Stop Thief!

A Harris Interactive poll suggests that public awareness of health privacy concerns is on the rise, according to a report in Modern Healthcare.  The poll is described as an “online interactive” survey, however, which raises concerns about sampling validity.  That caveat aside, it’s interesting to note that there appears to be increasing public awareness of health data theft and data security issues - which, as we have written here before, are rampant.  (We’ve been following health privacy concerns for some time now.)

The poll also suggests that data thefts could be undermining public support for Electronic Health Records (EHR), which is another reason to get this problem under control before it escalates any further.

The Modern Healthcare article also reports that Booz Allen Hamilton was awarded a $450,000 grant in order to

…do an “environmental scan” to get its arms around the problem, then convene a meeting to gather ideas on how medical identity theft should be addressed, and then to write up an action plan recommending ways to deal with the problem.

I would’ve liked to have that contract, and I could’ve done it for a lot less.  We haven’t begun to explore the full implications of rampant health data theft - and we shouldn’t, at least in a public forum.

Still, I suspect the real solution to this problem is going to come from an imaginative entrepreneur, not a Federally-funded study.

(via CHCF’s iHealthBeat; image courtesy Medical Informatics Insider)

A Billion Here, A Billion There: California HMO Figures Are a Challenge for Free-Market Health Advocates

If the Free Market can cure all the ills in our health economy, why are we seeing billion-dollar expenditures for non-health items - even as prices soar and buyers rage? It looks like somebody has taken the Invisible Hand off the wheel.

The California Medical Association, which has its own ax to grind, is publicizing state data about HMO expenditures.  (Remember HMOs?  They’re the organizations that were going to improve outcomes while cutting costs.)  According to data from the Department of Managed Health Care, California HMOs spent about $6 billion last year in administrative expenses - including seven-figure salaries for a number of CEOs.

Meanwhile large plans like CalPERS are facing 8% increases, while individual enrollees - the linchpin of consumer-oriented free market policies - are seeing increases in the 10% range.

If the market is really “rational,” as we’re always being told, why aren’t buyers forcing these overhead costs down?

Sen. Sheila Kuehl is quoted as saying that her bill, which mandates that plans spend no less than 85% of premiums on direct health costs, would have resulted in $1.1 billion more being spent on medical care.  I need to read Sen. Kuehl’s bill in detail, but here’s my problem with the principle:  The easiest was to get to that ratio is by increasing premiums, not reducing administrative expenses. Unless the bill prevents that, that’s the likeliest outcome - especially since market forces don’t appear to be doing the trick.

In the abstract sense, I don’t care how much profit HMOs make, if they’re getting the right results.  If they can provide better health care at a lower premium cost, and make a 20% or 30% profit margin - great!  Everybody wins.  The problem is that there’s no indication that they can.

For balance, total California health spending is in the hundreds of billions, so we’re talking about marginal figures.  But marginal or not, you save a billion here and a billion there and pretty soon you’re talking real money.

And a number of the state’s HMOs fall within Sen. Kuehl’s margins, including CIGNA at 94.3 percent, Inland Empire at93.1 percent, and Kaiser at 90.6 percent.  Community-based LA Care clocks in at an impressive 97.1 percent.

But the question remains:  If the market can’t get these escalating costs under control - even with administrative expenses in the $6 billion range - how can it be the stand-alone solution of the future?

Tier 4 Drugs: An Industry Response

Ezra Klein spoke with Robert Zirkelbach of America’s Health Insurance Plans regarding Tier 4 medications. Mr. Zirkelbach’s response hits a few points:

National Conversation

That we need a “national conversation” about “whether drugs that cost ten or a hundred times as much as current treatment options are producing better outcomes.” (Whatever your opinion of Hillary Clinton, I’m not particularly grateful for the insertion of the phrase “national conversation” into the political lexicon. A little less talk, a little more action, as Elvis would say.)

In this case, I would say we don’t need a “conversation” about better outcomes. We need data. It’s a research question, not a political one. If these therapies are better than the alternative, then we need a conversation - but it has to be about our level of willingness to provide insurance that pays for the best available treatment. That’s a debate worth having, and it’s also where we need some of that transparency Jonathan Cohn calls for.

Generic Alternatives

Mr. Zirkelbach says we should encourage “generic versions” of Tier 4 drugs. But, as Ezra points out, they’re not likely to be available.

