With 80% of their 115,000 employees currently on one of the company’s self-insured health care plans, the cost of covering 100% of primary care visits could be steep.  However, IBM believes (via their director of health benefits Marianne Defazio) “very strongly that employees should have a primary care physician who’s sort of the quarterback to help coordinate all of their care.”

It will be interesting to see what the initial results of this benefit design change look like next year as they begin to track and compare utilization and prevention metrics.  I would imagine in some way or another this new coverage is going to impact employee behavior.  Bottom line – it’s always good to see large employers taking risks and trying new things.  A small part of me still believes companies like IBM and others are really going to pave the way for change in health care, driving and creating sustainable ways to improve the current health care crisis and our approach to wellness.

As long as we’re herding cats on healthcare reform, let’s ask a critical question…What is the timing for the changes being made for healthcare reform? Not “when will it get passed” but rather “when will the changes, whatever they end up being, go into effect”?

Logistically, it’s a nightmare.

Healthcare Reform Will NOT be here by January 2010

Employee populations have already been underwritten for 2010. Rates have already been set. Policies are already in place. Open enrollment has already begun. Surely no one would jump in front of that rolling momentum even though the government has the authority to do so. It takes a full year to do all that needs to be done for a health plan when it is business as usual.

[cats like big balls of yarn, and this is a BIG one]

Imagine the implications of just two details…

1. Insurers Have to Cover Pre-existing Conditions
2. Insurers Cannot Drop Clients with Extreme Expenses.

In short, the very business practices on which insurers, doctors, hospitals and every company that provides health insurance have built their business are undermined. Wow!

[think two wild feral cats left to their own devices in the barnyard]

Insurance companies would be SCRAMBLING…

• to change rates.
• to underwrite to new standards.
• to negotiate new provider agreements
• to develop new policies.
• to train people on the changes.
• to print new materials.
• to engage countless attorneys to understand and interpret changes.

[think of the crazy old cat lady with 72 cats in her one-bedroom 650 square foot apartment]

At the same time, employers would be scrambling to understand and reevaluate their business model as their health plan costs changed. They would be looking to alter their plan in an effort to control their rates and protect their business. They would be struggling to educate their employees. And struggling to meet a bottom line with new rules on one of their single largest line item expenses – health insurance.

[think of the animal shelter stuck with the crazy cat lady's 72 cats - what the hell do we do with these?]

Docs and hospitals and other care providers are little better off. They would have new rules on what is or is not covered. They would be left to figure out how much they could expect in income on those “Good Samaritan” services they had been providing for “free”. They would have new systems and rules to evaluate. Their very business model would shift.

[think of the vet trying to provide services out of the goodness of their heart, but faced with the financial implications of having to spay ALL 72 cats]

Cats would be living with dogs. And January 2010 would be here.

A Similar but Not Related Video that Conveys my Thoughts on This…

“…one of…”

Pushing cost to the patient is merely the first step. Without transparency, consumerism has the potentially devastating affects on the gains that wellness and disease management have begun to make.

Under Consumer Directed Health Plans (CDHP), the patient is responsible for more of the costs. They are often shocked to find that the cost of an office visit is $70, $80, $100 or more. They are distraught to discover that a diabetes maintenance drug runs them $750/month. So while CDHP help to make consumers accountable for the costs they incur, it provides a negative reinforcement as well.

Remembering that the last office visit cost them $80, patients may opt not to go for their annual physical. Aware that the medication was $750 last time, the patient halves the dosage or forgoes the prescription. Not knowing what the cost of a different service is going to be, but having been hit hard for other healthcare expenses, the patient simply avoids or delays care. None of these scenarios bodes well for wellness or disease management.

As a consumer, the patient needs to be educated on how the costs and how the healthcare system works. They need to understand that the annual physical may be covered under wellcare in their plan and comes at little or no cost. They need to know that the same $750 prescription can be had for $450 at a different pharmacy directly across the street. They need to know the cost of services when referred to a specialist before they go, lest they decide they cannot afford the risk of incurring a large expense.

Consumerism without cost transparency and education of the patient/consumer threatens to undo all of the positives that healthcare has been working so hard on in the form of wellness and disease management.

The answer lies in transparency in the system. Make healthcare transparent and the consumers will ferret out the inefficiencies in the system, make rational decisions about trade-offs in quality versus cost, and in the end, the patient/consumer will be the solution to improving the U.S. healthcare system.

