March 1st, 2013 by David E. Williams of the Health business blog
The Health Business Blog turns eight years old today. Continuing a tradition I established with birthdays one, two, three, four, five, six, and seven I have picked out a favorite post from each month. Thanks for continuing to read the blog!
As far as I’m concerned, a lot of medical debt isn’t real debt. Real debt is borrowing money from a bank to buy a car or using a credit card to finance a vacation or taking out a student loan to pay for college. Borrowers know ahead of time that they are incurring a financial obligation for a known amount of money for specific goods or services. Hospitalized patients receive bills that are often indecipherable, incorrect, and owed by an insurance company. Even when technically correct the amounts can be non-sensical and vary widely from provider to provider. So it’s seems wrong to me that even medical bills that are paid off –sometimes just to end the nuisance– can have a long-term, negative effect on one’s credit rating.
Under the Affordable Care Act, health plans have to issue rebates to policyholders if they don’t spend at least 80 or 85 percent of premiums on medical costs. Now that the law is in effect, about $1.3 billion is to be paid out. I support the ACA but I don’t like the notion that any dollar spent on medical claims is good and anything spent on administration is bad. The rule discourages administrative spending to reduce medical costs and that’s a shame.
Blue Cross Blue Shield of Massachusetts (BCBS MA) is the largest health plan in the state, and is making waves with its innovative Alternative Quality Contract (AQC). In this interview, BCBSMA CEO Andrew Dreyfus and I discuss the role of BCBS in cost containment, why premiums are stabilizing, opportunities for employers to play a role, and how state government fits in.
There’s a good debate still to be held in this country on health reform, but only if the Republicans step up to the plate with serious ideas. I’m unimpressed with the five main ideas I’ve heard: buying insurance across state lines, small business purchasing pools, tort reform, block grants for Medicaid, and tax deductibility for individuals who buy insurance.
It’s no surprise to me that hospitals are starting to advertise high profit services on Google and Facebook. According to a Kaiser Health News piece, University of Pennsylvania Health System is trolling for lung transplant patients. Spending $20,000 generated 4,600 clicks, 36 appointments, and at least one prospective patient. With lung transplant revenue in the range of $100,000 per patient, even one patient may be enough to justify the media spend.
Orthopedic device makers are putting more control in the hands of patients to make adjustments that used to be handled by physicians. It’s more convenient for patients, but the key to the business model is that such moves reduce the demands on physicians, who otherwise would have to participate in these low-margin, unexciting activities.
I’m bullish on employer-sponsored health insurance exchanges and am happy to see the general media pick up on the theme. I understand why observers are nervous that the use of these exchanges will contribute to cost shifting but I think the concerns are overblown.
Genentech got a lot of grief back in 2007 for trying to keep Avastin away from compounding pharmacies, who were re-packaging the cancer drug to make a cut-rate version of Lucentis for wet age related macular degeneration. I defended the company and pointed out that the New England Compounding Center had been issued a warning letter about its lack of sterility control. Five years later nearly everyone was taken by surprise when New England Compounding Center was in the news for a contamination scandal that led to many deaths. Regulators have no excuse for not dealing with the company when they had a chance.
Colorado is taking a unique approach to its All Payer Claims Database (APCD).
The Colorado legislature mandated payers to submit data, but the effort is privately operated (by CIVHC) and financed by private health care conversion foundations rather than the government. Independent financing and governance make a significant difference. Initial reports are being made public soon after the data is submitted, unlike in other states that don’t make the data public at all or do so under major constraints or time lags.
When hospitals purchase free-standing physician offices they often convert them into outpatient clinics. The shift isn’t visible on the surface, but underneath the covers a powerful economic transformation has taken place, with the new owners now able to charge a so-called “facility fee” to cover the cost of their infrastructure. Medicare and commercial health plans routinely pay such fees. But patients are pushing back, as well they should.
Almost no one really uses smartphone apps to track their health. That’s my takeaway from the latest Pew Research report. Although the report says close to 70% of adults are tracking some health statistics such as weight, diet or medical symptoms most of them do so either in their head (49%) or on paper (34%). Until we get to really smart, passive devices, which will take a decade or more, you should expect to see successive editions of the Pew report saying more or less what this one says.
Concerns are emerging that the adoption of electronic health records is leading to inappropriate increases in billings to payers, including Medicare, and that these higher billings could undermine or even overwhelm any cost savings generated by the digitization of providers. The concerns are legitimate but overall I’m not worried about this phenomenon, at least in the long term.
Thanks again for reading the blog!