Inkwell: Authors and Artists

    

I have an example of how health care has changed at Kaiser.

It turns out that the kaiser redwood city has a Asthma Care Manager.  Why
they only have just one is beyond me.   I met with her this week for 2
hours.  FREE.  No CoPay.  She explained, she tested, she instructed, she
consulted with docs. she referred.  she gave me the most information about
the meds I take, how to take them, showed me how aand made me show her how I
did it.

Got a new diagnosis that aalso includes asthma.  Was referred for a Chest
CT, did that the next day, $50 co pay.  CT negative.

Email from my NP/PCP scheduled me for a phone consult for this coming
Wednesday.  I assume this is also no pay.  Previous phone consults have been
FREE.  It's true at the moment I don't actually need to see her in person.
She needs to figure out what we need to do testwise before, if necesssary,
referring me to a specialist.

so recap:

1.  2 hr Asthma care appt - FREE
2.  Email with asthma care and my PCP - FREE
3   CT Scan/no contrast $50 (in and out in 30 mins)
4.  More email FREE
5.  Phone consult to come FREE

So, Joe, tell us how this works on the doctor/hospital side in terms of
their cost, savings, etc.
  

    
Sorry for the delay. Things have gotten astonishingly busy.

Lendie, that makes perfect sense from their point of view. Kaiser
famously, is the best example of a capitated system. They mostly don't
make their money from those co-pays, those are really just to keep you
from over-using the system. They make it their money from the premium. 

Asthma is one of those things that, if not managed well, results in a
lot of ER visits and even hospital time. That's expensive — to them. So
anything they can do to help you manage it is money in the bank for
them. 

Kaiser is a mixed system. The health plan and the facilities are
not-for-profit, the doctors are a connected series of multi-specialty
practices, for-profit of a sort known as "mutual benefit." Every year
the overall system shares its profits 50/50 with the docs, so the docs
are heavily incentivized to provide care in a way that keeps their
internal costs down.
  

    
> one of the main drivers of that difference in pricing is the
market clout of the provider

Yes. And the new factors (such as increased consumer awareness,
increased employer aggressiveness, new business models for providers,
and such) tend to undercut that market clout.
  

    
I am aware of companies that are trying to make it easier for
consumers (and employer HR departments) to do those apples-to-apples
provider comparisons. I'm not sure whether they're having any sort of
impact yet, though.
  

    
Joe, I'm making my way through your book. One thing that especially isn't 
clear: how do we get from where we are, to where we should be? What does 
it look like? Are the 2nd phase of health reforms passed in MA last year a 
plausible path forward? In particular, how do we turn healthcare into 
something where consumers can be well-informed about costs, where 
hospitals compete on price, as well as service, and where some sort of 
normative market can help create efficiencies?
  

    
Fawn, I talk to top execs across the industry almost every day. My
feeling is that those kind of provider comparisons have not yet begun
to show up very much in overall price reductions. But the prospect of
them, and the belief that they will become more common, is having a
deep impact on the industry. Among hospital and health system execs, it
is a commonly-held belief, close to a consensus, that various of the
usual revenue streams are likely to get throttled down in one way or
another, they will need to compete strongly for new revenue streams,
and that competition will be based on price, quality, and convenience.
  

    
> Are the 2nd phase of health reforms passed in MA last year a 
plausible path forward?

Here is a thoughtful criticism of that law as it was passed last year.


<http://www.forbes.com/sites/aroy/2012/05/06/massachusetts-institutes-health-ca
re-price-controls-is-america-next/>

His three most on-point criticisms are:
1) Global top-down cost controls never work. Players in the system can
always game them. This is illustrated by my opening argument here,
showing that cost controls nationally have actually coincided with big
cost jumps.

2) A lot of power to decide who is charging "too much" is given to a
state commission. This is open to a lot of political gaming and is
unlikely to be effective.

3) Giving total transparency on prices, and then basing regulatory
punishments on distance from the median price, does encourage the
outliers at the top end to rein in their prices somewhat — but it
equally allows and even encourages those on the bottom end to bring
their prices up. Thus increasing the median. Thus letting those on the
top end keep their prices up or raise them. 

