The healthcare industry's unwillingness to let go of the so-called "chauffeur model" has prevented commodification and customer autonomy from developing in healthcare delivery, according to Malcolm Gladwell, the noted New Yorker writer and book author.
"That person who stands between the consumer and a (medical) service or technology, and serves as a powerful intermediary, remains in place in healthcare" today just as that person did at the beginning of the healthcare industry, Gladwell asserted Friday at the 2012 conference for America's Health Insurance Plans.
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Not so, countered Harvard professor and author Atul Gawande, MD, who joined Gladwell on stage. "The real problem with the healthcare industry is that it focuses on having great components. We're obsessed with components. We want the best drugs, best tools, and best specialists, but we spend very little time thinking about how everything will work together."
He likened the obsession with the best components to building a car with Porsche brakes, a Ferrari engine, a Volvo body, and a BMW chassis. "Put it all together and what you have is an expensive pile of junk that doesn't go anywhere because the pieces don't work together."
Gladwell presented the chauffeur analogy as an example of what happens when new technology is introduced. At first everyone is unfamiliar with the technology and needs a guide. When automobiles were first introduced they were embraced by the wealthy, but because they didn't know how to drive they hired chauffeurs.
Families needed the chauffeur to bridge the technology. Chauffeurs had power; families couldn't travel in the car without them. But, over time as more people became familiar with cars and learned to drive, chauffeurs lost their power.
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Gladwell pointed to phototcopying as an industry that let go of its chauffeur and grew by leaps and bounds. He explained that when Xerox first introduced its machines in the 1960s a Xerox rep would be on site to take care of the machine. Offices paid a royalty for the number of copies used. "Xerox was the chauffeur." As other companies entered the business and competition increased, the industry changed. The chauffeur became less important.
He noted that two processes that have happened quickly in other industries, commodification and customer control or consumerization, have been slow in coming to healthcare. The reason, said Gladwell, is the healthcare industry has been unable to compromise on the quality continuum.
"A key step in any kind of technological transition is the acceptance of a temporary deficit in performance at the beginning in exchange for something else," said Gladwell. That something else can eventually include increased convenience and lower cost. He offered a number of examples, including the shift to digital cameras where early pictures were not as good as film and the advent of the digital compression of music, which he contends has made the quality of music worse.
The changes in film and music were accepted, he said, in exchange for new opportunities to arrange, manipulate, and personalize our pictures and music. "In healthcare we don't have the same stomach for that period of transition. That's striking to me."
As an example, Gladwell offered dialysis treatment, which was first developed in the 1940s. "In every other technological marketplace there would have been a move to self-administration within the first eight years. That's the trajectory of new innovations in other industries. That hasn't happened in dialysis. The chauffeur is still there."
He noted what he termed "one lonely study" in Sweden where dialysis patients began to self-administer their treatments. Self-administration trimmed costs by 50%, and increased patient engagement and adherence to dialysis regimens.
"After 70 years this is all we have, one study. Why? Because the transition would be difficult."
Gladwell sees some hope in removing the chauffeur in new technologies such as the iPhone, which some researchers think could reduce the number of physician office visits by 70%. "But the transition will still be difficult. There will be a period of time when people will struggle with how to communicate with their provider. Things will go awry."
For his part, Atul Gawande clicked off a number of industries were the chauffeur still exists, such as teaching, firefighting, and police work, and yet progress is made. For Gawande the range of costs in healthcare is key. "We know that the most expensive services don't always yield the best results. If it was just a matter of the highest price providing the best care then we would be having a rationing conversation. We know that facilities that have systematic care environments where treatments and services joined together consistently have the best clinical results."
He contends that penicillin, for all its positive attributes, fooled the healthcare industry and consumers into thinking that there would always be easy fixes. "A simple injection that saved thousands of lives. It made us think that the future of medical innovation was going to be just like that. But it wasn't. Healthcare is intensely complicated. We can't perform our own knee operations. We're all in the position of having to hire intermediaries or chauffeurs."
