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Washington’s Inaccurate Way with Words

December 11, 2014
4:19 pm

In assembling the so-called “CRomnibus” legislation that will set federal government spending levels until September 2015, U.S. House of Representatives appropriators have included language in the measure that would significantly affect a provision in the Affordable Care Act intended to maintain health insurance stability and affordability.

Some lawmakers want to curb funding for the aspect of the ACA known as risk corridors, saying it represents a taxpayer “bailout” for health insurers.

One would have to do some historical digging to see if the word “bailout” has ever been used quite so incorrectly. In no way whatsoever are the risk corridor provisions being attacked in the “CRomnibus” a handout to health insurance companies. Rather, they are valuable protections for coverage-purchasing consumers.

Here’s why risk corridors are so necessary. For the health insurance industry, the implementation of the Affordable Care Act was essentially a leap into the great unknown. With the new law barring medical underwriting – basing insurance premiums, in part, on a consumer’s health status – health insurers simply did not know whether the population enrolling in plans through the ACA coverage exchanges would be less healthy and prone to using more, and more expensive, healthcare services.

Risk corridors are simply temporary (they run through 2016) protections against significant unforeseen financial losses until the ACA marketplace can be better defined and understood. Without these protections, consumers face the danger of rapidly escalating costs. Risk corridors bring stability to a new, uncharted health insurance environment.

Oh, by the way, this tool has been used quite effectively in the Medicare Part D prescription drug program – without a whisper of political controversy.

Conservative analyst Yevgeniy Feyman described the importance of risk corridors well in a Forbes column, noting that “Risk adjustment mechanisms get you the buy-in of insurers, but they also help keep premiums at manageable levels while insurers develop enough experience to properly price plans on their own. This helps encourage people to enroll in these plans, which in turn helps insurers develop the necessary pricing experience – resulting in a virtuous cycle.”

It should also be noted that the lawmakers and political advocates who want to take an ax to the risk corridors are doing so after health insurers have already set premium rates for 2015. They want to, in essence, change the rules in the middle of the game.

The losers, though, wouldn’t be the health insurance companies or the Obama administration. Rather, consumers would be taking a direct hit to their checking accounts.

And if this ill-conceived action takes effect and millions of American households suffer financially for it, who exactly is going to bail them out?

Policymaking That Releases the Brake on Innovation

December 05, 2014
1:27 pm

I want to bring to your attention an op-ed piece that appeared on the Government Health IT website this week because it goes right to the heart of the issues affecting the technological innovation that will shape healthcare’s future.

The commentary by McKesson Chairman and CEO John Hammergren (McKesson is a Healthcare Leadership Council member) and Tejal Gandhi, president and CEO of the National Patient Safety Foundation makes two important points.  First, interoperability – the ability of information systems to “talk” to each other – is commonplace in consumer electrics, but woefully lagging in the healthcare world.  Enabling interoperability is critical in unleashing the power of data to improve healthcare quality, cost-effectiveness and research.

Hammergren and Gandhi make another important, and often overlooked, point about policymaking.  For all we read and hear about partisan strife in Washington, D.C., there has actually been an admirable level of bipartisanship on issues affecting healthcare innovation and technological advancement.  In the coming months, it’s critical that we build upon that bipartisanship to, as the authors put it, “achieve, rather than impede, the potential that health IT has to improve patient care and enhance clinical safety.”

I encourage you to take the time to read the Hammergren-Gandhi perspectives on issues so critical to the next generation of healthcare delivery:

Commentary: The key to patient safety? Innovation

There are few areas of modern life that technology hasn’t altered. From our smartphones to our DVRs to the GPS in our cars, technology has changed the way that we shop, read, watch movies and television, drive … the lineup goes on. What’s missing from this list? Healthcare.

While there have been pockets of innovation, the healthcare consumer has not benefitted from the rapid advancement of technology that has touched nearly every part of American life.

