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)

With A New VA Scandal, We Need a Military Health Task Force

There’s a new Veterans’ Administration scandal brewing. A McClatchy investigation suggests that senior VA officials falsified report data and issued misleading public statements about the VA’s performance on everything from appointment scheduling to medical outcomes. We need to be sure we’re getting accurate information about the VA’s performance. But more importantly, the healthcare we provide to our soldiers and veterans should be the best in the world. That’s a way to honor them for their service, bolster our national security, and help build a better health system for all of us.

We need a high-level and nonpartisan Task Force to lead a major initiative that will redesign the entire military health system for the 21st Century. This Task Force can address the scandals and doubts of the past. More importantly, it can design the military health system of the future.

John Kerry’s Reinsurance Bill: Will It Work?

John Kerry has introduced a bill that provides Federal reinsurance for high-cost medical cases. This was one of the key provisions of his 2004 healthcare platform. He wrote an editorial for the Boston Globe recently detailing his plan.

My friend Bob Laszewski outlined his concerns about the proposal in a recent blog post. “This isn’t cost containment,” says Bob, “it’s cost shifting.” He writes that the proposal “is well meaning but wouldn’t do anything to reduce our nation’s overall … cost burden,” adding that the proposal is “popular among some big companies with tons of legacy health care costs looking for someone dumb enough to take them off their hands.”

So who’s right: My friend Bob, or Sen. Kerry (who I also know and respect a great deal)?

My answer is both. Here’s why: I agree with Laszewski that the Kerry plan as currently designed is essentially a cost-shifting strategy. I also agree that it reduces financial incentives for appropriate management of both medical cost and quality. If it resembles the 2004 plan it doesn’t eliminate that incentive altogether, since payers will still be responsible for 25% of cost. Still, payers will have less reason to be manage hospital expense or appropriateness of surgical interventions, to name just two examples, since most cost for hospitalizations and surgeries will now be borne by the taxpayer.

Nevertheless, Kerry had identified a fundamental problem that urgently needs solving. A 2004 Washington Post article summarized it this way:

“All it took was one cancer case and one chronic illness — two employees out of 50 — and the health insurance premiums of an Ohio faucet company jumped from $200,000 to $350,000 in a year.”

So what’s the real solution? The answer lies in first recognizing the public function insurance (and reinsurance) is intended to serve. Insurance isn’t the same thing as financing. In its present form, it was created to serve two purposes:

1. It shares risk among large groups of people to prevent financial catastrophes to individuals or businesses.
2. It encourages risk-averse behavior – for only those aspects of risk that can be controlled – by providing financial reward in the form of reduced premiums.

The U.S. allows private insurance on the premise that it will fulfill these two social functions. The problem with the Ohio faucet company case is that the insurance system failed to serve its two primary roles. First, it didn’t distribute the risk widely enough to shield this small business from significant financial harm. Second, it punished that company for circumstances beyond its control, namely a chronic illness and a cancer case.

Isn’t that the problem we should be addressing?

Sen. Kerry observed that ” 2 out of 10 patients account for more than 80 percent of all healthcare costs.” That’s true, but this Pareto-style disproportional distribution is common to all forms of insurance. Simply assuming primary financial responsibility for the 2 patients out of 10 won’t address the underlying issue.

Here’s another way to solve the problem:

1. Establish underwriting guidelines (at the state or national level) that require genuine risk distribution.
2. Implement a Kerry-style Federal reinsurance program – but charge a variable premium (possibly from a base of 0) based on simple, measurable quality and cost management measures Administer the program using an underwriting model adopted from best practices in the reinsurance industry, combined with defined policy goals.

You could carry out either step independently of the other. My advice for Sen. Kerry would therefore be to modify the bill so that it includes true underwriting functionality, promoting good healthcare quality and avoiding waste through a process of diligent review and rate-setting. You don’t necessarily need to create a new bureaucracy, either – you could bid the program out competitively.

And if the Federal government finds itself in the mood to take on medical costs, here’s a wild idea for debate and discussion: Why not have a government initiative to fund preventive and wellness services? Once again private industry is buzzing with chatter about wellness, as it does every ten years or so. But employers and insurance companies will never do it right. As long as employees keep changing jobs and insurers, the private sector won’t have any incentive to invest in saving money for somebody else a few years down the road.

Wellness is a low-cost area with big rewards. Unfortunately, those rewards don’t usually go to the ones paying for it. The Kerry bill provides incentives for wellness, but why not spend more money in that area – maybe with the reinsurance premiums collected from insurers and employers who aren’t managing their medical programs well?

VA Played Fast and Loose With the Facts – So, How Good Are They Really?

The Veterans’ Administration has been promoting its effectiveness for some time, based on both administrative and clinical measures. As a result, some health reformers have even taken to touting the VA as a model for national health reform. Now their findings and the VA’s veracity are being challenged by a new report. The VA still has its defenders, but I have questions about other favorable studies of the agency (see below.)

They’ve done some things very well, but there’s no reason to believe the VA is a model for the nation. The issue should be resolved through a comprehensive analysis of their medical outcomes conducted by unbiased analysts.

An in-depth journalistic investigation now suggests that the VA has been misleading policymakers and the public about its accomplishments for some time. The gamesmanship reported by McClatchy ranged from the relatively trivial (e.g. changing request dates in the appointment system to make wait times appear shorter) to the more substantive.

Deceptions about appointment wait times and patient satisfaction are wrong, and overstating the availability of PTSD treatment is reprehensible. (Why not ask for the money to give vets what they need?) Still, in my opinion, skewing clinical data to overstate results is the most serious charge of all. A RAND study cited by the VA didn’t say what VA officials claimed it said: namely, that the VA performed better than 12 other systems. Officials went on to say that RAND had concluded that veterans “receive better health care than any other patients in America.” The RAND study was not designed for that purpose, and found no such thing.

McClatchy raises questions about the RAND study’s objectivity, given the fact that four of its nine authors were affiliated with the VA and the agency helped fund the study. RAND’s objectivity is well-regarded by me and others, so I’m less concerned about this issue.

The newspaper’s other question about the RAND study is far more telling: It was published in 2004, yet only used data from 1997 to 1999. In my consulting experience, unexpected date ranges raise a red flag – could the data have been cherry-picked to get the best results?

Something like that could well happen without RAND’s complicity – if they were engaged to study a certain data set, that’s what they would do. The selective use of data could occur when the client engaged the consultant/think tank to do the work. I’ve seen it happen a number of times in my data analysis work, although its more typical of the private sector.

Some people like Ezra Klein are still arguing that the VA’s quality is unsurpassed, based on pieces like the ones published in the New England Journal of Medicine. Yet I have similar concerns about the New England Journal pieces, as well. One such article (“Effect of the Transformation of the Veterans Affairs Health Care System On the Quality of Care”) was published in 2003 yet used essentially the same date range as the RAND study – and focused on a fairly limited number of conditions.

McClatchy notes rightly that the VA has performed very well in providing necessary tests and services. And Ezra and other are right to note its excellent performance in a number of areas. But analyzing health data is a tricky affair.

The VA may have more to say in its defense, but I found the explanations they offered to McClatchy unconvincing. Here’s the way to resolve the issue once and for all: fund a comprehensive review of the VA’s outcomes, conducted by independent analysts with full access to all of the VA’s data.

Until that happens, I’m not comfortable with any of the rosy reports on the VA’s effectiveness. They may well be doing a terrific job in outcomes, but there’s no independent verification of that fact. Until there is, I would argue that using the VA as a model for national reform should be put on hold.