Light in the Darkness: How Information Will Create Transparency in Healthcare
Presentation Transcript
Miriam Paramore
SVP Strategy and Government Affairs at Emdeon
August 26, 2010

Presented at “The Naked Hospital – A Provocative Look at Healthcare” a Nashville Technology Council super roundtable event., Miriam Paramore of Emdeon, mentions change:healthcare in reference to cost transparency in the healthcare industry.

http://www.slideshare.net/nashtechcouncil/light-in-the-darkness-how-information-will-create-transparency-in-healthcare

Medicare for Age 55

In an article published by the Wall Street Journal, Janet Adamy writes about a proposed medicare bill saying, “Under the new Medicare plan, consumers ages 55 to 64 would for the first time be allowed to buy into the federal program for the elderly, starting as soon as 2011. Congressional aides estimate that two million to three million people would participate.”

The element of this bill that is most interesting is not the creation of the NFP private insurance company overseen by the federal Office of Personnel Management.

It is the idea of letting folks over 55 years old “buy in” to the Medicare program.

1. It “creates” a public option for the highest healthcare utilizers outside of current Medicare/Medicaid enrollees.
2. It seriously curtails the “high risk” pool for private health insurers today allowing them to keep rates down for the under 55 population.
3. It cuts reimbursements to doctors, hospitals and other providers by giving the 55-65 crowd Medicare rates (typically recognized as the low cost payor in the market).
4. It allows the government to underwrite the failing Medicare program projected to bankrupt in 20XX.

By opening Medicare up to the 55 and up group, the government is essentially extending it’s current “public option” in the form of Medicare down to the 55 and up age bracket. It’s not a full public option, but it is kind of like letting your neighbor move his fenceline onto 20% of your property. Some folks are going to be happy. Some folks are not. So let’s look at all of the players and see how it might shake out.

Insurers should be somewhat happy. But it’s a double edged sword. Gone are some of their high dollar utilizers who are subsidized by younger healthier folks buying into the plan. That’s lower expense, but it’s also less income which may not help the balance sheets of those insurers. And it’s also less buying power and therefore potentially higher rates for the younger healthier folks left on their rolls – but those higher rates could help bring the revenue numbers back up. Obviously, there will be an equilibrium to be achieved.

Providers (docs, hospitals, pharmacies, etc.) will be generally annoyed. A sizable portion of their “best” recurring patients could move to the over 55 plan and suddenly start paying reimbursements that are in line with the low cost payor in the market – Medicare. However, they may find that a suitable tradeoff in exchange for more predictable payment. At any rate, they won’t lose any revenue, since they will likely raise rates on the under 55 crowd and the private insurers who lost volume buying power with the exit of the over-55s. Like insurers, providers will be searching for an equilibrium.

Patients 55-65 may be relieved because they have an option for catastrophic incidents. They may be less than thrilled when they discover that it is harder to find a physician willing to see them since they are part of the Medicare payment group now. The devil is in the details, but I’m willing to bet, if you have children still eligible for healthcare, you won’t be taking the 55 year old buy in option. And it will be interesting to see how we take into account the over 55’s still throwing off offspring. It would seem that the 55 buy in option is going to be less widely adopted than one might think.

Patients under 55 may be relived because the older and generally healthcare-needier folks they’ve been underwriting will be out of the mix. That means lower premiums. But remember, there will be some cost shifting to the under 55 crowd as a result of a lack of buying power on their insurer AND because the providers will want to make up the lost income somewhere and it will not be through government controlled Medicare rate.

Patients over 65 – oh you forgot about them didn’t you? They are going to be pissed when they realize the impact. Sure AARP will support it. It will drive more members for them. In fact with increased buying power, Medicare rates could even go down more. But the over 65 crowd is going to find it even more difficult to get in to see a physician because all these 55-65 year olds just got dumped in and want to see the handful of docs that were willing to take the low cost Medicare reimbursement. And people over 65 generally are not real wild about change in any form, so expect them to be pretty angry.

Government should be relived to get this monkey off of their back. But it does mean that the gorilla on their back in the form of a Medicare program projected to bankrupt in 20XX just went from 800 pounds to 1,000 pounds because they just will not get the budgeting right.

Taxpayers should be wary. Very wary. Sure, we’ll breath a sigh of relief if the whole healthcare debate is finally coming to a conclusion and we are getting reforms that disallow pre-existing conditions and provide other basic consumer rights. But be prepared to get the wind knocked out of you, since no one with any historical perspective on the government’s abilities in terms of controlling costs will entertain the notion that this will be budgeted properly – think, more taxes to cover this coming soon.

May you live in interesting times.