Step 1 is Consumerism.

Step 2 is transparency about cost and understanding the health plan.

Step 3 is the consumer stepping in to make rational decisions about what defines quality and what warrants reasonable cost in the market.

First user question: I had surgery and received a bill for anesthesia. When I called the insurance co. they informed me the provider was out of network, therefore I was charged per the terms of the contract (40% of bill). I was never told by anyone that the provider was out of network prior to surgery. Am I responsible to pay bill?? I have already reached the maximum annual out of pocket expense BEFORE the anesthesia bill. Do I have any recourse and if so who do I address it with.

This is a great question because it happens frequently.  Oftentimes, the facility will be in-network, but the anesthesiologist is contracted through the facility and out-of-network for you as the patient. Here is the answer:  If the patient signed a contact with the facility that performed the procedure, prior to receiving services, agreeing to pay for services provided by out-of-network physicians, then there really is nothing that can be done.

However, if the patient did not sign any paper work the best place to start conversations is at the facility level. Begin by calling the billing department number included on the bill.  If the patient was not notified prior to surgery that the facility may use out of network physicians, then they should be willing to provide  in-network pricing for those providers.

At this point it can be helpful to contact your insurance company and see what a reasonable reimbursement would be for an in-network anesthesiologist.  This will provide you with a great baseline for negotiating with the hospital.  You may also want to check with them regarding refiling the claim. This will help with getting the insurance company to cover more of the costs.

Second user question: Can a company keep changing insurance carriers every year?  Are employees protected if their doctor then becomes out-of-network?

This is another great question. I imagine that employees are seeing this occur more frequently as health care cost and insurance rates continue to increase.  Here is the answer: Unfortunately, a company can change insurance carriers every year.  This is probably occurring due to increasing rates, which are sometimes upward of 30%.  They are probably having multiple carriers bid on the company’s health insurance coverage and then going with the option that proposes the lowest cost increase. This is a method some companies use in an attempt to maintain health care cost increases.

Unfortunately, employees are entitled to have their physicians included in the company’s new insurance network, or offered protection if a shift in network coverage occurs. The best thing to do in this case is to speak directly with your physician and/or the physician’s billing department.  If you speak with the billing department, inform them of how long you have been a patient, and that your company recently switched insurance companies, making your doctor out-of-network. The physician may be willing to offer you an in-network rate for their services.

If not, make sure you understand how much of the bill you will be responsible for when the doctor’s charges and services are processed out of network.

For more information on understanding In vs. Out-of-Network Healthcare Cost click here (8).

I am soooo behind on sharing everything that is going on around me related to healthcare, employers, consumerism, and the proposed government ‘public plan’ for healthcare [I get 2-3 phone calls a week from various system constituents and politicians posing questions, ideas, or plans around healthcare consumerism].  However, what causes me to perk up is when ‘front-line and in-the-trenches’ discussions surface across the blog-o-sphere such as the one taking place over on Dr. Jay Parkinson’s blog of HelloHealth [click here for the blog post].

Of most interest to me (selfishly) is an insightful comment made by the Orthopod:

…In one of the only examples of its kind, a true randomized placebo trial was published on this in NEJM and there was found to be no difference in outcome for knee scope in pts with joint space narrowing, yet the procedure continues to be done at a very high rate.  Why?  Because it pays $800-$1000.  And it takes 1/2 hour.  In fact there are studies showing that people who get scoped, go on to get a knee replacement sooner.   I don’t know if any committee is the solution.  Since patients don’t pay their own money, they are not incentivized to ask the right questions or be skeptical enough. And the CMS fixed pie system makes the PMD/ specialist war almost inevitable.  Sad.

PUH-LEAZ-EEEEE  go read the full post but MORE IMPORTANTLY read further down where the Orthopod adds a longer follow-up comment.  This frame of reference from the front-line is worth the 10min time it takes to read.

Nice, Jay. Simply Nice and Well framed.

Hooray! A good first step!

Now don’t rest on your laurels, Illinois.

Cost plus is great if you can understand the “costs” portion, but most patients do not. Step 2 is to root out the inefficiencies and poor procedures.

