Population Health Insider, August 2009

Inside:

Consumers interested in technology, but not using it now

Five key questions about an insurance exchange

Insurers: Added regulations through health reform will increase plan costs

Health reform calls for preventive care, but questions persist about savings

Healthy San Francisco has increased access

Pharma agrees to fund part of Medicare doughnut hole

Many business associates not ready to comply with HIPAA

Many young adults don’t have health coverage

Cost of hospital care for obese children has doubled

Physician compensation trails inflation

‘Rip-off’ insurance scam shut down

Blue Cross Blue Shield of Massachusetts rewards docs for efficient quality of care

Consumers interested in technology, but not using it now

Health insurers have spent millions on improving member outreach on the Web, but most people still don’t visit their health plans’ Web sites or believe their insurers support their health, according to the Microsoft Health Engagement Survey 2009, conducted by Kelton Research.

However, that sobering news is balanced with some positive findings. Survey respondents are interested in their health plans connecting with them via e-mail and phone for electronic coaching, but they want those services integrated into their lives.

Dennis Schmuland, MD, U.S. health insurance industry solutions director at Microsoft in Redmond, WA, says healthcare must control runaway medical cost growth. One way to do that is to improve chronic disease care and wring out costs. An example is to help members self-manage their conditions with the help of their health plan and assist those without chronic diseases to stay healthy.

The survey results show that health insurers cannot wait for consumers to self-manage their chronic conditions through stand-alone Web tools, Schmuland says. Instead, patients want providers and insurers to come together to help them improve their health habits and self-manage their conditions.

This will require insurers to implement a “new generation of technology designed to proactively improve health and coordinate care at the individual and community levels,” Schmuland says.

Survey respondents were not exactly positive about the current healthcare system. A majority of those surveyed see the healthcare system as fragmented and believe it doesn’t help them proactively manage their health (see Figure 1). Those who share that view are more likely to search general health Web sites for information rather than seeking health information from doctors or insurers (see Figure 2).

Schmuland says those who feel the system is fragmented tend to believe they are on their own when it comes to their health and healthcare.

The greater consumerism movement with insurers and employers pushing more out-of-pocket costs onto members has led insurers to invest in online components in hopes of creating more educated consumers. However, nearly half of those surveyed think health plans only support them when they need a doctor (see Figure 3).

This disconnect is creating barriers. Consumers are simply not visiting their health insurers’ Web sites. Although 82% of insurers provide Web sites with health and wellness information, nearly three-quarters of respondents visited their insurers’ Web sites fewer than six times per year. That includes 16% who never visited their insurers’ sites and another 16% who only went on the sites one or two times in the past year (see Figure 4).

Schmuland says people usually trust their doctors, but insurers, advisory hotlines, and association Web sites don’t enjoy the same level of trust.

“[Consumers] perceive the health plan cares about them only when they are sick,” says Schmuland.

Those who are actually going onto the sites are not using the breadth of information either. Nearly half of those surveyed go to find provider lists or coverage information. Only one-third check out information on health and wellness (see Figure 5). For those who actually search for health information, the survey found that many of those people do so only after a diagnosis. In other words, patients are conducting reactive health information searches rather than proactive wellness searches, according to the survey (see Figure 6).

They are also not going to insurers’ Web sites, but instead visit popular health sites, such as WebMD, or conduct searches on Google (see Figure 7).

Positives for health plans

The way health plans are implementing technology might not be working, but there are two positives from Microsoft’s survey: The vast majority of people surveyed said healthcare technological solutions are inviting (see Figure 8), and most respondents were interested in communicating with their insurer through e-mail.

More than half of respondents said they are interested in using e-mail to ask questions about benefits and coverage; receive feedback about their health; and get encouragement, reminders, and advice on diet and exercise (see Figure 9).

“They are saying ‘technology is inviting. I’m not afraid of it. I want to use technology,’ ” says Schmuland. This includes Web-based products and text messaging.

Microsoft officials say the survey shows that consumers want coaching through technology. This might be a cost-effective tool for health plans, which could reach more members through the use of an online coaching program.

Not only could health plans benefit from greater technology in the area of coaching, but disease management, wellness, and population health companies could also see great savings.

“This could change the ROI to their advantage,” says Schmuland.

