HCPro.com - Managed Care - DO NOT USE Top Stories

Inside the program: Nursing excellence designation is a high-profile award

Tue, 06 Oct 2009 20:21:00 GMT

The growing interest in ANCC Magnet Recognition Program® (MRP) designation and the escalating rate of organizations applying for it can be attributed to a number of factors:

Numerous published research studies have demonstrated better patient outcomes in hospitals with higher (i.e., better) nurse-to-patient ratios, higher percentages of certified nurses, and higher percentages of BSN-prepared nurses, all of which are characteristics of MRP-designated hospitals
MRP status has been identified in the federal Nurse Reinvestment Act and an Institute of Medicine report as an initiative for reducing registered nurse turnover and improving quality of care
The Joint Commission has identified designation as a positive force in improving practice environments, quality of care, and patient safety
Faculty in colleges and schools of nursing encourage graduates to ask questions regarding the practice environment of a potential employer and to seek employment at a designated hospital
In 2004, for the first time, MRP status was added as a factor in how U.S. News & World Report ranks hospitals

Source: Adapted from HCPro's Guide to Assessing, Pursuing, and Achieving Excellence in the ANCC Magnet Recognition Program®.

Public Plan Would Stifle Innovation. Or, Would It?

Wed, 10 Jun 2009 16:03:00 GMT

Depending on the breadth of a public plan and enrollment numbers, private plans could be either slightly affected or decimated. Private insurers and their supporters are in fighting mode, arguing that a public plan would have an unfair advantage over private insurers and would expand government-run healthcare.

Meanwhile, America's Health Insurance Plans, hoping to derail the public insurance option, has started to make concessions unheard of even a year ago. It has agreed to accept all members regardless of health status and to stop charging women higher rates for individual health coverage as long as the federal government mandates that all Americans have health insurance.

Despite these changes, President Barack Obama and the Democrats are still pushing for a public plan to compete against private insurers.

Private insurers' arguments against a public plan are valid, but I think they might have more support from the public and from politicians by taking a different tack. Namely, they should promote the idea that they are grounded in innovation. A number of health insurers recently told me that a public plan could cramp healthcare innovation. Creative thinking in healthcare does not come from the federal government, but through private enterprise, the argument goes.

Private insurers have introduced many healthcare innovations. Robert Zirkelbach, director of strategic communications at AHIP in Washington, DC, says private insurers have spearheaded quality improvements, care coordination, and chronic condition management programs. "Those kinds of things aren't being done in public programs today. A public plan could turn back the clock on all of those initiatives put forth," he says.

Sam Nussbaum, MD, executive vice president and chief medical officer at WellPoint, Inc., in Indianapolis, says programs like bundled payments, pay for performance, and value-based insurance design came from the private sector. In fact, VBID, which was spearheaded by private businesses Marriott and Pitney Bowes, is now featured in legislation that would test the idea in the Medicare population.

"I continue to like the current system with the ability to innovate, to do new things, to experiment with different approaches, and we're going to lose that under this government-directed centralized system," says Nussbaum.

Double-digit Rate Hikes Projected for Health Plans

Tue, 09 Jun 2009 13:28:00 GMT

Many popular private healthcare plans that cover nearly 100 million Americans will see double-digit rate increases into 2010, according to a national survey of more than 100 health insurers, HMOs, and third-party administrators.

"Although our survey reveals a slight decrease in cost trends since our prior study, there are signs that we're going into another cycle of high trends," says Harvey Sobel, a principal and consulting actuary at Buck Consultants, who directed the survey.

"Health insurers may increase costs in light of the continuing economic downturn and legislation, such as mental health parity and the recent expansion of COBRA," Sobel says. "They may also attempt to increase their prices prior to the implementation of national healthcare reform, including a new public insurance option."

For its 20th National Health Care Trend Survey, Buck analyzed responses from more than 100 health insurers, HMOs, and third-party administrators, and measured the projected average annual increase in employer-sponsored healthcare benefit costs. Insurers providing medical trends for the survey cover about 95 million people.

Costs for the most popular plans continue to increase by more than 10%, and are slightly lower than the trends reported in Buck's most-recent September 2008 survey. Health insurers reported an average prescription drug trend of 10.8%, down 0.6% from the 11.4% reported in the September 2008 survey. This is three percentage points higher than the 7.8% reported by pharmacy benefit managers, who generally do not take any underwriting risk.

Robert Zirkelbach, a spokesman for the industry trade group America's Health Insurance Plans, says health insurance premiums track the cost of medical care.

"As the cost of care goes up, premiums go up accordingly. Government data has shown that to be a consistent trend for the last 20 years," Zirkelbach says, adding that the Buck survey highlights the need to address underlying medical cost drivers.

"The question needs to be 'why are those medical costs going up?'" he says. "We know there are wide variations in practice patterns across the country. New medical technologies are driving costs.

Unfortunately, we don't have good data in this country about which treatments are most effective." Health insurers providing Medicare supplemental plans project an increase of 7.4% excluding prescription drug coverage. This lower trend reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and copays.

Health insurers use trend factors to calculate premium rates, and large self-funded employers use these trend factors to budget their future healthcare costs. In general, trend factors provide for price increases that may result from such variables as inflation, utilization of services, technology, changes in the mix of services, and mandated benefits.

Secaucus, NJ-based Buck Consultants is an independent subsidiary of Affiliated Computer Services, Inc.

Limiting Employer Tax Exclusion May Help Pay for Health Reform

Mon, 08 Jun 2009 20:08:00 GMT

Congress may find it difficult to finance universal coverage unless it limits to some extent the exclusion of employers' health insurance payments from employees' income and payroll taxes, according to a new study from the Center on Budget and Policy Priorities in Washington.

