A Forum for Discussing and Analyzing Healthcare Issues
About  |  HealthPolCom Consulting  |  Contact

Archive for the ‘Health System Reform’ Category

« Older Entries

ACOs - Accountable Care Organizations: Now and in the Future

By Michael D. Miller MD
June 28th, 2010

Because Accountable Care Organizations (ACOs) promise to reduce costs and improve quality it seems like everyone is talking about them as the solution for what ails the US healthcare system.

What is an ACO?
ACOs are a generally described as entities consisting of care delivery providers and clinicians, (e.g. doctors, hospitals, clinics, labs, etc.), organized so that they can more effectively coordinate care and the ACO can accept and mange some type of global, bundled, capitated, or case-base payments for this care in a way that makes the ACO financially accountable for all - or nearly all - the care individuals receive.  In addition, ACOs would be held accountable for their clinical outcomes by requiring them to report various clinical outcomes and performance measures, with the clear expectation that these clinical outcomes are tied to reductions in cost growth.

However, exactly what ACOs are is still very cloudy even though in recent years they have been described in many articles and presentations, and the concept was incorporated into the health reform law as a Medicare “shared savings pilot.”

The reason for all the interest in ACOs is partly due to the Medicare pilot scheduled to start in January 2012, and other initiatives for moving away from fee-for-service payments to more comprehensive payments for value - which is the kernel at the center of the ACO nut.  The hard part - and the source of the uncertainty - is putting substance and specificity around that seed. In other words, some of the “devil of the details” for ACOs are in delineating what the ACO would be responsible for, and how they would be held accountable:

  • Would the ACO be responsible for all a person’s care or only that provided within the ACO, or possibly not including some catastrophic illnesses, etc.?
  • What type of information about what clinical and economic factors would the ACO have to provide to payers and the public, and would they need to have all the information collection, analysis and distribution capabilities, or would that be shared with other ACOs or the community at large?

In addition, there are a variety of practical implementation issues that need to be specified in creating an ACO, including:

  • How individual providers would be paid within an ACO?
  • How would individual patients be assigned or connected to an ACO, and what would be the requirements or incentives for individuals to receive their healthcare within an ACO?
  • What are the antitrust issues involving providers coming together to form an ACO?

How to Think About an ACO
With all this uncertainty about the specifics of ACOs many people are trying to paint pictures about what ACOs would look like in comparison to existing structures or arrangements in healthcare, i.e. managed care organizations, IPAs, Medical Homes, etc.

Part of the problem people are having in describing or visualizing ACOs is that they will certainly vary across the country - and very possibly even within the same cities. This variety means that what works for building an ACO in one community won’t be exactly replicable in another.

ACOs are the House inside which Medical Homes can be Formed
One way to think about ACOs are that they are like a house.  The house is an overall structure that contains many different rooms with different functions - from bedrooms to bathrooms to a single kitchen, etc., while distributed service functions are inside the walls, (like electricity, phone, cable, plumbing), the roof and outside walls provide structure with windows to let in light and enable the inhabitants to see outside, and the yard and front walk provide buffers and a path to the outside world.  In this analogy, primary care practices (or Medical Homes) would be the multiple bedrooms, other outpatient clinical settings might be the bathrooms, the kitchen might be a clinical lab, the laundry room a hospital, the living room an imaging center, the windows and wires the information technology systems, etc…..

And consistent with this analogy, in different locations, houses are constructed very differently, i.e. multi-story colonials in New England, apartment buildings in cities, single-story stucco in Florida, etc…. and some are free standing while others share walls, utilities and other functions like laundry rooms.

Follow the Money Into and Within ACOs
While the house analogy may describe the organizational structure of ACOs, the flow of money into and within an ACO can be complicated to understand, and may be even more important for the long-term success of the ACO: The flow of money into an ACO will typically be from a payer to the ACO as an umbrella organization for the care of specified individuals connected to that payer, i.e. an employer, or an insurance company.  The flow of money within the ACO is where things get more granular since an ACO needs to distribute funds to providers and clinicians in ways that are both fair and create incentives for them to delivery quality and cost effective care.

These internal financial payment systems and incentives are essential since the success of the ACO depends upon it being able to achieve savings, and sharing them not only with payers, but also internally and potentially with patients as well.  In addition, the ACO will need to have information systems capable of keeping providers updated about their progress toward clinical and economic goals - possibly in conjunction with various payers or the community overall.  It is also important that whatever information is provided to clinicians within the ACOS - and their associated patients - is delivered in a way that is usable and within a time frame that relates to their actual healthcare decisions, ideally within a month.

ACOs v. MCOs
Some have questioned how ACOs are really different than managed care organizations.  This is a fair point since at a very macro level, like a staff model HMO, an ACO is accepting a fixed amount of money, (a.k.a. capitation), for providing comprehensive care to individuals.  However, there are many differences below that broad description.  For example, ACOs will most likely be formed as business relationships among a variety of different care providers rather than as a fully integrated single business entity.  Therefore, in a very general way, ACOs could be seen as virtual managed care organizations, with their structures varying based upon the existing relationships within a community.  But ACOs may not be fully responsible for the cost of care for a defined population, and at least initially they will likely enter into shared savings and shared risk relationships with payers - who will also continue to play a role in managing the enrollment/assignment of individuals to the ACOs and the flow of dollars from the individual (and their employer as a contributing payer) to the ACO.

Medicare’s Shared Savings (a.k.a. ACO) Pilot
Last week, the Centers for Medicare and Medicaid Services (CMS) held an Open Door Forum conference call about the Medicare shared savings pilot created in the Accountable Care Act, and scheduled to begin January 1, 2012. This conference call was designed to provide individuals and groups the opportunity to comment upon the legislation and make recommendations about how various issues should be addressed by CMS in their regulations for the pilot - a draft of which are scheduled to be released this fall.  As expected, on the conference call CMS repeatedly stated that no decisions have been made, and most of the organizations made comments that seemed to be from prepared statements outlining their major concerns about how the pilot is implemented.

Not raised in the conference call was what may be one of the most important sentences in this section of the new law, “The Secretary may give preference to ACOs who are participating in similar arrangements with other payers.”

This is a key concept for two reasons.  First, for a group of care providers to organize themselves and establish new ways of providing healthcare and managing payments based upon quality and efficiency will require them to have a significant percentage (e.g., >60%), of their patients coming to them with some type of shared savings/risk payments. Otherwise they may find they are losing money for their efforts because delivering care in more efficient ways while still receiving mostly fee-for-service payments will reduce their income rather than potentially raise it.  Therefore, while Medicare is a major payer in many areas, for most potential ACOs it will not represent anything close to 50% of their patients or revenues.  Thus for the pilot to be successful, CMS should seek to leverage their efforts with other payers who are also looking to change their payment mechanisms to promote the creation of ACOs - which is the reason that sentence was added to the legislation. Second, the word “similar” is key in the sentences since while Medicare may “assign” patients (and hence payments) to ACOs based upon where individual beneficiaries have historically received care, but as a government program they will likely find it difficult to require beneficiaries to choose a specific ACO or create significant financial incentives for beneficiaries to receive their care within the ACO.  Conversely, large private payers - insurers and large self-insured employers - can more easily create incentives or situations for individuals to enroll into or preferentially use a single ACO.

Good News about ACOs
The good news about ACOs, their formation, and the ability of Medicare to work in conjunction or parallel with private payers, is that in many communities across the country multi-stakeholder conversations are taking place about how to form ACOs.  And from what I have heard several things are clear:  First, these conversations recognize that ACOs need to reflect existing relationships among local providers.  Second, managed care organizations and provider groups, (e.g., multi-specialty physician groups and IPAs), seem to be ahead of the curve in these discussions since they see a clear path for establishing the care delivery and information processing capabilities required to be an ACO.  And third, multiple stakeholders are part of these conversations, i.e. employers, insurers, hospitals, patient groups, etc.

The importance of these discussions should not be trivialized because they will lead to negotiations and legal documents for the formation of ACOs, and thus need to be conducted in good faith and with diligent examinations of the financial, clinical and information processes required to be “accountable.”

The bottom line is that while the regulations from CMS about the Medicare shared saving pilot will be important guidance for those looking to create ACOs, they will only be part of the equation since  private payers’ goals and payments will also be significant for planning the creation of ACOs. The success of nascent ACOs will not be apparent on January 1, 2012 when the Medicare pilot starts, but rather over the following years as their clinical and IT operations are improved, and the financial mechanisms and incentives (both internally and externally) get refined.

As I’ve said before about the health reform legislation, keep your seat belts fastened since this will be a rough and twisting ride.  However, what is different now is that all stakeholders need to be at the table for these discussions and negotiations, and it will be an ongoing process of analysis and improvement for making ACOs a successful part of the US healthcare system over the next decade and beyond.

Tags: , ,
Posted in Delivery of Healthcare, Health System Reform | 1 Comment »

Health Reform’s Effects on Star Trek Medicine - Diabetes and Otherwise

By Michael D. Miller MD
May 11th, 2010

A long-time colleague recently asked me what effect the new health reform law would have on the use of the famous Star Trek Medical Tricorder.* I told him that provisions of the new health law will try to reduce the number of unnecessary imaging tests, and since the tricorder is a hand-held imaging scanner the new law might reduce its use - if it really existed.

Star Trek Medical Tricorder

Thinking about it later, I realized that if/when such hand-held scanners are developed they would replace much larger and more expensive devices.  The impact of innovations like this on healthcare spending depends upon how health insurance pays for these tests. For example, if these hand-held tests are paid the same amount as the big machine tests, then spending would likely increase because more of these tests would be done since they would be easier and faster to do.  However, if the amount paid for each scan were reduced, then the total effect on spending would depend on that old economics formula: Spending = Price x Volume.  But a third scenario is also possible.  If the tricorder were inexpensive enough that it was just another tool in the clinician’s hand - like a stethoscope is today - then there wouldn’t be any separate reimbursement and spending would dramatically decrease.

But back to the new health reform law: The new health reform law could directly alter incentives for discovering and developing new imaging and diagnostic tests, (as well and new therapies),  since R&D incentives are closely tied to future expectations for payment amounts and methodologies.  The new health reform law has several provisions that could either positively or negatively change these incentives.  For example, increasing the number of people with insurance creates a larger paying population, which would increase incentives for investing in R&D.

Conversely, the provisions for comparative effectiveness research, the Independent Payment Advisory Board, and movement towards bundling payments to larger groups of healthcare providers could put negative financial pressure on the incentives for some types of R&D……. depending upon how those provisions are implemented - particularly how robust the quality monitoring efforts are in conjunction with any initiatives to control spending.  That is, quality monitoring needs to make sure that spending cuts are not broad-sword like hacks at the biggest costs categories, but rather surgical in nature so that they truly reduce ineffective spending while appropriately valuing clinically and cost effective diagnostic and therapeutic interventions.

How the new health reform law’s implementation, (and other initiatives such as the President’s new National Commission on Fiscal Responsibility and Reform which could dramatically effect Medicare payments), will impact biomedical R&D remains to be seen.  But how it changes government and private sector payment amounts and methodologies, (as well as any changes to the policies and practices within regulatory agencies such as the FDA), will be closely watched by biomedical research companies, investors, and patient groups looking for better therapies, diagnostics, and disease monitoring devices.

Advancements in Diabetes
One clinical area where therapeutic and diagnostic advancement has occurred in recent decades is diabetes. Not only are first generation glucose monitoring watches now available, but insulin pumps - which were in clinical trials when I was in medical school - are now being used by such proto-celebrities as Crystal Bowersox, one of the four finalists on this season’s American Idol TV show.  (Note - Ms. Bowersox was shown on the TV show telling Harry Connick Jr. to hang on during their rehearsal session since her insulin pump was “talking at her.”)

Crystal Bowersox

While diabetes monitoring and treatment are certainly not inconsequential, it is now possible to avoid the devastating effects of poorly controlled blood sugar levels so that a 24 year old Mom can compete on a tremendously popular live TV show. And similarly, the disease wasn’t an issue in the nomination or confirmation of Sonia Sotomayor to sit on the US Supreme Court.

Sonya Sotomayor

*According to Wikipedia, “The medical tricorder is used by doctors to help diagnose diseases and collect bodily information about a patient; the key difference between this and a standard tricorder is a detachable hand-held high-resolution scanner stored in a compartment of the tricorder when not in use.”

Posted in Health System Reform, Innovation | No Comments »

Making Health Reform Work

By Michael D. Miller MD
May 6th, 2010

The May issue of Health Affairs focuses on Reinventing Primary Care - a topic that has been part of health policy discussions for at least 20 years. A few things have changed in that time: now there is better evidence about the importance of primary care providers in coordinating care to improve quality and reduce costs; the structural concept of this care coordination has been codified under the new term the “Patient Centered Medical Home,” (which has also been given precise parameters by NCQA); the complexity of medical care has increased so that the need for care coordination is greater; and electronic information storage, analysis, and communications technologies have been developed which - in theory - should make care coordination and the resultant quality improvement and cost control easier and more practical.

Health Affairs held a briefing on Tuesday about their May issue at the National Press Club.  Keynoting the meeting was HHS Secretary Sebelius. She rightly pointed out that healthcare delivery in the US is a “truly broken system.”  Her remarks touched on the various parts of the new health reform law that would help fix what’s broken, but the reality is that the Patient Protection and Affordable Care Act (PPACA) is very heavily weighted toward health insurance/financing reform, with comparatively little addressing delivery system reform.  Similarly, the Health Affairs articles are very heavy on the situation with primary care, the problems with our delivery system, and what a reformed (or transformed) delivery system should look like, but aside from reimbursement reforms, the articles have very little about how to achieve this transformation.

No “How” to go along with the “Who,” “What,” “When,” and “Why”
Like a good news story, a successful reform initiative needs to address the basic concepts of Who, What, Why, When, and How.  Unfortunately, the “How” part is frequently missing or minimal in most health policy discussions and proposals - aside from financial rearrangements. This heavy emphasis on financial incentives is because government programs like Medicare and Medicaid are significantly limited in what they can change outside their payment amounts and methodologies. And in the private sector, changing financial incentives is also the easiest thing to do.  In other words, changing reimbursements and other financial incentives, (such as pay-for-performance or bonus payments), is the lever most often used because it is the one that policy leaders are most familiar with, and it is the easiest for them to pull or push.

Challenges of Reorganizing the Unmotivated
Even though transforming healthcare delivery is based upon reorganizing the structure of healthcare delivery there has been very little focus on how to actually get physicians to participate in this reorganization.  While economists and others keep pointing to the economic incentives lever, it is pretty clear that physicians are not interested in reorganizing for the sake of improving their incomes. David Rotherman’s review of Timothy Hoff’s book about primary care physicians’ practices at the back of the Health Affairs May issue discusses how physicians like the current situation and their incomes. In this review he notes that it doesn’t appear that “primary care physicians have substantial dissatisfaction with the current system or levels of pay,” and that, “They seem comfortable as pieceworkers, not professionals.”

Thus, while policy researchers and payers correctly describe the great need for and value in delivery system reform, those actually delivering care seem to like many parts of the system - particularly their steady income stream and ability to run their own operations.  And while delivery system integration could solve many things clinicians don’t like - such as insurance and paperwork hassles - convincing them that working in a larger organization will significantly improve their lives is a difficult concept to sell. The challenge here is to overcome the inertia of change and getting them to consider the value of shifting from the “devil that they know.”

Private Medical Practices are Small Businesses
Another way to look at this is to see primary care physicians as small businesspeople.  As Boedneheim and Pham illustrate in their Health Affairs article, “Primary Care: Current Problems and Proposed Solutions,” 88% of primary care physicians are in practices with 5 or fewer physicians: 32% in solo practice, 14% in two person practices, and 32% in groups with 3-5 physicians.

What distinguishes these small businesses from non-medical enterprises is that because reimbursement systems using fee schedules create fee-for-service volume incentives, these physicians have very few business incentives to change.  Since their businesses are generally making a profit, and most physicians’ training and skills are not in running an efficient business, they few reasons to change their businesses operations.  While classic economic theory would disagree with that statement, and posit that their incentive should be to improve efficiency to increase profits, the reality is that people don’t like change - and they generally need to believe there there will be a 2:1 return for their financial or psychological investment before they are willing to undertake changes.  And small business practicing physicians don’t want to make those changes because they are concerned that no matter what the policy rhetoric states, they believe that any changes will decrease their income.

In addition, physicians generally believe that proposed health delivery transformation changes will reduce their autonomy - something they may value as high, or higher, than their income since it may be one of the reasons they became physicians, it may be why they are practicing in a small group or solo practice, and autonomy of clinical decisions is part of how physicians are trained.

Conclusions - How to Go About Achieving Health Transformation
Transforming healthcare delivery in the US will not be as simple as paying more for primary care services, and/or training more primary care clinicians, and/or training all physicians to work in team-based environments rather than as autonomous clinicians.  While all those are good things that certainly should be done, reforming how clinicians are trained will take 20-30 years to produce significant changes in the makeup of the US clinician workforce - and maybe even longer to change the ratio of primary care to specialty practitioners.

