Apr

Universal healthcare will lead to rationing

Posted by Joe Paduda on Friday, April 10th, 2009 | Comments

We’re going to start off the discussion about universal healthcare with one of the more common concerns voiced by opponents – Universal ‘coverage’ does not mean universal care, as it will lead to rationing of care, either overt or via extended waits for care.
Before we begin, lets not confuse ‘universal healthcare’ with ‘single-payer’. Single payer is one mechanism to deliver universal healthcare, but it is by no means the only one – as has been demonstrated by many European countries where private insurers are active and significant players in the market.
Let’s start with a key – if obvious – statement. No one I know would assume that universal coverage means anyone can get any medical service at any time from anyone they choose for free. Some ‘strict-intrepretarians’ may call that rationing, but the vast majority of people would undoubtedly say, “well, of course it isn’t!”
There’s a difference between rationing and appropriate buying behavior. According to Wikipedia, “Rationing is the controlled distribution of resources and scarce goods or services. Rationing controls the size of the ration, one’s allotted portion of the resources being distributed on a particular day or at a particular time.”
The operational word is ‘controlled’, and the question is by whom?
‘Rationing’ in today’s US health care system
In today’s non-elderly market, health plans ‘control the distribution’ of care; big insurance companies like United HealthGroup, Aetna, Wellpoint, CIGNA, Humana. Through their pre-certification processes, reimbursement arrangements, summary plan documents, provider agreements, and other business policies they try to make sure they only cover what they are legally required to cover (no cosmetic stuff) allow only those procedures that are appropriate for that condition delivered by an appropriate provider, and pay only what they have to for those procedures and services.
But there’s a big group of folks who don’t have access to any insurance (although they can access care on a limited basis through EMTALA) – the uninsured, a population that is likely pushing close to 50 million these days. Is their care ‘rationed’? No, they just can’t get any that’s not driven by an emergent condition. Hypertension medications, COPD treatment, asthma prescriptions are all not available (except in a few cases where provided by charity) unless and until the patient has to be admitted to an ER.
So, what do the data show? We’re living in a very expensive glass house. In 2007, Troy Brennan, Medical Director of Aetna, Inc, said “the (U.S.) healthcare system is not timely…” citing “recent statistics from the Institution of Healthcare Improvement … that people are waiting an average of about 70 days to try to see a provider. And in many circumstances people initially diagnosed with cancer are waiting over a month, which is intolerable…”
Conclusion? Today, Americans with coverage do not have unfettered access to any type of care.
‘Rationing’ in countries with universal healthcare
Opponents of universal healthcare often make the logical leap that somehow it will inevitably lead to extended waiting times. I’ve never understood the connection. How better access to care, leading to more preventive care, will lead to waiting lines for procedures has never been made clear to me. Moreover, the data refute that opinion.
The logic (an admitted misuse of that term) appears to go something like this: “In Canada (or the UK or France or wherever) they have universal healthcare and people have to wait forever for care, especially costly types of care”. We’ll leave aside the delays that exist in this country even for those with health insurance, the difficulty in finding a primary care doc who is still taking new patients, the waits to see specialists (god forbid you need specialty care from a chronic Lyme expert, the delays are months).
Or perhaps we won’t. In fact, A Commonwealth Fund study of six highly industrialized countries, the U.S., and five nations with national health systems, Britain, Germany, Australia, New Zealand, and Canada, found the United States ranked last on four measures of continuity of care and access problems reported by patients.
Here’s what a bit of specific data show (excerpted from the Commonwealth Fund report).
* The percentage of U.S. patients who waited six days or more for a doctor appointment when sick was not significantly different from the rate in Canada (23% v. 36%), the worst-performing country.
* Only 47 percent of U.S. patients were able to see a doctor on the same or next day when sick, versus 61 percent to 81 percent of patients in the four better-performing nations.
* U.S. patients were less likely than patients in Canada (12% v. 24%) but more likely than patients in Germany (4%) to wait four hours or more to be seen in the emergency department.
* U.S. patients were less likely than patients in four countries (except Germany) to wait four weeks or longer to see a specialist (23% v. 40%-60%) or to wait four months or longer for elective surgery (8% v. 19%-41%) (Schoen et al. 2005).
Another way to look at rationing is the volume of care delivered to those patients that actually receive care. Tom Lynch did a terrific comparison of the US to other OECD countries, within which he said this:
“Hospital discharges per 1,000 people in the US are 25% lower than the average for all OECD countries, and doctor visits are 42% lower.
Well, maybe people have significantly more intense and aggressive service while they are hospitalized in the US? One indicator of intensity is the average length of acute care hospital stay. In the US, the length of acute hospital stay is 5.6 days, which is less than all but eight of the other 29 OECD countries. But shorter stays could mean higher efficiency. A better way to look at it is to look at specific causes for hospital stays, like heart attacks, for instance. The US average hospital stay following acute myocardial infarction is 5.5 days, the lowest in the OECD.”
Clearly folks in countries with universal healthcare are not getting kicked out the door, or discharged “quicker and sicker” as we in the US do so well. Nor are they subjected to waiting times significantly different from those in the US.
What does this mean?
In several areas the US already has longer waiting times and poorer access to care than countries with universal healthcare. If the US adopts universal healthcare as practiced in other countries, the evidence indicates access will go up and waiting times may well go down.

