than if the HMO offered comprehensive diabetes care. Marketing and market segmentation at its best.

Just because these HMOs had a lot of people in health clubs does not mean that their members were healthier because they joined the HMO, it could mean that because the members were healthy to start with, they joined the HMO.

My bet is that the folks with chronic conditions that took care care of themselves in the consumer-directed plans were doing so before they joined. Not, as Dr. H says, that "These plans appear to have transformed how some enrollees approach their healthcare."

a nod to fierce healthcare for the head's up.

Posted by Joe Paduda at 6:39 AM | Link to this post | Comments (1)

From Hank Stern and Bob Vineyard at Insureblog comes a note that they posted about a problem a CIGNA HSA aka High deductible health plan (HDHP) client had that looks remarkably similar to the now-well-known "colleague".

Turns out that the CIGNA HSA plan, which is supposed to help insureds be more sensitive to their expenditures by giving them a financial stake in their care, does not appear to allow insureds to access CIGNA's contract discounts if the insured has yet to meet their deductible.

Evidently other HDHP/HSA plans have similar provisions. While this may make sense in the ivory tower in Edina (home of UHC) or Philly (CIGNA), it makes no sense to a mom with a child screaming due to an apparantly terminal earache, adverse drug reaction, or profusely bleeding head wound. And it will...anger...her immensely, leading her to switch plans (and wonder why this is so complicated and unfair and timeconsuming and stupid).

A reader asked what my opinion of HSAs is.

I believe that getting patients involved in their care, their health, and the financial implications of same is an excellent idea. Twenty years ago I worked for a firm that was trying to do just that - demonstrate to individuals and companies that many health care conditions were due to bad choices. We actually developed a rough algorithm that linked health behaviors, conditions, and attitudes to future health care expenditures. And no one bought it.

So, I still believe in the concept.

What I don't believe is HSAs as a panacea. I'm not going to get into all the reasons for this; if you're interested read here. It also makes me nuts when pundits and politicians and "economists" claim that all we have to do is add a healthy dose of "consumerism" to health care to fix it. What morons.

I do believe that this focus on HSAs and consumerism is largely a waste of time. We should be working to fix our system, not tweaking around the edges. And all this tweaking does is postpone, and make much more expensive and painful, a real solution.

Posted by Joe Paduda at 5:04 PM | Link to this post | Comments (3)

My post about a colleague's unwitting effort to educate the rest of us about the nuances of HSAs and payment policies has drawn a bit of interest amongst loyal readers and a couple of others as well. That requires follow up.

The plan itself is not a full service plan, instead it is a "hospital surgical" plan that covers (among other things) emergency room services but only in a hospital, and does not cover physician office visits. A brochure, entitled "UHC Choice Plus network" was included in the marketing package, and states that "when you use a network provider for medical services you benefit from the special rates offered to covered members..." that my colleague interpreted, reasonably, to mean that s/he would benefit from UHC's negotiated discounts. And, when the colleague's dependent needed emergent care, located a UHC-contracted provider, and went to that provider.

Here's a quote from the colleague:

"it would be really hard to negotiate with a facility given the fact that I was not aware that I needed to as well as that I was attending to an injured child. Actually my spouse was as I was traveling on business. The furthest thing from my spouse's mind at the time was negotiation of rates. This is why we contracted with UHC..."

Golden Rule is the United Healthcare entity responsible for most of the company's HSA offerings. Their website has a disclaimer regarding care, quality, medical services, but nowhere is it mentioned that payment for services under a deductible are not subject to the network rate. Here's what the language says (bolded text is my edit):

"UnitedHealthcare arranges for providers of health services to participate in a network made available to you as a Golden Rule Insurance Company insured. Network health care providers are independent contractors and are not employees of Golden Rule Insurance Company or UnitedHealthcare. Golden Rule Insurance Company makes payment to network providers through various types of contractual arrangements."

Another part of their website references the "shared savings" program; here's the language: "When you seek health care in the UnitedHealthcare network, you can take advantage of network benefit levels and negotiated discounts with network providers. Staying in-network will result in the lowest out-of-pocket cost to you." Seems pretty unambiguous...

But, the site then directs you to go to another site (Multi-Plan), to find providers who participate in the "shared savings program."

So, technically UHC is more correct than not; the colleague is likely not a "covered member" for that particular service and therefore the health care sought and received is not covered, and therefore not subject to the UHC contracted rates.