For example, it’s reasonable to charge someone an amount for a service well done and efficiently. But for the patient who gets 5 nurses at bedside, 3 specialists and the whole battery of tests to determine that he has a splinter, cost plus is not effective. Cost plus just rewards the hospital with an amount they can pursue aggressively and justifiably in collections. The patient may still be exposed to inefficiencies like improper diagnosis, inappropriate treatment and inefficient practices.

Step 1 is easy. Now for the hard part. Step 2 – improve the standard of care.

Still, congrats to you Illinois!

Sad… as if we need another player in the health care game to quit! See Workforce Management for more details on the study.

Equally as interesting as those planning on leaving the game are the priorities of the employers who plan to continue to offer benefits. “Promoting employee accountability” was ranked as the number one component of employers 2009 health care strategies. “Offering competitive benefits” and “managing health risk” came in at second and third.

What I have to say is directed at those who plan on dropping benefits and those who plan on keeping benefits and promoting employee accountability:

LET change:healthcare HELP!!! Our site and online tools help employees save money (which saves the employer money) and make smarter healthcare decisions.

The problem is apparent… we are asking employees to be responsible for their health and healthcare when they still do not know what health care really costs, they do not have enough skin in the game ($20 co-pays are not going to increase responsibility) to care, and those who are on CDHPs are lacking the tools to understand how to save money and make better decisions.

The message to employees is simple … we want you to get engaged.  There are tools out there (if we are working with your employer) that will show you simple and tangible ways to save money on your healthcare… tools that will show you what your peers paid (the network price) for services and prescriptions you need, allowing you to proactively research costs and quality, allowing you to become an active participant in your healthcare.

The action for employers… call change:healthcare.  We want to help you preserve your benefits and engage (keep) your employees. We want to help you save 30% on your healthcare.

Healthcare does not have to be daunting and saving money does not have to be hard.  Let us show you how we make both of these things simple!

The main reason cited in Healthpopuli for the poor fiscal health is that admissions are down. Another oft-cited factor is the proliferation of HDHP (High Deductible Health Plans) where consumers are left with the first $1500, $2000 or even as much as $5000 of their healthcare expenses within a given year. 

It’s easy to place the blame on fewer people coming through the doors, but who knows, maybe we’re getting healthier or just using better judgement about what constitutes a needed procedure. Maybe our wellness and DM programs are working. Insurance companies and self-insured employers should be jumping for joy at the news because that SHOULD translate to lower healthcare expenses for them in the form of fewer claims – at least in the short term. Hospital should be taking a collective sigh of relief that they can finally slow down on adding yet another massive capital building project to meet the ever-increasing demand. That might save them some of their cash and get them closer to being profitable again.

It’s easy to place the blame on consumers not paying their bills, but perhaps it’s an opportunity for hospitals to take a good hard look at their processes and procedures and address ineffiencies. In reporting a negative earnings period, one hospital identified five reasons they were unprofitable, and there is no small amount of irony in the fact that they attributed $200K of their $1.6M shortfall to overruns in their self-insured health plan for the hospital as an employer.

With the average deductible rate topping $1000 for the first time in history and 20% of employers saying they are considering dropping their healthcare plan, it looks as if simply raising the rates at the hospital is not going to be a solution. Demand is already down. Payment is already off. Raising rates will only further stifle demand and higher rates will only result in increased non-payment. Blood will not flow from a stone no matter how deep you cut it.

Just as a physician must not allow themselves to treat the symptom, but instead identify the disease, hospitals find themselves in the same position. The health system as a whole is diseased – from patient, to insurer, to provider to government. As patients, we are being forced to take more responsibility through increased share of the burden of the costs, wellness and disease managemet programs. Insurers have work to do as well (that’s another post). Governement is studying where they need to go. Hospitals need to begin to look at what they can do in terms of equivalent wellness and disease management programs for their facilities. They need to trim the fat. They need to be more efficient. They need to proactively seek out better long-term solutions instead of resorting to quick fixes as the insurance company all too often forces them to do.

The poor fiscal health of hospitals is not the cause, it is the symptom. Time to get the diagnosis right, start treating the disease and not fixate on the symptoms.

And no sooner than I hit the publish button on this post, Jen McCabe Gorman tweets EXACTLY what I’m talking here on Henry Ford Clinic.

Just saw the CNN report on 13 million uninsured 20-somethings in this country. New to the job force and turning down their health insurance.

What are they thinking?!?! Do they believe that they can just go out and buy what they need in terms of medical goods and services on the free market? Good grief! This is America for goodness sakes.

