A test of consumer behavior shows many employees willing to give up healthcare benefits for lower premiums, and ready to spend defined-contribution money on other benefits.
With so much attention focused on the travails of the federal and state health insurance exchanges, it has been easy to overlook a third HIX model: Private health insurance exchanges. They have more or less been operating under the radar and away from the glare of the nightly news.
Yet the way in which these private exchanges are organized and run—by the likes of Aon Hewitt, Mercer, Towers Watson, and Walgreens, as well as insurers such as Aetna, Cigna, and Highmark Health Services—gives me hope that this new-fangled insurance marketplace can actually succeed.
Employers are turning to these private exchanges as a way to (hopefully) reduce their healthcare costs by shifting from a defined benefit to a defined contribution model. Enrollment is estimated at just one million this year but is predicted to increase to 10 million by 2018.
Of course it is much too early to measure any success in terms of lower healthcare costs, but a new survey from Accenture focuses on consumer buying behavior in private HIX (PDF) and provides some food for thought for health plans.
The 2,006 survey participants, all with existing employer-sponsored coverage, were set up with a mock private HIX and asked how they would spend a defined contribution on insurance in the HIX. In real life, defined contribution works something like a gift card for healthcare insurance. Each employee receives a set amount of pre-tax dollars from their employer to spend on the HIX to purchase whatever level of coverage is preferred.
And remember, this is cold, hard cash. Not cash-in-hand money, but a defined benefit, be it $2,000 or $6,000, is more tangible than a monthly premium that just disappears from a paycheck each week. Did that make a difference in how survey participants spent the money?
Yep. Survey respondents selected lower coverage levels with lower premiums than their employer-sponsored insurance provided. In fact, 25% of the survey respondents say they would trade healthcare benefits for a lower healthcare premium.
"The survey is about the propensity for employees, when given the opportunity, to make benefit trade-offs," says Rich Birhanzel, managing director of Accenture Health Administrative Services. "That 1 in 4 employees would be willing to make that benefit trade-off is significant. It impacts the level of coverage the average employee is going to have and [creates] opportunities to sell other benefits to those individuals who are spending less on their medical benefit."
Okay, if people are willing to give up some benefits to lower their premiums, what else are they willing to trade? Here are some of the survey highlights:
Employees are most likely to trade a higher deductible for premium savings. Some 83% of respondents say they would pay a higher deductible to save $900 annually in premium costs. Almost three-quarters would pay a higher deductible to save as little as $300 on their premiums.
Three-quarters say they would pass on wellness benefits to lower their premium.
Employees are much less likely to forgo provider choice, with only 26% saying they would be willing to have less network flexibility in return for a lower premium.
Only 23% are willing to trade a lower premium for higher copayments or coinsurance, which are very visible to consumers because they have to pay every time they get service at a pharmacy, a clinic, hospital, physician's office, etc.
What happens to the savings? Defined contribution also permits employees to cash out once they have purchased their insurance. So if an employee has $2,000 to purchase health insurance and only spends $1,500, then the remaining $500 is "found money"—albeit taxable. But 57% of survey respondents say they would not take the cash-out option, and instead would spend those dollars to purchase ancillary health benefits such as vision and dental coverage, and even life insurance and disability benefits.
We are talking billions of leftover cash—what Birhanzel terms "discretionary premium dollars." Accenture estimates this new pool of money will grow to $4 billion by 2018.
"We see interesting growth opportunities in this ancillary benefit space that didn't really exist before for this population because it didn't have the opportunity to make these trade-offs," says Birhanzel.
A GAO report examining the health status, program spending, and use of services by Medicare beneficiaries who were commercially insured for at least six years before joining Medicare suggests that healthcare reform will reduce healthcare spending.
A report from the Government Accountability Office finds that Medicare beneficiaries who were insured for at least six years before joining Medicare are healthier and cost the program less than beneficiaries who are new to healthcare insurance.
This is good news.
Of course, this probably comes as no surprise to commercial insurers who have for years pursued a marketing strategy of trying to lock in members throughout life transitions from individual coverage, to family plans, and then onto Medicare Advantage products. The strategic thinking is simple: people who are accustomed to having health insurance will probably be in better health than those who have had gaps in coverage.
The study was performed at the request of two Senate committees, the Committee on Finance and the Committee on Health, Education, Labor, and Pensions. These bodies are charged with assessing the Medicare program, identifying its challenges, and making recommendations to help maintain the financial sustainability of Medicare.
The GAO report examines the health status, program spending, and use of services of by Medicare beneficiaries between 2001 and 2010. It compares beneficiaries with prior continuous coverage to beneficiaries who enter the Medicare system after several years without health insurance.
