Posted in Accountable Care, Affordable Care Act, health reform

TrumpCare: What We ‘Know’?

by Gregg A. Masters, MPH

You’ve no doubt heard the expression: ‘a picture is worth a thousand words‘.

Well courtesy of Oliver Wyman Health we have an infographic that segments key provisions of ‘TrumpCare’s‘ impact on providers. For original graphic, click here, and timely commentary, see:Special Election Coverage: What Now? The Impact of a Trump Presidency‘ via Partner Sam Glick.
TrumpCare Impact on providers

Oliver Wyman breaks down the identifiable components of TrumpCare’s impact on providers as follows:

TrumpCare screen-shot-2016-11-15-at-10-06-48-am screen-shot-2016-11-15-at-10-07-00-am

 

So much ‘meat’ remains to be put on the bone. Assuming anything whether ‘substantiated’ by previous campaign rhetoric or more recent ‘indicia‘ of what will emerge post ‘repeal and replace‘ or now ‘amend’ intentions relative to the ACA (see: ‘As the TrumpCare Pivots Begins‘) is without a doubt ‘faith based‘ reliance on what remains essentially an aggregate ‘hologram‘ of President-Elect Trump’s health reform agenda.

Stay tuned!

 

Posted in Accountable Care, Affordable Care Act, health reform

As the TrumpCare Pivots Begins

by Gregg A. Masters, MPH

Just when we thought it was safe to get back in the ‘white water of health reform‘ with needed fixes to this arguably complex and ambitious Act, surprise!

Against all odds and the best and brightest minds in the polling community welcome President-Elect Donald Trump and his litany of public statements regarding the intent to ‘repeal and replace’ the Affordable Care Actday one‘.

There is so much to this story that it’s difficult to fix a single point of entry, so we’ve sourced just a few of his public statements to frame the discussion which we’ll launch here but dive further into at This Week in Health Innovation and PopHealth Week with my colleagues Fred Goldstein and Douglas Goldstein.

Last week the Wall Street Journal posted a piece which began what some now expect to be the inevitable revisionist walk-back on the range and depth of what is realistically possible for the categorical ‘repeal and replace‘ rhetoric of this ‘holographic‘ candidate, now President-Elect Trump. Trump has been rather clear that the ACA aka ‘Obamacare’ is a ‘disaster‘ and must be thrown out and replaced with some ‘beautiful‘, ‘bigly‘ or who knows what else occurs to him as a politically feasible replacement alternative?

Some of my colleagues in the health policy and health-wonk space who’ve inexplicably (in my view, though see: ‘Dear Mr. President-Elect, about that Ryan Plan Thing‘) hitched to the TrumpTrain and it’s Rorschach projection of what is to become ‘TrumpCare‘ have stunned me by proffering seemingly apologist precedent for his now revisionist tune:

Just to make sure you have the facts.. 🙂 He said in early primaries and consistently after that that preexisting and all that stays in.

This was in response to the following tweet given the WSJ piece:

screen-shot-2016-11-14-at-9-46-31-am

Yet here’s just a sampling of public statements made during his campaign:

trumpcare1

trumpcare7

trumpcare12 trumpcare10 trumpcare8 trumpcare7 trumpcare6 trumpcare5 trumpcare4 trumpcare3 trumpcare2

trumpcare8

This portion of Trump’s health reform agenda is so target rich and ‘on the come‘ while campaign rhetoric meets the real world of policy and politics, so we intend devote a fair amount of coverage and commentary to TrumpCare’s emerging policy indicia.

Meanwhile, here is the vision posited to the people and the Congress of the President Elect’s health reform (similar as ‘guidance‘ offered though materially at variance with Obama’s ‘8 Principles’) submitted to Congress as parameters for the debates and negotiations eventually leading to the passage of ACA:

TrumpCare

Some related references here:

http://www.sciencemag.org/news/2016/11/here-s-some-advice-you-president-trump-scientists

Medical science policy in the U.S. under Donald Trump

We do in fact live in interesting times!

 

 

Posted in Accountable Care, population health

Accountable Care, Population Health and the Social Determinants of Health

by Fred Goldstein, M.S.

Recently I took part in the Florida Trail Association (FTA) Annual Conference. The FTA develops, maintains, protects, and promotes a network of hiking trails throughout the state, including the unique Florida National Scenic Trail (FNST). This event celebrated the 50th Anniversary of FTA founding.

