Evergreen Health is the only health insurance cooperative that employs physicians itself rather than link to provider networks. Evergreen embraces telemedicine and offers a wide range of services through primary care medical homes.
Peter Beilenson, MD, MPH
CEO of Evergreen Health Photo: Har Sinai Congregation (Facebook)
Innovation is the central issue in economic prosperity.—Michael E. Porter
For many years, Peter Beilenson, MD, MPH, has advocated for single-payer financing of US healthcare.
Now, he runs an insurance company.
Beilenson is president and CEO of Evergreen Health, one of two dozen insurance cooperatives formed with support of the Patient Protection and Affordable Care Act. Evergreen is the only PPACA-spawned cooperative with a health services delivery network.
The health plan business model at Evergreen is closely tied to the PPACA individual and group exchanges. Doctors are salaried in Evergreen's healthcare delivery system, which has been formed with the primary care medical home model. Evergreen medical homes embrace telemedicine and offer a wide range of services including primary care, wellness programs, home monitoring of chronic diseases such as diabetes, and preventative services.
The average size of an Evergreen primary care physician's patient panel is about 1,400. Nationally, the average is 2,200, according the Center for Excellence in Primary Care at the University of California, San Francisco.
Evergreen has its roots in the Healthy Howard Plan, which Beilenson helped launch in 2008 as the top health officer in Howard County, MD. Healthy Howard targeted 2,000 uninsured individuals. The plan offers primary care with a monthly premium of about $65. In addition to affordable rates, the plan features face-to-face health coaching.
Beilenson, who earned his medical degree at Emory University and master's degree at Johns Hopkins, schooled me on Evergreen and its sister co-ops in an interview earlier this month.
HLM: How does a health insurance cooperative work?
PB: It's a nonprofit health insurance company with the majority of the board made of members. … We are unique among the 23 co-ops in that we have a health system. We raised several million dollars on our own to create our primary care system. … The other 22 basically have networks of providers.
HLM: Where do co-ops fit in the patchwork quilt of reform efforts under the PPACA and other federally driven healthcare reforms?
PB: I think of it more as a Rube Goldberg cartoon, but the quilt analogy works. … Where there is a co-op in a state with an exchange, co-ops are driving down costs 10 to 15% because of competition. The market presence of another competitor has reduced costs.
HLM: Before Evergreen, you formed the Healthy Howard Health Plan. What did you learn that you have applied at Evergreen?
PB: We didn't know that healthcare reform was even going to happen in 2007. … Using the patient-centered model is clearly the way to go. … Access to doctors up to midnight made a huge difference in triaging people away from the emergency room. At Evergreen, we've had a tiny number of emergency room visits.
HLM: Are co-ops such as Evergreen good fits with particular markets or can they thrive in the broader, national health insurance market?
PB: We definitely feel our model is replicable regionally and nationally. … The states should be the incubator of change, and the federal role is to support and kick-start what's happening at the state level.
HLM: Can a patchwork quilt approach to transforming US healthcare succeed? What happens if it fails?
PB: I would guess this will eventually lead to a single-payer system. They really didn't bend the cost curve. … The federal government and states will either bend the cost curve or the system will move to a single-payer model because the costs will just be too difficult to sustain. … A single-payer system is the most equitable.
HLM: What are the benefits of establishing medical homes?
PB: Basically, you want someone to coordinate your care. Primary and preventive care are not provided by specialists. … Specialists are very important but they focus on one part of the body. Our primary care medical homes are actually more robust than a primary care center.
HLM: Are you confident or cautious about the 2014 beneficiary pool at Evergreen?
A multidisciplinary medical task force of the North American Spine Society is recommending best clinical practices for more than a dozen spinal treatments, surgical procedures, and diagnostics. The information is being shared with health plans.
"These are coverage recommendations that have been vetted extensively," says Christopher Bono, MD, an orthopedic surgeon and second vice president of NASS.
The recommendations, released this month, cover 13 treatments, surgical procedures, and diagnostics, such as cervical artificial disc replacement (CADR) and lumbar fusion. They include clinical criteria that indicate whether or not a particular kind of spine care is indicated for a patient with specific diagnoses and symptoms. NASS is expecting to release 14 more coverage policy recommendations.
The Burr Ridge, IL-based organization's coverage task force, which helped craft the recommendations featured "the whole gamut" of spine health professionals including surgeons and radiologists. "It's a product that's different than anything NASS has done before," says Bono.
The chief of spine service at Brigham and Women's Hospital in Boston, Bono says improving transparency in spine care is a top goal of the NASS recommendations. "The status quo has been insurance companies developing their own coverage policies," he said, characterizing NASS's traditional role in the process as reactive. "NASS would see a draft and it was not always clear how the policies were set."
A key directive to the NASS coverage task force was to apply the principles of evidence-based medicine. "For most things that we do, fair coverage will be based on published data," Bono says.
In the past, when the evidence was not available or not clear, the task force followed the "reasonable man theory" of the US justice system as its guide. "We tried to strike that balance on those procedures where data was absent," he said. "We tried to present what a reasonable spine surgeon would think is appropriate."
For example, the NASS recommendations portray cervical artificial disk replacement as an "emerging/emerged technology" that appears capable of achieving results similar to cervical fusion procedures.
"Though not currently to be considered the standard of care for treatment of degenerative cervical disorders, [CADR] has shown promising results in the available data, indicating at least equivalence to cervical fusion following adequate decompression," The NASS guidelines say.
Bono said it will take time for the NASS recommendations to have an impact in the marketplace. "I would anticipate this is a five- to ten-year project," he said. "It's going to take multiple patients and multiple years to see if this makes a difference."