Apr

Could you just make a decision? Please??

Posted by Joe Paduda on Thursday, April 9th, 2009 | Comments

TPAs and employers and insurance companies send out requests for proposal – to each other, to managed care firms, specialty providers, voc companies, IT providers, law firms. All have been on the receiving end of a voluminous, detailed, structured and rigorous RFP – so big that it clogs their virtual and/or physical mailbox.
The erstwhile vendor is initially happy. Hey, we made the cut, we’re on the list, we ‘get’ to respond. We have an opportunity.
Then the work starts. Even if the vendor is big, and has staff to help write the responses, and even if it has a ready-made library of canned responses, it is still a lot of work. We aren’t talking a couple hours here and there by a junior staff writer – every question has to be reviewed and assigned, then the answer checked for accuracy, grammar, and consistency with other answers. Then someone has to find all the reports and IT flow documents and disaster recovery plans and professional certifications and insurance coverage documents and CVs and make sure they have the right appendix numbers and are in the right format. Then it has to be collated, checked one more time, signed by an executive, and shipped out. All on the prospect’s schedule.
And that’s if it’s a big vendor; if it is a small company, the folks who are doing this work are also the folks who are supposed to be doing the ‘real’ work – handling the tasks that actually deliver value to customers and owners alike.
The point is there is a lot of work involved, and most of the vendors who are doing the work are not going to get anything out of it – at least in terms of revenue. No, they’re going to have to savor the joys of a job well done, even if not done well enough to actually win the business.
I know, the ‘customer’ has also put a lot of work into the process – no argument there. Just understanding what it is you want, what restrictions exist, what the timeline should be and who should be involved in the process from initial specs to final decision means meetings on top of meetings.
But just for a minute think about it from the vendors’ perspective. We’ll take your perspective on tomorrow.
The erstwhile vendors want to deliver for your company, they think they can do a better job of anyone else, yet they’re forced to only answer what they’re asked, not allowed to demonstrate their abilities and insights and expertise and knowledge. Yes, they may be able to – in response to the “is there anything else we should know, or other ideas you have”. But the responses to these questions don’t fit the scoring methodology. Even if they are creative and innovative and fresh, and look promising, it’s tough for them to see the light of day in the typical RFP process.
Now comes the waiting…and the waiting…and the waiting…
Sure, there’s a deadline. But more often than not, the deadline comes and goes, unmarked by the award, or announcement of a potential award. Instead, there’s news that the prospect needs more time to review the proposals, or more information has come in, or…
At the risk of being accused of unfairness, ask yourself – how often has an RFP process ended when it was supposed to, with a decision made, vendor selected, and losers notified, according to the original timetable?
I’ll go out on a very solid limb and say the answer is ‘not very often’.
Let me suggest this. The more a prospective customer delays the decision, the less credibility it will have, and the less willing potential vendors will be when the next RFP comes out. Some decisions are seemingly never made, until the queries from once-hopeful vendors trickle away.
If and when the award is announced, those potential customers who are willing to have the tough conversation with losers – despite what their lawyers say – are doing the right thing. This is a small world, and treating losing vendors professionally is just the right thing to do. It will also make them better when next they respond to the ‘customer’s’ RFP.
It is also a recognition of the work invested by all vendors, not just the winner. It provides the losing vendor with valuable input and knowledge, and delivers at least some return on all that effort.
What does this mean for you?
Do unto others.

