20th Century Health Plans in a 21st Century

It’s almost kind of shocking to realize that we’re fourteen years into the new Millennium; doesn’t Y2K seem like a long time ago?   On the face of it, it would seem that health plans have never had so much change thrown at them as they have in just this decade of the new Millennium – mostly but not entirely due to ACA -- yet sometimes I worry that the changes they are going through are more like trying to put jet engines on a biplane instead of taking the time to truly redesign the plane.  It might work, but chances are it’s going to crash. 

It’s high time we rethink what health plans are and what they do.  I’ll give an example later on.

Let’s face it, health plans are not often known for speedy processes or use of the latest technology.  A recent report by HealthEdge (which, it must be said, has a vested interest in the topic) highlighted the continued use of “antiquated legacy technology.”  The health plans surveyed overwhelmingly saw the need to automated manual processes (81%) and increase auto-adjudication rates (56%).  It’s easy to look down on CMS for what happened with healthcare.gov, but if anyone was to probe very deeply into health plans’ technology, I suspect they’d have more than their fair share of embarrassing examples as well.

Health plans are trying hard to change.  They absorbed the requirements to cover dependent children, have started to live with the new medical loss ratio (MLR) standards, have revamped their benefit designs to fit the ACA standards (which, of course, resulted in the wave of cancellations that hurt ACA almost as much as the healthcare.gov debacle), and have totally changed their rating and underwriting processes in the individual market.  Those are huge changes, but are only the beginning.

The exchanges and the individual mandate have woken insurers up to the realization that health insurance is going to be retail in a way we have never seen before.  Aetna CEO Mark Bertolini predicts all this will cause health insurers to spend billions on consumer marketing (which, of course, will impact those MLRs).  Many health plans saw that future well before ACA.  Florida Blue opened its first retail store in 2006, and not only have they subsequently added more stores but numerous other health plans have followed suit – e.g., Highmark, Kaiser and United Healthcare.  Aetna has its own retail approach, partnering with retail chains like Best Buy and Costco.

The payor consumer strategy is not only bricks but also clicks -- Chilmark Research just released their Payer Benchmark Report 2013, and one of their key findings was how health plans’ use of consumer tech to engagement with members has exploded.  A PWC report reached the same conclusion, noting that health plans especially need mobile options to win the highly desired “young invincibles.”

Despite the health plans’ efforts, consumers’ opinion of health insurance companies remains largely negative – a Kaiser Foundation poll found only 43% had a favorable opinion (and, frankly, I’m surprised it was that high).  Worse yet, consumers with more recent experience with a health plan only had 35% with a favorable opinion.  Health plans seem to shoot themselves in the foot when it comes to dealing with consumers.

I think they’re doing it again by the explosion of narrow networks in the exchanges.  The idea, of course, is that health plans can offer lower premiums by limiting their networks to lower cost providers, assuming (correctly) that consumers are highly price sensitive when looking at premiums.  It also may be a not-so-subtle way of getting around the guaranteed issue requirements; consumers with more complex health problems may be more likely to be associated with higher cost providers, such as academic medical centers, and the exclusion of such providers from the narrow networks may well keep those sicker patients from enrolling in plans utilizing them.  

It’s a double win for the health plans – able to offer lower premiums due to including only lower cost providers and by attracting lower cost patients – but one that may prove short term.  I think it’s a short term strategy, because neither providers nor patients are stupid. 

Health plans tried narrow networks, and tight utilization management techniques, in the early 1990s, and they were successful in reducing cost increases, but a combination of provider consolidation and consumer backlash forced them to back off.  How long until the same happens in the exchanges?

I think we should move past the concept of networks entirely, and that’s an example of how I would revamp health plans.  Instead of managing a network – deciding which providers are in and out, negotiating reimbursement contracts with each of them, etc. – why couldn’t the health plan act as a “provider broker” for consumers? 

In this approach, the health plan’s role is to help consumers find the right provider for them, based on cost, quality and other consumer preferences, rather than to select the set of providers consumers need to pick from.  And I don’t mean giving them, say, a selection of ACOs or other integrated delivery service and then locking consumers in to one of them in for all services.  I mean, given a specific health need, helping the consumer get to the right provider(s) for that need.  Just because an ACO is best at caring for diabetics doesn’t mean anyone should also get their heart transplant there.

