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 Tipping Point for Desktop Analytics: A Watershed Moment in the History of Health Care

Germ theory in 1860. The Flexner Report of 1910.  Zombie immortality in 2015  There are only a few watershed moments like these in the history of U.S. health care and, after hearing the other speakers at the recent Star Ratings Congress in Las Vegas, the Disease Management Care Blog thinks it's found another one.

 It calls it "desktop analytics."

In its early health services research career, the DMCB's studies consisted of creating study protocols that included data collection and storage, very high end computing, statistical planning and a carefully contrived reporting format. The timeline typically spanned over several months, required high end computing, involved fussy Ph.D. level statisticians unaccustomed to exceeding customer expectations and ultimately having to convince a narrow, highly educated, and skeptical audience of the veracity of the DMCB's conclusions at a scientific meeting.

While that is still necessary in traditionally funded research studies, the story is now far different in mainstream health care and insurance settings.  Tapping electronic record or insurance claims data bases are now far easier. Statistical software packages are do-it-yourself and 'walk' users through the basics. Ph.D-level statisticians are unnecessary. Mainstream health workers have a working appreciation of measurement as well as trending and the folks inhabiting the C-suites use their in-house research conclusions in core business planning.  And it can all be done using desktops that cost a few hundred bucks.

At the Star Ratings Congress, the DMCB listened to speaker after speaker who presented highly polished insights about quality and cost that were developed thanks to in-house information systems and analytics resources that would have been unthinkable a decade ago. This advance in data management has enabled providers and payers to spot trends on a month-to-month basis, compare local performance to historical as well as national benchmarks and report outcomes to external agencies on a regular basis.  The research efficiency was astonishing.

It was also so taken for granted. It shouldn't be.  Compared to 10 years ago, the industry has gone from the wheel and fire to the internal combustion engine and automatic transmission.

The DMCB thinks its going to get better too.  While the electronic health record vendors have been notoriously inept at supporting data analytics, it's going to just be a matter of time until community-based providers can hit a function key on their keyboards and scan (for example) mammography rates by age, race, zip code and months since last visit.  Insurers will be able to project which enrollees with diabetes on three or more prescription drugs are least likely to take their medicines after controlling for co-pay and weather.

When we finally do figure out how to increase quality and reduce costs, it'll be because desktop analytics had finally reached the tipping point.

Coda: This has important implications for the Affordable Care Act's Coordinating Council for Comparative Effectiveness Research.  The Council may find that by the time a prospective CER study is complete that desktop analytics had already found the answer and the much of the industry had moved on.  Stay tuned.

Where Did The 2010 Increase In Health Care Costs Come From and Who Is Paying?

Remember the last Health Wonk Review?  The Disease Management Care Blog recalls being impressed by the description of the "Health Care Cost Institute," a not-for-profit outfit that was established to store de-identified commercial insurance claims data for research purposes. The participating health insurers are Kaiser, Aetna, UnitedHealthcare and Humana. The database covers 33 million individuals less than age 65 years with employer-sponsored insurance. The DMCB suspects its personal Aetna claims information is in there, somewhere.

The DMCB is more impressed, because the HCCI has just released its first report on 2009 and 2010 health care cost trends. It's full of insights. 

To wit:

1) If you've wondered why your 2010 personal health insurance cost so much, it's because per capita spending was $4,255. This suggests insurers are not the only problem.

2) Costs in 2010 increased over baseline by 3.3% and was driven by an increase in unit prices (i.e., charges), not by greater utilization or overall mix of services.  This suggests providers are charging more for their services.

3) While costs increased, beneficiaries' out-of-pocket costs grew at a faster rate. In 2009, they paid 15.6% of their bill, while in 2010, they paid 16.2% - an increase of 3.8%.  This suggests that insurers are passing a small but painful amount of the additional 2010 provider charges to the consumer.

The DMCB says bravo to the four insurers for making this information available.  This and promised future reports should shed light on health care cost trends.

Image from Wikipedia

More On The Politicizing of Preventive Health Care: Keeping the Feds Out of the Way

Guideline experts at work

Max Levin of the Health Diplomat Blog isn't sure about the DMCB's suggestion that guideline interpretation for health care coverage decisions (including preventive care)be decentralized.  While pushing responsibility down to the local health plans and provider organizations would certainly defang the powerful special interests, Max points out that without a nationally recognized guideline "Good Housekeeping" seal of approval, charlatans and hucksters will be able to foist their pseudo-clinical recommendations on an unsophisticated and unsuspecting public.