Chad Pomeroy, vice president for innovation and eBusiness at WellPoint, Inc., in Indianapolis, says health plans must explore ways to quickly and easily access their healthcare information to make better decisions. “This research is a wake-up call to the health insurance industry to start untethering much of the online tools and services they’ve tied to stand-alone member self-service portals and weave them into the consumer’s daily digital world,” says Pomeroy.

Opportunities for health insurers

Although the survey showed that health insurers are not maximizing member communication on their Web sites, the findings provide a glimpse into what consumers want and how health plans can implement those solutions.

The first step for health plans is figuring out how to get into members’ digital lifestyles, then concentrate on content, says Hector M. Rodriguez, industry chief technology officer/technology strategies for Microsoft’s health plan industry group in Irvine, CA.

The survey shows that people want to integrate health information into technology, which they can seamlessly connect into their daily lives. An example is cell phone applications that track a person’s calories, fat, etc.

Schmuland says health plans need to reinvest their technology and self-service portal money. Insurers have added personal health records, communications, and videos, but they are not being integrated into members’ lives.

Connecting patients with other healthcare stakeholders leads to receiving the best care possible from the doctors, says Ted Epperly, MD, FAAFP, president of the American Academy of Family Physicians in Leawood, KS.

“When patients and their personal physicians work together and involve technologies that empower them to improve their health plans, they can lower their health risks and self-manage chronic conditions,” says Epperly. “It’s critical for providers, patients, and public and private payers to work as a team to improve health, well-being, and outcomes at the individual and community levels. Such collaboration would help control the runaway rate of medical costs that keeps health coverage beyond the financial means of every American.”

The online survey took place between March 10 and 17. Kelton interviewed 1,002 Americans over age 18.

Five key questions about an insurance exchange

Imagine a Web site that allows consumers to compare health insurance plans and select one that best suits their needs. That just may become a reality if lawmakers include an insurance exchange as part of the larger healthcare reform package. There are several different insurance exchange proposals in Washington, and they vary in a number of areas.

Supporters of the various insurance exchange programs agree that the program would provide one-stop shopping for individuals to compare available plans. The program would also allow for portability so a person wouldn’t lose health insurance because of job loss. After those two highlights, however, there is a lot of disagreement as to the actual makeup of the exchange.

Here are five tough questions lawmakers will have to answer if the insurance exchange remains part of a larger health reform package.

1. Does it include a public plan?

The most hotly contested healthcare reform topic in Washington has been a public insurance plan. Supporters say a public option is one key way to reduce health costs because private insurers would need to cut costs to compete against a public plan with lower overhead.

However, public plan foes say the government should not create a public plan that would pay doctors and hospitals less and potentially hurt private insurers. They argue that a public plan, paying at rates similar to Medicare, would actually cause doctors and hospitals to transfer more costs onto private insurers.

Robert E. Moffit, PhD, director of the Center for Health Policy Studies at The Heritage Foundation, wrote The Rationale for a Statewide Health Insurance Exchange in 2006 after about 15 state legislatures introduced statewide health insurance exchanges. Moffit supports an exchange that would make health insurance portable by having employers pay tax-free contributions to the exchange for their employees’ healthcare.

He says creating a health insurance exchange to work in concert with a public insurance plan, on the other hand, will mean the end of private insurance.

“In my view, we’re talking about something that looks like the Roman Coliseum, where all the private plans are the Christians and the public plan is the lion,” Moffit says. “So the national health insurance exchange becomes a giant killing field for private health insurance, which is what I think they want to do.”

2. Is it a federal or a state program?

An insurance exchange could be a federal program or a state-run program that would launch with federal seed money. Most experts agree that the exchange would need to be run at the state level because there are so many variations in mandates, laws, and insurers by state that a national exchange would be impossible.

Janet Trautwein, executive vice president and CEO of the National Association of Health Underwriters, says most of the insurance exchange proposals would create an exchange that would not preempt state law. Another option is to let individuals choose between policies with state-mandated policies and ones without those mandates.

Trautwein says lawmakers must make sure that insurers are treated the same whether outside or inside an exchange, such as offering the same subsidies to each. A level playing field is needed or people could flee their employer-based plans to take advantage of subsidies in the exchange.

“It is very important if we have an exchange that the rules be the same whether people purchase inside or outside the exchange—otherwise, it could really upset the market,” she says.

3. Will it include an individual coverage mandate?

An individual coverage mandate has been the cornerstone of Massachusetts health reform, and state officials say they wouldn’t enjoy such low uninsured numbers without the mandate.

