More ideas for addressing the Affordable Care Act…

In my last post, I recommended a series of ideas for reducing the costs of care. What we hear discussed in the daily media are legislative techniques for shifting costs to other parties- rarely do we see recommendations for actually reducing costs.

We have accepted the goal of “bending the cost curve”, which means slowing the rate of annual increase. This is not nearly enough. We must strive to actually reduce the costs of care, so that they begin to resemble costs in other large, diverse, developed countries. Presently we run about 30% higher than these other developed countries.

To put the costs of our health care system in perspective, our President’s recent military proposals have been estimated to cost $54 Billion, and this number is causing many to pause and wonder how we will pay for it. Guess what? Our health care industry spends $54 Billion every 6 days!

What follows are more recommendations for actually reducing costs, as a follow on to my last post:

Testing
Place limits on, or require justification for many commonly overprescribed tests which have not demonstrated real value. Among these are annual EKGs, many imaging tests including PET scans, annual PAP exams, some bone density tests, some colonoscopies and believe it or not, the annual physical. Source: AARP Bulletin, March 2014. (Read their full article to understand the limits of what they are saying).

Fraud and Financial Review
Conduct more frequent and more aggressive fraud audits. Invest in advanced technologies to assist in identifying fraud. The ROI on these investments is quite high.

Similarly, conduct more contract audits. These do not identify fraud as such, but cases of exorbitant pricing that may not technically be fraud.

Transparency
Create and publish a national database of list prices for common procedures, by zip code. As recommended in my last post, providers should also be required to publish their list prices for common procedures and items.

Access
Create a national network of urgent care centers that will provide a range of services at published prices and that will accept all certified plans. These centers should be able to interpret and read tests performed by others, and to prescribe and deliver follow-up care. The intent is to supplement the network of HRSA funded Community Health Centers already in place.

End of Life Care
Allow and encourage advance planning and advance directives.

Regulatory
Remove the requirement for “doctor’s orders” to purchase most supplies (not drugs) that are non-invasive and do not expose the patient to radiation or toxic elements.

Pricing
Eliminate provider markups and/ or stocking charges in excess of 5-10% for inventoried drugs, supplies, and items ordered directly for the patient, e.g. crutches.

It will be difficult to link these recommendations directly to a budget line item. This is why legislators do not come up with these types of suggestions. But with higher and higher deductibles, these are the types of recommendations that will translate directly into patient savings.

Remember- it is providing health care that is the privilege, and receiving it that is the right.

21 Ideas for Addressing the Affordable Care Act

The future of the Affordable Care Act is at the top of the news. Frequently, it is said that there are no credible proposals on the table for an effective replacement. This writer feels it is time to focus on costs, as I have stated in the past.

What follows is a series of detailed suggestions, with some commentary, with the goal of reducing costs. Some promote increased competition, some suggest increased regulation in markets that are too thin to support competition.

There are 2 broad philosophies behind these points- first, that health care is a right (with some exceptions), but PROVIDING health care is the privilege. I feel we have it backwards in this country, where providers of all types have the right to provide services, and we are lucky if we have the privilege of seeing them.

Second, I feel that all parties are to blame. By this I mean that we should not gang up on one sector, such as insurers or doctors. All parties are misbehaving, including hospitals, physicians, pharmaceutical companies, insurers and yes, consumers.

What follows is a series of recommendations, by category, for finally controlling costs:

Hospitals
Require full transparency on prices. Hospitals should publicly post “list” prices for common procedures or bundles of procedures. What is included in the bundle should also be posted. The requirement to post prices should not be clouded by the statement that “hospitals are actually reimbursed different amounts by different insurers”. While this is a true statement, it is a distraction and list prices should still be posted.

Crack down on sham Joint Ventures. These are the joint ventures where a hospital purchases a physician’s practice. They then designate the physician’s office to be an “outpatient satellite of the hospital”. They then receive increased reimbursements from insurers and the government because services are reimbursed more generously when provided in a hospital setting versus a physician’s office. Notice, nothing has changed except the sign on the door, that now says “part of the University Hospital Network” or something similar. Literally nothing has changed except the sign on the door and the reimbursement, which has increased dramatically. In some cases the increased prices are justified on the basis of “rolling the new practice into the Electronic Medical Record of the hospital”. EMRs were supposed to reduce costs. Weren’t they?

Limit “empire building”, where every hospital in a community feels they need to provide all things to all people- this results in “a cath lab on every corner”, low utilization for all, and increased prices to cover high fixed costs.