"There are a huge number of ways to raise additional revenues," said Paul Van de Water, a senior fellow at the center, who authored the report. "At least in theory, one could pay for health reform without limiting the employer exclusion. But, when we go through the individual options one by one and think about all of the objections that are raised to them, we think as a practical matter that it may be very hard to pay for health reform without doing something to limit the employer exclusion."

The issue, in various forms, has been discussed by the Senate Finance Committee as a way to pay for coverage under healthcare reform. So until other alternatives are identified and settled, "we shouldn't rule this or anything else off the table," said Van de Water, who previously served as vice president for health policy at the National Academy of Social Insurance and as deputy assistant director for budget analysis with the Congressional Budget Office.

The current exclusion is poorly designed, which gives a greatest benefit to those with higher incomes, according to the report. The higher exclusion can provide an incentive for employers and individuals to select more generous or costly coverage, which in turn could lead to an increase in healthcare service demand that pushes up prices.

In a way, limiting tax exclusions could push in the direction of greater efficiency in the healthcare system, Van de Water noted. Those with higher benefits might end up seeking more economical plans that use resources more effectively.

"It's not a perfect tool, but clearly we're going to have to do a lot of different things to drive the system to be more efficient. This is one that would run in the right direction," he said.

It's unlikely that Congress will choose to move toward making employer sponsored insurance totally taxable. "That clearly doesn't seem to be in the cards," Van de Water said. Instead, other options could be considered, such as basing limits on household incomes, basing limits based on the value of insurance, or basing limits on both incomes and insurance value.

AHA and AMA Ask Health Plans: Can't We All Just Get Along?

Fri, 05 Jun 2009 21:44:00 GMT

Top officials for the American Medical Association and the American Hospital Association agreed yesterday that they should set aside their long adversarial history with health plans and work together, not for their own bottom lines, but to improve the health of their patients with by adhering to comparative effectiveness research.

“We need to fundamentally change the relationship between America’s health plans, physicians and hospitals,” said Thomas Priselac, chairman of the AHA board and president and CEO of Cedars Sinai Hospital in Los Angeles, who called for “a paradigm shift” in the structure of how they interact and how they share information.

Nancy Nielsen, MD, president of the AMA, agreed, saying interactions have been “wildly adversarial” between health plans and doctors “for much of recent history. We are all trying to change that.”

The health leaders made their comments in San Diego before an audience of several hundred attending the annual convention of America's Health Insurance Plans.

Nielsen added that it's the AMA’s highest priority to get health insurance coverage for every American. “The fact that we have not as a country been able to figured out how to have affordable health insurance for our citizens is a moral stain on this nation,” she said. “It is time that we fix it.”

One overarching concern, however, is how physicians and hospitals can refocus their efforts on what works, rather than what patients want or what happens to be covered. “It is clearly in America’s physicians’ best interest to have really good comparative effectiveness research data,” Nielsen said.

She added that next week, AMA officials will announce a major cooperative effort with a health plan to work on a comparative effectiveness research project in one state and said that is evidence that cooperation is possible.

Priselac added that there’s a wonderful opportunity for health providers to gain information from health plans about utilization. “America's health plans have great amounts of data that’s very useful and helpful,” he said. “But they don't have the complete clinical record. We have the complete clinical record.”

Ex-Governors Spar Over The Role of a Public Plan at AHIP Convention

Fri, 05 Jun 2009 14:01:00 GMT

Hundreds of health plan representatives heard three former governors—two of them physicians—argue over what role federal money should play in health reform as the America's Health Insurance Plans convention began its annual convention in San Diego on Thursday.

Former governors Howard Dean, MD (Vermont), Jeb Bush (Florida), and John Kitzhaber, MD (Oregon), agreed that the current system is functionally flawed. And they agreed that health plans, employers, and consumers need to take more responsibility for their own healthcare.

But they disagreed on how much of a role the government should play, and whether any level of its regulatory presence would stifle innovation to improve the delivery of medicine.

For many in the room, listening to Dean might have resembled hearing the enemy speak. Health insurance companies are vehemently opposed to a public plan.

But Dean considers public health insurance a necessity. "I think it is absolutely essential. And I don't think health reform is worth doing without a public option."

"What the president is proposing to do is say, if you like what you have, you can keep it. If you're comfortable with the private insurance market, you can keep it. Not only that, but we'll help you buy it. There will be a government subsidy based on your income, particularly helpful to small businesses, that you will receive to buy healthcare in the private market," Dean said. "But you will also have a choice of buying into a public plans such as Medicare or some other public plan. And I'm one of the few defenders of that in this room."

"Now I know people in this room, in this industry, are very, very fearful," he said. "This is the center of opposition."

He looked at the rows of representatives of Aetna, Blue Cross, and dozens of other companies assembled and said, "Your living is at stake here. But I don't think it's going to be as tough as you think it is."

The reason, he said, is that most of the nation's CEOs, despite "incredible inflation," prefer to have employer based health insurance. He emphasized that there is still a role for private health insurance, but one that would be shared by public plans.

Bush, however, argued for government to step back. "Beware of too much intrusion by the federal government in all of this," he said. "I'd be very, very cautious of ever expanding federal government."

Bush said too much of the debate centers on access, and not responsibility, saying patients should be given more incentive to more take responsibility for lifestyle decisions that affect their healthcare.

"In almost every other aspect of our lives we ask people to be responsible for their own decisions. But in healthcare, by and large today, individuals are not responsible for their healthcare decisions," he says.

Bush urged for more emphasis on disease management, which he said "should be allowed to happen more often than it is."

