National Healthcare Reform Magazine
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National Healthcare Reform Magazine
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EDITORIAL Editor-in-Chief
Jonathan Edelheit
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Tercy U. Toussaint
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CONTENTS
Inpatient vs. Outpatient Observation Hospital Status by James Baker
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from the Editor 04 Letter Rob a Bank for Healthcare ~ The Only Option in 2011? by Jonathan Edelheit
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Health Reform and the CLASS Act: Threat or Opportunity? by Todd Grove
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Market Based Patient Care
HRAs ~ Time and Money Well Spent by Dr. Don Hall
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by Ralph F. Weber
Disease Prevention through Healthy Lifestyle Choices ~ Fitness and Proper Nutrition by Deborah MacArthur
Feds Set Explicit Goal to Eliminate Fee For Service in Self Funded Plans
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by Stephen George
SPECIAL: Voluntary Benefit Magazine Exclusive Interview
Vision for a Strategic Alliance 18 The Interview with Aetna & Allstate by Megan Chiarello
Diabetes and Its Effect on Future Employer Health Costs - Guidance for Employers by Jonathan Spero
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Healthcare ~ Cheaper, Better & Faster is The “New” Game by Rajeev Mudumba
Copyright © 2011 Healthcare Reform. All rights reserved. Healthcare Reform Magazine is published monthly by. Material in this publication may not be reproduced in any way without express permission from Healthcare Reform Magazine. Requests for permission may be directed to info@HealthcareReformMagazine.com. Healthcare Reform Magazine is in no way responsible for the content of our advertisers or authors.
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EDITOR’S LETTER
Rob a Bank for Healthcare ~ The Only Option in 2011?
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his indeed did seem like the only option for Richard James Verone, a 59-year-old from North Carolina, who robbed a bank on June 9, 2011 claiming this was the only way for him to get coverage; because they have to provide healthcare in prison.
Verone handed a note to the teller claiming he had a gun, and demanded $1 US dollar. After she gave it to him, he sat in the bank’s lobby waiting for the police to arrest him. He asked only for one dollar so that it would be clear his motive was not to rob the bank, but get arrested for medical care. He has no job, two ruptured disks and a growth on his chest. He hoped he would be sent away to prison for three years and that would allow him time to get all the medical care he needed to be healed. Verone told reporters, “If it is called manipulation, then out of necessity because I need medical care, I guess I am manipulating the courts to get medical care.” Unfortunately for Richard, it is estimated he will only get sentenced to 12 months in prison, and may not get all the medical treatment he intended to. I think as individuals, many of us who are involved in the healthcare and health insurance industry forget about the people who don’t have or can’t afford health insurance. We forget to put ourselves in their shoes, to feel their fears, pain and desperation. We are removed by it all, because while it is an emotional topic, we have health coverage, we may not be happy with it, it may be expensive, but we have it. It’s not a healthcare crisis; it’s a healthcare disaster. It’s not getting better, it is only getting worse, and the passage of healthcare reform legislation will just continue to degrade it as costs are increasing. Is this what America has come to? People committing crimes so they can get free medical care from the state while in prison? There are more and more Americans like Richard who don’t have jobs, and in the future small employers may be forced to lay off more employees because of rising healthcare costs. Many small employers are getting renewals on their group health insurance as high as 40%. That’s crazy! What happened to the promises of lower costs under healthcare reform? People are starting to finally realize, that’s all it was, promises, and we need real healthcare reform and soon.
Jonathan Edelheit
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Jonathan Edelheit Editor-In-Chief jon@employerhealthcarecongress.com
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HEALTH REFORM AND THE CLASS ACT: THREAT OR OPPORTUNITY? by Todd Grove
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arch 23 was the one year anniversary of President Obama signing into law the health care reform bill, which includes the Community Living Assistance Services and Supports (CLASS) provisions. Many of the details of the CLASS provisions are not yet defined and will be developed through regulation, but as with all other aspects of this industry altering legislation, nothing will ever be the same – both for consumers of health care and the brokers who serve them.
Some of the major concerns I hear fall into the following buckets: Reduction in income. Most health brokers believe that their income will be adversely affected. Client Relationships may be threatened. Loyalty is becoming a very rare trait amongst even our most well entrenched clients and that could be shaken even further by an upheaval in policy design/pricing.
Most brokers I speak with are very concerned about Value proposition could be diminished. As a most of the health care reform in its present form.
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consolidation of plans occurs, understanding the In some parts of the country, it can cost over differences between one broker and another may $100,000 a year. If we assume that nursing home become more difficult. costs will continue to reflect recent trends, by the year 2021, the average rate will have risen to about All of these are the perceived threats of health care $480 a day, or $175,200 annually. reform which will roll out over the course of the next two years. As a result of these alarming statistics, Senator Ted Kennedy made it his mission to include some Another school of thought lies around the benefit – albeit small and controversial – in the final opportunities the reform act presents, and we will health reform legislation. focus here on the CLASS Act as a particularly effective way for health brokers to combat all three What are the details of the coverage that of the concerns mentioned above. would be provided?
First, a bit of background
Most of the terms of the new CLASS program that passed as part of the Patient Protection and Affordable Care Act will be developed by the Department of Health and Human Services over the next few years. Certain terms are set in statute, including the following:
Why does health care reform include any provisions for long-term care? After all, no major medical plan – not even Medicare – presently cover LTC costs at all. Let’s look at why long-term care cost are so alarming and need to be addressed now with all employers and their staff: Enrollees will:
Of every 100 people over 65 years of age, 43% will • pay a monthly premium, through payroll need long term care.. deduction, that has yet to be determined, but most -Technical Report 1-01, Scripps Gerontology Center, February 2001 recent estimates indicate that the average premium 40% of the people receiving long term care are will be $180-$240/month; that premium could be increased yearly to ensure that the CLASS fund is working adults between the ages of 18 and 64. actuarially sound. -(GAO/HEHS-95-109 long term Care Issues, p. 7). When you reach age 65, you have a 40% lifetime • be covered on a guaranteed-issue basis. chance of entering a nursing home, and a 10% risk that you will stay there at least five years • be eligible for benefits for their long-term care - (U.S. Department of Health and Human Services). needs after paying premiums for the first 60 months of coverage (i.e., a 5-year waiting period) and have “The average length of stay in a nursing home worked at least three of those five years. (current resident) is 892 days” (The National Nursing Home Survey).
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• receive a lifetime cash benefit after meeting benefit eligibility criteria, based on the degree of impairment, which is expected to average about $75/day or more than $27,000 per year and is payable as long as the claimant remains disabled. Enrollees will be offered coverage through their employers and will be automatically covered unless they opt out. They can opt back in at a later time. Self-employed people or those whose employers do not offer the benefit will also be able to join the CLASS program through a government payment mechanism.
Bad Math
so many unanswered questions. What are the premiums, how are they set and where do they go once collected are but a few of the more pressing queries. Douglas Holtz-Eakin, who was the director of the Congressional Budget Office from 2003 to 2005, wrote concerning this issue; “Consider, the fate of the $70 billion in premiums expected to be raised in the first 10 years for the legislation’s new long-term health care insurance program. This money is counted as deficit reduction, but the benefits it is intended to finance are assumed not to materialize in the first 10 years, so they appear nowhere in the cost of the legislation.”
“Removing the unrealistic annual Medicare savings This part of health care reform is one of the most ($463 billion) and the stolen annual revenues from controversial – in large part because it creates Social Security and long-term care insurance ($123
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billion), and adding in the annual spending that so far is not accounted for ($114 billion) quickly generates additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.”
