Health Business Blog

Small business is an essential part of the American economy and a key focus of the Patient Protection and Affordable Care Act (PPACA). Only 57 percent of companies with under 50 workers provide health insurance, compared to 92 percent in the 51-100 range and 97 percent with more than 100 employees. Despite what you may have heard, PPACA (aka ObamaCare) is not a radical government takeover of the health care system. Instead, it seeks to preserve and extend the employer-sponsored health insurance model and extend it further into the smaller employer realm.

PPACA was crafted to encourage smaller companies to provide insurance for employees by regulating the insurance market, establishing health insurance exchanges, providing tax credits for the smallest employers, providing grants for wellness programs and imposing penalties on some who don’t comply. We’ll see where all this leads as the Supreme Court considers PPACA’s constitutionality and Democrats and Republicans contest the 2012 elections, but small businesses would be wise to start planning for the full implementation of PPACA, which is less than two years away.

Kaiser Family Foundation has a good fact sheet on the topic. Key takeaways are:

• PPACA allows businesses to “grandfather” health plans in place as of March 2010. That was to address concerns that people would have to give up health plans they’re happy with now. Companies may wish to use grandfathered plans because such plans are subject to fewer requirements than the “Essential Health Benefits” that will be specified under PPACA. Most small businesses have at least one grandfathered plan. Theoretically these plans could be cheaper, but in practice I expect that most such plans will be abandoned over the next five years as market conditions change
• Health plans will have to guarantee that coverage is available and can be renewed. They’ll also have to offer coverage to dependents up to the age of 26. Importantly, plans won’t be able to base premiums on health status of a company’s employees. Instead they can rely only on age, smoking status, individual/family and location. They can provide substantial discounts for those engaged in wellness programs
• Essential Health Benefits (referred to above) will be decided on a state level, with federal input
• Health plans will be subject to minimum medical loss ratio (MLR) rules and will have to rebate overcharges if medical and quality improvement spending fails to reach 80 percent of premiums
• Plans will be assigned simplified ratings (bronze, silver, gold, platinum) to reflect their level of coverage relative to expected total costs
• Small businesses will be able to participate in state run or federally run health insurance exchanges
• There will be penalties for businesses with more than 51 employees if they don’t provide affordable coverage. Note that businesses with fewer than 50 employees are exempt from the penalties
• Substantial tax credits will  be available to low-wage businesses with fewer than 25 employees
• Businesses with fewer than 100 employees will be eligible for grants to launch wellness programs if they did not already have them in place

In short, PPACA has a lot of implications for small and mid-sized businesses. But employers with fewer than 50 workers won’t actually be compelled to do much. Their employees are likely to obtain insurance coverage through the individual market and Medicaid. In contrast, under state health reform in Massachusetts the mandate kicks in when employers have 10 employees, which is a big difference.

Share

The Brain Resource Company (BRC) is a global leader in personalized medicine for the brain. In this podcast interview, BRC’s Executive Chairman Evian Gordon and I discuss:

• The similarities and differences between personalized medicine for the brain and overall
• The iSPOT study that focuses on biomarkers for depression and ADHD
• The importance of a standardized platform
• The business case for personalized medicine for the brain in pharmaceutical discovery and development
• How the next few years will unfold from a brain research standpoint

If you want to hear more from Evian, you can check out a video of his recent conference presentation at Stanford.

Share

David Williams interviews Brain Resource's Evian Gordon [ 18:44 ] Play Now | Play in Popup | Download

How many times have you read about the staggering shortage of nurses? It’s routine to see numbers in the hundreds of thousands tossed around –representing the seemingly insatiable demand for nurses from an aging population. I’ve always been suspicious of these estimates. First, it’s not how the economy works. We’re not really going to have 260,000 unfilled nursing positions in 2025. Either supply will rise, demand will fall or there will be a substitution of other kinds of labor or capital. Second, these numbers often come from interested parties, usually advocates for higher nurse pay and benefits or people who are running nursing schools and would like them to expand.

So I was struck by an article today that mentioned a glut of nurses, even in places like California that mandate minimum nurse staffing ratios. The situation is blamed on the recession, which depresses demand as hospitals and other nurse employers seek to control budgets, and also increases supply as nurses delay retirement, seek more hours, or return to work when a spouse is laid off. I’m sure there’a lot of truth to this, but if there is really such a big shortage it shouldn’t turn into a glut so quickly.

