Brother, Can You Spare An Hour?

For all the frustration over double digit premium increases, at least some employers are controlling health care costs. At this link, you can watch a health care panel discussion that was a part of the WMC Business Day in Madison February 23rd. John Torinus from Serigraph is the last of three speakers and the entire discussion is a little over an hour. It's all good stuff but make sure you listen to John. Take notes. I did.

Let me know what you think.

Why Premiums Are So High: Chapter 287

Clients invariably tell me of their own encounters with health care. Here's another anecdote from just the other day.

"I took my wife to the doctor for a varicose vein procedure. We arrived for her appointment at 9:00 in the morning. By 11:30 we were at Panera Bread having lunch. There was no surgeon; no anesthesiologist. Not sure what exactly was done but for the short time she was there, I never expected to see a bill for $13,000!"

Stories like this drive me nuts. Is this a fair price? (Maybe it is.) I imagine a doc doing about a dozen or so procedures a day at $13,000 a pop. Wow. Isn't it just a matter of time until the opening of a "Veins R Us" where you can have sclerotherapy for $1000?

I hope so . . . . .

Medical Tourism; Maybe Your PPO Network IS Too Small Afterall

Suppose you are a business owner with 220 employees. Like the majority of medium sized to larger businesses, you partially self-fund your health plan. By that I mean, you have 'stop loss' insurance but only after - let's say - the first $75,000 of claims per covered life come out of your pocket. Despite your best efforts at promoting wellness, every year one or two people in your group have a very expensive episode of care. Wouldn't you jump at the chance to reduce the cost of those 'shock loss' claims by 50 to 75% or more?!

I've been reading about "medical tourism" for a couple of years now. What is that? Well, check out this link for a prime example. Take the Bumrungrad International Hospital 'virtual' tour that can be easily accessed on their Home page (upper right). After just three minutes, I wonder if - like me - you'll be thinking what I'm thinking; why isn't this facility in my PPO Network?

Perhaps it's (past) time to demand that your insurer or self funded TPA (Third Party Administrator) credential and add facilities like these to our networks of providers.

Et tu, WSJ ?!

The airwaves are full of ads from doctors, dentists and other health care providers encouraging you to spend "unused" dollars before the end of the year. Even my own dentist, in advance of a routine appointment last month, sent me a personalized letter informing me I had used only a fraction of my Dental Plan's annual limit, so wouldn't I like more dental care before year end? (Oh please, let's go for a crown!)

I don't blame providers for trying to drum up business and perhaps there is some logic to spending unused flex dollars that can not be rolled over from year to year. Just because you've satisfied your health plan deductible or other out of pocket limits, let's not kid ourselves - as the ads would have us believe - that there is no cost to additional spending.

The WSJ Editorial Board has been a great champion of restoring "consumerism" to health care markets. They have long advocated that individuals should have some "skin in the game" so as to make more prudent spending decisions. Thus it was particularly galling to read an advice column authored by Anna Wilde Mathews in a recent Wall Street Journal 'Sunday' feature, in which she suggested to readers that at this time of year they need to "check that you aren't missing out on free stuff"!!!

Let me make this crystal clear: whether paid for by your insurance plan or the government, health expenses are NOT "free"! Premiums (or taxes) paid - whether all or in part by an employer - proportionately reduce employee spendable income. And claims paid - even those at year end after our deductibles have been satisfied - add to overall utilization which causes even higher premiums (or taxes).

This lesson reminds me of the P. J. O'Rourke quip: "If you think health care is expensive now, wait until you see what it costs when it's free."

Conspicuous By Their Absence

The most recent U.S. News & World Report on America's Best Hospitals ranks the top 25 hospitals in sixteen different categories. Not one hospital in southeastern Wisconsin - not one - makes the grade!

So, if I need anything other than the most routine care, should I be looking to go out of state? And if I do, are the most highly rated facilities considered "In Network" by my health insurer? With so many people considering year end 'Open Enrollment' health plan options, this might be a very oportune time to do a little home work.