The promise of what technology innovation can bring to patient care and outcomes is high — but two major challenges stand in our way. First, we have dated government rules in place that are slowing innovation. Second, even if the pace of healthcare innovation matched that of, say, consumer electronics, it wouldn’t matter because we don’t have interoperability — that is, a system in place to safely and seamlessly share patient information between providers, payers and other healthcare stakeholders. Just imagine the public’s response if the smartest smartphone couldn’t place calls to a similar smartphone on a different wireless carrier.

What is it going to take to bring about the changes that are needed? The answer is cooperation across party and competitive lines in both the public and private sector, as well as cooperative work between industry stakeholders to develop standards and best practices for patient safety and health information technology (IT).

We need to start by updating the current health IT regulations. Health IT operates under a regulatory framework that was crafted nearly 40 years ago. Think about it: We’re working with regulations written when people had 8-track tape players in their cars. It’s time we update the rules to create predictability for everyone involved and to support the innovation in healthcare that patients deserve.

The good news is that there is bipartisan support and momentum to update health IT regulations. While the conventional wisdom these days suggests that our nation’s capital has become dysfunctional and unable to work across party lines for the greater good, we have seen real bi-partisanship at work on the issue of health IT, with key members of both parties working together to bring health IT regulation into the 21st century. These elected leaders, along with hundreds of organizations across the industry, are working to create a framework that will achieve, rather than impede, the potential that health IT has to improve patient care and enhance clinical safety.

Just as members of Congress are reaching across the aisle on the issue of health IT regulation, competitors in the private sector need to join together to achieve interoperability. Creating such a system will improve the patient experience, care delivery system efficiencies and, most importantly, the quality and safety of care.

There is also real momentum in the private sector to advance the interoperability of our healthcare system. Through the not-for-profit CommonWell Health Alliance, competitive businesses are deploying a universal system nationally to allow for the seamless access of patient-centered data across all settings of care. Through both government efforts and this Alliance and its member companies, healthcare interoperability is becoming a reality and, when realized, will significantly transform the future of the industry.

Leading industry stakeholders are working with well-respected organizations like the National Patient Safety Foundation and the ECRI Institute’s Partnership for Health IT Patient Safety to develop tools to achieve patient safety through health IT, but more must be done. Developers, implementers and end-users need to work cooperatively to ensure that patient safety is always a priority when creating and deploying any healthcare technology solution, as well as assuring usability for clinicians. By working together, we can optimize the safety benefits and mitigate any new risks that technology may bring.

We cannot deny that there is a need for increased innovation in health technology. The benefits of technological advancements are numerous, from improving patient safety to providing consumers with more tools to manage their own healthcare. At this moment in time, public and private leaders have a unique opportunity to demonstrate their ability to work cooperatively to modernize health IT regulation and achieve real interoperability — with the goal of improving patient safety and outcomes.

When that happens, we’ll begin to see exciting innovation that will fundamentally change and improve patient care.

Aetna CEO: New Math for Medicare

October 22, 2014
5:02 pm

(We have made the point often in this space that, even with the private sector’s successes in containing healthcare costs and reducing Medicare per-capita spending to historic lows, the sheer magnitude of baby boomers reaching 65 and reaching Medicare eligibility necessitates significant changes to the program.  Moving away from a fee-for-service model that incentivizes volume rather than value is essential.  As Mark Bertolini, CEO of Aetna (a Healthcare Leadership Council member) points out in this Forbes op-ed column, innovative approaches to Medicare payment and healthcare delivery can achieve better patient health and improved system sustainability.)

By Mark T. Bertolini

The Medicare Part A trust fund will be exhausted by 2030. As 11,000 baby boomers become eligible for Medicare daily, Medicare spending is projected to exceed $1 trillion in 2020. We can’t change the numbers that define our population but, we can apply new math to them.

