Health Business Blog

Researchers have now discovered what regular people already know: waiting for the results of a biopsy can be extremely stressful. The radiologists are holding their annual conclave (RSNA) in Chicago now, and heard a presentation on the stress topic. From MedPage Today:

Waiting for a diagnosis — and for the procedure that will provide that diagnosis — can be more nerve-wracking than prepping for a procedure to treat malignant disease, researchers found.

Women awaiting a breast biopsy reported more stress and anxiety than those waiting to be wheeled in for an invasive procedure to treat liver cancer, Elvira Lang, MD, of Harvard, and colleagues reported at the Radiological Society of North America meeting here.

“Uncertainty is a greater stressor than awaiting risky treatment,” Lang said during a press briefing. “The invasiveness of a procedure has less influence on stress.”

Interestingly, and not surprisingly, the authors and radiologists focus on how to reduce the stress from these procedures.

“It’s extremely important for a patient’s experience, and their ability to return to that institution” for follow-up tests if need be, [radiologist and co-author Dr. Bob Kerlan] said, adding that this area of research will be increasingly important.

Radiologists will listen because they definitely want their customers to come back! But these findings should also be viewed within the context of deciding which tests to recommend in the first place. In particular, the research is consistent with taking a more cautious approach to screening and at least recognizing the harms from false positives that result when so many are screened so frequently.

See my earlier post, More on the overuse of mammography in elderly women, for a broader discussion of the topic.

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Check out the latest edition of Grand Rounds at Colorado Health Insurance Insider.

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As a health care consultant, blogger and board member it’s pretty much all health care all the time for me. But it’s starting to turn out that way for the country as a whole. For example:

• Federal budget deficit? Main cause is Medicare spending.
• States can’t balance their budgets? Medicaid and state employee costs.
• Towns can’t afford to hire teachers and cops? Retiree health benefits.
• Employers can’t afford to hire staff to grow? Health care premiums.
• Tuition rising fast? Health care premiums for staff.
• Consumer spending slow? Too much money spent on health insurance or out-of-pocket payments.
• Doctors giving up private practice to work as hospital employees? Can’t afford to pay health care benefits to their staff (seriously).

But the area that may ultimately get the most attention ultimately is the defense budget. Active duty military, retirees and dependents cost the Defense Department a lot of money: about $50 billion today rising to $65 billion in five years. That’s about 10 percent of the military budget and as Defense Secretary Robert Gates says, “Health care costs are eating the Defense Department alive.”

Defense budget analyst Todd Harrison from the Center for Strategic and Budgetary Assessments says, “In the long run it could actually limit our ability to field a military of sufficient size.”

To put things in perspective, the US Defense Department’s health care spending will be larger than the entire military budget of every country but China, the UK and France. Actually, the UK and France are likely to shrink their military budgets over the next five years so only China will spend more in total than what the US spends on health care for defense.

As analysts and politicians grapple with the long-term budget deficit, health care spending considerations will seep into every area. The good news about that is it may force the country to finally grapple with health care costs in a serious way.

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Thanks to a librarian relative who tipped me off, I started using Google early on, before the company started making money from ads. I remember thinking it was just a matter of time before Google started charging users for the valuable search service they provided.  But one reason Sergey Brin and Larry Page are multi-billionaires and I’m not is that they figured out a much more powerful economic model. Google’s real product is not providing search solutions for consumers; it’s segmentation of consumers for marketers. The Google-led approach has become so pervasive that consumers just assume any service they receive on the web will be free and don’t tend to think through the implications.

In Privacy Groups Fault Online Health Sites for Sharing User Data With Marketers, the New York Times points out that consumer oriented health sites such as QualityHealth collect information on users that they then sell to marketers. In this case, as with many health care sites, the real customers are pharmaceutical companies seeking qualified prospects for their wares. As you might expect, some people are up in arms about this. In a way I don’t blame them, because the sites seem to treat the consumer as the customer, at least at first glance.

If someone offered you something valuable for free in real life you’d be suspicious and ask, “What’s the catch?” It’s time consumers starting thinking that way on the web, too. Eventually it might lead to services where the user is the paying customer, but I don’t think we’re nearly there yet.

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In Health care’s dilemma: Competition or collaboration? the Washington Post’s Steven Pearlstein points out that health care reformers tend to favor integrated care providers like the Mayo Clinic, which deliver affordable, quality care.