All of a sudden the health plan would go from being seen as limiting choice to being seen as enabling choice.

Current transparency efforts by payors or the many vendors that have popped up in this space really only help consumers find providers within the network of the health plan they are already enrolled in, which is very different than helping them find the “best” provider anywhere.

To facilitate comparisons, the costs would have to be all-inclusive, bundled rates for specified sets of services.  Providers would probably have to bid on their rates (which may not vary by payor), and coordinate between the various required providers.  To avoid the local monopoly problem, available options should include providers in other areas, especially for high-risk, non-emergency types of care. 

In this role, if the health plan still has financial responsibility – and I do not take that as a given that they would – I expect they would have to use a reference pricing approach, so that consumers could choose whatever provider they wanted but would be liable for any amounts providers charged over the reference price.  That will make both providers and consumers price sensitive very quickly.

Health plans sell an extremely complicated product that consumers don’t understand, don’t like, and think is too expensive.  Providers also see them as administratively burdensome and with a penchant for interfering with care delivery.  So who is it that wants to keep health plans structured as they are?  Surely in 2014 we can do better.  Let’s stop tweaking an outdated structure and rethink the entire approach.

They Shoot EHRs, Don't They?

For all of us who have been waiting for EHRs to revolutionize health care, well, I fear we may have to wait a while longer.  Many a lot longer.

That may sound odd, because there would appear to be lots of good news on EHR adoption.  Karen DeSalvo, the National Coordinator for HIT at HHS, thinks so.  She reports that nearly 80% of office-based physicians use some type of EHR, almost 70% of office-based physicians intend to participate in the federal EHR incentive program, and 48% use a system that qualifies as at least a “basic system.”   Indeed, CMS reports over $16b in EHR incentive payments – to 386,000 professionals and 9,400 hospitals. 

That’s all good news, right?  Not so fast: witness an article in The New York Times on the growing use of “scribes” to do the actual input into the EHR for the physicians – often being right in the exam room with the physician.  The article cites several sources who see the input as purely clerical.  “Making physicians into secretaries is not a winning proposition,” says one primary care physician in explaining the problem.  The cost for these scribes is typically borne by the practice, and is made up by improving the physicians’ efficiency in seeing more patients.

Somehow I can’t help but feel we’ve taken a wrong turn somewhere on the road to EHRs.

CMS has spent $16b to incent EHR adoption, hospitals and providers have spent some multiple of that amount to buy and install the EHRs, and yet practice overhead – and probably health care spending -- is going up in order to pay for scribes to actually use them?  No, that’s not good news.

It’s worse than that.  A report released last fall from RAND and the AMA found that the current state of EHR technology has significantly worsened physician dissatisfaction in multiple ways, including poor usability, data entry, impact on face-to-face interface with patients, and conflict with clinical workflow.  Physicians like the concept in principle – just not in actual execution.

ONC knows usability is an issue, and claims it is a priority.  They note that barriers include that fact that the buyers often aren’t the actual users, that it’s hard to change EHRs once implemented, and that they exist in the context of legacy software that is hard to change.   All are valid barriers, and none are ones that are likely to change in the near future.

One would like to imagine that all the EHRs that have been put into place reflect thoughtful analysis of the costs and benefits from the hospitals and physician practices, but that may not be the case.  The IOM just released a proposed standard model for evaluating ROI on EHRs, which seems like a good idea…five or ten years ago, before all those billions had been spent.  One wonders what kind of analytical models have been used in the meantime; I hope the purchase decisions weren’t simply due to the desire to not miss out on HITECH incentives.  

Even worse, another recent report from RAND did a meta-analysis of studies involving health IT, and found less-than-robust results.  As the authors say, “[A]lthough the health IT evaluation literature base is expanding rapidly, we are concerned that there has not been a commensurate increase in our understanding of the effect of health IT or how it can be used to improve health and health care.”  They conclude, “the health IT literature is expanding rapidly but failing to produce a commensurate amount of useful knowledge.”  We’re not only not producing useful knowledge but we’re also not even quite sure how we should be studying the impacts of HIT.  