Apr

Universal healthcare is bad – 2009 version

Posted by Joe Paduda on Thursday, April 9th, 2009 | Comments

There are many arguments advanced by the opponents of universal coverage, from the sublime to the ridiculous, the practical to the ideological, the informed to the ignorant. I’ve attempted to identify ten of the most common and acknowledge there is overlap amongst these objections.
That’s fine, as the purpose of this series is to confront the issue where it has the most traction – in the minds of the layperson.
After some considerable research, here is this year’s top ten list of reasons universal coverage is bad.
1. Universal coverage does not mean universal care, as it will lead to rationing of care, either overt or via extended waits for care.
2. Universal coverage would result in the government running the health care system making it worse than it is today – because the government can’t do anything right
3. Competition is what made this country great, and universal coverage is anti-competitive as the government is involved.
4. It’s unfair to ask the young and healthy to pay for the health care costs of the older and sicker.
5. Universal coverage will lead to a decrease in innovation.
6. Solutions such as ‘health status insurance’ can provide long-term, secure health insurance, obviating the need for universal coverage.
7. Even though every other industrialized country has some form of universal coverage, many are looking to add market mechanisms to their plans. This shows universal coverage doesn’t work.
8. The problems with the US health care system are not caused by the private market, but by over-regulation and over-involvement of the government in the current market.
9. It’s unaffordable.
10. Health care is not a right; if we are guaranteeing health care why not guarantee food, clothing, housing…

Apr

Why your hospital costs are going up

Posted by Joe Paduda on Wednesday, April 8th, 2009 | Comments

There’s little doubt hospital reimbursement methodology is going to change dramatically over the next few years.
We’re going to see a shift from fee for service to global episodic reimbursement, a shift that has already begun. I’ll get into that next week, but for now, there’s increasing evidence that private payers’ hospital costs are rising in large part due to several recent changes in reimbursement policies.
Over the last year, there have been three major changes in hospital reimbursement: the implementation of MS-DRGs (increase in the number of DRGs to better account for patient severity); a 4.8% cut in Medicare hospital reimbursement spread over three years; and the decision by the Centers for Medicare and Medicaid Services (CMS) to stop paying for ‘never ever’ events – conditions that are egregious medical errors requiring medical treatment.
The net result of these changes has been a drop in governmental payments to hospitals, the decision by several major commercial payers to not pay for never-evers, and increased cost-shifting from hospitals to private payers.
The implementation of MS DRGs and the accompanying decrease in reimbursement looks to be the most significant of the changes, and is already having a dramatic impact on hospital behavior patterns. By adding more DRG codes, CMS is acknowledging there are different levels of patient acuity – that performing a quadruple bypass on an otherwise-healthy patient takes fewer resources than doing the same operation on an obese patient with diabetes and hypertension. While these different levels were somewhat factored in to the ‘old’ DRG methodology, the new MS-DRGs better tie actual costs to reimbursement. (for a more detailed discussion, see here)
Here’s one example.
CMS projected that these changes would reduce Medicare’s total reimbursement for cardiovascular surgery by about $620 million, while orthopedic surgeries are projected to see an increase in reimbursement of almost $600 million.
Orthopedic reimbursement is increasing because there are now more MS DRGs for orthopedic surgery, and the additional DRGs will likely mean hospitals will be able to get paid more in 2009 and beyond than they were last year.
Hospitals are going to work very hard to get more orthopedic patients in their ORs, and they are going to carefully examine these patients to make sure they uncover every complication and comorbidity – because a ‘sicker’ patient equals higher reimbursement.
What does this mean for private payers?
Orthopedic costs will likely rise because hospitals will get better at allocating costs. But cardiovascular costs will also increase due to cost shifting.
Heads they win, tails you lose.

