Today is April 1 and tradition says we should try to do some type of prank or joke to pull the wool over someone’s eyes to have fun. Just over a year ago PPACA was signed into law and with much fanfare over how the bill will change healthcare for the better, we are now scratching our head and wondering was this some type of April fool’s joke. First lets be fair, there needed to be something done to the current healthcare system. Some of the provisions of the law I do agree with however, we are no closer to resolving the real problem and that is affordability of healthcare. Just providing access and coverages for certain ailments are important but not addressing the real issue of “charges” will send us back to where we started, and that is more and more employers and individuals going without health coverage.
In the March 21 issue of FORTUNE the CEO of Humana, Michael McCallister was interviewed. The interviewer asked him this question and I have posted his response:
Q: What’s your bottom-line prediction of what will happen to health care costs in the next five to 10 years?
A: “They’re going to rise because we have not addressed the drivers. Nothing in this bill (PPACA) has done that. We have a system where we’re insulated from real-world cost and quality measures, and we as consumers can’t behave in the way we normally do, and we’re not taking care of ourselves in an appropriate way.”
His comments are right on. We have not addressed the key drivers of charges within the healthcare delivery system. Add to this the consumer is removed during most of the interactions of what is being charged, how it’s being charged and if what is being charged appropriate.
Today is April fool’s day. But it is not joke, charges will continue to rise in healthcare and that is no laughing matter.
In today’s Wall Street Journal article there is a very good overview of some of the next challenges that have to be worked due to the recently passed PPACA. Specifically what will be required to be considered “essential benefits” in the health law? The legislation gives 10 categories of care that plans must provide for customers of the health-insurance exchanges that are launching in 2014. But the law leaves details up to regulators, who are now starting to develop the rules.
I think this is where we are going to see tremendous debate over the next few weeks. There are certain areas of healthcare we can all agree need to be considered “essential” but there will be tremendous challenges in agreeing on all areas of what should be considered essential benefits. As we all know the more items are added as essential benefits the higher the price tag. What you may consider as essential benefits might not be considered essential benefits by someone else.
Check out the 10 general categories of benefits that the health law considers essential at:
When networks were first created (nearly 25 years ago), you had a select few groups of providers who agreed to a discount, with the notion that giving a discount will drive more business to the provider. Right idea, but where did we go wrong? Fast forward to today and nearly every provider is in a network; so are you really getting a discount? In fact, somewhere between 2% to 8% of claims occur outside of PPO network. A very small number.
So between 92 - 98% of the population are in a PPO accessing a network where there is a “contract” between the provider who agrees to perform services at an agreed-upon rate. For those who seek care within the “network” of providers, a member supposedly gets a discount off a billed charge and no balanced billing is to occur. That has been the “mantra” for years. Go to the network of providers, get a discount and no balanced billing. If you go outside the “network” you pay a higher portion of the fee and deal with potential balance billing issues.
Cost containment organizations like NCN have worked with providers in the out-of-network setting: clients want some rate reduction for out-of-network claims and don’t want to pay retail. However, the moment you work on out-of-network claims, clients have a “deep concern” about the patient not being balanced billed.
I can understand the need to work in partnership with the provider and patient to create a resolution that provides a rational payment for the provider. However, when the focus is placed squarely on the issue of “balance billing” in the out-of-network setting, clients assume that balance billing does not occur in the in-network setting when in fact, balance billing could possibly be bigger issue for in-network claims. As provider incomes continue to be cut due network agreements, government cuts, etc, balance billing may be a bigger problem for in-network claims than out-of-network claims.
An article published in BusinessWeek in 2008 highlighted a growing issue with balance billing occurring with providers who had network agreements but were balance billing anyway. I realize this can occur accidentally. Providers have so many different networks they work with that it is hard for them even to know what is to be reimbursed. Add this to the fact most hire outside billing/collection agencies to handle their business and you have another layer of potential miscommunication. All said, it is important for all of us to realize that balance billing is not an exclusive issue for out-of-network claims. It is occurring in the in-network environment.
Members should be given tools, such as data and support, to negotiate with providers for a satisfactory solution. NCN published an article, Negotiating a Balance Billing Solution, that a member recently used to save more than $1000 on a balance bill for ambulance services. Download it here.
Last Friday, Aetna released their earnings report and as expected had an increase in profit. When you read the news release you will see a common theme in theirs that you also see in UnitedHealth, Cigna and WellPoint: more and more members are delaying to seek care. As the economy is struggling to regain stability, and those covered under insurance today have very high deductibles and coinsurance, people will delay seeking treatment for services.
