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:
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.
A great article appeared in today’s Wall Street Journal written by Anna Wiled Mathews. This highlights the unintended consequences of a healthcare system that is spinning out of control. Employers continue to raise deductibles and coinsurance in order to offset the increases in premium, thus forcing doctors and hospitals to chase more out-of-pocket dollars. Doctor today are not only healthcare providers but financial service companies. Their receivables are at record highs today. It used to be that providers only had to work with insurance companies to collect the fees for their services. Today, they are not only working with the insurance companies to collect they are having to collect a record amount from the patient.
You can’t blame the physicians for saying “enough.” They went to medical school to learn how to provide excellent healthcare, not to chase receivables. As Americans struggle with the increasing costs of healthcare, we will see a more severe price increase in health costs over the next few years. As doctors sell their practices to health systems and take themselves out of the billing nightmare, we are going to create another pricing issue. We will be left with mega systems controlling the pricing structure of healthcare with very little ability to control the pricing structure. With the consolidation of physician practices with facilities, there is worry that we will see an increase in pricing. As Karen Ignagni, CEO of AHIP, stated in the article, "We've always been concerned about combinations that are being done to increase prices." William F. Jessee, CEO of the Medical Group Management Association, said he expected to see "more physicians selling out to hospitals."
In the October 21, Wall Street Journal the Democratic governor of Tennessee, Philip Bredesen, wrote a very thought provoking article on some of the unintended consequences of the new PPACA / ObamaCare. He does an excellent job in outlining what could happen with the state of Tennessee employees under the new health reform law.
His argument is their state could save a substantial amount of money if their employees opt out of the employer plan (in this case, the state of Tennessee plan). One problem with his assumption is if all employees go into the exchange and the premiums continue to rise in the exchange that cost will ultimately come back to the state to make up.
However, in the short-term, the governor makes a good argument for savings by moving employees to the exchange. Remember I said short-term. Long-term this is not a sustainable solution.
Tennessee: call Massachusetts and ask them how their health program is doing now that it has been in place for awhile.
Editorial Writer Joe Rago on GOP plans for health-care reform.
It was reported the week that the U.S. Justice Department and Michigan Attorney General Mike Cox has filed an antitrust lawsuit against Blue Cross and Blue Shield of Michigan alleging the insurer's contracting methods with hospitals are creating higher prices and fewer choices for health coverage in Michigan. It is interesting to note that the Blues' policies cover about 60% of the commercially insured population in the state, a portion that reflects about nine times as many residents as are covered by the next largest competitor. The lawsuit states that it contracts with 22 hospitals, representing 45% of the state's tertiary beds, hospitals and are required to charge as much as 40% more than the rates negotiated with the Blues.
Most likely we will see more of these lawsuits filed throughout the United States. There is tremendous pressure with each to allow greater competition, especially when staring at the insurance exchanges that will be coming in the near future. How this will help control the cost of healthcare is clear … it won’t. If you removed most favored nations clauses it will allow the provider groups to raise their prices, in this case, for Blue Cross Blue Shield members. Logic would say provider prices would come down since they wouldn’t have to cost shift to other payers to make up the difference for losses sustained with the Blue’s contracts. Do you think the providers are going to reduce their rates? Most likely not. The favored nation clauses will go away and prices will increase for the Blue’s members. Those in the non Blue’s program will still see higher prices and not much will change.
Trying to develop contracts based on patient volume and patient mix will no longer work in today’s environment. We must get to a rational payment system that is based on “cost up” approach that looks at benchmarking like facilities with full transparency. The providers need to make money. The employers need to control the rising cost of care. The employees can only afford so much out-of-pocket charges. These three competing dynamics can only be solved with a different approach. The past approach is not working and we continue to put lipstick on the pig in hopes that it will get better.
Recently an article appeared in the Wall Street Journal where McDonald's is considering dropping their health coverage for the more than 30,000 employees who have enrolled in their program. Most of the employees are covered under a mini med program and with the new health reform act PPACA that was passed now is considering doing away with this plan. Due to the requirements for medical loss ratio and the restraints put on mini med plans, McDonalds is faced with a critical decision and has asked HHS for a waiver. It was granted. Now HHS is granted other waivers to employers.
We are entering a very interesting period of time as the renewal rates are hitting the employer market and many of the requirements of PPACA are starting to take effect. With that said one of our clients shared and op-ed piece that appeared in Investor's Business Daily and raises some very interesting points.
Check out this great editorial from Investor's Business Daily about The Unraveling of ObamaCare
. In the light of day this bill that lawmakers signed without reading, is being revealed as an "unaffordable fraud."
This week I came across an article in the Hartford Courant written by Matthew Sturderant. The gist of the article centered on how health insurers are asking for immediate rate increases of more than 20 percent in Connecticut for certain health plans. The rate increases still need to be approved by the state for the individual health insurance market, but what we see happening in Connecticut will be occurring throughout the United States. How each state will handle this is yet to be seen but bottom line, the new normal is in progress.
Connecticut Attorney General Richard Blumenthal has weighed in on the increases when he said, "These outrageous requests demonstrate the need for stronger Department of Insurance authority to block unjustified health insurance premium increases, as I strongly advocated in the last session. My proposed bill would have allowed the commissioner to consider insurer profitability, required insurers to inform customers of rate requests and mandated an up or down ruling on all increases."
As I mentioned in my previous posts, these increases may be unjustified and outrageous but for the sake of argument, what if these increase ARE justified. What makes them justified? The higher charges being submitted by the healthcare delivery system. With that said, has there been any government official sending out “threats” for outlandish charges? Most of the discussion today is on the insurance companies rate increases, salaries of the insurance companies executives and how they are the problem. Again, there may be justification in these arguments but do not lose sight that there are more people involved in this equation.
In my next post I will share some of the interesting findings of the recent healthcare salary survey. As the old saying goes, it takes two to tango.
In a recent Wall Street Journal article by Janet Adamy the headline read “U.S. Rebukes Health Insurers.” In the article it shared that the Obama administration will “track those who enact unjustified rate increases linked to the health overhaul.” I find this statement very interesting. We are “threatening” health insurers for putting into place rate increases to reflect the new health reform act. This threat is coming from the same group that has yet to finalize the PPACA regulations –HHS. We are taking the caps off lifetime limits, including children to the age of 26, developing regulations on how to define a grandfathered plan from non-grandfathered plan. How can you add all these benefits and have no experience, and yet “threaten” the insurers if they raise rates?
I’m all about keeping people in check for unjustified price gouging but I would also hope the administration would issue the same threat to the medical community. If providers charge “unjustified” prices what are the ramifications? The insurers and providers must work together. If the current administration is only focusing on insurers we are in trouble. As Karen Ignagni, President of AHIP stated, “To suggest that cost containment can be achieved by singling out health plans ignores the very inconvenient truth that premium increases reflect increases in the underlying cost of medical services,” Ignangi says. “Regulating premiums won’t do anything to reduce the soaring costs of medical care. This would be like capping the prices automakers can charge consumers, but letting the steel rubber and technology manufacturers charge the automakers whatever they want.”
We must have a rational, transparent payment system in place.