Apr

The arguments against universal coverage – 2009 version

Posted by Joe Paduda on Tuesday, April 7th, 2009 | Comments

Way back in 2007 I did a series of posts on the top ten reasons universal coverage is bad. Back then the arguments against socialized medicine included:
1. We can’t afford it.
2. People aren’t insured because they choose not to be.
3. UC won’t help solve the health care crisis.
4. UC will give the government too much power.
5. UC is a devastating blow to personal liberty.
6. A mandate is not necessary as the free market will solve the problem.
7. If you give more people health insurance, they’ll use it, which will cause costs to increase. (the moral hazard argument)
8. It will drive up costs, which will inevitably lead to forced rationing.
9. It’s just a replacement for a failed Medicaid/Medicare system that should be covering those folks without employer-based insurance. Once we fix the ‘M’ programs we’ll be fine.
10. It’s socialist. And that’s bad.
Times have changed, more research has been done, and more arguments advanced pro and con – it’s high time to re-examine the topic, identify any new anti-universal coverage arguments, and separate the valid from the non.
The fun starts tomorrow.

Apr

TPAs and transparency – the bigger issue

Posted by Joe Paduda on Monday, April 6th, 2009 | Comments

It just won’t stop.
Over the last few years, long-suffering TPAs, hammered by the soft insurance market, went from making a few bucks on managed care services to earning most if not all of their profits from commissions on same. Some TPAs provide managed care services themselves, others have preferred partners, and a few are willing to work with any vendor their employer customers bring to the table.
There are good reasons for each model, and I can argue in favor – or against – each of them. But from a broader perspective, there is a bigger issue, one that has been missed in most of the discussion about managed care fee-sharing.
That issue is simple – does the managed care program offered, or enabled, by the TPA actually work? Does it reduce total claims cost? Does it result in fewer extended disabilities?
That’s where the discussion needs to begin. If a TPA doesn’t have managed care expertise, if their executives can’t talk in detail about how their approach addresses total cost, their managed care business model is irrelevant. Unfortunately, there aren’t too many TPAs that have intelligent, effective managed care programs – the original objective has been sublimated to the demand for revenues and profits. Not all TPAs have lost their way (or were never on the right path to begin with); a few are innovating, breaking away from the same old same old discredited model as they search for a true long term solution.
There’s no question many TPAs have expertise in managed care. There’s also no question many risk managers think they know it all, and love to pontificate about their ‘ideal’ model – and force the TPA to implement their brain child, ignoring the TPA’s advice (and then blaming the TPA when the ‘can’t fail’ program fails). But that discussion should start, and end, with the overall goal of the program – lower total claims costs.
Yes it is critically important to know where your workers comp dollars are going. One way to do that is to require the TPA CEO to sign a document (after your attorneys polish the language) stating words to the effect that “We will fully disclose any and all financial transactions involving (TPA) and any and all managed care entities providing services to (employer) and employer’s claimants. This disclosure includes but is not limited to service fees, commissions, implementation fees, RFP and proposal assistance charges, transaction fees, connection fees, membership fees, and any and all other transfer of monies from managed care entities to (TPA).”
That’s a start, the initial requirement that must be met before any substantive discussions can begin. And once that attestation has been signed, step back and ask what the TPA is doing to attack total claims costs.
Because that’s where the big bucks are.