In some ways having people delay going to the doctor and asking the question, “do I really need to seek care?” is a good thing. Why may you ask? Many years ago we introduced the very low copay option to insureds. We did this as an incentive to go to a PPO/HMO provider as an incentive to try this “new” concept out. What we created were people going to the doctor with the slightest sniffle or ache. The cost was minimal; why wouldn’t you?
Fast forward to where we are today. Those covered by insurance with high deductibles are now saying “maybe I’ll feel better tomorrow,” or “let me look online to see if I really need to see a doctor.” This is a culture shift from when we had low copays, no claim forms and unlimited access. Today, the consumer is thinking with their pocketbook. Again, people should seek care that they need, it but it is interesting to see how the culture shift is being played out in the financial numbers with the carriers.
No doubt they will have to adjust their assumptions, but stay tuned. I guess my mom was right, “unless you are bleeding and pass out, there is no reason to go into town to see a doctor.” (I lived on a farm in Nebraska)
Listed below is the highlight of Aetna’s earnings news release:
“Aetna said the profit boost was "largely the result of higher commercial underwriting margins driven by management actions to appropriately price the business," along with lower health care use. Aetna had struggled through 2009 with medical costs that climbed higher than the company expected when it set prices for that year. Company leaders said then that they repriced a significant portion of Aetna's commercial insurance business.
Aetna is the third largest commercial health insurer based on enrollment, trailing WellPoint and UnitedHealth. Those insurers and Cigna Corp. have all seen a slowdown in health care use over the last part of 2010.
Industry observers have said use slowed due to a mild flu season that followed the swine flu outbreak of 2009 and because consumers tend to cut back on care during a struggling or recovering economy.”
In a recent survey conducted by Thomson Reuters/HCPlexus, physicians were asked a series of questions relating to health reform and the future of healthcare. Of the 3,000 physicians surveyed, 65% worried that healthcare reform would produce lower pay and lower quality of care. As the old saying goes, be careful for what you wish for. During the debate the AMA came out in support of the health reform bill. I realize the AMA does not have the strong voice with providers as they did in the past but they still carry weight in their support or lack of support of health issues.
As reported by Bernie Monegain the key findings of the survey showed the following:
- During the next five years, 18 percent say the quality of healthcare in this country will improve, 17 percent say it will stay the same and 65 percent say it will deteriorate.
- 9 percent of the doctors surveyed say The Affordable Care Act will result in physician reimbursement becoming fairer, while 17 percent say it will neither be fair nor unfair and 74 percent believe it will be less fair.
- 27 percent of physicians believe the impact of the Affordable Care Act for patients will be positive, 15 percent say it will be neutral and 57 percent say it will be negative.
- 8 percent of physicians believe the impact of the Affordable Care Act on them will be positive, while 14 percent say it will be neutral and 78 percent say it will be negative.
We are now entering the next round of debates with the House voting to repeal the bill and waiting to see what the Senate will do; the next few days will be interesting. We all know that repealing the ACA will not be possible. What is clear, based on this survey, is that physicians are realizing the next few years will be a defining moment. Things have to change. They must change. We must provide a rational system where providers, payers and consumers are all sitting at the table and developing solutions that will balance the competing interests of the marketplace. If we don’t, I would hate to see if the survey is conducted two years from now what the results will look like.
2011 National Physicians Survey polled 2,958 physicians of varying specialties and practice types in all states. Thomson Reuters and HCPLexus conducted the survey in September 2010 and updated it in December 2010 and January.
As we start the New Year we are faced with the reality that healthcare rates continue to rise and the employers who just received their renewal rates for health premiums are increasing their deductibles and coinsurance for their employees. Gone are the days when employees had a $100 to $200 deductible with coinsurance ranging from $750 to $1,500. Today individual deductibles are at $500 to $1,000 (and even higher) with coinsurance at the $3,000 to $10,000 range. This is the new reality.
With this new reality, patients are going to have to be fully engaged in the pricing discussion with their provider. No longer is the discussion centered on should a certain treatment or medication be received. It now includes “what are you going to charge me for this service?” and “can I afford this treatment?”
Just walking in a plopping down an insurance ID card with a simple $10 copay for office visit has gone the way of Leisure Suits and 8-track tape players.
In the January 8th, edition of the New York Times there is an interesting article on how to negotiate with a provider for care. We will be seeing more of these articles in the coming months and employers will need to start arming their employees with tools and solutions to help them navigate the new reality. We offer such tools through our ConsumerScope web tool and iPhone application, and many more tools will be implemented in the coming months.