Therefore, what is needed is more emphasis on non-financial levers that can be used to alter physicians’ attitudes and actions around improving healthcare delivery - including their immediate practice situations, and how they relate to other providers and their patients.  Changing financial incentives can certainly support this, but it is very unlikely to successfully produce these changes in isolation.

Rather, some of the general principles involving the adoption of innovations should be applied to bring physicians - and other community care leaders - to be more receptive and participatory in making delivery transformation both a reality and a success. These principles, (as described by researchers in the 70s and 80s), have been applied to improving the quality of hospital care by organizations like the Institute for Healthcare Improvement, and include providing information about how simple the proposed changes are and how comparable they are to the clinicians existing day-to-day actions, and making it possible for clinicians to observe and/or try out these changes before they have to adopt them.

One of the major catalysts for using these principles to successfully implement reforms is to use change agents to communicate the value and reality of the proposed practice changes, and to simultaneously diffuse misconceptions and fears about them.  Since the old adage about physicians is that you can tell them, but you can’t tell them much, the best change agents for leading physicians through this transformation are other physicians who have participated in and/or observed, and/or analyzed other practices that have gone through similar changes.  There are also two caveats about these change agent leaders.  First, they need to be seen as independent and not biased or conflicted for financial or other reasons.  And second, they must be able to culturally and geographically connect to the clinicians they are trying to educate and lead.  For example, information about practice transformations in Vermont aren’t going to have much traction with physicians in Texas, nor are the experiences of Philadelphia practices going to carry much weight with physicians in rural Illinois.

Afterward: “Making Health Reform Work” Book Project
These concepts and messages about care delivery transformation using the principles of innovation adoption and stakeholder engagement are at the core of what I’ve been trying to construct into a book containing logical and understandable prose and graphics.  The working title for the book is “Making Health Reform Work.” However, the passage of health reform and its impending implementation have overtaken my ability to finish it. Therefore, I wanted to put forward some of these ideas here to stimulate more discussion about these issues and concepts because I strongly believe that without a broad based and balanced approach to health delivery transformation, significant efforts and money will produce suboptimal results and leave a bad precedent for future transformation and quality improvement efforts.

Posted in Delivery of Healthcare, Economics & Financing, Health System Reform, Quality of Care & Safety | No Comments »

Health Care Reform (PPACA): By the Numbers and Political Battles Over Numbers

By Michael D. Miller MD
May 3rd, 2010

A week ago I ran into a long-time Republican health policy expert who was very excited about the Memorandum the CMS Chief Actuary had released on April 22nd about the financial effects of the Patient Protection and Affordable Care Act (PPACA).  He was very excited because he believes that the Memo has significant information that will support repeal of the new health reform law when the Republicans take over one or both houses of Congress next year.  (FYI - Current credible speculation puts the House as a toss up for Republican control in 2011, but the Senate is less likely to switch party control.)

Having reviewed the Actuary’s report I don’t think it has dramatically new information, or orbit altering analyses.  However, it does provide some insights into the new health reform law and how the political discourse about it may play out over the coming months - and possibly years.

First, Rick Foster, the Chief Actuary at CMS, is very clear about the difficulties and uncertainties of estimating the impact of the new law.  He specifically states at the end of the Summary:

“The actual future impacts of the PPACA on health expenditures, insured status, individual decisions, and employer behavior are very uncertain.  The legislation would result in numerous changes in the way health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation.  Consequently, the estimates presented here are subject to a substantially greater degree of uncertainty than is usually the case with more routine health care legislation.” [emphasis added]

And the “Caveats and Limitations of Estimates” section of the memo includes 11 bullet points, one of which states: “Due to very substantial challenges inherent in modeling nation health reform legislation, our estimates will vary from other experts and agencies.  Differences in results from one estimating entity to another may tend to cause confusion among policy makers. [emphasis added]  These differences, however, provide a useful reminder that all such estimates are uncertain and that actual future impacts could differ significantly from the estimates of any given organization.  Indeed, the future costs and coverage effects could lie outside of the range of estimates provided by the various estimators.”

This second paragraph directly addresses how the CMS Actuary’s April report differs from the Congressional Budget Office (CBO) March estimates.  Without going into technical details, there are two important things to note in comparing the two analyses.  First, CBO estimates focus on Federal spending, while the CMS Actuary looks at national health expenditures.  Both are important, valid, and useful, but different.  And second, looking at insurance coverage, the CMS Actuary found that the PPACA would be more effective at reducing the number of people without insurance and in getting people covered under Medicaid, while causing less disruption of employer sponsored benefits.  Specifically, compared to the CBO’s analysis the Actuary concluded that in the year 2019:

  • More people would get insurance (33.8 million v. 32 million according to CBO - although their baseline numbers also differ so they both estimate that there will be ~23 million people without insurance in 2019);
  •  Employer provided health benefits would decrease by 1.4 million people v. 3 million according to CBO’s estimates;
  • Medicaid enrollment would increase by 20.4 million v.16 million in CBO’s assessment;
  • The number of the people in getting their insurance through the new Insurance Exchanges would be 31.6 million v. 24 million according to CBO’s estimates.

So overall, it could be concluded that the CMS Actuary estimates that the new law would be slightly more effective in improving coverage than what CBO had estimated.

Outlook for Individual Costs and Cost Control Still Cloudy
Unfortunately, what neither of the analyses provide are estimates of how much actual insurance premiums will increase over the next 10 years.  Lack of control over spending growth is a generally agreed upon weakness in the new law, and the almost certain increase in insurance premiums and overall health spending will at the core of potent political arguments about the new law and how it should be modified, built upon and/or repealed.

Political Battling With Numbers
Reports - like those from the CMS Actuary and CBO - will provide nuggets of numerical information that will be turned into sound bites flung in the political-rhetorical skirmishes that will play out in the coming months - and probably years.