JUST WHAT ARE 'GLOBAL REIMBURSEMENTS'?

I wrote an Op-Ed piece for the Journal Sentinel this week and sent friends/clients a sneak preview. In it I discussed a fundamental re-make of the payment models for health care. I opined we should stop paying a discounted fee for every service and instead develop "global pricing" for "episodes of care". A little more explanation would have helped sell this vision.

The way we pay for care now, docs are actually rewarded for non-compliant patients. The diabetic who fails to take his meds for example, sees his health spiral out of control. Problems develop with vision (in the extreme resulting in blindness), circulation (amputation!), heart failure, etc etc. all requiring more treatment and more income for the doc. The patient that takes his meds, changes his diet and controls his disease obviously doesn't need to see the doc nearly as often. So the doc has the less income but the same overhead. He loses money delivering better outcomes. Isn't that just wrong?

Why not develop a fixed price for each diabetic patient. What will it cost on average to treat them? $2,500 a year? $15,000 a year? I don't know what would be a fair number but whatever it is, that becomes the "global" reimbursement for the diabetic's entire "episode of care". Doesn't this change all the incentives?

Here's another example. You have a strained back. Under the current system you might seek out a physical therapist who recommends twice weekly visits. This goes on and on and on . . . . . and on. Every visit, another payment. What other market gives the seller of services so much control over the buyer? Do you have the knowledge to question whether or not you really need 35 treatments! Heck, if the insurance company is paying the bill, what do you care. Well, if the diagnosis is a strained back, why not just set a fixed fee for treatment. If the PT can get you back to normal in three or four visits, he makes out nicely. If it takes 15 visits, not so well.

Now, couple this change in payment methodology with complete transparency. PT 'A' is charging $1000 for every strained back so PT 'B' figures out a way to charge $850 and with better outcomes. Do you see where this could go?

This isn't nearly as controversial as you might think. Many health systems have pretty much moved to this model already. When payers (government and insurers) better align the incentives, we will see enormous savings. Waste, fraud and abuse are estimated by some to be as high as 50% of our total health care spend. How many more people could be insured if premiums were 40 - 50% lower?!

The question is, when so many agree on the need for this change, why is it taking so long?

Health Insurance Renewals for Small Groups: Mid Year 'Report Card'

Our Agency works with many small businesses who have health insurance primarily on a fully insured basis with one of four insurers. We've pretty much completed January 1 thru June 1 renewals so I asked for a comparison of last year's renewals to this year. Here are the mid-year results:

2008 +17.31% vs 2009 +16.86%; clients of Insurance Co. A

2008 +20.26% vs 2009 +22.08%; clients of Insurance Co. B

2008 +16.40% vs 2009 +19.88%; clients of Insurance Co. C

2008 +10.61% vs 2009 + 8.45%; clients of Insurance Co. D

All Clients Combined: +16.96% 2008; +19.18% 2009

The above increases are almost always reduced to single digits after plan design changes and/or underwriting with a new insurer. Never the less, what does it say about 'our' insurer's ability to "manage care" if during such troubled economic times and with all the political pressure to contain costs, premium increases like these are still needed to cover more expensive health care and greater utilization!?

Results like these are used by many as proof we need to move to a government run plan as the pace of health care inflation is clearly unsustainable. But such a conclusion misses the more important point. Simply changing payers will either lead to the bankruptcy of the government or rationing of care. Fortunately, as serious reform talk heats up in Washington, the brightest prospects for meaningful "change" address systemic reform of the way we deliver health care.

And might I add that under our current system, at least I have the option of moving to Insurance Company D!

The Day After An Historic Day

Wednesday November 5th. My first appointment; an employer/client with a staff of 16 (average age, 35). I'm delivering their health insurance renewal. It's a 4.4% increase without any changes to deductible or co-pays. (I wish they were all this good!) After the increase, the annualized billed premium per covered employee will be $4,960.