A Brief History

The National Scenic Trails were authorized under the National Trails System Act of 1968 that began with the naming of the Appalachian Trail (AT) and Pacific Crest Trail (PCT) as the first National Scenic Trails. The AT was originally founded by Benton MacKaye and completed in 1937. It’s over 2,000 miles long. Earl Shaffer was the first person to do a complete single thru-hike of the AT  in 1948. Earl was a soldier returning from World War II who said he was going to “walk off the war”.  More on this and its relevance to current day later.

fta-conference-jim-and-fred
Jim and Fred at the unveiling of the sign

The Florida National Scenic Trail another of the eleven National Scenic Trails is about 1,300 miles long and has its own originator, Jim Kern. The weekend was a well-earned celebration of Jim’s vision to establish the Florida Trail 50 years ago.  Jim is also a co-founder of the American Hiking Society, and founder of Big City Mountaineers which takes under-served urban youth through wilderness mentoring expeditions.

Jim has become a friend and I am now assisting him as a Board Member of  yet another organization he founded, Friends of the Florida Trail. Most people are not aware that the only National Scenic Trail that is complete from end to end is the Appalachian Trail.  All of the other trails have hundreds of miles of gaps which require hikers to walk along roads and highways, limits access to sections, has access that can be withdrawn at any time and trail routes are constantly changing as a result. Friends of the Florida Trail is working to find a way to complete the Florida Trail.

Hiking and Population Health

fran-mainella
Fran Mainella while working at the NPS

So how does my interest in the Florida Trail and getting outdoors relate to my work in Population Health? Well its really quite simple and in fact the guest speaker, Fran Mainella addressed it in her presentation.  Fran was the 16th Director of the National Parks Service under President George W. Bush and before that she was director of the award-winning Florida State Parks for 11 years.

As she said said and I am paraphrasing:

“At the same time that outdoor places and trails seem see to be becoming less relevant to our youth with the advent of new technologies, the internet, online gaming, Facebook, Snapchat and messaging, we have become more aware that getting outdoors, walking and hiking have incredible health benefits.”

We have both seen the link that needs to be created between the healthcare system and these outdoor locations and activities to improve the health of our country. The healthcare system and the trail associations can come together in a mutually beneficial way. It’s a golden opportunity for health plans, hospitals and other providers to promote and create health in their populations while supporting a great cause, the awareness, use and protection of these outdoor assets.

img_6072Our long distance trails provide  even more reason to be supported and this was clearly expressed in what I felt was the best presentation of the entire event. The presentation was given by two recent veterans who discussed Warrior Expeditions and Warrior Hike. As mentioned above, Earl Shaffer thru-hiked the AT after WW II to “walk off the war”. Many of the men and women returning from Afghanistan, Iraq and other places, come back suffering from PTSD and other stress related issues. Warrior Hike, working with Georgia Southern University and other sponsors provides these returning veterans with the opportunity to thru-hike many of the National Scenic Trails to “decompress from their military service and come to terms with their wartime experiences”  or as one speaker said “deal with these demons.”

This year, six veterans began a thru-hike of the the Florida Trail and five completed it. The veterans told incredible stories of their journeys on the Florida Trail and how these long distance hikes positively changed their lives’, providing them with some healing from the trauma they faced.

All of the National Scenic Trails are amazing places, not just because of their beauty, but because of their ability to impact our health, both physical and mental; they are more than just a “walk in the woods” they are about Well-being for us and future generations. We should do all we can to protect and complete them.

A Few More Conference Highlights

There are two other things I’ll mention about the conference.

Ben Montgomery author of  Grandma Gatewood’s Walk gave an engaging presentation. This book, a Pulitzer Prize Finalist is worth a buy. It’s a great story about an amazing woman Grandma Gatewood, who was the first woman and just the 6th person overall to thru-hike the AT in 1955 at 67 years of age. How she did it was unbelievable and why she did it was something we as a society must work to eradicate. Having just completed the book, there’s much more to this story, but I won’t spill the beans.

img_6070
Kara Montgomery Store Manager of the Jacksonville, FL REI with their award.

In addition to the great presentations, in attendance was  REI and Kara Montgomery.  When REI came to Florida, they located their first store in Jacksonville. Since then I have been able to meet Kara and the excellent staff, purchase many items and introduce them to the FTA. REI has become a strong supporter of the Florida Trail including providing grants in 2014 and 2015.  At this years annual conference they had a booth, provided classes on map and compass and received the Florida National Scenic Trail Volunteer Partner Group of the Year award. Congratulations to REI and Kara and thanks for all of the support you provide to the FTA and other organizations around the country.

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Post originally published at Accountable Health, LLC.

