Wednesday, September 30, 2015

Everything You Need to Know About Health Care Reform, Thanks to a 25 Minute Video, Courtesy of Managed Care Magazine

Thanks to Managed Care Magazine, the Disease Management Care Blog can post this interesting 25 minute interview with Princeton healthcare economist Uwe Reindardt.  Suitable for desk-bound meal-break viewing by overachieving DMCB readers, the modest and insightful Dr. Reindardt gets it mostly right:

No, the slowdown in the U.S. rate of health care costs cannot be ascribed to passage of the Affordable Care Act.  It started wayyyy before Obamacare was passed and is more likely due to the economic slowdown and increased consumer cost-sharing.

Accountable Care Organizations remain an "iffy" experimental proposition because they "don't go all the way like Kaiser."

Republican proposals to let health insurers sell their products across state lines are hardly a health reform panacea, because prices (and therefore premiums) are not a function of where the insurer is domiciled, but where the care is rendered.  Texas insurers would still have to pay New York prices.

Americans use fewer pills, occupy less bed-days and see fewer doctors, but we pay more because providers can charge more.  Despite being relatively small vs. the behemoths like Aetna and Cigna, regional hospitals have considerable market power that translates into take-it-or-leave it local single seller monopsonies.   Europeans, in contrast, have lower prices because their system is dominated by single purchaser monopolies.

We're headed toward a three-tier system comprised of 1) the indigent safety-net public programs, 2) the middle class "reference pricing" "networks" where consumers pay the difference if they want to buy up and 3) "boutique" health care for the 5%.

There's reason to be optimistic about the next five years thanks to a sluggish labor market (making it easier to impose networks and even more cost sharing) and innovation (computational capacity is putting meaningful quality measurement within reach, while techy gizmos are making self-care simultaneously cheap and fun). 

Plus, there's reason to be of good cheer.  Compared to the U.S. education and the legal systems, health care is far more efficient and consumer-friendly.  Stop beating up on yourselves.

(The DMCB didn't quite agree with Dr. Reinhardt's views on worksite wellness.  He finds the notion counterintuitive and intrusive, preferring that insurers own wellness.  He neglects to mention that the employers who invest heavily in wellness are typically self-insured and that employers have an arguable stake in improving the quality of their human capital.)



The Most Interesting Man In the World Teaches the PHB about the Medical Home

The Population Health Blog isn't sure why its Twitter account was targeted by the Dos Equis ads about the exploits of "the world's most interesting man." Tweets on how "His grandmother uses his family recipes!" and "Fish fight for his bait!" tempted the PHB succumb to Twitter followership.

Which naturally prompted the debonair PHB to ponder the exploits of the Patient Centered Medical Home (PCMH).

To wit:

The White House wants to throw the bus under the PCMH.

Health insurers like it when the PCMH loses money.

The PCMH sues malpractice attorneys.

Ezekiel Emanuel wants be enrolled in a PCMH after he turns 75.

Biker pediatricians have tattoos that say "PCMH."

When they encounter a PCMH, actuaries stop counting.

PCMH jargon about smart device apps has led to the creation of a PMCH jargon app.

"PCMH" is how "ACO" is successfully spelled.

The most interesting man in the world is enrolled in a PCMH

The PHB invites other exploits.

Stay healthy, my friends.

Saturday, September 26, 2015

The Good and the Bad of Risk-Based Contracting: Large Integrated Groups Are Adapting Another Form of Managed Care with Limited Consumer Choice and Restricted Networks?


"Should I refer out of network?"
What is the secret health reform sauce of those famous large integrated medical groups?  Come to think of it, do they even have secret sauce?

To better understand the apparent success of household names like Dean, Geisinger, Group Health, and Mayo, Rob Mechanic and Darren Zinner surveyed and then interviewed the CEO or the Chief Medical Officer (CMO) of 21 famous large provider groups to understand their operational approach to risk based contracting.
 
That's important because emerging payment public and private insurer reform will include "bundled payments," upside risk-sharing and forms of capitation.  In these kinds of arrangements, the financial "risk" from high overhead, overutilization or excess costs will be the provider groups' problem, not the insurers'.

In other words, if ACO wannabes want to succeed when it comes to risk-based contracting, they may learn about the good and the bad of the large integrated group business model.

The authors discovered that about half of these groups had less than a third of their income coming from risk-based contracting (RBC).  In these ten groups, an average 88% of income was fee-for-service.

The other half (eleven) had more than a third of their income coming from risk based contracting.  In these groups, 71% of income was risk-based.

The authors then compared the approaches of the "low" risk and "high" risk groups.

While Disease Management Care Blog readers will be very familiar with elements making up the "good" secret sauce of risk-based contracting, they may be surprised at the reemergence of two bad downsides.

The good ingredients included 1) blunted physician financial incentives to "churn" patient visits, 2) a slight but significant increased emphasis on using quality measures to reward physicians and 3) a significant investment in data warehousing, analytics, patient registries and point-of-care patient-tracking.

In particular:

9 out of 10 low risk contracting groups based the "majority" of physician income on productivity. In contrast, five of the capitated groups paid 80% of their PCPs with a salary, while the other half paid 80% of income based on productivity

"Quality" measures drove a small percent of PCP income in both groups, though it was higher in the capitated groups (5% vs. 12%)

85% of all groups had invested in electronic health records; 100% of the capitated groups had invested in data warehouses with analytic software and two thirds had patient registries.  Only one of the FFS groups had those capabilities. While both types of groups had a low rate of "patient engagement" programs, the high risk groups were more likely to have care management programs in place. 

And the bad? 

The DMCB was surprised to read that the risk-based groups were far more likely to have mechanisms in place to limit their patients' out of network utilization (90 vs. 20%) and 2/3 vs. 1/3 had preferred relationships with "efficient" hospitals and providers.  In other words, these role-model and state-of-the-art organizations could be limiting patient choice and economically credentialing their provider groups.

Much depends on the details.  Insurers have probably not forgotten the abuses and resulting backlash that arose from unfettered capitation.  Good risk contracting typically includes quality and satisfaction metrics side by side with utilization targets and specifically prohibits windfall profits. Modern consumer protections at the state and federal oversight level are also far more rigorous.

That being said, the DMCB points out that it's no accident that this study shows risk-based contracting is associated with limits on choice and restricted networks.  We may not call it "managed care," but in many respects it is.

The Latest Health Wonk Review Is Up!

"Baseball isn't boring, you are!" goes the adage. While the DMCB struggles with the implications of that, the Wing of Zock has a baseball-themed Health Wong Review that certainly isn't boring.  What's more, after you read all the submissions of other health policy bloggers, you'll be more exciting.

Enjoy!

Friday, September 25, 2015

Community Care North Carolina Style Medical Home Saves Money

So, does the medical home "save money?"  A recent publication in Population Health Management about Community Care of North Carolina (CCNC) says "yes." That's important, because CCNC program has had more than its fair share of controversy

You can read more about CCNC here.  According to the Commonwealth Fund, Raleigh pays CCNC's 14 non-profit regional networks $3 per member per month (PMPM) for medical home services for over a million Medicaid and CHIP beneficiaries. In exchange, the 1300 clinics provide preventive care services, 24 hour coverage services, coordinating access to specialty services, care management and quality improvement. To do all that, CCNC uses a "medical home model" with "specialized chronic care programs" staffed by teams of docs, pharmacists and care managers.

