Monday, September 20, 2010

The Brave New World of Accountable Care Organizations

Brave New World for Health Care in America
Recently I attended a health care conference, sponsored by ECG Management Consultants, on the impact of accountable care as mandated by new government regulations for quality and transparency. An accountable care organization is a clinical group that receives a patient management fee from Medicare in exchange for improved patient oversight and quality standards. In short, this is pay for performance, not only for procedure. All of the panelists at the conference were in agreement that the health care paradigm has shifted irrevocably. There was much discussion around organizational adaptation for integrating quality measures in reporting and contracting, including one from a clinician in attendance, who decried the poor reimbursement for solo primary care practitioners. Essentially he was told that only clinicians whose model meets the new requirements for reporting and care metrics will be able to adapt. Wow, pinch me, did someone running a health care organization really say that in public? This is definitely the first time I have been in a conference where all of the experts were in agreement and publicly stating the old model for doing business in health care is dead, which is to treat and bill for services, based on usual customary and reasonable charges. It is no longer adequate to do a good job with your patients; you have to be able to demonstrate that with your quality metrics. Certainly some clinicians will choose to retire, others will join larger clinics to be able to compete, and some will be the leaders in this adaptation. The Everett Clinic comes to mind, a leader for decades in the provision of affordable care to a diverse patient population, and with excellent quality measures, as reported by Leapfrog and other quality watch dogs.

The medical community, as represented at the conference, is anxious to adopt a new compensation model beyond the fee for service practice and though it will be a process of adaptation to include medical home and other primary care provisions into a reimbursement model, it is happening. The accountable care organization provisions encourage health care entities to reduce waste, provide measureable improvements in care, and improve the end stage of life care process. The first article I wrote in my health care column in 2007, was about end-of-life-care and the impact on the patient as well as the cost to society, with my brother as the benchmark for the shift away from prolonging life regardless of quality.

Conference speakers from Monarch HealthCare, Brown & Toland Physicians, The Everett Clinic, and Premera Blue Cross were in agreement on the following principles derived from the recent health care reforms:
1.Health care decisions will be driven by the individual and less so by the corporations.
2. We are going to have to provide a lot more care to an aging population for less money.
3. The system has to make meaningful cost management changes.
4.One of the big costs that need to be confronted is inappropriate end of life care due to the absence of medical directives, lack of palliative care programs, and general lack of awareness on the part of patients.
5.Other cost vectors that need to be controlled are reducing unnecessary procedures, allocating technology more efficaciously, and reducing excessive administration costs.

Government Processing Speed

Concerns raised by this group of health care administrators include the speed with which the Center for Medicaid Services, CMS will be able to process all of these changes. It took a year and a half for them to measure the Everett Clinic’s results in a demonstration project. Since the scale and degree of health care changes are significantly greater with the 2010 health care reforms, one has to wonder how many years it will take for the reporting to occur, let alone system integration.
New Medical Model
The model for an effective health care delivery organization will have to include these criteria to succeed in the new health care environment in the United States:
1.Clinically integrated multispecialty physician networks
2 An economic model to manage risk and deliver patient value
3.Immersion in evidence based medicine
4.Successful communicators of their value
Benchmarks for America’s New Health Care Program
The United States’ ability to compete for goods and services on a global scale demands a more efficient health care system, because we cannot continue to spend 20% more than everyone else for health care. Several countries have managed private insurance programs for the provision of health care including; The Netherlands, Switzerland and Taiwan. The USA would be wise to observe how these models function and to adapt best practices. One thing that is clear, despite the catcall for subsidizing health insurance costs, these other countries provide subsidies, up to 40% of the premiums, depending on the income level and location of the enrollee. So to all of the whiners who criticize insurance subsidies for the middle class, if you want an inclusive national medical program using private insurance, this is a mandatory element, so get over it! It is in the best interest of everyone for the focus to remain on how those dollars are spent and on the value we are getting for improved health care, for example, managing hypertension to reduce the incidence of kidney dialysis, which costs a minimum of $50,000 per patient. If we improve our health care model and deliver care more efficiently we can bring down the relative per capita cost of health care over time.