Obama Shows Support for Insurance Mandate

Thu, 04 Jun 2009 14:05:00 GMT

In a letter to Senate Democratic leaders, President Obama on Wednesday outlined what his vision for healthcare reform should look like—including addressing the idea of "moving towards a principle of shared responsibility—making every American responsible for having health insurance coverage and asking that employers share in the cost."

"I share the goal of ending lapses and gaps in coverage that make us less healthy and drive up everyone's costs, and I am open to your ideas on shared responsibility," he said in a letter to Senators Edward Kennedy (D-Mass.) and Max Baucus (D-Mass.) who chair the two Senate panels overseeing healthcare reform. However, he requested that they provide a hardship waiver "to exempt Americans who cannot afford it"—especially small businesses.

Obama, writing the letter one day after meeting with two dozen Democratic senators in the White House, told the leaders that the "plans you are discussing embody my core belief that Americans should have better choices for health insurance—building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold."

For those who don't have such options, "I agree that we should create a health insurance exchange—a market where Americans can one stop shop for a health care plan, compare benefits and prices, and choose the plan that's best for them, in the same way that Members of Congress and their families can."

While covering the uninsured could cost upwards of $1.5 trillion over the next decade, Obama did not propose how that entire cost would be covered. However, he did suggest that "fulfill this promise," he would set aside $635 billion in a health reserve fund as a down payment on reform.

This reserve fund, he said, would include several proposals to cut spending by $309 billion over 10 years, which would include: reducing overpayments to Medicare Advantage private insurers; cutting Medicare and Medicaid waste, fraud and abuse; improving care for Medicare patients after hospitalizations; and encouraging physicians to form "accountable care organizations" to improve the quality of care for Medicare patients.

He also said he was "committed to working with the Congress to fully offset the cost of health care reform by reducing Medicare and Medicaid spending by another $200 to $300 billion over the next 10 years, and by enacting appropriate proposals to generate additional revenues."

Obama said these savings will come not only by adopting new technologies but going after the key drivers of skyrocketing health care costs, including unmanaged chronic diseases, duplicated tests, and unnecessary hospital readmissions. These steps, he said, could close loopholes, would raise $326 billion over 10 years.

Private Insurers: Give Us the Medicaid Drug Rebate, Too

Wed, 03 Jun 2009 16:24:00 GMT

Private health insurance leaders are pushing Congress to allow insurers to benefit from the Medicaid Drug Rebate Program, which lets states pay less for drugs in their Medicaid program.

There are two reasons behind the insurers' plea: a desire to improve the bottom line and a need to improve care coordination.

The drug rebate was created in 1990 and requires drug manufacturers to enter into an agreement with HHS to offer the rebate to Medicaid state programs. In 1992, the rebate program was extended to include the Veterans Administration.

Approximately 550 pharmaceutical companies participate in this program, which is available in 49 states and the District of Columbia, according to CMS.

The current law, which would be changed if legislation on Capitol Hill is approved, forces states that partner with private insurers to make a tough decision. Do they save money and carve out pharmacy from their Medicaid managed care programs that are run by private insurers? Or, do they keep pharmacy within private health insurers' Medicaid programs and gain the benefit of better care coordination, while losing out on the rebate?

States that want to take advantage of the drug rebate have carved out pharmacy programs from their private insurer-run Medicaid managed care plans, but these plans don't integrate immediate pharmacy benefit information because pharmacy is carved out of the program in order to benefit from the drug rebates. Private insurers say this leaves out an important piece of care coordination.

For instance, in going with a private insurer as opposed to carving out the program, when a Medicaid beneficiary is placed on a particular medication, the private health plan can find out immediately and enroll the member in a disease management or wellness program. With pharmacy carved out of the program, there could be a lag or the health insurer might not have access to that information at all.

In the struggle to find savings that don't involve program cuts and layoffs, it's easy to understand why states are carving out pharmacy from Medicaid managed care. The tough economy makes it critical for health insurers to push for change in the Medicaid Drug Rebate Program because more states will surely look under every rock to find savings and sometimes at the detriment of providing an integrated program that benefits from receiving clinical, claims, and pharmacy data.

The Obama administration has targeted the Medicaid Drug Rebate Program as a potential area of savings and calling for a reduction of $8.8 billion over five years by mandating increased Medicaid drug rebates. With the rebate on the table, this is an opportunity for health insurers to promote why they too should receive drug rebates—and that is exactly what they are doing.

America's Health Insurance Plans President and CEO Karen Ignagni said Medicaid managed care plans should receive the same drug rebates because they are in effect working as state agents.

J. Mario Molina, MD, chairman and CEO of Molina Healthcare, which covers more than 1.3 million Medicaid lives in 11 states, said roughly half of Medicaid beneficiaries are covered under managed care plans, which shows the rebate's importance to insurers and states.

As the health insurance industry converges on San Diego for its annual AHIP conference this week, healthcare reform tops the agenda. The discussion has focused mostly on the public insurance option, but health insurers involved in Medicaid should also keep their eyes on Medicaid Drug Rebate Program legislation and work to integrate rebate changes into the larger healthcare reform package.

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Three Issues Health Insurers Face as AHIP Kicks Off

Wed, 03 Jun 2009 13:42:00 GMT

As health insurance leaders converge on San Diego for the annual America's Health Insurance Plans Health Institute this week, they face a potential new competitor—the federal government—that insurers worry could put many of them out of business. But the issues for health insurers go beyond whether the feds grab a greater share of their market; declining membership and perceptions about insurance costs and profits are also acute concerns.

Public insurance
Much of this year's conference focuses on the public option and healthcare reform. Over the past year, AHIP has presented a health reform plan that features an individual mandate to require that all Americans have health insurance, along with a guarantee that health insurers will not reject any prospective member because of a preexisting condition or charge women higher premiums than men for their individual coverage.