Just got finished trying out the White House twitter site that allows tweeple to pop off a pre-formatted mantra in favor of healthcare reform. It’s a neat bit of technology – cool in many ways. But it’s an agenda pusher.

It’s all talk and NO action.

Now compare that with the recently-launched Twitter app from change:healthcare. It allows tweeple to receive information on health conditions and medication costs as well as prescription medication costs, generic alternatives and more using secure private messages via Twitter.

Government talks. Industry acts.

If you want to find the cost of prescription medication and medical term definitions via Twitter – Just Ask! Follow @askch on twitter and send a question in the proper format to see how you can change healthcare too.

“Have you heard of tiny Melinda Mae,
Who ate a monstrous whale?
She thought she could,
She said she would,
So she started in right at the tail…”

- Excerpt from Melinda Mae by Shel Silverstein

Healthcare reform is a “monstrous whale.” The federal government could learn a little something from the childrens’ tale about Melinda Mae. Instead of trying to cram ALL of healthcare reform into one big bill and get everyone to swallow it all at once, smaller bites would be more manageable.

Smaller bites might actually pass.

What Do Small Bites Look Like?

Let’s start with some easy small bites that most Americans are eager to agree on. How about a bill with just these points in it to garner support and get something/anything passed.

1. No more pre-existing conditions
2. No more pulling of policies for large claims
3. Same premium rates for all with premium adjustments only on the basis of tobacco use, age, family size and geographic location
4. Banish all attorneys to…erm…I mean…malpractice suit limitations

Those are things most all of us can get behind. Once we get that, let’s go for the next bite. Eventually we will finish the whole whale, or at least we’ll eat what we’re able to stomach.

That’s how Melinda Mae would do it.

Let us know your thoughts on healthcare reform in the comments! Your voice matters.

Photo by Kevin Dietsch for Time

Details on the health care reform plan being pushed by the gang of six and headed up by Senator Baucus are coming out.

The BIG Question: Will it Add to the Deficit?

The stock answer is NO, it will not add to the federal deficit. Note the qualifier – the FEDERAL deficit…FEDERAL. Now your personal deficit and that of your employer, well, that’s a different story. The government won’t speak for business. Government only addresses the federal cost issue.  Hmmmm.

The Next Question: How will it impact Your Pocketbook?

Funny you should ask. The plan calls for 50% reduction in Medicare Part D prescriptions at a cost of $8B to the pharmaceutical industry. If you are naive enough to think pharma is simply going to cut $8B in profit to cover this expense out of the goodness of their heart – think again. The price of prescriptions to the private insurance portion of the population will rise to compensate. It’s called cost-shifting. It happens every time the government lowers Medicare rates on what it pays for medical services and products – the lost revenue has to be made up somewhere, and it is made up in increased rates to the private health insurance industry. This is also known as the healthcare policy your employer pays for and that has been eating your cost of living increase for the past few decades.

In addition, there is a law that prevents exclusion on pre-existing conditions. That HAS TO COST MORE for the insurance company to cover. Rates HAVE TO GO UP to cover services that, well, they were not covering before. And plans now HAVE TO OFFER WELLNESS PROGRAMS. Those incur costs that have to be covered as well, so that will increase insurance plan costs.

But the good news is all rates HAVE TO BE THE SAME for all groups. Insurers can only discriminate based on tobacco usage, age, family size and geographic location – all fairly legitimate adjustments to cost. More good news is that the rates for the oldest people can only be as much as 5x (five times) what they are for the youngest members on a plan. That’s a good way to keep costs within an artificially controlled range. But what does that mean will happen to costs? The cost for the youngest in the population (the very folks who put Obama in office) are going to go up – just so the insurance companies can get the 5x rate to cover the exponentially higher utilization of the older population. In other words, the most expensive portion of the population to cover will increase the cost of the lowest portion as they “drag the bracket upward.”

Sounds expensive for those of us on private insurance.

Is this the plan perfect? No way. Is it a step in the right direction? In some ways. Many ways. Is it going to cost more? No. Well, at least it won’t cost the government any more.

If your company is trying to find out how they could save their employees and themselves money now, and after the reform, check out some of the change:healthcare tools for employers. We have some interesting programs that help everyone save money on healthcare.

Image from Mike Moreu

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…

Image Courtesy aflcio2008 on flickr

Senator Jim Cooper (D) of Tennessee has been one of the most prominent politicians traversing the country on the idea of healthcare reform. In his early presentations on the subject, the approach was a hard line push to get universal coverage (covering the uninsured) with NO FOCUS ON CUTTING wasted expense that could have paid for the program. Cooper is clearly the most articulate and knowledgeable politician I have run across with an in-depth perspective of healthcare AND business. I am convinced that he has a hand in the movement of the healthcare reform to something that will be more beneficial to Americans that earlier plans.