Apr

Health care reform – more money or furious docs, pick one

Posted by Joe Paduda on Friday, April 3rd, 2009 | Comments

That, in a phrase suitable even for twitter, is the future of health care reform.
We can afford universal coverage – if we cut provider costs drastically, through reduced prices, reduced services, or more likely, reductions in both. So far, no one, and I mean no one, with any political power has even broached this subject.
Or, our elected officials can decide to avoid the lynching that would follow immediately after they start talking about slashing provider reimbursement, and instead decide to just pass universal coverage-based reform now and worry about paying for it later. This has worked really really well for past Congresses and Presidents, so what the hell?
As for budgeting money to pay for reform, as Bob Laszewski has pointed out, the $635 billion President Obama has allocated won’t be near enough; and even that figure is highly dubious.
One option that will not get serious consideration (I can feel the anger coming thru the ether already) is single payer. Sure, it would solve a lot of problems, but it just is not going to happen in the US. Never ever ever. Politics is indeed the art of the possible, and single payer is just not possible. Accept that and move on.
So we’re stuck on the very long and very sharp horns of a dilemma, or more accurately, Congress and President Obama are.
Does anyone believe Congress has the intestinal fortitude to cut reimbursement, no matter how that ‘cut’ is described/presented/packaged? Anyone?
We know that there is a cabal that is in favor of ignoring the red ink and just passing universal coverage, with the assumption that the $1.6 billion spent on comparative effectiveness will cut medical spend by, oh, say, $600 billion per year a decade from now. But thankfully that group of irresponsibles are getting little traction.
I just don’t see health reform happening anytime soon – with ‘soon’ defined as within the next few years. I don’t like it, you don’t like it, no one likes it. But that’s reality.
That doesn’t mean I won’t keep hoping it will happen, and working towards that end.

Apr

HWR – it’s opening day!

Posted by Joe Paduda on Thursday, April 2nd, 2009 | Comments

Anthony Wright’s edition of HWR incorporates the wisdom of Yogi Berra – something that would be most useful in DC these days…
beautifully illustrated, too, Anthony!

Apr

Coventry to acquire UnitedHealth Group

Posted by Joe Paduda on Wednesday, April 1st, 2009 | Comments

Industry sources informed MCM late today that, in a stunning move, Coventry Healthcare agreed to acquire health plan giant UnitedHealth Group. For several days there had been rumors that UHG would snap up Coventry, the troubled mid-tier health plan, but events of the last few days led to grave concern at UHG that the Ingenix database problems might bring down the parent company. Reportedly the board felt it had ‘little choice but to get what we can while we can’.
The deal was done over the last two days, evidently triggered by the appearance of UHG CEO Steve Hemsley before Sen Jay Rockefeller’s Senate Committee. Hemsley and Ingenix CEO Mike Slavitt were ‘hammered’ by Rockefeller and his fellow Senators, who were particularly incensed at the health plan execs inability or unwillingness to “acknowledge consumers’ concerns about whether they were being shortchanged.”
The hearing was quite contentious, but there was at least one light moment. At one point, responding to a Senator’s pointed questioning about UHG’s conflict of interest, Slavitt said “”There is an important difference between an inherent conflict and the actual practice of bias–the latter is something neither I nor my employees nor our parent company would ever tolerate…” Senator Rockefeller reportedly whispered to a colleague “huh? that guy talks like a politician…”
Sources indicate Hemsley called old friend and colleague, current Coventry CEO Allen Wise, to commiserate shortly after he and Slavitt left the Senate hearing room while they were en route to National Airport. “I don’t want to be AIG’ed”, Hemsley reportedly told Wise; “I can’t believe there’s all this fuss over a lousy few hundred million bucks…I just want to run my company and be left alone, and now this McCaskill woman says she’s going to be on me like white on rice…”
Wise had thought he was close to a deal with his old employer to sell Coventry for a slight premium over the current stock price (around $13). Instead, Hemsley told him he and the UHG board had decided to get out of the health plan business, and were going to sell the company as quickly as possible. A deal came together very quickly, with overall terms agreed to before Hemsley and Slavitt boarded their flight for a return to MInneapolis. (terms were not disclosed)
One of the key motivators for UHG was the concern on the part of UHG’s board and Hemsley that they would be back in front of Rockefeller et al repeatedly, and would be ‘the poster child for bad health plans’. The Senator had concluded the hearing by telling Hemsley and Slavitt that he was going to order the GAO to determine if and how Ingenix’ database had been used to shortchange federal employees who had accessed out of network providers.
Slavitt was reportedly quite shaken by the dressing-down during the hearing, and was ‘close to tears’ as he exited the chamber. Hemsley was seen to be comforting Slavitt, patting him on the shoulder and murmuring “now, now, it will all be all right” as they walked towards their waiting limo.
When reached for comment, Hemsley refused to confirm or deny the deal, although he did say “I actually had to fly commersh to DC; do you have any idea what a hassle that is?” Hemsley was referring to the Board’s command that he not use one of UHG’s fleet of corporate jets, and instead fly Northwest to attend the hearing. (On a side note, Hemsley reportedly said “Northwest… isn’t DC southeast of here?”)