Robert Zirkelbach, director of strategic communications at AHIP in Washington, DC, says the insurer group supports a comprehensive healthcare reform package that includes the individual mandate coupled with payment reform that rewards physicians for improving health outcomes rather than paying for volume of service; research to find which treatments work best; and improved health information technology.

"They are all under the broad banner of reform," says Zirkelbach. "We believe we need health reform and we can address all the core concerns by building on what is working in the current healthcare system."

Insurers are afraid that a competing public plan, with lower administrative costs and lower premiums, would coax employer-based insurance members to flee for the public plan and crush private plans in the process.

In response to the public plan, Ian Duncan, FSA, FIA, FCIA, MAAA, president and founder of Solucia Consulting in Farmington, CT, says private insurers should promote the benefits of their offerings. "I would stress the positives that come from the current insurance system. Although nobody likes [the current system], you have the ability to strike individual contracts and strike individual bargains between payers/providers/patients. That would go away under a government system. I don't see anyone standing up and saying what we have is not perfect, but there are some positives to it," says Duncan.

Sam Nussbaum, MD, executive vice president and chief medical officer at WellPoint, Inc., in Indianapolis, says the healthcare industry and policymakers should develop a "meaningful healthcare reform" through such programs as pay for performance, bundled payments, and value-based insurance design.

"There is not one silver bullet here. There are many, many opportunities to improve health outcomes, to reduce costs, and to advance quality. There are many strategies that need to take us to better healthcare for all Americans," says Nussbaum.

Declining health plan membership
The future is cloudy for insurers, but the present isn't so sunny either.

Layoffs and employers cutting employee health benefits have hurt private insurer membership. Duncan says a major health insurer client is losing 1/2% of its membership every month because of the economy and related job loss. That insurer has lost more than 6% of its members in a year.

"A health plan doesn't grow in normal times that much in a year," says Duncan. "The contraction of employment is hurting health plans."

Though more members are being forced out of employer-based plans, private health insurers and employers are not making massive changes to benefits. In fact, employers continue to push ahead with employee wellness programs, which surprises Duncan. "In a situation of reduced budgets, I would expect [employers] to go for that first."

Workers' Share of Health Cost Soars in Employer Plans

Tue, 02 Jun 2009 13:15:00 GMT

Health consumers who think they're digging deeper into their pockets to subsidize employer-sponsored health plan costs are absolutely right, according to a report released today in the journal, Health Affairs.

"If you are sick and earn a modest income, then you are probably underinsured, even if you have employer-based health coverage," the authors wrote.

In 2007, employees on average contributed $729, or 34% more than the $545 they paid in 2004 in premiums, deductibles, and out-of-pocket costs, according to the survey from the National Opinion Research Center. The study extrapolated survey data on medical claims filed for 10 million American workers covered by health plans. The authors applied those findings to 161 million Americans covered by an employer's health plan.

"The years from 2004 through 2007 were a period of economic expansion, yet rising health care costs still eroded the value of employer sponsored coverage," said lead author Jon Gabel, a NORC senior fellow. Since then, employees "have been asked to shoulder even more of the cost-sharing burden during difficult economic times such as the United States is now experiencing."

He concluded that health reform must include constraints on health spending, "or else health insurance will become unaffordable for low-and middle-income Americans, and reform itself will be unsustainable."

The paper was co-authored by researchers at the Watson Wyatt Worldwide and was paid for by The Commonwealth Fund.

As expected, the increase in worker contributions for their healthcare was most pronounced among those who had the most healthcare expenses. For the highest-cost 1% and 10% of adults, out-of-pocket spending rose 42% and 39% respectively, to $8,703 and $3,364. This may be attributable to employees first exceeding their deductible, and then their out-of-pocket maximum cap. For the lowest 50%, spending rose 23% to $85, the authors said.

The trend is hardest on those earning less. For example, the authors reported, of those workers earning 200% of the federal poverty level in 2004, 13% spent more than 10% of their income on premiums and out-of-pocket expenses. But by 2007, that figure rose to 18%.

For people earning 400% of the federal poverty level in 2004, 2% spent more than 10% of their income on premiums and out-of-pocket medical expenses. But by 2007, that percentage doubled.

Bill Would Test Value-Based Insurance in Medicare

Fri, 15 May 2009 16:49:00 GMT

Legislation filed yesterday would create a demonstration project to test whether value-based insurance design can work in the Medicare population.

Trumpeted by employers and health plans as a way to both improve patient outcomes and lower long-term health costs, VBID lowers or eliminates copays for high-value prescriptions and treatments, such as medication for diabetes, asthma, and heart disease. The concept follows the logic that removing cost barriers will help at-risk patients follow their prescription regimens and not postpone doctors' appointments because they can't afford the care.

The bipartisan legislation was filed by Sen. Kay Bailey Hutchinson (R-TX) and Sen. Debbie Stabenow (D-MI). Hutchinson says the federal government has lagged behind the private sector in adopting VBID strategies.

"Value-based insurance design has the power to truly bend the healthcare cost curve in the right direction. By taking practical steps to lower healthcare costs and improve health, we can make insurance more affordable for all Americans. Ultimately, that is the single most important goal of healthcare reform," says Hutchinson.

VBID pilot programs have been successful in the commercial population. Pioneers in the VBID movement, Marriott and Pitney Bowes, eliminated cost sharing associated with diabetes medications and achieved positive cost and quality outcomes.
While many health insurers and employers have increased copays and created high-deductible plans as a way to lower their healthcare costs, VBID supporters say the concept is a more forward-thinking way to tackle spiraling costs.