Why should Benefit Brokers Care? First off, because they have to now. CLASS is not “voluntary.” Every worker is involuntarily and automatically opted into the program. Each employee or self-employed person must willfully opt out to avoid the program’s large “premiums” that will otherwise accrue by default. Second, CLASS is not “insurance” by its true definition. Insurance is for healthy people who want to prepare responsibly for the relatively small possibility they may become disabled or chronically
ill. CLASS is in essence a “pre-payment” of care subsidized by the insurable for the benefit of the uninsurable. As a result of all these problems and concerns, why would an employer offer CLASS when a voluntary offering of true long-term care insurance would make so much more sense for the vast majority of his/her employees? The answer: not many. Unfortunately, most benefit brokers are woefully uneducated on both CLASS and the multi-life offerings in the market. Therefore, they will not be able to position private sector options well when the employers start calling. But, with education comes opportunity. Employers need guidance. Brokers need clients. LTC insurance specialists bridge the gap and can accomplish the goals each party has throughout this turbulent period.
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The Best Defense… The average broker in America today still sells— and will continue to sell—one or two LTCi policies a year. Why? Simply put, they do not see it as their role with employers. As a result, they will never focus on comprehensive long-term care planning. So, how can the important subject of long-term care planning be addressed professionally and ethically with the millions of at-risk, actively working baby boomers? The only sensible and effective approach is through strategic partnering. Most agents who have been successful at providing LTC insurance have focused solely on this complex product and the emotionally charged sales process that accompanies it. They are never a threat or a competitor to benefit brokers because LTCi is all they provide.
The How-to’s of Partnering with LTCi Specialists Broker partnering is a challenging process – much more art than science. It must start with the realization by the broker that they need to work collaboratively to support their clients in the brave new world of health care reform. Once that fact has been accepted, the first step is to locate a professional and ethical long-term care insurance specialist. The best method for finding a specialist to work with is obviously word of mouth/professional networking. However, locating them can also start with a Google search in your area. One organization that is national with trained worksite specialist is LTCFP. Another, ACSIA, can also be identified on the web.
The CLASS Act is exactly what has been needed to When searching, designations can be helpful as crystallize attention by employers, LTCi specialists well. The two most common are CLTC and LTCP. and benefit brokers on this voluntary benefit. Of the two, CLTC is commonly accepted as the industry standard. • LTC insurance specialists need access to boomers where they work. Attend NAIFA and NAHU meetings. Many of the • Advisors need to fulfill fiduciary responsibility leading LTC specialists are involved on a local level and inform their corporate clients of the severe in these organizations. limitations of CLASS.
Questions to Ask When Interviewing These two disciplines perfectly support one Specialists another. The key is bringing them together in a way that benefits all parties involved. The importance of LTC insurance will continue to grow, as will the options on how to design and underwrite coverage. Therefore, it is in the best interests of all parties— benefit brokers, LTC insurance specialists and their clients—to develop trusting and mutually beneficial partnerships. This model will in large part transform the marketing of LTC insurance throughout the years ahead.
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How long have you been in the field? Look for at least 5 years. If they were previously affiliated with a captive or career shop, that is a benefit because they received significant training and support. What businesses/organizations have you worked with? Experience at the worksite using simplified underwriting and a 60 day enrollment period are important.
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What carriers do you work with? Pick an agent who has appointments with many large, reputable carriers like Prudential, Mutual of Omaha and Transamerica. Captive agents are not effective in the worksite since “one size does NOT fit all” in this marketplace. Ask if the specialist is compensated identically carrier to carrier. This obviously avoids conflict of interest. What other benefit brokers do you partner with? You might as well find out about what your competition is up to. Maximizing the Relationship: Keeping it Productive – and Profitable Here are a few tips to help set appropriate expectations and develop long-term, mutually
beneficial relationships that proactively address the issue of LTC planning with your client base: 1. Commit to addressing LTC – with all clients. The most common reason why benefit broker/ LTC specialist partnerships fail is lack of focus. Both parties get excited and a few introductions are made, then things fade to black. This is avoided by creating a marketing plan that both the benefit broker and the specialist document and sign off on. The most important element is consistency. Speaking with clients every week about LTC and a voluntary offering or carve out is essential. This proactive approach repositions the broker in the mind of the employer and he/she is seen as a valuable resource on health care reform – and the welfare of the employees.
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2. Don’t get greedy. Any specialist worth his/her salt will provide all the following on each worksite enrollment: • Vet carriers • Develop proposals • Implementation calls with carrier • Worksite case preparation • Enroller management if necessary • Proposal development and presentation • Enrollment presentations – on location/webinars • one-on-one meetings with all interested employees • • • •
Application scrubbing/processing List bill preparation and reconciliation Policy delivery Ongoing customer service on active cases
3. Re-Brand your image in community. The brokers who truly leverage their relationship with LTCi specialists take a proactive approach to addressing this benefit – and the concerns most employees have surrounding it. That is completely different from the majority of benefit brokers and as a result, provides real opportunity to differentiate their services in a highly competitive market. Incorporate CLASS into many discussions, include some aspect of it in advertising/ marketing pieces. LTC Education at the worksite will cut stress, improve productivity – and solidify your relationship with clients who are confused about this issue.
CLASS Act forces an acceptance of long-term care planning. Those brokers who view this as an opportunity by partnering with LTCi specialists will As a result, the broker will earn a percentage of the “ride the wave” of government mandated health reform commission, but generate significantly more income and be viewed as a resource rather than a “bearer of off of LTCi than at any time in the past. The adage “A bad news”. small percentage of a lot beats 100% of nothing” truly applies in this scenario.
Bio
Todd Grove, LTCP, CLTC is a founding partner of LTC Financial Partners and has specialized in this field for 20 years. Some of the publications he has contributed to are the New York Times, Senior Market advisor, National Underwriter Magazine, and the Portland Press Herald. He is a member of the Estate Planning Council of Maine and Past President of the Maine Employee Benefits Council. He can be reached in Portland at 207-772-5793 or todd.grove@ltcfp.net
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MARKET BASED PATIENT CARE by Ralph F. Weber
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ealth plans are expensive, because medical care is expensive. Will shopping across state lines for insurance fix that? It’s a nice sound bite and will allow the insured to drop some of their own state mandates, but the biggest input to the cost of a health plan is the underlying cost of the medical care financed by this plan. If you buy a plan in Shreveport and
use it in San Francisco, it will trend up in costs. During the yearlong healthcare debate, I did not hear ONE person ask why medical care is so expensive. They barely even asked why health insurance was expensive, but if 85% of the premium for health insurance must be paid out in medical costs with the new medical loss requirement--and we have not addressed the w w w. H e a l t h c a r e R e f o r m M a g a z i n e . c o m
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cost of medical care--then insurance premiums will CONTINUE to rise at an unsustainable rate. Enacting health insurance reform without addressing the cost of medical care is like putting a new roof on a building which was in an earthquake.
Here’s how the Feds put the fix on health care pricing. It all starts with a Federal agency called the Center for Medicare Services (CMS). They set the reimbursement rates for some 14,193 medical procedures. How they come up with these figures is based on a “secret formula” calculated like most government methods of accounting. Then CMS pays the AMA (American Medical Association) to produce and manage “secret codes” called Current Procedural Terminology codes (CPT codes). The AMA then sells these codes to all doctors and hospitals, and insurance billing clerks. Altogether, they receive annual income reported to be $69.9 million, to manage these codes. Insurance companies then use the reimbursement rates as a starting point in determining how much should be covered as an insurable benefit under the term, which you no doubt recognize as “coinsurance”. In any business model where prices are fixed and paid by a third party, the patient (consumer) and doctor (provider) both have an incentive to consume more services than may be needed to gain maximum benefit. This is why these programs have become entitlements, rather than indemnity programs. If patients travel to Kansas for a bunionectomy, New Jersey for a knee replacement or Oklahoma for a Coronary Artery Bypass Graft--and you allow doctors and hospitals to compete across state lines with their own rates, THEN you will achieve fair market rates and sustainable costs.