The best part of the law is encouraging the migration to new payment
systems like those I have discussed here, though it is not clear from
this analysis how that will be enforced.
  

    
> how do we get from where we are, to where we should be?

Big questions, <ari>. Any answer in one post will oversimplify.
Roughly speaking, though, I think the path looks like this: 
 o Stronger market forces, pushed by:
 o Increased employer awareness of and access to alternative ways of
buying healthcare
 o The mandate to cover everyone, which puts a lot of high-spenders
with big chronic diseases into the pool, putting a huge demand on
payers and healthcare providers to find more efficient and effective
ways of treating them
 o The fact that increasing percentages of people covered by employer
insurance, and all of the new people coming in through the exchanges,
are participating in costs through deductibles and co-pays and
co-insurance. This makes them very cost-conscious.
 o Rapidly increasing access to information.
  

    
I am not ideologically pro- or anti-government. Private enterprise has
equal ability to screw things up and be inefficient as government.
There are two advantages of market forces in keeping down healthcare
costs: 
 o Market forces are much harder to game than government commissions
and rules. If no one is buying Best Buy's home theater systems because
CostCo is offering the same systems for 30% less, Best Buy can't get a
regulatory change to force all those customers to come back.
 o The people actually setting the prices depend for their livelihood
on getting it right. If they don't, they will disappear like Circuit
City did.

In the Massachusetts example, the state's commission and transparency
may not really encourage the high-cost provider to bring their costs
down much. But if market forces get serious (as I believe they will),
the loss of business to lower-cost competitors will.

The best role of government is setting the rules of the game,
enforcing transparency, making sure everyone is covered, allowing new
forms of competition, and so forth.
  

    

I think the "new forms of competition" is key. In my area, there is
now only one high-quality nearby hospital so it's harder to look for
alternatives. One friend did go to a more distant one for treatment
but it's harder to do.

So we need more alternatives to a full service hospital for many
treatments.  And they need to be staffed adequately. My wife passed a
kidney stone and we wound up in the ER for pain care because the "urgent
care" facility required appointments and there was no other place for
us to go.
  

    
Joe, check this out: 
<http://www.strategy-business.com/blog/Why-We-Should-Deregulate-the-Government>
  It's not what you'd expect from the title.  It's WELL oldtimer <art>
about ways large organizations including governments fall into
"entrenched ignorance of quality management." It's about the
registration process, but perhaps also ties into some of the challenges
ahead?
  

    
In <34> you say: "Market forces are much harder to game than
government commissions and rules. If no one is buying Best Buy's home
theater systems because CostCo is offering the same systems for 30%
less, Best Buy can't get a regulatory change to force all those
customers to come back."

That's definitely true. Except, in health care, it's much harder right
now under our current system to know what X provider costs vs. y
provider. As part of the Massachusetts reform you talk about, we
actually have a law that deals with this, see this Globe article from
just a couple days ago:

http://www.bostonglobe.com/lifestyle/health-wellness/2013/12/09/new-law-requir
es-insurers-providers-give-consumers-cost-estimates-for-their-medical-care/Sxk
01bNeqgi0mEU95uMOAM/story.html


"Thanks to a unique state law, millions of Massachusetts residents
finally can get an answer to the question that has long befuddled
consumers seeking medical care: How much will it cost me?

Many consumers may be unaware, but health insurers have been required
since October to provide their members with cost estimates — within two
working days — for specific tests, procedures, and office visits. That
means, for example, insurers must tell members how much an MRI of the
knee costs at an individual hospital, imaging center, or doctor’s
office, so that patients can comparison shop. The quote will include
how much of the total price members would pay based on their
deductibles and co-payments.

And by next October, insurers will have to provide this information
instantaneously. By January, hospitals and doctors will be required to
provide their own cost estimates to patients.