Private health insurance exchanges will thrive no matter what action the Supreme Court takes on the matter of the Patient Protection and Affordable Care Act,. That's the collective opinion three panelists offered during a Wednesday session at the annual conference for America's Health Insurance Plans in Salt Lake City.
The future doesn't look quite as rosy for government-run exchanges, which could lose their funding mechanisms if the Supreme Court's decision results in significant changes to the Obama administration's healthcare reform law.
Private exchanges are commercial health insurance marketplaces typically run by insurers and employee benefit consulting firms. While government-run exchangess are very prescribed, private exchanges have more freedom to define the benefits and services they offer.
The panel looked at three potential Supreme Court outcomes and offered scenarios depicting how private exchanges would likely be affected:
Scenario #1: The ACA is struck down
"Private exchanges will have a future with or without national healthcare reform," says John Rich, CEO of NPH Health, which operates a private exchange with 150,000 lives in Massachusetts, New Hampshire, and Rhode Island. NFP Health was in business before national healthcare reform was enacted.
Rich explained that there's a strong push in the health insurance market to provide self service tools that enable consumers to access and manage their healthcare benefit functions and purchases. He says private exchanges are freer to meet those needs than government-based health insurance exchanges.
He noted that wellness programs are being weaved into private HIE and offer individuals and small groups access to a service they normally wouldn't receive. Also the private exchange platform can provide data about providers and hospital networks. Educational programs that are normally the purview of large companies with human resource departments can be scaled for small companies and individuals on a private exchange platform.
Chris Condeluci, an attorney with law firm Venable, with experience on Capitol Hill, notes that private HIE like NFP Health, existed before the healthcare law, so "obviously there's a market for them." He says private exchanges will survive even if the ACA is struck down because the exchange mechanism itself has bipartisan support in Congress. Condeluci served as tax counsel for the Senate Finance Committee when the healthcare reform law was being crafted.
If the law is overturned, he says policymakers who like the exchange concept will encourage its private market development over the more regulated model now in place.
Scenario #2: Individual mandate is struck down but the ACA stands
This is a worrisome option for insurers. Rich predicts that if the individual mandate were to disappear and guaranteed issue were to remain, then "health insurance prices will sky rocket."
If both the mandate and guaranteed issue disappear, he expects that consumers will need more help in making their healthcare purchases. He sees private exchanges as filling that gap. Consumers, he says, would be open to different shopping experiences and insurance carriers will be in a position to be more creative in their product offerings such as bundling and offering discounts to keep consumers engaged in the HIE over the long term.
Condeluci notes that one of the goals of healthcare reform is to make the individual market more functional. If the mandate is struck but guaranteed issue and community ratings remain, he contends that private HIEs could become something of a "safe harbor" for consumers and small groups to navigate the market, especially if the exchanges include education tools and decision support systems.
Condeluci doesn't expect the group market to be affected if the individual mandate is struck down. If prices increase, then private exchanges could be "an appealing option" for employers who want to move from a "one-size-fits-all insurance benefit model" to a defined-contribution model, which allows employers to simply subsidize coverage. The exchanges would take on everything else associated with the coverage.
Scenario #3: The ACA is upheld
This scenario would be the green light for private exchanges to accelerate development, says Sanjay Singh, CEO of hCentive, a healthcare technology provider. "I see hundreds of these exchanges developing. The floodgates will open."
When he was with the Senate Finance Committee, Condeluci says he worked with Sen. Grassley (R-Iowa) and Sen. Baucus (D-MT) to develop a model for the exchanges. "We wanted to model the exchanges after private exchanges with private market solutions as opposed to what became part of the law."
If the Affordable Care Act is upheld, he says there may be some concern that the private exchanges will compete with public ones. Condeluci says it's more likely that states will view the private exchanges as an additional distribution channel and develop partnerships with the private exchanges. "They can tap into those exchanges in order to get more people covered by health insurance."
In an all-too-rare bit of good news from the realm of provider reimbursements, commercial health insurers posted a significant reduction in bungled medical claims in 2012, says the American Medical Association.
Only 9.5% of claims were improperly denied or paid physicians the wrong amount. That compares to 19.3% in 2011, the physicians organization says.
The AMA says the improvement helped physicians reduce unnecessary administrative work to reconcile mistakes, which saved the health system a whopping $8 billion.
"Paying medical claims accurately the first time is good business practice for insurance companies that saves precious healthcare dollars and frees physicians from needless administrative tasks that take time away from patient care," AMA board chair Robert M. Wah, M.D., said in a press statement.
On the health plan side it looks like the improvement can be attributed to a couple of things. Robert Zirkelbach, the spokesperson for American's Health Insurance Plans noted in an e-mail exchange that streamlining healthcare administration to reduce paperwork and improve efficiency is a priority for health plans. Collaborating with providers and investing in new technologies to improve the claims submission process have also produced results.
The 2012 National Insurer Report Card, which was released on Monday during the AMA's annual meeting in Chicago, looks at the timeliness and accuracy of claims processing for Medicare and seven of the largest health insurers: Aetna, Anthem Blue Cross, CIGNA, Humana, Regence (Blue Cross Blue Shield-affiliated healthcare plans in Idaho, Oregon, Utah, and Washington), UnitedHealthcare, and Health Care Service Corp. (parent of Blues plans in Illinois, New Mexico, Oklahoma and Texas).
While there was across-the-board improvement in claims accuracy, most of the improvement was recorded by Anthem, which processed 88.6% of its claims accurately. That's up from 61% in 2011. For the second year in a row UnitedHealthcare scored the highest accuracy rating?98%? up from 90% in 2011. Humana rounded out the list with an accuracy rating of 87.4%.
The study analyzed a random sample of 1.1 million electronic claims for about 1.9 million medical services submitted in February and March of 2012. The claims were collected from 380 physician practices in 79 medical specialties in 39 states.
Other key findings:
Denials are on the rise. Medical claim denials are on the rise after recording a downward trend for several years. Only Humana managed a slight reduction in denials. Anthem posted the highest denial rate at 5.1%, while Regence had the lowest denial rate, at 1.4%. A lack of coverage under a patient's benefit plan continues to be the most frequent reason for a denial.
Prior authorization is required more frequently. Only Anthem and Medicare reported a drop in prior authorizations. Regence's request rate is less than 1%, while Humana has a request rate of almost 14%.
Claims are being processed faster. HCSC and Humana had the fastest median response time?six days. Aetna and Medicare had the slowest with a median response time of 14 days.
Transparency has increased. Health insurers increased the transparency of rules used to edit medical claims by 33% from 2008 to 2012. According to the AMA, reducing the use of undisclosed proprietary edits reduces the administrative costs of reconciling medical claims.
I expected that there would be high fives all around between physicians and health plans to celebrate the report's good news, but both sides were quick to point out some shortcomings. For its part, the AMA estimated that an additional $7 billion could be saved if insurers consistently paid claims correctly.
AHIP's Zirkelbach noted that "more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed."
The annual report card is part of the AMA's "Heal the Claims Process" campaign, which was launched in June 2008 with the goal of reducing the cost of submitting claims for the physician practice from as much as 14% of physician practice revenue to just 1%.
Medicare's fee-for-service benefit design should be changed to provide better protection against high out-of-pocket cost sharing and to create incentives to encourage beneficiaries to make better healthcare decisions, the Medicare Payment Advisory Commission (MedPAC) said in its latest annual report on Medicare and the healthcare delivery system. The report was released on Friday.
"The design of the FFS Medicare benefit package…has remained essentially unchanged since the creation of the program in 1965," the commission said in its executive summary. "Over the years, Medicare FFS prices and the amount of services beneficiaries receive have grown dramatically; as a result, some beneficiaries many now incur a very large cost-sharing liability."