Posted in Accountable Care, ACO, Affordable Care Act

ACO Winners and Losers: A Quick Take

by Ashish K. Jha

Last week, CMS sent out press releases touting over $1 billion in savings from Accountable Care Organizations.

Here’s the tweet from Andy Slavitt, the acting Administrator of CMS:

NEW ACO RESULTS: physicians are changing care, w better results for patients & are saving money. Over $1B. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-08-25.html 

The link in the tweet is to a press release.  The link in the press release citing more details is to another press release.  There’s little in the way of analysis or data about how ACOs did in 2015.  So I decided to do a quick examination of how ACOs are doing and share the results below.

Basic Background on ACOs:

Simply put, an ACO is a group of providers that is responsible for the costs of caring for a population while hitting some basic quality metrics.  This model is meant to save money by better coordinating care. As I’ve written before, I’m a pretty big fan of the idea – I think it sets up the right incentives and if an organization does a good job, they should be able to save money for Medicare and get some of those savings back themselves.

ACOs come in two main flavors:  Pioneers and Medicare Shared Savings Program (MSSP).  Pioneers were a small group of relatively large organizations that embarked on the ACO pathway early (as the name implies).  The Pioneer program started with 32 organizations and only 12 remained in 2015.  It remains a relatively small part of the ACO effort and for the purposes of this discussion, I won’t focus on it further.  The other flavor is MSSP.  As of 2016, the program has more than 400 organizations participating and as opposed to Pioneers, has been growing by leaps and bounds.  It’s the dominant ACO program – and it too comes in many sub-flavors, some of which I will touch on briefly below.

A couple more quick facts:  MSSP essentially started in 2012 so for those ACOs that have been there from the beginning, we now have 4 years of results.  Each year, the program has added more organizations (while losing a small number).  In 2015, for instance, they added an additional 89 organizations.

So last week, when CMS announced having saved more than $1B from MSSPs, it appeared to be a big deal.  After struggling to find the underlying data, Aneesh Chopra (former Chief Technology Officer for the US government) tweeted the link to me:

@ashishkjha CMS always releases these results. They are on the website!

You can download the excel file and analyze the data on your own.  I did some very simple stuff.  It’s largely consistent with the CMS press release, but as you might imagine, the press release cherry picked the findings – not a big surprise given that it’s CMS’s goal to paint the best possible picture of how ACOs are doing.

While there are dozens of interesting questions about the latest ACO results, here are 5 quick questions that I thought were worth answering:

  1. How many organizations saved money and how many organizations spent more than expected?
  2. How much money did the winners (those that saved money) actually save and how much money did the losers (those that lost money) actually lose?
  3. How much of the difference between winners and losers was due to differences in actual spending versus differences in benchmarks (the targets that CMS has set for the organization)?
  4. Given that we have to give out bonus payments to those that saved money, how did CMS (and by extension, American taxpayers) do? All in, did we come out ahead by having the ACO program in 2015 – and if yes, by how much?
  5. Are ACOs that have been in the program longer doing better? This is particularly important if you believe (as Andy Slavitt has tweeted) that it takes a while to make the changes necessary to lower spending.

There are a ton of other interesting questions about ACOs that I will explore in a future blog, including looking at issues around quality of care.  Right now, as a quick look, I just focused on those 5 questions.

Data and Approach:

I downloaded the dataset from the following CMS website: https://data.cms.gov/widgets/x8va-z7cu and ran some pretty basic frequencies.

Here are data for the 392 ACOs for whom CMS reported results:

Question 1:  How many ACOs came in under (or over) target?

Question 2:  How much did the winners save – and how much did the losers lose?

Table 1.

Number (%)

Number of Beneficiaries

Total Savings (Losses)

Winners

203 (51.8%)

3,572,193

$1,568,222,249

Losers

189 (48.2%)

3,698,040

-$1,138,967,553

Total

392 (100%)

7,270,233

$429,254,696

I define winners as those organizations that spent less than their benchmark.  Losers were organizations that spent more than their benchmarks.

Take away – about half the organizations lost money and about half the organizations made money.  If you are a pessimist, you’d say, this is what we’d expect; by random chance alone, if the ACOs did nothing, you’d expect half to make money and half to lose money.  However, if you are an optimist, you might argue that 51.8% is more than 48.2% and it looks like the tilt is towards more organizations saving money and the winners saved more money than the losers lost.

Next, we go to benchmarks (or targets) versus actual performance.  Reminder that benchmarks were set based on historical spending patterns – though CMS will now include regional spending as part of their formula in the future.

Question 3:  Did the winners spend less than the losers – or did they just have higher benchmarks to compare themselves against?

Table 2.