Among the benefits of continuous coverage identified by the GAO:
Better Health Beneficiaries with continuous insurance were more likely to say they are in better health (84.2% vs. 78.7%). The gap widens rather than narrows after five years of coverage (81% vs. 75.1%). "Being uninsured before Medicare may have effects on beneficiaries' health that remain for some time. For example, if a beneficiary without prior continuous insurance is diagnosed with diabetes and has inadequate access to care before Medicare, the beneficiary may develop complications that increase the risk for adverse health events for years to come, even after the diabetes is controlled," says the report.
Lower First-Year Costs During their first year in Medicare, the total program spending for beneficiaries without prior continuous insurance is about 35% ($2,300) more than those with who had been covered by commercial plans without interruption. The higher spending may reflect pent-up demand for medical services among those without prior coverage. In this case the spending gap steadily narrows to $562 in the fifth year.
Lower Spending on Outpatient Services
Although the number of institutional outpatient visits was not statistically different, beneficiaries with prior coverage had lower institutional outpatient spending during their first and second years in Medicare—$513 or 32% less and $609 or 33% less.
After year three, however there is no discernible pattern of difference—sometimes the gap narrows and sometimes it widens. Again, pent-up demand comes into play. The results suggest that beneficiaries without continuous prior insurance required more costly outpatient care in those early years.
Fewer Physician Office Visits
Beneficiaries with prior insurance coverage made 23% to 50% more physician office visits during their first 5 years in Medicare than those without prior coverage. According to the report, this utilization pattern may indicate that beneficiaries with prior continuous insurance continued to access medical services differently because they were more accustomed to having benefits that physician office visits.
During the first year, beneficiaries without prior insurance spent more on physicians and other non-institutional spending—$381 or 17% more. But after the first year, the beneficiaries with prior coverage spent $589 or 30% more in year four and $511 or 28% more in year five. We know that they visited physicians more often, so this higher expenditure makes sense.
The GAO report seems to confirm that having healthcare insurance as required by the Patient Protection and Affordable Care Act helps lower beneficiary Medicare costs not sometime in the undefined future, but within the first years of enrollment.
Could the much-maligned PPACA and its equally maligned individual mandate could help save Medicare? Stay tuned.
Cheryl Bartlett, RN, hasn't been paid as a nurse in many years, but she maintains her nursing license and says she still brings the perspective of a nurse to her job as the commissioner of the Massachusetts Department of Public Health.
This profile was published in the December, 2013 issue of HealthLeaders magazine.
Cheryl Bartlett, RN, hasn't been paid as a nurse in many years, but she maintains her nursing license and says she still brings the perspective of a nurse to her job as the commissioner of the Massachusetts Department of Public Health.
"Nurses have a wide range," she explains. "They think holistically about the person and not just about a particular condition, risk factor, or disease. They think about what a person needs from a social determinants perspective."
The DPH is the perfect place for that kind of thinking. As the commissioner, Bartlett is responsible for the work of 10 bureaus that oversee a laundry list of healthcare activities—health and nutrition, community health, infectious diseases, substance abuse, environmental health, research and statistics, licensure, perinatal services, and patient safety. Four public hospitals are also part of DPH.
Her path to DPH was somewhat circuitous. She began her nursing career at Yale-New Haven Hospital in cardiac intensive care, then moved on to Nantucket Cottage Hospital where she says she did every type of healthcare job, including running the dialysis clinic and working as an emergency room and operating room nurse, to moving up the ladder to director of nurses and director of clinical services.
Eventually she gravitated to public health, which she describes as "where my heart is." She founded the Nantucket AIDS Network and worked in social services and patient advocacy in Cape Cod, Martha's Vineyard, and Nantucket. Along the way she served on the board of selectman in Nantucket and worked for a nonprofit preservation organization.
She came to DPH in 2008 as deputy director of the bureau of community health and prevention. It was an opportunity, she says, to "take everything I learned to this place that really helps people across the state. I think I bring a lot of on-the-ground experience to all the work we do."
She was named bureau director in 2010, interim deputy commissioner of DPH in January 2013, interim commissioner in May, and she was tapped as commissioner in June.
Bartlett inherited a department still stinging from two recent scandals: a national fungal meningitis outbreak linked to a compounding pharmacy in Framingham and the mishandling of drug evidence at a former DPH crime laboratory.
The department has also struggled to continue its public health mission in the face of a weak economy, which has increased demand for DPH services and produced challenging budget cuts.
Bartlett says the top priority for DPH is to build the infrastructure necessary to strengthen the core foundation of the Massachusetts public health system. She points to compliance with licensure surveys for healthcare facilities, inspections for food establishments, the state's food protection program, and oversight of the pharmaceutical industry as areas that have struggled and need more attention.