This afternoon we are delivering another renewal to a client with 156 employees (average age, 41). They are getting an 11.7% increase but after switching to a new provider network - with the same insurer and a 99% overlay (match) - we end up with a 5.2% increase. With no other plan design changes, after the renewal, the annualized billed premium per covered employee will be $7,027. Note: I did not cherry pick these two groups because they have exceptionally low costs. They just happen to be on my calendar today and in fact, across the board, our clients pay on average an annualized premium of $5589 per employee. Premium sharing between employer and employees further reduce our client's cost by about 25%.

I share such detail because yesterday's election results included advisory referendums from 22 cities and counties across the state on the question: "Shall the state legislature enact health care reform legislation by December 31, 2009, that guarantees every Wisconsin resident affordable coverage as good as what is provided to state legislators?" By about a 74% margin - it wasn't even close - all 22 voted 'Yes'.

Have the voters spoken? Figures available on line show that 81,440 employees covered under the Wisconsin Employee Trust Fund cost taxpayers $950,775,000. Despite the size of the pool and the state's obvious 'buying power', that works out to $11,675 for each employee; about double - but sometimes triple - what our small business clients are paying. Would the results of the referendums have been the same if the wording defined "affordable"? [Everyone wants their children to have a good education but referendums asking for millions to build new schools more often than not are rejected.]

As soon as January, the new majorities in the State Assembly and Senate will be eager to respond to the voice of their constituents. We've asked for change so by golly, change we're going to get! "Affordable health care as good as what is provided to state legislators" will be at the top of their list. Every client I work with has a different take on what health coverage is "good" and what premiums are "affordable". The great thing about my work as a broker/consultant is the choices I bring to each situation. Those who will be crafting reform legislation would do well to model their ideas on the results achieved by small businesses and not state employees. To do otherwise would bankrupt an already cash strapped state.

The Trouble With Health Care Cost Surveys Is That They Don't Survey Health Care Costs!

Lot's of headlines again this week over the release of another new "survey of employer health care costs". Surveys released in the fall help businesses develop strategies for their year end health plan renewals. Details always include median premium figures for single and family coverage, deductible levels, expected cost increases and on and on.

Here's a request to those who conduct the surveys and those who report on them: Please, please, maybe you should conduct a survey of health care cost increases. As just an example, I'd like to see what a normal pregnancy cost 10 years ago and what it costs today and an explanation for the increases. Or, I'd like to see a figure showing the cost per hospital admission 10 years ago and the same figure for today. Instead of surveying the cost of providing employee benefits, wouldn't it be more enlightening to shed a little light on the cost of care?
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As I turned the pages of my paper reading about this survey, I couldn't help notice the number (and size) of ads from hospitals and clinics and physicians extolling the wonders of their services. Try as I might, I couldn't find a single figure on the cost of those services. Now, do you suppose there just might be a connection between the survey results of employer's health benefit costs and these ads for health care? I'm not suggesting that advertising health care is a bad idea but maybe we ought to demand to know the cost!! (And yes, something about quality and outcomes would be nice, too.)

Tit For Tat: Health Care Consolidations Continue

There is news today of the demise of yet another independent physicians group. It seems they need the bargaining power of the large health systems to survive the payers pressure for ever lower reimbursements. Not surprisingly, the pace of provider mergers has pretty much been matched by payer consolidations.

In the S.E. Wisconsin marketplace where I do business, we're down to just a handful of mega providers and just as few payers (insurers). Did anyone get the upper hand in this progression? Are we on course for the ultimate consolidation to just one payer - the government? I'll bet providers will just love those fee schedules! And would health insurers be looking for new work?

Perhaps belatedly recognizing the folly of this arms race, provider and insurer websites are blossoming with information on price and quality. Have you looked recently? There are also nascent enterprises such as OutOfPocket.com - an independent health care transparency search engine - that will keep the pressure on. Think of a time when consumers have information and they (finally) make the market. The cycle of consolidations is likely to be broken and health care costs may actually come down.

Coming Soon; Another New Hospital Near You!