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Each doctor and hospital has different costs for different procedures, and each medical provider includes different services with any given procedure. When a third party arbitrarily decides to pay Dr. X in Los Angeles the same as they pay Dr. Y in Miami, some doctors will be overpaid for certain procedures and underpaid for others. Patients will receive “cost effective” procedures, which may not be what they really need. How many times have you turned on the television and heard a vendor offer, “If you have Medicare, we’ll get it paid for, or you get your scooter free.”? Would you get one if you had to pay $25,000 of your own money? Take your car to a body shop and get an estimate to fix a dent. Then say, “Oh, I forgot to mention, I have insurance”. The price will suddenly go up. This is because both the consumer and the provider are spending other people’s money. So how can we address the costs of medical care? By allowing doctors and hospitals to compete across state lines--not just insurance companies-and by having the patient see the true cost of the care and direct their own care--a key element completely missed in healthcare reform. In recent years, an industry known as “Medical Tourism” has emerged and is projected to grow at an estimated 35% per year. Medical tourism brokers send people overseas with “promised” savings which compare “billed rates” in the US to “paid rates” overseas. There often exists an added incentive for these brokers to send you overseas in the 20% to 80% or more that they get in kickbacks from the facility they send you to. These kinds of kickbacks are illegal in the US, so these brokers usually won’t refer you to a US facility. Deloitte estimates that by the year 2017 as much as $599.5 billion per year of medical care revenues could be lost from the US in favor of overseas facilities. There is a very important place for overseas
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medical facilities in caring for US patients, but they are often not competitive on price. When US doctors and hospitals are permitted to set their own rates, they can usually compete very favorably with overseas facilities. A service such as MediBid.com allows patients to shop domestically as well as internationally and define their own criteria for medical care. The status quo, and the reformed healthcare model lack transparency, as well as financial incentives for both provider and consumer to reduce costs. To reduce costs while encouraging technological improvements, we need to introduce competition among doctors and hospitals.
Bio Ralph F. Weber, President of MediBid, started an international health insurance brokerage in Canada, then moved to the U.S. and expanded his brokerage. Ralph has contributed healthcare reform policy to Rudy Giuliani and Mike Villines. Driven by a passion for greater access and transparency, Ralph and private investors started MediBid, a truly free-market solution to healthcare.
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FEDS SET EXPLICIT GOAL TO ELIMINATE FEE FOR SERVICE IN SELF FUNDED PLANS by Stephen George
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ederal reforms under the Patient Protection and Affordable Care Act (PPACA) and Centers for Medicaid Services (CMS) continue to regulate material change to the status quo. Federal Exchange plans at 24,500 members and growing slowly. Enrollments by state can be found at: http://www.healthcare.gov/news/factsheets/pcip06102011a.html
Centers for Medicare Innovation have stated their goal to eliminate fee-for-service medicine in 30 new Accountable Care Organizations (ACO). Noteworthy is a CMS stated goal of also directing same ACO’s into “population based reimbursement” or capitation for Part A and Part B medical expenses. CMS is explicitly directing selected ACO’s to also modify existing contracts with both Medicaid and Commercial Self funded medical populations. Several well organized medical centers are eagerly applying for ACO participation by deadline in August.
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CMS states, “The goal of population-based payment is to allow Pioneer ACOs the revenue flexibility to provide services not currently paid for under FFS, and to invest in infrastructure to support care coordination. This particular approach to population- based payment exposes the Pioneer ACO to the same level of financial risk as in the payment arrangement in the second performance period. The Innovation Center is open to testing a different form of population-based payment in the Alternative Payment Arrangement that would offer the Pioneer ACO greater levels of financial risk and reward.” For many metropolitan medical practices relying on Medicare (and eventually Medicaid), this means real change to the status quo. CMS is heavily targeting member assignment to experienced primary care physician patient management as their foundation to lower cost. CMS states, “Pioneer ACOs must commit to
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entering outcomes-based contracts with other purchasers (private health plans, state Medicaid agencies, and/or self-insured employers) such that the majority of the ACO’s total revenues (including from Medicare) will be derived from such arrangements, by the end of the second performance period in December 2013.” Merger or management of primary care function favors early adopters with clear vision, facilities and leadership. Many commercial and self funded plans are currently in place nationwide. Traditionally compensated fee-for-service medicine follows the practice of delivering care at disease onset with no payment for organized prevention. In a very real sense, we do not have health care plans, but we have disease care plans. The directly stated goal of converting entitlement reimbursement to capitation represents real change for doctors and hospitals who are unable to organize or manage the quality measurement standards mandated by CMS and ACO compliance. Primary care physicians have been complaining for years that the current feefor-service neglects to compensate wellnesscounseling that averts the very expensive and serious health attack. Capitated care is designed to pay doctors and their ancillary services personnel to stay in regular contact with higher risk patients and keep them healthy. Many have criticized inherent conflict of interest issues with fee-for-service payment; Conflicts that reward higher profits for unnecessary care. The capitated model represents a method to combat runaway medical expenses by rewarding physicians who are able to deliver care under a budget by keeping people healthy.
The philosophical position by some to declare capitation an incentive to restrict care for higher profits, must also claim the opposite position of fee-for-service incenting excessively prescribed procedures. The Federal Government has stated their belief in setting budgets, and ACO’s will deliver or lose up to 10-15% of total Part A and Part B reimbursements under one of five Pioneer ACO risk contract options. Where there is risk, there is potential reward. The upside bonus is shared savings of 50%-70% for managing care under the budget. “CMS will enter into Agreements with Pioneer ACOs only if they provide enforceable assurances that they can reimburse Medicare for all potential losses.” Stop loss works to reduce unpredictable budget shortfalls, and Provider Risk, LLC will be helping with this endeavor. Medicare spent about $528 Billion in 2010, and is projected to spend $1,038 BILLION by 2020. There is little question that benefits will be changing, along with the way CMS pays for care. CMS is clearly moving away from Fee For Service compensation as quickly as medical providers get organized and assume the budgeted program.
Bio Stephen George is CEO of Provider Risk, LLC. Specialists in Medical Stop Loss and reinsurance. reinsurance@providerrisk.com www.providerrisk.com
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National Healthcare Reform Magazine SPECIAL: Voluntary Benefit Magazine Exclusive Interview
The Vision for a Strategic Alliance
Interview with Aetna & Allstate by Megan Chiarello
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oth James Reid, head of Aetna Voluntary Plans, and David Bird, President at Allstate Benefits, have genuine excitement and enthusiasm in their voices. Upon the official announcement of the strategic alliance between Aetna and Allstate Benefits, Reid and Bird talk passionately about the decision to offer financial protection plans to Aetna’s more than 33 million members and why both companies seized an opportunity to partner two Fortune 100 companies with strong brand recognition. David Bird puts it perfectly when he describes quotes his predecessor telling him, “David, you’ll never go broke splitting profits.” Bird explains of the gentleman’s advice, “It’s another good description of why this partnership was so interesting to us.” Both Aetna and Allstate will benefit from the incremental income generated from Allstate workplace voluntary benefits. James Reid describes the alliance similarly, stating
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“I think that Aetna and Allstate recognize the significant opportunity as well as the good synergies between both organizations,” and “when you look at a company that has traditionally played in the core medical benefits field with a company that played in the traditional voluntary medical field, you can see how those two get along very nicely.” Read the full interview, exclusively with Voluntary Benefits Magazine.