I don’t think employers of nurses are quaking in their boots due to the prospect of a gaping shortage of nurses. Although they might not say so openly (since everyone loves nurses) the forward thinking hospitals are planning for the day when nurses comprise a substantially smaller portion of their costs than they do now. They’ll do it with better decision support systems, workflow tools and robots that will take over many routine and high-skill nursing functions. Hospitals may seem capital intensive now, but I really believe there will be even more substitution of capital for labor in the future.

So if you’re betting on a giant nursing shortage in the year 2025 my guess is you’re going to lose.

Share

Health plans have realized for quite some time that the widespread practice of scheduled C-sections and induced labor before the end of 39 weeks of pregnancy is an expensive proposition. Even babies born a week or two early have a significantly higher chance of being admitted to neonatal intensive care units, having difficult breathing and experiencing bloodstream infections. Such births are surprisingly common. In 2010 about 17 percent of babies were delivered at 37-39 weeks without a medical reason.

The Leapfrog Group. March of Dimes and American College of Obstetricians and Gynecologists has taken the initiative to try to address this issue by getting the word out and having hospitals set performance. They’ve decided there’s no reason for hospitals to have more than 5 percent of births in the early delivery/no medical reason category, and have asked hospitals to report their results.

The good news is that it seems to be working. The rate dropped from 17 percent to 14 percent from 2010 to 2011, according to newly published figures.  More than 700 hundred hospitals voluntarily reported their rates to Leapfrog. It’s fascinating to scroll through and see the variability. A good number of hospitals are at or below the 5 percent target while some others are way up in the 20 to 30+ percent range. That can’t be random variation.

So why are these medically unnecessary early births occurring? Childbirth Connection has a good summary:

• Women’s lack of knowledge about the risks, benefits, and appropriate use of labor induction
• Lack of shared decision making
• A perception among women, caregivers and hospital administrators that induction is convenient and cost-effective
• Frequent use of screening tests at the end of pregnancy, despite lack of evidence of improved outcomes
• A belief that the best way to manage risks in pregnancy is to deliver the baby

Share

Hospitals in Northern New Jersey (and no doubt elsewhere) are a lot more likely these days to collect patient payments upfront rather than waiting to bill and collect later. Although it sounds a bit cold-hearted, it’s not a bad idea if done properly. In particular if a hospital can determine upfront what a patient’s co-pay or deductible is, it’s reasonable to try to collect it when the patient is there. That avoids the substantial costs of collection and dramatically boosts the percentage of patients who pay. In theory it may also lower the rates a hospital can accept from insurance companies, which ultimately could translate to lower premiums when there is less cost shifting from those who don’t pay to those who do.

As I write this I’m well aware of the problems such a policy can cause including deterring people from needed care, increasing anxiety at a time of heightened stress, delaying clinical triage, and getting the amounts owed wrong. The biggest issue is the first one –for example even an insured patient may not have the $1000 or $2000 co-payment or deductible on hand. But that also shouldn’t necessarily be the hospital’s problem. Rather that’s an issue for the plan sponsor (often an employer), state or federal policy.

I do worry about big institutions such as hospitals acting inappropriately aggressively toward patients, but this problem already exists with post-treatment payments. If anything, taking care of the bill up front may reduce the interest and fees that can pile up, especially when a collection agency gets involved.

Share

Newt Gingrich has positioned himself as the “true conservative” in the Republican Presidential primary. And last night he trumpeted his support for the Medicare Part D drug benefit program, which was spearheaded by Republican majorities in Congress  and signed by Republican President George W. Bush. Sorry, but supporting Part D and being a conservative don’t go together.

Gingrich said he supported the measure because it didn’t make sense to pay for kidney dialysis and open heart surgery but refuse to pay for insulin or heart medicine. That’s logical enough.

But Medicare Part D was and still is a fiscally reckless program. Unlike Medicare Part A (hospital insurance) which is 84% funded by a dedicated payroll tax, Medicare Part D has absolutely no dedicated revenue source at all, beyond the very modest premiums paid by beneficiaries! And when the prescription drug benefit was put in place there were no attempt to offset the added costs by cutting elsewhere.

In other words, the government’s Medicare Part D costs of about $50 billion per year go straight to expanding the federal deficit.

