Accountable Care, ACO, Affordable Care Act, health insurance reform

Health Insurance Industry Consolidation: Any ‘Qui Tam’ Exposure?

by Gregg A. Masters, MPH

If you’re a health policy junkie like me, then the best show in town (or anywhere for that matter) was in the Dirksen Senate Office Building in Washington, D.C., where HMO industry veteran and Chairman, President and CEO of Aetna Mark T. Bertolini and Anthem President and CEO Joseph R. Swedish among other industry stakeholders testified before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on health insurance industry consolidation, for video replay click here or watch below:senate hearing health insurance industry

As most of you reading this blog know, subject to the Department of Justice review Aetna will acquire Humana, and Anthem will acquire CIGNA. Thus, the submitted testimonies and ad hoc answers to sitting Senators on the Subcommittee were potentially a high stakes exchange.

Moreover, the hearing today was nothing short of a tutorial into the dynamics of the managed competition marketplace (both theory and practice since absent complete transparency assuming the salutary benefits of such competition may be more ‘wishful thinking‘ than reality as noted by Senator Blumenthal – CT, the home of the insurance industry) and whether this unique American strain of public/private collaboration can deliver on the oft repeated promises of such integration, i.e., that scale via consolidation drives operating efficiencies, improves quality and lowers costs to end users. We shall see…

As I heard the pitches from the various representatives assembled to offer perspective to the sitting Senators (see list here), I began to wonder if any of their testimony would be subject to the ‘false claims Act‘ if post consolidation the promised benefits do not accrue to the intended benefactors.

For those of you not familiar with the ‘False Claims Act‘ or otherwise known as Qui Tam filings, here a summary including its recent expanded scope via the Affordable Care Act:

The False Claims Act, expanded by the Fraud Enforcement and Recovery Act of 2009, P.L. 111-21 (S. 386), 123 Stat. 1617 (2009), now proscribes: (1) presenting a false claim; (2) making or using a false record or statement material to a false claim; (3) possessing property or money of the U.S. and delivering less than all of it; (4) delivering a certified receipt with intent to defraud the U.S.; (5) buying public property from a federal officer or employee, who may not lawfully sell it; (6) using a false record or statement material to an obligation to pay or transmit money or property to the U.S., or concealing or improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S.; (7) conspiring to commit any such offense. Additional liability may also flow from any retaliatory action taken against whistleblowers under the False Claims Act. Offenders may be sued for triple damages, costs, expenses, and attorneys fees in a civil action brought either by the United States or by a relator (whistleblower or other private party) in the name of the United States.
If the government initiates the suit, others may not join. If the government has not brought suit, a relator may do so, but must give the government notice and afford it 60 days to decide whether to take over the litigation. If the government declines to intervene, a prevailing relator’s share of any recovery is capped at 30%; if the government intervenes, the caps are lower and depend upon the circumstances. Relators in patent and Indian protection qui tam cases are entitled to half of the recovery.

Not sure if qui tam consideration can or even remotely applies to the upside representations proffered in favor of the acquisitions, since as noted by one or more witnesses today much of the empirical (public) record is incomplete and inconsistent with respect to supporting or discounting the arguments that will or have been made to DOJ as they conduct their anti-trust investigation into the proposed acquisitions or mergers.

[Editor’s Note: Two examples of previous health insurance industry consolidations were noted, including Aetna’s 1999 acquisition of PruCare, and United Health Group’s acquisition of Sierra Health Services. I will post the submitted witness testimony once it becomes available online, including any current discussion ‘tea leaves’ of what and where the DOJ investigation may be headed in both transactions. If you have anything, please feel free to add in comments section.]

This Subcommittee hearing is rich with both fundamentals and nuance considerations of the Affordable Care Act and whether it’s many moving parts can indeed align to meet the legislative intent of its authors.

Stay tuned!