Voluntary Benefits Magazine: Tell us about the unique partnership between Allstate and Aetna. How was it created and why? James Reid: We felt that in selecting them as a partner and vice versa, them selecting us as a strategic alliance partner, it was a good fit. When you look at a company like Aetna that’s been in business for well over 150 years and has played in the medical
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James Reid: Our plan is to use options of the Allstate commission structure that they have in place. More importantly, we are really excited about introducing these products to the insurance agents and brokerage houses that we’ve done business with over the years. Brokers, as you know from what you’ve covered in your magazine so well, are looking for new solutions to provide their clients as well as new revenue streams for their own firms. We plan on using the Allstate David Bird: One of the reasons it was so interesting commissions and discussing those individually to us [to partner with Aetna] is based on studies with the partners that we do business with, and done by LIMRA, the Life Insurance Marketing then following up on case by case opportunities and Research Association. One employer survey with the customers that will have these products found that over 75% of employers said they would offered to them. prefer to purchase their voluntary benefits from a broker/agent/consultant with which they are VBM: What are some of the additional already doing business. So if you think about that, advantages to enrollment options Aetna’s already there in the workplace. They are a because of the partnership? trusted insurance provider. We think Aetna is well positioned to offer voluntary benefits products to David Bird: These products are attractive to their employer clients. Instead of watching them employers and employees because they provide do this with someone else, we thought Allstate financial protection and additional financial could offer a very attractive partnership with them security to middle to moderate income working in that type of program. Americans and their families. The group critical illness and the group accident benefits are paid VBM: How would employers market directly to an employee in addition to benefits the joint products to employees? from any coverage they have. From an employee perspective, these products give them some level James Reid: There are a number of important of financial empowerment to then go out and elements that we are working on to make a address their medical needs. A recent article smooth experience for brokers, employers, and from Levi Marketing Research was titled, “50% their employees. Some of these key areas include of Americans Couldn’t Come up with $2,000.” -brochures and marketing materials, enrollment That speaks to the need of middle –to- moderatecapabilities of how we receive enrollment data, income Americans for financial empowerment whether that would be paper or electronic, online that can come from owning these types of products or a wire transfer, that we’re able to get it from the and receiving benefits from them, in times of employer and the prospective member to enroll illness and injury. with Allstate. We feel really good and confident that it should provide a really good experience for James Reid: The advantage that we see for both customers, brokers, and members. parties is that we [Aetna] have customer and broker relations with a significant amount of group VBM: For insurance agents, would business and already have enrollment, whether it there be a unique commission structure be our medical products, dental products or vision products, and group life and specialty products. and how would it be tracked? We’re doing enrollment for a majority of those field with individual and Medicaid, Medicare and group benefits, dental and group insurance, life and disability, we really thought there was a good opportunity for us to really look at the voluntary space. We also wanted to look at an opportunity to form a strategic alliance that would allow us to offer new products to our customer base that really focuses on providing them with financial protection.
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cases, whether for Small Group Business or Middle Market customers or National Accounts, so the advantage is really where we have the customer today. We offer their core benefit offerings and now we can offer two new products through the group Critical Illness and Group Accident plans that can be part of that enrollment offering. We have resources within our voluntary marketing team that will work with our customers if they decide to offer these products, to ensure that they develop customized marketing and enrollment strategies that meet the needs of each client and employee base. Allstate, as you well know, has a suite of enrollment options, as well as we [Aetna} have, that we’re going to tap into. Allstate’s capabilities, including administrative, are industry leading. We plan on using the existing relationship we have and hopefully bring in new ones with both national and regional enrollments, to make sure however the customer wants to enroll in these products, that we meet their needs. ` 20
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VBM: Do you feel the Aetna/Allstate Alliance will spur other major health insurers like United Healthcare, Humana or Cigna to offer something similar? David Bird: Humana has already done this, having acquired KMG Kanawha Insurance Company, which is in the voluntary benefits space. Via this acquisition, Humana has entered the voluntary benefits space and has these types of products available. In terms of United Healthcare and CIGNA, I’m not sure what they have planned, but I would think that they would want to follow suit in order to remain competitive and on a level playing field with others in the industry. James Reid: I really can’t speak for other carriers, but as I mentioned in your initial question, I believe that the opportunity and synergies between Aetna and Allstate are tremendous. Creating the Group Critical Illness and Accident Products, with our core
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products, provides new opportunities for customers to provide their employees some protection, so I wouldn’t be surprised to see other large carriers try to get into this space in a different fashion.
VBM: What are the key components you feel Voluntary Benefits Magazine readers should know about the Aetna/Allstate Alliance?
VBM: In your opinion, do you feel this David Bird: I think the key components are the things alliance will change employee benefit plans we mentioned, as I described in the partnership. in the future? Generally, the structure is the key and how unique James Reid: I think that between both organizations, we hope it changes it significantly. That is why we are partnering and creating this strategic alliance with Allstate, but I think that based on the trend that you’ve [VBM] seen and that you’ve [VBM] reported on, we’re seeing a shift in and convergence between the traditional core medical benefits coverage and the traditional voluntary plans, to get it to address some financial needs and affordability for consumers. As consumer directed health plans become more rapid and are more uniform, we feel that consumers will see a degree of visibility and transparency on what they’re spending on healthcare and what their expenditures are. With this newfound visibility, it’s very important that these types of products are out there to meet the unique needs of each individual customer. I think there has been a shift in the voluntary sales over the last ten years and you’ve seen a significant growth in these types of products and in that market space because that really addressed the needs of the employers, their members and their employees. I think you’ll continue to see that over the next few years. David Bird: I think voluntary benefits are becoming more and more accepted in the industry and accepted by employers and employees—they’re almost really starting to blur and transition in categorization from being voluntary to being part of the core offerings. As the voluntary products we know today are being integrated with the medical insurance plans offered by companies like Aetna, I think that’s going to make them more prevalent and accepted in the industry.
the alliance is. We’re excited about it and I think Aetna is as well. James Reid: I would say really trying to provide best in class product, distribution, and brand. I think that between the products that we offer historically at Aetna and partnering with Allstate, we can come into an employer and can really say we can meet the unique needs of you as an employer as well as the very individual needs of your employee. When you think about brands, Allstate and Aetna are two brands that are known not just in the voluntary and the traditional medical business, but brands that are reputable and known worldwide. I think that there is a significant opportunity in knowing how we structured the deal, but really an opportunity to make sure that we create return to our collective shareholders; our plan sponsor customers, the brokers that we do business with, and most importantly, the people that we cover.
VBM: How do you feel the alliance brings value to the voluntary benefits industry? James Reid: We have to deliver on the value of proposition that both David [Bird] and I stated collectively for our organizations. From the beginning, I think that the alliance will create significant awareness and opportunity that the convergence of medical coverage and the traditional voluntary coverage are crossing over. This alliance highlights the fact that two companies are really coming together to make sure that they’re helping plant sponsors, helping members and brokers they do business with, and meeting the needs of their clients.
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Inpatient vs. Outpatient Observation Hospital Status by James Baker
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o detect and reduce Medicare waste, fraud and abuse, the Centers for Medicare & Medicaid Services (CMS), as well as many insurance providers, have increased scrutiny on the medical necessity of a one-day length of stay for inpatient admissions to hospitals. In response to this, hospitals are now screening inpatient admissions for Medical necessity, and educating providers, nurses, administration and other staff on the medical necessity requirements for inpatient status.
Below are a series of questions and answers on CMS’s guidelines for inpatient vs. outpatient (observation) status, which will hopefully help you become more familiar with this decision making process, since this criteria is also being used by the health insurance industry as a cost containment strategy.
What does a Medicare patient pay as an “inpatient”?