The Boston-based surgeon says early contacts with payers about the recommendations have been encouraging. NASS shared the organization's lumbar fusion recommendations with United Healthcare officials about seven months ago. "The feeling was quite positive," he said. "They made some requests to make it more useable."
Another payer, Cigna, is also weighing in on the NASS recommendations. David H. Finley MD, Cigna's national medical officer for enterprise affordability and policy, says the NASS guidelines should help the insurer set insurance coverage guidelines.
"Cigna appreciates the recommendations from NASS and will take them into consideration," he said. "Most of Cigna's coverage policies are reviewed annually and our decisions are based on a thorough study and analysis of the latest scientific evidence. We also consider guidance from medical societies."
Joseph Gregory, a surgical devices analyst at London-based GlobalData, says the NASS recommendations are a positive contribution to the spine surgery field, which has drawn scrutiny over explosive growth in spine fusion procedures. From 2002 to 2011, the annual number of US spine fusion procedures increased 77 percent, rising from 260,000 surgeries to 460,000, according to the federal Agency for Healthcare Research and Quality.
"They're a fantastic initiative by NASS," Gregory says of the new recommendations, adding the International Association of Spine Surgeons has released similar guidelines to "promote education on payment."
Gregory, who has been working on a spine fusion report that GlobalData is set to release soon, says the "The level of detail [in the NASS recommendations] is really great. "The breadth is definitely there."
In a prepared statement released with the spine care coverage recommendations, NASS President William Watter III, MD, MMS, MS, said better guidance is needed in the field for several reasons. "Maintaining patient access to high-quality, evidenced-based and ethical spine care is the single most important part of NASS' mission," he said.
"It is our hope that payers, spine specialists, and their patients will use these evidence-based coverage recommendations as a reference to advocate for appropriate care for patients."
At least $42 billion of the $2.8 trillion US healthcare industry is up for grabs as new market entrants from Walmart to technology start-ups seek a slice of the pie, according to a new study.
In a trend that threatens to upend the healthcare industry, new market players are capitalizing on freshly empowered consumers and the drive to create a value-based medical services delivery system, according to a new PricewaterhouseCoopers study, "Healthcare's new entrants: Who will be healthcare's Amazon.com?"
"There are huge openings for these new entrants to disrupt the healthcare sector," Ceci Connolly, managing director of PwC's Health Research Institute, said Tuesday during a webinar on the study. "In overwhelming numbers, consumers are willing to abandon old models for more efficient, convenient care. … We are seeing this go far beyond flu shots."
The key findings of the study are:
Two dozen of last year's Fortune 50 companies are new entrants to the healthcare market
New entrants are driving "democratization and decentralization" of healthcare, which is boosting access to medical services
Consumers' growing insistence on price and transparency presents an opportunity to new entrants and a risk to traditional healthcare organizations
New entrants are not only seeking a share of the $2.8 trillion medical services market but also "reshaping and expanding the $267 billion US fitness and wellness industry"
The new entrant study's lead author, Trine Tsouderos, a director at PwC's Health Research Institute, says a consumer survey served as "the heart of our report." The survey asked consumers whether they would be comfortable receiving medical services outside of a traditional setting or with new "virtual technology" options such as smartphone apps and telemedicine. The medical services in the survey ranged from a routine electrocardiogram to dialysis.
A significant finding of the survey is that 45% of respondents said they were likely to choose the new options for outpatient care and services historically obtained in physician offices. "People were very open to doing these in new ways," said the study's lead author, Trine Tsouderos, a director at PwC's Health Research Institute, during the webcast.
New dialysis options drew the most tepid consumer response, with 26% of respondents embracing options such as home dialysis.
Tsouderos says the consumer survey also gauged "the money at stake" for traditional healthcare organizations. She said $42 billion is a "conservative number," noting 2011 data indicates new entrants had the potential to vie for more than $64 billion in medical services.
New entrants, new payment models
Lack of experience in the healthcare industry—particularly with complex payment systems—is the largest obstacle for nontraditional players trying to establish niches in the market, Connolly says. Some new entrants are building their business models without public and commercial healthcare payers in the mix, she says. Other new entrants are establishing partnerships with traditional players.
An example of a new entrant is San Francisco-based CellScope Inc., which markets technology that turns a smartphone into a digital otoscope. The technology allows parents to conduct diagnostics at home to determine whether a child has an ear infection.
Connolly says CellScope decided against working with payers entirely on its CellScope Oto product. "They are hoping to market that directly with consumers," she says.
An intriguing new-entrant partnership has been formed between Oakland, CA-based Kaiser Permanente and retailer giant Walmart. In California, the companies are opening Kaiser Permanente Care Corners, where patients can have a private teleconference with a doctor or nurse, with a vocational nurse on-site to collect vital signs and other data that can be sent to Kaiser Permanente physicians. The Care Corners sites also generate referrals and offer medical advice for conditions including asthma, diabetes, and joint pain.
Kauffman said providers and payers alike should take notice of the way new entrants are utilizing telemedicine. "This is here to stay," he said. "It's important for all the stakeholders to get together and figure out how … to deliver some of these telemedicine solutions."
Meeting new capacity and expectations
Brian Kim, senior vice president of account management at Southboro, MA-based ikaSystems, says the PwC report's findings reflect what he is seeing in the marketplace. "Of course there are going to be these new entrants. People want to get into this business because there is tremendous opportunity."
Kim says the millions of people who have gained health insurance over the past year represent not only a new pool of customers but also a chance for new entrants to help address an anticipated capacity shortfall. "There's going to be incredible stress on the delivery system," he says. "You need additional capacity to serve the population. … The key disruption is the uninsured."
For example, the Kaiser Permanente Care Corners at Walmart are "about increasing capacity for a population that probably didn't have coverage before and probably went to the emergency room to get care," he says.