Focus first on helping the chronically ill

The sickest 5 percent of fee-for-service Medicare patients with chronic conditions drive more than 40 percent of the total cost of health care in the program. We should use the lessons learned in Medicare Advantage and other proven innovations. Encourage Medicare Part A and B enrollees with multiple chronic conditions to participate in new integrated care programs with top-notch physicians to ensure high-quality service. Pay managed care organizations rates that guarantee savings for taxpayers out of the gate.

Use the successes and learnings of this approach to phase out the Medicare fee-for-service payment model

The fee-for-service model has doctors getting paid by the number of procedures they do or tests they run, rather than on how well their patients do. We need to move to a system that pays for quality over quantity.

These two changes alone will mean lower cost coupled with better integrated, quality care for the members of our families that need that care the most.

While the Congressional Budget Office recently reported that estimated costs of Medicare and Medicaid have dropped, our country’s coffers are still being drained by a too-costly health care system. This was reconfirmed in July, when the Boards of Trustees of the Federal Hospital insurance and Federal Supplementary Medical Insurance Trust Funds projected that Medicare costs will grow from their current level of 3.5 percent of the gross domestic product (GDP) to at least 5.3 percent of the GDP in 2035.

Consider this: As baby boomers become Medicare eligible, the number of beneficiaries will grow from 50.7 million in 2012 to 81 million in 2030—a 60 percent increase in less than 20 years. Add to this that the tax base is shrinking: Baby boomers are retiring, leaving the country with a much smaller workforce paying a much higher Medicare tax burden. With average life expectancy projected to reach 81.5 years by 2030, on average those seniors will use Medicare benefits for three times as long as when Medicare was enacted in 1965. Chronic conditions among Medicare beneficiaries also are on the rise, making them a sicker and more expensive population than existed in 1965.

The current fee-for-service payment model unintentionally incentivizes the wrong kinds of behaviors—spending less time with patients, or having more tests and procedures. There is little reward for finding more efficient ways to make people better or for keeping them healthy in the first place.

Bringing innovative collaboration to traditional Medicare

Many programs that have been so effective for caring for Medicare Advantage’s sickest beneficiaries, including enhanced home-based care, care coordination and medication review, are not always covered under traditional Medicare. Our experience in Medicare Advantage shows the promise of these models. For several years, we have worked with health care providers to establish reimbursement models based on risk-sharing that encourages higher-quality performance. Aetna Aetna’s Medicare Advantage Provider Collaboration program, and its work to create accountable care organizations (ACOs), are examples of cooperative arrangements that are improving care quality and health outcomes while also reducing costs. In many instances, these programs have resulted in fewer inpatient hospital days, fewer hospital admissions and fewer readmissions for patients, which can reduce health care costs by as much as 30 percent.

Bringing innovative provider collaborations and managed care approaches to traditional Medicare is a winning proposition for everyone. Patients could get a full team of experts providing customized and focused attention, and be rewarded with incentives for adhering to treatment. Doctors could get greater support, information and resources to help their patients get and stay healthy. Managed care companies could serve a broader Medicare population, as long as they meet the required quality and outcomes results. Taxpayers could get a lower-cost, better-quality healthcare system.

In the past, we have shied away from making significant changes to Medicare, since the issues seemed to be so far down the road. That is no longer the case. Our Medicare spending has a tremendous impact on our economy now, and that will only increase over the next decade. Our population is aging too quickly and our nation’s Medicare costs are growing too rapidly for us to be timid. We need to take dramatic action now, and revolutionize how we approach the problem. The numbers can work if we are ready to adopt a new model. We can achieve a result that includes both healthier seniors and a lower tax burden.

The Burwell Direction

September 08, 2014
3:22 pm

If her first public address as Health and Human Services Secretary is any indication, Sylvia Burwell has her department headed in a positive and much-needed direction.

Speaking to an audience at George Washington University, Secretary Burwell made it clear that she has no interest in maintaining the partisan strife that has characterized the handling of healthcare issues in recent years.  In describing her governing philosophy, she said “What’s central to all of this is not politics.  It’s progress:  setting aside the back and forth and continuing to move forward.”