We may be in the era of “big data” in health care, but we’re not be in the era of useful data yet.

Adding insult to injury, a report from IDC Health Insights found that 38% of documents used in health care are still paper (and I find that way, way too low), a third of which just get typed into a computer at some point.  And, according to IDC, 62% of health care workers say volume of paper has increased or stayed the same over the past few years, despite the huge increases in EHR adoption.  Those findings illustrate that EHRs are simply adding work, not replacing it or making processes more efficient.

Hard as it is to believe, the increased physician dissatisfaction, lack of evidence of improved outcomes, and questionable ROI are not the only bad news.  OIG released a report earlier this year that warned that CMS has not done enough to deter fraud and abuse associated with EHRs, such as the use of “cut-and-paste” functions that may help providers document care that was not actually provided.  OIG warns such practices may have led to $75b to $250b in healthcare fraud.  That’s serious money.

So, yes, overall it’s hard to see that we’re getting the desired bang for our EHR buck.

I am deeply sympathetic to physicians, but -- unless they also had scribes for their paper records (or dictated notes for transcriptionists) – that sympathy has its limits.  Moving to EHRs undoubtedly requires significant changes to clinical processes in order to be fully effective.  I worry that physicians who employ workarounds such as scribes may not have truly evaluated what changes the EHR means for their practice.  Reengineering work processes is one of the hardest things for any business to do, but if any industry needs it – EHRs or no EHRs – it is health care.

Nor am I buying the argument that physicians are computer or technology phobic; a study last year from Epocrates found 86% of physicians use smartphones in their professional activities, and 53% use tablet at work.  Not exactly a bunch of Luddites.  I blame the design of EHRs.

A well-designed EHR shouldn’t be harder than paper records to keep, view, or add to, while they should provide much, much better ability to detect trends, receive real-time warnings or suggestions, and move data from one provider to another.  It should fit into and improve clinical workflows.  So why don’t we have such well-designed EHRs?

I wonder if HITECH has had the effect of impeding progress.  Lots of smart people have done lots of hard work in coming up with the federal certification process and meaningful use standards, but federal standards are not usually associated with innovation.  In fact, what other industry (besides education, which is its own sad story) needs federal incentives to computerize its processes and go digital?  Our big investment in EHRs is well on its way to being used to raise costs and decrease efficiency.  You have to admire the U.S. health care system for its chutzpah. 

I don’t normally drink the Apple Kool-aid, but when it comes to EHRs I’m wondering where the Apple-like products are, ones that surprise and delight their users.  Apple didn’t need federal funding to develop the iPod, iPhone, or iPad, nor did their users ask for incentives to buy them or to change the way they access music, movies, or a host of other parts of their lives.  Nor do those users typically hire other people to hit the keys for them.   

What I don’t think we’ve really done is fundamentally rethink the concept of a patient record.  We shouldn’t be simply putting the paper record in an electronic format; we should be creating a 21^st century version of it – interactive, visual, collaborative.  It should be part of the clinical process – not an impediment to it -- and should serve as an added diagnostic tool.  Its use should delight clinicians and make their jobs easier, not force them to hire scribes to use them on their behalf.

If any organization is doing that, I’d like to know about it. 

Does Anyone Know What Price it Is?

I’ve written before about the almost comical lack of transparency in health care pricing, such as the inability of hospitals to quote their own prices for hip replacements or ECGs.  Yet the fodder for illustrating this problem just keeps on coming.  

A recent survey by Okike, et. alia in Health Affairs focused on orthopedic surgeons at seven U.S. academic medical centers.  The 503 respondents were asked to estimate the cost of thirteen commonly used orthopedic devices.  Only 21% of attending physicians (and 17% of residents) could guess within 20% of the actual cost of the devices…although I’m left wondering where the authors were able to get the “actual” costs from!  What is even more startling is that their guesses ranged from 2% of the actual price to 25 times the price.  Eighty percent of respondents felt that cost should be moderately, very, or extremely important in device selection, but obviously they lack the necessary information to make such evaluations. 

I’d be curious how close the costs ranged between the seven institutions that participated; in both the hip replacement and ECG studies cited above, the prices ranged about tenfold for the few institutions that could provide them.  It makes one wonder if lack of transparency on prices is often as much due to embarrassment as any desire for secrecy.