Here in the Milwaukee area - as is happening all over the country - we learned yesterday of plans for yet another new hospital. The news reports centered on the need for another facility and the impact on costs. Perhaps a more pragmatic view of this news would be beneficial.

The notion that the best hospital is always the nearest hospital is laughable. And yet in an emergency, when you call 911, the chances are the local fire department responding will only take you to the nearest ER. Wouldn't it be prudent to be better rehearsed for such an event? Say I have an acute heart attack. On the one hand, the local fire responders could take me to a hospital only 8 minutes away but then I might lay waiting for the 'on call' team to arrive; a team that might be only slightly experienced to treat my condition. A better scenario might be to call a private ambulance company that drives me an extra 15 minutes to a facility equipped 24/7 to give me the best care possible. Despite the extra drive time, I could actually receive care faster and from a better team of experts.

Convenience is great when it comes to fast food restaurants or drug stores. But when you need critical hospital services should convenience be anywhere near the top of your selection criteria? "Shopping" for health care when you are unconscious strapped to a gurney is unlikely. But why can't you do your homework now? It could save the life of you or a loved one.

Lessons From Another Health Encounter

At the tail end (an apt choice of words) of my annual exam the other day, my doc asked me if I wanted to have a vaccine for shingles. Then he handed me some information about this condition from the Centers for Disease Control (CDC). I have a friend who suffered from shingles for over two years so this had my attention. My first question: "what does it cost?" The answer: "$300 and your insurance probably won't cover it." I gave him the green light anyway.

That decision puts me in the top 5% of my "class" (finally!); e.g. of the 45 million folks boomer age and older who should be vaccinated for shingles, only 2.3 million have done so. It seems besides the influenza vaccine most of us know about, there are other "adult immunizations" most of us do not hear about; tetanus, pneumonia, even cervical cancer! Perhaps this is largely because our health plans don't cover them. That seems like another of the many confounding financial decisions we allow our insurers to make for us. [Actually, if I were (way) older and covered by Medicare Part D, the shingles vaccine would be covered subject to a copay I found as low as $37 with one carrier.]

I also found that had I simply delayed my decision, I could have had the same injection at a Walgreen's Take Care Clinic for just $219.99. The moral of the story: listen well to your doctors advice but then if conditions allow a little time, shop for the best deal. Of all the people who should have known that, you'd think it would be me. My Health Savings Account will be minus $300 instead of $219. Darn! And, since my risk of getting shingles has now been halved, I'll be asking my insurer for a discount when the renewal premium arrives. Which brings me full circle on this post . . . . . .

Just What 'The Doctor' Ordered

Harvard Professor Regina Herzlinger - not an MD but a PHD - has often spoken/written about how consumers will figure out the best buys in health care; just give them information! I don't think Dr. Herzlinger could have ordered up a better course of information treatment than what is in the July Issue of Consumer Reports.

In an important article entitled "Too much treatment", we get a look at the 2008 Dartmouth Atlas of Health Care decades long study of millions of Medicare beneficiaries. Not surprisingly, "the local supply of doctors and hospitals has more influence on the amount and type of care that patients receive than their actual medical conditions." The kicker is, the more costly aggressive care does not yield better results!

This news on top of the United States Department of Health and Human Services Hospital Compare tool that has just recently received headlines, suggests that Dr. Herzlinger's 'prescription' for transparency of health care cost and quality is well on its way toward being filled.

And to further connect the dots; reporting of this kind will foster competition which lowers costs thus making health care more affordable for the under or uninsured.

Revisiting My Mantra: "Co-Pays Suck - Get Rid of Them"

Yes, I did utter those words at an MMAC Forum several months ago. Pretty eloquent, huh?! In the context of discussing how "qualified" High Deductible Health Plans (HDHP's) combined with HSA's drive behavior change - thus reducing health utilization - the idea is (just) one key component of the Consumer Driven movement.

