Payers & Providers – Issue of May 13, 2010

8/9/2019 Payers & Providers Issue of May 13, 2010

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A report by the nonpartisan New AmericaFoundation has offered a 10-point blueprintfor reducing healthcare costs in Californiaby $309 billion over the next decade.

The report, penned by the 35-memberCalifornia Task Force for Affordable Care,noted that healthcare costs in Californiahave more than doubled between 2000 and2009. They are predicted to more thandouble over the next decade to nearly $500billion, a trend that is not supportable.

This places an increasing andunsupportable burden on the budgets ofCalifornias families, businesses and thestate, said Leif Wellington Haase, directorof the California program at New Americaand executive director of the task force.

Haase added that the task force which

included representatives from the businesscommunity, hospitals, health plans,healthcare purchasers, consumer advocatesand academics was guided by theprincipal that most medical care is focusedon treating rather than preventing illness,and that the spending on healthcareservices does not match the value of thecare received.

The proposals include completely linkingreimbursement for care to outcomes, anaggressive program to reduce hospitalacquired infections, merging portions of thestates insurance bureaucracies and

concentrating the market power of thehealth insurance exchange that willbecome operational in California as aresult of healthcare reform.

Micah Weinberg, a senior researchfellow at New America and the taskforces senior director, observed thatmany of the proposals will beimplemented in some fashion or anotheras the result of recently passed federalhealthcare reform, but that they lackcoordination.

Here are things that are already inprogress...and as long as you are doingthese things, this is a way to direct themin a way to get better value for medicalspending, Weinberg said.

The task force members reached for

comment agreed that all or most of theproposals were feasible.It was the consensus of the task force

that these were doable deeds, and I wason the side of (stretching to meet) thegoals, said Steve McDermott, chiefexecutive officer ofHill PhysiciansMedical Group in San Ramon.

McDermott added that the ability ofHills 3,000 physicians to adjust toinitiatives such as pay-for-performance,post-discharge care, bundled payments

A Blueprint For Californias OverhaulNew America Report Proposes 10 Major Changes

California Edition

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Payers & Providers

and closely collaborating with patients tocraft a course of care suggested to himthat all providers could make the same

changes.Task force member C. Duane Dauner,president of the California HospitalAssociation, believes the recommendationhospitals focus on reducing the utilizationof imaging and other services was lessrealistic.

Hospitals have nothing to do withutilization. They do nothing to a patientunless it is ordered by a doctor, Daunersaid, adding that laws addressingeconomic credentialing and otherpotential interference with the medicaljudgment of physicians bars hospitals from

having a great deal of say in the matter.Weinberg questioned that notion.You really have to push back against

the claim that hospital administrators haveno control, he said. Certain hospitalshave done much better than others inCalifornia on this issue.

Dauner did support a proposal thatwould strive to eliminate hospitalacquired infections and penalize providersfor re-hospitalizations, but wanted asystem in place that assigned blame for are-hospitalization appropriately. As part ofthe healthcare reform package that was

passed by Congress earlier this year,Medicare payments to hospitals would bereduced if hospitals have to readmit anexcessive number of pat ients. Thatprovision kicks in during the fall of 2012.

If the patient doesnt follow post-discharge orders and winds up back in the

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hospital, the hospital should not be heldaccountable, Dauner said.

Aside from drastic changes in the

payment systems, the report proposedmerging the medical insurance portion ofthe California Department of Insurancewith the Department of ManagedHealthcare. The DOI deals primarily withfee-for-service and preferred providerorganization health plans, while theDMHC focuses on managed care plans.

Weinberg noted that the existence oftwo agencies often prompts insurers tocreate products that fall under DOIregulation, which is considered theweaker of the two agencies.

Anthony Wright, a task force member

who is executive director of Sacramento-based advocacy group Health Access,believes the merger would providestronger regulation of insurers.

It makes no sense to have twocompeting regulators the insurers can playoff one another. They cannot chose themore lenient regulator, he said. Weneed to figure how to better consolidatethe oversight so that all insurers play byall the same high standards forconsumers.

The report also proposed that theinsurance exchange mandated by federal

healthcare reform be the only source ofinsurance for small businesses andindividuals in California. If not, the risk ishigh that the exchange will cover onlyhigh-risk individuals and make itfinancially unfeasible in the long-term.

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In Brief

L.A. Care Grants$795,000 to 5

Community Clinics

L.A. Care Health Plan has granted$795,000 to five community clinics

in the Los Angeles area in order toimprove their infrastructure.