She also wants to see more emphasis on health information policy and informatics to help identify efficiencies in delivering DPH services. Community engagement is also a priority. The department has $60 million in a prevention and wellness trust fund to create collaboratives with community-based organizations, municipalities, and healthcare providers to improve clinical care in early 2014. Bartlett says DPH will look at whether accountable care organizations can deliver community-based care at a more affordable cost. Another mandate is to certify some medical marijuana dispensaries by January 2014.
Despite some challenges, she characterizes herself as "someone who can get things done. I am like a dog with a bone. If I believe something should happen and it makes sense to me, then I am very persistent. I know how to navigate the waters and find the right people."
A typical work day, which often stretches well into the night, will find Bartlett visiting communities around the state to see DPH programs in action. "I like to dig in to the work. I think the more I know about the challenges and barriers, the more I can help solve problems and help the system be better."
Running a state department with a more than 3,000 employees and a $906 million budget means Bartlett has had to relinquish some of the hands on participation that she enjoys. "I have realized that while I like hands-on, I also see that the higher up you get in an organization the more ability you have to influence the outcome systemwide. I enjoy that, too."
The insurer's chronic care health division is partnering with several telehealth providers to test various remote monitoring formats for common causes of readmissions.
Humana is testing a pilot project that adds a new wrinkle to patient engagement and telehealth: passive remote patient monitoring.
Humana Cares/SeniorBridge, the Louisville-based healthcare insurer's chronic care health division, is partnering with HealthSense, a provider of senior care technology, in a year-long pilot. The project uses in-home sensors and remote monitoring technology to monitor how changes in daily activities may signal a change in health status for certain Medicare Advantage enrollees.
Humana has enrolled 100 Medicare Advantage members in the pilot, which is under way in Florida, Kentucky, North Carolina, South Carolina, and West Virginia. Many of the pilot participants are over age 70 and have multiple chronic illnesses, including congestive heart failure, COPD, diabetes, and hypertension. They have each experienced at least two hospital admissions over the past 12 months and already receive regular weekly visits from in-home care managers. They were recruited to the pilot program by the care managers.
Among the pilot goals, says Denise Streible, RN, a program manager with Humana, is to detect emerging health concerns before they turn into emergencies that could require a costly trip to the ER or a preventable hospital readmission. Those readmissions are top of mind for most providers these days as new rules make 30-day readmission rates public and can result in lower reimbursements.
The remote monitoring program, dubbed eNeighbor, sets up 11 sensors throughout a participant's home. There are four types of sensors:
Motion sensors placed on walls that monitor the movement pattern within the home
Contact sensors placed on the refrigerator or kitchen cabinets
Bed sensors placed between the mattress and box springs
Toilet sensors that monitor flushes
Together the sensors and Healthsense software collect information to establish the daily routine of each participant. No biometric measurements such as blood pressure are included. The daily routine is the benchmark for establishing when medical assistance is needed without a person needing to check in, punch a button, or pull a cord.
The goal is to detect changes in daily activities. If a participant typically opens the refrigerator door at 7 am but doesn't one morning, then a telephone call will be made to the home. If no one answers, then the care manager and the member's emergency contact will be alerted.
More subtle changes can also be identified. "We can learn about things like restless sleep, which could mean a member is in pain, or increased toileting, which could indicate a urinary tract infection. Information like that can help us to get our members connected with their physician faster and helps us update their care plans," says Streible.
"We really expect that this type of information is going to help us intervene early," she adds. It may also help in educating members about some of the more subtle signs of a health problem.
ENeighbor is one of several pilots Humana has undertaken to measure the effectiveness of remote patient monitoring. Many are focused on CHF, which is a leading cause of hospital readmissions. A study published last year in The Journal of the American Medical Association found that 24.8% of Medicare patients admitted for heart failure were readmitted within 30 days after discharge.
One CHF pilot monitors more than 400 Humana Medicare Advantage members in Ohio. The remote patient monitoring solutions include Bluetooth-enabled weight scales and blood pressure monitors and interactive voice response technology. Humana is partnering with AMC Health, a New York-based telehealth provider. Coaches and care managers work with participants to modify unhealthy behaviors and help them comply with their treatment regimens.
In 2011, Humana teamed with Intel-GE in a long-term pilot to remotely manage the care of 2,000 CHF patients in 33 states. The program combines daily monitoring of biometric measures by Humana nurses as well as face-to-face tele-meetings via computer. Depending on the results, the program may be rolled out to members with other chronic conditions, such as diabetes.
HealthLeaders 20 honoree Nann Worel works in an area that hosts film festivals and the Winter Olympics, but her part of Utah still has uninsured and medically underserved patients who need to be treated.