Medicare Part A (hospital insurance) covers inpatient hospital services. Generally, this means you pay a one-time deductible for all of your The result has been an increase in the number of hospital services for the first 60 days you’re in the outpatient observation patients and an increase hospital. If you are hospitalized again after 60 days in confusion on what the differences are between Medicare may apply another deductible. inpatient versus outpatient (observation) status. I recently attended a presentation by a south Medicare Part B (medical insurance) covers most of central Pennsylvania area hospital COO who said your physician services when you’re an “inpatient”. outpatient observation status admissions at their You pay 20% of the Medicare-approved amount hospital totaled ~2500 in 2007, whereas in 2010 for physician services after paying the annual Part B deductible. they totaled >5000 (100% increase). To see an example of how these guidelines are being used by the Blues in level of care audit reviews go to: https://www.bcbsnd.com/docs/ providers/29306598_4.pdf
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What is “inpatient” status?
Physicians and hospitals follow a specific set of clinical criteria (severity of illness and intensity
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of service needed to diagnose and treat) that assists in determining whether a patient meets medical necessity for “inpatient” status in the hospital. The Centers for Medicare & Medicaid Services (CMS) has specific guidelines (medical necessity) on whether a patient should be Inpatient or Outpatient Observation — depending on how severe the patient’s symptoms or condition is.
affect how you are billed and what you will have to pay for out-of-pocket.
Can a patient be an “outpatient” anywhere in the hospital, even if they were told they were being admitted to the hospital?
Yes. A patient can be receiving any service anywhere in the hospital (Radiology, Emergency Department, or nursing floor) and What is “outpatient” status? still be considered an “outpatient” according to “Outpatient” status is commonly referred to CMS guidelines. The term “outpatient” is used patients who typically go to an outpatient by Medicare and other insurance companies for department such laboratory, radiology or to the billing status only, not patient care status. Emergency Department for diagnostic services. Your physician may write an order for you to be Who reviews a patient’s health admitted as an outpatient or observation patient admission information to determine at Austin Medical Center. The observation stay the criteria? is intended for short term diagnostic testing and Your health care team, which includes monitoring, which are reasonable to evaluate physicians, nursing staff, and hospital case your condition. This is done to determine your management staff (Utilization Management), need to be admitted to the hospital as a hospital reviews the medical record for the clinical patient or be discharged to go home. information and applies the research-based clinical criteria utilized by CMS that provides Why is it important to know if a patient a recommendation for either “outpatient” or is an “inpatient” versus “outpatient “inpatient” status.
observation” status no matter if they are on Medicare or not? Your physician determines the final status If you or a family member is in the hospital more than a few hours, always ask the physician or hospital staff if you’re an “inpatient” or “outpatient or observation” because it WILL
however, if Medicare does not agree with the determination, Medicare will not reimburse the hospital for costs incurred. The hospital costs may then be billed to the patient.
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Why am I an “outpatient observation” day of your discharge. patient instead of an inpatient?
For example, a physician may have determined that a patient be on “outpatient observation” status to help decide whether the patient needs to be admitted to the hospital as an “inpatient” or whether they should be discharged. During this time, the patient is still considered an “outpatient” even while receiving hospital If a patient has been in the hospital services, which may include staying overnight over 24 hours, do they get changed multiple nights. Specific criteria (based on severity of illness and intensity of service) must be met to admit a patient to the hospital. In some cases it is not immediately clear whether you are well enough to go home or if hospitalization is needed until further testing and evaluation is completed.
from “outpatient observation” to If you are still on an “outpatient observation” “inpatient” status?
status even if you have a 3-day stay in the hospital, Medicare will not count this time toward the required 3 day minimum hospital stay for your stay in a Skilled Nursing Facility. What does a Medicare patient pay If you are ready for discharge, you may need to as an “outpatient” or “outpatient either pay part of your stay at a Skilled Nursing Facility or ask for other options for payment. The observation”? Medicare Part B covers outpatient hospital and hospital discharge planner or Social Worker can physician services. Generally, this means you assist you and your family with these decisions. pay a copayment for each individual outpatient hospital service. This amount may vary by service. Jim is employed as Sr Consultant For more detailed information on how Medicare Talent Management at the covers hospital services, including premiums, Manufacturers’ Association of deductibles and copayment, visit www. South Central Pennsylvania and a medicare.gov/Publications/Pubs/pdf/10050.pdf member of the Society for Human to view the Medicare & You Handbook, or call Resource Management. He is certified as Senior 1-800-MEDICARE (1-800-633-4227). Professional Human Resources (SPHR); past president of MASCPA affiliated Employee How does “inpatient” versus Relations Council; past president of Hanover “outpatient observation” status in Area Management Association; past president of the hospital affect the way Medicare Hanover Area Human Resource Association; Past covers care for the patient in a skilled president of York Personnel Association, and past nursing facility (or nursing home)? chair of Baltimore Industry (OFCCP) Liaison Medicare requires a “qualifying hospital stay” Group. A graduate of York College of Pennsylvania for Medicare A to cover care within a skilled with a Bachelor of Science degree in Accounting, nursing facility. A qualifying hospital stay is Jim earned his Masters of Administrative Science defined as a hospital “inpatient” for a minimum from Johns Hopkins University. Jim can be of 3 days in a row — counting the day you were reached by emailing jbaker@mascpa.org admitted as an inpatient, but not counting the No. A patient status is only changed if they meet full “inpatient” medical necessity or severity of illness criteria.
Bio
National Healthcare Reform Magazine
HRAs ~ Time and Money Well Spent by Dr. Don Hall In response to Lisa Holland’s April 1, 2011 National Healthcare Reform Magazine article, “Health Risk Assessments: A Waste of Time and Money” (promoting Simplicity Health Plans)
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here is usually a grain of truth in most dissenting opinions regarding the proper way to manage an employee wellness program. It is true that we know what most people need to do to improve their health – namely, eat more healthfully, eat less, and exercise more. You don’t need a health risk assessment (HRA) to tell you that. But are HRAs a waste of time and money?
have to find out what each individual needs to see the most improvement.
Most people are overweight, but a third of the population is not. Some have high blood pressure, high cholesterol, or high blood sugar, but the majority does not. It’s vital for each person to know what his or her major health risks are and what specifically can be done to minimize the risks and prevent serious health problems in the I suppose the same question could be posed future. That’s the primary purpose of an HRA. about medical care. Since we already know which health problems are the most common Here are several excellent and proven reasons and what most patients need to do to correct why you do need a good health assessment at them, why should a doctor waste time and the start of a wellness program. money doing physical exams and blood tests? The answer to both questions is the same: You 1. Each individual needs to know what
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his or her major health risks are. Some are obvious, such as smoking and obesity. Others are not. Those include high blood pressure, high cholesterol, specifics about poor eating habits (i.e., low intakes of fiber, fruits, vegetables and whole grains), and symptoms of depression. 2. Each individual needs a Personal Prevention Plan – specific steps on how to lower identified risks and how to specifically improve health. A good HRA provides this information with personalized and specific guidelines for lowering the risk of heart disease, diabetes, cancer, improving eating habits (based on their individual needs), improving their fitness level, etc. 3. HRAs establish benchmarks. When a company starts a wellness program, it is important to have benchmarks – both for individuals (weight, cholesterol levels, activity levels, eating habits, mental health indicators, etc.) and for the organization (number of smokers, number of sedentary individuals, number of employees with signs of depression, etc.) so you can measure change and improvement. Before HRAs became readily available, people ran wellness programs “blind” – without knowing anyone’s health needs, company-wide health needs, or benchmarks. Then when administrators were asked if their wellness programs were successful, no one knew. They had no way to measure improvement. Are there fewer smokers now? Are people eating more healthfully? Are more people exercising now? How can you tell a person that he or she has improved this year (or not improved, as the case might be) unless you can compare current results with earlier benchmarks? Without a good HRA, you wouldn’t have a way to track improvement year by year, which means you couldn’t show if your program is beneficial. Measuring outcomes is critical for documenting improvement and benefits from your program.