So what are they doing in lieu of buying insurance?

Radical things like minding their health– watching what they eat, working out, bundling up before they go out in the cold, washing their hands (oh, these kids – they’re like modern day hippies shunning the norms of society).

They go to the doctor only when absolutely necessary instead of for every little ache and pain. They go to retail clinics (like Minute Clinic and The Little Clinic) where they know the costs BEFORE they buy (oh my, what are these kids coming to wanting to know the price before they blindly incur the expense). They look things up on the internet (It may be MY chronic disease but shouldn’t the doctor know more about it than me? He treats it, and I only live with it…every single day of my life).

But why should these 13 million have insurance? In case something happens.

Hellooooo – they’re 20-somethings and invincible.

But seriously, why should they? Because it underwrites the rates of the older portion of the population. If they don’t get healthcare, they don’t offset the risk pool – they don’t underwrite the older segment of the population. And we know what that means – our rates will go up because they aren’t contributing monetarily (and taking less out than they put in) as we expect them to do.

But we can still get them. In New Jersey, children can stay on their parents insurance to age 30! Thirty!!!! In many other states it’s only 24 or so.

So now I’ll set aside the sarcasm.

What we are seeing is the revolution. The new generation is taking a stand. We have a product – health insurance – AND THEY ARE NOT BUYING! The business world should get the message here. These folks are going to opt for surgery overseas, retail clinics and internet consults. They are going to cost shop prescriptions and doctors. They are going to demand affordable access to care and they are going to want to know the price AHEAD of time. And they are going to return health insurance to truly being insurance – a safety net for catastrophic situations instead of the all you can eat buffet for $20 we have bad for soooo long – too long.

Do NOT think that it is the sage old regime of healthcare executives and politicos in D.C. who are going to change healthcare. It is the 20-somethings. They alone are able to break out of the old ways of thinking. It has been that way generation after generation. THEY have the new ideas. THEY are taking a more rational approach. They are getting organized and THEY are not content to go along with the system as it has been.

Yes, they are 13 million without health insurance…and growing. THEY will change healthcare.

Congratulations

Congratulations on your continued progress in gaining commitments from insurance companies to step away from the Ingenix Prevailing Healthcare Charges System (the database most health insurers use to determine “usual and customary rates” for out-of-network reimbursement rates). Most individuals inside and outside of the industry recognize the potential conflict of interest as well as the likelihood that what Ingenix defined as “reasonable” was probably less than reasonable by a significant margin.

And Then I Read…

My understanding of your settlement with each insurance Carrier (such as Wellpoint and Aetna) is based on the following excerpt::

…WellPoint will end use of the [Ingenix] database [to determine out-of-network reimbursements] and pay $10 million to help finance the development of a new independent database administered by a not-for-profit group. Cuomo, who reached similar agreements with five other health insurers earlier this year, said that his office hopes to have the new database operational in six months and estimated that the effort will cost about $100 million (Bray, Wall Street Journal, 2/19).

Without question, I applaud your efforts and commitment to create a not-for-profit entity that ensures objective, transparent and reasonable out-of-network insurance pricing. Spot on, sir. But an estimated cost of $100 million?! Good grief, I was caused to pause and try digest such a staggering expense for an informational tool that shouldn’t, nay, couldn’t cost that much.

A Drop In The Bucket

I then came across a New York Times article (2/18/09) entitled “For Uninsured Young Adults, Do-It-Yourself Health Care.  I contemplated the plight of New Yorkers but also people across the nation and noted that Gov. Paterson of New York proposed allowing parents to claim young adults as dependents for insurance purposes up to age 29. Unfortunately, this approach merely supports what I consider “a drop in the bucket“, as the article pointed out…

If Governor Paterson’s proposal is approved, an estimated 80,000 of the 775,000 uninsured young adults across New York State would be covered under their parents’ insurance plans. That would leave hundreds of thousands to continue relying on a scattershot network of improvised and often haphazard health care remedies.

And then the final straw smacked me in the face via yesterday’s (2/24/09) Washington (Associated Press) causing me to draw a deep breath while reading:

A new government report on medical costs paints a stark picture for President Barack Obama, who is expected to call for a health care overhaul in a speech Tuesday night to a joint session of Congress.

Even before lawmakers start debating how care is delivered to the American people, the report shows the economy is making the job of reform harder.