Comparing New and Current Treatment Options

Lastly, Zirkelbach suggests “we need a national system in this country that compares new drugs with the treatment options currently available in the marketplace.” That’s a good point. Even under single-payer coverage, we would still need to do cost/benefit analyses on very expensive therapies - and not just for pharmaceuticals. The more information that’s made publicly available, and the more education and debate that ensues, the better.

I still say there is a point at which “insurance” becomes a misnomer. What that point may be is somewhat subjective, but in theory it’s this: When the coverage being provided no longer protects individuals from severe financial harm as a result of loss.

And I’d add this thought to the “national conversation”: When plan designs are no longer made to change behavior, but simply to transfer high-cost items back to the insured party, that’s risk transfer and not benefit design. As a result, the insurance concept is being subtly modified - and arguably undermined.

Tier 4 Meds: When Is Health Insurance Not Insurance?

Is health insurance even insurance anymore? The high cost of intensive drug therapies is being shifted back onto patients - and not because the procedures are considered “experimental.”

The New York Times’ Gina Kolata wrote a piece today about a new kind of financial catastrophe striking Americans who have - or think they have - health insurance. The problem is with so-called “Tier 4″ drugs, which are typically prescribed for severe medical conditions. These medications are extremely expensive, and insurance companies have been exempting them from the usual rules (like fixed copays and out-of-pocket limits) that protect their members from financial shock. As a result, people who think their they’re protected financially are being hit by huge drug bills.

Patients aren’t bearing more of the cost for these medications because they’re experimental - a reason that’s often used for denying certain treatments. They’re bearing more of the cost because they’re expensive, at least as far as some quick research today could determine. And, as Jonathan Cohn of The New Republic observes, the political debate isn’t even addressing this part of the problem.

How bad is it? Take one breast cancer patient in the Kolata piece, for example, who lives on Social Security disability and has Medicare coverage:

(Her insurer) declined to say what Tykerb might cost, but its list price according to a standard source, Red Book, is $3,480 for 150 tablets, which may last a patient 21 days. Wellcare requires patients to pay a third of the cost of its Tier 4 drugs.

That’s nearly $400 every three weeks. Or, how about the MS victim whose Kaiser coverage changed unexpectedly, so she didn’t find out until she picked up her usual prescription?

Now Kaiser was charging 25 percent of the cost of the drug up to a maximum of $325 per prescription. Her annual cost would be $3,900 and unless her insurance changed or the drug dropped in price, it would go on for the rest of her life. “I charged it, then got into my car and burst into tears,” Ms. Steinwand said.

Ezra Klein’s not sure how Tier 4 drugs are designated. (But he got curious about it, too. See his post and my reaction.) Ezra writes:

(Kolata’s) article vaguely implies that Tier Four is simply composed of costly drugs that insurers are dumping on patients. My understanding of the situation is that Tier Four is actually composed of largely experimental and unproven treatments that don’t seem to offer benefits in line with their cost. If it’s the former, then this really is, as the article seems to suggest, a cruel and crazed practice. If it’s the latter, then it’s exactly what we need to be doing.

I wish Ezra was right, but he’s not. Here are a couple of examples of the logic used to transfer these costs to customers. Blue Cross and Blue Shield of North Carolina says Tier 4 drugs are “medications classified by BCBSNC as those which require special dosing or administering, are typically prescribed by a specialist and are more expensive than most medications.” That’s it: nothing about “experimental.” And the UPMC health plan, affiliated with the University of Pittsburgh health system, says this:

The fourth tier is for specialty drugs, which are high-cost medications and biologicals, regardless of how they are administered (injectable, oral, transdermal, or inhalant). These drugs also have the highest level of copayment. These medications are often used to treat complex clinical conditions and usually require close management by a physician because of their potential side effects and the need for frequent dosage adjustments.

These two descriptions are typical of the way insurers describe Tier 4 drugs. Defenders of the Tier 4 system will say that health premiums will become unaffordable if these costly treatments, which can exceed $100,000/year, are paid by insurance. There’s some truth to that. But here’s the problem with that argument: The function of insurance is to protect individuals from expenses they can’t afford. Once you start withdrawing that protection, it’s a misuse of language to describe the product you sell as “health insurance.” It needs to be called “health cost offset,” or “selective health cost mitigation,” or something else that doesn’t promise more than it can deliver.

If costs have become so high that the private health insurance system can’t provide affordable coverage that protects people from financial harm, then the entire system needs to be re-envisioned. Remember: In all the debate about “universal healthcare,” most politicians are really talking about “universal health insurance.” But if it isn’t really “insurance” anymore, what are they offering voters?