The quasi-experimental evaluation published in PHM used "hierarchical modeling" to evaluate the impact of CCNC on two different samples of non-elderly (ages 0 to 64) disabled Medicaid patients who had no other insurance:

Model 1: compared the medical home patients' claims expense within and outside the enrollment periods "after controlling for other covariate values"

Model 2 created matched cohorts of enrolled and non-enrolled patients to compare pre-post differences in insurance claims expense. Matching was based on pre-enrollment pharmacy use, race, age, enrollment duration, clinical risk and behavioral health burdens.  For every enrolled patient, ten non-enrolled comparison patients were selected. 

The study period was January 1 2007 through Sept. 30, 2011.  Any single months of disenrollment were "filled in" if there was enrollment 2 months per and 2 months post. 

Results?

Model 1: This used insurance claims data for over 169,000 patients with an average age of 35 years. 52% were male with a 24% rate of mental illness and an 8% rate of chemical dependency. Compared to the time of not being enrolled in a program, claims expense was statistically significantly $190 per member per month (PMPM) cheaper in the first year; that declined to $64 PMPM cheaper in the last ear of study.  Persons with a higher burden of illness had even greater savings.

Model 2: This studied claims from approximately 102,000 enrolled patients with pretty much the same baseline characteristics in Model 1. Savings achieved statistical significance in the 3rd, 4th and 5th years of study: $81, $73 and $121 PMPM, respectively.

The DMCB's take:

While it can get lost in the sublime minutiae of hierarchical modeling, the DMCB finds the methodology and the numbers to be credible.  It has used the same Model 2 style of matching in its own studies. Since a pristinely conducted prospective randomized control clinical study is functionally impossible in a state-wide Medicaid program, quasi-experimental study designs like this are a good window into figuring out what happened.

And what happened is that they saved a lot of money. Assuming CCNC was paid $3 PMPM or $36 million per year for a about a million beneficiaries, avoided claims expense appeared to be well north of that.

While CCNC has a lot of moving pieces, the DMCB believes the key success factor was based on identifying the most vulnerable patients and then using nurses to intervene on the them.

The average caseload per nurse ranges from 150 to 200 patients.  As the Commonwealth Fund summary describes.....

"Case managers... work with primary care providers (“medical homes”) to identify patients who will benefit most from targeted care management interventions, such as patients making repeated ER visits; patients diagnosed with asthma, diabetes, or heart failure; and patients who have two or more chronic conditions (including mental health conditions) with high service use or activity limitations indicating complex care needs. Care managers identify high-risk patients through the CMIS and from case-identification lists provided by the CCNC central office, notifications of admissions provided by hospitals, and physician referrals."

CCNC is to be congratulated for moving from opaque actuarial studies to the harsh glare of peer-reviewed publications.  While some critics may pounce on some of the weaknesses inherent in any retrospective analysis of subpopulations, the observations from two "Model 1 and Model 2" vantage points  are sufficiently positive to believe that North Carolina's taxpayers got their money's worth.

The DMCB would point out two caveats:

The disabled Medicaid beneficiary population is a notoriously high utilization group that is a classic example of the return on investment from "low hanging fruit." A little coordination goes a long way in a population with a baseline of high utilization.  The same approach may not work in other populations with different patterns of claims expense.

Unfortunately, this gives us little insight about the potential impact of a similar medical home model in commercially insured populations or among Medicare beneficiaries.  That's doubly true for fee-for-service beneficiaries who are outside of any managed care networks.

The Perils of Government Involvement in Health Care

A Disease Management Care Blog spawn is implacably opposed to a Romney Presidency.  The argument is that while there's admiration for Mitt's successes as a businessman, running a government is better left to accountable politicians.

Which the DMCB appreciates. That doesn't mean there isn't a downside to the meddling of Republicans as well as Democrats.  Take health care for example.

Turbocharged by decades of direct government funding and favorable tax policies, insatiable healthcare consumer demand has created a medical-industrial bubble that is eating close to 20% of the U.S. economy.  Since Washington DC's direct costs are outstripping tax receipts, the same political process that got us into trouble is now supposed to get us out.  While the President's proposed 2015 budget has some painful cuts, that's nothing compared to the looming havoc being threatened by the coming fiscal cliff.  This is government accountability?

For a smaller example of the dysfunction created by government meddling, consider the electronic health record (EHR) mess.  Despite warnings from the DMCB that EHRs' documentation capabilities enable increased billings for the same care, both Presidents Bush and Obama promoted the EHR as an informatics cost-reducing panacea. 

It turns out the DMCB was right. This OIG report raised the possibility that EHRs are behind a recent coding uptick, which was further examined in this telling New York Times article by Reed Abelson et al

Government response? This threatening warning to stop using a product as designed that our political class had promoted all along.

(Latest update: Reversing course on years of being conspicuously silent in the face of the Adminstration's health reform bullying, the hospitals are pushing back.   Nothing like the threat of budget cuts to clarify just who your allies are - and aren't.  The cliff promises to be an interesting ride.)

Thursday, September 24, 2015

Dr. Emanuel Hopes He Dies Before He Gets Old

Poor judgment.

The Population Health Blog can't discern another explanation for Ezekiel Emanuel's Why I Hope to Die at 75 article in The Atlantic.  Since leaving Washington DC, Dr. Emanuel has become safely ensconced at the University of Pennsylvania, where he can disclose what he was really thinking while he was helping to stand up the Affordable Care Act.

The Population Health Blog appreciates Dr. Emanuel's recycled nostrums on the quality vs. quantity of elder-years, Americans' unrealistic yearnings for immortality and medical over-testing. And, if the essay prompts patients and families talk to their doctors about end-of-life care, even better.

But those good points are far outweighed by four intellectual blunders:

1) The watershed age of "75" that is used by Dr. Emanuel is an averageMany individual patients suffer declines in quality of living and life expectancy before as well as after that particular age. The PHB has been privileged to care for healthy persons aged 85 who have been correctly looking forward to additional years of rich and rewarding activity.

2) The "value" of a "poor quality" life is in the eye of the beholder. The PHB has also been privileged to care for very unhealthy persons over the age of 75 who remarkably treasure every day they are alive. Who is Dr. Emanuel to disagree with their decision-making?

3) While The Atlantic piece is about the writer's very personal views, they're not only arguably ageist, they're confirming the worst fears of the "death-panel" loonies.

4) Last but not least, real doctors know that healthcare preferences can change. That's especially true for end-of-life care, where yesterday's kitchen-table decisions routinely fail to account for today's emergency room realities. While Dr. Emanuel may hope he dies before he gets old, he should think on how the lyricists behind My Generation continue to rock decades later. He may live to regret his words.


Will the Roll Out of the Affordable Care Act's Health Insurance Exchanges Be Delayed?