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Accountable Care, Affordable Care Act, health reform

The @Aetna and @Humana Marriage: Will It Be Different This Time?

by Gregg A. Masters, MPH

Wow! Ahead of the 4th of July weekend Mark T. Bertolini (@mtbert) and Bruce D. Broussard (@BruceDBroussard) both savvy and seasoned managed health care industry players and visionary captains at @Aetna and @Humana respectively, announced their marriage via a $35 billion, see Bloomberg story: ‘Aetna-Humana Deal to Lower Consumer Costs, CEOs Say deal. aetna humanaYet the initial market reaction to this presumptive value added union has been somewhat of a Vulcan mind mood disappointment.

When the Bloomberg reporter Betty Liu inquired about the initial (and continuing as of the date of the post) bearish investor response to the transaction, Bertolini posited:

‘I don’t think its all investors Betty, I actually think it’s the ‘Arbs’ (arbitrageurs) that got in the deal looking for opportunity and I’m not quite sure they know how to do this trade.  This is a longer term strategy. This is a very big combination that is going to have a longer term impact on the quality of healthcare, the cost of healthcare in an evolving consumer marketplace [emphasis mine, more later].. once the noise settles down we’re going to do just fine.’

Then the billion, perhaps trillion dollar question was lobbed to Broussard via Liu:

‘Ok Bruce so is it going to lower healthcare costs for consumers?’ 

To wit the Humana chief noted:

‘very much so, I think as you see the transition from a more employer based to a consumer based model and a value based reimbursement model from a fee-for-service model, these combined organizations will have the capability to meet both of those trends. Both in the way of our clinical capabilities on the Humana side and the deep, deep employer relationships that Aetna has on their side.’

Now lets step back a minute and first breathe in this fact: no-where in evidence has the aggregate cost of healthcare, nor health insurance premiums as proxy, declined (except for a brief period in the 90s when the medical care cost (MCC) index actually fell temporarily into negative territory), then as risk was pushed back by providers to the health plans, resumed their inexorable movement UP. So on a trend basis, health care costs ALWAYS rise as a multiple of CPI. Only recently has that rate of growth fallen from high single or the double digit rate of increases witnessed historically to low single digits – perhaps due more to the economic meltdown (declining demand and higher deductibles/copays) than any proactive contribution via improved health plan clinical risk management, direct or delegated.

Yet in offering documents filed with the SEC and investors as to the rationale for the combined company merger that ‘benefit’ is always posited as an outcome of the transaction. We always hear about ‘scale’, ‘operating efficiencies’ and even better management as a byproduct of the combination.

Secondly, some ‘de-coding’ is in order here. Both Bertolini and Broussard two men I admire as exemplary disruptor’s of ‘legacy healthcare’ inertia, i.e., Bertolini grew up in the HMO industry back in the day when even though his experience was forged in the for profit side of the business, it was none-the-less a mission oriented member focused sector (more MHAs, MPAs, and MPHs than MBAs) much like the community based operators in the non profit sector (RIP).

Broussard on the other hand is not your typical health plan executive as his roots are forged on the provider side with senior roles as U.S. Oncology (the successor to Physician Reliance Corp and ‘TOPA’ Texas Oncology, P.A.), Sun Health (the hospital group) and Continental Medical Systems (a rehab company). So his zeitgeist is firmly rooted in the provider culture with which his company buys, contracts for or joint ventures with to bring products to market.

Now back to the ‘code phrases’ used as rationale outlined for the inked merger/acquisition. Bertolini referred to ‘an evolving consumer marketplace‘ which means as more costs are shifted from the plan (Aetna, Humana and all other health plans writ large) to the member or insured, we (the consumers) will demand more ‘accountability’ from the provider world and thus somehow restrain aggregate healthcare costs via transparency tools or so called ‘skin in the game’ as a result of the shift to ‘consumer directed’ (i.e., high deductible) health plans.

This strikes me as a somewhat disingenuous argument bordering on perhaps naiveté (though it is highly unlikely that this characterization can stick to either of them). But ask yourself, if Aetna, Humana, United, Anthem or the member licensees of the Blue Cross and Blue Shield Association as aggregate wholesale buyers of hospital and physician services, leveraging millions of members or ‘covered lives’ (insurance speak), backed by seasoned provider contracting staffs can’t restrain the cost of healthcare, how can an ‘app empowered’, health literate enabled retail ‘shopper’ (you and me) for health services do better? I don’t think so… There is just too much of a power differential to overcome not to mention eco-system complexity to navigate ‘digital empowerment’ promises notwithstanding. Whether, ’empowered or not’, we are generally ‘screwed’ with more or less support from our ‘friends’ at the health plan if we’re lucky enough to be insured.

The second but related theme was outlined by Broussard:

‘as you see the transition from a more employer based to a consumer based model and a value based reimbursement model from a fee-for-service model’

The two strands here are movement from the employer sponsored model which retains some vestiges of ‘defined benefits‘ at least for union negotiated plans, to a ‘consumer based model‘ more akin to the ‘defined contribution‘ practice of limiting the plan’s liabilities by capping what it pays for on behalf of its members or insureds. The kicker and perhaps ‘game changer‘ here is the near unanimous recognition in the health wonk, including health plan world that fee for services medicine is a burning platform on a dying paradigm – yet, arguably 80-90% of the money in the healthcare eco-system today remains in a predominant FFS book of business – HHS Secretary Burwell’s value based healthcare announcement notwithstanding) so don’t hold yer breath.

So there you have it. Will it, can it be different this time? Can two demonstrated champions of patient centric healthcare in an industry valued slightly higher than tobacco companies get it done when ALL of their predecessors have tried and failed? The carnage is plain to see, but only if you have an event horizon beyond the 24/7/365 current headline news cycle. I don’t know, but maybe the market knows and may even be paying attention to what came before?

For those who want some academic consideration of the broader strategic question, industry history,  if not possible glide-path in the consolidation orgy we are currently witnessing (both provider and health plan/payor/benefits solutions providers) with an exquisite dissection and analysis of the rise, fall and rise again (post Aetna/U.S. Healthcare acquisition), check out: ‘From Managed Care To Consumer Health Insurance: The Fall And Rise Of Aetna‘ by James Robinson, PhD, MPH the Leonard D. Schaeffer Professor of Health Economics and Director, Berkeley Center for Health Technology at my alma mater U.C. Berkeley.

Accountable Care, ACO, Affordable Care Act

It’s All About the Network

By Gregg A. Masters, MPH

2014 has kicked off to a challenging pace and doesn’t look to let up any time soon!

Over at Health Innovation Media where we follow health innovation from ‘idea to business model’ including accountable care platforms, ‘apps’ or infrastructure plays,  Dr. Pat Salber, CEO of early mover in the ‘rewards based’ crowd funding and innovation challenge space HealthTech Hatch and curator of The Doctor Weighs In and me are in workflow overflow from the mHealth Summit 2013 in National Harbor, VA.

If that wasn’t enough of a stretch for our new media startup, we just concluded the better part of the week in Las Vegas covering digital health developments at CES 2014 (see: Amidst the CES 2014 Firehose: Brands, Blogs & ‘PR’ Compete for Relevance in the Digital Economy) and it’s internally nested ‘Digital Health Summit‘, only to return to California challenged by the depth and breadth of the proceedings from both the JP Morgan Healthcare Conference and lesser known OneMed Forum.

One vetted message with relevant context to accountable care and the associated quest for the triple aim is sourced from the above JP Morgan Healthcare conference. The inspiration for this post’s headline and specifically it’s inherent ‘managed competition’ wisdom is courtesy of the CEO of the most ‘transformational ACO payor partner‘ – at least from the point of view of KLAS‘s ‘Accountable Care Payers: Partners in a Changing Paradigm‘. That player is Aetna or perhaps an attribution more holistically made to the aggregate activities of it’s fire-walled innovation sub Healthagen.

JPM14 KLAS transformer recognition

In his talk Mark Bertolini Aetna Chairman, President & CEO a man who’s career was forged squarely in the belly of HMO culture inside a traditional service vs. indemnity play,  via a rust belt domiciled ‘Blue plan’ competitor lays out the challenge not just for Aetna, but anyone in the accountable care space whether payor, provider or hybrids intent upon the co-creation of a sustainable future.

(NOTE: The entire series of JP Morgan webcasts including decks (where supplied) are accessible here. You’ll  need provide your email for a one time registration process to access all sessions, but the benefits are well worth it).

Back to Bertolini’s message, here are some note-able quotes from a very insightful and smart senior executive who sets the transformational imperative as follows:

This is how people feel about the healthcare system, it was designed in 1945 after WW2. It was funded by Hill Burton, and not much has changed over that time period in the way we run our healthcare system.

We leave the consumer to try and find their way through the system without much information, without much transparency.

So our goal is to change the system to align the incentives on the provider side [with the payor], give the consumers the tools so these questions can be answered and they can find a direct line of sight about how to use healthcare.

Our view is the system should work around the member, that it should be all about the member and  that it should be a personalized experience where all of these issues come together in one way… [i.e., the triple aim]

JPM14 Aetna healthier world

 

 

‘Line of sight’ what?

Heresy one might say from a once ‘all in’ little-to-no copay access to comprehensive health benefits HMO guy to now espouse a role for a marquee health plan operator to drive ecosystem integration between a tech enabled but evolving retail medicine (aka consumer directed or high deductible health plan world) segment and the costly, inflated, siloed and opaque sick care non-system.

But there’s more as the story is not so simple, nor easily analogized.

Bertolini continues and goes to the fundamental drivers of the Affordable Care Act and the enabling ACOs, ‘accountable care arrangements’ or their derivative plays that will ‘chop the wood and carry the water’ of this unprecedented transformation of a WW2 vintage legacy paradigm on life support.

If you’ve seen one ACO, you’ve seen one ACO, we do not call all of our value based contracting an ACO.

We have 100’s of value based contracting arrangements and various incentive programs in place, but for us, an ACO is an enabled provider network that’s at risk with us to improve the overall outcome for the patient and get rewarded as a result of making that happen.

Branded health plans is the next step [in the KLAS continuum noted above] and our most recent relationship with Inova we have launched Innovation Health Plans which is a branded private product of the Inova Health System in Northern Virginia.

This whole idea is to create transformational relationships with providers that let them be in the business of providing health plans to their community, allow them to change their revenue model by enrolling their patients and getting [Aetna] out of the middle of that relationship. We provide the risk mechanism, the technology and the intellectual property to allow it to happen, and that is what our ACO model is.

Bertolini then pivots to adding value in this expanding ‘retail’ market where Aetna enables informed choice via tools that empower members with the requisite ‘line of sight’ and thus gain share given projected enrollment of 75 million by 2020.

JPM14 Aetna retail projections

May I say, with the posting of this strategic glidepath the pivot of Aetna as a proxy for the legacy carrier health insurance business (including their forays into the HMO business) comes to an end. Rather re-skinned PPO’s, POS’s, and OWA’s morphed into ACOs of varying stripes intent upon passing increasing ‘skin in the game’ exposure to their members or insureds to vote with their feet and thus pocketbooks is now permanently enshrined as the defacto standard of ‘health insurance’ (whether ASO, fully or now retail/exchange based) in the U.S.

In this new model, health plans will morph into ‘utility companies’ who’s core competencies will center or transactional efficiency, member empowerment (to promote informed line of sight choices) and ecosystem stakeholder homeostasis largely as benefit solutions providers more and more with local or regional provider co-branding and sponsorship DNA.

Don’t get me wrong, I respect Mark and his chief architect Chuck Saunders, MD who’s assembling these consumer, informational and transactional empowerment capabilities inside the Aetna mothership via a ‘fire-walled’ Healthagen. From MediCity to iTriage and Active Health, this is precisely what the new zeitgeist requires of the legacy health insurance business.

Lets just call it as it is, AHIP and it’s member partners (principally the Health Insurance Association of America/HIAA constituency, exclusive of the Group Health Association of America/GHAA contingent) have failed at managing clinical risk and have effectively thrown in the towel, i.e., managed care was never more than mere contracting for discounted pricing, as armies of medical directors rarely denied more than 1% of referrals and/or admissions.

So today, surprise, surprise, it’s all about the network – as in ‘high value networks’ – tighter, smaller value based clusters of high performing provider collaborations.

Again, this is a fabulous pitch by Bertolini and one I highly recommend you listen to in it’s entirety.

Next up similar insights from AthenaHealth CEO Jonathan Bush followed by a somewhat anemic if not apologetic performance of Universal American’s CEO I’ll title ‘a not so healthy collaboration.’