Health care costs will top $8,000 per person this year, consuming an ever-bigger slice of a shrinking economic pie, says the report by the Department of Health and Human Services, due out Tuesday.

As the recession cuts into tax receipts, Medicare’s giant hospital trust fund is running out of cash more rapidly, and could become insolvent as early as 2016, the report said. That’s three years sooner than previously forecast.

Based on current events and the state of our economy … The Offer

I would like to offer the LIVE and fully accessible healthcare consumerism change:healthcare platform, which currently is processing claims from multiple clients as a vastly less expensive, already HIPAA compliant and available TODAY for data connection to the carriers.

In fact, I would also be so bold as to say that we would offer our platform and Carrier integration for $3 million a year OR our annual operating/staff support cost (whichever is less) and we would immediately engage whichever University or not-for-profit entity you prefer for database auditing and oversight purposes.

I am offering you and the carriers an immediately available, already proven and secure platform that is currently used by employers and their employees to save money (30%) on their healthcare expenses and make informed decisions.  I’d rather you and the Carriers leverage our platform at “cost” than to unnecessarily spend $100 million to build something that already exists.  We would be doing this for the public good, but that’s in line with our company values and founding principles!

Why do we care?

I have been holding back on this proposition for several months, but my blood was brought to a “I’ve got to do something now” boiling point due to the February 19th USA Today article by Julie Appleby regarding double-digit premium increases on the individual insurance market (est. at 17 million people):

At a time when more people are forced to buy their own health insurance because of job losses, costs for many individual policies are soaring…

Among this year’s large rate increases on the individual market:

• Anthem Blue Cross in California has notified about 80% of its 800,000 individual policyholders of double-digit increases, many above 30%. Spokesman Ben Singer says rising medical costs are prompting the increases.
• Blue Cross of Michigan is seeking state approval for a 56% increase in individual premiums. Spokesman Andy Hetzel says the company needs to offset losses stemming from state rules making it the sole insurer required to take all applicants.
• Regence Blue Cross Blue Shield of Oregon will raise rates for approximately 10,000 Washington state customers by 27.1% on March 1.

Another Washington insurer, LifeWise, raised rates 17.6% on Jan. 1, according to the Office of the Insurance Commissioner in Washington state…Some insurers say increases this year for individual policies aren’t out of the ordinary. Aetna, for example, says individual policy increases nationwide range from 8% to 22%.

…The average deductible, the amount paid before coverage begins, was nearly $2,000. Family coverage ranged from $219 to $494 a month with an average $2,600 deductible.

Insurers face shrinking enrollment in group plans because employers are shedding jobs. They also have deflated investment portfolios and higher costs as patients use more health services, says a report out last week from ratings agency A.M. Best. Those problems could lead to “higher rate increases than in the past,” says Sally Rosen, a managing senior financial analyst at Best.

Now it would be foolish of me to urge insurers to restrain premium increases. They are merely operating as businesses as any stock shareholder would expect (though I find a great deal of irony regarding these potential increases that will fall on the heels of the government’s COBRA subsidy plan for the recently unemployed). Yet, due to these decisions, there will be an immense welling of pressure on individuals to pay more for their premiums, swallow higher deductibles, and therefore urgently need help to understand and know where EVERY dollar is being spent and what their choices are.

As the tidal-wave of healthcare cost and utilization drowns individuals bearing the full weight of those costs, a dire need is raising it’s ugly head: The need for access to easily understandable negotiated prices for providers and the services they offer, allowing consumers to make informed decisions as well as save money that most of these people do not have. It’s rather simple, we need to enable a more transparent market for purchasing healthcare services. It’s not THE silver bullet, but rather one of many support mechanism that needs to be put into place.

Not a Perfect Solution, but it’s a start…

So there you have it. The wheels have begun rolling forward and what I am offering may seem trivial or naive but at least let us do something that would help you provide people with an easy to use tool at a fraction of the cost… in fact, at OUR cost.  I am offering our platform to support healthcare transparency combined with your choice of University or not-for-profit entity to ensure that out-of-network pricing remains independent and avoids (in your words) “manipulation”… all for $97 million dollars less than you anticipated. And yes, I really do stand behind this offer. Please feel free to contact me or my team to coordinate further discussions about our platform.

Sincerely,

christopher parks

CEO | co-founder
change:healthcare, Inc.