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4. You can identify groups with specific needs for intervention. If you are a wellness coach working with people to improve their health, would you want to work blind – and not know their health needs or practices? Or would you rather have a wealth of information with recommendations at hand so you could talk to people intelligently and specifically about their health? A good HRA lets you query the database to find specific groups that need special attention. This is invaluable for inviting people with specific needs to an intervention.
National Healthcare Reform Magazine
For example, if you have a new intervention on 7. Family history is not as important as personal stress management, wouldn’t it be valuable to information. It’s true that government regulations specifically invite those who have signs of stress? have limited data gathering by disallowing family health history and personal genetics questions on 5. Self-reported information IS reliable and is HRAs in certain circumstances. But while family the most common way health information is history is important, it isn’t critical. In fact, in collected. When an HRA is conducted properly the esteemed Nurses’ Health Study, women with and people are assured that their information will modifiable risk factors for diabetes had the same not be seen by management, but used only for risk whether or not they had a family history of their own benefit, the information gathered is quite diabetes. A good HRA report will point out to reliable. Nearly all health studies conducted by the individuals if they have a history of early heart government and research programs are based on disease, diabetes or cancer, they may be at even self-reported questionnaires. All good HRAs also higher risk. include collecting biometric data such as height and weight measurements, body composition, I know that no good doctor would ever treat a blood tests, blood pressure, and fitness tests. These patient without gathering a medical history and data increase the HRA’s accuracy and objective doing health tests and examinations. Wellness results. In her article, Lisa does point out the value counseling and assessment need to be given the of collecting biometric data. If you collect this same careful attention and professional treatment data, you need to record it in a database so you can to help companies achieve high quality outcomes track any changes, do group statistics, and show with their wellness programs. HRAs, which can individuals their results. A good HRA does all of be done inexpensively and quickly online, provide this automatically. a rich and beneficial addition to any wellness initiative. 6. Health insurance claims don’t tell the full picture. For example, if a person is taking a beta blocker, does he or she have high blood pressure, coronary heart disease, or a heart arrhythmia? Do Fitness, nutrition, and health you want to wait until a person is taking diabetes promotion expert – Dr. Don Hall medication to identify who has diabetes, or would has made good health his life’s you rather have the ability to identify pre-diabetes work. Don Hall holds a Master or those who are at risk of developing diabetes, in Public Health (MPH) degree long before they start taking medication? People in Nutrition and a Doctor of Public Health with undiagnosed diabetes (a sizeable part of (DrPH) degree with an emphasis in Preventive the population) who also have depression or Care, both from Loma Linda University. He hypertension won’t be found at all just by looking is also a Certified Health Education Specialist at health claims. But they would be identified with (CHES) and an active member of the American a good HRA and biometric screening. Claims College of Sports Medicine (ACSM). In the data will give you some information, but it can’t early 1970s, Dr. Hall founded Wellsource, Inc. paint a complete picture. It is largely “reactive” – As Chairman, Dr. Hall continues to lead the identifying people who already have disease rather company into an era when being healthy is not than finding those at risk for developing disease. only a good idea – it’s good for all businesses.
Bio
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Disease Prevention through Healthy Lifestyle Choices ~ Fitness and Proper Nutrition by Deborah MacArthur
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he mere mention of the words cancer, heart disease and diabetes strikes fear in all of us. These and other disease can affect the young and old, strong and weak, male or female. There are studies, theories, and a multitude of proposed ideas on preventing diseases. New studies show that certain diseases can be prevented through healthier lifestyle choices, including regular exercise and a good nutritious diet. By taking care of the body through proper nutrition and being physically active, it is possible to help ward off mysterious and often fatal diseases.
body function, and better sleep and reduced fatigue. Research indicates that exercise can prevent certain diseases and cancers. Here is some food for thought: • Exercise reduces obesity, which has been noted as major factor in some forms of cancers and other diseases. Generally, people who exercise grow into other good lifestyle habits including eating healthier to stay fit.
• Exercise speeds up your metabolism, which helps flush out food waste and other harmful substances. These toxins travel at a faster rate through the Regular exercise offers numerous health benefits, digestive track, which decreases the time that the including an improved sense of well being, increased colon tissue is exposed to waste and toxin. strength and flexibility, toned physique, increased
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• Exercise helps to balance hormone levels, which are often linked to certain cancers. The female hormone estrogen seems to play a key role. Exercise lowers blood estrogen, which helps lower the risk of breast cancer. Exercise also reduces other cancer-growth factors such as insulin. • Dr. Inge Haunstrup Clemmensen, of the Danish Cancer Society, has theorized that regular exercise can boost the immune system, and having a strong immune system can stop the growth of cancer cells. Research by the American Cancer Society has indicated that an inactive lifestyle and poor diet are key factors to increased cancer risk, it becomeswhich makes imperative to add exercise into your daily schedule. Below are some suggested activities to engage in that will burn fat and boost metabolism. Keep in mind that the benefits of exercise increase as you increase the intensity: 1. Brisk walking: This can be done indoors on a treadmill, or outdoors around the neighborhood, or on a nature trail. 2. Yoga: A great stress reliever, as well as good physical activity. 3. Dancing: You can put some music on and dance at home in your living room, at a dance studio or at the health club. Zumba and other dance-based aerobic classes are popular offerings. 4. Swimming: Uses all muscles in the body and is a great cardio exercise, which is gentle on the joints. 5. Tai Chi: This form of martial arts promotes good health through controlled breathing and slow moving exercises.
7. Organize a team sport through your workplace: This is a great way to be active, get involved with coworkers and enjoy some healthy competition. These are just a few suggestions, but the message is that everyone needs to be active, get up and move! National activity guidelines suggest at least 30 minutes of exercise most days of the week. There are other small steps you can take to increase your level of activity. When you are at work, walk to your colleague’s office instead of picking up the phone or sending an email. Take a walk after lunch with your co-workers. Don’t take an elevator if you can take the stairs. Each day make a conscious effort to be active and make good choices. The other side of the healthy living coin is proper diet and nutrition. By making good food choices, you can build a strong and healthy body. The American Institute for Cancer Research (AICR), scientists believe a diet based predominately on
6. Cycling: Whether on a traditional or stationery bike, this is a great cardio exercise.
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and proper nutrition into your daily schedule. This is an area of your life that you have control over, and making the proper choice may save your life someday. Keep in mind that the choices you make each day regarding exercise and nutrition impact your chances of getting cancer. You can begin taking steps today to protect yourself against cancer, heart disease and other diseases. Many companies offer corporate wellness programs to provide the support and resources to their employees to make a healthier lifestyle a reality. If your company doesn’t offer a corporate wellness program, consider being an ambassador at your workplace. You can suggest initiating a wellness program to your human resources department or company management. Your efforts will not only benefit you, but they might be instrumental to affecting others to make healthier Below are recommendations regarding healthy lifestyle choices to prevent obesity, diseases, cancer lifestyle choices that will help prevent cancer from and maybe even save someone’s life. the AICR’s Expert report. These coincide with the recommendations from the American Cancer Society: plant-based foods may help protect against certain cancers. This type of diet includes vegetables, beans, fruit and whole grains. The fiber and water in plant foods gives a feeling of fullness without supplying a lot of calories. AICR recommends that two-thirds of your plate should be filled with vegetables, beans, fruit and whole grains, and one-third or less animal protein.