Apr

What self-insureds want from TPAs

Posted by Joe Paduda on Wednesday, April 1st, 2009 | Comments

The work comp TPA business is at last beginning to emerge from a very long, and very cold, winter. The soft market drove many of their customers back into the arms of insurers, as premiums were very competitive with the projected costs of self-insurance, with few of the risks.
It’s about time, as more than a couple TPAs were driven out of business by the precipitous decline in self-insurance, particularly in Florida and California.
As the market begins to harden (a transition somewhat delayed by AIG’s continuing effort to buy business), those TPAs that were able to survive the last few years will find their endurance rewarded, as more prospects come to them looking for bids.
TPAs will also find prospects have evolved, matured, become more intelligent and more demanding. Large employers are (with some notable exceptions) going to ask a lot more of their TPA in 2009 than they did in 2003. And chief among their demands will be smarter, faster claims adjusting and data-driven medical management.
Employers have had just about enough of the same old same old. Their experience with generic, one-size-fits-all approaches to cost containment is not good – many have come to realize that what works in one area, for one type of claim/care/condition may be counter-productive elsewhere. Increasingly buyers are looking for solutions customized to their specific situation, and flexible enough to adapt when those needs change.
It all starts with accurate, consistent data – data about injuries, treatments, disability and functionality. These data provide the foundation for broad decisions about what networks to use where – factoring in where injuries occur, what types of injuries are most common, and which become the most problematic. And here’s where most TPAs are falling well short.
TPAs tend to do what’s easy for them – keeping it simple, uniform, consistent across customers makes it easier for their IT departments, adjusters, managers, compliance folks, vendor management departments and nurses. But that’s not why they’re in business. TPAs are in business to serve the needs of their customers, to provide customer-specific solutions. To do that, they have to invest in people and IT that will enable them to understand their customers’ cost drivers, and build customized medical management solutions unique and specific to each client.
These solutions must allow the TPA to provide claimants with ‘best-in-area’ networks, networks that carefully select physicians based not on how deep a discount they’ll give but how well they manage comp injuries and return to work. There is no single national network that has the best answer in all areas; Horizon is very strong in Jersey, Rockport in Texas, Kaiser on-the-job in much of California.
That’s nice, you say, but in many areas the generic networks – Coventry, CorVel, etc look like the only game in town. That’s not the case – specialty hospital bill repricing services can deliver savings far greater than that available from the generic networks; specialty vendors in PT, imaging, Rx, and DME/HHC provide much better savings and much better outcomes than the generics.
This requires IT flexibility – the ability to plug in and pull out networks, individual providers, and provider groups as customer needs evolve. And to have different answers for different customers in the same jurisdiction – because at the end of the day, TPAs are there to deliver results, not do what’s easy for them.
What does this mean for you?
Before you roll your eyes and complain about how hard this is, know this – a few TPAs are already well down the path on precisely this strategy. And if you can’t do it, they’ll eat your lunch.

Year: 2009