The grants, which range from$105,000 to $200,000, are part ofL.A. Cares Robert E. TranquadaSafety Net Awards. They areawarded through a competitiveprocess.

Pomona Community HealthCenter will use its $200,000 grantto transform a 5,000-square-footspace in a former shopping mallinto a satellite clinic that will servesome 5,600 patients a year. Theplan will help address a shortfall ofsafety net primary care in thePomona area, which has only one

community clinic and a waiting listof up to six weeks to receivemedical care.

University Muslim MedicalAssociation, which operates a largecommunity clinic in South LosAngeles, will use its $200,000 grantto open a student-based healthcenter at Fremont High School. Theclinic will focus on general health,family planning and prenatalservices.

Other recipients included theURDC/Bill Moore Clinic inPasadena, which received$165,000; Garfield Health Centerin Monterey Park ($125,000); and

Cleaver Family Wellness/OurSaviour Center in El Monte($105,000).

To date, L.A. Care has awarded23 safety net grants totaling $5.2million. L.A. Care officials say thegrants help guarantee the long-termsustainability of the clinics andtheir ability to grow in order tomeet the needs of the communitiesthey serve.

New America (Continued from Page One)

Continued on Page 3

NEWS

Reports Suggestions and Projected Savings Over One Decade

1. Pay providers for risk-adjusted outcomes

2. Hold hospitals accountable for reducing utilization

3. Reduce hospital-acquired infections and hospital readmissions4. Standardize billing, eligibility and contracting

5. Merge portions of the Department of Insurance with the Department of ManagedHealth Care

6. Reduce defensive medicine

7. Create a sole-source insurance exchange

8. Encourage shared decision-making between physicians and patients

9. Impose a tax on calorically-sweetened beverages

10.Encourage walking and use of public transportation

Source: New America Foundation


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NEWS

In Brief

Southwest Healthcare

Close to Settlement

With CMS

Southwest Healthcare System,which has been under fire byregulators for lax patient carestandards, said this week it is closeto a settlement with the Centers forMedicare and Medicaid Services toallow it continue to receive federalfunding for care.

CMS announced last monththat Southwest would be barredfrom participating in the Medicareand Medi-Cal programs on June 1due to operational issues dating to2007 that threaten patient safety.The California Department ofPublic Health also said it wouldmove to revoke Southwestsoperating license. The CDPH hasissued six administrative penaltiesagainst Southwest since 2007,including three that were issuedlast month.

We are continuing to workwith CMS on an agreement andhope to have something completedsoon, read a statement issued bySouthwest on Tuesday.

A source close to CMS saidthe agency would likely allowSouthwest to continue to operateunder an extensive and veryclosely monitored plan ofcorrection. A CMS spokesmandeclined to comment on thematter.

Southwest, which is owned byfor-profit operator UniversalHealth Services, operates InlandValley Medical Center and RanchoSprings Medical Center in theRiverside County communities ofWildomar and Murrieta. Its chiefexecutive officer resigned late lastmonth in the wake of thecontinuing regulatory issues.

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RAND: P4P Could Hurt Some PatientsStudy Suggests Medically Vulnerable Put At Risk

trends, said Milliman Principal LorraineMayne.Physician costs were the largest. At

$6,062, they comprise one-third of all costs.Inpatient costs comprised 31% of expenses a$5,581. Pharmacy costs comprised 15%

Outpatient medical care had the largestpercentage cost increase, rising 11.6% to$3,094 annually.

Miami had the largest per-householdmedical costs, at $22,089, followed by NewYork City, at $21,477. Phoenix was the leastexpensive major city, with medical costs of$16,071, followed by Seattle, at $17,007.

L.A.s Healthcare Costs StableMilliman Study Pegs Increase to National Average

Pay-for-performance programs have thepotential to exacerbate healthcare disparitiesif used to treat certain populations ofmedically vulnerable patients, according to anew study by Santa Monica-based RAND.

The study focused on 438 primary carepractices throughout Massachusetts. The datasuggested that a medical practice engaged ina P4P program serving medically vulnerablecommunities could suffer an annual loss ofincome of as much as $7,100. The loss couldrise even further if the P4P program focusedon long-term goals over several years.

Paying for performance may have theunintended effect of diverting medicalresources away from the communities thatneed these resources the most, said MarkFriedberg, the study's lead author and an

associate natural scientist at RAND. If youdon't watch where the money goes, pay-for-performance programs have the potential tomake disparities worse.