While the Governor's Mansion in Pennsylvania is currently under the control of the Republicans, the Disease Management Care Blog knows the state's Insurance Department is relatively apolitical. That's why this September statement by Pennsylvania Commissioner Consedine before the U.S. House Ways and Means' Subcommittee on Health is quite telling

In it, Mr. Consedine describes how the Keystone state is encountering difficulties implementing an health insurance exchange. As DMCB readers will recall, exchanges are a key feature of the Affordable Care Act, because they'll provide an online market that will enable individuals to obtain coverage.

According to Mr Consedine, CMS is failing to support a good law with the many regulatory details that turn a vague idea into a functioning reality. These failings include:

1. "Interim," not "final" rules on eligibility, tax credit calculations, cost sharing and the role of brokers

2. Little formal guidance on the determination of the essential health benefit.

3. Delays in issuance of regulations on how states and Uncle Sam will split or mutually indemnify the myriad costs of the exchange and the Federal Data Hub.

4. Delays in the issuance of regulations on how states can exit a federally run exchange to set up one of their own.

5. Lack of clarification of CMS' impact on insurance markets operating outside the exchanges.

6. Little understanding of who's in charge of consumer protection statutes.

7. Confusion over reconciliation of multiple states' insurance laws and regulations in multi-state exchanges.

8. No guidance on how to roll long-extablished and well functioning state-subsidized insurance programs into the exchanges.

9. Concern that funding of the information technology could be clawed back if Medicaid eligibility does not meet CMS' criteria.

10. Little guidance on whether exchanges will need to provide consumers with a list of providers who are accepting new patients.

The concerns are also damning in the context of the the normal tug of war between the states and Washington DC. That's because in his testimony, Mr. Consedine states he wrote to HHS weeks ago and has not received a reply.  While its' not unusual for the Feds to stiff politically inconvenient inquiries, the Disease Management Care Blog is fearful that the reason why HHS seems unwilling to provide a timely reply is because it doesn't know the answers.

If Pennsylvania's experience is typical, that means the roll out of the exchanges could be significantly delayed.

You read it here first.

9/26/12 Update: Senator Hatch agrees with the DMCB

Media Savvy and the Implications for Business Leadership in the 21st Century

The Disease Management Care Blog continues to be beguiled by Meghan McCain, and not just because she could be a good match for one of the DMCB's unmarried spawn. Ms. McCain's career may hold some early lessons in the coming style of 21st century leadership.

Way off topic for the health industry-oriented DMCB? 

Not quite.  It explains below.

As the DMCB understands it, the very blond daughter of Arizona Senator John McCain has a reputation for a liberal style of nontraditional Republicanism. That, combined with her namesake's political and media connections, has undoubtedly (and perhaps unfairly) catapulted her into the national spotlight.  She could have faded away along with her dad's presidential ambitions, but she now has a web-TV gig that is a curious mix of 50% reality show (e.g., the travails of hanging taxidermy), 50% social commentary (e.g., her generation's lackadaisical views on privacy) and 50% chatty self-promotion.

That's not the point.  What is the point is that 20th century old-fashioned (in politics, think Ronald Reagan or in business, Jack Welch) leadership skills were honed by decades of practice practice practice in the written word, public speaking and retail networking. Once they mastered that, their formidable communication skills helped propel these very talented men into their very successful careers.

We don't know where Ms. McCain's career trajectory will take her, and it's very possible that she could ultimately fade away. The DMCB bets not. While her current views and public persona can come across as na├»ve and unpolished, this young woman is likewise practicing practicing practicing to master a newly emerging 21st century style of leadership that will rely on the broadcast word, media savvy and web-based networking.  By the time she is in her 50s, decades of experience combined with her other skills on both sides of the lens could make turn a diamond in the rough into a formidable force in business or politics or both.

Which brings the DMCB back to the business and politics of health care.

This has important implications for health industry leadership, including population health management. Simply avoiding the social media is no longer a formula for success. Smart hospital administrators are also mastering blogging to mitigate threats. Bad moments captured on YouTube can make health industry leaders look bad.  Branding without Twitter is now like personal injury attorneys without contingency fees. Boards of Directors can't ignore the threat of adverse media relations like this in their enterprise risk management.

And who will be best positioned in the coming decades to lead health care companies through these challenges?  Smart CEOs and executives who have a deep familiarity with leveraging TV and social media - thanks to decades of personal experience -  to engage their constituents and customers to choose their products and services instead of their competitors'.   And if they go into politics, they'll be leveraging the same social media skill-set to get voters choose their ideas and to vote for them.

You go gurl!

Image from Wikipedia  

Wednesday, September 23, 2015

State Medical Societies: Obamacare's Early Warning System

A canary for the health care reform mine
The Disease Management Care Blog has a theory.

Whatever you think of health care reform, there is a possibility that its implementation could be troubled for years to come.  Too few healthy young people could sign up, provoking an upward insurance cost spiral.  Bureaucratic meddling could further increase administrative burdens. Washington DC's political and fiscal woes could erode fee schedules.  Large regional delivery systems, saddled by inefficient capital, workforce salary inflation and overly optimistic risk contracting could become stressed.  The medical-industrial complex's bubble won't necessarily burst, but increased demand and less money could mean a painful contraction.

What will be the first signal that that's happening?

It won't be the pronouncements from the intelligentsia running HHS. It won't be a late Friday press release from the White House. It won't be a breaking news report from the clueless reporters in any of the major media outlets.  And, unfortunately, it won't be in a prescient posting by the DMCB.

It'll be an uptick in physician membership in 50 state medical societies, followed by phone calls their affiliated professional liability insurance brokers.

The DMCB is talking about the state organizations that largely make up the base of the American Medical Association (AMA).  After seeing many of these organizations up close, the DMCB can assure readers that that is where the resemblance ends. Being much closer to the ground level of clinical practice, these entities are acutely aware of the decline in private practice. Many have watched their membership - and their income - go down as the result of docs joining salaried settings where membership dues are a cost and meetings are time away from patient care. As a result of their hunger for business, the state societies have responded in part by making their suite of member services more turn-key and easy to use than ever before.  They have to do that to hold onto their current membership.   

Fast forward the possible bleak future described above. The most expensive part of a hospital system's work force will no longer look quite so affordable.  Some physicians will have their contracts euphemistically non-renewed, while others will be beat up by less "fixed" and more "performance-based" variable salary arrangements.  Since its reasonable to assume that the health reform's malaise will be nationwide, it's unlikely that these disgruntled docs will be able to simply pull up stakes and get hired in some other comfortably suburban setting in the next county or next state.

They'll think about private practice.

They'll wonder if they can start their own businesses, negotiate their own insurance contracts and do so with less overhead and without being told what to do by clueless administrators.  They'll be wondering about finding a practice manager who knows about coding and billing. They'll think about about cutting out the insurer middleman with a cash-only option. They'll think about dropping of out Medicare. And they'll realize that they will probably need to buy "malpractice" insurance and want a quote.

There are many good companies that offer support services to physician-owned practices. They'll get phone calls too, but not like the state organizations. They'll be the first to know.

They'll be the canary in the mine.

And in case you think the DMCB is being a pessimistic weenie, consider this anecdote: decades ago, physician staff unhappiness with one health system's managed care contracting led a renegade group of docs to call a state medical society for help.  The society obliged and participated in a series of after-hours presentations on physician practice that was attended by almost a third of the staff physicians. The young physician DMCB was in the back of that room.

If the DMCB was in the Obama White House, it would advise that it assign one of its health policy interns to regularly call the execs of a number of state medical societies.  If they describe sharp upticks in membership, that'll be cause for concern.

Image from Wikipedia

Tuesday, September 22, 2015

The Antifragile VA: Lessons from the NFL

Unacceptable behavior. Tone deaf sanctions. Superficial investigations blaming a few bad apples. Contrite leadership promising change.

Population Health Blog readers might think that this is about the National Football League (NFL), but it's also about the Veterans Administration (VA) whitewash.

But, in reality, this is about something much bigger: the unpredictably predictable dysfunction that happens to large and complex organizations. Mix insular leadership (Commissioner or Secretary), an unaccountable bureaucracy (owners or appointees), huge budgets (as in very huge) with hidebound government oversight, and something very big and very bad is bound to happen. Sooner rather than later.

That something often remote (an elevator or a Phoenix clinic), is only obvious in retrospect (atrocious male violence or gaming outcomes), signals a deeper problem (player recruitment or leadership integrity) and results in a loss of reputation that lasts for years

Think baseball and steroids, NASA and shuttles, GM and starters, Presidents and red lines.

This is classic antifragility.  As we continue to concentrate economic and social power into large organizations, logarithmic jumps in complexity will lead to rare, contagious, catastrophic and unpredictable crack-ups. Naturally, our response will be to layer in more systems complexity.

Assuming large and complex ACOs prove they can really conjure money out of providing fewer health services, the PHB believes their next biggest threat is a black swan event. A huge patient data breach.  Withholding care.  Cutting corners.  Something else. You read it here first.

In the meantime, smart PHB readers will discern that there are some important differences between the NFL and the VA:

                                  VA                                            NFL
    
Problem:               Waiting lists.                      Switches and fists.

Involving:                   Docs                                     Jocks

Result:          Congressional indignation.       Sponsor consternation

Solution:             Budget Conference                    Press conference.

The Media:     Monday morning quarterbacking   Monday Night Football

So the chief gets:          Replaced                         Breathing space

The real problem:        A monopoly                         A monopoly

Saturday, September 19, 2015

The Limits of Decision Analysis in Real World Health Care

Decision tree logic
Tired of hyper-rational experts using opaque decision logic to pass judgement on the value of your favorite medical tests or treatments?  Do you disagree with the Disease Management Care Blog's infatuation with Quality Adjusted Life-Years (QALYs)?  Then you may want to check out this article on "There Is More to Life Than Death" by Pamela Hartzband and Jerome Groopman.

Classic decision analysis combines "probability" and "utility" to mathematically compare multiple care options that lead to hard outcomes such as death, disability or cure (an example is here).  Unfortunately, say the authors, this imposes numbers on a narrow set of possibilities that fail to account for the full range of outcomes.  For example, the recent controversial and arguably nihilistic breast and prostate cancer screening recommendations were informed by decision analysis. While that methodology may have its place, "More to Life" argues that this sterile approach fails to account for the full range of physical and psychological burdens that can result from delayed diagnosis and inappropriate treatment.

While decision analysis attempts to make up for its shortcomings with additional analytics, Drs. Hartzband and Groopman argue that much of the underlying premise is fundamentally flawed by its failure to capture highly individual interpretations of what it means to be sick and how that can vary over time.  Distilling this down to a limited set of uni-dimensional outcomes centered on death, disability or cure ignores the "vital dimensions of life that are not easily quantified."

Yikes.

It's it own defence, the DMCB's fondness for decision analysis has been based on its insights, not on its answers.  In other words, it's a tool can open one window on the truth.  What Drs Hartzband and Groopman charge, however, is that the science of clinical guidelines is being hijacked by an over reliance on decision analysis by out-of-touch experts.  That's a serious charge that will complicate the national effort to disseminate scientific guidelines into every nook and cranny of medical practice.

Which leads the DMCB back to another fond topic that ultimately trumps all others: the need for an informed and engaged patient to process clinical guideline recommendations, the advice of a physician, the opinions of friends and family and their own personal values to ultimately make the decision for themselves about testing and treatment. 

Decision analysis alone is not up to the task.

The Latest Cavalcade of Risk is Up

"Risk,"  It can be quantified and then monetized.  Even chicken nuggets are not immune.

Learn more about the thinking that goes into that arcane process by checking out the latest Cavalcade of Risk, hosted by Nancy Germond's Insurance Rider. 

Enjoy!

Friday, September 18, 2015

Pay for Performance and Physicians may be like taking Cats for a Walk

 
The look of cooperation
Medicare continues to move forward with its PRQS "value-based" fee schedule modifier that will adjust physician payments up or down by 2% and 1%, respectively

As the Disease Management Care Blog understands it, 2015 physicians' quality and cost data will be compared to peers, and the docs who are above and below the mean will be correspondingly financially rewarded or dinged starting in 2015.  While the American Medical Association continues to quibble over the details, this Affordable Care Act pay-for-performance (P4P) train has left the station.

Unfortunately for CMS, plenty of research suggests that it remains an open question whether PRQS will have much of an impact. For example, findings from this Ontario study indicate that incentives tend to reward physicians who have already achieved the quality thresholds, doing little for the docs who are behind.  Additional research shows physicians may not agree with the underlying methodology and distrust the reliance on insurers' data, leading to a willful disregard of the incentives.  And then there's this expert survey that suggests that the effort it takes to achieve low single digit digit changes in income may be viewed as not worth the trouble.

The DMCB also thinks there may be another under-recognized issue at stake. While fee schedule changes in the 1% to 2% range can make a big difference to large hospital-physician organizations, that money, thanks to these organizations' byzantine internal accounting and transfer pricing, is unlikely to trickle down in a meaningful way to their employed physicians' paychecks. 

Ouch.

Physicians and P4P may turn out to be like cats and going for a walk.



Image from Wikipedia

The Death of Private Practice?

Private practice faces the future?
Quick: if you were asked how many practicing physicians have bailed out of private practice and have become employees of large corporations, regional hospitals, accountable care organizations or multi-site clinic groups, would you say.... a majority?  A huge majority?

You'd be wrong.  Most mainstream media reports on the decline of private practice either project the rise of large medical groups or have (shockingly) engaged in anecdotes. In other words, a killer version of the flu is not going to kill millions anytime soonglobal warming is not going to result in the sea flooding of central Pennsylvania (at least not tomorrow) and private practice is not dead.

So says this report by the American Medical Association. Using the Physician Practice Benchmark Survey on a representative sample of physicians doing hands-on care more than 20 hours a week, 53.2% of respondents were full or part owners of their practices, while 41.8% described themselves as employed.  Compared to a similar survey in 2007/2008, the number of owners declined by 8%

Surgical specialists (a high of 71.9%) were more likely than adult primary care (50% to 56%) to be owners.  Approximately 60% of physicians work in groups of ten or less and about 18% of physicians are in solo practice. 

