Seasons Greetings
Monthly Archives: December 2019
Trading high deductibles for narrow networks
https://mailchi.mp/f3434dd2ba5d/the-weekly-gist-december-20-2019?e=d1e747d2d8
For many employers, narrowing provider networks has been a bridge too far, despite unrelenting healthcare cost growth.
A recent Los Angeles Times profile of a Boston union that was able not only to lower costs but also nearly eliminate employee cost-sharing may make doubters reconsider. Unite Here Local 26, which represents 9,000 hotel workers and their families, implemented a narrow network health plan in 2013, when two-thirds of its members agreed to forego care at certain marquee academic hospitals, which charged two to three times more than others in the Boston area.
Today the union actually pays less in medical costs per member than it did six years ago, and premiums are ten percent lower than the national average, despite Boston being one of the highest-cost healthcare markets in the country. Employees pay no deductibles, and generic medications cost them only $1. Savings have translated into raises for many employees, with some low-income workers seeing a pay jump of up to 39 percent across six years.
As we’ve discussed in the past, employers are reaching a limit on how high they can push deductibles, especially in a tight labor market. Some are beginning to experiment with various network options that lower health care costs—but many have been reticent to change benefit design in any way that could be perceived as narrowing choice.
Local 26’s experience shows that well-designed narrow networks, implemented with employee education and buy-in, can provide cost relief for both businesses and individuals that can be sustained over time.
In a Boston acute care matchup, home beats the hospital
https://mailchi.mp/f3434dd2ba5d/the-weekly-gist-december-20-2019?e=d1e747d2d8
Despite all of the recent hype, the idea of “hospital-at-home” is hardly a new concept. The first randomized, controlled study on the topic, published over 20 years ago, showed that the model was safe, finding that patients with five common conditions who would normally have been admitted to the hospital experienced similar outcomes when treated at home.
This week a new randomized, controlled trial from researchers at Boston-based Brigham and Women’s showed that hospital-at-home had better clinical outcomes and was a whopping 38 percent cheaper than equivalent management in an acute care hospital. Yes, the study was small (91 patients) and probably had some selection bias (just 37 percent of eligible patients chose home care).
Drilling into the data, length of stay for home-based patients was a little longer, but at-home patients received dramatically fewer lab tests, imaging studies and specialist consults—raising the question of whether all those daily chest x-rays, CBCs and curbside consults in traditional hospitals really provide value.
And 30-day readmissions and ED visit rates for home-based patients were less than half of the control group. Selection for clinical appropriateness and family support is critical, but experts estimate that up to a third of medical admissions could be managed in the home setting.
As growing evidence shows hospital-at-home to be safe, effective and lower cost, the lack of a reimbursement model to support investments in home-based acute care is now the greatest obstacle to widespread adoption.
Get ready for the “Yolds”
https://mailchi.mp/f3434dd2ba5d/the-weekly-gist-december-20-2019?e=d1e747d2d8
In a recent discussion on consumer strategy, a health system executive relayed a surprising data point: the system’s most “digitally activated” market was a local retirement community. The residents of this over-55, master-planned community, designed for active seniors, had the system’s highest rates of patient portal activation and online appointment scheduling.
Growth of this cohort of “young old” consumers (YOLDS) —over 65 but still active—will explode as the peak of the Baby Boom joins their ranks. And with a median wealth of $210,000, they’ll have tremendous spending power, so much so that the Economist recently dubbed the next ten years “The Decade of the Yold”. Many “Yolds” will keep working well into their 70s, and those that do will experience slower rates of health and cognitive decline.
For health systems, the next few years are critical for deepening relationships as the Yolds transition into Medicare. What do they want today? Technology-enabled care, and access and communication that works right out of the box, as they have little patience for troubleshooting buggy software. Customized, high-touch services, like they’ve come to expect from everything they consume.
