Insight, analysis & opinion from Joe Paduda
Desperate times call for desperate measures, and today’s GOP is certainly close to desperation. A recent news article highlights their new strategy; building bridges to allies in the fight to overturn, repeal and replace ObamaCare.
You’ve got to admire the Republicans’ big tent…
I’ve long held that broad-based attempts to control the price of medical service are, at best, a short term fix, and at worst, a blunt instrument that actually encourages over-treatment and extended disability.
Greg Krohm, Executive Director of IAIABC, has a similar take. Speaking for himself and not in his IAIABC role, Greg notes:
“payment rules like fee schedules are devoid of financial incentives for good medicine and good treatment outcomes, [emphasis added] including early return to work…I can think of no reason for a clinician – other than professional & moral values – to put in the extra time it takes to counsel and manage patients on tricky issues like return to work, pain management, therapeutic programs, and the prevention of re-injury. The payment is a flat rate per billing code without regard to quality or care given.”
Greg is, or course, dead on. His column is well worth a read and re-read, as he delves into several related issues. But for now, let me focus on just the price issue.
Fee schedules attempt to control cost by controlling just one aspect of the medical cost equation – which is:
Price x utilization (number of services used) x frequency (percentage of claims that use that type of service) = cost.
Some services – MRIs. for example, are indeed more a price than a utilization problem (not that there isn’t over-utilization of imaging, but price is a more important driver), so focusing on price per service makes sense. Hospital and facility fees are another service type that are primarily a price-per-service issue.
Physical therapy is much more of a utilization problem; the price per service is relatively low, but the number of services tends to be quite high, and many payers struggle to control utilization.
Even if price is the issue, attacking price alone without paying attention to utilization and frequency is akin to plugging one of three holes in a dam; the water will just seek out the other gaps, enlarge them, and before you know it the flood is even worse.
That’s but one aspect of the issue; we haven’t even touched on how low fee schedules disincent provider participation in workers comp thereby reducing access to care, or the inability of the regulatory process to keep pace with medical innovation, or bill review vendors charging some payers merely to reduce provider bills to an inordinately-low fee schedule.
WorkCompCentral’s Greg Griggs has written an excellent piece on this issue; [sub req]Griggs interviewed a couple folks who disagree with Greg Krohm’s views.
What does this mean for you?
Price controls. and artificially low prices, don’t reduce total costs.
On Thursday I’ll be speaking at the Geisinger Clinic in Danville, PA on Comparative Effectiveness; the Payer’s ethical dilemma.
This is one of those ‘honored to be asked’, followed almost immediately by ‘I’ve a lot of work to do’ things. And a lot of work it indeed has been, but the deeper I’ve gotten into this, the more…gratifying it has become.
One example. In my research I came across Jim Sabin, MD. Dr Sabin, clinical professor in the departments of Population Medicine and Psychiatry at Harvard Medical School; he also directs the ethics program at Harvard Pilgrim Health Care and writes an excellent blog, Health Care Organizational Ethics.
Here’s a few of the things I’ve learned from Dr Sabin.
1. Harvard Pilgrim may be the only health insurer in the country that has an inhouse ethics program that includes members, employers, brokers, community members, administrators and physicians. (If there are others out there I’d love to hear about them)
2, This isn’t a program set up merely for PR; rather it has studied significant issues, taken tough stands, and been public about its role and results.
3. The issue of ethics in medical research on effectiveness has another dimension, one that I hadn’t thought thru or explored in enough detail – health plans and health systems can be and in many cases are ‘sites’ for research; there are several ethical issues inherent in that role, issues that involve informed consent, public involvement and education, funding sources and use of those funds, the balance of cost and effectiveness, and the potential impact on the physician-patient relationship inherent in many research efforts.
4. Perhaps the most helpful discussion was around the not for profit status of HPHC. As a not for profit, Harvard Pilgrim doesn’t have to deal with the primacy of stockholder returns inherent in the for profit world; that’s not to say it doesn’t have to ensure financial stability and long-term viability. The difference is in what’s most important – profits or patients.
