Site moved to, redirecting in 1 second...

« November 2008 | Main | January 2009 »

13 posts from December 2008

December 22, 2008

Partners Healthcare, competition, regulation, and the redeeming virtues of robust quality and cost data

The Boston Globe Spotlight Team had another installment of its Partners Healthcare saga in Sunday's paper.  The general gist: Partners horning in on community hospitals in their home commmunities, Jack Connors (board chair at Partners) extolling the virtues of the free market (with some less-than-kind words for the competition), community hospital execs and other partisans questioning the appropriateness of Partners' expansion.  See Kevin, M.D.'s cogent summary and commentary as well.  As some have noted, this isn't exactly news, but I'll take it as an opportunity to make a couple of points.

Beverly Hospital, complaining about Partners horning in, did the same on a smaller scale, competing against smaller North Shore facilities.  So it may not be Beverly's place to complain at this stage of the game.

Nevertheless, the question is raised: should health care resources be developed in an unregulated manner?  Is this really an enterprise appropriate for the free market?

As an unreconstructed former certificate of need lawyer for the Commonwealth, I would have to answer: Not yet.

Frankly, we have all seen quite recently and quite vividly the havoc wreaked by the private sector let loose in the until recently unregulated, or under-regulated, banking, financial services and auto industries.

Viewed from the health care system level, it is apparent that there is an appropriate level of health care resources that ought to be made available to the residents of the Commonwealth, and that if more are made available (in a certain specialty or in a certain geographic area), we enter the Field of Dreams school of health care planning ("if you build it, they will come") -- and we will all, collectively, get socked with the bill, because most, if not all, of these services come with a whole host of fixed costs that are added into the cost of health care in Massachusetts whether they are fully utilized or not.  Thus, the costs of the "old" service as well as the cost of the "new" facility built across town end up dragging us down.  As I never tire of saying: in a perfect world, I'd rather see excess health care dollars spent on childhood vaccines and other primary and preventive care.

Massachusetts'  legislature and Department of Public Health have responded to the latest rash of providers with an edifice complex by reinstituting determination of need jurisdiction for certain outpatient facilities (those with a price tag of $25 million or more), but the regulations are too little, too late; the facilities described in the Globe article (and others) all predate the new law or are grandfathered by its provisions.

Is there a role for competition in health care markets?  I would agree with Kevin Pho (see link above) and say that there is, but that the currency on this field of play (to mix metaphors) should be cost and quality, not economic market power.  Massachusetts is taking some baby steps in this direction, with the recent launch of the Massachusetts Health Care Quality and Cost Council website, MyHealthCareOptions.  That site is a work in progress, but it shows promise.

If health care purchasing decisions may be de-linked from brand-name marketing and linked instead to cost and quality indicators, I would have to believe that all players would be reasonably satisfied.  Teaching hospitals need not compete on cost for routine procedures, and community hospitals need not compete on quality for procedures on the bleeding edge. 
For a time, the thinking was that third-party payors would be able to incorporate cost and quality factors into the calculus to such a degree that CON jurisdiction could be cut back appropriately.  The legislature has recently expanded that jursidiction (as discussed above), judging that we aren't there yet.  In the presence of a robust market with providers competing on the basis of cost and quality, and ultimate health care payors having sufficient information on which to base purchasing decisions, CON (or as we say here in Massachusetts, DON) wouldn't be necessary, and we'd hear less crowing and whining.  

Update 12/29/08:  The Boston Globe comes back for more, alleging an antitrust violation in an unwritten agreement between Partners and Blue Cross Blue Shield of MA.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 17, 2008

Jacob Hacker makes the case for public plan choice in national health reform

Costchart Jacob Hacker, at UC Berkeley, who has previously laid out the Medicare-for-all (plus some employer-based insurance) concepts that have been at the core of several Democratic presidential candidates' health reform plans (including the President-elect's), released a paper today demonstrating the value of a government plan such as Medicare as one option among a menu of options for health care coverage under an Obama health reform plan, through The Institute for America's Future. 

A summary of key findings culled from the paper was released as well.

His conclusions:

First, public health insurance outperforms private insurance in controlling costs while maintaining access and benefits—even when compared with private plans that are regulated to ensure broad coverage. Second, public insurance has also made major strides in quality improvement, and a new public plan working with Medicare alongside private plans would be able to make much greater strides in the future. Third, a competing public plan is essential to set a benchmark for private plans, providing a “check and balance” that ensures private plans, as well as the public plan, uphold high standards.