David Schultz, president of Albany, NY-based Media Logic, a healthcare marketing firm, believes the enhanced role of the consumer in healthcare is the key that has opened the door for new entrants. "The entire industry is due for a major upheaval," he said after Tuesday's webinar. "Once you've made consumers actual buyers, their whole set of expectations has changed."
US consumers are still learning the healthcare industry ropes, but their interest in price and transparency is a game-changer, Schultz said. "Their needs will be met by entrepreneurs," he says.
Highmark, the Pennsylvania-
based integrated healthcare network, seeks to use ACOs and primary care medical homes to transform the way it does business.
One of the biggest Blue Cross Blue Shield carriers in the country says it is pushing the accountable care organization envelope.
Highmark Inc. has offered BCBS health plans for more than 75 years. A year ago, the Pittsburgh-based payer acquired the seven-hospital Allegheny Health Network, which helped make Highmark the third-largest integrated delivery network in the country.
Now the 5.2 million-member insurer with operations in Delaware, West Virginia, and Western Pennsylvania is banking on the ACO model to drive down costs in the seven-hospital network and spur development of a sprawling integrated healthcare delivery system.
In a phone interview last week, a pair of Highmark executives described the company's quest to transform the way the Blues does business. "We're trying to change our primary care model," said Mark Piasio MD, MBA, medical director at Highmark.
Deborah Donovan, director of provider performance and innovation at Highmark, said merging payer and provider offers valuable opportunities for the partners to leverage each other's skills and resources.
"Payers have incredibly rich data sets that we haven't shared with providers; we haven't really needed to because of the focus on care [to the exclusion of cost in the fee-for-service system]," she said. "The holy grail is when we can link the rich claims data with the clinical data the providers have."
Piasio, who practiced as a physician for 25 years, says he "never really understood the incredible complexity of what an insurer has to do. We still have a ways to go [toward] sharing data."
After finalizing the financial framework of its payer-provider partnership in the first months after the Allegheny acquisition, Highmark turned to "the loftier goals" of an ACO transformation, with primary care medical homes driving the process, Piasio said.
"It's interesting serving two masters, being both payer and provider," he said of the effort required to get the health plans and their providers working toward shared goals of lowering costs while raising efficiency and quality standards. "This is not a two-week project. This is a journey."
Bring in the Clinical Transformation Consultants Donovan says Highmark's medical homes follow established regional and national models that focus on clinical quality and cost of care. Two key elements of the company's ACO genesis are a staff of "clinical transformation consultants" who are helping physicians retool their practices and the establishment of gain-sharing programs with physicians.
"We are partnering with our providers and helping them transform… "[The clinical transformation consultants] work in the areas the practices need," Donovan said of the 30-member specialized consultant staff. "That's a major commitment on the part of the health plan."
Highmark is in negotiations with several physician practices to establish gain-sharing programs, she said, noting that "high volumes" of patients are required to optimize the benefits for both payer and provider.
"It's a good tool to use," Piasio said of gain-sharing programs. "We're exploring them everywhere they make sense."
He believes medical homes are particularly effective in helping patients manage chronic illness in a way that improves quality of life and contains costs. "They need a great deal of coordination to make sure one condition is not affecting another," Piasio said of chronic illness patients.
"How we deliver primary care and how specialists view the world will be totally different than we have today. Otherwise, we will be just kicking the can down the road."
In addition to the clinical transformation consultants, Highmark is providing financial support to help physicians invest in the changes needed adopt the medical home model and operate within the new integrated delivery system.
Highmark has provided funding for electronic health record upgrades and developed "detailed analytics" to share with physicians to help them understand more about the medical needs of their patient populations. "We're providing that on our dime. We are fully supporting them on all fronts," Piasio said.
Early Results
About 850,000 Highmark health plan members are receiving medical services through 3,500 physicians at primary care medical homes. "It's a significant footprint," he said, adding the early results are promising. The payer has documented an uptick in "gradable quality scores" among practices that were already participating in quality programs," Piasio said.
And Highmark's medical homes are starting to pay off on the cost side. "For the most part, relative to the market, they are outperforming those who are outside the system. Our costs are trending below the market," he said.
Donovan said the startup phase of Highmark's ACO drive will take several years. "We're looking at this being a three-to-five year assessment," she said. Piasio believes sustaining and growing ACOs and other value-based healthcare delivery systems will take much longer.
"This isn't easy. There are a great many complex parts that go into how Americans get and pay for healthcare. If it got changed in a generation, that would probably be good," he said. "It's a huge endeavor, but what we're seeing early on is there is uptake… At least the train has started moving."
A survey designed to measure the level of trust that hospital executives have in health insurance companies finds several factors that contribute to low scores, including the length of time it takes for claims to be paid, and the rates hospitals and physicians are paid.
It may come as a shock, but new research confirms it: Healthcare providers do not trust payers.
Payers scored poorly on all three of the new trust questions in the annual National Payor Survey conducted by ReviveHealth, a Nashville, TN-based strategic communications firm and Catalyst Healthcare Research. The results from the final question, which asked providers whether a particular payer "balances its interests with ours and doesn't routinely take advantage of us," were particularly dire.
"I was surprised that the numbers were as bleak as they were on [that] last question," said Brandon Edwards, CEO of Nashville-based ReviveHealth. "It's very hard to lawyer your way around that, or to contract your way around that."
On a 1–100 scale, payers posted an average score of 47 on balancing interests with providers. "All scores were lower in this measure, suggesting a disconnect between the interests of payors and providers," the survey states.
ReviveHealth's "Payor Trust Index" crafted the trust questions in conjunction with Catalyst Healthcare Research. Slightly more than 200 health system and hospital executives participated in the survey, with respondents representing about a quarter of the country's hospitals, Edwards said.