The primacy of stockholder returns influences ethical and business decisions, or rather should. For profit companies must consider shareholder returns first and foremost; to do otherwise would be an ethical problem. There are for-profit health plans and insurers that work diligently to deliver services ethically and responsibly, bending over backwards to do the right thing. Aetna is one that comes first to mind. And there are others that don’t bend at all.
Which is ‘right’? A compelling argument could be made for either position.
On Tuesday night, PBS’ Frontline focuses on what really happened to get health reform passed. Here’s a blurb from the press trailer:
“The administration’s hopes for reform rested with Sen. Max Baucus (D-Mont.), the powerful head of the Senate Finance Committee, who also happened to be one of the Senate’s top recipients of special interest money from the health care industry.
The White House encouraged Baucus to quietly negotiate deals with the insurance lobby, drug companies and other special interest groups, despite promises to run a different kind of White House. “The president said that having people at the table is better than having them throw stuff at the table,” White House Communications Director Dan Pfeiffer tells FRONTLINE. ”
While I haven’t seen the actual program, the trailer is pretty tough stuff.
CompPharma LLC, a consortium of workers comp PBMs, has just published a glossary of terms commonly used in the comp pharmacy business, the press release is here and the glossary, which entitled CompPharmaPedia, is here.
Why a glossary?
Several reasons.
Regulators and legislators are working feverishly to figure out what they will use as a basis for their pharmacy fee schedules when AWP is no longer published by First DataBank. While they are working on fees, they may well want to tweak other provisions of the comp code; CompPharmaPedia can help provide a standard definition of terms so stakeholders have a consistent understanding of what, for example, a ‘claim’ is.
(in comp, a claim is the injury and all the activity surrounding that activity; in group and governmental programs a claim is the bill for a specific medical procedure(s) or prescription or service)
Many payers are looking to improve the results of their pharmacy programs, and there’s a good deal of confusion out there as different PBMs use different definitions in their reports and marketing literature. CompPharmaPedia is an attempt at standardization, so payers can do the proverbial “apples to apples” comparison.
Researchers are looking deeper into comp pharmacy, and CompPharmaPedia should help them use standardized terms to improve understanding across the entire community.
A couple of disclaimers.
CompPharmaPedia is a service; there is no ‘requirement’ that PBMs, or anyone else, use the definitions. PBMs may and some likely will continue to use their own definitions.
CompPharmaPedia is also a work-in-progress, and will evolve as the comp pharmacy business does. Expect more terms to be added and current definitions to be ‘tweaked’.
(Note – CompPharma is owned by myself and Helen Knight.)
Stratacare’s (relatively) new owners are delivering on their commitment to growing the company; they will be acquiring Marsh’s CS STARS MedBillPro operation.
Paul Glover et al (Stratacare leadership) has been aggressively on the hunt for new business; they were finalists in the now-defunct Bunch and Associates deal, and looked hard at OneCall Medical and at least one other deal. Expect to see more from Stratacare in the future; the RIMS Conference is coming up at the end of April, an event where new deals are often announced.
The announcement is here.
What does this mean for you?
Activity generates interest in the investment community…
Bill Sota posted a brief piece about the Veterans Administration’s adoption and use of Electronic Health Records, citing: “Good news on the cost savings performance of Vista which is the VA’s electronic medical record system:”
Bill is referring to the primary source, an article in Health Affairs:
“The VA spent proportionately more on IT than the private health care sector spent, but it achieved higher levels of IT adoption and quality of care. The potential value of the VA’s health IT investments is estimated at $3.09 billion in cumulative benefits net of investment costs.” [emphasis added]
Two points.
1. The VA is a very, very large health system that has implemented an EHR program and saved taxpayers over $3 billion dollars – so far. Implementing EHR is difficult, time-consuming, and a lot of work. Yet it can, and has, been done.
2. This is a creditable result, and one that should encourage other integrated health systems to find out what the VA has done and, perhaps, do something similar. After all, if the gubmint can do it, it should be child’s play for the vaunted free market…
Unfortunately, it appears as if the private sector isn’t as competent in this area as the VA. Within the article itself are a couple telling conclusions. First, the VA spends considerably more (as a percentage of total expenditures) on IT than the private sector does. Yet the VA’s ratio of IT capital spending to total spending is considerably less than the private sector’s.
