Great article from Jane Sorenson-Kahn pointing out that employers see “cost-sharing among employees as a top #1 cost-control strategy.” and that employers are “less satisfied [with] online comparison tools.” That’s a bad mix. No information on price AND you’re going to have to pay for it. Sounds like going to the auto-repair mechanic who just grins when he sees you walk in the door.

Let’s see if we can wipe that grin off of his face.

First, the Facts: Healthcare costs are out of control trending toward 16% of the GDP today and projected to be 20% by 2017 (that’s just around the corner, folks). So cost-shifting to the employee should come as no surprise. And with an economy like we’ve had and jobs as scarce as they are, employers have their choice of job candidates, so if you don’t like the health plan, there’s the door. So we are going to be paying the bills now. Time to put on the big boy pants and get serious. That damned mechanic’s grin just widened a bit.

Second, the Solutions: Most current online pricing solutions are relative scales where $ is inexpensive and $$$$ is expensive. When the treatment is $55-85 that MIGHT suffice, but when it’s $600-1,300 (like the MRI my daughter had on Friday), the difference between $ and $$$$ is significant. People WANT and NEED specific pricing information. Usually when you DO get pricing info, it’s an average negotiated rate, not the exact price (since doctors do NOT all get paid the same for the same service).  So even the “precise” number lack s precision. And I’m really getting sick of that mechanic’s smirk.

This is where change:healthcare steps in. We provide the tools that employers are telling us they have been looking for. We look at the services and prescription people receive, and then we proactively reach out to employees when they are paying too much for a service or a prescription and tell them exactly where they can go to get it for less. They don’t have to go where we tell them. It’s their money, and they can spend it how they want. But at least they know now. The mechanic has a bit of a surprised look on his face.

Oh, and then we monitor your employees’ spending for them. If prices change, we let them know that there are more cost effective options. Prices for doctors vary by 100% for many specialties. Prescriptions vary 40% between chains. We’ve seen diabetes maintenance medications that are $750/month at one pharmacy and $450/month across the street for the EXACT SAME THING.

We tell your employees.

We provide the online pricing tools employers have been looking for.

And we wipe that damn smile off of the mechanic’s face.

Employers, we hear you. We’re here to help.

Jane’s post is based on a PWC report that you can find here: “What employers want from health insurers in 2010.” Photo from user Neubie on Flickr.

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.

In an article today on BusinessInsurance.com states that IBM plans to cover 100% of primary care visits in 2010, going against current trends of pushing a great portion of the health care cost burden onto employees shoulders.

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.

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…

Consumerism in healthcare has been hailed by many including ourselves as one of the key components in solving the healthcare crisis in the U.S.

“…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.

Today, change:healthcare had two great health care questions that I thought I should share with the rest of the change:healthcare community.  Remember, we are hear to help and answer your questions… so let us know if we can be of service!

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 (10).

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.

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!

In a recent survey conducted by Hewitt Associates, about 20% of employers said they are planning to stop offering health benefits over the next three to five years.

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!

Thursday’s Healthpopuli post caught my eye – Hospitals’ fiscal health is eroding. More than 50% of hospitals had a negative margin in Q4 2008. Sounds like the hospitals need wellness and disease management programs to address their ailing health just like patients are getting.

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.