The U.S. has fantastic health care, the problem is….

https://www.optum.com/content/dam/optum3/optum/en/resources/articles-blog-posts/wf1341834-cmo-campaign-wyatt-decker-article-part1.pdf

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In part 1 of an executive interview series, CEO and physician Wyatt Decker discusses his perspectives on today’s challenges and opportunities for reinventing health care.

IMAGINE THIS SCENARIO: there are 200 people in a room and each person has a serious health condition. Cost is not a barrier to each of these people receiving their prescribed treatment. A question is asked — how many of you would book a flight to a different country to get your care? You guessed it. No hands go up.

Dr. Wyatt Decker is chief executive officer of OptumHealth and an emergency medicine physician who brings more than two decades of service within the Mayo Clinic. He held dual roles as chief medical information officer for Mayo Clinic and CEO of Mayo Clinic in Arizona. Dr. Decker often conducts this experiment with audiences to underscore the quality of care delivered in the United States. We often hear about the problems of health care. No doubt, there are deep and serious problems. However, in scenarios like the one above, we understand that the quality of care delivered by our nation’s physicians is among the finest available. So why do we hear so much about what’s wrong?

According to Dr. Decker, the real opportunities for reinventing health care lie in improving system access, increasing affordability and meeting consumer preferences. “ All of these things really require us to think deeply about how health care is delivered and how can we do it better,” he says.  In part 1 of a recent conversation, Dr. Decker shares lessons learned and offers his perspective on where today’s health care executives and clinical leaders should focus.


What is your take on the state of the health care industry today? What challenges are driving the need to rethink health care systems and delivery?


THE CHALLENGE OF HEALTH CARE ACCESS:  “ People want to get to a doctor or a health care team and they can’t. Either because they are underinsured or they don’t have the financial resources. They don’t know where to go or sometimes there just aren’t enough doctors or the right type of doctor, whether it’s primary care or a specialist available in their area to see.”

THE CHALLENGE OF HEALTH CARE AFFORDABILITY:
“ We hear a lot about affordability of health care and outof-pocket cost can be very high, but also the health care system itself is very expensive. So how do we make it more affordable for large employers, individuals, consumers and even the government itself? Can we get on a more sustainable path?”

THE CHALLENGE OF CONSUMER PREFERENCES:  “ Most people who’ve experienced the health care system feel that it isn’t focused around their needs, schedules or preferences. We’re entering an era where in most other industries there’s lots of personalization and consumer focus. Health care has been very slow to evolve. We need to make it an experience where people feel appreciated, valued and respected. Not just that they’re getting great quality care, but also that their preferences and needs are being met.”

“ Our nation’s care providers are deeply committed and among the best-trained in the world. But I also see them in a system that is struggling. Emergency departments are, at times, the last resort for people who lack resources and access to care. I’ve seen patients struggle to manage chronic conditions without the right support and how the absence of good guidance can create confusion.”

Clearly, the need to reinvent in all aspects of health care is top of mind for many. But it can be difficult to figure out where to start. Can you discuss where you think it’s smart for leaders to focus?


“ We should all be thinking about how we drive towards a health care system that really creates and adds value to people’s lives,” says Dr. Decker. Here’s his advice on key areas of focus.


PAYMENT MODELS:  “ Move towards payment models that actually reward the correct behaviors in health care. What do I mean by that? The pay-per-value model — rewarding groups of providers to keep people well and healthy — is far more powerful than the traditional fee-for-service model.”


LOCAL ECOSYSTEMS:  “ Recognize that health care is local. It’s important to create ecosystems that deliver great, connected care for individuals throughout the health spectrum. This means the patient and their health data move seamlessly between specialists, hospitals, ambulatory care centers, and so on. These kinds of networks and interoperability of data is crucial to create a successful health care system.”

SOCIAL DETERMINANTS OF HEALTH:  “ Health care outcomes are driven not only by the quality and capabilities of the health care provider, but also by social determinants of health. Good health care addresses things like access to good nutrition, social connections, transportation and more that can limit the ability for a person to get and stay healthy. For example, in-home health visits to help patients who have difficulty traveling or easily obtained referrals to social and community services can really enable success.”


From your perspective, what could health  care reinvention mean to a patient, provider  or health plan?


TO PATIENTS:  “ It means a health care system where instead of waiting for something to go wrong, there is a team helping you proactively flourish and be healthy. It means a simple phone call or an app or a video chat could advise you on when you might be at risk of developing a serious condition before you develop it. It means a system that  is always there for you, almost like a guardian angel. It helps you navigate the system and your journey towards health and wellness. It means all of this in a health care system that is easy to access, affordable, high-quality  and compassionate.”


TO PROVIDERS:  “ Providers have high rates of frustration and even burnout with their own profession. Reinvention looks to reduce the very heavy clerical burden driving these trends. Doctors today spend about two hours of clerical and non-visit care for every hour of direct patient care that they provide. However, when you talk to doctors, they find the most fulfillment in engaging directly with patients and making a difference in their care. Reinvention means relieving exhausted providers of administrative and clerical duties that don’t bring enjoyment or result in improved care  and outcomes.”