“This is a really revolutionary law that hasn’t gotten a lot of
attention yet,’’ said Barbara Anthony, undersecretary of the Office of
Consumer Affairs and Business Regulation, which is overseeing insurer
compliance. She said there is a learning curve for insurers and
providers — who have never been required to disclose this level of
detail about their prices before — and for patients who may have been
shy about inquiring."


Massachusetts reform is not primarily about government regulation or
its commissions -- but about creating this market pressure you're
talking about. It's like you say - we need a transparent private
marketplace. It just takes government intervention to get it.
  

    
In case it wasn't clear that last paragraph is me, not the globe
article. Should have made a clearer line break. 
  

    
very interesting-- I wonder how much flexibility people have to choose
where they get their procedures, though, if they are locked into a
network by their insurer--if you go cheaper outside the system, you pay
less in short run, but it doesn't count toward your deductible either,
does it?

Still sounds like a move in the right direction, of course.
  

    
The "narrow networks" mostly work differently. It is as if the
shopping is done for you at the network level. But this will always be
less powerful than market forces, the actual users choosing the service
based on the fact that they are actually paying part of the price.
This operates somewhat in the "narrow networks," but as you noticed, on
a pre-restricted field.

The Massachusetts model is based on programs like "Blue Choice," in
which Blue Cross/Blue Shield members are given choices rated by price
and quality. If you choose a lower quality provider, you pay the whole
cost yourself. Choose a high quality/low cost provider, BCBS pays full
freight, no cot to you. Choose a high quality/high cost provider, and
the extra cost is your co-pay. So: powerful market forces embedded
within a health plan.
  

    

Joe,

What do you thinmk of this piece entitled "'Road Map' Needed for Switch to
Accountable Care" which says that we need a concerted effort to transition
to accountable care organizations because many are not capable of figuring
out how to implement them.

I'm not sure I agree with top down, versus experimentation and bottom
up solutions, but my opinion is not by any means a strongly held one.

http://www.medpagetoday.com/Washington-Watch/Reform/43463
  

    
I agree with that piece. I wrote a similar column just recently. These
ACOs are crude, they are being put together largely by people who have
never created such a complex organization before, and without a lot of
examples in front of them. Most of the ACO models I have seen are
still actually fee-for-service, which means that they will not achieve
the great cost reductions that they are meant to. 

In a fee-for-service ACO, there is no actual model for making more
money, only a model for losing less money: If you do it really well and
get significant efficiencies and so save the government money, the
government will kick back to you some percentage of those savings.

Everyone says we have to move away from fee-for-service to achieve
real savings. Almost no one out there has any clarity on how to do
that, operationally, in the real world.

What this article calls for is not exactly a top-down solution. Note
that it is talking about a "road map" that would lay out the various
possible solutions and how to achieve them in different markets for
different kinds of institutions and organizations. That would be all to
the good.
  

    

What you write about I agree with. But given the way things work, I
think it more likely that something top-downish would emerge. I'd love
to be wrong.
  

    

Here's another one that seems to be promising:

Factbox: Value-based insurance in practice

The model, known as value-based insurance design, makes patients foot more
of the bill for medical procedures of questionable value, like surgery
for enlarged prostate and many back operations, and less - even zero -
for unquestionably beneficial care such as vaccines and hypertension
treatment. But while health policy researchers have been pushing the
idea for a decade, it is only now catching on.
...
With employees shouldering an extra $500 for less-effective
medical services, she said, MRIs have fallen almost 30 percent and
musculo-skeletal procedures such as spinal fusions are down as much as
17 percent. "Spending is dropping like a rock," she said, benefiting
employees: Premiums, which had been rising by some 7 percent a year,
are now falling 0.5 percent a year.

*In August, when Michigan became the 25th state to expand Medicaid under
President Barack Obama's Affordable Care Act (ACA), the legislation
required value-based design.

By next July, Michigan Medicaid plans must have co-pays that "encourage
use of high-value services, like prescription drugs for high blood
pressure, and discourage use of lower-value ones," said Michigan Medicaid
Director Stephen Fitton.
...