In sum, he presents a strong argument for building on the Massachusetts "Connector" model -- the Connector is the state agency that serves as a clearinghouse for private non-group and small-group health insurance plans required under the Massachusetts universal health care coverage law -- albeit with one significant difference.  Unlike the Connector, which offers only private health plans, the Obama proposal calls for a public health plan to be offered side-by-side with the private plans.  Hacker promotes the notion of using Medicare or a Medicare-like plan -- and not the often-discussed option of allowing folks to buy in to the federal employee health benefits plan -- because Medicare's cost structure and inflation rate is significantly lower than that of private plans.  (A naturally cynical sort, the HealthBlawger wonders if the comparison is truly apples-to-apples.)  It's an interesting read, treading a bunch of familiar territory as well as marshaling the evidence in favor of Medicare or a Medicare-like public plan to be offered through an exchange.

Prof. Hacker and Congressman Stark announced the release of this report on a conference call today.  Stark warns not to look for legislation in the first hundred days of the Obama Administration, and they both emphasized the potential for robust competition between public and private plans which would redound to the benefit of ultimate payors of health care premiums. 

Update 12/17/08:  Following the conference call, Prof. Hacker was kind enough to answer a couple of questions I posed to him via email:

Q:  Much has been said about how Medicare's costs are not fully-loaded and that therefore there is no apples-to-apples comparison being made when promoting "Medicare For All."   So, when you compare Medicare costs and cost growth rates favorably to FEHBP and other private health plan costs and cost growth rates, are you comparing apples and apples?  What about "hidden" or undervalued CMS costs, such as office space (in GSA's budget?); also, are CMS employee expenses fully-loaded?
A:  First, the comparison of administrative expenses in public and private plans by the CBO that I cite in my brief (showing a 9 percentage point public-plan edge) looked at Medicare Advantage plans and the Medicare public plan, so these "hidden" costs were constant across the two. I do note that some of Medicare’s administrative expenses are not included in the standard calculations, but there is no question that Medicare has substantially lower administrative costs than private plans—even within the FEHBP. There is simply no contest.
Second, this is basically irrelevant to the question of cost growth. The issue there is whether Medicare is more capable of restraining the growth of costs (which it is), not whether Medicare can deliver the same benefits for less (which it can). I compare the growth of Medicare spending per enrollee and private health insurance spending per enrollee for comparable benefits – which is as close to an apples-to-apples comparison as you can get. And Medicare is clearly superior in terms of cost control: Private insurance outlays per enrollee grew an average of 7.6 percent a year between 1983 and 2006, compared with 5.9 percent growth in per enrollee spending under Medicare—a 22 percent difference. (1983 was the year in which Medicare’s prospective payment system for hospitals was implemented; 2006 is the last currently available data year.) The gap is even bigger in recent years. Between 1997 (when the Balanced Budget Act of 1997 further constrained Medicare spending) and 2006, private health insurance spending per enrollee grew at an annual rate of 7.3 percent, compared with an annual growth rate of 4.6 percent under Medicare—a fully 37 percent difference. As these comparisons indicate, not only has Medicare more successfully restrained the rate of increase of per enrollee spending, the rate of growth is also on a steeper downward trajectory under Medicare than under private insurance.    
Q:  Given the value in eliminating excess administrative costs to the system associated with having multiple payors, is it your belief that a "connector" with public and private plan offerings would either yield a market with lower prices overall due to competition, or morph into a de facto single payor system, and if so, over how long a period of time?
A:  I believe, as do other experts, such as John Holahan and Linda Blumberg at the Urban Institute, that you could have stable competition in which private plans played an important ongoing role. For one, a good number of people will probably want to be in a private plan. For another, the private plans will have greater scope to achieve efficiencies by restricting provider access or more directly coordinating care. The overall effect of this competition, in my view, will be much more effective restraint on costs, yet with built in safety valves for people in both the public plan and competing private plans.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 16, 2008

HIPAA faces the music: New OCR Guidance on the HIPAA Privacy Rule and the Electronic Exchange of Health Information

HIPAA guidance for the world that followed HIPAA (finally): HIEs, PHRs, etc., and how they may be brought under the big tent of HIPAA.