This profile was published in the December, 2013 issue of HealthLeaders magazine.
Park City, Utah, is a playground for movers and shakers. It is home to popular ski resorts that hosted events during the 2002 Winter Olympics. Each year its hosts the Sundance Film Festival, which attracts celebrities from around the globe and swells the population of about 8,000.
It is not the type of place where you would expect to need, much less find, a health clinic dedicated to the uninsured.
Nann Worel, executive director of the People's Health Clinic, is very familiar with that thinking. She notes that the workforce that supports the area's tourism industry—the gardeners, restaurant staff, maids, resort workers, musicians, and artists—are often among the uninsured.
She adds that with the economic downturn, sales managers, real estate agents, and other white collar residents have lost their jobs and healthcare benefits.
Last year there were about 9,500 patient visits to the clinic.
The People's Health Clinic was founded 13 years ago to serve the residents of Summit and Wasatch counties where the uninsured rate is 16% and 21%, respectively. The clinic began as a mobile service that set up shop in area parking lots. It eventually graduated to rental space and in December 2009 found a permanent home in a building it shares with the Summit County Health Department.
Worel has spent six years with the clinic but she has devoted much of her professional life to public health issues, especially access to and care for the medically underserved. "It gets in your blood," she says. "You have to have a passion for it and it is my passion."
After earning a graduate degree in hospital administration from UCLA, she was recruited for a one-year appointment at the University of Alabama-Birmingham and the Jefferson County Health Department. A Seattle native, Worel had never been to the South and decided to make the temporary move. But she met her future husband in Alabama and the one year stretched into more than 20.
Along the way they moved to the coastal city of Mobile where Worel was instrumental in the creation of Victory Health Partners, which provides primary care services to uninsured adults in the area. The idea for the clinic developed during a fireside chat among a group of medical and dental professionals on a 10-day mission trip to Venezuela. Worel remembers that the group began talking about the medical needs of the poor and uninsured back home in Alabama. "Once we looked into the needs, we realized there was a huge population with little access to care."
Worel and her friends rolled up their sleeves and Victory Health Partners opened its doors in 2003. Worel spent several years with the clinic, including time as the development director. Last year VHP treated almost 13,000 patients.
The move to Park City was meant to be something of a trial retirement for Worel and her attorney husband, who soon decided that he was too young to retire. Worel began as a volunteer at the People's Clinic. By 2008 she was the development director and a year later she was named executive director.
Today Worel manages an annual budget of $1.2 million, including $600,000 in in-kind donations. She oversees 35 volunteer medical providers, including physicians, physician assistants, and nurse practitioners. Two paid, part-time physicians help make sure important things like patient lab work don't fall through the cracks and the clinic's chronically ill patients get ongoing care they need.
The clinic also works closely with Intermountain Healthcare, which has 22 hospitals throughout Utah.
The clinic focus is primary care, although naturopathic physicians, chiropractors, homeopathic psychologists, licensed social workers, mental health counselors, acupuncturists, and physical therapists who volunteer at the clinic are available to the patients.
The People's Health Clinic requires appointments and patients are asked to contribute $20. Worel says it's important for patients to have some skin in the game. "I think people tend to comply better with medical advice if they pay a bit to help the medical care happen."
In recent years Worel has expanded to the national stage her advocacy for the medically underserved. She serves on the board of National Association of Free and Charitable Clinics for and is now the board chair. In addition to increasing the profile of clinics among elected representatives, the NAFC sponsors monthly webinars and maintains discussion boards for sharing ideas and best practices to improve patient care.
That's an important connection as Worel and the board of the People's Health Clinic explore their options to open the clinic beyond its current Tuesday through Thursday schedule. "The demand is there but we have to look at expansion from a budgetary standpoint," says Worel. "But if you don't feel good, Thursday to Tuesday is a long time to wait."
HHS wants to ensure that health plan IT systems meet interoperability standards to exchange information with providers. A proposed rule is now open for public comment.
Hey, health insurers: Washington feels your pain!
Many of you have complained that a lack of consistent testing processes hindered your efforts to comply with HIPAA standards and operating rules for certain types of electronic healthcare transactions, including electronic funds transfers or EFTs.
Well, the Department of Health and Human Services has taken your complaints to heart. Earlier this month it released a proposed rule [PDF] designed to serve as "an initial step" toward the development of "consistent testing processes" that will (hopefully) enable health plans to "better achieve and demonstrate" compliance with HIPAA standards.
In other words, HHS wants to make sure that health plan IT systems meet interoperability standards to exchange information with providers.