Patients aren’t much better about costs.  A recent survey by the Altarum Institution found that only 32% of patients had asked for cost information prior to obtaining health care services in the past twelve months, and 35% had tried to find quality information.  Frankly, I’m surprised the numbers are that high.  Eighty-one percent claimed they were comfortable asking for cost information from their doctor, yet only 46% had ever done so.  And, really, what are the odds they’d be able to get an accurate answer if they were bold enough to ask?

Only about a third of patients had any confidence in their ability to reduce their costs by trying to shop for lower costs, while slightly over half thought they could use quality information to pick better doctors.  The vast majority – 88% -- felt costs are too high, but were fairly split about whether there is anything they could do to impact them.  Patients still blame the usual suspects – insurance companies, pharmaceutical companies and the government – for high costs while largely absolving themselves, their doctors, even hospitals and lawyers.

The “good” news from the Altarum survey is that patients strongly say they want to be very involved in their health care decisions – 16% want to be completely in charge, 43% want the final decision with input from their physician, and 33% want joint decisions with their doctor.

It seems patients want responsibility but usually still don’t take it.  Everyone wants them to assume more responsibility – as illustrated by “consumer-directed” products from the payor side and “patient-centered” care models from the provider side – but we’re a long way off to making that a reality.  ONC has just released its vision for “Person @ Center,” with goals for increased self-management and prevention, seamless interaction with the health system, and shared management of health care, all supported by technology.   It hopes the new paradigm is in place by 2020.  That seems like a long way off for something all parties say they want, but I’m still not holding my breath.

Forbes calls transparency the health care story of 2013, which had no shortage of other big health care news; USA Today lists it as one of the key trends to watch in 2014.  Whether or not it starts to have a noticeable impact remains to be seen, but in the meantime it certainly is becoming a nice business: some $400 million has been invested since 2010.  For example:

• Castlight Health has raised almost $200 million and is reportedly considering an IPO;
• Change Healthcare took in some $15 million in Series D funding last year; 
• Healthcare Bluebook just secured a $7 million investment   
• Healthsparq just bought ClarusHealth in a move to triple its access to health plans, while also claiming it can demonstrate that its online transparency tools do lower costs;

I certainly am a big supporter in transparency, but continue to view it as a necessary but not sufficient requirement for change.  When I get medical services, I’m not really much more knowledgeable buyer than when I get services from, say, a car mechanic or a plumber.  When I get those kinds of services, though, I do expect to get a reasonably accurate estimate, and – more importantly – I know I’ll be paying them with my own money, which makes me more careful about spending it.  If a car repair or plumbing job is going to cost me thousands of dollars, I’d get multiple estimates from reputable vendors before proceeding.  People still don’t think about health care services in that same light, and providers typically would balk at requests to bid on expensive services.   

The awful truth, though, is that the bulk of health care spending is not from most services done on most patients, but from high-end services done to chronically ill patients.  AHQR recently reminded us of the super-concentration of spending: the top 1% accounted for 21% of all spending, the top 5% accounted for 50%, the top 10% accounted for 66%, and the bottom 50% only spent 2.8% of the total.  It’s not even clear that diverting care for costly patients out of hospitals to lower cost settings can make much difference, according to a study from Brigham and Women’s Hospital. 

Transparency might impact spending from that bottom 50%, but that spending is so small that it won’t matter much.  And it may not have not all that much impact for the top 1%, or maybe even the top 10%, as these patients may not be in much position to “shop.”  So who exactly are we targeting with it?

The Massachusetts Health Policy Commission recently released its 2013 cost trends report, one of the key findings of which was that 21% to 39% of health care spending in Massachusetts was wasteful – some $14.7b to $26.9b.  Those percentages are in line with previous national estimates.  I did notice, though, that adding up their specific examples don’t even reach $2b, indicating how hard it is to pinpoint where the “waste” actually is.  There’s no shortage of evidence (see, for example, Brill or Rosenthal) that what makes our health system so expensive is not the use of services as much as the inflated prices for those services.  This is where greater transparency can help – but only if we start demanding that providers compete on price and on value.