One of the creators of VBID, A. Mark Fendrick, MD, who is co-director at the University of Michigan's Center for Value Based Insurance Design, says, "Cost containment efforts should not lead to preventable decreases in quality of care. The inclusion of value based design into the Medicare program will show that an approach that encourages the increased use of high-value medical services will produce more health for every taxpayer dollar spent."

Could VBID work in Medicare?

A recent white paper by Avalere Health and the Center for Value-Based Insurance Design suggested that the government could implement VBID in Medicare. VBID addresses both the objectives of cost containment and quality improvement by promoting fiscally responsible, clinically sensitive cost sharing, according to the white paper.

VBID advocates and policymakers think the concept could be a winner in the Medicare population. Twenty-three percent of Medicare's 26 million beneficiaries have five or more chronic conditions and account for nearly 70% of the program's spending.

Medicare beneficiaries are more likely to have chronic illness than the commercial population and more apt to take multiple medications.

Costs can create a barrier to medication compliance for beneficiaries. In fact, the Medicare Part D population takes five prescription drugs per day on average and nearly 20% of them are not able to fill a prescription or delay filling a prescription because of cost, according to the white paper.

"You have the potential to have an even greater impact [in the Medicare population] because the sicker the beneficiary is and the more you can target a value-based insurance design, the better the outcomes are likely to be," says Lisa Murphy, manager at Avalere Health in Washington, DC, and coauthor of the paper.

The researchers reviewed five options for Medicare and found that three of them can be implemented immediately with minor operational changes:

Reduce cost sharing for specific drug or drug classes
Exempt specific drugs or drug classes from 100% cost sharing in the coverage gap
Reduce cost sharing for chronic special needs plan enrollees based on the plan's target condition

The other two options that were reviewed would require policy changes, such as CMS revising its non-discrimination clause to allow for reduced cost sharing for enrollees with chronic conditions or reducing cost sharing for enrollees in Medication Therapy Management Programs.

Tanisha Carino, PhD, vice president at Avalere Health in Washington, DC, and co-author of the paper, says her research shows VBID's potential in the Medicare population. She says VBID has the potential to help make Medicare a "more prudent purchaser of healthcare that meets patient needs. These tools need to be considered in the context of health reform as they map directly into the administration's goals of improving quality and preventing complications of illness."

Providers Will Play Role in GE's 'Healthymagination'

Fri, 08 May 2009 13:32:00 GMT

General Electric (GE) announced yesterday that it will spend $3 billion over the next six years on new medical technology as part of its new "Healthymagination" initiative. The initiative will also include participation with healthcare providers that have been actively involved in healthcare innovation in the United States, including Salt Lake City-based Intermoutain Healthcare, the Mayo Clinic, and the Cleveland Clinic.

The goal is to launch at least 100 innovations that "lower cost, increase access, and improve quality by 15%," said GE Chairman and CEO Jeff Immelt, at a conference held in Washington. This means the company will be "accelerating health information technology, improving access, and really driving health into the home and into more preventative settings."

At the same time, the company will focus on the health of its 600,000 workforce as well. "In employee settings, we are going to make our workforce healthier," Immelt said.

The company will invest in wellness and healthy worksite programs and is aiming to keep the annual rate of growth of employee health costs at the consumer price index or less.

One focus of the initiative will be electronic medical records and other information technology. GE, working with Intermountain Healthcare and the Mayo Clinic, already has developed physician decision support through IT in the form of evidence based care and announced that it will be launched commercially in 2010.

Brent James, MD, executive director of Intermountain's Institute for Healthcare Delivery Research, said at the conference, that they mostly use the EMR to build it into workflow--"so it becomes the routine way things are happening."

The Healthymagination initiative is being patterned after GE's successful "Ecomagination" program launched four years ago that emphasized environmental issues.

“We saw the same type of tipping point,” Immelt said. “We learned that technical innovation can drive solutions and value for customers, investors, employees, and the public."

Washington Insider: Health Reform in Trouble, Medicare Advantage May Survive

Thu, 07 May 2009 21:03:00 GMT

A leading Washington healthcare expert is questioning whether any major healthcare reform will happen this year or even if the proposed Medicare Advantage payment cuts will get through Congress.

Robert Laszewski, president of Health Policy and Strategy Associates, LLC, in Washington, DC, has been outspoken in his belief that policymakers have simply not found enough money to fund major healthcare reform. For instance, a major healthcare reform effort supported by Obama would cost $1.2 trillion over 10 years, but federal leaders have only been able to find $316 billion over 10 years through payment reforms, he says.

Because lawmakers haven't found a way to fund a major healthcare plan, Laszewski says interests groups and Washington insiders are presenting their own Plan Bs, which include minor tweaks to healthcare rather than wholesale reforms.

"There is a whole other scenario starting to brew out there, and it's not clear what it's going to look like--but it ain't major healthcare reform," he says. "How it impacts Medicare Advantage is in no way certain."

Support for major healthcare reform is getting dimmer, he says. "The rats are headed off the ship . . . Everybody is covering their own butt," he adds.

Laszewski has predicted major Medicare Advantage payment cuts over the past two years because the Democrats oppose the program, but times are changing rapidly.

Healthcare reform is "floundering" on Capitol Hill and the Congressional Budget Office keeps rejecting healthcare reform funding programs.

Plus, Laszewski says so-called Blue Dog Dems, which are about 50 House moderate and conservative deficit hawks, have agreed to give a two-year patch to Medicare physician fee reductions, including the 21% cut planned for January 1. This in effect means that Medicare payments won't be required to follow the statutory pay-go requirement, which means that Congress won't have to find the $38 billion that would have been saved through physician cuts by cutting other programs. Instead, the $38 billion winds up being tagged onto the federal deficit.

