The prediction that healthcare cost increases are expected to stay at the same level this year is not allaying employer fears that they won’t offer the same health benefits in 10 years.
Healthcare costs are predicted to rise 6% for the third straight year in 2009, which pales in comparison to the 14.7% increase in 2002. However, the 489 large U.S. employers surveyed about health benefits are still concerned whether they can continue to offer employee health benefits in a decade, according to the 14th annual National Business Group on Health/Watson Wyatt Employer Survey on Purchasing Value in Health Care.
The reasons are twofold: the current economic downturn and the fact that the annual 6% cost increase is twice the rate of inflation. Ted Nussbaum, group and healthcare practice leader at Watson Wyatt in Stamford, CT, says large employers are reevaluating health plan strategies given the current financial crisis.
Sixty-two percent of large employers in the survey are confident that they will offer healthcare benefits in the next decade, which is a drop from 73% in 2007.
Nussbaum says employer confidence levels usually correlate with cost trends so the higher the cost trend, the less comfort for companies. That’s what makes this year’s percentage surprising.
"This is the first time in 14 years that confidence has dropped and it’s not related to cost trends. It sort of tells you, given the economic climate that we are in, that companies are feeling less confident that they can [offer health benefits]," says Nussbaum.
Though companies are concerned, few are actually making major changes to healthcare benefits now. "I think companies are moving along a continuum and they are comfortable with where they are going and what they are doing. I am certain they are making contingency plans in other areas, not in healthcare," says Nussbaum.
That short-term satisfaction is evident in the fact that most large employers are shying away from total replacement programs, such as moving all employees into a consumer-directed health plan. Only 3% of employers in the survey said they plan a total replacement plan and a mere 6% of those surveyed already have total replacement plans, according to the survey.
Nussbaum says most employers don’t implement total replacement plans because they are worried about employee backlash and eliminating choice. He adds companies faced employee backlash after businesses moved their covered employees into point of service (POS) plans in the early 1990s. Employees did not like losing choice, he says.
"I would expect that there would be a much more aggressive posture relative to addressing healthcare programs. While choice is nice, choice doesn’t maximize your ability to control costs, to control patterns of use, so on and so forth. I was surprised that we did not have more total replacement consumer-directed health plans," says Nussbaum.
Although they are not making large-scale program changes, employers are tweaking programs and strategies. For instance, health plan eligibility and enrollment audits/reviews, personal health records, and lifestyle behavior change programs are on the rise, while fewer employers are "significantly" increasing employee copays and coinsurance.
Helen Darling, president of the National Business Group on Health in Washington, DC, says many of these programs are extra services that health plans did not offer more than five years ago. "What that is saying is even in a time of severe financial stress, including a recession, employers are spending extra money in order to do these things to try to improve the health of their employees and dependents," says Darling.
Nussbaum doesn’t expect "radical changes," but thinks employers will adopt data initiatives, provide quality and price information, measure program ROI, remove programs that aren’t producing positive ROI, and create new incentive-laden consumer-directed health plans.
Employers are also linking employee health to the bottom line. The survey found agreement on the top challenge that employers face in order to maintain affordable benefit coverage. About two-thirds of large employers surveyed pointed to employees' poor health habits as the No. 1 concern, with the underuse of preventive services a distant second.
"[Employers] recognize that employees’ poor health habits are so important," says Darling. In the past, Darling says, employers focused on hospital and provider costs and didn’t think about employee health and prevention.
"They have really begun to connect the dots between costs and cost drivers, not just costs for providers . . . That’s a totally different framing of it," says Darling.
Darling says health insurers should learn from the results that there is a lot of work needed to fix healthcare, such as reducing waste and unneeded services. "I think the most important thing, and I think the president is saying it very well, is 'we will not be able to have a strong economy and strong country if we don’t have control of our healthcare costs,'" says Darling.
Though healthcare costs have increased at the same level over the past three years, Nussbaum says Watson Wyatt expects a spike soon because healthcare expenses work in cycles. "I don’t know if we will get to a 15% trend again, but this is a cycle like most other economic systems," he says.
If a Medical Board of California proposal is approved next month, California doctors will soon have to post a sign in 48-point Arial type in their office:
NOTICE
Medical doctors are licensed and regulated by the Medical Board of California
(800) 633-2322
www.mbc.ca.gov
The 48-point type requirement is twice as large as originally suggested. The larger type is "more legible and easier to read," says board spokeswoman Candis Cohen.
The controversial posting requirement’s exact language was released on Thursday and the board will consider the change at its May 8 meeting.
The proposed notification also requires physicians to include this information in a written statement that is signed and dated by the patient or the patient’s representative, and retained in that patient’s medical record, stating the patient understands the physician is licensed and regulated by the board.
Also, physicians will have to include the notice in a statement on letterhead, discharge instructions or other document given to a patient or the patient’s representatives, "where the notice is placed immediately above the signature line for the patient in at least 14-point type."
The added stipulations are intended to inform patients of physicians, such as emergency room doctors, pathologists, and radiologists, who do not usually see patients in office settings.
The board's staff has proposed this requirement in the belief that too few patients know where to file complaints if they’re not happy with care. Many think the only recourse they have is through the courts, and that may cost money upfront, board officials point out.
The Medical Board of California licenses and disciplines 125,000 physicians in the state, although a national patient advocacy group, Public Citizen, recently criticized the board for having one of the lowest track records for censuring physician practices in 2008.
California Medical Association officials and many physicians throughout the state say they fiercely fight the requirement because they believe it unnecessarily sours the relationship between the physician and the patient from the start.
California Medical Association trustee, Ted Mazer, MD, objects to the notification proposal saying it is more strict than what had been previously discussed. The prior proposal did not suggest that the physician would have to have patients sign such notices indicating they had received the information and place those signed documents in the patient's chart.
Also, the proposal previously required the sign's type to be half as large.
"The latest changes are quite worrisome and go well beyond simple patient education," Mazer says. "Please show me any other regulated business or profession that is required to so notice its customers of who to complain about them to, beyond a sign on the wall or window about the regulating agency."
The San Diego physician adds, "If the problem is that patients who fail to educate themselves [about their option to complain to the medical board] before seeking an attorney—which then might result in costs for litigation—perhaps the onus should also fall on the attorneys. Why shouldn't the attorneys be required to advise the potential client about the use of the MBC before they take a dime from the patient and begin court action?"
CMA representatives also say they don't think the posting requirement will do any good. It shifts to physicians the responsibility of educating patients about the existence of the medical board, which they say is the medical board's job, not the doctors' responsibility.
Only 2% of the nation's Medicare beneficiaries live in South Florida, but that region accounts for 17% of Medicare's total spending on inhalation drugs because of potential fraud, according to a Department of Health and Human Services report. Medicare spent $143 million on claims for drugs to treat respiratory ailments in Miami-Dade County in 2007, which is 20 times more than the amount Medicare spent in the Chicago area, which has twice as many beneficiaries.
Although specialty hospitals have reportedly skimmed profitable patients, general hospitals have not cut back on their care to low-income patients, which is threatening general hospitals' ability to subsidize their care to the poor, according to a survey of three U.S. healthcare markets.
The Center for Studying Health System Change, a nonprofit research group based in Washington, D.C., studied the Indianapolis, Phoenix, and Little Rock markets, each of which has both specialty hospitals and general hospitals. Safety net hospitals, which have a higher percentage of uninsured or underinsured patients, also reported limited impact from specialty center competition, saying they were able to adapt to the competition.
"Concerns that specialty hospitals 'cream-skim' more profitable, less complicated, well-insured patients from general hospitals" prompted Congress in 2003 to mandate an 18-month Medicare moratorium on physician self-referrals to physician-owned specialty hospitals, which compete with general hospitals for profitable service lines, the report says. The fear was that general hospitals would cut expenses by reducing emergency room care, closing burn or psychiatric units, or providing less compensated care.
But in these three communities, that has not happened, the report said.
That is not to say that specialty hospitals—in these cities free-standing centers focusing on heart or orthopedic care—have not lured physicians and nurses away from general hospitals, the report says. Nor did it preclude general hospitals from facing new challenges, such as filling their required emergency room call panels.
General hospitals did note that they were treating more "financially vulnerable" patients, and some did attribute this to losing insured patients to specialty facilities. But mostly, the report said, the hospitals said their higher load of financially vulnerable patients was due to the overall increase of such patients in their markets.
"A few general hospitals reported losing significant numbers of cardiologists, orthopedists or other specialists who left to start their own hospitals or enter joint ventures with a corporate entity," the report said. Those physicians may prefer more predictable work schedules, easier access to operating rooms and diagnostic equipment, and the ability to focus and improve on one service line. If they are owners, they also would have more control, the report explained.
But the study's authors said that, in these three markets, some hospitals that lost physicians were able to "employ or aggressively align" with specialists through contractual arrangements, and tried to better accommodate their need for easier access to operating rooms.
Chris Van Gorder, CEO of the five-hospital Scripps Health system, which absorbs large numbers of uninsured from around San Diego County, vehemently disagrees with the study’s finding and says such specialty centers have definitely hurt his hospitals.
"It's absolutely illogical to believe that taking profitable patients away from community hospitals, while leaving the uninsured, underinsured, and indigent patients to the community hospitals, doesn't hurt those hospitals and their ability to serve the community," he says. "Somebody is spinning statistics to achieve their goal."
He mentions that physician-owned specialty centers focusing on imaging, radiation oncology, and orthopedics have drawn insured patients away from his hospitals, "leaving the underinsured and uninsured with us."
Additionally, Alwyn Cassil, spokeswoman for the Center, emphasizes that the study focused only on these three markets. "The conclusions are not nationally representative."
Rick Wade, spokesman for the American Hospital Association, echoes that point. He adds that the impact varies among communities and their demographics as well as the number of general hospitals competing in a market. "In some communities, the experience is similar to the center's observations, but in others the damage to the strength of the full service community hospital is real. And of course the study doesn't and can't look at the larger issue of self-referral and the inherent conflicts of interest," he said.
American Medical Association board member William Hazel, M.D., calls the report "good news for the communities that benefit from specialty hospital care, as it affirms government study findings that show general hospitals are not harmed by competition."
Hazel adds that government studies "have found fewer complications, like infections and hip fractures, at specialty hospitals, and that they provide more net community benefits through uncompensated care and taxes than general hospitals. As we work to reform the healthcare system, innovations such as physician-owned hospitals that provide patients with high-quality care should be embraced by policymakers."
Specialty hospitals in general do treat patients who have less acute illnesses, who are more likely to need non-emergent elective procedures and who are more likely to have generous insurance plans, the report said.
Whether general hospitals will continue to offer services at the same level in the current economic climate, however, is unclear, the report said. "General hospitals will likely experience an increased burden of uncompensated care as job losses in the worsening economy are accompanied by the loss of health insurance."
Additionally, if the market downturn continues, general hospitals may be more partial to granting staff privileges to physicians who bring less sick and better insured patients, a practice termed "economic credentialing." Also unclear is how severity adjusted payments, which favor hospitals that treat sicker patients, will affect the bottom line of either type of facility.
Hearings and actions this week on Capitol Hill have shown that the Democrats are planning to move full speed ahead toward having healthcare reform bills ready to mark up by summer.
Senate Finance Committee Chairman Max Baucus (D-MT) announced after a healthcare expert roundtable on healthcare delivery systems Tuesday that the committee will have a "walk through"—essentially looking through potential provisions addressing delivery of care—on April 29. "I'm very excited about this. We're going to go somewhere," Baucus said. Two additional Finance roundtables have been scheduled as well—expanding coverage on May 5 and financing health reform on May 14.
The goal, Baucus said, is to have a mark-up of a health reform bill ready by June. In a letter to President Barack Obama on Monday, Baucus and Sen. Edward Kennedy (D MA), chairman of the Senate Health, Education, Labor and Pensions Committee, confirmed their committees are planning to mark up separate healthcare reform bills in June—although the bills’ language is expected to mirror one another so lawmakers can easily combine them into one bill.
At the April 21 roundtable, a dozen participants—which included representatives of several provider-related groups including the American Hospital Assocition and the Geisinger Health System in Pennsylvania—examined such measures as bundling of payments, quality reporting organizations, hospital readmissions, outcomes, value-based purchasing incentive programs, patient-centered medical homes, and care coordination across healthcare organizations. (See finance.senate.gov/sitepages/hearing042109.htm for the complete written testimony.)
Meanwhile, three committees on the House side—Ways and Means, Energy and Labor, and Commerce last month set a goal of completing a reform proposal before the August recess. But some bumps are being encountered along the way, including examining the viability of a "public plan option" that could possibly expand healthcare coverage.
However, Republicans are letting Democrats know that they want to be involved in the reform process—and are being vocal when they think Democrats are ignoring their views. At the House Ways and Means hearing on insurance market reforms on April 22, ranking minority member David Camp (R-MI) expressed irritation to Committee Chairman Charles Rangel (D-NY). Camp said he fears the healthcare debate will "disintegrate into the familiar—though not necessarily partisan—arguments" that have prevented "comprehensive reform."
Health insurers would be required to cover the cost of hearing aids and cochlear implants for hearing-impaired children under a bill that passed both houses of the Wisconsin Legislature. The measure cleared the Assembly 80-16, while the Senate approved it on a voice vote; both houses have Democratic majorities. It now heads to Democratic Gov. Jim Doyle, who is expected to sign it. About 200 children are born with permanent hearing loss in Wisconsin each year, according to backers of the bill.
Citing new statistics that show a 41% decline in medical malpractice lawsuits statewide since early in the decade, Pennsylvania Gov. Ed Rendell said that efforts to address Pennsylvania's malpractice insurance crisis had curbed the rise in premiums for doctors and given patients better access to care. He said a report released by the Administrative Office of Pennsylvania Courts demonstrated that new laws and judicial rule changes since 2002 had also improved the healthcare climate in the state.
Kaiser Permanente has come up with a system that allows its members to store health information on a USB flash drive that can be carried with them on business trips and vacations. For $5, Kaiser members can get a thumb-sized digital memory device that contains an accurate, up-to-date summary of their health information in a format that virtually any doctor with a computer can read. To safeguard patient privacy, the drive is encrypted and password protected with a password. The information can not be changed by either the member or doctor, but patients can get their devices updated for free.
Large hospitals around Washington state are heading to federal court seeking millions in federal payments for some indigent patients who aren't eligible for Medicaid or Social Security. When such a person goes to a hospital in Washington, the state covers some of the cost, but the hospital would get more money from the federal government if he qualified for Social Security and Medicaid. The University of Washington Medical Center and 17 other large hospitals in Washington state are seeking higher reimbursement for such cases from the U.S. Department of Health and Human Services, arguing that the federal government should pay for such patients because it did so in some other states before 2000.
WellPoint, the nation's largest health insurer, has launched what could be the start of a campaign for the hearts and minds of the American public as the country prepares for debates over reshaping its healthcare system. The company made 3 million computer-generated phone calls last week to gauge the public's appetite for overhauling healthcare and to enlist, critics say, a grass-roots army to voice concerns about the sweeping proposals developing on Capitol Hill.