Basically, the rule defines the information and documentation (more on this later) that must be submitted to prove that a health plan has tested its IT system and meets HIPAA standards for these specific electronic transactions: insurance eligibility, healthcare claim status, and healthcare EFTs and electronic remittance advice (ERA).
Health plans would have until Dec. 31, 2015 to submit their documents of attestation. After that date procrastinators could face a penalty fee of $1 per day per covered life (not to exceed $20 per covered life) until certification is achieved. The maximum penalty doubles to $40 per covered life if a health plan knowingly provides inaccurate or incomplete information in the certification process.
The proposed rule runs about 100 pages. Here are salient points:
1. Why is this rule necessary?
This dates back to the Health Insurance Portability and Accountability Act, which became law in 1996. With an eye to reducing administrative costs, the law encourages the use of electronic transactions and entrusts HHS with setting the standards and operating rules to reduce the healthcare industry's reliance on paper and manual processes.
Compliance dates were set, but health plans had a difficult time meeting the deadlines. Typically, HHS responded by delaying implementation or relaxing enforcement, but the industry has been unhappy with that approach because, as stated in the proposed rule, "such practices can be expensive to the industry."
2. Who must comply?
A health plan, any health plan subsidiary, and any business that conducts those applicable electronic transactions on behalf of a health plan must comply with the proposed rule.
3. What documentation must be submitted?
There are two types of evidence of compliance, both issued by the Council for Affordable Quality Healthcare (CAQH) Committee on Operating Rules for Information Exchange (CORE):
CAQH CORE certification (also known as the Phase III CORE Seal).
This requires testing by a CORE-authorized vendor and compliance with CORE standards, as well as a gap analysis to determine what system and business process changes may be necessary for a health plan to make.
HIPAA Credential from CORE documenting compliance with HIPAA standards.
CAQH CORE is still developing this credential, but when finalized it is expected to require attestation to compliance with HIPAA standards and operating rules for eligibility. The health plan will attest that it successfully tested at least 30% of its total transactions with at least three providers for three electronic transactions. Contact information for the providers must also be submitted.
According to the proposed rule, the submission requirements "are a snap shot" of a health plan's compliance with the standards and operating rules. "Such information and documentation does not reflect continuing compliance, nor do we do intend the information or documentation to be updated or resubmitted on a regular basis."
4. How must the documentation be submitted?
This is tricky. The proposed rule doesn't identify a specific submission format. The number of health plan covered lives (important only if a penalty is imposed) will probably be submitted via an online form. An electronic version or copy of the Phase III CORE Seal or the HIPAA Credential may be required to be submitted online, or HHS may ask for a tracking number that links to CAQH CORE records.
Remember, all of this is only a proposal for now. HHS really does want to know what you think, so submit your comments by March 4.
After a year of headline-grabbing changes—most notably the troubled launch of the federal health insurance exchange—look for a focus on the mechanics of change in 2014.
Mark Lutes, Member of the Firm,
Epstein Becker Green
If you set aside the complete misfire of the federal health insurance exchange, then 2013 has been something of a watershed year for healthcare reform. Price transparency made a quantum leap with the release of chargemaster data, the rate of growth for healthcare spending began to slow, and Congress inched toward a doc fix.
What will happen in 2014?
I recently spoke with Mark Lutes about the healthcare issues he thinks will be important in 2014. Lutes is an attorney and principal in the healthcare and life sciences practice at Epstein Becker Green, a law firm whose specialties include healthcare, labor and employee benefits. Lutes, who is something of a Washington, DC insider, gave me his take on some of the fundamental healthcare matters—not necessarily the headline grabbers—that he will be paying attention to next year.
HLM: What are some of the healthcare issues you have on your radar for 2014? Lutes: Attempts to make the coverage expansion work are the part of healthcare reform that get all the media attention. That is only part of the story; the value-based purchasing leg of healthcare reform is of equal significance.
Can we deliver the care or arrange for the care in a cost-effective, high-quality manner? We're giving short shrift to the discussion of the value-based purchasing part. The provider community and the services sector need to have frank conversations around the topics of the value-based purchasing.
HLM: What should be included in that discussion? Lutes: Risk adjustment, for one. That's a fundamental concept to value-based purchasing. There needs to at least be a basis for risk adjustment relative to the complexity of the patient.
Medicare now has a number of years under its belt with its condition coding. That system is a bedrock of Medicare Advantage and has been adapted to the ACO formula. It has also been incorporated into risk balancing among exchange plans. It's central to the economic bargain—the financial bargain—being undertaken.