And a focus on helping them maintain their active, productive lifestyle for as long as possible. But they’re not brand switchers: once they join a Medicare Advantage plan, there’s a 90 percent chance they’ll stay. Building loyalty with the Yolds can be the found
A look at what lies under the (high) deductible
https://mailchi.mp/f3434dd2ba5d/the-weekly-gist-december-20-2019?e=d1e747d2d8
With the continued growth in high deductible health plans (HDHPs) in both employer- and exchange-based insurance markets, a larger number of services are falling “under the deductible”, leaving patients responsible for the full cost of care.
The graphic above illustrates the national cost ranges of ten common outpatient services, based on data from a publicly-available commercial claims database. It’s not just minor services like lab tests or diagnostic imaging that are falling under the deductible—many consumers are now paying full freight for a growing list of outpatient procedures like cataract or carpal tunnel surgery, or even knee arthroscopy.
Shopping can pay off: for any service, the highest-priced provider can be over three times the lowest-priced, translating into thousands of dollars of savings for patients with high-deductible plans.
Outpatient services now account for over half the revenue of many health systems. As deductibles climb, more and more of the (profitable) health system services are becoming “shoppable” for consumers—creating an imperative for systems to both lower costs and pursue rational pricing as scrutiny becomes more intense.
Christmas comes early for healthcare industry groups
https://mailchi.mp/f3434dd2ba5d/the-weekly-gist-december-20-2019?e=d1e747d2d8
Today, President Trump is set to sign into law a $1.4T spending agreement that keeps the Federal government open and avoids a year-end budget showdown with Congress. The agreement is comprised of two separate spending packages, with a total of 12 budget bills, and includes good news for almost every segment of the healthcare industry.
It repeals the long-debated “Cadillac Tax” on high-cost health plans, which was a key funding mechanism for the ACA and was intended to force employers to encourage their employees to use healthcare services more frugally.
It also repeals the “device tax” on medical device manufacturers, and the separate fee on health insurers, both also part of the ACA.
In sum, those three repeals will reduce tax revenue by about $375B over the next decade and will remove a substantial portion of funding originally earmarked to sustain the 2010 health law.
Meanwhile, notably absent from the budget deal are measures to address surprise billing, which have proven difficult to finalize despite broad bipartisan support, and steps to reduce the cost of prescription drugs, a key legislative priority on both sides of the aisle.
Thanks to intense lobbying by various industry interest groups, and the toxic political environment in Washington, the year is drawing to an end with virtually no progress to show on either front.
As a result, despite a year’s worth of heated rhetoric about the high cost of care, the burden of health spending on individuals, and the need to rein in runaway health spending, 2019 is ending with almost every industry interest—pharmaceutical companies, device manufacturers, insurers, physician groups, and hospitals—largely avoiding accountability in the form of federal legislation. As we head into an election year, we’ll likely have to wait until after next November to see real progress on any of these issues. Merry Christmas.
All the Best this Holiday Season & New Year
Obamacare Ruling May Spare Republicans Some Political Pain
The practical effect of the decision is likely to be months of delays, pushing the final outcome of the case beyond the 2020 election.
A federal appeals court in New Orleans handed Republicans a Christmas present.
The court had been considering a case with the potential to dismantle the entire Affordable Care Act, an outcome that could have set off waves of chaos and disruption leading up to the November election, and for which there was very little contingency planning.
The court had two main options. It could have agreed with the Trump administration, along with a set of Republican state officials and a district court in Texas, and overturned all of the law. Or it could have upheld Obamacare, undermining the arguments of the White House and its allies.
The court found a third way. In a decision at the close of business Wednesday, two of the three judges signaled their support for a key part of the Republicans’ legal argument. The two agreed with a lower court that Obamacare’s individual mandate had been made unconstitutional by a 2017 law that eliminated the financial penalty for remaining uninsured. But the judges punted on the case’s key question of what that meant for the rest of the health law, asking a lower court to reconsider it. The effect is likely to be months of delays, pushing the final outcome of the case beyond the 2020 election.