Worse yet, Medicare Part D is available to any Medicare eligible person regardless of income. That means many seniors who don’t need another handout from the government are getting one.

You can’t be a conservative and be in favor of Medicare Part D. So, which is it, Newt?

Share

The Wall Street Journal devotes its Journal Report section today to pro/con debates on six health care issues. Five are reasonable and either timely or timeless: Should everyone be required to have health insurance? Should healthy people take cholesterol drugs to prevent heart disease? Should every patient have a unique ID number for all medical records? Can accountable-care organizations raise quality while reducing costs? Should patents on pharmaceuticals be extended to encourage innovation?

But one –Should physicians use email to communicate with patients?– should have been settled more than 10 years ago. It’s almost a joke that it’s still being asked, and at first I thought the question was about whether doctors and patients should still be using email as opposed to whether they should be trying it for the first time. Dr. Joseph Kvedar of the Center for Connected Health trots out all the well-rehearsed arguments that have been used over the past 15 years to encourage patients to use electronic messaging with their patients. And I agree with it all:

• Privacy concerns are overblown and not unique to electronic media
• Not every interaction needs to be in-person
• Doctors won’t be inundated with messages, despite their fears
• Patients feel more connected to their physicians when they can reach them online
• Electronic communications promotes efficiency
• Liability issues are mino

Dr. Sam Bierstock, founder of a health care-IT consulting firm, takes the con side of the argument. He’s probably an intelligent guy and knowledgeable about health IT. I’m guessing he jumped at the chance to write a piece for the Journal (and even have his picture published) –even if it meant taking a silly, losing position. Kind of like the Washington Generals, who used to play against the Harlem Globetrotters.

Bierstock concedes that “email can be useful for certain very basic patient-doctor communications” but then lays out a bunch of arguments that aren’t terribly persuasive:

Share

I find it really strange that dental care is excluded form health insurance, including commercial and government programs. It’s increasingly untenable in my view. Why?

• Neglect of dental issues due to lack of coverage causes higher medical expenses, for example as dental infections spread to other parts of the body
• Hospital emergency rooms are seeing many dental cases (representing as much as 2.7% of ER volume) and are not well equipped to treat the problems, according to USA Today. In any case the expense is high
• Even well-off people with medical coverage often don’t qualify for dental insurance –e.g., because they aren’t part of a group–  and end up paying high fee for service rates to providers rather than benefitting from a plan’s purchasing power and network
• To the extent that we are moving toward a more integrated approach to care and payment (e.g., medical home, accountable care organization) it makes sense to bring the whole body under one roof

Share

Among the wide array of hyperbolic complaints about health reform, the phrase “government takeover of the health care system” has always struck me as an odd one. It makes it sound as though the government is taking over the means of production, which is far from the case. In researching this post I realized I’m far from the first to make the observation. Actually it was featured as the Lie of the Year for 2010 by PolitiFact.

The government does play a major role in the health care system. It’s a big customer, financier and regulator. The feds own and operate VA and DoD hospitals, and there are various county, city and state facilities, but this is a small share of the total.

Kaiser Family Foundation has an informative piece today (Betting on Private Insurers) that  looks at health care based on who’s managing the benefits. The conclusion: at least 73 percent of those covered are in private insurance arrangements, whether through employer coverage, individual policies, Medicare Advantage or Medicaid managed care. The rest are mainly in fee for service Medicare and Medicaid. And many fee for service Medicare patients have private Medigap and Part D drug plans. If anything, the Affordable Care Act is likely to boost the percentage managed by private entities. More individuals are slated to purchase commercial insurance on their own or through exchanges, and much of the growth in Medicaid will be in managed care.

Providers of health care are overwhelming private and likely to remain so. The government isn’t nationalizing hospitals nor forcing physicians out of private practice.

Sure, it’s arguable that many hospitals are so dependent on Medicare that the government influences them heavily without owning them. But I haven’t heard anyone say the government has taken over the defense industry even though many weapons makers can only sell to the feds.

I think it would be healthy to have a debate about the extent to which government should get more involved in health care delivery and benefit management. Maybe the VA model should be replicated and a public insurance plan be introduced to compete with the private health insurers. But none of this is part of the Affordable Care Act and therefore it’s laughable to frame “ObamaCare” as any kind of government takeover.

Share

Julie Ferguson of Workers’ Comp Insider hosts the Look to the Future edition of the Health Wonk Review.

Share