But, and this is a mighty big but, UHC's stance fails, miserably, what my friend Peter Rousmaniere refers to as the "reasonableness" standard. What would a reasonable insurance customer making a reasonable interpretation of the language conclude?"

Posted by Joe Paduda at 8:09 AM | Link to this post | Comments (1)

A colleague working in the managed care industry purchased a HSA plan through United Healthcare/Golden Rule. This colleague, a highly experienced and very knowledgeable industry veteran with extensive expertise in assessing physician outcomes and inpatient and outpatient hospital costs and quality, and several years' experience in provider network development and operation, was confident in his/her ability to effectively reduce costs while obtaining care for the family.

Not so.

United, which recently released a glowing report on its consumer-directed health plan results, evidently has some fine print in its HSA policy language that is so fine it is invisible. According to my colleague, a dependent received care that cost less than the deductible amount, resulting in a bill for about $800 from the provider (contracted under UHC), which was repriced to about $250 by United. When the colleague tried to pay the $250, the provider refused to accept the payment, stating that the amount owed was the billed charge of $800. Colleague then went to United to ensure the provider was under contract at the time of the service, which it was.

Here's where it gets slimy. UHC then informed said colleague that as the care was provided outside of UHC's liability, that the colleague's liability was, in fact, billed charges. Questioned on this, the UHC representative stated that their provider contracts do not require the provider to accept the contracted rate for services rendered that are not specifically payable by UHC. (I may have the wording slightly off, but you get the picture.)

Colleague, was, as one can imagine, puzzled, s/he went back and read through the entire policy language, EoB, statement of benefits, and marketing literature.

Nowhere in any of those documents could s/he find any reference to this "policy".

One of two things is occurring here. It is possible that the UHC rep is misinformed, in which case shame on UHC for not training their staff on something as critical as this. And for not training their providers as well, who also stated that their contracts allowed for requesting payment at billed charges under these conditions. That would make the most sense, as it is hard to fathom why UHC would engage in a policy that will obviously result in so much consumer dissatisfaction.

Now it could be that s/he, despite being a highly educated individual, with 15+ years experience in managed care, missed this crucial language in their plan documents. I don't believe that's the case, but that possibility actually makes a critical point. If s/he missed this, than 99% of the consumers buying into this plan will certainly miss it as well.

Actually, there's the worst case, which is UHC didn't even think about the possible negative implications of their "policy" regarding this scenario.

Meanwhile, CalPERS, the retirement system for many of the state's retirees and a good chunk of present employees, has brought suit against UHC, alleging that the giant health plan's policy of retroactive dating of stock options cost CalPERS upwards of $20 million in reduced stock value. This policy was likely partially responsible for providing stock options ultimately worth $1.6 billion to CEO Bill McGuire.

Posted by Joe Paduda at 6:50 AM | Link to this post | Comments (15)

The latest budget projections have federal spending on Medicaid programs dropping below projections, while Medicare is suffering from the reverse. It appears that the shifting of reimbursement for drugs from Medicaid to Medicare is at least partially responsible for the financials, but increased utilization of physician and outpatient hospital services is also a major contributor to the increase.

This last point illustrates just how ineffective the price controls used in Medicare have become. While per-service prices have been held flat, utilization, driven by the use of more services and higher-cost services, has been the driving force behind the need to increase Part B premiums by 11% for 2007.

Meanwhile, preliminary indications are that Part D costs will come in under (the already highly inflated) expectations, although how this can be determined based on one quarter's worth of data is a mystery to me.

Perhaps those actuaries have gotten much better at predicting direction by looking in the rear view mirror.

Posted by Joe Paduda at 12:40 PM | Link to this post

Well, duh.

My pejorative use of the playgound expression is not directed at Health Affairs or the authors of the excellent study that is the cause of my use of the childish expression, but rather at those who actually think HSAs (health savings accounts, aka health spending accounts) will reduce spending by making consumers, well, better consumers.

The central finding of the study (authored by Dahlia Remler of CUNY and Sherry Gilead of Columbia University) is this "fully half of (health care) spending is for those who face reduced cost sharing on average (under an HSA plan as opposed to a more traditional health benefit design). Thus, when considering the plans in existence today and comparing them with the types of plans associated with the new (HSA) legislation it is not clear that HSAs live up to their advertised increase in cost sharing."

I'd go further - it is clear that HSAs will have little to no impact on health care spending by the high spenders. This blows a very large hole in HSA advocates' arguments that consumerism is the solution to our health care crisis.