The VA spends more on IT, with a big chunk of that invested in implementation and maintenance. And the results show the impact:
“The VA has achieved close to 100 percent adoption of several VistA components since 2004. In contrast, the private health care sector has not reached significant adoption of any of these systems. Adoption in the private health sector of inpatient electronic health records stands at 61 percent; use of inpatient bar-code medication administration is at 22 percent; computerized physician order entry adoption stands at 16 percent; and outpatient electronic medical record adoption is at 12 percent”
Finally, the implementation of the VA’s VistA system has delivered significant improvements in the quality of care delivered. Here are just a couple examples (quoted from the articleº:
– For preventive care process measures such as cancer screenings, the VA had higher performance during 2004-2007 relative to the private health care sector
– VA patients with diabetes had better glucose testing compliance and control, more controlled cholesterol, and more timely retinal exams when compared to the Medicare health maintenance organization (HMO) private-sector benchmark.
– The VA averaged about fifteen percentage points higher than the private sector on preventive care for patients with diabetes and seventeen percentage points higher for patients with diabetes who have well-controlled cholesterol
What does this mean for you?
EHR can, and has, delivered significant savings and RoI while increasing quality.
The next time someone bemoans the government’s incompetence and complete lack of ability to run anything, tell them about the VA. And tell them to stop parroting Fox talking points; they are a poor substitute for actual thinking.
The tradition here at MCM is to honor all the important holidays, with none so important as April 1. In the five and a half years I’ve been publishing this blog, the April 1 post has become a challenge – how can we top the previous year?
Last year’s post about Coventry acquiring UnitedHealthGroup was reportedly the cause of some consternation at the afore-mentioned firm, which was forced to issue a press release denying the deal (I’m kidding).
This year’s effort generated much good cheer among many readers, as even a few who take issue with some of my opinions got a good laugh (Allen you weren’t alone).
Unfortunately, there’s always someone who doesn’t think before passing on the post as truth, resulting in a bit of embarrassment. The adults are a bit chagrined, and a bit wiser, and take the heat in good spirit, realizing the spoof is all in good fun.
But there’s always someone without a sense of humor. Late on the fateful day, a senior policy person at a conservative-group-that-shall-remain-nameless sent me an email which read in part “Is this really true? If so, it is extremely explosive and could quickly become a national story. Can you cite the specific language in the law just signed by Obama and the relevant NHS language that leads you to your conclusion? Thank you.”
I responded back that no, it wasn’t true.
Evidently my correspondent is afflicted with a serious case of SOHDS (sense of humor deficit syndrome), as he (yep, it was a male) shot back “That is extremely unfortunate and not at all funny. I had run it past several very senior people who were looking forward to confirmation of its veracity.”
I’ll bet.
(In retrospect, maybe I should’ve come up with some wild story about how this was in a Presidential signing statement that had not yet been made public, and quoted actual verbiage…)
I was interviewed by CompTalk Radio’s Bob Wilson a few days ago on the subject of the direct – and indirect – effects of health reform on workers comp.
The interview is here.
I’ve commented at length on the impact of health reform on workers comp, and will dive deeper into this topic in the coming months. There are several others who also are looking into reform, and their different opinions are well worth considering.
Greg Krohm, Executive Director has posted his views on the topic recently; as the head of the association of workers comp regulators, Greg has a unique perspective enhanced by deep knowledge of the intricacies of work comp regulation and operation in every jurisdiction.
Greg makes several interesting points:
– pharma costs may continue to rise due to increased demand for drugs
– the increased demand for physician services, particularly in rural areas, may lead to extended delays in getting initial treatment, especially in states with low fee schedules and high administrative loads. This is a trenchant observation, and one I’m going to have to think about as it relates to provider networks.
– with lower state budgets due to the significant expansion of Medicaid leading to possible continued reductions in staff at regulatory agencies, disputes will take longer to settle, rulings longer to be handed down, and clarifications on rules and laws delayed.
Greg’s observations are well worth considering.
What does this mean for you?
The impact of reform will play out over several years; knowing what may come will help you recognize the early signs and prepare for change.