The modifications that have been made in the past few weeks are significant. Socialized healthcare (a wholly government run program) is giving way to government incentives for consumerism coupled with universal healthcare (getting the uninsured covered), and more ethical treatment of members by health plans (no pre-existing conditions and protection from being kicked off of a plan for large claims).

It is encouraging to see that questioning of Senator Cooper and other prominent members of congress have started to take root in D.C., either as a result of that meeting or others. I hope the plan is not finished evolving. Private business needs to get behind the idea of making healthcare more efficient and some are fighting for the opportunity to do that through organizations like SIIA.

For far too long, companies have been passive about healthcare as an outsourced expense and did not get involved preferring to push the burden of understanding this to the insurance companies. The insurance companies obliged and took the power that came with that responsibility.

The government is pushing employers to get involved. Getting employers MORE involved and not less involved is what we help us drive the cost down while improving quality. If employers continue to wholly outsource their healthcare without actively addressing it, look for us to wind up back at the sort of option that Senator Cooper had originally presented.

If you have picked up a newspaper or turned on any news station during recent weeks, I am sure you have heard a lot about President Obama and health care reform. I am also sure that much of what you have heard about has been the lack of any resolve between Democrats and Republicans. Divided as to what the appropriate step towards improving the US health care system should be, the disagreement has made it difficult for policy makers to develop a bipartisan plan. At this point, President Obama has started directing more of his energy towards engaging the states and individuals in this national issue. Following the health care debate can definitely become confusing and overwhelming. So, we’ll briefly outline the status of health care reform as it stands now.

Currently, the main push by the White House and most Democrats is to provide a public option for the uninsured that will compete with private insurance companies. Essentially, those without an employer-provided option would be able to choose either a different private health care insurance option or the public plan. President Obama has argued that if the insurance companies are telling the truth and doing the best they can for their customers, then the implementation of the public plan should not affect their business.

Last Thursday, Democrats released a revised plan that estimated $611 billion over the next decade would be required to overhaul the healthcare system and provide coverage for 97% of Americans. This proposal calls for most employers to provide health coverage for their employees and the development of a public option. In addition to the funds outlined in the proposal, the expansion of Medicaid (which would be the expected first step in the process) could add several hundred billion dollars more in legislation costs. President Obama and Democrats want to cap initial costs in healthcare reform to $1 trillion over the coming decade. This limit, however, is not set in stone.

Clearly, there are two big issues surrounding reform: how much this change will cost and how involved the government will become in the healthcare market. Surveys by NBC and the Wall Street Journal, CNN and the Opinion Research Corporation, and Quinnipiac all indicated a nearly 50/50 split in terms of people who are willing to pay and not willing to pay to provide coverage for the uninsured. Two surveys by the Kaiser Family Foundation and CBS and the NY Times produced contrasting results that Americans are not and are willing to pay for reform respectively. The prospect of increased income taxes and/or taxes on employer-based health coverage makes many Americans hesitant to support the spending the government proposals would require. Moreover, various interest groups oppose the implementation of a government plan that could interfere with the healthcare market. For example, insurers and drug companies, along with Republicans, fear that the public, government option would drive private insurers from the market and would eventually lead to a single-payer system. While Republicans have been quick to criticize proposals, they have been slow to provide suggestions of their own. Without support from both parties, moving healthcare legislation through Congress will be difficult. Luckily, there has been growing optimism from both sides that an agreement will be met by the end of August.

So, that was pretty much the simplest rundown on reform imaginable, but hopefully it got any newcomers up to speed.  Keep in mind that you as a consumer and voter have the power to influence what happens in Washington.  If you support or oppose any proposed legislation or you want your elected officials to know your opinion, call their office or write them a letter.  You may not realize it, but it does make a difference.  They are in office to make their constituents voices heard.  So, tell them what you think.  Trust me, they want your votes and know they have to respect their voters to get them.  Want to contact your congressman? your senator? your governor?  Find out who they are (in case you don’t know) and how to contact their office here.

While we would love to help keep you up to date on the changes and news with health care reform, that topic deserves an entire blog of its own. Plus, while I like to think of myself as well-informed when it comes to health care, I’m thinking the experts might have one up on me when it comes to the complexities associated with the reform process.  There are lots of good sources out there that tackle the many issues wrapped up in changing our healthcare system. A good place to start is Jane Sarasohn-Kahn’s blog, http://www.healthpopuli.com/, which provides daily updates on health care reform.  Happy reading.

As of April 1 in Illinois, they have taken step 1 in protecting the uninsured. A new law caps uninsured patient bills at cost +35%.

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!

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.