But, as he says:

Here’s the dilemma: The only way for the health-care industry to move toward accountable care is to further accelerate a process of consolidation that has already reduced competition and increased market power. Hospitals are once again busily buying up physician practices and outside laboratories that used to compete with them, incorporating them into their “systems.” And independent physicians who used to compete with one another are quickly merging into multi-specialty practices, offering a full range of services to large blocks of patients for fixed annual fees – an arrangement known as “capitation.”

I agree with Pearlstein that hospital consolidation is a likely next step in the evolution of the health care system. But it’s untrue that “the only way… to… accountable care is… consolidation.” Certainly the easiest way for providers to gain clout with health plans is through getting bigger and developing networks that the plans can’t get away with excluding. But along with market power come serious downsides to consolidation. For one thing, when physicians sell their practices to hospitals they tend to adopt an employee mentality. They stop working hard to build their practices and start taking it easy and griping about work conditions and salary. Big systems can become unwieldy and require a lot of extra administrative expense. And the days of bulking up and extorting health plans for higher payment are coming to a close as health plans face pressures to keep premiums down and as governments intervene. For example, Partners HealthCare in Boston, which for years used its non-excludability to extract premium reimbursement levels from health plans, is facing pressure from the state to be part of the solution rather than part of the problem.

Integrated Delivery Networks (IDNs) are working hard these days to prevent “leakage,” i.e., patients leaving the system to receive care elsewhere. Conscientious physicians are unhappy about this trend, because it can mean referring patients to second-best choices.

The alternative to consolidation is physician-led Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs) that provide patients with a high-service, concierge-style primary care physician who has the freedom and information resources to refer patients to high quality, efficient specialists and hospitals that meet their specific needs. One key is interoperable electronic health records and community based health information exchanges that allow physicians to communicate effectively with all providers, not just those in their big hospital-led systems.

This will require physicians and their  financial partners to step up to the plate and create alternatives to the big IDN cocoons. If they do, and payments are based on capitation and outcomes rather than fee for service volumes, there should be great opportunities to forgo the consolidation model and encourage hospital-based systems to compete against one another in the patient’s interest.

In Boston, I’d like to be able to see whichever provider makes the most sense for my specific issue. I don’t want to be limited to Partners, CareGroup or some other system. I’d rather have an independent primary care physician who can work effectively with everyone and I don’t see why this shouldn’t be the case.

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The government has decided to exempt limited benefits plans (also known as mini-med plans) from rules requiring minimum medical loss ratios. Under the Patient Protection and Affordable Care Act (PPACA), most plans will be required to pay out at least 80 or 85 percent of premiums on medical care. As I’ve written, I don’t think minimum MLR rules are a good idea. I’d rather my plan figure out a way to keep me healthy and spend as little as possible sending me to the doctor or hospital.

I’m glad, though, to see that mini-med plans are off the hook. These plans are typically offered to low wage workers to provide access to the health care system and protection from unexpected medical expenses. The plans aren’t great, but then again neither is a career making minimum wage. The plans simply are not comparable to the comprehensive plans that are the target of minimum MLR legislation. By their very nature they will have higher administrative costs on a percentage of premium basis –even though such costs are far lower when calculated on a per member basis.

The basic McDonald’s plan for an individual workers costs about $13 per week (~$700 per year) and is capped at $2000 in annual benefits. To put that in perspective, $2000 will barely pay for one MRI and is just a little bit more than the monthly premium for comprehensive family coverage in Massachusetts. There’s no way McDonald’s could offer comprehensive insurance, since paying for a family would cost more than the full time, pre-tax salary of a minimum wage worker.

I’m happy that McDonald’s and other employers provide mini-med plans. They should be encouraged to continue doing so until PPACA is fully implemented, by which time their employees will be able to participate in the insurance exchanges and receive subsidized coverage. Exempting mini-meds from MLR rules does not undermine health reform in any way.

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I had to laugh at the Boston Globe’s sanctimonious editorial today about alcohol/caffeine drinks (Four Loko ban shouldn’t blind regulators to binge drinking), which rails against the glorification of alcohol abuse and in favor of promoting moderation. Why was it funny? Because the Globe itself promoted immoderate drinking in an article on Friday, (Giving thanks with fine craft ale; Do it right and pair beers with the dinner’s courses, starting with something light).