1. Be as lean as possible without becoming underweight. 2. Be physically active for at least 30 minutes every day. 3.Avoid sugary drinks. Limit consumption of energy-dense foods. 4. Eat more of a variety of vegetables, fruits, whole grains and legumes such as beans. 5. Limit consumption of red meats (such as beef, pork and lamb) and avoid processed meats. 6. If consumed at all, limit alcoholic drinks to two for men and one for women a day. 7. Limit consumption of salty foods and foods processed with salt (sodium). 8. Don’t use supplements to protect against cancer. There are a multitude of reasons to fit regular exercise 30
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Bio
Deborah MacArthur is the Director of Marketing and PR for FACTS Fitness, a Commercial and Corporate Fitness Management Company located near Philadelphia, PA. FACTS Fitness is a one stop fitness management company offering corporate wellness and fitness programming, fitness staffing, fitness center design, corporate fitness IT programming, multitenant fitness facilities and more. To learn more about FACTS Fitness services including corporate wellness programming, fitness management, fitness center design, etc. please visit www.factsfitness.com, email info@factsfitness. com or call 610-355-3236.
National Healthcare Reform Magazine
Diabetes and Its Effect on Future Employer Health Costs - Guidance for Employers by Jonathan Spero
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iabetes is a disease caused by elevated blood sugar with medical complications, which are costly and devastating. According to the Centers for Disease Control and Prevention (CDC), the number of diabetics in the United States has grown to nearly 26 million, a 10 percent increase in the past 2 years.
of obesity, currently two-thirds of the U.S. population is either overweight or obese. In addition, the average age of the U.S. population is steadily getting higher secondary to people living longer and the baby boom generation now all above the age of 50.
What is more alarming is that, according to the CDC, over 79 million adults in the U.S. are classified as pre-diabetic, a precursor of diabetes. This is a 33 percent increase in the past 2 years. According to the CDC, it is predicted that 25 to 33 percent of the U.S. adult population will have diabetes in 2050. (1,2,3)
Well, it turns out that the cost of health care for people with diabetes is 230 percent more expensive than for people without diabetes according to the American Diabetes Association. (4) This statistic has been confirmed by a recent report from United Healthcare, which compiled data from 10 million members and found that the average annual health care costs in 2009 for a person with known diabetes were about $11,700 compared with about $4,400 for the non-diabetic public – 260
So why are so many Americans developing pre-diabetes and diabetes?
The prevalence of diabetes is directly related to increased weight and age. With the epidemic
How will this impact employers?
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of this decade it is estimated that medical care for pre diabetes and diabetes will account for ten percent of the total healthcare spend in the U.S. Employers will bare a significant portion of this financial burden.
diabetes are not aware they have it.(5) Therefore, screening for diabetes is critical to diagnose the large population of persons who are undiagnosed. Furthermore, screening also identifies the much larger population of persons with pre-diabetes, a precursor Why is care for diabetes so expensive? of diabetes. To start, the actual medical care required to treat -Employers can screen their entire employee diabetes is costly. Furthermore, the complications of population for diabetes easily and inexpensively with diabetes are very serious and enormously expensive to a simple blood finger stick. treat. These conditions include heart disease, kidney disease, eye disease, nerve disease, and many other Prevention - – Modest weight loss achieved by conditions. lifestyle coaching can prevent persons with prediabetes from every developing diabetes. In fact, So what can employers do to a large, nationally recognized study published in address this issue? the prestigious New England Journal of Medicine The solution for this issue requires a three-pronged demonstrated that achieving a modest 7% weight approach – screening, prevention, and disease loss goal resulted in a 58 percent% reduction in the management. The necessary tools are currently incidence of diabetes in a high-risk population that available for employers to tackle all three. Let’s take had pre-diabetes.(6) a closer look at what these initiatives are and why all -Employees with pre-diabetes must be encouraged to three are necessary. enroll in diabetes prevention program with a focus on proper nutrition and exercise. Screening - – Almost 30 percent of persons with
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Disease Management - By all measures, diabetes is sub-optimally managed by physicians in the United States. Poorly controlled blood sugar and lack of routine maintenance care leads to an accelerated risk of complications and increased healthcare costs. Several key diabetes studies have demonstrated that proper disease management intervention not only significantly improves HEDIS scores but also reduces healthcare claims for those patients enrolled in the program. -Employers’ investments in diabetes disease management programs show promise in delivering both short term and long-term health and financial benefits. In summary, diabetes is an epidemic that will significantly impact the cost of healthcare for employers in the near future. There exists well thought out strategies for addressing this issue that demonstrate a clear return on investment.
Bio Jonathan Spero, MD, is CEO of InHouse Physicians and board certified in Internal Medicine. Dr. Spero is an expert in the field of targeted employee wellness programs with measureable ROIs. InHouse Physicians is a global employee health and wellness provider delivering innovative cost containment solutions to corporations around the world. InHouse Physicians high touch employee health services include a wide range of offerings such as cost effective worksite health centers, evidence based “pre- disease” wellness initiatives, health screenings plus analytics, flu vaccinations, and travel medicine.
References 1. Narayan KM, Boyle JP, Geiss LS, Saaddine JB, Thompson TJ: Impact of recent increase in incidence on future diabetes burden U.S., 2005-2050. Diabetes Care 2006, 29(9):2114-2116. 2. Magliano DJ, Shaw JE, Shortreed SM, Nusselder WJ, Liew D, Barr ELM, Zimmet PZ, Peeters A: Lifetime risk and projected population prevalence of diabetes. Diabetologia 2008, 51(12):2179-2186. 3. U.S. Census Bureau. National Population Projections Released 2008 (Based on Census 2000). 4. American Diabetes Association: Economic costs of diabetes in the U.S. in 2007. Diabetes Care 2008, 32:596-615. 5. 2005–2008 National Health and Nutrition Examination Survey. 6. Diabetes Prevention Program Research Group N England Journal of Medicine 2002; 346:393-403 February 7, 2002.
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Healthcare:
Cheaper, Better & Faster is The “New” Game
by Rajeev Mudumba
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evisiting an old management truism, a business must execute cheaper, better and faster to do well. But alas, the magic formula has its own limitations. If you want high quality at a low cost, then it will take a long time. If it’s high quality at a fast pace, then cost will take a hit and if it’s low cost at a high speed, quality will go down.
hand. The solution is not viable just with reach; it has to produce the promised results. That’s where quality comes in. As for costs, the lower they are kept, the simpler healthcare is to manage and the further its reach. Healthcare can be efficient while effective, accessible and still reasonably priced.
In today’s environment of healthcare reform and changing health dynamics, the success of future Now, this does not hold true for healthcare. Speed healthcare is hinged on doing better for less. And in terms of healthcare translates into the urgency enterprises are awakening to this. Infact, some are to respond as well as the reach of that response. already headed in that direction. In other words, it translates into how many more people have access to service and how quickly in According to a study conducted by Thompson case of need. Healthcare is a high accuracy science Reuters, out of the $2 trillion spent on healthcare, and hence, efficiency and effectiveness go hand in $700 billion is spent correcting preventable
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mistakes and errors [1]. There is an estimated $250 billion spent on unnecessary procedures. In other words, about a trillion dollars in savings are waiting to be discovered. With that much money, we could more easily afford universal healthcare. And when I say universal, I am talking about healthcare that is accessible to all. The Centers for Medicare & Medicaid Services data shows that the agency spent $4.4 billion in 2009 on care for patients harmed in hospitals and another $26 billion on patients who were readmitted within 30 days [2]. According to the Kaiser Family Foundation, U.S. spends twice or more while leaving millions uninsured than other comparable countries such as France, Australia, Germany, Japan etc. which spend less while covering everyone in their countries. Not only that, WHO studies have shown that we get less bang for our buck when compared to these countries. Countries that are ahead of the U.S. in such studies have reflected valuable lessons we need to take note of. Countries offering universal healthcare have shown that the care offered is the same to all citizens irrespective of their economic status. Canada, France and Israel have shown that investments in primary care are important [3]. Availability and accessibility of primary care to all ensures, that in the long run, there is a lower incidence of the need for urgent care which is both expensive and puts pressure on the available resources. Primary care advocates the wellness philosophy of prevention, thus helping control and minimize cases where a cure is needed. Britain and France have advocated the optimization of non health personnel that are not doctors [4]. Nurses, midwives, physician assistants etc. have their roles to play but can be optimized to service patients where a doctor’s expertise is not necessarily required. These
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personnel can play an effective role is spreading the reach of healthcare to remote areas and to non urgent clinical situations. These countries have championed the cause of guaranteed treatment taking out the debate around what is insurable and what is not, who can get treatment and who cannot. As a result, doctors can do what they are trained for, which is, manage people’s health instead of managing the business of health.