OCR release from late yesterday:

The Department of Health and Human Services (HHS) Office for Civil Rights (OCR) has published new HIPAA Privacy Rule guidance as part of the Department’s Privacy and Security Toolkit to implement The Nationwide Privacy and Security Framework for Electronic Exchange of Individually Identifiable Health Information (Privacy and Security Framework).  The Privacy and Security Framework and Toolkit is designed to establish privacy and security principles for health care stakeholders engaged in the electronic exchange of health information and includes tangible tools to facilitate implementation of these principles.  The new HIPAA Privacy Rule guidance in the Toolkit discusses how the Privacy Rule supports and can facilitate electronic health information exchange in a networked environment.  In addition, the guidance includes documents that address electronic access by an individual to his or her protected health information and how the Privacy Rule may apply to and supports the use of Personal Health Records. 

These new HIPAA guidance documents are available on the OCR Privacy Rule Web Site.  See also more information on the Privacy and Security Framework and other documents in the Privacy and Security Toolkit.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 15, 2008

Massachusetts Health Care Quality and Cost Council: Quality and cost transparency or veils?

One of the much-ballyhooed (and predictably delayed and diluted) innovations of the 2006 Massachusetts health care reform and universal access law is the development of an online resource providing cost and quality data in a consumer-friendly format.  MyHealthCareOptions debuted last week (see HCQCC press release).  After taking it for a spin, I must express my disappointment with the current state of affairs.

The site does not provide very much meaningful data.  For example, hospitals' differing rankings on quality of care are mostly undercut by notes saying that the differences are not statistically significant.  In other cases, both cost and quality data are unavailable.  In any event, cost data are not given in dollars but in ranges ($, $$, $$$, etc.), and quality data is given in the form of star ratings, as a result of the long negotiations among payors, providers and the state agency, as is par for the course in this sort of cost and quality disclosure exercise.

Many of the categories of data described on the site are empty -- I hope they are placeholders for data to be provided in the near future, but I am concerned that the data will not be forthcoming.

Even if the site were more fully realized, how would it affect health care purchasing behavior?

Except for the tiny minority of patients with truly consumer-directed health care (e.g., gold-plated indemnity plans or high deductible health plans combined with health savings accounts and no network restrictions) patients go to health care providers based on referrals from their primary care providers, within networks defined by their health care insurers.  The health care insurers that had the tiny bit of data on the new website coaxed out of them have much more data available in-house, and they have been using this information for years on developing provider networks and encouraging utilization of an appropriate mix of highest-possible-quality, lowest-possible-cost providers, consistent with the demands of patients and premium payers for world-class health care in teaching hospitals and at their affiliated providers.

In sum, cost and quality transparency won't change health care purchasing behavior unless the data provided is much more robust and employers and other premium payors are in a position to demand that health care insurers change their contracting practices.  Unfortunately, I do not think that the data will be much more robust in the near term, and I do not think that any employer or health plan will be prepared to engage in development of tiered health plans, restricting access to certain groups of providers.

Cost and quality transparency will change behavior only if there is a sea change both in the quality of this data and in the impact of the health care purchasing decision on the patient's pocketbook. 

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 11, 2008

Just the wonks, ma'am

Vince Kuraitis, channeling Joe Friday, brings us the latest edition of Health Wonk Review at his e-CareManagement Blog.  Somehow, the HealthBlawger was corralled with "the usual suspects and hippies."  But I know my rights . . . .

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 10, 2008

Grand Rounds is up at Sharp Brains

Call it crowdsourcing, transparency, or whatever else you like, but the Obama transition team has been hard at work opening the door to the policymaking process.  Sharp Brains lends a hand this week, with a Q&A-format edition of Grand Rounds.  Have a look at some of the collected wisdom of the medblogoshere.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 09, 2008

Stay Smart Stay Healthy: Humana's adventures in YouTube for the short of attention span

Humana purports to cut through all the jargon and traditional media with a new series of faux naif video clips on YouTube accessible through the managed care giant's Stay Smart Stay Healthy web site, which tells us:

In the old world, companies tried to explain health insurance through complex brochures or some other kind of traditional media filled with industry jargon and littered with “legalese.” This is one of the main reasons consumers fail to understand their health insurance. We, the industry, just don’t make it easy.

Today, consumers are increasingly filtering out complex messages, in favor of clearer, more relevant ones delivered through new, engaging mediums of communication. Recognizing this, Humana is now exploring non-traditional avenues to influence consumers’ mindsets and behaviors.