Physicians
Broaden the scope of practice for physician assistants, nurse practitioners and similar professionals, known as “physician extenders”. This means that these extenders are allowed to do more, which allows costs to decline. A concrete example would be for the Minute Clinics at CVS to be able to provide a broader range of services.

Implement a mandate for providers of all types to accept government plans. (Philosophically, this is where we need to understand that it is PROVIDING health care that is the privilege). Physicians, hospitals and other providers should not be able to pick and choose whom they see based on finances- a government plan should be sufficient. Providers who decline should not be eligible for government grants, tax subsidies, meaningful use payments or other government programs.

Create a national provider network. This will become important when insurance can be purchased across state lines. The challenge here is not the selling of insurance, but the delivery. If Blue Cross of Ohio sells a policy to someone who lives in Kentucky, but has no provider network in Kentucky, the person who bought the policy would need to go to Ohio for all of their care. A national provider network would address this. In practice, this is no more complicated than accepting Medicare, though I am not suggesting we combine the ACA with Medicare.

Pharmaceutical Companies
Implement price controls for very expensive drugs. In general, I am talking about “Specialty Pharmacy”, where we see drugs of $1000 per dose or $100,000 per year or more. Frequently the number of patients on a particular drug, or the patent protection held by the manufacturer, does not allow for a competitive market to exist. This is one of the rare cases where I support direct regulation.

Device Manufacturers and other suppliers
Similar to Pharma, above, some level of regulation is appropriate here to prevent price gouging, particularly for new devices and technologies that are protected.

Insurers
Allow the sale of policies across state lines (see comment on National Provider Network under Physicians above).

Maintain limitations on exclusions for pre-existing conditions.

Maintain MLR requirements (Medical Loss Ratio) for insurers. Currently, insurers are required to spend 85% to 90% of revenues on actual medical expenses, as opposed to marketing and administrative costs. If and when medical costs decline, as this ratio is preserved, the costs of the actual policy must decline too, instead of increasing profits.

Laboratories
Allow walk-in testing without a physician order.

Allow (require) a-la-carte pricing

Dialysis, Chemotherapy, Surgery and Imaging Centers
Require price transparency at the point of service.

Use government purchasing power to negotiate these prices downward.

Consumers
Require consumers to take more responsibility. Smokers should pay increased rates.

The Federal and State Governments
Allow government payors to negotiate with pharmaceutical companies.

Create a public option to provide insurance competition in all markets.

Plan Design
Reduce the breadth of services required for minimum plans.

-Offer catastrophic only coverage.

-Offer maternity and pediatric coverage as a rider, directed towards those planning families. This is generally, though not always a planned event. Today, it is treated as an “unforeseen illness”, which it is not. This might be one area where government subsidies are helpful, as the pool of people purchasing this coverage will be smaller than 100% of the population.

Access
Increase funding for expansion of Community Health Centers, funded through the Health Resources and Services Admistration (HRSA).

Expand the infrastructure for Remote Medicine. The vision here is diabetics testing themselves and corresponding with professionals remotely, e.g. email; or a patient with Congestive Heart Failure using a digital scale to remotely transmit their daily weight to professionals. This vision is less geared towards telemedicine, which envisions a specialist having a real-time discussion with a patient using expensive video technology and other devices.

These recommendations are designed to reduce the actual costs in the system, as well as to increase the cost effectiveness of the system (e.g. Community Health Centers).

Bending the so-called cost curve is simply not enough. Traditional cost shifting is not enough. We need to reduce actual costs significantly below the level of where they are today.

The time is now!

Health care is a right. Providing health care is the privilege. We have it backwards in America!

You will frequently hear the question “Is health care a right or a privilege”? I believe that health care is a right (yes, with some limitations to prevent fraud). It is providing health care that is the privilege. We seem to behave as if providers have the right to set up shop, and that seeing them is a privilege. We have the whole thing backwards!

First, a definition:
Providers are hospitals, physicians, rehab facilities and therapists, pharmaceutical companies, pharmacy retailers, device manufacturers, laboratories, surgicenters, imaging centers, dialysis and cancer clinics, ambulances, long term care facilities and product suppliers. In short, anyone who sells a product or service into the system.

It is a privilege to sell their services into this great market, but somehow we have to beg this sector to take our money! All $3 Trillion a year!

Consider:
-Hospitals get tax breaks, physicians get educational assistance, pharmaceutical companies get tax breaks, many have some access to public grant and research funding, yet, everyone is allowed to pursue extreme profit.

-When physicians get into trouble, such as substance abuse, it is they and their careers who are protected, not the public.