Starting in 2017, the Republicans’ failed effort to repeal and replace large portions of the health law was deeply unpopular and became a central campaign theme of the 2018 election, in which Democrats won a House majority. Democrats cast themselves as the protectors of Obamacare’s most popular provisions, especially its protections for Americans with pre-existing health conditions.
While most Democrats would have favored a court ruling that upheld Obamacare, a reprise of those politics could have given them a lift in an election year. Voters tend to trust Democrats more than Republicans on health care, but much of the debate during the primary season has focused on ambitious new expansions of government coverage. Those proposals do not enjoy the widespread support attached to the preservation of Obamacare’s core consumer protections.
Those dynamics have allowed Republicans to focus on arguments that they will protect private insurance and oppose socialism, without forcing them to articulate their own detailed health plans. President Trump has periodically hinted at an imminent Obamacare replacement plan, but he has yet to produce one. Mitch McConnell, the Senate majority leader, has declined to produce or advance a major health care bill in the Senate.
But if a court had ruled that all of Obamacare had to be wiped off the books, it would have been far harder for Republicans to avoid articulating their vision for health care. The public did not like their previous attempts in 2017, and there has been little progress, even behind the scenes, to produce an alternative plan more palatable to the public. Two concepts have emerged since then, one from a group of conservative think tanks, and one from the House Republican Study Committee. Neither has received much public attention by party leaders, and both share the basic structure of an earlier legislative plan that divided Republican legislators so much that it never made it to a vote.
Meanwhile, Democrats could have retreated to safer ground, by promising to reinstate popular Obamacare provisions.
If the court had overturned all of Obamacare, it could have meant major disruptions to the health system. Such a ruling, if upheld by the Supreme Court, would have eliminated consumer protections for people with pre-existing health conditions, and wiped away financial assistance that have helped millions of middle-class Americans buy their own coverage.
It would have erased the Medicaid expansion, which provides health insurance to millions of low-income Americans in three dozen states. It would have reversed Medicare policies that make prescription drugs more affordable for seniors, and Food and Drug Administration rules that have allowed cheaper copies of expensive biologic drugs to enter the market.
It would have undone major experiments in the delivery of care, meant to improve health care quality. It would have rolled back enhanced punishments for Medicare fraud. It would have reduced requirements that workplaces provide space for lactating mothers to pump breast milk, and requirements that chain restaurants post calorie counts for their food.
Around 20 million more Americans would have become uninsured, according to an estimate from the Urban Institute. Experts on Medicare policy said they were not even sure how some of the changes could have been carried out now that they have been enshrined in complex regulations and built on in subsequent laws.
None of those effects would have happened immediately, even if the Fifth Circuit had agreed in full with the lower court; the Supreme Court would have probably weighed in. But the prospect of such huge changes had the potential to reset the political conversation about health care in both parties. By avoiding a decision on the case’s consequences, the Fifth Circuit has effectively postponed that shift.
In a statement Wednesday night, President Trump applauded the court’s ruling that the individual mandate was unconstitutional. But he emphasized that the decision would not result in any meaningful changes to voters’ health care.
“The radical health care changes being proposed by the far left would strip Americans of their current coverage,” he said. “I will not let this happen. Providing affordable, high-quality health care will always be my priority. They are trying to take away your health care, and I am trying to give the American people the best health care in the world.”
Such a statement would have been harder to issue if the court panel had agreed with the arguments made by Mr. Trump’s lawyers and called for the reversal of Obamacare’s coverage expansions.
Democrats’ frustration with the court’s indecision was palpable. Chuck Schumer, the Senate minority leader, described the judges’ move as “cowardly.” The decision is “obviously an attempt to shield Republicans from the massive blowback they would receive from the public if the highest court in the land were to strike down the A.C.A. before the upcoming election,” he said in a statement.