As always, your thoughts, opinions or challenges are welcome.

ACO, Affordable Care Act, Triple Aim

This Week in Accountable Care with Aetna Strategist Charles Saunders MD

By Gregg A. Masters, MPH

On the broadcast I chat with Charles Saunders MD, CEO of Emerging Businesses at Aetna. Dr. Saunder’s seat in the house of healthcare innovation is a unique perch and his tenure in the business brings both depth and breadth to fundamental questions we face as a collective industry.

A fountain of information and insight we discuss the emergence of all strains of ACO’s from the Medicare Shared Savings Program to accountable care collaborations and their public/private hybrids and derivative strains. There is strong demand from the provider community to work with Aetna as an infrastructure and strategic partner.

We originally broadcast this episode on September 18th 2012 under the blog post: ‘I’m Absolutely Bullish on the Future of Healthcare!‘ The story remains an important one and if anything, the momentum has only accelerated since up to and including the recent announcement of the launch of the National Association of ACOs earlier this month. Do yourself a favor and spend some time with Dr. Saunders, it is well worth the listen.

ACO, Affordable Care Act, HealthIT, Triple Aim

HiMSS 2013 Accountable Care Organization RoundUp: Monday March 3rd

By Gregg A. Masters, MPH

Himss 13 LFTF Masthead

We’re only 8 days out from the HiMSS bash in the ‘big easy’ aka ‘NOLA’. We’ve been so engaged in planning the Health Innovation Broadcast Consortium aka @HIBCtv coverage it’s been a challenge to stay on top and share the more worthwhile developments in the ACO space.

So lets detail some of the events that have caught my eye and we’re likely to cover in some fashion. First up and from the ‘specialty program’ department from the Delivering on Value – The Handshake Between Cost & Quality  I’m intrigued by the following trilogy as all address fundamental issues in standing up a viable ACO:

The ‘ACO Encounter: Physician-Lead Perspective

Description: The fastest growth in accountable care organizations is in physician-led ACOs. Gain insights from the experiences of knowledgeable physician-led accountable care initiatives who work with multiple small and medium size practices. **Each ACO Encounter presentation will be provided three times between 1:45 p.m. and 4:45 p.m. Attendees will have the opportunity to rotate though all three encounters during that time frame. Please refer to the attached PDF program for more details.

Speaker: Michael Griffis

Obtaining Quality through New Care Models: Challenge and Promise of ACOs

Description: Hear how to identify and better manage high-risk, high-cost patients, while exploring different care models, such as accountable care organizations, and incentive programs, such as value-based purchasing, to optimize patient care management.

Speaker: Blair Childs

ACO Encounter: Payer Perspective 

Description: Commercial health plans are partnering with providers to build successful accountable care collaborations with their expertise and analytic capabilities. Hear from leading health plans about innovations and strategies around reporting, care coordination, payment models, and analytic tools including risk identification and predictive modeling.

Speaker: Charles D. Kennedy, MD

Note: While much of the attention in ‘ACO-dom’ has rightfully centered around CMS certification of participating entities in the Medicare Shared Savings Program (MSSP), and via the Centers for Medicare and Medicaid Innovation (CMMI) the Pioneer and Advanced Payment model programs, there is a frenetic pace of activity in the commercial markets stoked in part by Aetna, Cigna, United et al, under the banner of ‘accountable care collaborations’ et sequelae. Dr. Kennedy is a principal architect of Aetna’s accountable care solutions group.

We spoke with in ever so briefly here, and look forward to spending some time with him up close and personal in NOLA.

Uncategorized

None of the Ransomed Ever Knew How Deep Were the Waters Crossed

By Gregg A. Masters, MPH

Ah yes, those ‘white waters’ of health reform or more aptly put ‘transformation’ (you know, the triple aim thingy). As more has been revealed, I offer a quasi ‘mea culpa’ of sorts…

Light years ago, or so it seems, as I began at least the blogging portion of my social media participation I penned this post, headline below dateline: August 18th, 2009 – pre-passage of the Affordable Care Act.

Health Reform 101 – ‘None of the Ransomed Knew How Deep Were the Waters Crossed!