-Americans spend far more than in other developed countries, yet we die younger. The dying part is a complex discussion, but the spending part is very clear. We are simply overtreated and overpriced, and we allow it to happen.

How do we straighten this out?

First and foremost, regarding the Affordable Care Act (Obamacare), if there is to be a government mandate, that mandate should fall on providers to accept all patients, not on citizens to purchase a set menu of benefits.

Specifically, providers, as defined above, should not have the right to refuse patients with Medicare, Medicaid, Obamacare, Tricare/ VA, ERISA plans or certified commercial plans, and they must accept the contracted rate as payment in full (plus contracted co-payments). If they do refuse, they should not have access to any government or commercial subsidies, incentives, research grants, performance bonuses, tax breaks or public institutional affiliations.

Second, providers should publish all prices and a standardized list of “performance metrics”.

Third, providers of products, including drugs, devices and supplies should be subject to price limitations (not strict controls) to prevent gouging.

It is only by changing this top-level dynamic- just who is it who has the privilege- that we can address the core problems with our health care system.

There’s more- lot’s more, but let’s start here.

What do you think?

Should the health care discussion be re-framed as stated: that health care is a right- providing health care is the privilege.

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Becoming More Health-System Independent

This blog has been quiet for a while, and for a reason. We will undergo a bit of a repurposing.

Our major focus in the recent past was the implementation of Obamacare, with commentary on the major developments as they occurred. Going forward, however we will become more focused on our core message: People should become more independent in managing their health.

We are not suggesting that people stop seeing their doctor. We are saying “be informed, take control, know you rights”.

In that vein, we have published an expanded set of useful health care links, built around a theme:

To increase your level of independence, become informed in these nine general areas:

1) Understand your personal situation
2) Understand who is treating you
3) Understand the finances- yours
4) Understand the finances- theirs
5) Understand your alternatives
6) Explore online tools to help yourself
7) Understand your rights
8) Plan for the future
9) Know where to get help

Within this framework, we share over 100 links to governmental organizations, insurers, foundations, associations, news articles, databases and additional high quality sources as we become aware of them.

And as additional functionality becomes available on our site (today you will find this blog, a discussion forum, health community resource sections and an online health record), we will share that information here. The new, expanded links can be found at Health Tactics Resource Links

We hope you find them to be useful.

Make the shell smaller, please!

So, Obamacare has passed, been legally upheld by the Supreme Court and appears to have met its enrollment goals.  So how far have we really come?  Not that far.  Let’s look at the statements and actions of some of those who actually run a portion of the system:

We need look no farther than The New York Times, May 26, 2014 for two separate indicators:

First, in an article titled “Hospitals Look to Health Law, Cutting Charity”, the author describes how some large hospital systems are reducing the level of charity care they provide, encouraging patients to sign up for Obamacare instead.  Or perhaps Medicaid.  Or if the patient doesn’t qualify for coverage, bill them directly.  One big shell game, as long as the hospital doesn’t have to eat the costs.  (The author didn’t say all of this- the author just stated the facts behind the cost shifting).

Then, in the editorial section, same date, we see responses to an earlier article that blamed the pay of insurance executives for the high costs of care, and attempted to shift the spotlight away from physicians.  It was the responses (letters to the editor) that interested me.

No less than three physicians wanted us to know it wasn’t the doctor’s fault.  Not to be outdone, a hospital association executive pointed out that it wasn’t the hospital’s fault.  Finally a nurse wrote in saying guess what?  If we only paid them more… (actually I do think nurses are the “good guys”).

So it’s one big shell game, and it’s not the doctors, hospitals or nurses at fault.

Here’s the news, all of you experts- we know it’s one big shell game.  Just make the shell (costs) smaller!  So the part that falls on us is tolerable.

With all of your expertise and training, you must be able to conceive of a solution to the problems of the health system that is more sophisticated than simple cost shifting!  Two children can do that (“make him pay…no, no, make him pay!).

So now that Obamacare has passed, been upheld and met the enrollment goals, do we all now get to sit back?

No.  It’s time to focus on costs.  Aggressively.  Now.

#Obamacare- The focus needs to be on Costs.

Now that an estimated 6 million + people have signed up for Obamacare, how have we done?  Is 6 million enough? Is the mix of young and old the right mix? Did enough previously uninsured people sign up?

Long term success will hinge not on any of the above questions, but on what we do about costs.

I am not talking about the cost of the insurance premium.  After all, if you insure something expensive, the insurance policy will be expensive.  Rather, I am talking about the costs of the underlying products and services- physicians, hospitals, pharmaceuticals, devices and supplies.