Stay Smart Stay Healthy is a Humana new-media venture designed to deliver guidance, and to support awareness and understanding of the healthcare industry. Our goal is simple: to educate consumers on the healthcare system by removing the usual complexities and replacing them with an informative and engaging series of videos.

Why read your subscriber agreement or a summary when you can watch a "new media" video?

The videos are undeniably clever and engaging, and they do contain some valid information.  (I'm making this blanket generalization after watching only the latest addition to the series -- the tenth video, on Medicare.)  However, at least this most recent video includes the managed care organization point of view slipped in -- not-so-subtly -- among the "facts."  Specifically, the clip explains Medicare Advantage as managed care for Medicare beneficiaries that reduces cost and improves quality.  Of course, Medicare Advantage is also a program that provides an essentially guaranteed profit margin to (mostly) for-profit managed care organizations.

The installment on "Why Is Health Care So Expensive?" was similarly deconstructed by Michael Miller at his Health Policy and Communications Blog, one of the other bloggers apparently getting the Humana email updates on this series.

It will be interesting to see whether this series of videos will spawn replies or parodies, as often happens on YouTube.  Once "old economy" companies engage with "new media," they no longer control the discourse.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 08, 2008

Blawg Review of the Ancient Mariner

Since his last outing as host of Blawg Review, Colin Samuels, of Infamy or Praise, has had, shall we say, an albatross around his neck: three towering achievements based on a literary trilogy, and the need to persevere despite Dante's failure to write more than three canticas in his Divine Comedy.  Well, today he has more than met our expectations, with a Blawg Review inspired by The Rime of the Ancient Mariner.

He brings the rest of us blawgers into the picture, too:

When he is rescued, the Mariner looks to the holy man to absolve him of his sins. The hermit can offer him no absolution, but the Mariner finds some measure of peace and release from guilt in telling his story.

This then becomes the cycle of the Mariner's life. As the voice had predicted during his return, he continues his penance for what he has done. The nature of that penance is described by the Mariner:

    Since then, at an uncertain hour,
    That agony returns;
    And till my ghastly tale is told,
    This heart within me burns.

    I pass, like night, from land to land;
    I have strange power of speech;
    That moment that his face I see,
    I know the man that must hear me:
    To him my tale I teach.

A slightly-creepy guy telling stories to anyone who'll pause to listen? Give that Ancient Mariner a Blogger account and a pair of pajamas!

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 05, 2008

Caritas Christi $100m infusion from Ascension Health on hold

Caritas Christi, the Boston-area Catholic health system, has been through the wringer and was looking forward to some capital improvements to be financed by issuing bonds.  $100m of the bonds were to be acquired by Ascension Health -- one of the two larger Catholic health systems that considered acquiring Caritas and then backed off.  Today's Boston Globe tells us that the bond issue is on hold and Caritas is looking at layoffs.  As my colleague Marc Bard is quoted as saying, Caritas is not alone: elective surgery is down and uncompensated care is up at all hospitals. 

The article repeats Caritas CEO Ralph de la Torre's earlier pledge to keep all of its hospitals open, but I have to wonder whether there might be a change in the air -- Carney Hospital is a candidate for conversion to non-acute-care uses, and such a conversion may well be a reasonable approach to cost-cutting while enabling a more appropriate use of the facility.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

UnitedHealthcare: Stranger than fiction

Uninsurance insurance.  Yep, that's the latest arrow in the quiver of health care insurance giant UnitedHealthcare.  As it loses covered lives thanks to layoffs of folks insured through employer-sponsored plans, UHC is looking to pick up a few bucks by selling insurance to folks who are currently insured but fear they might not be at some time in the future.  By paying 20% of what their health insurance premiums would be, folks can lock in access to health insurance in the future having to worry about pesky details like pre-existing conditions and personal risk profiles that would pump up premiums in non-community-rated jurisdictions.

At least two fellow Health Wonks have weighed in already: Bob Laszewski lays bare the folly in this endeavor in a Julie Rovner piece on NPR, and Joe Paduda shakes his head in wonderment at Managed Care Matters

Here's the thing: between COBRA (which lets you buy continuation coverage post-employment at essentially the same rate -- yes it's expensive, but it's no more expensive than what UHC is offering to guarantee access to), and the right under HIPAA to buy insurance individually or through a new group plan even after a gap in coverage if you have sufficient "creditable coverage," with no pre-existing condition exclusions, most bases are already covered.

UnitedHealthcare's move looks to be a cynical combination of fearmongering and a bet against meaningful health care reform under an Obama administration.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting