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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#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.

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!