High and LowScorers
In addition to the question about balancing of interests, the survey asked whether a payer made "every effort to honor its commitments" and was "accurate and honest in representing itself and its intentions."
The survey found "the level of trust that hospital executives have in the health insurance companies they regularly deal with is abominably low."
A comparative bright spot, Bloomfield, CT-based Cigna, led the pack with a 63.1 composite trust score. The average score for all payers was 53.2, with Minneapolis-based UnitedHealth Group garnering a mark of only 40.7.
The low scores don't bode well. "Trust is a critical ingredient for the parties to work together," said Dan Prince, president of Catalyst Healthcare Research. "This means there's a long road ahead."
Cigna played up its relatively positive standing among its peers in a media statement, saying "While ReviveHealth's new Payor Trust Index paints a rather stark picture, we're pleased that Cigna is perceived as the most trusted health plan," said John Wray, senior vice president for delivery system innovation and collaboration.
Last place-finisher UnitedHealth had this to say: "This small, narrow, non-scientific survey misses several critical components of the positive relationships that UnitedHealthcare has with most hospitals. It is not indicative of the strong connections we have cultivated with our network of more than 800,000 physicians and 6,000 hospitals. These collaborative relationships with providers are at the core of our work to improve quality for patients across the country."
Results Not Unexpected
Several factors contributed to healthcare payers' collectively poor performance, "including the length of time it takes to get paid, and the rates hospitals are paid for their services," the survey states.
"But new factors also play a role. Narrow networks, tiering, and changing the terms of provider contracts are among the unilateral changes that payors are making right now."
A pair of healthcare provider executives familiar with the survey said the findings are disappointing but far from unexpected.
"It doesn't surprise me," Debi Hueter, VP for managed care at Atlanta-based Piedmont Healthcare, said this week. "Everybody is talking about different funding methodologies… But we really haven't seen flexibility on the other side."
Hueter says payers are often unresponsive to providers' market-specific concerns during contract negotiations. "Those are your marching orders," she said of the conditions some payers set for their provider networks. "Obviously, that doesn't fit every market, every area… They're taking that box, putting it on the provider's desk, and you take it or leave it."
Some healthcare reform efforts have contributed to perpetuating a historically prickly relationship, she says. "Narrow networks have driven the payers and providers farther apart… We're both struggling with exchanges and narrow networks."
Clint Hailey, senior VP and chief managed care officer atDallas, TX-based Tenet Healthcare Corp., says providers and payers have been uneasy partners for decades. "It really has been that way forever," he said, adding that payers are in an unenviable position in US healthcare.
"They're in a tough spot. No matter how well they do, they start at a low point… Somebody's got to finance healthcare, and, for better or worse, health plans find themselves in that position a lot."
Hailey says the survey results are eye-popping given the pressing need for payers and providers to cooperate as they navigate the rapidly changing healthcare industry landscape. "It does scream for change," he said of the survey. "Something has to give. It doesn't mean they have to pay for more… What leads to relationships is mutual trust."
The Price of Mistrust
In strained individual human relationships, people either repair the damage or find new friends. Payers risk losing business partners and market share if they don't fix their broken images, Hueter said.
"They work for a for-profit Wall Street company. And you know there will always be an underlying we-have-to-keep-Wall-Street-happy mentality.
"We have to put the patient in the middle and decide what is best for the patient," she said. "It's got to be a long-term strategy, not a short-term strategy. That's just not in a payer's DNA…
"You will always have that yin and yang dynamic going on. We changed that by starting our own health plan, [with Wellstar Health System in 2012]" Hueter said. "We recognized change is coming down the pipeline. Every time we looked at our payer partners, they looked like deer in the headlights… We knew what we wanted to do. It's a physician-driven plan rather than a Wall Street-driven plan."
For the past decade, healthcare providers have been in the vanguard of efforts to combat the abuse and diversion of opioid pain medications such as Oxycontin. Now state and federal officials and health plans are joining the fray.
Oxycodone, 30 mg. Photo: CVS
For the rest of his time on Earth, one of my best friends will be walking the fine line between the life-preserving benefits of opioid pain medication and addiction.
I call my friend The Mayor of Martha's Vineyard. For The Mayor, powerful pain medications have been a blessing since 2002, when both of his lower legs were shattered in a horrific car crash on the island. The driver, one of his best friends, died in the driver seat beside him.
"My body will never be the same, and I need surgeries every two years just to be functional," The Mayor told me this week. He has been "tapered off" all opioid medication this year, but knows he will go back on oxycodone or Percocet following a hip replacement procedure in the fall, another consequence of the deadly wreck.
The Mayor is resigned to his need for opioid medication and the necessity to take steps to avoid addiction. A pain management doctor has been working alongside his primary care physician for the past three years, and monthly urinalysis testing is part of the pain doc's deal.
"That's probably the best thing as part of their treatment program," he said of the urinalysis tests, which not only keep patients honest but also provide pain doctors with solid data to help manage medication dosage. "And most people will do [the urinalysis voluntarily]. They are not addicts. They're law-abiding citizens."
Blue Cross Blue Shield of Massachusetts started ramping up efforts to help avert the misuse of painkillers about two and half years ago. "A small number of our members were responsible for a high number of our prescriptions," Tony Dodek MD, the Blue's associate chief medical officer and VP of medical quality and strategy, told me this week. "Those same numbers were driving up our costs."
The payer decided to help members find a balance between getting opioid pain medication when warranted, while avoiding the danger of addiction. A new painkiller prescription policy that applies to all members except cancer patients and the terminally ill has posted "remarkable results," he said.