Updates to this “numbers game” will fuel future political firestorm since they will almost certainly contain higher cost estimates than the recent ones from CBO and the Actuary because they will be shifting the 10 year cost window from 2010-19 to 2011-20.  That is, replacing 2010 - when very little of the new law was in effect - with 2020 - when all the provisions are scheduled to be implemented - will dramatically raise the dollar estimates, possibly in the $100 billion range.  While comparing the 2010-19 years with the 2011-20 years is certainly an apples-to-oranges comparison, for political sound-bite purposes it is like hitting a baseball off a batting T - just because it isn’t relevant to the actual (policy or healthcare reform) game, doesn’t matter if it leads to a huge (political) hit.

Conclusions
What does this all mean? It means that health reform will continue to be a huge political hot potato, and different groups will claim it is fried, baked, scalloped, au gratin, from Idaho, Maine, California, etc….. Basically whatever suits the group’s political purpose at the time, because within all the reports and numbers and variables in  implementation, there will be quantitative and qualitative data, (of good and other quality), to justify their positions and sound bites.

To counteract the inevitable political rhetoric, government agencies ranging from HHS, Treasury, and in every State will need to be rapidly and effectively implementing the many provisions of the new law. Right now, many people are scrambling as the marathon of health reform legislation has turned into the sprint (without end in sight) of implementation.  As the CMS Actuary has described, the actual results of the implementation of the new law could be very different from even the best estimates.  It is the goal of the legions of people inside government agencies and within private companies to try and make the results as good as possible, i.e. the most people covered with health insurance, at the lowest cost, with the highest quality.

At the same time, there will certainly be problems encountered along the way. And it will be the responsibly of Congress to be vigilant in listening to government officials and people in the private sector about these real-world problems, so they can modify the law and redirect resources to address these problems and maximize the value of the new law.  At least that’s the way it’s supposed to work. Whether politics gets in the way, and maneuvering for control of Congress, positioning for 2012 elections, or strategizing for market share complicates this process remains to be seen.

Hang On Tight
Implementing health reform, even for those driving the process, may be more like trying to steer a rocket sled than a 737.  So, as I’ve said before, hang on and make sure your seat belt is tightly fastened.

Posted in Economics & Financing, Health System Reform | No Comments »

Implementing Health Reform - The Long, Hard and Twisting Maze

By Michael D. Miller MD
April 13th, 2010

Health reform is now the “law of the land,” and “written in law.”  However, as people are quickly realizing, after a year of campaigning and more than a year of legislative action, implementing the new law will require navigating a long, difficult, and twisting path - even before any amendments are considered in this or subsequent Congresses.

Navigating the fast and slippery route to successfully implementing all the provisions of the PPACA will be daunting.  Three relatively recent laws are examples of the time and steps required for such implementation - and each of these was much simpler than the PPACA:

  • The Medicare Part D law was signed in December 2003 and the new benefit started in January 2006. This gave the Federal government about 2 years to develop the rules, sign up providing plans and facilitate enrollment by creating an exchange-like website and other resources, while the plans conducted the actual enrollment.
  • The Massachusetts health reform/insurance expansion law was enacted in April 2006. This was followed by a long series of staggered implementation steps. For example, insurance reforms, (on top of the state’s pre-existing significant insurance regulations), became effective in January 2007, and the new individual mandate started in July 2007.
  • The Federal stimulus law was signed in February 2009, and the HITECH Act part of the law included significant provisions and funding to boost the development and adoption of information technology by healthcare providers.  At the end of December 2009 a key draft rule on “meaningful use” was released, and it is expected to be finalized soon.  In the meantime, the Department of Health and Human Services has distributed funding to start the adoption of specific types of health IT.  (The April 2010 Issue of Health Affairs has a series of articles focusing on the implementation of the HITECH provisions of the stimulus bill.)

Written in Law - Not Written in Stone
The  implementation of these laws illustrates how it takes months and years after a law is signed to create the implementing rules and regulations, and to contract with organizations to actually carry out significant parts of the new law - and this is before any modifications are made by subsequent laws.

In the coming weeks and months, many entities will continue combing through the final law - which because of the circuitous path it took to Congressional passage is much more difficult to read and understand than most other new laws.  Some of the most challenging aspects of implementation will be in the states, where government agencies will have many new responsibilities and/or will need to be created. Federal and state governments, and many private organizations, will also probably need to hire people to carry out this implementation - and hiring government employees can be a lengthy process.

In addition healthcare companies - particularly health plans and insurers - will be working to determine how their business operations will be affected by new state and Federal regulations, despite the fact that those regulations haven’t been written yet.  And all but the smallest businesses will be seeking to understand how they will comply with - and possibly benefit from - the new insurance rules and financial incentives.

Overall, it is clear that the implementation will be the hardest part in taking health reform from a concept and a campaign position, to reality for individuals and society.  I know that many people in Washington DC - particularly Congressional, HHS and related health reform staff - worked very hard for many, many months in an exhausting process to get the law passed.  For Congressional staff at least, the implementation will be the responsibility of others, while Congress’ work will be to ensure that this implementation is consistent with their intent, and to work with HHS to adjust provisions according to the real-world bumps and detours in the road from here to there.

Conclusion
The cartoon below summarizes the expanding and complicated challenge of implementing health reform through the inevitably twisting and complicated path better than any combination of words could… I’ll have more about specific provisions and implementation in the coming days, weeks, and months….