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings (Losses)

Winners (n=203)

$10,580

$10,140

$439

Losers (n=189)

$9,601

$9,909

-$308

Total (n=392)

$10,082

$10,023

$59

A few thoughts on table 2.  First, the winners actually spent more money, per capita, then the losers.  They also had much higher benchmarks – maybe because they had sicker patients – or maybe because they’ve historically been high spenders.  Either way, it appears that the benchmark matters a lot when it comes to saving money or losing money.

Next, we tackle the question from the perspective of the U.S. taxpayer.  Did CMS come out ahead or behind?  Well – that should be an easy question – the program seemed to net savings.  However, remember that CMS had to share some of those savings back with the provider organizations.  And because almost every organization is in a 1-sided risk sharing program (i.e. they don’t share losses, just the gains), CMS pays out when organizations save money – but doesn’t get money back when organizations lose money.  So to be fair, from the taxpayer perspective, we have to look at the cost of the program including the checks CMS wrote to ACOs to figure out what happened.  Here’s that table:

Table 3 (these numbers are rounded).

 

Total Benchmarks

Total Actual Spending

Savings to CMS

Paid out in Shared Savings to ACOs

Net impact to CMS

Total (n=392)

$73,298 m

$72,868 m

$429 m

$645 m

-$116 m

According to this calculation, CMS actually lost $116 million in 2015.  This, of course, doesn’t take into account the cost of running the program.  Because most of the MSSP participants are in a one-sided track, CMS has to pay back some of the savings – but never shares in the losses it suffers when ACOs over-spend.  This is a bad deal for CMS – and as long as programs stay 1-sided, barring dramatic improvements in how much ACOs save — CMS will continue to lose money.

Finally, we look at whether savings have varied by year of enrollment.

Question #5:  Are ACOs that have been in the program longer doing better?

Table 4.

Enrollment Year

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings

Net Per Capita Savings (Including bonus payments)

2012

$10,394

$10,197

$197

$46

2013

$10,034

$10,009

$25

–$60

2014

$10,057

$10,086

-$29

-$83

2015

$9,772

$9,752

$19

-$33

These results are straightforward – almost all the savings are coming from the 2012 cohort.    A few things worth pointing out.  First, the actual spending of the 2012 cohort is also the highest – they just had the highest benchmarks.  The 2013-2015 cohorts look about the same.  So if you are pessimistic about ACOs – you’d say that the 2012 cohort was a self-selected group of high-spending providers who got in early and because of their high benchmarks, are enjoying the savings.  Their results are not generalizable.  However, if you are optimistic about ACOs, you’d see these results differently – you might argue that it takes about 3 to 4 years to really retool healthcare services – which is why only the 2012 ACOs have done well.  Give the later cohorts more time and we will see real gains.

Final Thoughts:

This is decidedly mixed news for the ACO program.  I’ve been hopeful that ACOs had the right set of incentives and enough flexibility to really begin to move the needle on costs.  It is now four years into the program and the results have not been a home run.  For those of us who are fans of ACOs, there are three things that should sustain our hope.  First, overall, the ACOs seem to be coming in under target, albeit just slightly (about 0.6% below target in 2015) and generating savings (as long as you don’t count what CMS pays back to ACOs).  Second, the longer standing ACOs are doing better and maybe that portends good things for the future – or maybe it’s just a self-selected group that with experience that isn’t generalizable.  And finally, and this is the most important issue of all — we have to continue to move towards getting all these organizations into a two-sided model where CMS can recoup some of the losses.  Right now, we have a classic “heads – ACO wins, tails – CMS loses” situation and it simply isn’t financially sustainable.  Senior policymakers need to continue to push ACOs into a two-sided model, where they can share in savings but also have to pay back losses.  Barring that, there is little reason to think that ACOs will bend the cost curve in a meaningful way.

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Post originally appeared at An Ounce of Evidence | Health Policy: The blog of Ashish Jha — physician, health policy researcher, and advocate for the notion that an ounce of data is worth a thousand pounds of opinion.

Posted in Accountable Care, ACO, Affordable Care Act

The Long and Winding Road to Healthcare Price Transarency

by Gregg A. Masters, MPH

Bitter Pill: Steve BrillWhen Steven Brill published ‘Bitter Pill: Why Medical Bills Are Killing Us‘ in 2013 he brought national attention via a series of personal stories that served to reveal the complex dysfunction inherent in our healthcare delivery and financing system. A veritable ‘conundrum‘ created over the decades of layering managed care complexity (pre-certification, prior authorization, referral management, contract payment adjudication, etc.) on top of the arguably burning ‘fee-for-services’ platform that incentivizes the prevailing ‘do more [units] to earn more [income]’ mentality of hospitals, physicians and allied healthcare practitioners who do not operate in a pre-paid or per member per month capitated environment.