(Kevin Drum has also written about this issue)

Are ‘Medical Googlers’ Really A Problem?

After dozens of ventures to create health sites for health consumers, most people still seek medical information through Google. That surprises some tech investors. What’s more, the very act of searching ticks off at least one doctor, and probably many more.

Dr. Scott Haig is aggravated by “Susan,” a patient he considers a “medical Googler” (as he writes in TIME Magazine and as covered in the New York Times). ” We had never met,” he begins, “but as we talked on the phone I knew she was Googling me.” Sounds a little defensive to me. That clackety-clack typing sound he heard could have been her making notes on the conversation, or Googling her health condition, or any number of other less personal activities. (Presumably she Googled him before she placed the call.)

It is rude to surf the Net while you’re on the phone - I’ve been busted for it myself. But no need to jump to conclusions.

Dr. Haig goes on to describe Susan’s irritating personality and seemingly inept parenting - as if those two were inevitable and inseparable characteristics of the “medical Googler.” But guess what? Studies indicate more than 130 million Americans sought medical information online last year. Are they all obnoxious jerks?

Dr. Haig’s reaction is indicative of a deeper trend that troubles many doctors: Patients are arming themselves with medical information and making their own decisions. In the abstract, that’s what they should do. But in practice, it results in a shift away from the doctor-centric model - physician as priest - that many practitioners understandably find more comfortable. And there are risks, which technology has been slow to address.

But here’s the bottom line: They’re here, they’re search-engine is near, get used to it.

If Dr. Haig’s description is accurate, Susan sounds like the kind of annoying patient doctors have had to tolerate since the dawn of the profession. Her ‘Googling’ doesn’t make her who she is - and she won’t change.

But physicians like Dr. Haig will have to adapt - or spend the rest of their careers in a state of heightened aggravation. The ‘Medical Googler’ (and her descendents on newer platforms) are the wave of a future that’s already here.

health wonk review: the daily double

It’s my turn once again to host the Health Wonk Review, and this gang has gone absolutely wild! Apparently it was Daily Double Week for the Review, with Joe Paduda heading the list of contributors who offered dual postings. That left us with 24 entries, so let’s get right to it (and if I’ve overlooked your entry drop me a line):

Joe Paduda says there’s a “pre-lash” against consumer directed health plans - that’s a backlash before something happens, says Joe. Then, ever helpful soul that he is, he recommends some fixes to help CDHP purveyors from feeling the sting of the lash.

David Harlow of the HealthBlawg looks at the new IRS position paper on EHRs, and follows up with a discussion of binding arbitration between nursing facilities and their residents. Nice double-down, dawg.

Roy Poses, MD summarizes the new information coming out about Avandia and possible cardiovascular risk, following up with some lessons learned and observing that some reports suggest the FDA may have known of the risk for seven years and done nothing.

Bob Laszewski offers an invaluable guide to the Democratic Presidential candidates’ health plans, with some interesting observations about the politics involved. He also notes the lack of detailed plans on the Republican side, and suggests that may be a miscalculation. (Bob didn’t submitted two posts, but I thought they were both valuable.)

I (Richard) looked at those various reform plans and offered some advice for employers in a changing environment, in a post called Health Reform: What Should Business Do?

Jon Coppelman analyzes Massachusetts’ low comp rates - a boon for employers - looking at who’s subsidizing this good news and the factors that might change the situation going forward. A valuable resource for comp mavens.

David E. Williams only offered a single submission - but it’s called Double For Nothing. He compares wait times in the US with those under other national systems. He observes that, while critics of health reform point to the waiting lists common in other systems, we’re not doing very well in this country either.

Matthew Holt takes on free-marketer Amy Ridenour with a singularity of purpose here.

Vince Kuraitis of theHealth e-CareManagement blog has an interesting post about disease management going mobile (wasn’t that a Who song?) and being distributed on a retail basis. That’s the kind of story that piques my interest from the perspectives of investment, social behavior, and technology.

Henry Stern, LUTCF, CBC presents Insurance going to the dogs (and cats)? posted at InsureBlog, saying, “When Fido (or Fluffy) need medical care, do you reach for his/her insurance card? Surprisingly, a lot of folks do.” Why did I have my cat spayed? I don’t mind paying for her coverage, but those dependent premiums were killing me.

Shaheen Lakhan presents Defining Malpractice During an Emergency Evacuation posted at GNIF Brain Blogger. Interesting issue - is failure to evacuate during an emergency a form of malpractice? Med mal insurers, take note: This could be you next time.