At a May 15th Healthcare Conference in Chicago sponsored by the Illinois Chamber of Commerce, I heard an intriguing presentation describing the importance of "Value Based Insurance Design" (drum roll please for just what the insurance business needs, another acronym: VBID). The issue is, do High Deductible Health Plans (or even modest Co-Pays) create financial barriers that cause people with chronic conditions to be non-compliant with drug and other therapies thereby increasing, instead of lowering, cost?

There will be much debate about this and having implemented many HDHP's, I know well the issues. Will the considerable premium savings of the HDHP be banked in an HSA or spent on the rent or higher gas prices? If banked, there are no "barriers" for health compliance. In fact, there are rewards; ie., we can spend enormous additional premium sums (or taxes) so that insurers (or Big Brother) can manage our care; or we can manage our own care and keep the savings!

I still think "Co-Pays Suck".

Go Figure; Drugs For Less Than A Gallon of Gas!

I have been reviewing the lengthy list of mostly generic drugs available at Wal-Mart Pharmacies. It is a comprehensive list. A 30 day supply can be purchased for just $4.00, less than I paid for a gallon of gas this morning. Remarkable. I understand similar pharmacy programs are available through Target and possibly other retailers.

If pharmacy competition is any indicator, will market forces have a similar salubrious effect on all health care costs? We can only hope!

Walkin' In To Walgreens

The ads for Walgreen's Take Care Clinics have been hard to miss; they promise quick convenient care for routine health conditions like the chest cold that was dragging me down this week. So I gave the nearest clinic a shot. Here's what I found.

I signed in at a touch screen computer which asked for the usual name, rank and serial number. I was also prompted to select the condition I wanted treated and given the cost of the consult. I think it was $56. Not a Co-Pay, this was the all inclusive price. There's a first - I know in advance what my health care encounter will cost. Cool!

An aide then took me into the one (and only) private room that looked just like a doctors office. Same examination table, sink, charts on the wall etc. No one asked me to disrobe. Cool, again! The Nurse Practitioner ("PhD, APNP" to be precise) that promptly entered the room had the usual white coat and stethoscope. After listening to me describe my symptoms she pretty much checked the usual things a doctor checks; blood pressure, eyes, ears, nose and throat. Then my heart and lungs. Yup, I have a virus. Nope, no pneumonia. Pretty standard cold. I'm just hoping to get an antibiotic and get the heck out of there but she's wise to the usual exaggeration of how long I've been suffering. (Haven't we all been pretty much conditioned to stretch the truth to get our drugs - especially since our insurers are paying for them!) She recommends instead an over the counter med and a prescription inhaler. Combined, the two meds are another $39.

So now the wheels are turning; would Walgreen's make more money on this course of treatment or on the sale of the expensive antibiotic. (What a cynic!) I guess I don't know nor do I care if this cheaper stuff works. The jury is still out on that. I paid for both the consult and the meds with a swipe of my HSA credit card. My insurance company will never see the claim and Walgreen's has their money without any delay.

In all I was at the Take Care Clinic almost an hour. And today when I got home I had a letter from 'my' Nurse Practitioner with a little professional advice on the need to keep current with annual exams etc. Believe it or not, I got a phone call too. How was I feeling? Did I want any more information? Wow! This is the kind of customer service every business tries to achieve. Nice job Walgreen's. All of that 'fluff' however is unimportant unless she got the diagnosis and treatment right. Without the MD after her name, there is just a hint of doubt.

One Night Stand is $53,103!

I recently reviewed a good friend and client's EOB - Explanation of Benefits. The insurer's form showed charges for a minimally invasive knee replacement in an Illinois hospital (where costs are allegedly lower). The in-patient charges for this one night stay were $53,103. I repeat and clarify: exclusive of the surgeon, this procedure was $53,103!!!

Several weeks later, the other knee costs 'only' $51,000. As this was an In Network provider for the insurer, the amount was discounted and paid at $36,110.

[Note to certain pandering politicians: My client owns a small business with only 20 covered employees, but this 32% negotiated discount is the same given to the insurer's largest national account - but I digress to dispel a myth.]