<http://news.yahoo.com/factbox-value-based-insurance-practice-060406590--sector
.html>
http://tinyurl.com/mojnzax
  

    
Most excellent. Thanks for mentioning that article. This is, as the
article mentions, an old idea. I am glad of the evidence that it is
gaining traction.
  

    
Thanks for that article -- I'm passing it around!

Also, <bbear> this:

>>Everyone says we have to move away from fee-for-service to achieve
real savings. Almost no one out there has any clarity on how to do
that, operationally, in the real world.

...really resonates with me. So what's happening to change that?
  

    
Sorry for a week's absence. Holidays, relocating from Idaho to
Sausalito to Baja, New Year's Eve overindulgence, football... the
usual.

What is happening to change fee-for-service to other models of
payment? There are a variety of ways, mostly driven from the buyers'
side. The reference pricing I mentioned in #22, and other similar
plans, just modify fee-for-service by putting the patient at risk for
some of the higher costs. "Bundling" is another such modification — get
your hip replacement here, or have your baby here, or get your heart
re-plumbed here, and it will cost X dollars — and that includes
everything, no extra fees for the anesthesiologist or the extra CAT
scan, any of that, everything. Most "fee-for-service" payments are for
parts and pieces of the service, not for the whole thing, and the
provider can pile on all kinds of extras. Bundling at least allows
comparison shopping on price and quality.

Modified capitation, a la Kaiser, is another model. You pay a fixed
amount for all your medical care, along with co-pays or co-insurance up
to a certain deductible level. Sounds like regular insurance, but the
insurance company is part of the same organization with the actual
providers. The actual providers of healthcare make more money if they
give you great care but do it more efficiently; if they give you an
unnecessary CAT or unneeded new knee, it costs them. But if they simply
deny people care and provide poor service, they lose customers.

"Mini-caps" are subscription programs for particular conditions, as
in: Pay X dollars per month, and we take care of anything related to
your diabetes. Or your asthma. These are often paid not by the patient
but by the employer or the insurance company.

Similarly, many companies are installing free-to-the-patient primary
care clinics right in the factory, the warehouse, the office building.
Walk right in, no need to take the afternoon off for a simple doctors'
appointment. Even the drugs are free. The employee/patient can still
choose to have do it the old way, going to a covered doctor elsewhere,
but they will have co-pays and such. So the clinic has to be good
enough (besides being free) that the employee will choose it. Why do it
this way? Because in the end it costs the employer significantly less
not only in medical costs but in absenteeism. The can still choose to
have do it the old way, going to a covered doctor elsewhere, but they
will have co-pays and such.
  

    
"Fee for service" is actually shorthand for a system in which fees are
paid not for a whole service (like a hip replacement) but for parts of
that service; in which the providers decide what else can be larded
into the bill, what other tests and procedures need to be part of it,
and what supplies and services they can bill for, from the $10 aspirin
to the $250 specialist visit that consists of a doctor who does not
know your case popping into your hospital room while you are asleep and
glancing at your chart — paid for at rates negotiated with the payer.

Anything that changes part of that "fee-for-service" system will bring
down healthcare costs.
  

    
Now people are talking about this to such an extent that the
vocabulary is useful.  However bumpy the process may be, we seem to be
increasing national health care literacy now. Or is that just my
impression from talk around the WELL?   Are people learning?  
  

    
I do wonder about that. The level of ignorance can be appalling, and
the constant barrage of misinformation from Fox and the right-wing
media has not helped one bit. The difference is that people opting into
Obamacare have to make actual choices based on their likely level of
use, their real needs, their real risks. So that does force them to
think about it some and get some help.

On the other hand, most people are appallingly ignorant about what
their real risks are, how much healthcare actually costs, let alone
that you can make actual shopping decisions about health care. One big
piece of the hope for actually driving down costs depends on people
paying the same kind of attention to where to get healthcare that they
do to what kind of car to buy and how to buy it, where to get the
information that they need, and who can help them make the decision.
The jury is still out on whether people can and will do that.