The nonpartisan MedPAC is charged with advising Congress on Medicare payment policy issues, including reimbursements to physicians, hospitals, labs and imaging centers. The focus on beneficiaries is a shift for the commission and reflects its position that "how beneficiaries view the Medicare program and how they make decisions about their health care are vital to the program's success."
The report makes recommendations in three benefit areas: benefit design, care coordination in FFS Medicare, and care coordination for dual eligibles.
The commission's recommendations for benefit design include:
Cap out-of-pocket beneficiary spending
Implement deductibles for Part A and Part B services
Replace coinsurance with copayments to enable beneficiaries to better anticipate their medical costs
Add cost-sharing for supplemental insurance or so-called Medigap policies, which cover deductibles, coinsurance, and copayments.
The commission contends that although Medigap policies protect beneficiaries from unlimited out-of-pocket expenses, the additional coverage, which usually covers all or almost all of Medicare's cost-sharing requirements, reduces any incentive to avoid costly or unnecessary medical procedures.
The health insurance industry is already pushing back on additional Medigap charges, as well as caps on out-of-pocket costs. America's Health Insurance Plans, an industry trade group, released a poll that says 90% of seniors are satisfied with their existing Medigap coverage and 79% say their policy provides excellent or good value for the money. According to AHIP, Medigap policies had 9.8 million enrollees in 2011.
"Medigap coverage provides seniors with financial security and peace of mind about their health care coverage," said Karen Ignagni, president and CEO of AHIP, in a press statement.
For care coordination in FFS Medicare, the commission's recommendations include:
Create a per-beneficiary payment for care coordination
Add or modify codes to allow providers to bill for selected care coordination activities
Develop payment policies to reward coordinated care and penalize fragmented care.
In its report, the commission cites poor care coordination as contributing to repeated medical tests, poor transitions between care sites, and the "unnecessary use of high intensity settings." Its recommendations are the beginning of an effort to improve care coordination by making it an "integral part of the system providing the care."
The commission's recommendations for care coordination for dual-eligibles include:
Improve the Medicare Advantage (MA) risk adjustment to more accurately predict risk across all MA enrollees.
Pay providers for the Program of All-Inclusive Care for the Elderly (PACE) based on the MA payment system for setting benchmarks and quality bonuses.
Change PACE eligibility criteria to allow nursing home-certifiable Medicare beneficiaries under age of 55 to enroll.
Provide prorated Medicare capitation payments to PACE providers for partial-month enrollees.
Establish outlier payment caps
Publish select quality measures on PACE providers and develop appropriate quality measures to enable PACE providers to participate in the Medicare Advantage quality bonus program by 2015.
The commissioners would like make the PACE program, which is a provider-based integrated care program structured around day care centers, accessible to more beneficiaries. Improving the MA risk adjustment system to more accurately predict risk across all MA enrollees would help make payments for PACE reflect the costs of the PACE program.
MedPAC's interest in care coordination was touted by the American Medical Association in a statement released Friday. "The AMA is very pleased with the focus on care coordination in the report released today by MedPAC. We are especially pleased the report stresses the need for Medicare to recognize and pay for care coordination services that physicians are already conducting, including telephone calls, patient education and medication management. These services are critical to improving patient outcomes, especially for chronically ill patients."
The statement noted that the AMA has been working through its chronic care coordination workgroup to develop new codes and relative values, which will be available for CMS to consider for implementation on January 1.
The MedPAC report was delivered to the offices of Vice President Joe Biden and Speaker of the House John Boehner. Although neither has released an official statement about the report, it is generally accepted that no significant action will be taken on the MedPac recommendations until after the November 2012 elections.
Premera Blue Cross, a Washington State-based insurer, has reduced its healthcare costs by increasing the fee-for-service reimbursements it pays to some of its physicians. Participating physicians can increase their FFS payments on an annual basis by reducing the cost of care for their attributed Premera patients compared to all of the Premera members in a geographic area. The savings are calculated each year so bumps in reimbursements are on a year-to-year basis.