Though Obama has been vocal in his opposition of Medicare Advantage and the need to cut health insurers' payments, Laszewski is not sure whether Congress will ultimately approve those cuts.

Medicare Advantage payment cuts have always been linked to physician payment cuts. The thinking has been that the money saved by paying private insurers less would offset delaying physician payment cuts for another year. Now, with physician payment reductions not following pay-go, Laszewski suggests that Medicare Advantage supporters could push to not make Medicare Advantage payment cuts because they won't need to offset the physician payment reductions.

"What I think is interesting this week is we have always tied the Medicare Advantage money to fixing the doc problem, but now that the docs seem to have worked a side deal and healthcare reform is floundering, there is a scenario you can paint that Medicare Advantage does not get touched this year," says Laszewski.

Sebelius: Same Rules for Public and Private Health Plans

Thu, 07 May 2009 13:19:00 GMT

Department of Health and Human Service Secretary Kathleen Sebelius, during her first full week on the job, paid a visit to Capitol Hill Wednesday morning for her first formal opportunity—aside from the confirmation process—to discuss healthcare reform. Chief question on the minds of House Ways and Means Committee members during her conversation in front of the panel: what is President Obama's vision for a public health plan?

She said she shared the president's belief "that reform must guarantee choice of doctors and health plans," along with the public and private plan options, she told the panel. "No one should be forced to give up a doctor they trust or a health plan they like. Comprehensive reform shouldn't force any Americans [to give up] their coverage to make changes."

She sees the public plan option operating much like state employee health plans currently operating in 30 states, including Kansas. The public option plans generally are offered side by side with private plans to state employees—giving them competitive choices from which to select their coverage, she added.

She also noted that a number of states have established health insurance plans for children with side-by-side private and public providers. "It's about the rules that are established in the beginning, and the president and I are committed to working with members [on Ways and Means] and other members of Congress to make sure that the playing field is level."

By level playing field, she explained that for years, many private insurers operated on a "tilted field" where cherry- picking—or selectively choosing healthier patients—"is a strategy to make a profit," she said. This could make insurance unaffordable or unattainable for some individuals. "That doesn't work in a health exchange," she said.

If the rules are the same with public and private plans, the individuals with lower incomes or previously uninsurable conditions that come into the health exchange can choose between public and private plan options with the same rules. The goal, she told the panel, is for public and private plans to "compete on practice and protocol, on lowering overhead costs, on lowering administrative costs, and driving benefits to their incoming enrollees."

As to what the president is expecting to see in terms of healthcare reform in Congress, she assured the panel that he does not have a specific plan sitting in his desk drawer on reforming the health system. "I can assure you that it does not exist," she said.

Instead, she said his goal was to get the ball on healthcare reform moving forward. "His charge to me as the new secretary is to work closely with [congressional] committees as proposals are being developed," she said. "But the specific legislative language, the framework of exactly what the benefit package ultimately looks like, what the exchange may or may not look like will be a collaborative effort . . . primarily engaged in by Congress."

Legislating Medical Loss Ratio Leads to Unintended Consequences

Wed, 06 May 2009 15:06:00 GMT

Many healthcare advocates are suggesting that placing restrictions on health insurers' medical loss ratio (MLR) would save millions in healthcare costs—money that could be better spent expanding health coverage and reducing premiums. At least 15 states have implemented MLR laws so far and others are exploring the idea.

In California, one of the more outspoken groups on the topic is the California Medical Association, which says "healthcare administration costs are one of the biggest challenges physicians and patients face." California Gov. Arnold Schwarzenegger vetoed a bill that would have set an 85% MLR on all health plans last year. The law would have been the strictest in the nation.

I wrote about the push in many states to place a floor on how much health insurers pay on direct medical care in the April edition of HealthLeaders magazine. On the surface, increasing direct medical care payments and limiting health insurers' profits and administration costs sounds like a sensible idea. Why should health insurance executives get to pocket profits or pad their reserves? Shouldn't that money go to medical care?

Well, it's not that simple.

I dislike the million-dollar salaries paid to health insurance executives just as much as the next guy, but I question whether an MLR regulation would actually affect executive pay.

While it's true that non-medical care dollars could go to padding bonuses, administration funds also cover care coordination, disease management, health information technology, and customer service. Alan Katz, blogger and past president of the California Association of Health Underwriters and National Association of Health Underwriters in Los Angeles, told me that health insurers would cut those programs if MLR restrictions were implemented in California.

Many states with MLR laws have sliding limits depending on the type of plan. For instance, individual health plans, which have more customer service, marketing, and member outreach than large group plans, have lower MLR limits than the large groups.

The differences in health plans go well beyond individual vs. large group plans too. There are smaller group plans, PPOs vs. HMOs, and non-profits vs. for-profits. Each of these types of plans are unique and may have trouble competing at the same MLR levels.

There is also the issue about reserves. If health insurers were limited on what they could put into reserves because of MLR limitations, they wouldn't be able to properly prepare for an economic downturn. For this year, that would have meant healthcare premium increases even more than 6%. Restricting MLR would also force health insurers to drop more expensive plans, such as small groups and individual plans, which would result in more uninsured.

As with most legislation and changes, there are always unintended consequences and that is surely the case with MLR restrictions. Creating sliding MLR restrictions depending on health plan type would create a fairer system than a blanket MLR, but supporters of these restrictions must also realize that creating these limitations will not bring huge savings and improve care.

Most healthcare executives who completed the 2009 HealthLeaders Media Industry Survey understand that health plan administration costs are a factor, but not the factor in rising health costs. When asked to rank the top driver of healthcare costs, government laws and mandates finished number one with health plan overhead ranking a distant fourth.