Max has a point, but the DMCB isn't changing it's mind:

1. When one big national guideline gets it wrong, the damage involving thousands of patients can be considerable. Examples include years of supporting preventive estrogen for post-menopausal women and aggressive blood glucose control among persons with diabetes.

2. While advocates and lobbyists are just as able to swindle unsuspecting managed care and ACO leaders, they'd need to do so among hundreds of provider organizations.  When power is concentrated in Washington DC, all they have to do is convince one Congressman.

3. In the DMCB's experience, health insurers and ACOs are not only highly expert, but more skeptical when it comes to interpreting clinical trial data and deciding the fit in coverage decisions. For an example of their first-do-no-harm conservatism, recall how managed care refused to cover bone marrow transplants for breast cancer.

4. Last but not least, even Atul Gawande pointed out how "local" health care is.  It's up to communities to create working systems out of the complex fragments of health care that best fits the local population.

The Feds should assure guidelines are incorporated in coverage decision-making.  They can accomplish that through the regulatory process, periodic audits and during the appeals process.  Otherwise, says the DMCB, they should stay out of the way.

Health Reform and Capitation 2.0

New recipe for capitation?

Readers of Kaiser Health News, Politico and The Hill (here, here and here, respectively) were treated to the faux news of another expert report on the tedious topic of physician payment reform.  While the Disease Management Care Blog is a big fan of the brainy Society of General Internal Medicine (SGIM), this physician compensation communique is another rehash of "misaligned incentives" leading to "quantity over quality."

Yawn.

The good news is that there may be insights that were missed by KHS, Politico and The Hill.  In this instance, the DMCB has been listening closely and found one thing the experts aren't saying.

What was said?

Like the many other decrees that have preceded it, the Report of the National Commission on Physician Payment Reform recommends the recalibration and then phasing-out of stand-alone fee-for service (FFS) while transitioning to other payment models that blend FFS with global payment, salaries or "capitation."  It also advocates increasing payment for "congnitive" over procedural services, removing any hospital overhead costs from the fees that are paid for any service that can also be performed at a free-standing facility, rewarding measurable quality, paying for telemedicine, increasing the use of risk adjustment, repealing the sustainable growth rate (SGR) and reforming the RUC.  And like everyone else, it assures the reader that paying for the savings from all these reforms will more than pay for themselves.

And yes, the word "capitation" was in the report.

What isn't being said is that there is a growing consensus that scuttling of traditional fee-for-service will usher in a new era of capitation.  The DMCB thinks of it as Capitation 2.0.

"Capitation" doesn't necessarily have a good name, but that doesn't mean this new rose doesn't smell as sweet or have fewer thorns. Originally spawned by the go-go managed care era of the 1990s, it was blamed for putting profits before patients by giving physicians an incentive to withhold needed medical services.  While a much younger Donald Berwick reported that the medical literature "did not make capitation out to be the villain that some believe it is," the complex risk taking, a lack of individual physician support and unseemly group practice behaviors undoubtedly fueled the physician backlash and the end of managed care in the 1990s.

 So why is capitation coming back?  The DMCB suspects one reason is that there are only passing references to it and that it's been rebranded with more benign sounding names like "gain-sharing" and "global payments."  Another is Medicare FFS fatigue, caused not only by the SGR but by CMS' unending hassles, the uncertainty surrounding PQRS and the dread of having to go through one of those repugnant "RAC audits."  Unwilling (so far) to simply drop out of Medicare altogether, docs are backing into acquiescing to the recommendations of groups like the SGIM.

And why does the DMCB call it Capitation 2.0? Writing in SGIM's Journal of General Internal Medicine more than a decade ago, Thomas Bodenheimer predicted the survival of managed care thanks to the allocation of full capitation to institutions, not individuals. It's then up to those institutions to leverage both FFS and capitation at the individual physician level.  The DMCB would add that a third ingredient is tying any payments under capitation to specific quality goals, like control of chronic illness or maintaining access to care.

The DMCB's conclusions?

What they didn't say: The track record of original capitation or advent of Capitation 2.0 doesn't mean physicians are embracing what their organizations and political allies are saying what's best for them.  They simply don't see an alternative. The 1990s could happen again.

What they got right, sort of: Outside of large organizations that take capitation, we have much to learn about the best combination of FFS and fixed payments when it comes to physician incentives and protecting patients.  Like other reports before it, the National Commission suggests we need 5 years to assess new payment models.  Given the decades of experience with managed care's capitation and Medicare's institutional inertia, that may be overly optimistic.