But others say federal lawmakers should not require all Americans to have health insurance. They instead would rather a health insurance exchange that is similar to eHealthInsurance, which is a Web site that allows consumers to compare health plans. Joseph Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy at American Enterprise Institute for Public Policy Research, says lawmakers don’t need to mandate insurance to accomplish that kind of system.

“There are enough people who understand that they ought to have coverage and are interested in having some choices, and this is a viable business model,” says Antos, who recently wrote The Case for Real Health Care Reform.

Creating a program heavy with regulations and mandates would price young people out of the insurance market, Antos says, adding that young people want basic health insurance and not a plan that is designed for a middle-aged family man. Those types of plans are too expensive for recent college graduates, he says.

“If you set the bar very high—and that might be the direction that some Democrats want to go and certainly the direction Massachusetts went—then you will basically eliminate the economic incentive for insurers to try to come up with a better combination that reflects reasonable coverage at a reasonable price,” says Antos.

Rather than federal lawmakers creating mandates for insurers to follow, Antos says private insurers should be allowed to design benefit programs that interest their various members.

“What you really want to do is enlist the smart people in insurance companies who design insurance plans and give them an economic reason to design a plan that would actually be attractive to a wide range of Americans, which implies balancing the benefits with a cost,” he says.

4. Is the exchange a way to compare plans or something more?

An insurance exchange could be merely a Web site that allows people to compare prices and benefit packages or it could take a more regulatory role (such as Massachusetts) and negotiate with plans. An exchange could also mandate types of coverage and plans that it allows in the program.

The argument for setting a floor for benefits and coverage is that prospective members could compare apples to apples. However, those who oppose the idea say that coverage mandates will add costs and price out people, particularly younger people who are needed to fund health insurance.

One benefit of the exchange idea is that a Web site could go beyond providing price and benefit information and could help people learn more about health and how to become better healthcare consumers.

5. Who will have access?

Federal lawmakers can open the exchange to the individual market, small employers, or everyone.

Opening the exchange to only the uninsured to join individual plans would not help small employers who are struggling with health costs, but other experts are worried that opening the exchange to too many people initially will cause a stampede out of employer-based insurance and could flood the exchange in its infancy.

Trautwein says she would like an exchange to start with the individual market to work out the bugs before expanding to employers with as many as 50 workers.

The exchange must also provide low-cost plans to woo younger people into the plans, she says. “You have to really be careful about how you set up your rating model so it’s still affordable for young people to come in. Those are the groups you really want in. They are a big part of the group that’s not in today,” she says.

Regardless of the specifics of the insurance exchange, supporters in both parties believe it could become a part of a bipartisan reform package that gives Americans a place to become better health insurance consumers.

“Virtually all economists agree that if you provide more information to consumers and more choices, that they’re likely to pick something that is closer to the combination of benefits and cost that appeal to them personally,” Antos says.

Insurers: Added regulations through health reform will increase plan costs

For those who see private health insurance as a major problem in the healthcare system, reform is a chance to get insurers in line. But insurers and their supporters say added industry regulations will simply increase healthcare costs.

The health insurance industry has already come forward to say that it will accept certain regulations if the federal government requires all Americans to have health insurance. America’s Health Insurance Plans said health plans will accept everyone regardless of preexisting conditions and not charge women more for individual insurance if an individual mandate is part of healthcare reform.

Health insurers will allow these two changes without a fight because an individual mandate would flood the system with an influx of millions of newly insured, including young people with low health costs.

“Guaranteed issue can only work if everyone—the young and healthy, as well as higher-risk individuals—purchases coverage. This would help keep premiums affordable,” says Justine Handelman, executive director of legislative and regulatory policy at the Blue Cross and Blue Shield Association (BCBSA).

As long as everyone is required to have health insurance coverage, Handelman says, the BCBSA supports new rating rules, including phasing out the practice of varying premiums based on health status. The change must be phased in gradually state by state “to avoid major disruptions and large premium increases for current enrollees,” she adds. “It would still be critical for insurers to adjust premiums based on age [and] wellness factors, such as nonsmoking and geography.”

But there are other regulations being discussed in Congress that health insurers are not ready to accept, such as benefit design requirements that include removing lifetime benefit limits and limiting premiums based on differences in age, community, and family size; guaranteed issue without the individual mandate; and coverage mandates. Private insurers say these kinds of requirements would increase premiums and have the biggest effect on the less regulated states.

Rather than finding ways to regulate insurers, Joseph Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy at American Enterprise Institute for Public Policy Research, says lawmakers should look to reduce healthcare costs. Focusing on insurance regulation does not improve “a very inefficient healthcare system” or address the “fundamental cost drivers,” says Antos.

“The question is how onerous do we want those regulations to be, and do we want regulations that will substantially increase costs of insurance?” says Antos. “If you tell insurers that they have to take on all comers regardless of their cancer diagnosis they just got and now they want to buy insurance, that means the average premiums will have to go up to account for the fact that they are taking on people they were not taking on before. That means average cost of insurance goes up. That means young, healthy people will buy insurance less, and it will have less value to them.”

Robert E. Moffit, PhD, director of the Center for Health Policy Studies at The Heritage Foundation, says lawmakers should not place limits on health insurers’ underwriting policies, especially if new regulations supersede state law. Local conditions should drive health policy and regulations—not the federal government, Moffit says.

Regulations to the health insurance market, such as mandates and benefit design requirements, limit innovation, Moffit says. “The danger I see is the federal government creating a straitjacket that will prevent any kind of serious creativity and insurance market reform at the state level, and we can basically say good-bye to innovation,” he says.

Coverage mandates

The Council for Affordable Health Insurance, an insurance carrier research and advocacy association, reported in its Health Insurance Mandates in the States 2009 that there are 2,133 mandated healthcare benefits and providers throughout the country. Those mandates are increasing health plan costs—in some states by about 50%—according to the study.

In response, some states now let insurers offer mandate-lite plans, which allow lower-cost options to under-covered groups, such as recent college graduates. Fewer mandates allow young adults to purchase basic health insurance without being required to pay for mandated coverage that won’t likely affect them, such as chronic disease and coverage for grandchildren.

Antos says adding regulations will price people out of health insurance, especially young people, and require the federal government to offer subsidies or make exceptions for people who can’t afford it. “If you put enough regulation on it, then you better start making exceptions because you will have a fairly large population that can’t live by your rules,” he says.

Individual mandate

Health insurers are not against all new regulations. They stand behind the individual mandate, which would require most or all Americans to have health insurance.

Requiring coverage would serve as a shot of adrenaline to the health insurance industry, which is struggling with dropping enrollment in the employer-based insurance market because of layoffs and businesses dropping coverage.

President Barack Obama opposed the individual mandate during his presidential campaign, and it appeared as though the idea was dead, but the president and many congressional leaders are now open to the idea. Bruce McPherson, president and CEO at Alliance for Advancing Nonprofit Health Care, says the employer mandate is now a lightning rod for controversy.

“I’m pretty surprised that there’s been such a consensus on that one already,” says McPherson about the individual mandate. “I have to believe that labor and some other groups will be pushing back pretty hard, but it doesn’t seem like they have a lot of allies on that.”

Public insurance and insurance exchanges

If a public insurance option and/or insurance exchanges are part of healthcare reform, insurers will likely face additional new regulations. The federal government could impose minimum federal requirements for insurers to operate within an exchange.

The public insurance option would have a much larger effect on private insurers. McPherson says insurers in his group are most concerned about the public plan because they believe a public plan will lead to an unlevel playing field and the federal government will ultimately create Medicare and Medicaid for all in a few years.

“It is a scary proposition,” says McPherson.

Health reform calls for preventive care, but questions persist about savings

Supporters say prevention will save the nation billions in averted long-term healthcare costs, and recent studies show that Americans support investing in prevention. But questions persist—most notably from the Congressional Budget Office (CBO).

Prevention has been mentioned as an important piece of healthcare reform. In its health reform draft proposal, the House Committees on Ways and Means, Energy and Commerce, and Education and Labor shed some light on where the prevention dollars would flow:

• Expand community health centers
• Waive cost-sharing for preventive services in benefit packages
• Create community-based programs to deliver prevention and wellness services
• Target community-based programs and new data collection efforts to better identify and address racial, ethnic, and other health disparities
• Strengthen state, local, tribal, and territorial public health department programs

This proposed package of prevention programs in the healthcare reform debate would go beyond provider- based healthcare, with supporters hoping to create a better wellness culture in the country. But will the government be more successful than doctors, employers, health plans, and population health companies who have struggled to get people more active and eat right? Then there’s the question of whether prevention programs actually save money.