HLM: Isn't risk adjustment happening now? Lutes: It happens now in Medicare Advantage where plans are paid on a risk-adjusted basis. The value-based purchasing equation is asking providers to be involved in, to some degree, financial risk—bonused, or penalized, or maybe even fully capitated—for the cost of care of a population. It matters how the expected cost of treating that population is defined so you can decide if the provider has done better than expected or worse.
HLM: Will this involve any type of policy rewrite? Lutes: Policy is very much involved, including when a population's risk is reviewed, how it's scored, [and] how many times during the life of a contract it's adjusted. So when the CMS Innovation Center structures a program, it has to think about how risk adjustment will occur.
None of that discussion works unless everybody is fully cognizant of how the score is going to be kept. It's happy talk until it's boiled down to a score. And that score needs to be risk-adjusted.
HLM: Who will be responsible for the risk adjustments? Lutes: It depends on the context. For Medicare Advantage, CMS risk adjusts what it pays the plans. That's one context. CMS risk adjusts the Medicare Shared Savings ACOs. And every value-based purchasing contract, whether it's called a quality scorecard or something else, that looks at the impact of the provider's behavior on cost has implicit in it some assumptions as to the complexity or changes in the complexity of the population being measured.
So, every commercial deal between a payer and a provider that has a quality scorecard component implicitly deals with risk adjustment. They may not talk about it as much as they should, but it's in the mix.
HLM: What else do you see as important development coming in 2014? There seems to be interest in defined-contribution and high-deductible health plans. Lutes: I think the portion of the commercial market that is most at risk to cost trends is actually large employers because they're self-funding and they are bearing the insurance risk. Therefore, they should have the same interest in value-based purchasing as CMS.
The high-deductible health plan is a partial answer. It gives the employee a stake in conservative use of services. It shifts an increasing amount of the cost of coverage, of risk to the employee. We will try to incentivize conservative use of services by the high deductible.
HLM: Some observers say health insurance exchanges are an opportunity for employers to convert to defined-contribution plans, which would caps their costs. What do you think? Lutes: Right. We're all going to watch that space and see what businesses see as the opportunity. In some sectors of the labor market, it may be that defined contribution becomes the norm, and employers don't suffer in hiring.
But there will be some constraints on that where their competitors in the labor market continue to offer benefits. That's the dynamic we're grappling with. What companies can introduce defined contribution into their benefit offerings, without suffering employee loss?
HLM: What is really driving healthcare policy in Washington, DC? Lutes: A need to get control of federal healthcare expenditures running up against a perception of what the electorate will tolerate. And running up against the perception of what key business interests, which are often provider system interests, can live with.
If the government is spending large amounts on Medicare, policymakers think about how to get that under control. Do we means test and deal with the political fallout? Do we look at payments to hospitals, which are probably the largest category of payments out there, and deal with the impact of that on the largest employer in their district?
There's no painless solution in that equation. Value-based purchasing [is viewed as a way] to achieve savings without directly cutting from either of those camps.
HLM: How will healthcare policy change in 2014? Lutes: 2014, particularly after this budget deal, doesn't feel like a year for major restructuring.
There is an opportunity for new approaches to government savings in the context of the SGR fix, whenever that ultimately occurs. Each time partial fixes are undertaken, there's an opportunity for legislation that impacts that dynamic. I can easily see more being done around bundling as a pay-for for the SGR. That's an example of the most likely type of policy change—one that has a cross-savings impetus to it.
Instead of "grand bargain" type changes in the Medicare eligibility age or means testing or any of those big-picture type solutions, we're probably going to see more tactical steps taken, such as increased amounts of bundling.
HLM: How will the situation be different this time next year? Lutes: I don't think it will be appreciably different this time next year. I think we'll be working on the same problems. We'll be trying to figure out how to control Medicare and Medicaid costs. I think the same menu of tools are likely to be out there. We'll be making progress towards increasing efficiency through value-based purchasing, but it's going to be a long, long trajectory.
HLM: Do you think there will be a time when Congress can dip into the PPACA to make changes that make it more effective? Lutes: I think that will happen, but it may be after the election. We just have to get beyond the point where we say we can't touch anything. We have to get to the point where we're willing to do adjustments rather than replace. That's the hurdle to overcome.
HLM: In the current political atmosphere that seems a forbidding task. Lutes: In this political atmosphere, it is a forbidding task. But things do change. It's remarkable how what is gospel at a given time can change. Did anyone think four months ago that we could have the Ryan-Murray budget deal? Nope. And now it's like yeah, no big deal.
That's because people went through hell, and they don't want to go through hell again. That changes things. So, that's evidence that while things may seem hopeless at any given month, four months later they can be quite different.
The landscape is changing rapidly for payers. To be successful, insurers must adapt to new reimbursement models and forge new partnerships with providers.
It is that time of the year when we like to take measure of where things stand.