Secretary Burwell also emphasized the need for transparency in HHS actions and decisionmaking, bipartisanship and listening to stakeholders.

The last of those points is going to be particularly important given the challenges facing HHS in the coming months.  All parties hope that the next open enrollment period for the Affordable Care Act will go more smoothly than the initial sign-up efforts.  Making that happen will, by necessity, involve listening to the expert, hands-on perspectives of healthcare insurers and providers.  The Healthcare Leadership Council has, in fact, developed and provided a number of recommendations, generated from the insights of its member companies, on how to improve upon the previous open enrollment period.

Also, there is rulemaking scheduled this fall related to the Medicare Part D prescription drug program.  I like to think that the regulatory controversy over Part D earlier this year – when the Centers for Medicare and Medicaid Services ceased action on aspects of a proposed rule because of strong response from hundreds of healthcare and patient organizations over the prospects of fewer Part D plan choices and higher drug costs – could have been avoided with more communication between federal authorities and those groups working to preserve a strong, affordable Medicare prescription drug benefit.

With such important issues on the horizon, we strongly applaud the direction Secretary Burwell has set for her department and welcome the opportunity to work with her in achieving shared goals for American healthcare.

The Medicaid Standoff and the Need for Flexibility

July 02, 2014
11:55 am

The White House’s Council of Economic Advisors released a report this week that is clearly intended to intensify the pressure on the 24 states that have, thus far, refused to expand their Medicaid programs, as provided for under the Affordable Care Act.  As we recall, the U.S. Supreme Court ruled that the federal government cannot compel states to go along with the Medicaid eligibility expansion and many, predominantly with Republican governors and/or legislatures, have elected to pass.

In its report, the White House’s economic advisors make the point that almost 5.7 million more Americans will have health coverage in 2016 if these currently non-compliant states embrace expansion.

We’ve made clear in this space the Healthcare Leadership Council’s view that Medicaid is not the best option for reducing America’s uninsured rolls.  Medicaid’s reimbursement rates for doctors and hospitals, significantly lower than private insurance and even Medicare, underscore the point that coverage does not necessarily equal access.  Nonetheless, less-than-ideal coverage is better than no coverage for the millions of Americans who need healthcare but can’t afford to pay the providers who are delivering that care.

But, while it’s easy to blame states for not getting on board, the Administration needs to recognize its own responsibilities in this area.

It is fortuitous timing that the White House report was released in the same week that the state of Indiana submitted its proposal to the Department of Health and Human Services for an expansion of its Healthy Indiana program as an alternative to enlarging traditional Medicaid.  As Indiana governor Mike Pence wrote in an op-ed, Healthy Indiana 2.0 is a better fit for the sensibilities of his state in that in that enrollees can take greater control of their own healthcare decisions through contributions to private accounts that are not unlike health savings accounts.

As he put it, “As national leaders in healthcare innovation, Hoosiers understand empowering people to take greater ownership of their healthcare choices is better than government-driven healthcare.”  Pence backed up his rhetoric with metrics showing that Healthy Indiana participants use preventive health services at a high rate while making less use of expensive emergency room care.

The Indiana case, as well as the movement toward innovative Medicaid plans in Iowa, Arkansas and other states, emphasizes the argument that flexibility is critical in bringing Medicaid expansion to all 50 states.  It’s simply a political reality that many states with conservative-leaning leaders do not like ‘Obamacare,’ don’t necessarily trust the federal government to keep its promises in regard to financial support for Medicaid expansion and are not going to change their current programs.

On the other hand, granting flexibility to make better use of private health plans and to incorporate patient engagement and responsibility can help resolve a situation in which we’re essentially two separate nations when it comes to Medicaid.  HHS approving the Indiana proposal would be an excellent step in this necessary direction.