Here are several steps we can take that will decrease the costs of care:

-Allow Medicare to use its purchasing power to negotiate with pharmaceutical companies

-Implement tort reform

-Expand the scope of practice of physician extenders

-Open more retail clinics

-Allow, and reimburse more at-home care

-Encourage, and reimburse, more remote home monitoring

-Allow the sale of insurance policies across state lines

-Encourage more price transparency.  Increase the publication of prices.

Every one of these suggestions is either not done today or is limited in order to protect the finances of a particular interest group, be it physicians, hospitals, pharmaceutical companies, insurers or attorneys.  And in all cases, it is the consumer who suffers, either through lack of access, higher prices or higher taxes.

Don’t misunderstand me- I support Obamacare.  I am glad to see it happening.  But we need to focus on costs. Aggressively.  Now.

The only reasonable end-game is full transparency and significant downward pressure on prices.

As more and more people sign up for Obamacare, early indications are that there will be some adverse selection- more middle aged and older people, fewer young and healthy people.  This creates the “downward spiral” as those healthy people who signed up eventually drop out because prices are too high.  This worsens the risk pool and increases prices for those who remain.  Then more drop out.

This will accelerate as states and corporations discontinue coverage for some because they can now purchase coverage through Obamacare.  The people affected by this will mostly be retirees who are older and less healthy- more costs will be run through the exchanges.

If we don’t do something about the core issue of prices, this is not sustainable.

Whether the issue is people who only want catastrophic coverage but can no longer find it, or people who are forced to by coverage that cannot possibly apply to them (think 60 year olds purchasing maternity coverage), or part time workers whose hours are cut even further, there are many people who the market is presently ignoring, at great cost to the system as a whole and to those of us who participate in it.  And I am not talking about the price of insurance.  I am talking about the costs covered by the insurance- hospitals, physicians, drugs and devices.

We need to:

-force the publication of prices.  There have been several articles over the past year detailing how hospital and physician prices vary widely.  They seem unable to estimate prices until after you have received the service, then they are suddenly quite certain what you owe- and it’s a lot.

-broaden the scope of services for “physician extenders”, such as PAs and Nurse Practitioners.  If there is a “physician shortage”, the simple rule of supply and demand will ensure that they are in the “power position” in each and every discussion.  Allow more extenders, fix the shortage, reduce physician bargaining power and change the entire dynamic of the discussion with physicians.

-levy punishing fines, not token fines, when organizations are shown to have schemed the system, as one Florida hospital organization was recently shown to have done (driving up admissions and penalizing doctors who resisted).

-and yes- allow the market to provide products that are aligned with people’s needs.  If some want a catastrophic policy, they should be able to find one.  If a 60 year old couple does not want to buy maternity coverage, they should not have to.

I am not in favor of unfettered market freedom- after all, it is the market that gave us slavery and sexual trafficking.  I do believe, however, that a proper mix of regulation and market freedoms will provide the best answer.  Right now, we have swung too far in the direction of regulation, where attractive market options are forbidden by law.  We need to move back to a place where the market and regulations are in proper balance.  And if we provide transparency and allow the market to work, with some regulatory oversight, then prices will surely decline.

It is time to break the provider “monopoly” in health care.

Many of us believe the health care discussion is actually about money, masquerading as “quality”.  We see a number of versions of this:

1) The wave of hospital mergers.  They are presented to the public as “improving quality”, but a recent article (AARP bulletin, June 2013) cites cost increases of up to 40% following a merger.

2) Network restrictions imposed by insurers.  Large health systems whose prices are rejected during contract negotiations generally claim that to eliminate them from a network will “compromise quality”.  Pressure is then put on the insurer to include the prestigious hospital system in the network at a typically higher cost.

We also see some promising developments:

1) A recent New York Times article (“Lessons in Maryland for costs at Hospitals”, August 28, 2013) describes some results of using hospital price controls and encouraging patients to receive care outside of the traditional hospital (lower costs, better quality statistics, more satisfied patients, and yes, more profitable institutions).

2)     An increase in the number of retail clinics, and an increase in the range of services they are able to provide.

There are some commonalities here:  when we, the patients, are no longer considered “captive” by the local providers, and instead have alternatives where we can go to receive our care, interesting things happen- costs tend to go down.  Quality tends to go up.

So what then, are the benefits of granting local monopolies to select groups of health care providers?  There is an interesting lesson now playing out in New York City:

A hospital in lower Manhattan, St. Vincent’s recently closed.  Prior to the closure, providers predicted a drop in “the quality of care provided to local residents”.  Politicians predicted a disaster.  And what happened?  Nothing!  Death rates have not soared, the community has not suffered- in fact, many urgent care centers opened up to fill the void.