MAZE-Man

Posted in Federal Healthcare Reform, Health System Reform, HealthPolCom Blog, Politics, State-Level Healthcare Reform | 3 Comments »

Politics of Health Reform: Selling Anger or Catharsis

By Michael D. Miller MD
March 22nd, 2010

With the health reform legislation process winding up, it is clear that going forward politics are - and will be - front and center, with the divide between the Democrats and Republicans as wide as the orbit of Pluto…… the planetoid, not the Disney character. This divide is depicted in black, white, and red in the National Journal’s March 13th Insiders Poll question, “If Congress enacts something close to President Obama’s latest health care reform plan, how would that affect your party in the midterm elections?”  87% of Democrats thought it would “help a lot” or “help a little,” and 100% of Republicans thought it would help them.

They can’t both be right.

Each party is banking on their ability to sell health reform their way:  Democrats will present it as a significant step towards fixing many of our healthcare system’s and country’s problems.  Conversely, the Republicans will characterize it as fundamentally evil and something that will end individual freedom and civilized progress because of “government takeover of healthcare” being run by a “healthcare czar.”

These sentiments and strategies are clear in the quotes accompanying the National Journal’s poll:

Republicans:
“The tax increases, the wild spending, and the backroom deals and threats will shock voters of all parties, producing a GOP revolt.”

“Passing the bill will help the GOP by fueling voter (especially senior) anger at an arrogant majority that knowingly ignored popular opinion.”

Democrats:
“It will help a lot of people, show that Democrats can act, and get the ’sausage making’ off the news.”

“If it passes, people [will] see it’s not the end of the world and learn more about its benefits. The more they know about it, the more supportive they are.  Best of all, we can begin talking about something else.”

However, one Democrat in the 9% who thought enacting the law would “hurt a lot” said, “The Right hates it, the Left is not satisfied, and the middle is scared.”

Majority v. Minority - Catharsis v. Anger
 Without dissecting the merits of their positions, these divergent perspectives are due to the parties’ different roles in our two-party democracy:  The majority needs to present their actions in a way that fosters catharsis in people, (particularly in voters), by actually improving some problem. Their goal is to turn that catharsis into positive feelings about the majority party, leading to votes in future elections. Conversely, the minority party needs to create anger about what the majority party is doing or proposing, with the goal of turning that anger into….. (no surprise here)…… votes in future elections.

Thus the key for the party leadership, individual elected officials, and their communications and campaign staffs, is how to best create catharsis or anger - depending upon which side of the fence they are on.

An old friend, Dan Wasserman, the political cartoonist for the Boston Globe, in his March 2nd cartoon depicted this very nicely:

Dan Wasserman Political Cartoon - 03-02-2010 Romeny Anger
[This cartoon was also reprinted in the March, 6th issue of National Journal]

Challenges of Political and Policy Communications
How people, (i.e. voters), perceive the issues and problems - and potential solutions - is strongly influenced by how they are presented and described.  It is this communications process that builds or derails political and policy initiatives and campaigns.  No matter the long-term success or failure of the health reform law, the road from now until the November elections will be filled with messaging to instill voters with either catharsis or anger - particularly swing voters in key states and CDs. For the Democrats, creating cathartic feelings will be much, much easier as specific provisions of the law become effective.

For Republicans, creating anger will be possible from the outset. In the near term having a new law will give them a focal point for anger, with proposed regulations and rules being easy and rich targets.  In the longer term, as the new law actually improves many people’s lives, it will be harder to accomplish that goal.  However, by that time, if they can use the near term anger they’ve created to take control of one or both houses of Congress, or the White House, as the majority party they will be the ones trying to create catharsis - so some successes via implementation will be to their benefit.  In addition, if that happens, for political reasons Republicans will not want to repeal or significantly unravel the new law since continued implementation of health reform - without dramatic alterations - will deny Democrats one of their main campaign issues that they have historically used to generate anger among their base and swing voters.

—————————————————————–

Post Script: Turning Anger Into Productive or Destructive Action
[Omitted for space considerations.]

Posted in Federal Healthcare Reform, Health System Reform, Information & Communications, Politics | 1 Comment »

How Long is the New Health Law?

By Michael D. Miller MD
March 21st, 2010

With the House of Representatives passing the Senate’s version of the health reform legislation tonight, it can now be signed by the President.  An historic step by any measure. While one of the criticisms leveled against the bill has been its length - typically cited as 2,409 pages - I recently pointed out to someone that the 2,409 page length is because the bill is printed to make it easy to read by using a large font, leaving lots of space between the lines, and sequentially indenting subsections to make the overall structure clearer.  (Below is one page from the printed version of the bill.) However, by changing the font and reformatting it, I was easily able to make the entire bill fit on 60 pages.

So how long is the bill? It all depends.  But certainly the 2,409 page length “fact” - and similar figures - will be tossed around as pseudo-quantitative arguments that the new law is too complex, which will be another example of fun with facts in support of political positions.

Page 448 of Health Reform Bill

Posted in Federal Healthcare Reform, Health System Reform, Information & Communications, Politics | 1 Comment »

Regulating Insurance: States v. Federal Roles

By Michael D. Miller MD
March 18th, 2010

One of the fascinating issues within the health reform debate is how to improve the insurance market by changing government regulations.  While large employers who self-insure are except from state regulations, (and must only conform to limited Federal rules under ERISA), individuals, small groups, and others who actually purchase insurance have their policies regulated by individual states.

Both Democrats and Republicans agree that the current system of insurance regulation creates job lock and other socially undesirable effects, and that insurance companies should be able to sell policies across states lines.  However, their solutions are quite different.

Democrats favor national regulation to create a single playing field, and Republicans prefer permitting insurance companies to sell in multiple or all states if they are licensed and regulated in any state.  The insurance industry’s trade association (AHIP), doesn’t seem to take a firm position on this issue - at least from looking at their website.

However, I was surprised to see a full page ad from an individual company on the back cover of a recent issue of National Journal advocating for national rules to replace state insurance regulation.  This interesting ad included the following phrases:

“Something’s wrong when…. innovation surpasses…. insurance regulation.”