The only way to enjoy huge savings and improve patient care is by tackling direct medical costs. Health plans have been largely unsuccessful in that endeavor, but medical care is where most healthcare costs come from and is also the place for the most possible savings.

MLR restrictions are an easy target, but they don't tackle the real causes behind rising healthcare costs.

Health Spending Is Taking Up Bigger Chunk of National Purse

Mon, 04 May 2009 16:07:00 GMT

Though the rise in healthcare spending has slowed, it's taking up a much bigger space in the nation's budget, says a new report from the California Healthcare Foundation.

The report showed that national healthcare spending reached $2.2 trillion, or $7,421 per person, in 2007 representing more than 16% of the gross domestic product. Continuing at the same pace, it will reach 20.3% of the country's gross domestic product by 2018.

"Although there has been some moderation in health spending growth in recent years, its share of the economy continues to grow," the report says.

"This report shows the very trend that's behind a lot of the financial woes of the healthcare industry," said CHF senior program officer Marian Mulkey. "The fact that we are spending more and more on healthcare services translates into higher premiums, and makes it harder for businesses and employees to afford coverage. This documents the problem that is at the heart of the debate about health reform."

Mulkey said that the report, the sixth one in a series of annual reports, called Health Care Costs 101, is based on data from the Centers for Medicare and Medicaid Services.

Among the points in the report:

Healthcare costs grew nationally by 6.1% in 2007, the smallest increase since 1998, extending a five-year decelerating trend. Yet it continues to outpace inflation and is projected to reach $2.5 trillion this year.
The recession will more than offset the recent moderation in health spending, causing medical care's share of the GDP to rise rapidly to 17.6% this year.
Per person costs for healthcare increased 81% between 1997 and 2007.
While out of pocket costs for consumers continue to rise, over the past 40 years they have declined as a share of overall health spending, and are now flat at about 14%.

Report: Medicare Advantage 'Extra Payments' Will Reach $11.4 Billion This Year

Mon, 04 May 2009 13:49:00 GMT

The federal government will pay private insurers $11.4 billion more for Medicare Advantage plans this year than what the same beneficiaries would cost traditional Medicare, according to a new report from The Commonwealth Fund. The report adds more ammunition for critics, including the Obama administration and Democrats, who think the private Medicare program is too expensive.

Brian Biles, professor of health policy at George Washington University, and his co-authors reported in the analysis that private insurers have received $43 billion in "extra payments" since 2004. The extra Medicare Advantage payments this year will amount to an average of $1,138 or 13% over the fee-for-service costs for the 10 million Medicare beneficiaries enrolled in Medicare Advantage.

The $11.4 billion figure is a 34% increase over 2008 payments, which totaled $8.5 billion. The increase was because of payment rate and plan enrollment increases, the authors wrote.

Medicare Advantage, which was created in the Medicare Modernization Act of 2003, was an attempt by the Republican-controlled White House and Congress to privatize Medicare. Medicare Advantage has seen its enrollment more than double since 2004. In fact, Health Affairs and the Robert Wood Johnson Foundation recently reported that one in four Medicare beneficiaries is in Medicare Advantage, including 41% of Oregon beneficiaries and 34% of California beneficiaries.

Since Obama took office, the president and Democrats have taken aim at the program. CMS lowered Medicare Advantage reimbursements to health insurers by between 4% and 4.5% for 2010.

The Obama administration also implemented stricter terms for health insurers that offer Medicare Advantage. In the new regulations, health insurers will not be able to charge sick, low-income patients more than they would pay under traditional Medicare. The administration's move was a preemptive strike to prevent Medicare Advantage insurers from transferring costs onto the most vulnerable beneficiaries once the payment cuts went into effect.

The Commonwealth Fund President Karen Davis said Medicare Advantage payment cuts are an "excellent first step," but warned that policymakers should review whether the government could spend Medicare Advantage dollars more wisely.

The report's authors wrote that eliminating the extra payments to private insurers would provide $150 billion in savings over 10 years, which could help fund expanded health coverage to the 47 million uninsured Americans or offset the costs of Medicare policy improvements, such as reducing the Part B premiums or increasing eligibility for low-income Americans.

Given Obama's statements that private Medicare plans should be paid at the same levels as traditional fee-for-service Medicare, the authors suggested that future analysis could focus on creating a way to make the payments more comparable to Medicare fee-for-service costs.

They added that any Medicare Advantage payment reform should "provide increased incentives for private plans to better accomplish their intended role—to develop innovations in quality, efficiency, and patient service; to spur traditional Medicare to better performance; and to offer beneficiaries a choice of the best of both worlds," they wrote.

While the private Medicare program has been bashed by Democrats, Medicare Advantage supporters say the program offers benefits beyond traditional Medicare, including care coordination and vision and drug coverage. Medicare Advantage is also the home of special needs plans, which cover institutionalized beneficiaries who are dual eligibles and suffer from disabling chronic diseases.

Hey, Health Insurers: You're Missing Out

Wed, 28 Jan 2009 17:17:00 GMT

Health insurance companies lose $40 billion each year—and it has nothing to do with cost containment.

Instead, the problem stems from health insurers losing 3% of its group members annually because they aren't retaining members who retire or lose group coverage. Insurers could reverse that trend by simply tweaking communication processes and improving training that would nudge these members into individual or Medicare plans when the time comes. Retaining members is particularly important in the face of the current global economic crisis and a shrinking employer market. Instead, health insurers are focused on reducing spiraling costs and putting more responsibility on individuals. Those are both important initiatives, but as health insurers look to cut costs, converting existing members to other plans could provide a cost-effective solution.