National Healthcare Reform Magazine
with their own issues. They face the same healthcare inflation that we do in the U.S. This results in higher taxes to sustain the system they have in place. These countries are also seeking avenues to fight the rising costs of healthcare. But, they have a better percentage of satisfied citizens than we do. Governmental intervention in healthcare is a double edges sword. On the one end, it is a major cause of today’s high and rising healthcare costs. Medicare, Medicaid, and tax deductibility of employer provided health insurance created a system in which patients at the point of service pay only a fraction of their medical bills out of pocket. This subsidized system puts pressure on the available resources and those guaranteeing services. On the other hand, the expectation is that the Government intervenes further in guaranteeing healthcare access to all while also bringing costs down. Healthcare is a service business and should be treated as such. Today, healthcare is big business generating multimillion dollars in profits for the service providers, hospitals, insurance companies and drug companies among others. It would be a culture change to move from this model to one where it’s treated as primarily a service business administered at reasonable costs and profits. U.S. investors say they are focused even more intently than before on companies with products that aim to lower the cost of healthcare. Entrepreneurs are now thinking in terms of making healthcare Prescription drugs are also relatively cheaper in the more efficient. Just based on what we already know, East than in the West. Reason; governments ensure let us review some immediate steps that can be taken that there is fair trade practice associated with drugs. to see results in the right direction. In France and Japan, any injuries as a result of medical errors are promptly covered removing the 1. Focus on Primary Care - As we have discussed need for medical malpractice law suits [5]. before, countries that are doing better than the U.S This does not mean that healthcare is totally on the right track in these countries. They are wrestling
in healthcare have shown that they have focused on primary care. Primary care ensures that preventive steps are taken proactively to reduce the risk of
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chronic conditions later. We should focus more on extending quality primary care to all and ensure that citizens are educated about primary and preventive care. Another point to note is that in countries like France, medical education is either free or highly subsidized. As a result, doctors are not burdened with loans once they finish their education. They have similar opportunities whether they specialize or go into primary care. In the U.S., doctors end up with huge loans by the time they complete their education. They look for more lucrative careers and hence, pursue specialties since a specialist earns far more than a primary care physician. Steps need to be taken to bring primary care on par with other specialties so that primary care attracts quality health practitioners as well. Medical education can be subsidized to alleviate the loan burden on those who pursue it. Also, instead of relying solely on doctors, nurse practitioners can be leveraged to provide primary care across the country. Any or all of these measures will reduce costs, increase the reach and quality of healthcare. 2. Streamline and Digitize Medicine - Universal application of information technology to digitize patient records, physician practices and the interactions between healthcare providers, insurance carriers, third party administrators and Federal/ State bodies will ensure lower costs and increased efficiency. Electronic Healthcare Records (EHR) and Computer Physician Order Entry (CPOE) are a step in the right direction. eHealth, Teleradiology and other advancements in eMedicine help improve accuracy while simplifying procedures. These investments today are poised for great savings in the future. 3. Standardize Prevention & Maintenance Chronic illnesses are on the rise in the U.S. and the world. Chronic diseases are the number one cause of
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death and disability in the United States. According to Centers for Disease Control and Prevention, more than 133 million Americans, 45% of the total population, have at least one chronic disease. Chronic diseases kill more than a million Americans each year, and are responsible for 7 of 10 deaths in the United States. Chronic diseases account for 75% of the nation’s health care spending. Advocacy of health based prevention and regular health checkups are a precursor to tackling them. As a standard, if people have regular preventative health maintenance similar to the vaccine schedules and well baby checkups for children, most of the chronic illnesses can be prevented or caught at onset. When caught early, they are easier and cheaper to manage. 4. Manage Healthcare Accessibility - Healthcare costs vary within our own borders in the U.S. Based on the doctor-patient ratios in various locations, the number of patients seen by a practice also varies. As a result, there are rural locations where costs are less relative to urban locations and further, due to the lower doctor-patient ratio in such areas, the quality of care is also better. Such models should be propagated across the country. When the doctorpatient ratio is balanced in any area, it ensures better quality outcomes and can ensure balanced costs. To take healthcare to the most remote corners in the country, India is adopting telemedicine among its rural populace in a huge way. A foundation had been laid for a health superhighway to make the promise of universal healthcare a reality. The health superhighway will connect a chain of hospitals; both government and private through applications like telemedicine, mobile software and wireless networks so that doctors can connect with villages in India. Embracing technology and relying on resources other than just doctors to raise awareness levels helps lay the path to better health.
National Healthcare Reform Magazine
5. Tighten Control on Costs – In India, there is a growth in investments in a niche market for smaller companies that want to make healthcare affordable, accessible, and ubiquitous. They offer high quality services similar to their larger counterparts, but costs are kept under a tight leash. The aim is to have hospitals that are accessible and efficient, run with a tight control on cost, and a firm grip on pricing. These companies are geared towards catering to the middle class and lower economic status clientele but without compromising on quality and service. Some of the innovative steps taken by them to cut costs include shared resources, mobile clinical units and scheduled procedures in various locations where healthcare is not accessible. Innovation is key to control costs. There is a lesson to be taken from this example that shows that a uniform quality of service at reasonable costs can be provided to the farthest reaches of our society by leveraging innovative practices. 6. Advocate Checklists - Critical procedures can be monitored using simple checklists. These simple steps hugely contribute in minimizing medical errors as well as trauma and costs associated with such errors. ICUs in Michigan use a simple checklist famously chronicled in “The Checklist Manifesto” written by a cancer surgeon at Johns Hopkins, Atul Gawande. As we have seen before, a major chunk of healthcare costs are attributed to medical errors that are preventable. Adopting a checklist includes ensuring that simple things like hand washing and donning sterile gloves are done and it proved very effective.In the first year, the Michigan hospitals reduced infections by two-thirds, saving 1,500 lives.
Seton Family of Hospitals has shown successes in patient safety. They have adopted a nurse-led initiative that virtually eliminated bed sores, ranking Seton first internationally. Major reductions in infections were achieved. Seton has also dropped its birth injury rate to zero by putting best practices for obstericians around birthing processes. In 2003, when the safety initiative began, Seton billed Medicaid $500,000. In 2009, Medicaid was not billed at all [6]. This is just the beginning of a list. Further thought and discussion on this matter can provide several avenues for continuing the task of improving our healthcare infrastructure and services. Even without reinvention, restructuring our current healthcare system to make it cheaper, better and faster is a definite reality.
Bio Rajeev Mudumba works with a leading HRO/ Healthcare organization. Rajeev has over 16 years of leadership experience in the HRO, Healthcare and Technology consulting industries. His distinguished record of accomplishment and innovation includes high level strategy and ideation, precise execution and enhanced focus on efficiencies through the use of technology in business across various verticals. He can be contacted at rajeevsagar@gmail.com.
References: 1. Joe Flower, 15 Ways to Make Healthcare Cheaper by Making it Better 3,4,5. Arthur Caplan, Ph.D, Spinning the globe offers lessons in health care. What does the rest of the world know that we don’t? - By Arthur Caplan, Ph.D – msnbc.com, Sept., 18th, 2009 2,6. Tony Inglis, Efficiency can make health care better and cheaper, May 10th, 2011
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