Under that policy, health plan members trigger a painkiller safeguard program after they reach a 30-day treatment threshold. A threshold is described as any number of prescriptions in a coverage year that add up to 30 days of treatment with an opioid pain medication. Once a member reaches the 30-day threshold, the health plan requires pain management safeguards such as a treatment plan and limiting members to obtaining painkiller prescriptions from one physician.
Dodek says the new prescription policy has generated two positive results over its first 18 months:
Prescriptions of narcotic pain medications fell by 6.6 million pills
The company received only one member complaint.
"We had no disruption of pain medication for legitimate needs," he told me.
BCBS of Massachusetts' prescription policy also requires physicians to start pain medication prescriptions with short-acting formulations, which are generally less addictive than long-acting drugs. The policy shift, which applies to all members except cancer patients and the terminally ill, has resulted in a 50 percent reduction in prescriptions for long-acting painkillers, Dodek says.
And the health plan sends monthly letters to physicians about members who may be "pill shopping" for pain medication from several doctors simultaneously. "We see that in our claims pretty quickly," he told me, noting prescription claims are processed in real-time.
Another payer, Aetna, has launched "active surveillance" efforts on its members to help ensure that pain medications are not abused or diverted, Edmund Pezalla MD, MPH, the company's national medical director for pharmaceutical policy and strategy, told me this week. "We're looking for those [members] who have been getting a lot of narcotics at higher doses," he said. "We have a pharmacist who looks at this."
Pezalla says Aetna, which has 22.7 million medical insurance policy members and more than 600,000 physicians in the company's healthcare networks, reaches out to patients when painkiller abuse or diversion is suspected. "We offer patients counseling. We try to get to the patients, and assume they are people who need help." He notes that the health plan covers substance abuse treatment programs and can restrict a member's access to painkillers. "We can limit them to a single pharmacy or a single doctor."
While acknowledging that any snooping in members' claims data raises privacy concerns, Pezalla says health plans bear a responsibility for patient safety in the area of prescription medication.
"Safeguarding the privacy of our membership is very important to us," he told me. "But under HIPPA and other laws and rules, we can track anything that is part of the payment system or normal care."
Pezalla says Aetna is generally supportive of public policy efforts to address the abuse and diversion of painkillers, including state-based registries that track prescriptions of narcotic medications. "If a state puts a registry together, we will help them. We are here to help where we can," he told me. "The improper use of medication just makes it harder for the patients who need it."
Governors Take a Stand
In January, Vermont Gov. Peter Shumlin (D) devoted his entire state of the state address to the Green State's drug addiction crisis. In March, Massachusetts Gov. Deval Patrick declared an opioid abuse public health emergency in the Bay State.
"We have an epidemic of opiate abuse in Massachusetts, so we will treat it like the public health crisis it is," Patrick said in a prepared statement. His office announced a range of measures designed to combat the problem, including mandatory physician and pharmacist use of the state's narcotics prescription registry.
Background facts provided in the statement paint a dire picture of opioid abuse: "The use of oxycodone and other narcotic painkillers, often as a route to heroin addiction, has been on the rise for the last few years in Massachusetts. At least 140 people have died from suspected heroin overdoses in communities across the Commonwealth in the last several months, levels previously unseen. From 2000 to 2012, the number of unintentional opiate overdoses increased by 90 percent."
In April Patrick went so far as to order a ban on a new painkiller, Zohydro, until officials can "safeguard against the potential for diversion, overdose and misuse." Zohydro is a long-acting form of hydrocodone. (Vicodin is a short-acting form of the drug.) Federal and state officials, including Sens. Mitch McConnell (R-KY), Lamar Alexander (R-TN) and Tom Coburn (R-OK) and 29 attorneys general, are urging the FDA to reconsider its approval of Zohydro. The drug's maker says it is working to develop an abuse-resistant formulation of the drug.
Meanwhile, the Mayor of Martha's Vineyard hopes his governor can walk the fine line between cracking down on the minority of patients who abuse or divert painkillers, and the majority of patients who need pain medication to cope with arduous suffering.
"The percentage of people who take these drugs and abuse them is miniscule compared to people getting good treatment," The Mayor told me, adding a backlash against painkiller prescriptions is already having a chilling effect in the medical community. "They're just afraid for their jobs."
The impact of proposed changes to Medicare's Inpatient Prospective Payment System in 2015 will vary from hospital to hospital, but federal officials predict providers will take a $241 million payment hit next year.
Medicare and Medicaid have been under the budget knife for years. The proposed 2015 IPPS rules from the federal Centers for Medicare & Medicaid Services released last week have hospital officials asking a pressing payment question: How low can you go?
"It's really starting to chip away at hospitals," says Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association. "We really can't pin it on CMS because they are implementing cuts in a statutory manner."
The IPPS applies to nearly 4,000 acute care and long-term care hospitals across the country. In the proposed rules for 2015, CMS presents two classes of factors that will affect Medicare payments next year: set factors that will impact all hospitals covered in the proposed rules, and variable factors that will differ from hospital to hospital.
The set factors in CMS' proposed 2015 IPPS rules establish a baseline 1.3 percent increase in Medicare payments. The elements of that baseline figure are as follows:
2.7 percent hike, "market basket" update
0.4 percent reduction, productivity adjustment
0.2 percent reduction, Patient Protection and Affordable Care Act
0.8 percent reduction, documentation and coding
Federal officials expect the net IPPS payment figure to be in the red because of several variable factors—mostly negative adjustments and penalties under Medicare payment programs. Those payment adjustments and penalties include ongoing cuts to the Disproportionate Share Hospital program that reimburses hospitals for uncompensated care as well as penalties for high rates of readmissions and hospital-acquired conditions.