Here's the details.

The study referenced by the article in the Hartford Courant (a great local paper) shows that for some beneficiaries, HSAs coupled with high-deductible health plans will actually "reduce cost sharing...in particular, the group responsible for half of all medical spending would see no change or a decline in cost sharing at the margin and on average." While I'd note that it is likely that for others, their health care expenditures will decrease (over the short term), it may be that the decrease is due to lack of funds in their HSA, and/or their desire to not spend money. In turn, this may well lead to higher future health care expenditures when their failure to take their meds, get preventive care, etc. result in declining health.

I've been arguing this point for several months now; a Louisiana physician has posted an excellent ground-level perspective on his blog, and Michael Cannon of Cato has put up a semi-rebuttal on his site. Cannon's response, while thoughtful, misses the good doctor's central point - HSAs do nothing to address access to care.

Cannon also fails to refute the central point of Remler and Gilead's article - HSAs will not reduce spending by the individuals who spend the most.

The Health Affairs article, which is available in abstract at the site referenced above, adds a good bit of clarity to the opinions offered by yours truly and other pundits. It is worth purchasing. I'd like to post my copy, but would rather you send the good folk at Health Affairs a few bucks to support their great work.

Posted by Joe Paduda at 7:59 AM | Link to this post | Comments (5)

Jason Shafrin at Healthcare Economist has posted the latest edition of HWR for your reading pleasure. Contrasting opinions on quality, consumer directed care, and technology are featured in Jason's edition.

Posted by Joe Paduda at 7:06 AM | Link to this post

Jason Shafrin of Healthcare Economist is hosting this week's edition of HWR. Get your submissions in today or by 9 am tomorrow! You can use Dmitriy's automated entry system after registering here.

Posted by Joe Paduda at 2:53 PM | Link to this post

Kevin at Kevin MD posted a quick piece on the contention by researchers at Dartmouth College that there are too many providers, and he struck a nerve or three. And one appears to be the sciatic, for the amount of pain it has created amongst Kevin's readers.

The study, which was published in my-favorite-journal Health Affairs, contends that there are presently enough physicians in the US to provide all of us with adequate care. Moreover, the lead researcher opines that spending additional money to increase the number of physicians will divert funds from more critical needs.

If you agree w the study's results, it looks like we will soon have too many docs. And the more docs we have, the more procedures are performed, and the more bills generated. I'm also dubious about a return on that investment, as the health status of the average American will likely remain unchanged..

Posted by Joe Paduda at 7:12 AM | Link to this post | Comments (2)

Dartmouth's study on the number of physicians required to treat Americans includes an observation which bears directly on the USNews report on the nation's best hospitals. One of the top ten, the Mayo Clinic,needs one-third as many physicians to treat patients in the last six months of life as an unranked facility, New York University Medical Center (also a teaching institution).

That being the case, it is clear that being the best does not require having a lot of docs. And that has significant implications for the type and volume of procedures performed and the cost of care.

Posted by Joe Paduda at 6:13 PM | Link to this post

Health insurers are reluctant to pay for experimental or unproven medical procedures and drugs. And in most cases that makes sense; whether its apricot pits for cancer or artifical cartilage, until there is proof that the treatment will positively impact the condition, obtaining that care could harm the patient, or provide no benefit, while costing the insurance company (and therefore its policyholders) lots of money.

That long standing norm has required insurers to staff medical committees , also known as P&T committees, whose function is to assess new procedures and determine the insurer's coverage policy. These committees determine if the treatment is covered in all instances, for specific diagnoses, only after other therapies have been tried, or not at all. And in my experience the committees have done their jobs well, diligently, and fairly.

Personalized medicine, aka gene-based therapy, has long stood just outside the committees' meeting rooms, rarely poking its nose in but nonetheless a very real, and very shadowy presence. The door is about to open, forever altering the size, role, staffing, and reach of these committees. The knock is coming from a beta blocker, Bucindolol, which appears to work quite well for a few people and not at all for others. Early trials were terminated when it seemed the drug did not work nearly as well as others. Now, evidence is emerging that the drug is effective for a segment of the population with a slightly different genetic makeup.

This is the kind of information that will lead to a transformation of the P&T committee, benefit design, medical ethics and likely utilization review. Committees will become larger, require deeper knowledge of genetic medicine, and likely become even more tightly integrated with the medical management department.