Employers and the population health industry have been discussing the issue of prevention and ROI for years. Groups such as the Trust for America’s Health suggest the United States could save $16 billion annually within five years and experience a 5.6:1 ROI by simply investing $10 per person annually in community-based programs to increase physical activity.

Another study, funded by Pittsburgh-based health insurer Highmark, Inc., found a modest 1:64:1 ROI in a four-year review of the insurer’s employee wellness program, which includes employer health risk assessments, online programs in nutrition, weight, and stress management, tobacco cessation programs, on-site nutrition and stress classes, biometric screening, and health coaching.

Anna Silberman, vice president of preventive health services at Highmark, says the company’s prevention program stops non-healthcare users from becoming “huge users of the system.” Prevention not only reduces direct medical costs, but also saves companies and the nation on work-related costs in the areas of absenteeism, work production, and presenteeism, Silberman says.

The healthcare system should reward physicians for educating their patients about prevention and reminding patients of recommended tests, such as mammograms and diabetes screenings, says Silberman. “There are so many things that we can do that often get put on the backburner because we’re dealing with the acute thing that’s happened as a result of not addressing them earlier in our lives,” she says.

However, there are others who say prevention doesn’t save much—if anything. The issue is that preventive programs are open to a wide population rather than those who could be at risk of chronic diseases, such as diabetes, heart failure, or kidney disease. So, in fact, the companies are using a wide net to help people who may never have a chronic disease or are destined for a chronic disease regardless of activation level or food choices.

One group to question the cost-effectiveness is the CBO, which suggested in December 2008 that more prevention would bring modest cost reductions over 10 years and could actually increase costs.

Mary Jane Osmick, MD, vice president and medical director at LifeMasters, a health management company in Irvine, CA, supports wellness programs, but acknowledges there are still questions about whether wellness programs can save money.

“My guess is that there is a [positive] ROI, but I don’t know that we have the methodology to say this is what it is and this is when you’ll see it. I think the jury’s still out on that,” says Osmick. “But I sure believe it from a physician standpoint, that prevention is the absolute way to go.”

Whether prevention is cost-effective depends on the program, says Judith H. Hibbard, PhD, professor of health policy in the University of Oregon’s Department of Planning, Public Policy and Management in Eugene, who created the Patient Activation Measure, a questionnaire that gauges an individual’s activation level in health. “If you mean by clinical prevention, I don’t think it’s going to get us that far,” Hibbard says. “If you mean to really help people to avert illness or avert future declines in health, then yes, I think it could [save money].”

Hibbard says prevention programs can’t merely happen in physicians’ offices. Ninety percent of what determines an individual’s health state is outside of the healthcare system. For prevention to be successful, the country will need a more encompassing wellness program.

“I think we have to take a more holistic view and get outside the system too. People live inside the community and not just look for the medical system to make that happen. They need to be part of the solution too—not divorced from it,” says Hibbard about empowering the individual.

With that thought in mind, Sen. Tom Harkin (D-IA) filed legislation that would provide tax credits for employers that spark employees to participate in programs such as health education and behavior change.

Health management company Alere also recently presented its National Health Improvement Strategy that it claims could save American businesses and health insurers “tens of billions of dollars” by focusing on preventing health risks and chronic illness.

Alere CEO Ron Geraty, MD, promotes more collaboration between providers, employers, and health plans in the areas of health information technology, home monitoring services, rapid diagnostic tools, clinical outreach, and health coaching.

Geraty says these program could avoid episodic visits, procedures, and treatments. In addition to national nutrition programs, the government needs to kick off a national healthy pregnancy campaign because healthy babies lead to healthy adults, he adds. “We think a concerted strategy for the country is needed to say ‘we care about health, we promote health, and then when there is disease, we are actively managing the longitudinal impacts of those illnesses.’ That will really change the way healthcare is delivered in the country,” says Geraty.

To change the healthcare system to focus on prevention, industry experts pointed to several needed changes:

• Paying healthcare providers for keeping patients well, such as reimbursing for patient education, prevention, and early detection. “I think it’s important for physicians and other healthcare professionals that there be a mechanism introduced where immunizations are adequately reimbursed for,” says Silberman.
• Physicians need to be trained on nutrition and exercise so they can provide guidance to patients.
• Incentive programs for people who are active in physical or nutrition programs, which employers have found can improve the wellness culture.
• Technology to make health a more compelling choice, such as portable interactive Web sites that integrate a personȁ