Jason Shafrin presents Will Medical IT increase cost? Is slow adoption better? posted at Healthcare Economist. This is an important topic for economic analysis, since the Democratic candidates’ health platforms are predicated on a decrease in cost via IT.

Health Reform: What Should Business Do?

A lot can happen between today and next November, but as of now Democrats stand a decent chance of taking the Presidency and solidifying their hold on Congress in 2008. The three major Democratic Presidential candidates have now revealed some or all of their proposals for health reform. (There’s a good summary here.) How should businesses be preparing for the possibility of change?

1. Recognize that change isn’t inevitable, but is possible.

Democrats may be underestimating the level of resistance reform plans will meet. So far each plan has something to commend it, but none is visionary or inspirational enough to draw the kind of public support that can’t be eroded by well-funded campaigns like the “Harry and Louise” ads of the 90’s or the AMA’s “no socialized medicine” efforts in the 1950’s. Still, the possibility of change under a Democratic administration is there, and many business people understand that the right kind of health reform could improve their bottom line and make them more competitive globally.

2. Study the plans and participate in the dialogue.

Business leaders should inject themselves into the reform dialogue in a meaningful way. That means studying the plans and finding one to support. Many have signed on with Andy Stern and the SEIU. Business leaders should also look carefully at the plan put forward by Sen. Ron Wyden, which would take employers out of the health financing business altogether. That’s a radical shift for larger businesses, but one worthy of consideration.

3. Find the details you support and promote them.

Sen. Clinton calls for a Best Practices Institute. That’s a good idea worthy of widespread support. So is her call for IT upgrades (a call that’s common to all the plans, but which she initiated first.  Obama has upped the ante by calling for $7 billion more in development than she has proposed.) Edwards was the first to call for public/private competition, which should drive down costs for employers and individuals. These details can dramatically affect the impact of reform on the business community.

4. Understand the potential impact of reform on your business.

Large employers are more likely to benefit from health reform that reduces the cost of coverage they already provide their employees. Reform plans would very possibly change the mix of plans they can offer, reduce the cost of catastrophic care, and place a greater emphasis on wellness. Large employers should look at their own health costs and model the impact of these changes - as a planning exercise, and for common sense. They should also avoid multi-year deals for insured coverage or reinsurance on a self-insured plan.

Small employers may be required to provide coverage under health reform, and should be preparing for this possible additional expense. The specifics of reform will determine who will be hit in the small business community, and how hard, and nobody’s offering that detail yet. I predict a boom for the PEO industry if small businesses are hit with a mandate - that is, assuming a mandate of that kind doesn’t become a last-minute boon for the Republican Party.

We’ll provide more detail on these plans as it becomes available - although the candidates have very little reason for making that detail available. Politically speaking, the devil’s in the details - so the less said, the better. It will be up to business leaders (and those in labor and elsewhere) to push discussion to a more detailed - and more meaningful - level.

Will PHPs Succeed or Fail? It’s All About Execution … Which Means Investment

Highmark (Blue Cross Blue Shield of PA) is offering an online Personal Health Record portal, or PHR. As HealthDataManagement.com reports:

Available through a secure page at highmarkbcbs.com, the Pittsburgh-based insurer will automatically populate PHRs with relevant claims and administrative data that includes dates of service, diagnoses and treatments, medications and other information.

The PHR includes tracking technology that enables users to keep records on certain health status measures, such as blood glucose, blood pressure, cholesterol level and weight. Other recordkeeping functions include medication tracking, immunizations, physician information, treatment history and allergies. Members also can enter additional information in their PHR, which is printable to share with clinicians.

Highmark further will offer PHR users personalized plans for improving their health. The PHR includes links to educational materials.

There are a lot of factors to consider in good web portal design - including variations in literacy rates, ease of access, generational/cultural differences in how people interact with a screen, identifying the “teachability moment” in health education, and much more. That doesn’t even touch the issue of content. Execution will determine the success or failure of the PHP concept.

There’s a good opportunity for the right team to build the content and develop design templates for PHPs. The question is: Where is that team? There’s an investment opportunity out there for the right partners …

(courtesy iHealthBeat - California HealthCare Foundation)

Free IT For Doctors, Updated - New York’s Using It For Those Who Treat the Poor

I’ve written about the potential market for IT in the primary care physician arena before (here and here, for example). There is a substantial need for solutions in this arena, and for those that can serve other physician specialties too.