And that's a good thing.

Posted by Joe Paduda at 7:49 AM | Link to this post

In a presentation to the Global Six Sigma Summit, CIGNA (health plan) CEO Ed Hanway made the link between good health and economic viability. This is one of the few times I have seen a health plan exec directly address the real reason employers should be concerned about health care - its impact on their workers' productivity and therefore the employers' success.

Considering that over 50 million workdays were lost due to a failure to receive needed care, and that this information has been out for years, it's encouraging that a health plan CEO has recognized the role of health care in economic success.

Here's a quote from Hanway's speech...

"By improving the health and well-being of individuals, we create a more productive work force...By supporting a more productive work force, we contribute to a more competitive business community. By improving business competitiveness, we create a stronger economy. And by strengthening the economy, we build a stronger nation."

Hallelujah.

Posted by Joe Paduda at 6:56 AM | Link to this post | Comments (3)

A rather interesting report from Vox Inc. reviews the websites of a dozen major insurers, revealing the good, the bad, and some pretty ugly as well. As more and more consumers are getting their quotes over the internet, the usability of web sites is getting more and more important. If you've been near a TV any time over the last few months, you've probably seen the ubiquitous Progressive guy talking about their site. Well, he and his fellow pitchpeople have been very effective in driving traffic; 68% of consumers are now getting quotes over the web; 55% over the phone.
That's a remarkable statistic.

One really interesting takeaway (mine, not their's) is that compared to user-specific needs such as finding an agent and accessing a policy, way too much space is devoted to institutional image.

There is some very useful information in the report, info that all marketing, sales, PR, and exec staff would be well-advised to spend some quality time reviewing.

And don't complain you don't have time - this is how people are buying your stuff, so it is the most important thing you could be doing.

Posted by Joe Paduda at 2:14 PM | Link to this post

US News' annual rankings of the nation's "best" hospitals by specialty is out, and hospital execs and PR staff around the country are either studiously ignoring the release or aggressively trumpeting their selection. Expect to see more billboards, especially around Baltimore, where Johns Hopkins got the top rank, Rochester MN (Mayo Clinic), Florida and Ohio (Cleveland Clinic).

There are several good things about this highly public presentation of "quality". First, it gets people's attention. Second, it gets hospital execs' attention. Third, it provides a somewhat objective review of providers' quality. Any time the industry is forced to focus on quality, however defined, that is a good thing. While we can, and I will, argue that one set of criteria is flawed, or another is somehow unfair or biased, in the larger scheme the attention paid to "quality" is just as, if not more, important than the actual criteria used. I'm sure I'll get some heated email on this, but the point is we do not pay enough attention to "quality", so any device, however cumbersome, that increases focus on quality is good.

So here are my complaints. First, the characterization of "best" is misleading. The criteria used do not provide a solid enough basis for claiming that facilities are "best". Here's what USNews' website said about this.

"The mission, unchanged over 17 years, has been to identify centers that take on and excel at tough procedures and conditions—rare cancers, worsening heart failure, seemingly untreatable leg-artery blockages. That is why most of the institutions ranked are referral centers, where the sickest patients are sent for advanced care. Such hospitals follow—and often pioneer—new treatment guidelines. They conduct bench-to-bedside research. And they exploit the latest advances in imaging, surgical devices, and other technologies."

That objective does not square with the term "best". I'm not sure I want to go to a referral center for a routine procedure, when I'll be surrounded by residents and students, potentially subjected to "new treatment guidelines" or "bench to bedside research", or exposed to the latest advances in surgical techniques. Do your research on someone else, thanks.

Second, criteria for selection are somewhat limited, and limiting. One third of the score is from a survey of random physicians' ratings of facilities; another is a severity-adjusted mortality rate, and the final third incorporates quality of care measures. Notably, several specialties were "reputation-only", including ophthalmology, pediatrics, psychiatry, rehabilitation, and rheumatology.

Third, a hospital pretty much has to be a teaching facility to be included. While that may be a bit of an exaggeration, the list is dominated by teaching facilities, and the criteria certainly are biased in this direction. There are lots of really good hospitals that are not teaching facilities, and therefore will suffer in comparison if consumers use this survey without considering the criteria. As they will.

What does this mean for you?

It's good that more light is directed towards quality, and we'll get better at focusing the light with more practice.

Posted by Joe Paduda at 4:12 PM | Link to this post | Comments (5)