Central to Brill’s narrative was the hospital ‘charge master‘, typically a made up fictional schedule of retail (sticker shock) values with ZERO relationship to the actual cost of services provided nor what would ultimately be paid by the patient or third party on his or her behalf.

Brill admonishes readers to:

Pay no attention to the chargemaster – No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost — that any hospital executive I spoke with was able to explain. “They were set in cement a long time ago and just keep going up almost automatically,” says one hospital chief financial officer with a shrug.

Most of us are fortunate enough to have 3rd party coverage via our employer or Government funded programs like Medicare, Medicaid, etc., and benefit from deeply discounted intermediary ‘wholesale rates‘ often beginning at 50% of the published charge master rates.

Ironically, those who of us absent this ‘buffer’ and who could least bear the sticker shock burden associated with arbitrary (no relationship to cost) charge master pricing, i.e., the un and under insured, paid the steepest price, see: ‘Medical Bills Are the Biggest Cause of US Bankruptcies: Study‘.

Consumer Directed Health Plans and the ‘Empowered Patient’ Mandate

Since the launch of the Health 2.0 movement and arguably the ‘digital health‘ innovation industry writ large by co-founders Matthew Holt and Indu Subaiya, MD, some of the start-ups launched addressed the problem of price transparency ‘workarounds’ via back end building of ‘virtual’ contract rate books through platform user submissions of EOBs detailing the charge basis and ultimate contract repricing per the health plan negotiated rate of the services rendered and paid. Some of the companies operating in the space, though not necessarily back-ending virtual rate books, include: Medlio, Change Healthcare, Healthcare Bluebook and Castlight Health, see: ‘8 companies working on healthcare price transparency‘.

Clearly the ‘holy grail‘ here is contract rate-book transparency, but don’t hold your breath. These rates are deemed proprietary and thus closely guarded ‘trade secrets’.

So fast forward to today. It’s 2016 (some 43 years post HMO Act) and healthcare inflation which has shown remarkable restraint principally due to the lingering impact of the great recession of 2008, coupled with the health insurance industry’s new found love affair fueled by the ACA with so called ‘consumer directed health plans‘ (aka code for the ‘cost shifting’ charade). Think of it this way, massive health plans, pooling millions of lives, extracting maximum pricing leverage from providers and exercising varying degrees of medical management oversight have explicitly admitted that as an industry they can NOT manage clinical risk, thus have chosen make provider pricing restraint ‘our’ problem. Afterall, they reasoned the required (mythical absence of?) ‘skin in the game‘ of high deductibles, non-covered services, copayments and co-insurance drives granular price sensitivity since the once 3rd party buffer (if it ever existed) is no longer present to immunize our exposure to the cost of utilizing healthcare services.

Last month The Health Care Incentives Improvement Institute (HCI3 ) and Catalyst for Payment Reform (CPR) issued the fourth installment of the ‘Report Card on State Price Transparency Laws‘. The picture below tells the less than pretty story:

Price Transparency Report Care

 

They open the report noting:

Despite the full integration of price information into almost every other retail experience, it’s typical in American health care for consumers to go into an appointment or procedure knowing nothing about what it will cost until long afterward

And conclude as follows:

Our 2016 Report Card on State Price Transparency Laws shows that price transparency—an obvious expectation integrated into every other consumer experience—is on the minds of state legislators and other health care leaders throughout the U.S. It also highlights why this information is so critical to every health care consumer in every state; prices for routine and very common procedures can vary by more than 50 percent, even in the same geographical area, placing a potentially significant financial burden on individual consumers, a burden that can be avoided with robust health care price transparency. Thus, design and implementation of the legislation matter.

In fact, the potential for transparency to empower consumers, shift costs down, and raise quality rests entirely on the strength and comprehensiveness of each state law’s implementation. This is a perspective that is often lost in some of the research on the effectiveness of price transparency, even though no one should be surprised that weak resources yield poor results. Importantly, a very strong and thorough body of research demonstrates that consumers will seek lower-priced, high-quality providers when given the right information in the right format.

Many states may see low grades for themselves. However, in this report card, they also have a roadmap for improvement. It’s up to states to apply that roadmap to benefit from the desired and proven positive effects of price and quality transparency. 

I am not as optimistic as the authors that price transparency solutions coupled with a growing army of ‘empowered patients‘ are sufficient to tame the rapacious appetite of a predominantly volume incentivized delivery system. Clearly this is a slog unlike any other industry re-tooling, re-invention or re-engineering challenge we’ve EVER faced in the United States. More will be revealed as we move from niche solutions (concierge medicine, direct practice, non-risk bearing ACOs or IDNs, or HMO-lite solutions, etc.) tweaking at the margins of the ecosystem dysfunction but delivering little by way of sustainable contribution.

As I was recently reminded by Dan Munro of a quote often mis-attributed to Winston Churchill:

The question is whether there is any reason to believe that such a new era [think value based healthcare driven by ’empowered patients’] may yet come to pass. If I am sanguine on this point, it is because of a conviction that men and nations do behave wisely once they have exhausted all other alternatives. Surely the other alternatives of war and belligerency [avoiding the inevitable path of risk assumption/integration] have now been exhausted.  Abba Eban,  June 1967 

Bottom-line?

I see HMO’s 2.0 (global risk) in our future. There just isn’t anyway around it, though we’re trying our best to avoid the inevitable.

Your thoughts?

 

Posted in Accountable Care, ACO, Affordable Care Act

Day One: You’re Covered!

by Gregg A. Masters, MPH

August 1st, 2016 marked the first day that I’ve been covered by health insurance since leaving the W2 workforce in 2000 as Vice President of Payor and Provider Contracting at Wellspan Health Network a ‘Super PHO’ launched by Texas Health Resources, post combination of Presbyterian Healthcare System, Harris Methodist Health Services and Arlington Memorial Hospital.IMAG2725

Granted the choice to ‘go bare‘ (i.e., self funding my acute, elective or urgent healthcare needs and exposure for accident or injury risk) and incur the tax (shared responsibility) penalty associated with the post ACA era was a conscious choice. The calculus was derived via a cost/benefit analysis of sorts taking into consideration premium costs, plus deductibles, co-pays and co-insurance of principally the ‘silver metal‘ plans offered via Covered California – the State health insurance exchange operating in California.

Going Bare

My decision to remain bare was in part supported by my history as a low utilizer of physician and hospital services, i.e, as a healthcare insider who rarely used his health plan coverage while insured, and saw the consequences and risks of medical errors and hospitalization ‘up close and personal‘, I reasoned though older and therefore at greater relative risk than when I was in my 40s and 50s, if I continued to eat well, stay physically active (running, cycling and surfing) and refrain from avoidable risks (smoking, drinking alcohol to excess, etc.), the decision to self fund the exposure was somewhat of a ‘reasonable’ if not calculated gamble.

But make no mistake, the decision to bear the tax penalty and retain the health risk was principally a matter of economics. As a self-employed small business operator (I am the founder of Health Innovation Media, a boutique digital media agency) with the typical unpredictable start-up income stream and thus low earnings visibility, I chose to preserve cash and remain uninsured. Unfortunately, the ‘affordable nature’ of ACA related health insurance offerings in the exchange marketplace were neither affordable nor of sufficient value for me to dig into my pocket and pull the trigger on coverage.

That I was three years away from Medicare eligibility was also another consideration in my decision to remain bare. Fortunately that chapter in my life ended today. And other than the tax penalties paid, I have remained in relatively good health while still a card carrying member of ‘the worried well‘ club, i.e., I typically though temporarily obsess over this pain, or that bump or lump as signs of my impending demise. For example, though approaching 65 this month, I have NOT had that colonoscopy recommended for men starting in their 50s. So since I don’t know what’s going on down there, I often wonder about the potential for colorectal disease though I have no classical symptoms per se.

Choosing a Health PlanIMAG2724

As one of the estimated 10,000 baby boomers per day turning 65 and thus qualifying for a ‘public option’ aka ‘Medicare’ one of the first decisions to make is the selection of health plan coverage options via Medicare. There are basically four key considerations:

  • Stay in the traditional Medicare program (Parts A and B); and
  • Optionally purchase a ‘Medicare Supplement‘ plan; or
  • Elect a Medicare Advantage participating health plan (Part C)
  • If principally staying in traditional Medicare, add an optional Prescription Drug Plan (Part D)

Medicare Part A covers ‘hospital services’, while Part B which is optional and requires the payment of a monthly premium covers ‘physician services’. Medicare Supplement insurance typically covers the co-payments and co-insurance present in traditional fee-for-services Medicare. While Medicare Advantage is a private health insurance option that contracts with the Centers for Medicare and Medicaid Services and offers typically HMO plan options to Medicare beneficiaries often with little to no premium payment required, and some plans even add drug benefits without having to elect a Part D Prescription Drug plan. Part D is typically purchased when electing to stay in the traditional Medicare program and layer into your benefits prescription drug coverage.