Only 23% of physicians were in practices that were partially or wholly owned by hospitals.

While this information isn't all that surprising to DMCB readers, it does point to a slow gradual decline in small physician-owned groups.  That decline, however:

1. does not point to a nation-wide collapse of private practices, which still remain the largest piece of the physician-cased care system, and

2. does not line up a bunch of points that inexorably lead to zero.  In other words, it's just as possible that the slow decline could accelerate or remain the same or level off.

3. does point how important it will be for policymakers, regulators and politicians to consider the well being of small physician groups when they concoct their proclamations on such things as electronic records (very capital intensive), payment reforms (can hurt small business cash flows) or fraud and abuse (audits can bully small practices).

4. is potentially questionable because, once again, the DMCB has to contend with a report that hasn't gone through independent third party review.  It hopes that some or all of the data is eventually reported in a reputable journal.

Coda:

Just in case you're like most smart DMCB readers and want to know the methodologic details: This survey sample came from the 155,000 users of "Epocrates" who use the app to access information about medications; according to the AMA, this pool of physicians appeared to be quite similar to the more than 600,000 physicians who are in the AMA Masterfile. 14,750 Epocrates physicians were asked to participate in the survey and the response rate was 28%.  The responses were "statistically weighted" to match the Masterfile.

Image from Wikipedia

Thursday, September 17, 2015

More on the Definition of Care Management (and how well do IPAs and PHOs deliver on it)

Care management in action?
What is "care management?"

As discussed and quoted by the Disease Management Care Blog, here's one useful definition courtesy of the New England Journal:

"A set of activities designed to assist patients and their support systems in managing medical conditions and related psychosocial problems more effectively, with the aims of improving patients’ functional health status, enhancing the coordination of care, eliminating the duplication of services, and reducing the need for expensive medical services."

Now another one has emerged, thanks to this article by Lawrence Casalino and colleagues that appeared in the August issue of Health Affairs. The authors were interested in comparing the use of "care management processes" in small to medium sized physician-own practices that were either in or outside of an Independent Practice Association ("IPA") or Physician Hospital Organization ("PHO").

For this article, Casalino et al developed a "care management index" that reconciled five care management "processes" (1. use of a registry, 2. access to nurse care managers, 3. reliance on guideline-based reminders at the point of care, 4. sending care/health maintenance reminders to patients and 5. reporting outcomes)against the four chronic conditions asthma, heart failure, diabetes and depression. Having all 5 processes available for all four chronic conditions resulted in a top score of 4 x 5 or 20. The score therefore ranged from a high of 20 down to zero.

So, as ACO wannabes, hospital administrators, health system entrepreneurs, policymakers and regulators assess their care management landscape, they now, thanks to Health Affairs, have this handy zero to twenty scale.

To perform the study, a sample of physician-owned practices were asked to participate in a telephone survey in which the lead physician or administrator was asked about the 5 processes for each of the four conditions.

The results resembled the DMCB spouse's scoring of her husband's clean-up-after-himself processes.  There were some points, but there's plenty of room for improvement against the measured baseline. 

Small to medium-sized practices with "significant" participation in an IPA or a PHO had a average care management process score of "10.4" vs. a score of "3.8" in the unaffiliated practices.  When the care management processes were provided by the IPA or PHO to the practices, the average score was 5.4. 

The value proposition for IPAs and PHOs includes care management, but they have a ways to go.

Swaying Brains for Behavior Change

Here's looking at you!
The Disease Management Care Blog appears to be reaching a critical mass of readership. IP address traffic statistics are showing that the DMCB is part of many home, university and business readers' morning internet surfing. After unlocking their computer, more and more savvy health care leaders are accessing their company's intranets and clicking on browsing favorite "DMCB" for insights that buck the prevailing wisdom.  

The DMCB isn't surprised because its postings are tailored for a select readership on the front lines of program development, management and research.  Even if readers disagree with the DMCB's biases, they'll know what the opposition is thinking.

To those of you who are consistently returning day after day and week after week, the DMCB thanks you!

+++++++++

After reading the DMCB's shameless self promotion, check out this Wall Street Journal weekend essay on "Five Ways to Sway Voters' Brains."  It seems political consultants on both sides of the partisan divide are brazenly stealing a decade's worth of disease management behavior change technology to manipulate voters.

The italicized text above is an exercise in their subterfuge:

1. Make the voter/patient/reader "visualize" the preferred behavior (accessing the intranet with the DMCB as a browser favorite)

2. Portray the preferred behavior as cool ("savvy" and "select" health care "leaders.")

3. Predict voter/patient preferences ("development, management and research") and tailor the messaging ("insights").

4. Manage any negativity with an alternative rationale ("know what the opposition is thinking")

5. Let them know they are being watched (IP addresses from your universities, businesses and homes)

Image from Wikipedia

Wednesday, September 16, 2015

HHS Assistant Secretary for Planning and Evaluation (ASPE) Report of $1.2 Billion in Savings: Take the Government's Word For It? Why It's Time for Third Party Peer Review of Obamacare Claims of Cost Reductions

Public servants enjoying a good spin
According to this U.S. Department of Health and Human Services: Rate Review Annual Report September 2015 from the U.S. Department of Health and Human Services' Assistant Secretary for Planning and Evaluation (ASPE), the federal government's scrutiny of proposed health insurance rates "saved consumers approximately $1.2 billion" in 2015

In other words, U.S. citizens: 1.  Health insurers: 0.  Or rather, the score is 1.2 billion to zero.

That's a lot of money.  When the DMCB reads the report, it's a credible manuscript that resembles the peer-reviewed medical literature. 

The problem: it doesn't and it isn't.

The DMCB explains.

Disease Management Care Blog readers may recall how Wellpoint's tone deafness turbocharged the inclusion of federal "rate reviews" in the Affordable Care Act.  In addition to hundreds of millions in state grants to bribe strengthen the states' regulation of health insurers, the law also required that proposed increase of 10% or more must be submitted to HHS and "justified."
 
While the DMCB suspects that rate approvals ultimately belong to the state insurance regulators, HHS' new power is the threat of public humiliation from posting the health insurers' rate requests, their actuarial justification and a determination that the rate is "unreasonable."

It was presumably this threat that led to the initial requests being "reduced or denied" to the tune of $1.2 billion  When the requested amounts were compared to the implemented amounts, there was $311 million in savings in the individual insurance market and $866 million in savings in the small group market.

As the DMCB understands it, the data was from health insurers in 47 states that were submitted on a quarterly basis. Rate submissions had to be "cleaned" to correct "filings that were out of scope, or contained similar or duplicative entries, missing or incomplete filings, or incorrect data on requested and/or approved rate changes."  154 rates were reviewed and 43 were "modified or rejected" in the individual market, while 136 were reviewed and 38 "modified or rejected" in the small group insurance market.