I read the article because I’m a fan of craft beers and was looking for some suggestions, but was a bit shocked at the implications of following the article’s advice. According to the author:

Thursday is the perfect time to introduce your friends and relatives to some outstanding brews, while at the same time helping them realize that “beer’’ does not have to equal “Coors Lite.’’

Hard to argue with that –except it’s actually Coors Light, not “Lite.” It’s also worth pointing out that Coors Light, like most light beers, has about 4 percent alcohol. Standard American brews like Coors and Bud are in the 5 percent range. The author suggests pairing a beers with each course as follows:

• “When your guests walk in the door hand them something light.” Allagash Tripel Ale (9% alcohol)
• “Keep the beer tame as you bring out the hors d’oeuvres.” Smuttynose Shoals Pale Ale (5% alcohol)
• “Turkey, stuffing, gravy –for food like that, you want something with higher alcohol.” Avery Brewing’s The Reverend (10% alcohol)
• “Something that’s able to stand up to the dessert.” Dogfish Head Miles Davis’ Bitches Brew (9% alcohol)
• “Once you’re done eating, you may want something to digest your gigantic meal.” Stone Old Guardian (11% alcohol)

If a Coors Light devotee suddenly is enlightened by a Globe reader and drinks 12 ounces of each of the above, it will be the alcohol equivalent of more than 9 Coors Lights. I guess the Globe is implying that’s a moderate consumption pattern. What’s silly about the choice of beers is that there are many outstanding craft beers with alcohol levels closer to 5 percent. Take a look at the various Sierra Nevada and Samuel Adams offerings and you’ll see what I mean.

An editor must have had a quick look before the piece went to press and got nervous, because someone inserted the following at the end:

No one is suggesting you spend your holiday sucking down high-alcohol beers. These are merely suggestions to help guide your way. Bigger bottles should of course be shared three or four ways. It is Thanksgiving, after all.

Of course.

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The Wall Street Journal reports (Private Medicare Plans Are Retrenching) that senior citizens enrolling in private Medicare policies, known as Medicare Advantage plans, are facing fewer choices as insurers stop offering certain plans –mainly Private Fee-for-Service (PFFS) plans. However, those who remain insured through Medicare Advantage will generally pay about the same in premiums and have richer benefits. I’d like to see Medicare costs brought under control and so I applaud the reduction in PFFS plans, which are a big waste of taxpayer money. I only wish the cutbacks went further.

Medicare Advantage is a complex topic, and I won’t try to explain it all in this post. Here are some basics, though. About three-quarters of beneficiaries are enrolled in traditional Medicare indemnity coverage. They do not interact with private health insurers. Medicare Advantage plans cover the remaining one-quarter of beneficiaries.

There are three main flavors of Medicare Advantage plans:

• Managed care plans –which are similar in operation to commercial HMOs and PPOs
• Private Fee-for-Service (PFFS) plans –which are essentially indemnity plans offered by private companies. In other words there are no network requirements nor other typical manifestations of managed care
• Other plan types –mainly demonstration projects and experimental forms of coverage. These plan represents a small share of the total.

Medicare Advantage plans have enjoyed rapid growth during the past five years, roughly doubling in membership between to more than 10 million people. PFFS plans have grown even faster since they were introduced in 2003. And Medicare Advantage shoppers have a lot of choice. The typical beneficiary had 35 plans to choose from in 2008, compared with about 12 in 2006.

The original intent of the Medicare Modernization Act of 2003 (MMA) was to increase the availability of private plans. The assumption was that private sector efficiencies would reduce costs over time.  Before 1997 Medicare paid managed care (then known as Medicare + Choice) plans 95 percent of the average cost of traditional Medicare fee for service spending, so there was some savings. However, Medicare + Choice plans were hard to operate in rural areas, where it was impractical to build networks due to lack of choice of providers. Medicare PFFS plans were designed to give beneficiaries the option of a private plan even where managed care wasn’t feasible, which sounds reasonable.

However, that assumption about private sector efficiencies turned out to be a bad one in the Medicare Advantage market. It turned out that Medicare Advantage plans became significantly more costly to the government than traditional Medicare, without generating any evidence that of higher quality. Overall, Medicare Advantage plans cost the government about 115 percent of Medicare indemnity rates, with PFFS plans even higher than that.