As you approach your 65th birthday be prepared for the tsunami of marketing materials you will receive from health insurance companies, their participating broker/agents and Medicare Advantage plans participating in your service area.

The Choice

Having made my decision, I can see why the typical senior who is not a ‘insider’ in the ways of healthcare operations and finance might need help working through all the plan options presented. This is a potentially confusing experience with a series of questions and plan options to sort through. Yet, for me the choice was relatively easy. I know the pros and cons of Medicare Advantage, the limits of traditional Medicare (with or without a Supplement) and have written about the limits of the Prescription Drug Program off and on over the years. Further, I am almost within walking distance to a Kaiser Permanente Ambulatory Care Center and Kaiser San Diego offers in my service area a no premium Medicare Advantage program that provides additional benefits including drug coverage and health club participation via the Silver Sneakers program.

When I added the maturity of KP San Diego as a quality operator in the integrated delivery space with a reasonably extensive and accessible ambulatory and inpatient facilities network vs. other options that relied upon ‘IDNINOs’ (integrated delivery networks in name only) commonly associated with name plate hospital/health system operators in San Diego (Scripps Health, UC San Diego Health System, Sharp Healthcare) county in partnership with the likes of Humana, Anthem or United Healthcare, the decision was a relatively easy one.

I reasoned if I get seriously sick, I will be cared for by a coordinated team of health professionals who’s incentives are to keep me healthy and out of the inpatient theater (a literal fail moment). Further, as a real IDN, KP San Diego is more likely to operate in a seamless care coordination manner vs. many of the aforementioned players who have to more or less degrees grafted an IDN culture on top of a traditional, silo-ed fee-for-services network of providers.

Finally, I have watched my mother spend hours on the phone dealing with toxic and dated (in excess of a year) billing matters from UC San Diego associated with her membership in Humana’s Medicare Advantage program. Try as they might, the non KP players in this market have yet to achieve the level of IDN operational excellence demonstrated by KP San Diego (and its sister regions in both Southern and Northern California) from point of care services to any billing and collections infrastructure associated with ‘revenue cycle management’ (RCM) purposes.

So a new chapter has begun. We shall see if I reasoned correctly, and KP San Diego is what I assume it to be. More to be revealed!

 

Posted in Accountable Care, ACO, Affordable Care Act

Those Failing CO-OPs: Implications for the ACA and its ACO Workhorse

by Gregg A. Masters, MPH

As the battle for the hearts and minds of Americans relative to the Affordable Care Act (ACA) continues, and the tracking sentiment index waxes and wanes between ‘favorable’ and ‘unfavorable’ one front in particular seems to have a fair degree of utility with the narrative profferred by the ‘repeal and replace‘ crowd.

Consumer Operated and Oriented Plan (CO–OP) Program

Nested in Section 1322 of the Affordable Care Act (ACA), the ACA created the Consumer Operated and Oriented Plan Program (the CO–OP program):

‘to foster the creation of new consumer-governed, private, nonprofit health insurance issuers, known as ‘‘CO–OPs.’’ In addition to improving consumer choice and plan accountability, the CO–OP program also seeks to promote integrated models of care and enhance competition in the Affordable Insurance Exchanges established under sections 1311 and 1321 of the Affordable Care Act. The statute provides loans to capitalize eligible prospective CO–OPs with a goal of having at least one CO– OP in each State. The statute permits the funding of multiple CO–OPs in any State, provided that there is sufficient funding to capitalize at least one CO–OP in each State. Congress provided budget authority of $3.8 billion for the program’

For program details and background see the Notice of Proposed Rule Making (NPRM) hereACOwatch_COOPGraphs_netIncome

As fodder for the anti-ACA crowd, much of the recent headlines have rightfully focused on the problematic ‘failure‘ rate of many of these community based AND governed start-up health plans.

Just witness some of the associated reports recently in the news:

Lets underscore the fact that CO-OPs are de-facto start-up health plans – a problematic undertaking under ideal launch conditions. As any entrepreneur or VCs fueling their vision knows, there is a tender proof of business model period during which an entities’ expenses typically exceed their revenues as they build market share and compete for members or lives in the market where they operate.

The ‘break-even’ (B/E) formula is rather simple:

revenues – expenses + subsidies = profit (or for non-profit entities: surplus revenues over expenses)

While not a golden rule, the B/E crossover point is rarely (if ever) within the first 24 or even 36 months of a stand alone (vs. subsidiary) operations and wholly determined by local market conditions and competitive landscape. Whether capitalization is via private investment or as in the case of CO-OPs via Federal loans this start-up fragility can not be overstated.