The proposed IPPS reduction in HACs, which federal officials estimate at 0.3 percent, could be the most prominent pain point for hospitals, according to Kim and several other observers. She says large hospitals and teaching hospitals appear to be hardest hit. "If it's because they treat sicker patients, we don't think that's fair."
Peter Angood MD, CEO of the American College of Physician Executives, says reducing hospital acquired conditions is going to be a challenge for everybody.
"The complexities of reducing those HACs are tough," he said, noting reductions in readmission rates are easier to attain through relatively modest changes in programs and procedures. "It gets to the core of trying to improve the healthcare delivery system… Reduction in HACs is a longer term project. We've been on this journey for about a decade."
While Angood praised CMS for driving the effort to promote value in US healthcare, he said hospitals and other key stakeholders face short- and medium-term risk from the "dichotomous" payment system they face in the transition period. "CMS is using its platform effectively to shift us from volume to value… It's complicated for health systems to navigate both sides of that."
Two-Midnight Rule
The proposed IPPS rules are more about staying the course than breaking new ground, several observers say.
"It's 1,700 pages of a pretty boring rule," Eric Hammelman, VP of data analytics at DC-based Avalere Health, said Friday.
Anyone expecting CMS to chart a new course on its so-called "two-midnight rule" for hospital admissions is surely disappointed. Under the rule CMS set last summer, patients who stay at a hospital for a period of time spanning less than two midnights are generally considered appropriate for payment at outpatient rates under Medicare Part B. Inpatient hospital stays are reimbursed at the higher Medicare Part A rate.
Hospital Execs Hope for Two-Midnight Rule Repeal
In its proposal, CMS invites providers to offer exceptions to the two-midnight rule via email for inclusion on a list of procedures that are automatically designated for inpatient payment. But there is no new guidance on the rule.
"They didn't change any of the regulations," Paul Clark, a supervisor at Wolters Kluwer's Health Reform KnowlEDGE Center, said Thursday. "They just repeated guidance that RACs are at bay until March 2015."
Medicare recovery audit contractors are the biggest two-midnight rule losers for now, he says. "[Contractors] are not going to be making as much money. They are not happy."
Avalere's Hammelman says CMS appears determined to move forward with enforcement of the rule, which has drawn howls of protest from healthcare providers and their allies in Congress. "In their minds, this is a policy [CMS officials] have implemented." While recognizing there are exceptions to any rules, CMS has directed contractors to start looking at Medicare billing with the two -midnight rule in mind, he says.
The proposed IPPS payment statutory reductions such as those mandated under the PPACA and programs that will hit individual hospitals differently such as HAC penalties have been expected.
"It's all stuff that [CMS officials have] telegraphed," Hammelman said. And several quality programs such as HAC have the potential to take bigger and bigger bites out of bottom lines over time. "It will become a growing issue as we see hospitals face penalties in the six, seven, [or] eight percent range."
'Really Hurting'
The proposed 2015 IPPS rules cover several other topics for healthcare providers and other Medicare stakeholders to consider during the 60-day comment period that began April 30.
Wolters Kluwer's Clark says CMS appears to be trying to rein in appeals of decisions made at the Provider Reimbursement Review Board. "About a third of the newly proposed regulations apply to the PRRB," he said. "They're trying to eliminate certain appeals that providers can do. … In recent years, the PRRB has been trying to reduce the number of appeals they have to deal with."
Ongoing cuts to DSH payments will hurt hospitals in states where Medicaid expansion under the PPACA has been blocked, Clark said.
"One of the big issues in this one is going to be DSH reimbursement," he said of the proposed 2015 IPPS rules. "The assumption was the need for DSH payments was going to go down. CMS doesn't seem to be taking into account that the level of uncompensated care is not going down the way regulators, lawmakers and others had expected… For 2015, they're not making dramatic changes. It seems like they're going ahead with the existing formula."
The federal officials who drafted the PPACA expected states to expand Medicaid to more adults under a deal that has Washington paying 100 percent of the bill for the first three years. Federal support of Medicaid expansion is set to taper down to 90 percent in 2020.
"States that didn't expand Medicaid and already had a relatively sick population are really hurting," Clark said of states such as Georgia and Missouri, where hospitals are set to endure another round of double-digit cuts to DSH payments in 2015. "Struggling, marginal hospitals… the DSH payments may have been making them solvent. Those marginal ones are going to be in a bind."
Health plan enrollment nationwide beat HHS's expectations, but fell short on attaining two key goals of federal officials: enrolling Latinos and adults between 18 to 34 years of age. The differences from state-to-state were, in some cases, pronounced.
The early results are in. While federal officials appear to have beat expectations for 2014 HIX enrollment nationwide, the performance of the new public exchanges varies state-to-state.
In a 45-page report released Thursday, the U.S. Department of Health and Human Services provided detailed demographic data on the people who signed up for individual health insurance policies on the new public exchanges between October 1, 2013 and March 31, 2014.
Some key findings:
More than 8 million people signed up for health insurance policies through the Patient Protection and Affordable Care Act exchanges during the enrollment period
About 28 percent of 2014 exchange enrollees (2.2 million people) are between 18 and 34 years old
Nearly half of the people who signed up for exchange policies —3.8 million—signed up during "the March surge" at the end of the HIX open enrollment period
About half of those who enrolled during the surge at the finish were in the 18 –34 age group, a coveted cohort for payers
The report reveals wide variances among states, but indicates that enrollment nationwide exceeded HHS's expectations. Last June, HHS Secretary Kathleen Sebelius and the federal Office of Management and Budget set the national enrollment target for the exchanges at 7 million beneficiaries.
Latino, Youth Enrollment Disappoint
The national enrollment data shows the exchanges fell short on two key goals of federal officials, the enrollment of Latinos and of adults 18 to 34 years old.