“Here’s something to bristle at: the regulatory system that shapes our…. insurance policies hasn’t changed much in the last century.  Yet everything …. has changed dramatically…… Chrome and steel have given way to thermoplastic and fiberglass.”

And the company’s recommendations for solutions focus on increasing national regulations:

“Today there are 50 different sets of insurance regulations in 50 states.  This makes it difficult to introduce innovative new products.  But with a modern system of national regulation, consumers would get to choose from the best products available nationwide.”

“National regulation would help spread risk more fairly across similar geographic areas.”

“Modern regulation is the kind of protection Americans deserve.”

However, the caveat here is that this ad is talking about regulation of car insurance and not health insurance.  In fact, the specific company doesn’t even sell comprehensive health insurance - so they don’t have a dog, cat or Cadillac plan in that fight.

What is also interesting is the parallel developments and history in the State of Massachusetts with health and auto insurance. Everyone following the debate about health reform has certainly heard what Massachusetts has done with health insurance reform and mandates to achieve near universal coverage.  However, in roughly the same time-frame the state also reformed its auto insurance regulations to enable national insurers to enter the market.  This increased competition resulted in dramatic decreases in premiums - but the insurance plans are still regulated by the state.

How changing the regulation of selling health insurance would change costs and affect consumer protections is open to debate.  Unfortunately as an “issue” it has been overshadowed in the health reform discussions by other aspects such as the so-called public option, abortion coverage, coverage of immigrants, costs to individuals, effects on the Federal deficit, and mandates for having insurance. Thus Federal v. State insurance regulation - which is really a core part of health reform - hasn’t been a big part of the national political debate, even though changing insurance company practices has been a large part of the Democrats’ messaging.  Despite that, there are several interesting points to consider:

  1. Insurance companies operate on a business model very similar to financial institutions, such as banks, in that they seek to manage risk and they make most of their money on the “float” - or interest earned - based upon having large amounts of money for a period of time between collecting premiums and having to pay for covered benefits… and deductibles also adds a delay to these payments, which creates a cushion to the float.  Therefore, because their revenues are tied to their interest earnings, the lower the prevailing interest rates the lower their earnings - and thus the more they need to raise premiums… and vice versa.  (I did an analysis several years ago showing that premium increases were directly correlated with interest rate fluctuations, but delayed a year or two.)  This parallelism with banks raises the question about why it is OK to Federally regulate banks, but not health insurance companies? How much more important is it to protect people’s money than their health insurance coverage?
  2. National insurance regulation would help address both job lock for individuals within companies that purchased insurance directly, and location lock for small businesses and entrepreneurs - particularly those operating service businesses where location may not be as crucial as manufacturing or retail operations.
  3. Permitting the selling of insurance across state lines based upon licensing in one state would probably result in reduced consumer protections since some states have less oversight and requirements than others about marketing, coverage guarantees, etc.
  4. And neither national rules from the Federal government or allowing selling across state lines would significantly affect the growth in health case costs or insurance premiums, i.e. they wouldn’t really bend the cost curve.  Although allowing selling across states lines could reduce premiums in certain higher cost states, but that would be due to people being able to by insurance policies with less coverage or intrinsic protections.  In some ways this would follow the old saying, “you get what you pay for.”
  5. And since the consensus is that bending the cost curve will require changing how health care is actually delivered to patients, (which makes sense since ~80+% of health care spending goes to pay for health care goods and services), this discussion makes me wonder how differential state regulation of doctors and healthcare providers fit into this equation?  While laws and legal procedures may vary among states, presumably the practice of medicine shouldn’t vary dramatically…. Although many studies have shown that it does so in ways that can’t be explained by demographic differences or regional variations in disease states such as Lyme disease. I’m not certain how changing the way clinicians are licensed would improve healthcare delivery or costs, but it is another aspect of State v. Federal regulation that is becoming an increasingly contentious issue - as was pointed out in an article in today’s New York Times.

Posted in Access to Healthcare, ERISA, Economics & Financing, Federal Healthcare Reform, Private-Employer Based Health Insurance, State-Level Healthcare Reform | No Comments »

Health Reform Without Health Reform

By Michael D. Miller MD
March 1st, 2010

With a few weeks to go before the President’s March 26th deadline for agreement on a comprehensive health reform bill, the likelihood of that occurring is diminishingly small. However, even without a comprehensive bill, or even several incremental Federal laws passed this year, health reform will be happening in the States and the private sector, while the Federal government may also pull a few of the strings it has available to shift the operation of our healthcare system:

State Level Health Reform
“State-Level Health Care Reform” is the title of an article in the Feb. 20th issue of the National Journal.  This article discusses various initiatives states are considering and how their national organizations, (such as the NGA and the NAIC), are supporting these efforts.  Of course, States face significant challenges for making investments in health reform because of their legislative calendars and budgetary pressures.  To help states’ fiscal problems, the Department of Health and Human Services announced on February 18th that they were providing states’ Medicaid programs with $4.3 Billion in relief over 2 years.

In assessing how states might try to create health reform based upon Medicaid, it is also important to remember that Medicaid is not one program - and not even 50 separate uniform state programs - but that states have hundreds of waivers for the operation of different parts of their Medicaid programs.  For example, Massachusetts has 6 waivers - one of which is the basis for the state’s health insurance expansion program - and Arizona has 2 waivers, the first one approved in 1982 as the basis for the state’s entire Medicaid program.

Private Sector Initiatives
Private companies are continuing to try and reform healthcare from the both the cost and quality perspectives as both purchasers and sellers.  A friend who works for a large company with a significant footprint in healthcare, and a very large and diverse workforce, told me that they are addressing healthcare cost and quality on both ends.  First they are shifting their entire health benefits system to high-deductible type options, and they are also developing products and services to improve the efficiency and quality of healthcare delivery.  Other companies are doing similar things and working through coalitions such as the Leapfrog Group, the National Business Group on Health and the Pacific Group on Health to work collaboratively, (and perhaps corrosively), with health plans and large providers to control costs and improve quality.