It’s no wonder Medicare Advantage –and PFFS plans in particular– became popular quickly. Health plans were able to use some of the additional funds to offer low premiums and/or enhance benefits (e.g., providing coverage for hearing aids, gym club memberships), which increased the appeal of the plans to prospective enrollees. Meanwhile, the PFFS plans were very simple to establish and operate. There was no requirement to establish provider networks. Plans could simply “deem” providers as participating and pay Medicare FFS rates. PFFS plans –unlike other Medicare Advantage plans—had no quality reporting requirements and premiums were not subject to approval by Medicare.

But PFFS plans in particular came under fire even in the free spending Bush Administration days. Higher payments to Medicare Advantage plans in general and PFFS plans in particular were highlighted by the Medicare trustees as a key accelerator of Medicare’s insolvency date. It was also noted that increases in payments relative to traditional indemnity Medicare were highly correlated with the growth of PFFS plans. For example, an analysis in Health Care Financing Review estimated that “if Congress reduces payments to traditional FFS levels it would cause… 85 percent of PFFS plans to exit the market.” Patients who quit PFFS plans are likely to return to traditional Medicare rather than shift to other Medicare Advantage plans.

The phenomenon of fewer PFFS plans highlighted by the Journal has been on the horizon for a couple of years, pre-dating the Obama Administration and health reform. In particular implementation of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) is making PFFS plans more complicated to operate. Starting in January of 2010 the plans had to begin reporting HEDIS quality measures, which is not that big of a deal. However, they will also be required to establish contracts with hospitals and physicians beginning in January 2011, and that’s why many plans are being scrapped now.

Medicare costs are killing the country. Even today, more than 40 percent of Medicare’s costs are paid out of general revenue. There are plenty of uninsured working class people paying into Medicare through payroll taxes and income taxes. That’s unreasonable enough, but it really adds insult to injury to give Medicare beneficiaries another 15 percent or so bonus on top of the existing payout just so they can get some freebies and lower premiums.

The Affordable Care Act addresses the overpayments to Medicare Advantage to some degree, but in future years I hope politicians go further. At some point I hope we’ll at least get back to the point where we’re paying less than 100 cents on the dollar rather than more.

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In his address to a n audience of Robert Wood Johnson Foundation funded community-based health alliances, former Office of Management and Budget Director Peter Orszag sounded a fairly optimistic note on prospects for implementation of health reform despite the Republican surge. He also emphasized provisions of the law that address cost and quality, areas that have received comparatively little attention in the general press.

Outright appeal won’t happen, as others have also said, but Orszag went beyond that, emphasizing the power of the Center for Medicare and Medicaid Innovation and the Independent Payment Advisory Board to scale up successful pilot programs and take action to curtail Medicare spending growth without additional legislative approval. Congress would have to work hard to stop these entities, and with gridlock the likely order of the day in Washington for a while, “The power of default and inertia may be key” to keeping health reform implementation rolling along.

Orszag expects that implementation will be underfunded by Congress –not completely defunded. That will slow things down and make implementation sloppier but won’t be a highly effective blocker. He quite rightly pointed out that the locally-based innovations being piloted by the Robert Wood Johnson Foundation’s Aligning Forces for Quality communities and others can counteract –to some extent– the effects of defunding of government programs.

I thought it was an effective and inspiring talk and agreed with most of what he said. On the flip side, there may be other vulnerabilities –such as the difficulty in selling PPACA to the American people and Republicans’ willingness to block appointments– that were brought up in the Q&A session but downplayed by Orszag.

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The 2010 Commonwealth Fund International Health Policy Survey finds the US lags other rich countries in health care system performance. It won’t be a big surprise to hear that the US stands out for the high number of patients having trouble paying for health care and foregoing care due to cost. But a few other findings stand out from the survey of 11 countries:

• 31 percent of people in the US report spending lots of time with insurance paperwork. Other countries with competitive insurance markets (e.g., Switzerland, Netherlands, Germany) have rates about half of that
• Even people in the US with health insurance run into problems paying for health care. That’s untrue in other countries
• 70 percent of adults in the UK  and 93 percent in Switzerland say they get same day or next day access to doctors when sick. The comparable number in the US is just 57 percent
• Countries like New Zealand, the Netherlands and UK have easy access to after-hours care. Not so in the US
• Looking on the bright side, the US is near the top in quick access to specialists

Read more about it here.

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