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!

 

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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!

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.