The DMCB's take:

The style and layout of the online ASPE report appears to be taken from the peer reviewed medical literature, such as the New England Journal of Medicine or Health Affairs.  Unfortunately, the resemblance ends there, because everything published in the Journal or in Health Affairs is subjected to external third party review.

While peer review is certainly not perfect, it's the best we got.  As this page shows, Journal editors take the threat of conflicts of interest quite seriously while they rely on external volunteer and expert reviewers as the "lifeblood" of journalistic integrity. As anyone who has submitted a paper for refereed publication knows, medical journal reviewers can be merciless nitpicking critics. While painful and certainly not perfect, the result is greater objectivity, transparency, clarity and trustworthiness.

As far as the DMCB can tell, the ASPE report has not been reviewed by external, unbiased third-party reviewers. While claims of $1.2 billion in savings is credible, the DMCB is worried that the data analysis was consciously or unconsciously configured or manipulated for maximum "spin." Since the folks who run HHS are understandably interested in the success of the Affordable Care Act, it's possible that the unnamed authors of this study configured the numbers to present the most flattering aspect of the rate review process.

Case in point?  At the very end ASPE report at the very end of the Appendix, there's this disclaimer:

"A limitation to this method for estimating savings by state is that it assumes that each affected enrollee in these plans paid the statewide average premium, which may not be likely when small numbers of enrollees are affected.  Another limitation is that the savings are applied to a full year of premiums, even though many rate increases go into effect mid-year.

In other words, there's a possibility that there wasn't $1.2 billion in savings.  Had this report been submitted for peer review, that weakness would have certainly been caught up in peer review and it's likely that another number would have been reported.

Bottom line: Because Obamacare continues to be implemented under ever-increasing levels of scrutiny (for example), it's time for outfits like ASPE to submit reports like this to independent journals for peer reviewed publication.  Just because it's the government doesn't mean we can take its word for it.

Image from Wikipedia

Telehealth Helps!

... and have you taken your pills today?
Are you in the "telehealth" business? 

Do you sell, buy, broker or provide remote monitoring, telephonic follow-up, internet-based patient management, handheld health apps, video-support or home-based medical devices? 

Then you'll probably want to download this 32 page paper.

Bashur and colleagues set out to review every good (defined as any controlled study with a valid concurrent comparison group with at least 150 study subjects) research paper on the impact of telehealth on three conditions: heart failure, stroke and chronic obstructive pulmonary disease.

177 references later, their conclusion is that telehealth - over a broad range of patient types (age, illness severity and co-morbidities), level and intensity of patient participation, provider types (nurses vs. physicians with or without an explicit protocol) - increases quality of care and reduces unnecessary utilization. 

In other words, telehealth is substitutive.  It doesn't add to inefficient services, it replaces them with something cheaper.

The Population Health Blog already knew that, of course, but it's handy to have an authoritative text that catalogs every published study.

What the PHB didn't quite know:

The official definition:

Telehealth (e-health, mobile health, m-health), connected health) is the delivery of healthcare via information and communication technology.

Telehealth jargon: when you launch it, make sure you have:

1. Fidelity (use in an appropriate setting with optimal strength and integrity),

2. Maturation (the technology may not have fully integrated personnel, other technology and patients to achieve maximum efficiency) and

3. Bundling (where the technology is vulnerable to how other concomitant supporting services are configured.

Tuesday, September 15, 2015

Is One DIet Program Better Than Another for Weight Loss?

As a doctor, the Population Health Blog was often asked by overnourished patients to help find a "best" diet.  Its advice to simply eat less and skip desert, however, was insufficient to overcome the commercial programs' allure of word-of-mouth, dubious advertising and fanciful on-line marketing . As a result, many desperate PHB patients fell into closed loops of pseudoscience, anecdotal testimonials and expertly crafted statements "not evaluated by the FDA."

As a population-health skeptic, the outcomes-focused PHB was never convinced that one commercial diet plan was "better" than any other.  Not only are excess calories very efficiently turned into corpulence by a very efficient human metabolism, it didn't make sense that that persons could eat their way to weight loss with more [insert one of the following: protein, fat, fiber, pre-packaged meals or vitamins].  Last but not least, if all these commercial weight loss outfits spent a tenth of their marketing budget on real science, the PHB may have had the evidence it needed to make a recommendation.

Well, a meta-analysis of "Named" (you'd recognize the brands) diet program outcomes has been published in JAMA and the results are decidedly unimpressive.  The good news is that all of the household-name programs result in modest weight loss compared to no diet.  The bad news is that the loss of two to six pounds for each program was no better or worse compared to the others.

The PHB's take?  It's up to the consumer to weigh their personal preferences for one type of diet plan vs. another.  In addition, out-of-pocket costs may also play a role in helping sustain the dieter's motivation in getting their money' worth. 

Beyond those two considerations, however, it's just a matter of eating less calories, not more of the latest nutritional fad.

Sunday, September 13, 2015

The Latest Health Wonk Review Is Up!

.... thanks to Louise Norris of the Colorado Health Insurance, who is hosting an "Inside Football" version of the Health Wonk Review. She sets, she kicks and she scores with a wide number of linked posts that provide insights you'll find no where else!

Enjoy!

Saturday, September 12, 2015

Bipartisan Health Care Cost Control By Diktat: Insurers or Providers or Both


According to the Kaiser Foundation, health care costs are continuing to go up. Assuming Uncle Sam is doing everything he can to "increase efficiency" and "reduce waste," what are the options that can quickly control costs?

It's simple: leverage the insurance companies or the providers or both.

1. Tell the insurance companies what they can charge: While the ability of the Feds to regulate insurance remains murky, the Affordable Care Act enables CMS to require that insurance companies "justify" a premium increase of 10% and keep their administrative costs below 15%.

What is less appreciated is that the Medicare premium support plan being championed by Republican Paul Ryan is a variation of this same strategy. Thanks to a voucher that is indexed to the rate of inflation, insurance companies would be essentially told what they can charge for the bulk of their insurance. If the health insurers need to charge more, they'll have to wrestle that out of the beneficiary.

2. Tell the providers what they can charge: For an excellent example of this at the state level, check out this article in JAMA that describes Massachusetts's just-passed law that aims to control the Bay State's $9278 per capita health spending. Large providers (with more than 15,000 patients or $25 million in revenue) are now subject to cost controls that are tied to the state's inflation rate.  Enforcement mechanisms will include "performance plan" reviews for violators, public reporting and the threat of civil penalties.

Of course, Medicare's fee schedule functionally dictates what providers can charge for their services at the federal level, but up until now, Congress has been unwilling to leverage that. While a softer and gentler approach of "upside risk arrangements" and "global fees" are being developed, the paranoid DMCB suspects that they'll be ultimately calculated to cover a predetermined charge that is supplemented with a small profit margin.

While Democrats and Republicans have been supportive of a limited number of options ultimately reflecting their ideology, the DMCB predicts that, over time and with a worsening fisc, both parties will converge on using all of the options described above.  That's because they'll have no choice.

Heluva way to achieve bipartisanship, but there you go.

