Insight, analysis & opinion from Joe Paduda

Jul
24

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.


Jul
23

Drugs in Workers Comp – Survey Report

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


Jul
20

End of life care costs too much

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.


Jul
19

Consumer-driven health plans’ ugly secret

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.


Jul
18

Herzlinger on consumer-driven Medicaid

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.


Jul
17

CIGNA’s HSA plan policy

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.


Jul
17

UHC’s HSA policy language

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?”


Jul
14

United Healthcare – the fine print that’s not there

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.

Continue reading United Healthcare – the fine print that’s not there


Jul
13

Medicaid down, Medicare up

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.


Jul
13

HSAs won’t reduce spending.

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.

Continue reading HSAs won’t reduce spending.


Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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