According to 2012 US Census Bureau statistics, Americans of Hispanic origin constitute the largest share of the country's uninsured population. At 15.5 million lives, nearly 1-in-3 uninsured Americans are Latino, the Census found.
The HHS report lists ethnicity statistics from the nearly three dozen exchanges that are administered by federal officials directly or in conjunction with the states. Of the 3.7 million beneficiaries who reported their ethnicity, only 403,632 were of Hispanic origin, slightly over 10 percent.
Richard Olague, a spokesman at the federal Centers for Medicare & Medicaid Services, said in an email Friday that exchange officials across the country face a challenge reaching Latinos.
"We always anticipated reaching the Latino community would require a unique approach that included more than having a Spanish website and offering bilingual support at the call center," he said. "Because of this, we took steps to utilize what we know are trusted messengers in the Latino community, including Spanish language media and community partners to provide as much in-person assistance to help educate and enroll the Latino community.
"Our goal remains to continue to educate… all Americans about the benefits and protections now available to them because of the Affordable Care Act," he said.
Young Invincibles
While it could have been much worse without "the March surge," the enrollment of people 18 to 34 years old still fell short of federal officials' hopes.
About 28 percent of exchange beneficiaries are in this age group, which represents about 40 percent of the population of Americans eligible to obtain insurance on the exchanges, says Elizabeth Carpenter, director in the healthcare reform practice at DC-based Avalere Health."
Speaking by phone Friday, she said, "we're certainly in the realm where the enrollee demographics will affect rates next year." The 2015 rates are highly likely to vary by health plan, she said, depending "on what their strategy was going in and what their strategy is going forward."
'State-by-state Question'
As exchange stakeholders pore over the 2014 beneficiary pool data in the coming weeks, they will be closely examining the state numbers. "This is not a national question," Carpenter said of analyzing beneficiary pools in the exchanges. "It is really a state-by-state, region-by-region question."
Multiple factors must be weighed when evaluating the beneficiary pools and associated risks for payers, she says, including the size of the state and the proportion of the state's population that was previously uninsured.
A handful of outlier states lie on both sides of the performance spectrum. The data released last week shows the District of Columbia and Hawaii "lagging behind" in overall enrollment, Carpenter said. Despite the Oregon exchange's decision last week to scrap its troubled state-administered website and to adopt the federal government's HIX website, HealthCare.gov, the West Coast beneficiary pools stand out positively, she noted. "California has exceeded expectations," and the Washington exchange also performed well.
"While Hawaii has had a hard time with its exchange, Oregon managed to come close to its enrollment target," Carpenter said. "There was a lot more that went into enrollment than just the performance of the exchange website."
Cover Orgeon's site performance was so bad that the FBI and the GAO have launched inquiries into what went wrong.
In Colorado, officials at the state-administered exchange are hopeful about their beneficiary pool. "There are many good signs," Linda Kanamine, director of communications at Connect for Health Colorado, said Thursday. "We are pleased to see an even distribution of enrollments statewide and that our young adult enrollments are increasing. Our focus continues to be on reaching more Coloradans and increasing access, affordability and choice."
Kanamine highlighted these data points:
Enrollments by each county very closely mirror each county's percentage of total state population.
60% of those who signed up applied for and got tax credits – averaging $277 per month statewide.
"26% of our customers were between 18 and 34. Factoring in Medicaid expansion, almost 44% of those new enrollees are also in the 18–34 range.
A Payer's Perspective
Indianapolis-based Wellpoint Inc. is upbeat about its new exchange customers.
"We continue to process applications and payments from our new members, as this first open enrollment period under the Affordable Care Act has drawn to a close," Wellpoint spokesman Jerry Slowey said in an email Friday.
"Our new enrollees appear to generally match the federal government's projections for the industry… At WellPoint/Brand, we are proud to have been essential players from the start, encouraging enrollment across our fourteen states. As we move forward, we can all take pride that for the first time, millions of uninsured Americans have access to comprehensive health insurance."
As model payment for healthcare services moves from fee-for-service to a system based on value, the health insurer Cigna is putting an emphasis on colon cancer prevention measures.
"A pound of prevention is worth an ounce of cure." – Benjamin Franklin
One of the worst perversions of fee-for-service medical care is the under valuing of prevention.
In the real world of human suffering, prevention is the ultimate value proposition. Preventing illness not only improves quality of life but also cuts treatment costs.
This concept is clearly on display at Bloomfield, CT-based Cigna, which began ramping up its efforts to increase colorectal cancer screening rates among its members in 2005. "At the time, our screening rates were comparable to what the national rates were, so there was room for improvement," Kathryn Pierce, director of clinical initiatives at Cigna, told me. "Colon cancer can be prevented or easily treated if detected early."
According to the American Cancer Society, colorectal cancer is the third leading cause of cancer-related deaths in the United States, and the disease is expected to kill 50,310 Americans this year.
Cigna's Colorectal Cancer Screening Program is making a difference. Last year, the company documented a 23.7 percent year-over-year increase in screening rates. Any boost in screening rates has the potential to save lives. And Cigna is cutting costs by paying for home test kits that indicate whether members should undergo more expensive testing such as a colonoscopy, which has an average cost of $1,185 in the United States.
This year, Cigna plans to reach two million people who are due for screening through a combination of targeted online messages and direct mail. More than 20 percent of health plan members who received an outreach message from Cigna in 2013 obtained a colorectal screening within six months of the intervention, according to the company.
Outreach is at the heart of the Cigna program. Anyone turning 50 or who becomes a Cigna health plan member past age 50 receives an educational brochure outlining all screening methods, which include a simple and sanitary home collection kit. "There are pros and cons to each of them," Pierce said of the screening methods. "For those who have used the kit in the past and have a preference for it, we send one directly. We take one step out."