The Latest Health Wonk Review Is Up

Do you like data but have trouble turning numbers into insight? Tinker Ready of the Boston Health News shows us how it's done with an interesting Health Wonk Review on data, medicine, insurance reform.

Enjoy!

Of Risk Stratification, Health System Variation and "Stupid" Decision-Making

A fly in the ointment
Years ago, a middle-aged Population Health Blog patient came in for a routine follow-up appointment.  Since his last visit, he had developed iron deficiency anemia. Since slow blood loss can be a sign of an early and curable cancer in the gastrointestinal tract, the PHB recommended a series of unpleasant tests. After a rather routine explanation of the time, expense and inconvenience of those tests, the patient surprised the PHB with a one-word answer: "No."

He went on to live for decades.

Which brings the PHB to this JAMA article on individually-tailored screening for another type of cancer. While even screening for prostate cancer is controversial, it's possible to stratify a man's risk of the condition with some questions, examination data and test results.  That risk can be portrayed in lay terms (there is a "42-in-100 chance" that cancer is present, but doing a biopsy has a "4-in-100 chance of causing an infection..."). 

The points of the well-written article is that 1) risk-stratification can be used to identify persons at high vs. low risk, 2) the decisions to screen, perform additional testing and embark on treatment can be, based on that risk, "tailored" to maximize a good outcome and 3) patients can use their level of risk to ultimately decide how they want testing and treatment to achieve the outcome they want.

Bravo, says the PHB.  While we're on the cusp of understanding whether a more sophisticated approach to screening ultimately leads to better outcomes than the standard all-or-none guideline (USPSTF "recommends against prostate-specific antigen (PSA)-based screening for prostate cancer"), there is enough face-validity to believe that patients will ultimately benefit.

But there is a fly in the ointment and a monkey in this wrench.

The fly? Variation will not go away. While health system bureaucrats everywhere would prefer that 0% of men undergo prostate screening, that 100% women over 50 get mammograms, and that 0% of us have a body mass index in excess of 25, individuals - after looking as the risk-benefit here, here and here, may choose otherwise.  We don't know what the "right" screening rates are.  In fact, we may not be asking the right questions.

The monkey?  Some "bad" decisions will occur. Once persons truly understand the benefits, risks and alternatives (including not dying prematurely of a preventable illness and side-effect risks that are less than driving in a car), they are allowed to make "stupid" decisions.  Physicians and bureaucrats may not like it when anemic patients, like the one described above, refuse no-brainer recommendations, but in a free country that's the price we pay. Our challenge is to make sure that our patients have all the information they need (which is apparently not the case here) to make a truly informed decision.

Image from Wikipedia

Friday, September 11, 2015

More On "Why No One Believes the Numbers" and the Uncertainty of Measuring Return on Investment in Disease Management

Measuring ROI
In yesterday's posting on Al Lewis' book Why No One Believes the Numbers, the Disease Management Care Blog pointed out that the measurement of population health management (PHM) outcomes remains an inexact and still evolving science. While that can be a source of endless fascination for the DMCB, the inability of the industry to rustle up credible "return on investment" numbers has prompted some observers to condemn PHM as a waste of money.

The search for simple answers explains much of the appeal of this book.

According to author, one important solution is the "dummy year analysis" (DYA). This relies on repeated year-over-year measurements of utilization that use multiple comparison pairings of all patients with the condition of interest. When that's combined with a "plausibility" check list, Mr. Lewis says purchasers of the Patient Centered Medical Home (PCMH), disease management or wellness programs should be able to get a better fix on whether they saved any money. You can a sense of that perspective here.

The DMCB isn't too sure about that because a) other factors that have nothing to do with population health management can also impact utilization during and after the dummy years, making it difficult to assign an attributable ROI and b) entire health plan populations can likewise regress toward a regional or national mean.

The DMCB also sees three additional reasons why there may be less to this book's methodology than meets the eye:

1. When employers, health plans, accountable care organizations or other buyers have a list of names that have been through a care program, they typically want to understand the outcomes for the individuals on that list. If that's the case, the challenge is to find an adequate comparator that portrays what would have happened in the absence of the care program. Multiple options for identifying a parallel comparator have been used in published science for decades. That's difficult, imperfect, but not broken.  It remains an option.

2. While the book is replete with examples of "actuaries behaving badly," it is impossible to underestimate the influence of actuarial science and trending on premium rate setting, statutory accounting, and the regulation of insurance. As a result, if the actuaries say money is - or is not - being saved, health system leaders ignore their insights at their peril.

3. Isolating the impact of PCMH, disease management or wellness program out of all the other "noise" of a changing economy, evolving consumerism, benefit changes, electronic health record databases, medical advances, inflation and the news media is a function of an increasingly sophisticated and changing statistical sciences and computational technology. It's ironic, but one outcome has been a better description and measurement of the uncertainty surrounding a result.
 
To the author's credit, Why No One Believes the Numbers is not being promoted as the single best methodology that will lead PCMH, disease management and wellness programs to outcomes certainty. Rather, it is one option among many in asking whether a program had any financial impact.

Ultimately, therefore, that's why the DMCB advises that measuring outcomes in PHM - absent an ironclad methodology - comes down to using multiple approaches to triangulate on the truth. After reading Why No One Believes the Numbers, some readers may choose it as one of those approaches.

Healthcare Is In the Hands of Who?

According to a Sept 11 front page Wall Street Journal article, bank regulators are still struggling over the wording of the regulations for the "Volcker" rule.  And while we are still struggling with the too-big-to-fail banks, the gun control wars continue, with a portion of northern Colorado wanting to succeed and form the 51st state and Newtown gun permit applications going up. At the same time, two New York careerist politicians were undeterred by the humiliating spectacle of their foibles going public, and made frighteningly credible come-back bids for public office. Expert advisers and policymakers failed to protect a cautious and intellectual President from a serious foreign policy stumble that has implications for the rest of his important agenda, including immigration reform and the national budget. And this book charges that our nation's capital is a narcissistic bubble of interlocked and attention-hungry reporters, facilitators, politicians and lobbyists for whom power is the only prize.

While the Disease Management Care Blog is an equal opportunity skeptic, it's finding it increasingly difficult to believe that the current crew of regulators, state elected officials, politicians, advisers, politicians, reporters and lobbyists can really be trusted with the understanding, funding, interpreting, enforcement of the deadlines, regulations, payment rules and information technology that undergirds health care.  The point isn't that the banks screwed us, that politics are polarized, that "unknown unknowns" lurk everywhere, that voters can make bad decisions, that power politics are a necessary evil or who is right or who is wrong, the point is that  Health Care 2.0 is vulnerable and has a troubled prognosis with a dysfunctional government. Present company included.
 
Years ago, the Disease Management Care Blog watched one version of the movie Titanic. As the ship began to list and the doomed patiently waited on deck for their instructions, a DMCB spawn asked why the passengers couldn't just lash some desk chairs together, jump and survive with a jury-rigged raft.  The tut-tuting DMCB pointed out that the water was frigid, the raft would disintegrate and the fools would die.