Some may argue that access in the neighborhood has improved- minor conditions can now be seen efficiently and at low cost, as opposed to lengthy waits in an emergency room that is also serving those with contagious conditions.

I hope this trend not only continues, but accelerates.  A provider “monopoly” tends to benefit only the providers.  It is time for the consumer to be at the center of this system!

A Comment on the “Time” Article

A recent article in Time Magazine (“Bitter Pill-Why Medical Bills Are Killing Us”, by Steven Brill), did a fine job of thrusting into the spotlight the profiteering behavior of some providers in our health care system.  While the article covered a lot of ground, his discussion of the behavior exhibited by hospitals and hospital systems was particularly interesting.  That is where I will focus.

To summarize, hospitals are wildly inconsistent in what they charge for specific services and service packages.  By packages, I mean the room, the procedure(s), the doctors, and the drugs required to treat you.  The costs are frequently hidden, and if pressed, hospitals will quote from a greatly inflated “charge master”.  One result is “non-profit” institutions that are incredibly profitable, while their patients experience financial devastation.

It almost seems as if the behavior is somewhat predatory (my words).  So what should we do?

Let’s start here- hospitals should be required to post conspicuously a price list for the 100 most common services or service packages.

If you are considering a hospital for an uncomplicated childbirth or a knee arthroscopy or a hernia repair, you should be able to look at a list and see what it costs.  The price should include all services, tests, supplies, labs and doctors expected to be involved. If the hospital chooses to post it’s charge master, fine (as opposed to an insurance rate, which may be prohibited by their contract).  Posting the charge master will allow consumers to compare prices.  Even if you wind up in the hospital because of an emergency, you can transfer to a more reasonably priced facility once the immediate crisis has passed.

Just this would prevent, or at least lessen, some of the financial horror stories described in the article.

So what do you think?

Should hospitals be required to post a price list for the most common service packages?

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We (the consumer) are about to get trashed!

I saw three articles that disturbed me last week.  Taken together, they are no less than frightening.  All were printed in the New York Times.

First came an article titled “Insurers alter cost formula- patients pay” (New York Times, April 24).  The main point is that insurers have changed the way in which they reimburse doctors and hospitals.  The reimbursement has gone down, so the patient’s portion has gone up.

The second article, also printed in the New York Times on April 24, is called “Pricing confusion adds to pain at hospitals”.  The main point here is that hospital bills appear to have no rhyme or reason, with the price for the same procedure in the same geographic area varying wildly, sometimes by a factor of ten or more.

Finally, in the New York Times on April 25, “Debt collectors pursue patients in hospitals” describes how employees of a collection firm, “Accretive Health” are actually allowed front line positions in their client hospitals where they can, and do, get right in patient’s faces demanding payment for expected or past services, sometimes before emergency services are provided.

Now put all of this together-

  1. We don’t know what something will cost and may be off by a factor of 10
  2. Whatever it does cost falls more and more on our shoulders to pay
  3. We will subjected to very extreme collection practices, including denial of services, until we pay what we owe.

Now compare this to the experience of citizens of every other advanced country in the world- costs are simply not allowed to come between a person and their need for health care.

We, the consumer, are about to get trashed, and it is time to do something about it! (Stay tuned for future posts).

Which of the key health industry players is to blame for the current problems?

Who is to blame?  All major participants have good and bad aspects:

Insurers:

  • The Good:  They bargain provider prices down.  They pay our bills when we get sick .
  • The Bad:  They deny coverage inappropriately.

Pharmaceutical companies:

  • The Good:  They provide medications that heal.  I’d rather take medicine than receive surgery.
  • The Bad:  They overcharge and put drugs on the market that are far more expensive and no more effective than what they replace.

Physicians:

  • The Good:  They provide good, compassionate care.  They save our lives!
  • The Bad:  They put us on a financial treadmill and churn patients to increase their incomes.

Hospitals:

  • The Good:  They provide the infrastructure within which healing and recovery take place.
  • The Bad:  They build empires and overbuild in general, driving up costs.  A cath lab in every town?

Device and supply manufacturers:

  • The Good:  They invent and produce live improving and life extending devices, e.g. pacemakers, MRIs.
  • The Bad:  They inappropriately work the system to sell more of their products.

So what does all this mean?  There is no universal “good guy” or universal “bad guy”.  In improving our system, all parties must be looked at carefully, and all parties must accept change!