Friedberg suggested that pay-for-

performance programs should be structuredto provide grants for physicians who treatmedically vulnerable populations, whichwould remove an incentive to not provideappropriate care.

"We found that practices that treatvulnerable populations have room forperformance improvement, so it's importantto preserve the incentive to improve qualityof care while taking steps to prevent anincrease in disparities," Friedberg said.

The study was published in this monthsissue of the journal Health Affairs.

The average household cost of healthcare inLos Angeles is $18,098 this year, just slightlyabove the national average of $18,074,according to a new survey by Seattle-basedconsulting rm Milliman, Inc.

Annual medical spending in a typical U.S.household increased 7.2% from 2009. Thetotal dollar increase was the largest sinceMilliman began tracking costs in the 1990s.

The cost of group insurance continues toincrease at a historically-consistent pace,even with reform now the law of the land.While there will be short-term costimplications, especially for particularemployees and certain employers, this yearreects a continuation of the prevailing cost
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A wealthy friend tipped me off about thefuture of healthcare insurers.

Hes a profligate spender (by mystandards), but he longer wishes to spendmoney on health insurance. Hes offendedby premiums that have passed the $700-a-month mark. He bought a pared-downpolicy instead, and may eventually gobare altogether.

Now, if someone who just plunkeddown some 60 grand to buy ahydrogen fuel cell for his mansiondoesnt believe hes getting value for

the pocket change he lays out forhealth insurance, why would someoneof more modest means be willing topay $8,000, $10,000 or even $20,000 ayear for the same product?

One might think that same question isfinally being bandied about by thecorporate captains at Anthem Blue Crossof California.

Anthems tone-deaf attempt earlier thisyear to increase its individualpolicyholder by as much 39% created acrucial opening for the ObamaAdministration. A healthcare reform bill

that had been declared moribundsuddenly sprang back to life.Not only did Anthem and its

Indianapolis-based parent companyWellPoint, Inc. single-handedly revivehealthcare reform, they have since beenput on their heels by Congressionalhearings, relentless criticism in the media,and an embarrassing rejection of itsproposed rate increases by CaliforniaInsurance Commissioner Steve Poizner.The latter incident suggested Anthemsactuaries were either incompetent, orcooked their numbers.

Anthem has been cutting backcoverage while demanding andreceiving double-digit hikes for yearsnow. However, it never did so during ayear when the healthcare reform debateraged so loudly, or when the head of thedepartment that grants such increases wasrunning for governor. Anthemsmanagement more than a dozen ofwhom earn seven-figure salaries was soused to getting its way that it ignoredobvious political headwinds.

Nonetheless, Anthem and other healtinsurers continue to cluck about the hugepremium increases they say will occur in coming years.

All those for-profit insurers need to fafacts: the environment that permitted it topost billions in earnings is drawing to a cNow that healthcare reform requiresindividual accountability, corporateaccountability must inevitably follow.

Which answers my original questiothe millions of Americans who buytheir own coverage wealthy or no

will no longer do so. Theyll pay thpenalty and do without, or theyllpurchase insurance only when they

become sick after pre-existing conditions phased out.

Meanwhile, better products will no dbe introduced by competitors looking to cto those dissatisfied customers. Hospitals medical groups may start marketing directo patients, for example.

If you dont think such a downfall caoccur to corporate behemoths, think agaiThe Big 3 spent 15 years pooh-poohing thlittle cars manufactured by Japan, while d

absolutely nothing to improve their ownproducts. The 1973 Arab oil embargo bectheir aha moment.

Yet Incredibly, after another 35 yearstaking their lumps (and now a couple ofbankruptcies to boot), the Big 3 remainuncompetitive. Their cars drive like a lot ohealth insurance policies: just enough effto get by, take it or leave it.

Anthem and the other insurers may sat such prognostications; after all, it tookdecades to humble the U.S. auto industrycheck back in 30 years. The actuaries saytheres a decent chance Ill still be here. B

am certain the Anthems, Aetnas and Humof the world will be by necessity muchdifferent companies. Or perhaps they wonbe here at all.

OPINION

Anthem, Reform and The New RealitPremium Hikes Without End Will No Longer Work

By

Ron

Shinkman

Ron Shinkman is the publisher of Payers &

Providers.

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Op-ed submissions of up to 600 words a

welcomed. Please e-mail proposals to

[email protected], or ca

(877) 248-2360, ext. 3.


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Payers & Providers – Issue of May 13, 2010

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