For health plans this year has been something of a mixed bag. Many of them have posted big profits, but there's no disguising it—healthcare is in the midst of a major shift from an emphasis on volume to value and that is affecting the health insurance industry.
The new focus in healthcare is on care coordination and population health. To be successful insurers must adapt to new reimbursement models and forge new partnerships with providers. Opportunities abound, but competition is getting tighter.
Here are three key ways the health plan game is changing:
1.New Competitors
Hospitals and health systems are beginning to launch their own health plans. Sure, they've tried this before and failed, but this time healthcare reform and the emphasis on the care continuum and population health have created a perfect storm of opportunity.
Their niches are local, small employer groups and their networks are narrow—typically their own hospitals and physicians, who can be easily managed to control costs and outcomes.
2. The Launch of the Federal Health Insurance Exchange
More than 2.8 million people tried to access healthcare.gov, on launch day (Oct.1). Their efforts were met with long, frustrating waits, security concerns, and inaccurate data. In short, the launch was a mess.
Two months later the system is not quite humming along but it is showing improvement. Bloomberg reports that the 800,000 people accessed the site one day last week. Around 100,000 successfully enrolled in a health plan during the month of November.
Health plan executives are cautiously optimistic about the online marketplace. Many are participating at a decidedly modest level. Humana, for instance has offerings in 14 states where it already sells insurance products. UnitedHealthcare has a presence in 12 exchanges.
With millions of uninsured people potentially enrolling in HIX this year, insurers see the demand for medical care exploding. Insurance executives say it is better to let those folks get all that care (and costs) behind them before they step in.
3.The Rise of Private Exchanges
Private HIX (created by health plans, brokers, or other groups) offer health plans more freedom than public exchanges in terms of their level of participation and the products they offer. Employers are using private HIX as a vehicle to transition employees from self-funded plans to a defined-contribution model offering, where the employer contribution to healthcare benefits is capped.
The shift means more revenue for insurers because fully insured memberships typically generate four to five times the profit contribution of self-insured memberships.
Aetna is among the insurers developing their own proprietary HIX where only its products will be offered to employers. The insurer plans to focus on population management and will allow consumers to customize products and services for their individual needs.
BlueCross BlueShield of Tennessee developed a tool kit for churches to use to improve immunization rates among minorities and rural whites in the state. Next up: Behavioral health and chemical dependency problems.
BlueCross BlueShield of Tennessee is working with churches and other faith-based organizations to improve its HEDIS scores related to childhood and adolescent immunizations for its members.
Through its BlueCare Tennessee subsidiary, which manages 450,000 Medicaid members, BCBSTN is partnering with the faith-based community to address the immunization disparities that exist within minority populations and the rural white population in the state. In 2012, less than one-quarter of African-American children (21%) and only 11% of Hispanic children in Tennessee received the recommended immunizations.
HEDIS, the Healthcare Effectiveness Data and Information Set, is a set of 75 measures across eight domains of care, developed by the National Committee for Quality Assurance to measure health plans' performance on care and service. HEDIS is used by more than 90% of U.S. health plans.
Earlier this year, the Blues plan established a 12-member disparities advisory board comprising local experts and community leaders to help the insurer develop a course of action to address a wide range of healthcare disparities, including the immunizations gap. Rafielle Freeman, director of quality improvement for BlueCare, says the committee came up with the idea of approaching pastors and churches as a way to reach minorities across the state.
"Tennesseans listen to their pastors and ministers," she explains. "The faith leader's voice can be powerful in promoting good health."
The Lifting our Members program includes a free tool kit that can be used within faith-based communities to help their individual congregations learn about the importance of childhood immunizations, preventive care, women's and men's health, and behavioral health.
Trained volunteers—mostly Blues employees—have distributed the tool kits and trained congregations at more than 200 churches in communities identified through the data analysis of ZIP codes as having the greatest disparities.
Freeman says she works closely with the analytics team at BCBSTN to develop the information the volunteers need to convince churches to support this effort. "We have to make sure the pastors and ministers see this as something beneficial." Customizing information by ZIP code makes the program "more powerful to them. It really brings it home when we can tell them what's happening in their local community."
In addition to volunteers, BCBSTN employs several community care partners in the focus communities who also do outreach to the congregations by organizing health fairs at which providers are on hand to help with immunizations and preventive screenings. The insurer also appeals to its provider network members to open their offices some Saturdays for shots and screenings.
Freeman notes that transportation is often an issue for the Medicaid population, so her team works with transportation vendors to help families get to medical appointments and keep their children up to date with scheduled shots.