The home collection kits are distributed by Madison, NJ-based Quest Diagnostics and are "very easy to use," Pierce told me. The collection is conducted after a bowel movement, requiring "a gentle brushing of the stool in water for about 5 seconds," according to information provided by Enterix, the company that makes the kit." The brush is able to pick up any blood in the water "that may be the result of bleeding the person may not be aware of," said Pierce.
The patient sends the collection kit to a Quest lab for testing and Quest notifies the patients about the results. A positive result prompts a recommendation to undergo further screening through their physician such as a colonoscopy.
Pierce said the vast majority of Cigna health plans cover colorectal screening "at 100 percent."
Healthcare providers are key partners in Cigna's Colorectal Cancer Screening Program, Pierce told me, noting the company's survey data has found that a doctor's recommendation is the No. 1 reason people get screened. "We have partnered with physicians with great success," she said.
Pierce told me Cigna's screening program is saving the company money, but she said the value of the effort goes far beyond the bottom line. "There definitely is a financial return," she told me. "But the thing you can't quantify is the lives saved. [The screening program] promotes a culture of health. It will encourage them to get their screenings for other cancers and cardiovascular disease."
Prevention potentially saves lives, cuts costs and "moves the needle" on overall health. That sounds pretty valuable to me.
A report setting principles and recommendations for achieving greater price transparency in US healthcare suggests the task will require cooperation between healthcare providers, payers, and employers.
"Patients are being asked to take on an increasingly significant share of the payment for healthcare services. They are looking for higher value providers: those that offer quality services at a fair price," Richard Gundling, VP of healthcare financial practices at HFMA, said in an email exchange. "It is impossible for them to make decisions about the value of a provider without having price as a component."
Why Is Healthcare Price Transparency So Hard?
The authors of the report wanted any form of price transparency to be easy to use and easy to communicate to stakeholders. They set the following goals as the foundation for price transparency reforms:
Should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care.
Should be paired with other information that defines the value of services for the care purchaser.
Should ultimately provide patients with the information they need to understand the total price of their care and what is included in that price.
Will require the commitment and active participation of all stakeholders.
"Transparency won't be successful without clarity of information, or without easy accessibility. The basic point is to make it easy for patients and other care purchasers to make decisions about which provider offers them their desired level of value," Gundling said.
"The report offers several examples of how information can be made easily accessible: Providers might post procedure prices on a public website, or provide information on how to make phone or email inquiries to pricing specialists. Many payers, as well as third party vendors, are already offering transparency tools for their members that enable them to make price and value comparisons among multiple providers."
Achieving the price transparency goals will require cooperation between healthcare providers and payers, Gundling said. "Transparency will work best when there is collaborative agreement between providers and payers on the right 'metrics' for transparency, offering different or potentially conflicting information will ultimately create confusion for care purchasers."
"And both payers and providers need to be responsive to feedback from patients/health plan members on what information they find useful when choosing a provider. The HFMA report includes a recommendation to establish "different price transparency frameworks for different care purchaser groups," he said.
For insured patients, the report recommends payers serve as the main source of price information. Providers are best suited to provide price information to uninsured and out-of-network patients, the report contends. And fully insured employers should use and expand transparency tools that help workers identify higher-value providers, according to the report.
"Patients are assuming greater financial responsibility for their healthcare needs and in turn need information that will allow them to make informed healthcare decisions," the report states. "Price is not the only information needed to make these decisions, but it is an essential component."
'Unleash the Market'
One of the most powerful results of greater price transparency will be transforming many fields of medicine into market-driven service delivery models, according to the HFMA report.
"Certain areas of health care are becoming, or already are, more like a retail marketplace, including the market for elective procedures such as Lasik eye surgery or cosmetic surgery," the report states.
"Recent trends in consumer-driven and value-based insurance design are moving 'commodity services' such as lab work, imaging, and screening tests, as well as some procedures, more toward a retail model. And new payment models are potentially reshaping how care will be delivered and priced."
David Friend, who earned a graduate degree in finance from the University of Pennsylvania's Wharton School, a medical degree from the University of Connecticut and now works at accounting powerhouse BDO, has been advocating for market-based reforms in medicine for nearly four decades. In a phone interview he said price transparency and market-based reforms go hand-in-hand. "They're going to have to unleash the market."
"If you let the market work, it will be just like restaurants," he said of achieving price transparency in healthcare. "You should know what you're getting and how much it's going to cost."
Friend believes the market forces that have already been unleashed are bearing down on the "vested interests" that oppose greater transparency in US healthcare.
"This is coming because the consumers are getting smarter and are starting to demand it," he said, noting individuals have an incentive to become savvier shoppers as they face wider healthcare coverage options that include a range of cost sharing burdens such as deductibles and co-pays.
"It's now finally going to happen," he said. "The entire health system has to change: 25 percent of the economy. With 25 percent of the economy up for grabs, you're going to have tremendous winners and unbelievable losers."
'Center Stage Without a Script'
The need for greater transparency is widely viewed as pressing. "We're giving consumers keys to a new car, but you wouldn't give anyone a new car without driver's education," Robin Gelburd, president of New York, NY-based FAIR Health Inc., said in a phone interview.
FAIR Health is a not-for-profit corporation established in 2009 as part of a settlement agreement between the state of New York and insurers over out-of-network reimbursement practices. According to the organization's website, the organization was formed to manage, improve, and expand the claims database that supported claims adjudication and to enhance its transparency, objectivity, reliability and accessibility."
FAIR Health maintains an independent database of healthcare claims information on 140 million "covered lives," Gelburd said.
"In the past, the consumer was like the chorus line in a Broadway show," she said. "Now they have been thrust to the center of the stage with the spotlight on them. They can't be center stage without a script."