The other consideration unique to the CO-OP Program is the locally brewed, governed and accountable nature imbued in the operating culture and mission of these entities.

When you layer in the well established actuarial dynamics of profit and loss cycles predictably inherent in health insurance industry including ALL managed care derivatives, the critical variable of timing of market entry may introduce a volatility factor over-expressed under the current market conditions the ACA has fostered.

In other words, start-up health plans take time to create the infrastructure (people, processes and culture) to market, retain, price and operate successfully under ideal let alone typical market conditions. When you add the disruptive conditions the ACA has created (see: ‘Risk Adjustment Gone Wrong‘) in the small group and individual markets via Federally Facilitated or State run health insurance exchanges that complexity, associated market share gain challenges and ‘volatility ratio‘ can only be expected to play an increasingly important role in the success or failure of the enterprise.

The HMO Act of 1973

There is precedent to perhaps gauge and contextually consider the relative success or failure of the CO-OP Program spawned by the ACA. When the managed care revolution was birthed by then Republican President Richard Nixon via the HMO Act of 1973 as a market driven solution to remedy the run away costs of healthcare, HMO’s were typically seeded as non-profit, community based AND governed risk bearing health plans with a principal mission to maintain the health ACOwatch_HMO_Actand well being of its members.

HMO’s like the CO-OP program today received Federal support via start-up loans to manage through the typical B/E point associated with the start-up of a community based health plan vs. the typical indemnity based, fee for services insurance companies that dominated the market. The two exceptions to this rule where the non-profits licensed and operating under the Blue Cross and Blue Shield label and at least in California the Kasier Permanente Health Plan.

During the launch trajectory as then designated ‘alternative delivery systems‘ (ADS) HMO’s slowly gained share (both mind-share and members) and made their way out of California, though constrained by their non-profit nature and operating culture including the limited marketing upside of ‘staff’ or group model HMOs portrayed as second class medicine. In the 80s HMO’s went mainstream via the introduction of Independent Practice Associations (IPAs) and later ‘network models’ which attracted the independent private practice cohort into managed care if for no other reason than to defend against an emerging trend that could threaten their livelihood as more and more health benefit plans started to traffic patients to a contracted network of ‘participating providers’.

Shortly thereafter fueled by Wall Street the major health insurance companies went on a acquisition binge of these sleepy, capital constrained community based health plans. This consolidation orgy created a legal bonanza via a new industry of for-profit conversions of community based health plans, the behemoths of which included many of the Blue Cross/Blue Shield licensees. During the ‘urge to merge‘ imperative the seminal transaction was likely the for profit conversion of Blue Cross of California under the stewardship of health wonk Leonard Schaeffer (former Administrator of HCFA – the predecessor agency to CMS). Blue Cross of California was then to serve as the founding member of the for-profit WellPoint empire now re-branded and operating as Anthem, Inc. 

As simple and narrow as HMO (alternative delivery system model) charge was then, it pales in comparison to the charge and expectations placed on the nascent and fragile CO-OP industry. Not only are CO-OPs to stand up entities that provides non-profit, community based alternatives in a competitively vetted, comparably priced tiered benefits package for exchange facilitated marketplaces, they are to do this while the hospital, physician and a health plan communities are rapidly consolidating to gain scale and thus pricing leverage.

Bottom Line

The health insurance industry is a complex and some would argue ‘protected‘ industry (see: McCarran–Ferguson Act) that challenges even best-of-breed leadership (Mark Bertolini, Bruce Broussard et al) to sustainably operate their business as profitable enterprises during the volume to value shift. Witness the ‘urge to merge‘ amidst the majors, i.e., Aetna’s proposed acquisition of Humana, and Anthem’s proposed acquisition of Cigna, both recently challenged by the Department of Justice, and both rationalized by the need for scale to achieve the operating results expected by their investors.

As to ACO implications, clearly there are some. It’s hard to predict the rate of legal and clinical integration and the seamless care coordination and commitment to quality envisioned by 2nd or 3rd generation ACOs (typically risk bearing) or any of their derivative plays as exchanges become the de-facto market place for small group and individual offerings, but the handwriting is clearly on the wall.

So as some of us point to the CO-OP failure rate as another example of ACA over-reach via fundamentally flawed legislation and thus cause for repeal or re-entrenchment from the law, it may be helpful to historically gauge the nature of their challenge AND the market conditions in which they operate. A little humility can go long way here.