Thursday, September 2, 2010

Private Sector Exemptions from 2010 Health Care Reforms and the Wellness Mandate

Private Sector Exemptions from 2010 Health Care Reforms and the Wellness Initiative
According to an article in the New England Journal of Medicine, 57% of private employer plans are ERISA self insured plans and are exempted from many of the 2010 health insurance coverage mandates, since these plans are not considered insurance. This means most of the large employers out there will continue to manage their own health care programs as they have in the past. Smaller employers will be the ones most impacted by the insurance mandates and often, they are the least able to pay. The federal subsidies help some small employers, but if you have over 25 employees you are required to provide the expensive first dollar coverage and pay a significant portion of the cost. Perhaps the small employers will elect to pay the penalty rather than play in this pool. It is also worth noting that a lot of start-up companies and nonprofit organizations fall into this size category and their funding is quite restricted.
Cost to Produce the Baseline Surveillance
The impact on the health plan’s cost will of course be a factor in the hiring of new employees. Though it is illegal to discriminate against older workers, one has to wonder why a small employer wouldn’t consider age when it would impact the cost of their medical plan. Even under the Obama reforms age is still a factor in establishing a community rate for the price of a health insurance plan. Yet another nail in the coffin for anyone who is over forty and looking for work. As a student of government policy making I am wondering if the unintended economic consequences were fully considered with this 2010 health care mandate for small employers to buy expensive front-end loaded insurance for their employees.
Encouraging the Desired Effect
I favor the carrot incentive method much more than the punishment stick and keeping the tax deductions for health and welfare plans is critical to employer sponsorship, as well as keeping some flexibility in plan design so the smaller businesses, both for-profit and not-for-profit can participate. The federal subsidies apply only to very small employers with 25 or fewer employees and are targeted to firms with 10 and under workers, which is understandable from a budget standpoint. It is telling that the government considers small business only those with less than 50 employees (the standard most likely to be adopted by the majority of the states), who are exempt from the penalties for not providing medical insurance plans. In the private sector, employers with less than several hundred employees are considered small and in my insurance career, several companies considered all firms with less than 2,000 employees to be small employers. This difference in standards is based on the volatility of the claims performance data and the management required in order to replicate a similar outcome for the smaller firm versus a larger client.
Wellness Care Mandates
Though I understand the importance of providing primary care, which means early detection of costly diseases like high blood pressure (which is a precursor to kidney failure and cardiac problems) through annual exams, perhaps having them provided by insurance companies is not the most effective method. The insurance industry is deft at managing large risks and not at providing disease surveillance or wellness. Any efforts to do so by insurance companies involve add-on commission based products that are provided through a third party and generally not well integrated into program performance. You can bet that plenty of insurance agents are selling wellness programs now that the coverage is a government mandate, but what is the efficiency of this model, other than to make more money for the insurance industry?
Better Way to Provide Wellness Services

Another way to provide disease audit and management could include using public health nurses or clinics to do the surveillance, which would protect the privacy of the individual and provide key surveillance information for a community trying to manage its health care. Since large employers may already use on-site clinics to provide the wellness services, the small employer sector needs a better model for identification of at-risk employees. Also, the public health programs need an infusion of capital and this would be a great way to take the old “school nurse program” and create a community nurse program nationwide. As someone who went through a Minnesota winter with untreated bronchitis I wish there would have been a school nurse in my high school. I would love to see a cost benefit study on using public health programs and federally qualified clinics to provide the wellness services versus the insurance industry products. Everyone likes to complain about the inefficiency of government programs, but the financial support of federally qualified health centers through federal grants has proven so effective it has been reauthorized by three presidencies. Public health programs have been on the front lines in addressing health risks for a hundred years. These programs are effective and they don’t require sophisticated and costly marketing schemes to pitch their results, but they could use your advocacy.
For those of you who have a fear of public health, I can attest to the efficacy of the program as I have been a customer of Seattle Public Health on many occasions, for my travel immunizations (they have the best travel clinic), for primary care treatment when I have been without insurance, and for referrals to other medical facilities, when no one in the private sector would see me. At least with the Obama protocols many of the uninsured will have medical insurance, which will at least enable them to get a private sector physician to schedule an appointment. The Obama health reforms are creating a new baseline for health care design and reporting and maybe in the long run it will empower consumers.
For more information on how the states are reacting and their regulatory authority for the federal health reform mandates, read the September 15th article in my contributing column for the life sciences newsletter of the east coast consulting group at
This article was written by Roberta E. Winter, MHA, MPA and may be reprinted with her permission.