"FFS is simply the vehicle to pass back savings based on overall healthcare costs," explains Rich Maturi, senior vice president of healthcare delivery at Premera.
What Premera calls its global outcomes contracting model doesn't focus on certain diseases or conditions, nor does it prescribe goals and incentives. Instead, physicians manage the care of an attributed group of Premera patients whose health status can range from very healthy to suffering from multiple chronic diseases.
The idea is for physicians to take more responsibility for the overall healthcare costs and the quality of care. "But they have flexibility to decide how they want to achieve the savings," says Maturi.
He says the process, which includes risk adjustment and quality metrics, allows all Premera patients to be part of the payment system. "There's no change in product and nothing needs to be rolled out member by member." That means no new contract negotiations. To keep things simple, Premera adopted the quality metrics used in the state's medical home program.
An added plus: physicians can simply add their Premera patients to existing programs. There's no need to develop special programs exclusive to Premera members. Maturi explains that one clinic already had in place a program to manage high-risk, multi-chronic disease patients, which included a team of primary care physicians, nurse care managers, pharmacists, and behavioral health specialists. As part of the global outcomes contracting the clinic wants to include Premera's high risk patients in the existing program.
Premera began signing up physicians for the payment model in 2010. Acceptance is building in a state that is not well known for its acceptance of managed care or capitated payments. To date, 100,000 Premera members, about a quarter of its membership, are provided care under the global outcomes contracting model. Twelve physician groups, including The Everett Clinic, and one IPA are part of the program.
Results from The Everett Clinic and The Polyclinic, two early adopters with a total of 18,000 Premera members, indicate that the total healthcare cost trends for these Premera patients in 2011 were 3% to 5% below the average cost of other Premera patients in the same region who have a regular physician. Maturi says that translates into savings of $1.2 million for The Everett Clinic and $2 million for The Polyclinic.
Lloyd David, CEO of The Polyclinic, says the group is trying to develop similar arrangements with other health plans. "We all know that payment based on volume isn't sustainable."
David says the Puget Sound-based clinic, which has more than 175 primary care and specialty physicians and serves about 170,000 patients, has incorporated Premera members into a number of existing programs such as its follow up after hospital discharge program and a program that contacts members after they visit the emergency department to help resolve the problem and to reduce expensive revisits to the ED for the same problem.
Premera wants to expand the payment program, but acknowledges that it may need to find different ways either to organize the delivery system or to adjust the payment methodology to enroll more groups.
As it stands now, the program requires access to reliable data that smaller physician groups simply can't produce. Over time, Maturi envisions smaller groups joining together into accountable care organizations or similar arrangements that would allow Premera to collectively implement the global outcomes contracting model into small practices.
Premera has taken a first step in that process with the signing of Northwest Physician Network, an IPA with several hundred independent physicians.
The lingering effects of the economic recession and a modest growth in personal income are expected to continue to constrain healthcare spending through 2013. But look for a jump in spending as more provisions of the Patient Protection and Affordable Care Act are enacted. Those are among the findings of the latest national health expenditure projections released Tuesday by the Office of the Actuary at the Centers for Medicare & Medicaid Services.
U.S. spending on healthcare is expected to increase by an average of only 4% between 2011 and 2013, which is slightly ahead of the historically low 3.8% experienced in 2009.
Total national health expenditures for 2013 are estimated at $2.9 trillion.
Although the spending increase reflects some implementation of the PPACA, the impact of the healthcare reform law is expected to be felt more fully in 2014 when spending growth is expected to increase by 7.4% to $3.1 trillion.
That growth will be driven by the increased demand for healthcare services and prescription drugs as an estimated 30 million people gain access to insurance coverage under provisions of the ACA, explained Sean P. Keehan, a senior economist with the Office of the Actuary, during a press conference to announce the results.
As the ACA becomes more embedded between 2015 and 2021, however, projections call for healthcare spending to grow at a somewhat slower rate?an average rate 6.2% per year. By that time the economy is expected to have rebound and more baby boomers will have shifted to the Medicare rolls.
The report notes that Medicare spending growth will be restrained by the ACA "through slower growth in both FFS and Medicare Advantage payment rates, the sustainable growth rate formula, and the sequestration process."
Keehan said it "remains to be seen" if efforts by insurers to slow healthcare spending through high deductible health plans or narrow provider networks will help slow healthcare spending.
Without the increased utilization fueled by healthcare reform, spending is projected to increase by only 5.3% in 2014.
The fate of PPACA stands in the balance awaiting a Supreme Court decision expected later this month that could strike down all or part of the law. Keehan and his team of economists and actuaries said the projections could be affected by changes in the healthcare reform law, as well as in the economy.
As a percentage of the gross domestic product, CMS projects national health spending to grow to 19.6% in 2021, up from 17.9% in 2010. In addition, federal, state and local spending is projected to account for almost 50% of national health spending versus 46% in 2011.
The CMS health spending projections appear in Health Affairs.
Amidst the tedium of waiting for the Supreme Court to make its decision regarding the Patient Protection and Affordable Care Act, almost any ACA-related news is fodder for coverage. So there was a ripple of excitement a few days ago when the mighty UnitedHealthcare announced which provisions of the ACA it says it will cheerfully continue, even if the law is ruled unconstitutional.
In a statement released without fanfare, Stephen J. Hemsley, president and CEO of UnitedHealth Group, outlined five coverage options it expects to continue:
preventive healthcare without copayments
coverage of dependents up to age 26
lifetime policy limits
rescissions
appeals
"The protections we are voluntarily extending are good for people's health, promote broader access to quality care and contribute to helping control rising health care costs. These provisions make sense for the people we serve, and it is important to ensure they know these provisions will continue," said Hemsley in the release.
Not to be outdone, the UnitedHealthcare announcement was quickly followed by me-too proclamations from Aetna and Humana. Now the Blue Cross Blue Shield Association, which represents 38 Blue insurers across the country, has added its support to continuing those five provisions.
These are admirable positions. But before we get too carried away with the accolades, let's take a look at what the health insurers have really done. They've simply identified coverage options that are popular with consumers and politicians and agreed to continue offering them.
Coverage of dependents up to age 26, for instance, has consistently ranked high in consumer surveys and House Republicans have specifically mentioned that provision as important to their repeal-and-replace approach to healthcare reform.
The five provisions promised to be extended are also relatively inexpensive for insurers, notes Avram Goldstein, communications and research director for the advocacy group Health Care for America Now.
The announcements by UHC, Humana, Aetna, and others leave open to question what will happen to pre-condition underwriting based only on age, premium rating area, family composition, and tobacco use. What about guaranteed issue? And where do they stand on medical loss ratio requirements? Will insurers continue to limit administrative costs to 15% to 20% of premium income?
"While I believe UnitedHealthcare has been active in health system reform, it would be interesting to know where UHC stands on issues of real impact, such as promotion of the various provisions related to payment reform and changes in how care is delivered," says Larry Boress, president and CEO, Midwest Business Group on Health. The group's 100 members represent over 3 million lives and spend more than $3 billion on healthcare benefits each year.
I had follow up questions for insurers about the issues raised by Larry Boress and others; unfortunately, I was referred back to their original press statements for answers.
Surely health insurers realize that stakeholders, including providers and members, will be looking for more information about how healthcare reform will continue in a non-ACA world. "The tougher discussion, if the individual mandate is set aside, will be how the guaranteed issue and community rating requirements of the ACA will be negotiated. Otherwise, plans will have no choice than to raise premiums substantially," says Paul Keckley, Ph.D., executive director, Deloitte Center for Health Solutions.
There's a statement in the UHC release that hasn't received very much attention. It refers to pre-existing coverage for children: "UnitedHealthcare recognizes the value of coverage for children up to age 19 with pre-existing conditions. One company acting alone cannot take that step, so UnitedHealthcare is committed to working with all other participants in the healthcare system to sustain that coverage."
Coverage for children with pre-existing conditions is already in effect but isn't popular with insurers. In 2014 the ACA will ban pre-existing clauses for everyone.
So far, other insurers have been mum on the topic of pre-existing conditions. But health industry stakeholders know it's this type of expensive coverage that will be difficult to continue if the ACA ceases to exist.
Michael Leavitt, the former Utah governor and federal government official tapped by Mitt Romney to head his healthcare transition team, has been under conservative fire for embracing some aspects of the Affordable Care Act such as health insurance exchanges.
But speaking at the closing session of the Third National ACO Summit in Washington, D.C., last week, Leavitt was quick to align himself with the free market powers of the healthcare system. Along the way he provided some insight into how a Romney administration might tackle healthcare reform.
Leavitt said the engine that is driving healthcare reform now isn't the Affordable Care Act, the upcoming Supreme Court decision, or even the outcome of the 2012 election. "The real driver is what I call global economic dispassion—the economic forces that are making this an absolute imperative. Health reform has become economic reform."
To meet this global economic dispassion "we have to be able to move more quickly," said Levitt.
He said that when people think about the American healthcare system they talk about "a race car that can go 200 miles an hour" but government is "still building a go-cart."
Leavitt offered the development of accountable care organizations as an example. "The ACO movement is a process. It wasn't initiated by legislation. It's been spontaneously developing for a long time."
His firm, Leavitt Partners, a Salt Lake City, UT–based healthcare intelligence business, has identified 221 ACOs across the country of which more than 73% are commercially affiliated. "This is a movement that's being powered outside of government payers. Activities I have observed in the ACO movement demonstrate to me that government payers are relatively slow innovators. I have fond memories if my time at HHS, but it is just the nature of government that it has a difficult time being an effective innovator. It's very good at powering innovation once it gets behind it, but it's not a particularly robust innovator itself."
Leavitt leveled some pointed criticism at the Center for Medicare & Medicaid Services. "I think CMS can be a helpful backer of innovation but there's evidence in the way CMS is going about it that there are times when it oversteps its appropriate role in this movement." He added that "it seems unproductive for CMS to be heavily involved in dictating how groups govern themselves. It would be a better role for CMS to help create performance criteria."
CMS's formal rules process makes "it very difficult to quickly innovate, Leavitt suggested. If you're going to get from a go-cart to a race car, you're going to go through a lot of iterations. You have to be able to experiment, refine, and figure out the different ways to do it."
Like the airline industry, Leavitt suggested that the healthcare industry needs an environment where it can balance competition with its need to cooperate and form networks. "There are barriers right now. We need to sort through the anti-trust burdens. It needs to be done before something breaks."
As for his support of health insurance exchanges, Leavitt noted that they will help increase small group and individual purchasing power in the health insurance market but "I passionately believe they [HIEs] should be market-oriented not active purchasers."
Instead of the federal subsidies and the mandated benefits of the Affordable Care Act, Leavitt sees employers shifting from the defined benefit health insurance model to defined contributions where the exchanges would be portals where employees could shop for their own benefit coverage.
"We need to be less prescriptive and more empowering," said Leavitt.
The Department of Health and Human Services continues to parse out potential requirements for essential health benefits A proposed rule released Tuesday reveals that HHS wants to use the small group market plan and product with the largest enrollment as the default benchmark plan, but only if a state doesn’t select its own benchmark.
HHS also proposes that the National Committee for Quality Assurance and the non-profit URAC serve as the interim accrediting organizations for health plans seeking to be part of the state health insurance exchanges.
The Patient Protection and Affordable Care Act requires HHS to define the EHBs. These are 10 categories of service that must be offered beginning in 2014 by HIEs and individual and small group health insurance policies. The ACA charges HHS with making the final EHB call after getting input from the Department of Labor and the independent Institute of Medicine.
The proposed rule follows the December 2011 release by HHS of a 15-page bulletin that was more or less an EHB trial balloon. The proposed rule incorporates some of the 11,000 stakeholder comments received in response to that bulletin.
HHS intends to allow EHBs to be defined by a benchmark plan selected by each state. The benchmark will serve as a reference for the scope of services and limits to be offered. In the bulletin, HHS proposed four possibilities for benchmark plans if a state doesn’t select its own benchmark.
Now HHS intends to propose that the benchmark would be the small group market plan and product with the largest enrollment. To begin that process HHS proposes that data be collected from the three insurers with the largest plan and product enrollment in the small group market. The data would include information on enrollment, covered benefits, and treatment limitations of those coverage benefits, as well as a list of covered drugs and information regarding any prior authorization or step therapy required.
Data collected in 2012 would define EHBs for plan years 2014 and 2015. HHS plans to revisit this approach in 2016.
The proposed rule also presents a two-phase approach for recognizing the credentialing organizations for health plans that want to participate in HIEs. On an interim basis two familiar organizations, the NCQA and URAC, which are already responsible for most health plan accreditations, will handle those duties. In the short run their selection will keep accreditation on track to begin in early 2013.
In future rulemaking HHS intends to propose a recognition process that includes an application process, standards for recognition, a criteria-based review of applications, public participation, and public notice of the recognition.
HHS is soliciting comment on other data elements that might be helpful and wants input on whether closed block products or association products should be included as options in the selection of the largest three products.
Comments on the proposed rule will be accepted here through July 4.
As we continue to struggle to climb out of the recession, The Commonwealth Fund is in the process of taking a two-year longitudinal look at low- and moderate-income adults to see how the group fares in terms of access to health insurance and medical care.
Two reports have already been published and a third is coming this week. The takeaway from the first report in February: Low and moderate income adults who are insured have some of the same struggles as the uninsured. Among the problems was finding a physician to even take the insurance.
It seems that lousy insurance isn't necessarily better than no insurance.
The third report, which will be released on June 8, covers one of the most popular provisions of the Patient Protection and Affordable Care Act, the one allowing young adults to stay on their parents' health insurance plans until age 26. The report is embargoed, so I can't write much now.
But last Friday's dismal jobs report helped me decide to write about the second report, which looks at what happens when Americans experience gaps in their health insurance coverage. Spoiler alert: nothing good.
While only 26%, or 48.2 million adults aged 19 to 64 years experienced a gap in their health insurance coverage in 2011, these folks often remain uninsured for a year or more. In fact, 57% were uninsured for more than two years.
The really bad news is that experiencing a gap in health insurance coverage can set a person on a slippery slope. Physicians may disappear and preventive care is often skipped. And this all happens fairly quickly. After an insurance gap of a year or more:
Fewer than half of the respondents still had a regular doctor.
Only 33% had their cholesterol checked in the past five years.
About 51% had their blood pressure checked.
Only 28% of women reported having a regularly scheduled mammogram.
Fewer than 10% had a colon cancer screening.
Change in employment status was the leading cause of insurance gaps with 67% reporting that when they switched jobs, lost their job, or worked part-time, they lost their coverage.
COBRA benefits, which allow a former employee to continue to purchase company health insurance, are cold comfort because they're pricey. And applying for individual benefits has its own challenges:
Some 62% said it was difficult or impossible to find affordable coverage.
Around 38% said it was difficult or impossible to find the coverage they needed.
About 31% reported that they were rejected, charged a higher price, or had a pre-existing condition excluded.
At the end of the day, 45% of the respondents who were uninsured and tried to purchase a plan in the individual market were not able to actually purchase one.
So where does that leave us?
The Commonwealth Fund report concludes that the "health insurance expansions and reforms in the Patient Protection and Affordable Care Act will end the gaps."
Well, that's worrisome, because sometime this month, the Supreme Court may strike down the ACA, in whole or in part. What will that mean to the millions of people who find themselves unemployed and unable to purchase health insurance?