Federal Initiatives
Without new sweeping laws, the Federal Government has significant administrative tools for changing how healthcare is paid for and delivered.  Beyond rule-making in programs such as Medicare and Medicaid, the government can use its purchasing power to change how private companies operate.  This lever was the focus of a February 26th New York Times article, the first two sentences of which may be heavy foreshadowing: “The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan. By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.” [emphasis added]

Conclusion - Pluralism, Federalism, & Individualism
The individualistic nature of US society has long shaped government and social programs, and the role of individual decision making - going back to the Constitution - has been reflected in preferences for local control and charitable-community actions rather than government programs. The challenge for government officials and lawmakers at all levels is to create health reform in a manner consistent with this fundamental societal philosophy. This conundrum may have been summed up by Vice President Biden at last week’s health summit, which CNN reported: “Vice President Joe Biden says the philosophical debate over whether health care should be mandated is similar to debate in the 1930s regarding Social Security. He also says after being in Washington for 37 years, he’s ‘reluctant … to tell people what the American people think. I think it requires a little bit of humility to be able to know what the American people think, and I don’t. I can’t swear I do. I know what I think. I think I know what they think, but I’m not sure what they think,‘ he says.”

I’m not sure I’ve heard a clearer explanation of the quandary policy makers have in deciphering the desires of the American people for comprehensive local solutions that provide uniform individualized options that are simple and efficient while eliminating waste, fraud, and abuse without excess government intrusion, spending, or taxes so that costs are reduced and quality improved while maintaining personal choices of doctors, hospitals, and therapies and incentives for creating better treatments and cures.

Posted in Health System Reform, Politics | No Comments »

Missing Pieces of Health Reform

By Michael D. Miller MD
February 23rd, 2010

At a briefing in Washington DC this morning, two very well respected and reasonable economists talked about how the increasing prevalence of chronic diseases and care delivery in outpatient settings are driving up costs in Medicare.  They also asserted that a greater focus on real cost containment - and possibly cost reduction - should be the focus of health reform, and that this could be achieved by increasing team based care coordination and increasing personal responsibility for care and costs, among other focused initiatives that might require political courage…..which one of them noted appears to be currently in short supply.

Their conclusions and analyses are all well reasoned and reasonable, but having listened to these types of analyses and briefings for more than 20 years I was stuck by two things.  First, what they were saying wasn’t significantly different from what people had been saying for, well, more than 20 years.  And second, like most presentations about health reform, they focused on what needs to be changed but didn’t talk about how to create that change - except to focus on altering economic incentives.  (It is worth noting that one of the panelists recommended that government programs such as Medicare should consider not just creating incentives for people and providers to do certain things, (like use electronic medical records),  but rather should say, “if you want to get paid by us, you will do things this way.” Clearly this type of ‘my way or the highway’ approach can be effective, but it also faces much higher political barriers because it could result in a number of doctors and other care providers being excluded from Medicare.)

Motivators Other Than Economic Incentives
What also struck me about their focusing on economic incentive as the driver of change is that this can work for some people and organizations, but in healthcare, there are other factors driving people’s behavior - particularly the behavior of patients and community practicing physicians.  For patients, if they were to act the way economic models would predict, (i.e., always in their best economic interests), everyone would brush their teeth and floss more often, exercise regularly and rarely eat anything that came out of a frozen box or a deep fryer.  But such economic modeling assuming that people act based upon full knowledge AND that their economic interests are the overriding force behind their decisions.  And in the real world, neither of those assumptions are true.

So what’s missing from the health reform prescriptions based upon changing economic incentives for physicians, patients and others?  First,  increasing relevant and useful information can help increase the impact of whatever economic incentives are created.  For example, showing physicians that their practice patterns are different that their local peers can help motivate them to change how they care for certain conditions in ways that economic incentives may not.

And second, non-economic motivators for behavior change can be created that are aligned with  financial incentives (and disincentives) to change actions and attitudes.  These types of motivators are particularly important for individuals - whether they be patients or individual physicians.  In addition, initiatives to change individual behaviors and actions need to recognize the 80-20 rule, where 80% of people go one way and 20% don’t.  In promoting care delivery changes it might be more accurate to call it the 10-70-20 rule, where 10% of clinicians are early adopters, followed by another 70%, with 20% resisting the adoption.  Thus, the key to changing clinical practices at the individual level, (i.e. getting real world clinicians to adopt the care practices of “evidence based medicine” that health reformers talk about), is to get the early adopters to rapidly adopt the better care practices, and for them to become active  teachers and proselytizers for these changes with the receptive 70% of their peers.  (Note: the early adopting 10% are sometimes called change agents or agents of change.)

The remaining 20% who resist change should slowly be convinced by their peers resulting in longer term improvements. And in the shorter term, getting 80% adoption of changed care practices that improve quality and reduce costs would equate to some tremendous improvements for patients and society.

Returning to the Book
How to develop and implement initiatives involving such non-economic motivators and pair them with economic incentives to transform healthcare delivery - resulting in increased quality and reduced costs - is a core part of the book I’ve been writing.  Unfortunately, I’ve been trying to figure out how to make the book relevant within the rapidly evolving health reform environment over the last 2+ years.  Now that the dynamic has shifted back to fiscal responsibility and cost containment, and health policy is all about health politics, it may be time to finish the book so that it will be available for policy makers and stakeholders when health reform initiatives return in 2011 and beyond. If you have any thoughts or suggestions about these issues or the book, please feel free to comment here or contact me at the physical or email addresses on my contact page.

Posted in Delivery of Healthcare, Economics & Financing, Health System Reform | No Comments »

« Older Entries