Although Freeman says focusing on healthcare disparities is simply "the right thing to do" and that the Lifting Our Members program has plenty of C-suite support at BCBSTN, she is also keenly aware that she needs to make a business case for the program and its budget. Success of the initial focus on childhood immunizations will be measured in several ways. Improvement in HEDIS measures related to childhood and adolescent immunizations is critical, says Freeman, because "for managed care organizations, that really is the only way we can get an apples-to-apples comparison across health plans on how we're doing." She says they will look at the HEDIS measures across all lines of business to see if there is an impact. Immunization levels among ZIP codes where the tool box is used will be compared to those where it is not used.
The goal is to get the tool boxes in 1,000 churches and to expand the effort to behavioral health and chemical dependency next, and then women's health, including maternity.
Freeman describes as "staggering" the rate of behavioral health and chemical dependency problems among minorities in the state, with 53% of non-Hispanic whites, 46% of African-Americans, and 31% of Hispanics having a problem. "If you think about it, those are just the people who are accessing the healthcare system. In every community there are all kinds of stigmas associated with behavioral health. We want to tackle that next to encourage seeking help and getting counseling and treatment."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Cheryl Bartlett, RN.
This profile was published in the December, 2013 issue of HealthLeaders magazine.
"I have realized that while I like hands on, I also see that the higher up you get in an organization the more ability you have to influence the outcome systemwide."
Cheryl Bartlett, RN, hasn't been paid as a nurse in many years, but she maintains her nursing license and says she still brings the perspective of a nurse to her job as the commissioner of the Massachusetts Department of Public Health.
"Nurses have a wide range," she explains. "They think holistically about the person and not just about a particular condition, risk factor, or disease. They think about what a person needs from a social determinants perspective."
The DPH is the perfect place for that kind of thinking. As the commissioner, Bartlett is responsible for the work of 10 bureaus that oversee a laundry list of healthcare activities—health and nutrition, community health, infectious diseases, substance abuse, environmental health, research and statistics, licensure, perinatal services, and patient safety. Four public hospitals are also part of DPH.
Her path to DPH was somewhat circuitous. She began her nursing career at Yale-New Haven Hospital in cardiac intensive care, then moved on to Nantucket Cottage Hospital where she says she did every type of healthcare job, including running the dialysis clinic and working as an emergency room and operating room nurse, to moving up the ladder to director of nurses and director of clinical services.
Eventually she gravitated to public health, which she describes as "where my heart is." She founded the Nantucket AIDS Network and worked in social services and patient advocacy in Cape Cod, Martha's Vineyard, and Nantucket. Along the way she served on the board of selectman in Nantucket and worked for a nonprofit preservation organization.
She came to DPH in 2008 as deputy director of the bureau of community health and prevention. It was an opportunity, she says, to "take everything I learned to this place that really helps people across the state. I think I bring a lot of on-the-ground experience to all the work we do."
She was named bureau director in 2010, interim deputy commissioner of DPH in January 2013, interim commissioner in May, and she was tapped as commissioner in June.
Bartlett inherited a department still stinging from two recent scandals: a national fungal meningitis outbreak linked to a compounding pharmacy in Framingham and the mishandling of drug evidence at a former DPH crime laboratory.
The department has also struggled to continue its public health mission in the face of a weak economy, which has increased demand for DPH services and produced challenging budget cuts.
Bartlett says the top priority for DPH is to build the infrastructure necessary to strengthen the core foundation of the Massachusetts public health system. She points to compliance with licensure surveys for healthcare facilities, inspections for food establishments, the state's food protection program, and oversight of the pharmaceutical industry as areas that have struggled and need more attention.
She also wants to see more emphasis on health information policy and informatics to help identify efficiencies in delivering DPH services. Community engagement is also a priority. The department has $60 million in a prevention and wellness trust fund to create collaboratives with community-based organizations, municipalities, and healthcare providers to improve clinical care in early 2014. Bartlett says DPH will look at whether accountable care organizations can deliver community-based care at a more affordable cost. Another mandate is to certify some medical marijuana dispensaries by January 2014.
Despite some challenges, she characterizes herself as "someone who can get things done. I am like a dog with a bone. If I believe something should happen and it makes sense to me, then I am very persistent. I know how to navigate the waters and find the right people."
A typical work day, which often stretches well into the night, will find Bartlett visiting communities around the state to see DPH programs in action. "I like to dig in to the work. I think the more I know about the challenges and barriers, the more I can help solve problems and help the system be better."
Running a state department with a more than 3,000 employees and a $906 million budget means Bartlett has had to relinquish some of the hands on participation that she enjoys. "I have realized that while I like hands-on, I also see that the higher up you get in an organization the more ability you have to influence the outcome systemwide. I enjoy that, too."