Insurers should expect the situation to get worse. Health insurance companies will lose members at a rate of between 4% to 8% annually over the next five years because of employers dropping coverage, layoffs, and baby boomers reaching retirement age, according to McKinsey & Company, which recently released a report called The missed opportunity for U.S. health insurers. Insurers don't tell members about their myriad offerings so those who move from employer-based coverage to Medicare have no idea that their health plan offers a Medicare Advantage or Part D program.

The solution to this problem would be fairly simple to implement. McKinsey & Company suggests the financial-services industry should inspire health insurers. For instance, Fidelity Investments captures 50 to 60% of workers who move from employer-managed 401(k) accounts to personally owned rollover Individual Retirement Accounts.

"There are a lot to be learned in how a health insurer can work with sponsors, the employers, in making it a much smoother process and making a fairly simple transition project," says Shubham Singhal, principal at McKinsey & Company.

Singhal provides three ways that health insurers can improve member conversion:

Standardize your communication processes so companies provide insurers will employee information at the time of a life-changing event and make converting members a priority in your organization. For example, promote different options to members so when they go through a life-changing event, such as losing a job or retiring, they will know their insurer offers health plans that suit their new needs. Another example is if a member who recently lost coverage calls the call center asking a question about COBRA, inform the person about your company's individual insurance offerings.
Simplify processes for the consumer. When you send out information on COBRA to a recently laid off member, include information about individual insurance options and enrollment forms. Don't make them take three steps when you can combine processes into one.
Incorporate conversion strategies into your training. One way is to train call center employees so they can pick up on cues to transform an issue into a sales opportunity. For instance, if a parent calls to ask whether her ineligible 20-something child is still covered under her plan, the call taker could provide tell the caller "no," but also provide information on individual insurance options. Insurers could perform similar strategies to convert people of retirement age to join one of their Medicare Advantage or Part D offerings. Here's one easy change for a health insurer: when a member turns 60, send the person information about your Medicare options. As the person moves closer to retirement age, make sure that the Medicare offering is displayed prominently on communication with that individual.

"I think it's a set of what at the end of the day seems like reasonable things, but the collective executive of those makes a big difference," says Singhal.

Singhal says most executives haven't figured out how to provide conversion solutions, while maintaining a profit and offering products that can pertain to any life situation.

"I think it's a mindset of understanding that the consumer is actually a customer and they have a set of real needs we need to meet. That is really an important element to have if health insurance is to move up in the ranking of industries that consumers show high satisfaction with," says Singhal.

Les Masterson is senior editor of Health Plan Insider. He can be reached at lmasterson@healthleadersmedia.com.

Health Insurers Can Learn From Capitation

Wed, 21 Jan 2009 17:30:00 GMT

Capitation remains popular in California and other pockets of the country, but the rest of U.S. healthcare providers associate the phrase with not getting paid enough. Though many practices blame poor financial performance of risk contracts for not trying capitation, a recent survey found poor results are not as common as has become generally accepted.

As healthcare leaders look for ways to improve upon the fee-for-service system, capitation-type programs have been eyed as a possibility. Three such options are the medical home payment model that provides care management fees for physicians who coordinate care, quality contracts that include both a baseline payment and quality incentives, and PROMETHEUS (provider payment reform for outcomes, margins, evidence transparency, hassle-reduction, excellence, understandability, and sustainability), which pays each provider according to his/her contribution to a patient's care.

Given this greater interest in capitation-type programs, health insurers should take a look at the recent survey released by the American Medical Group Association and ECG Management Consultants. The 2008 Capitation Survey found that most respondents with capitation describe their organizations' financial performance in risk contracts as above average or excellent over the past two years. Less than 10% cited poor financial performance. As these numbers show, capitation is working for some practices.

Here are three takeaways from the study that are revealing even for health insurers not in capitation:

Physician buy-in is the first step (isn't it always?). Respondents to the survey ranked physicians not willing to accept risk as the second largest barrier for practices interested in risk contracts (behind only unfavorable contract terms). This goes to the importance of setting the groundwork by educating physicians about how your capitation program benefits them. The study also found that pay-for-performance (P4P) programs are not popular. Though many health plans are looking to P4P as a way to improve quality and patient outcomes, a mere 10% of respondents said they were participating in a P4P program. Josh Halverson, senior manager at ECG Management Consultants, says successful capitation programs reward physicians for managing health. "To successfully manage risk, there must be an underlying culture and commitment to capitation," says Halvorson.
Doctors like payment models in which they control the outcomes. Professional and primary care capitation are the most attractive to providers, while global risk is the least attractive. By opening up to global risks, physicians feel a lesser amount of control and exposes "the group to greater levels of risk to issues beyond their contract," says Halverson.
Health plans need to work collaboratively with physicians to share pertinent claims data. Respondents said health insurers are providing eligibility data, but not claims information. Practices are not able to perform the necessary audits to "ensure adherence to contracted rates for services rendered and proper premium payments for the covered population," according to the survey. Instead, health plans need to create open communications between the insurer and the practice. This can happen through networks in which the two sides share claims data and patient information. More than half of respondents said their financial performance was good or excellent with specific health plans and they appreciated when health plans provided more data and utilization support. Sharing utilization and medical expense information between health plans and physician organizations is a "significant opportunity for improvement," says Halverson. In fact, physician organizations surveyed said that valid and consistent utilization data are even more important than providing utilization management staff.

If these kinds of payment models are to work, greater collaboration between physicians and health plans is needed. This greater integration is evident not only in capitation, but in areas such as the medical home, population health, consumer-directed healthcare, and quality contracts.

The only way these programs can work, experts now realize, is having health insurers, physicians, pharmacists, nurses, and myriad other healthcare professionals sharing information and working collaboratively for the patient.

Les Masterson is senior editor of Health Plan Insider. He can be reached at lmasterson@healthleadersmedia.com.