It’s possible, of course, that the case will reach a final disposition sooner anyway. California’s attorney general, Xavier Becerra, announced that he and other Democratic state officials involved in the case would be appealing the decision to the Supreme Court. Even though the appellate court sent the case back to Texas, the country’s highest court could still choose to take it, should four justices wish to. But the most likely path involves months or years of additional litigation, with lingering uncertainty over the fate of Obamacare.
Leading with Honor – Adverse Situation
A Leading with Honor Frequently Asked Question –
“During the Vietnam War, after 53 missions in enemy territory, your plane was hit. You managed to parachute to safety but landed in a field of Vietnamese snipers and were captured, subsequently being held prisoner for more than five years.
What lessons did you learn from such an adverse situation?”
Lee’s Answer –
“Because we had a lot of time to reflect and think about things in the POW camps, I really got to know myself. What are my strengths and struggles? What are my fears? Am I authentic, or do I hide behind a persona or façade—I wanted to be real, authentic in every situation.
I learned to be positive and expect a good outcome, even in difficult circumstances. Communication is so important. We had to work hard to communicate, because the enemy tried to keep us from communicating. Another important lesson learned is being resilient and bouncing back. We got knocked down and tortured, and what we learned was resilience.
Our senior POW leaders suffered first and most often and the most torture and hardship. They were committed to doing their duty in spite of the heavy costs. They leaned into their doubts and fears to do the right thing and that was a powerful example. We wanted to be like them, so they raised our level of courage and commitment by their example. My goal became to do the right thing regardless of my fears or the risks associated with the situation.”
PENNSYLVANIA HOSPITALS MADE $136.1B IMPACT IN FY 2018
The Hospital and Healthsystem Association of Pennsylvania report found that hospitals also supported more than one in every 10 jobs.
Hospitals in Pennsylvania made a total economic impact of $136.1 billion in Fiscal Year (FY) 2018, according to a Hospital and Healthsystem Association of Pennsylvania (HAP) report released Tuesday.
Of the total economic impact, $60.5 billion were the result of “direct impact,” such as employee salaries, benefits, as well as goods and services for hospital operations. Another $75.6 billion were the result of “ripple impact,” such as additional economic effects of a hospital in a community.
HHAP also found that hospitals supported more than 650,000 jobs, accounting for more than one in every 10 jobs in the state and providing $32.3 billion in total wages. Nearly 300,000 jobs were directly associated with hospitals while 363,000 jobs were associated with “ripple effects” of health systems.
The study’s findings point to the significant economic impact provider organizations have in the Keystone State and the need to promote policies that foster continued growth, according to Sari Siegel, PhD, vice president of healthcare research at HAP.
“While overall growth projections are strong, some hospitals remain financially stressed. Our work illustrates that hospitals often are the backbones of their communities and closure could cause devastating economic ripples throughout a region,” Siegel said in a statement. “The findings of this report underscore the need for policies that bolster hospitals’ long-term sustainability.”
Pennsylvania hospitals have contributed significantly to the state’s economy in recent years and have also made headlines throughout 2019.
Hahnemann University Hospital, a Pennsylvania-based hospital, filed for bankruptcy and closed over the summer. A group of six Philadelphia-based health systems won the hospital at auction for $55 million in early August.
The report was also released days after two Pennsylvania-based health systems, Tower Health and Drexel University, finalized a $50 million acquisition of St. Christopher’s Hospital for Children, a 188-bed pediatric medical center in Philadelphia.
There are 253 hospitals in Pennsylvania, according to HAP, with more than 37,600 staffed beds. The report also found that hospitals are among the 10 largest employers in 85% of counties across the state.
The total economic impact of Pennsylvania hospitals in FY 2018 grew by nearly $50 billion over the past decade, according to a HAP analysis of data collected from the Department of Health and Human Services (HHS).
Additionally, Pennsylvania hospitals received nearly $2 billion in research allocations from HHS and Patient-Centered Outcomes Research Institute in FY 2018.
HENRY KOTULA 