Looking at what's going in, it's beginning to wonder if the well-meaning, honorable and smart health care folks who are on the deck of the the USS Healthcare need to reconsider whether they should continue to not be alarmed by the listing or.... whether it's time to think about a potentially worse raft option. We'll have a better idea of that in 2015.

The Latest Health Wonk Review Is Up!

Are you proud to be a "wonk?"  Well, you can burnish your wonky credentials by clicking here and checking out David Williams' latest edition of the Health Wonk Review. You can learn about using the Medicare fee schedule to rationalize pricing, bundled payment, old problems and new proposals for U.S. healthcare reform, the VA and much, much more.

Thursday, September 10, 2015

How Badly Obamacare Beat Up On the Health Insurers, and What Does It Mean for the Individual Market

D.C. deals with health insurers
As Disease Management Care Blog readers are aware (for example, here and here), Obamacare forces health insurers to spend at least 80% (small group) to 85% (large group) of their premium income on health care, leaving only 15% for "other," including administrative overhead and profits. If that 80%-85% "medical loss ratio" (MLR) threshold is not met, insurers have to rebate the difference to their customers.

 While the White House has been happy to extoll the millions of dollars that were repaid to consumers (even though the individual checks were hardly eye-popping and then there is the risk that they're taxable), the DMCB is interested in what actually happened to the commercial insurers.  Did they game the system and garner even higher profits?  Or, have they gotten their comeuppance, are now losing money and have to pursue other lines of business, like covering zombie attacks?

This article in the latest Health Affairs looked at that impact of the law when it went into effect on January 1, 2011.  The authors used NAIC data to examine the impact on the individual (N=1,219), small group (N=804) and large group market (N=750) insurers.

Individual, small group and large group numbers are broken out below. If there is a *, the change is statistically significant.

In the individual market, from 2010 to 2011:

Median medical expenses, as a percent of premium, increased      by 5.5%*.
Administrative expenses, as a percent of premium, decreased            by 2.6%*.
Profit (otherwise known as "operating margin" or the bottom line) decreased by 1.3%*. "For profit" insurers fared even worse, with a decline in operating margin of 2.2%* vs. their nonprofit competition with a decline in 0.8%.

2011 operating margins were overall negative:

Individual overall -0.1%.
Nonprofits:  -3.5%.
For profits:  0.4%.

In the small group market:

Median medical expenses increased by 0.7%.
Median administrative expenses declined by 1%*.
The bottom line increased by .5%. Nonprofits saw an increase of 1.2%* vs. the for profits having a small decline of .3%.

2011 operating margins were positive, ranging from 2.8% to 3.8%  across the non and for profits, respectively.

In the large group market:
Median medical expenses declined by 0.7%.
Median administrative expenses declined by 0.9%%*.
Profit increased by .7%*. Nonprofits saw an increase of 0.1%* vs. the for profits having a increase of 1.2%.

2011 operating margins were positive, ranging from .7% to 2.6%  across the non and for profits, respectively.

The DMCB's take:

Obamacare had a single digit impact on health insurersMore was spent on health care and less was spent on administrative costs.  While the shifts were relatively small, those changes represent swings of hundreds of millions of dollars to the bottom line in an already thin margin business. If the purpose of Affordable Care Act was to beat up on the health insurers, it was more of a push than a shove.

Small and large group profitability increased and operating margins were positive, while the individual market struggled. As readers may recall, the inability of individuals to obtain coverage at any price was a big factor in the eventual passage of the Affordable care Act. While the future individual market may eventually benefit from an influx of healthy young "invincibles" armed with an accompanying bolus of insurance subsidies, Obamacare ironically hurt the individual market in 2011. If health care utilization didn't go down in 2011 as a result of the economy, it could have been a lot worse.

That tells the DMCB that, contrary to the insurers' reports of doom and gloom, the 80%-85% MLR rule hasn't been a catastrophe.  On the other hand, it hasn't been good news for the individual market.  If the young invincibles don't 1) respond to the individual mandate, 2) use functioning insurance exchanges and 3) sign up, it could portend further stress on that sector of the health care economy.  No wonder the Obama Administration is pushing that so hard.

Why Everybody Should Read Why Nobody Believes the Numbers

Music of the Spheres
Back in the early 1900s, Albert Einstein had a problem. Sophisticated instruments were unexpectedly showing that the measured speed of light was the same if the source or the observer were moving or stationary.  In other words, if one were moving away from a bullet, it should look (to the observer) that the bullet had slowed down. Light's refusal to conform to the prevailing common sense about how the universe should work ultimately forced Einstein in 1905 to conclude that, in order for the speed of light to be constant, time and mass had to be elastic. This ushered in a new field of relativity mathematics that is still being used to plumb the known universe's Music of the Spheres.

While the controversies surrounding the effectiveness of "population health management" (PHM) are quite minor compared to Einstein's Theory of Relativity, the comparison is still instructive. The similar mismatch between what is assumed, what is observed and how to mathematically describe the ultimate truth also underlies Al Lewis' book, Why Nobody Believes the Numbers.  In other words, we assume care management-based patient coaching always yields savings, increasingly sophisticated observations often fail to show it and, as a result, we need new mathematics to reconcile what we assume and what we observe.

Interestingly, author Al Lewis of the Disease Management Purchasing Consortium never doubts the speed of light or that high quality PHM ultimately can save money. While PHM vendors may interpret his long history of skepticism as some sort of shakedown, Al's passion is clearly evident: Why Nobody Believes the Numbers is ultimately driven by a search for the truth. For that he deserves a lot of credit.

The good news is that Mr. Lewis does a masterful job of examining the prevailing assumptions underlying the PHM universe by relying on layman's logic, simple examples, real world anecdotes and clever insights. As a result, even the mathematically challenged can come away with a better grasp of the pitfalls that surround selection bias, regression to the mean, invalid comparators and calculation of trend. As a result, the first chapter on "Actuaries Behaving Badly" is arguably "must reading" for human resources managers, sales personnel or C-suite types that are contemplating the "return on investment" from a company wellness or a disease management program.

That bad news is that Al Lewis is no Einstein. He suggests that a solution is at hand thanks to a simplistic "dummy year adjustment" methodology that is based on serial observations over a long period of time that includes all patients with the index condition.  When this is combined with a series of common-sense based "plausibility" tests, Al proclaims his mix of common sense and fundamental mathematics will yield a single, yes or no, black or white, it did or did not reduce insurance-claims expense-truth.

Unfortunately that ain't necessarily so. Even Einstein's insights couldn't explain all of the sublime harmonics that make up the Spheres. There'll be a future Disease Management Care Blog posting with more on how Why Nobody Believes the Numbers falls short.  That will address the unavoidable impreciseness that surrounds measures of central tendency, the challenges of measuring subgroups and the moving-target realities of an insurance industry that continue flummox those of us who are trying to explaining the health care universe.

In the meantime, if you're a buyer or a vendor, the DMCB recommends Why Nobody Believes the Numbers for your bookshelf.  DMCB readers will come away with a better grasp of the good, the bad and the ugly of outcomes measurement, understand what it can and cannot tell us and appreciate the underlying and still evolving debate over the ultimate value of the PHM industry.