This country's current system of every provider being in a Preferred Provider Network (PPO) while rate increases keep going up by 20-40% per year is not sustainable. The “New Reality” is here. New solutions and ideas will need to be implemented or the system that will likely occur is one few will enjoy. Have you negotiated for care?
A Talk With the Doctor May Help Patients Afford Care:
In the December 15th issue of the Wall Street Journal there was a headline that caught my eye. It read, “Phone-Wielding Shoppers Strike Fear into Retailers.” In reading the article it describes how consumers are using the smart phones to comparison shop in real-time. An example given was a consumer who walked into Best Buy looking for a Garmin GPS system. He found one at Best Buy for $184.85. Taking his Android phone he typed in the model number and immediately a listing of prices from other retailers offering the exact GPS system were listed. He found that the same system was offered on Amazon for $106.75. No tax and free shipping included. With a few quick strokes this consumer ordered the GPS system from Amazon (while in the Best Buy store) saving him nearly $80.00.
Full price transparency at the touch of the button is making retailers fearful. In the next five years, nearly every consumer will have a smart phone. With that, new and innovative applications to drive price transparency will be available. An application called RedLaser which allows shoppers to use mobile phone cameras to scan bar codes and compare prices has been downloaded six million times; the consumer is in control.
Now let’s take what’s happening in the retail sector and apply it to the healthcare sector (I know what you are thinking, there is no way you can do this. Let’s just remember that same thinking occurred in the retail space; now look at it today). Let’s assume you are scheduled for surgery for routine knee surgery, hip surgery, routine colonoscopy, etc. Could you take your smart phone and with a few simple clicks find the highest quality, lowest cost facility in your area that can to the procedure? Hmmm…well it’s here today. Our organization offers ConsumerScope for iPhones. This is an application that can be downloaded free to view what facilities typically charge for a procedure and what it actually costs for the procedure to be performed.
In a few short years I believe the next headline in the Wall Street Journal will read, “Smart Phones Strike Fear into the Healthcare System.”
A great article appeared in the Washington Post by N.C. Aizenman recently regarding doctors who are dropping Medicare patients from their practice. We are reaching a tipping point in healthcare. Doctors are struggling to determine what their business model will look like month-to-month. As congress continues to delay a decision on Medicare rates, it is almost impossible for physicians to run a business. Those plans who have stated that they will just pay a percentage of Medicare will be challenged. Any mention of payments being made on a percentage of Medicare will be severely challenged.
There was an interesting Op-Ed piece in the New York Post on November 22 by Scott Gottlieb. Over the last few months we've been seeing more and more interest in Accountable Care Organizations (ACO). Some are saying this is the answer to controlling healthcare costs; others are saying this will speed up the rising costs of healthcare. At this point the verdict is still out since we are in the early stages of this process. What we do know is that healthcare today is very fragmented and uncoordinated. Ask anyone who has been in the hospital for a period of time and you hear a consistent story. Doctors are highly specialized and don’t talk to each other. A patient may have 3 to 7 different doctors working with a patient and at times they are not on the same page of care coordination. The ACO’s were created to bring sanity to a fragmented process. It looks good on paper, but can you execute on this idea? It will require technology, a willingness on the part of providers to communicate with each other and with members, etc.
It’s important we review the pros and cons of ACO’s. Another excellent piece appeared in the recent Wall Street Journal giving a good balance to both sides of the argument ACO argument. The bottom-line is that the current system is not working, and healthcare delivery must change. The biggest challenge within the ACO’s is determining a fair pricing model for all involved. Also, a rational payment methodology must be incorporated for the participants who go outside the ACO for care. Are ACO’s the answer? Stay tuned.
Yesterday I came across a very interesting news item. It seems that one of my idols, Bill Nye the science guy, was about to speak at an event hosted by the University of Southern California. As news reports have it, as Mr Nye was walking up to the podium to speak and on his way he collapsed. Reports say he is fine but what is so interesting about this story is not that he collapsed, It is that no one ran from the audience to help him. Rather, the students were more interested in updating personal Twitter accounts or Facebook updates. As Alastair Fairbanks, a USC senior is quoted, "nobody went to his aid at the very beginning when he first collapsed — that just perplexed me beyond reason." The student added, "Instead, I saw students texting and updating their Twitter statuses. It was just all a very bizarre evening."
I love technology and it is changing the world but at what point to we step back and say “really?” As this relates to healthcare, I’m hopeful that if I collapse on the way to the hospital, the EMT or doctors would at least check my vital signs to before Tweeting.