That’s apparently part of the thinking behind New York City’s $19.8 million grant for physician systems that integrate clinical and billing/administrative functions. They’re starting with docs who treat Medicaid patients and the uninsured. That’s a good place to start.

Washington DC has decided to do something similar, starting with eight community health clinics and moving into local hospitals.

I haven’t looked at these particular apps, and I worry about ongoing R&D and support under this model - but I’ll keep watching. And I’m betting there are creative ways to enhance an app of this kind that these programs haven’t yet considered.

A Brief History of Capitation, From Medieval Days to 21st Century Reform

Whatever happened to provider capitation? It was going to be a core element in the managed care strategy to revolutionize healthcare delivery - back when people thought managed care could revolutionize healthcare delivery. In fact, capitation has been around in one form or another in every attempt at healthcare reform since the Norman Conquest. Some even say an earlier variant existed in ancient China. We don’t hear much about it anymore. Where has it gone?

When Henry I assumed the throne of the newly-combined kingdoms of England and Normandy he initiated a sweeping set of healthcare reforms. Historical documents indicate that soon thereafter at least one “physician,” “John of Essex,”was receiving an honorarium of one penny per day for his efforts. As historian Edward J. Kealey explains¹, that sum was roughly equal to that paid to a footsoldier or a blind person. (Historically doctors haven’t always been the high earners they are today.)

I assume that John of Essex’s income was a form of “capitation” - that is, a flat payment for treating a fixed number of individuals whether they are ill or well. This is only an assumption, given the lack of better historical data, but I believe it’s a reasonable one.

There’s clearer historical evidence to suggest that American doctors in the mid-19th Century were receiving capitation-like payments. No less an authoritative figure than Mark Twain, in fact, is on record as saying that during his boyhood in Hannibal, MO his parents paid the local doctor $25/year for taking care of the entire family regardless of their state of health². That’s genuine capitation.

The reason why capitation payments made a comeback in the managed care field during the 1980’s is because fee-for-service medicine creates perverse incentives for physicians. As many people now understand, fee-for-service medicine pays doctors more for treating illnesses and injuries than it does for preventing them - or even for diagnosing them early and reducing the need for intensive treatment later.

That’s one of the reasons why I haven’t embraced “Medicare for all” as a meaningful model for healthcare reform. Most Medicare is provided on a fee-for-service basis, and our country has created a class of high-earning doctors under that system. Medicare attempts to control utilization as well as cost, but putting the entire population into the current Medicare system without addressing the fee-for-service issue could have unintended consequences.

Nevertheless, the managed care industry’s experience with capitation hasn’t been a good one. The 1980’s saw a number of HMO’s attempt to put physicians in independent practice, especially primary care physicians, into a capitation reimbursement model. The result was often negative for patients, who found that their doctors were far less willing to see them - and saw them for briefer visits - when they were receiving no additional income for their effort.

Attempts were also made to aggregate various types of health providers - including hospitals and physicians in multiple specialties - into “capitation groups” that were collectively responsible for delivering care to a defined patient group.

Americans aren’t collective people by nature, however, and these efforts tended to be too complicated to succeed. One lesson that these experiments taught is that provider behavior can’t be changed unless the relationship between that behavior and its consequences is fairly direct and easy to understand.

Still, fee-for-service medicine will pose a significant risk to any health reform effort. Does capitation play a role in reform? There are only four possible answers:

1. No. The HMO experience taught us it can’t work in the U.S. context, so we need to stick with fee-for-service medicine.
2. No. Only group model healthcare (e.g. Kaiser, the VA) can succeed in the U.S.
3. Yes. The HMOs didn’t get it right.
4. We don’t know. The topic warrants further discussion and research.

I’m going with #4. How about you?

As for the ancient Chinese, physicians such as Dong Feng treated people without charge in the Third Century AD³. I’ve heard it said that other Chinese physicians were only paid if their patients got well. But stories that the Emperors cut off the heads of their doctors if they failed to cure them are only legends, as far as I can tell.

In any case, that form of reimbursement is more commonly known as de-capitation.

¹Medieval Medicus: A Social History of Anglo-Norman Medicine. Kealey, Edward J. The Johns Hopkins University Press, 1981.
²The Autobiography of Mark Twain. Clemens, Samuel (Charles Nieder, ed.) Perennial Classics (pub. date unknown.)
³Guo, Z. “Chinese Confucian Culture and the Medical Ethical Tradition.” J Med Ethics, 1995.