The intention was to frame the ‘grand canyon’ nature of the challenge (many were called, but all failed), and contextualize the likely ‘win’ from the eventual ‘against all odds’ success of national health reform.

It further signaled an impending hollow if not ‘pyrrhic victory’ followed by the recognition of certain legacy health insurers of the ‘burning platform’ nature of their business models. Bottom-line, the industry needed to reinvent itself as ‘value added’ players if not architects of a sustainable ecosystem less they find themselves at risk of extinction. A ‘racket’ of collecting large group ASO fees, while reducing covered benefits, and floating ever increasing premium to their clients (lets leave the small group and individual market disasters out at this point), just doesn’t cut it anymore.

I opined at the time, that the net effect of the ambitious health reform effort would be a sellout on top of a sellout, i.e., the abandonment of the public option, Medicare ‘E’ (everyone), and the categorical rejection (no consideration) of single payer as a potential solution. And worse yet, albeit via subtext, was to anticipate the storm of premature ‘strategic solutions’ typically proffered by ‘name plate’ consulting firms supported by armies of junior MBAs (on site associate project managers) with clipboards, ties and not ready for prime time answers.

While legitimate concerns at the time, the broad tapestry of the Affordable Care Act (the reconciled compromise), and the range of creativity its fostering in the accountable care space, including patient centered medical homes, and derivative accountable care collaborations both payor and provider led, have caused me to pause and be more hopeful that in the aggregate, there may be more magic in those 906 pages than may be apparent at first blush.

I keep coming back to @Aetna as one legacy health insurer’s ‘re-positioning’ (from @iTrage as a payor agnostic platform to ‘accountable care collaborations’ engineered via their Accountable Care Solutions Group) as indicia of a genuine commitment to build a sustainable, transparent, affordable, accessible and value driven healthcare ecosystem that actually works. Time will tell…

Uncategorized

I’m Absolutely Bullish on the Future of Healthcare!

By Gregg A. Masters, MPH

In the walk and perhaps some instances trot towards forming and launching an ACO you have prominent voices on both sides of the debate. The bearish camp is perhaps best represented by the likes Jeff Goldsmith in ‘Can Accountable-Care Organizations Improve Health Care While Reducing Costs?’ or Virgina Herzlinger in ‘Herzlinger Predicts ACOs, PCMHs Will Fail‘.

While the bullish camp advocates include Donald Berwick, MD in ‘Making Good on ACOs’ Promise — The Final Rule for the Medicare Shared Savings Program‘, Drs. Elliott Fisher and Mark McCllelan, see ‘Fostering Accountable Health Care: Moving Forward In Medicare‘. Now add to the bullish view and in no uncertain terms, that of Charles Saunders, MD, President of Strategic Diversification for Aetna.

I had the good fortune to chat (to listen, click on show image to the right) with Dr. Saunders today to gain additional insight into how one rather progressive and forward thinking ‘payor’ views their interest in the ACO and Patient Centered Medical Home market, while actively re-tooling its traditional health plan business model.

Healthcare consultant and author Joe Flower recently opined ‘Even Aetna CEO admits: We’re toast‘ while noting Mark T. Bertolini aka @mtbert, proffered the following sober reckoning on the demise of the traditional health insurance business model:

The system doesn’t work, it’s broke today. The end of insurance companies, the way we’ve run the business in the past, is here.

What Bertolini sees under the auspices of the Affordable Care Act and the ACO provisions specifically are minimally transitional if not replacement vehicles to the health plan business model. A reinvented Aetna (if not entire AHIP membership) will have a lot to do with technology and a range of value added roles Aetna can play in building and supporting the drivers of sustainable healthcare ecosystems. We’ve got to get beyond simplistic notions of ‘my revenues are your expenses’, and see our collective interests in a collaborative vs. competitive future.

The visionary on point to assemble, configure if not birth the moving parts of this future is Dr. Charles Saunders. We got some of his worldview today on ‘This Week in Accountable Care.’

In the words of a very smart man, from many years ago:

No one is big enough to be independent of others – Dr. William Worrall Mayo

Perhaps we’ll pay attention this time?