TO HEALTH PLANS:  “ Health plans are frustrated because they pay for a lot of care that evidence shows doesn’t improve outcomes or help patients on their journey to health and wellness. Payers are happy to pay for health care if it’s necessary. But it doesn’t make sense to pay for care that doesn’t add value. Reinvention means reducing this financial waste to bring down the cost of coverage for everyone.”

“ We have an opportunity now to make the health care system work better for everyone. Improve access and affordability for patients, allow doctors to spend more time with patients, and increase efficiencies within health plans. There’s an opportunity to help people connect the dots and get everyone working together.”

You’ve been a practicing physician and a business leader. Tell us the lessons learned from this unique vantage point.
“ I have spent most of my career as a practicing physician in busy, level 1 trauma centers and emergency departments. In that environment, you see health care at its finest and also how the health system can be challenging. I think in amazement of the times I’ve seen teams of people —  multiple physicians, nurses and technicians — come together as one unit to save someone from a major trauma. I also have great admiration for the persistence of doctors who save lives by diagnosing life-threatening conditions through nuanced symptoms.
I’m a deep believer that in health care, we need to place the patient at the center of everything we do. I always remind young doctors and medical students…imagine for a moment that your patient is you or a loved one. You’d want the doctor to listen and explain things in a compassionate and thoughtful manner. You’d want them to be focused. You’d want them to recognize your unique history and what’s important to you. The notion of putting the patient at the center of everything is something that I have carried with me throughout my career. I have also dedicated myself to developing better models of care and systems that allow doctors and care teams to function seamlessly, be high-performing and deliver great outcomes for patients.”

“ I have an appreciation for how powerful it can be when you work to reduce waste, create care that’s efficient and care that is patient-focused. Today I’m focused on an interesting juxtaposition — creating the right mix of scalable innovations that help our whole nation succeed in health care while also improving the personal and individual patient health care experience.”

STAY TUNED FOR PART 2  of this executive interview series to learn more about Dr. Wyatt Decker’s perspectives on the intersection of technology and health care, the human impact of transformation and physician burn-out.

 

 

 

 

 

 

Trump Shift, Backed by States, Fuels Fear of Too Few Medicaid Docs

https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2019/08/07/trump-shift-backed-by-states-fuels-fear-of-too-few-medicaid-docs?omnicid=CFC1662263&mid=henrykotula@yahoo.com

Stateline Aug7

Dr. Barbara Ricks is a pediatrician in Greenville, Mississippi, whose patients are nearly all on Medicaid. The Trump administration proposed eliminating an Obama-era rule that aims to ensure that patients can find a doctor who accepts Medicaid.
Rogelio V. Solis/The Associated Press

The Trump administration wants to drop an Obama-era rule designed to ensure that there are enough doctors to care for Medicaid patients.

State health officials say the rule, which requires states to monitor whether Medicaid reimbursement rates are high enough to keep doctors in the program, forces them to spend a lot of time collecting and analyzing data with little benefit. Health care advocates, though, fear that dropping the regulation would enable states to set those payments at a level that would cause some of the 72 million Americans who rely on Medicaid to scramble for health care. Research shows that when reimbursement rates drop, fewer providers agree to accept low-income Medicaid patients.

Although the Medicaid Access Rule, adopted in 2016, pertains to Medicaid fee-for-service plans, the Trump administration also is seeking to relax requirements on how states determine whether Medicaid managed care organizations have enough providers.

If reimbursement rates are too low, there’s a risk that health care providers would see fewer Medicaid patients or even refuse to treat Medicaid enrollees altogether. That, in turn, could lead to longer wait times to see providers still participating in Medicaid or force patients to travel longer distances to reach providers remaining in the program.

Medicaid, the government health plan for low-income U.S. residents, covers 1 in 5 citizens. It is jointly administered and financed by the federal government and the states.

The rule, the Centers for Medicare and Medicaid Services (CMS) said, “excessively constrains state freedom to administer the program in the manner that is best for the state and Medicaid beneficiaries in the state.”

According to Matt Salo, executive director of the National Association of Medicaid Directors, scrapping it would eliminate a bureaucratic headache for states that, in the end, hasn’t improved patients’ access to providers.

“Nobody is moving the goal of improved access,” Salo said.

Some health care advocates disagree, pointing out that the rule hasn’t been in place very long and that getting rid of it fits the Trump administration’s overall mission of giving states more freedom in operating Medicaid.

“The Trump administration’s approach to Medicaid has been state flexibility, giving states a lot more discretion to do what they want without a lot of attention to what beneficiaries need,” said Abbi Coursolle, a senior attorney with the National Health Law Program, a group based in Washington, D.C., that works to protect access to health care for low-income populations.

CMS last year called for a significant watering down of the Obama rule. Last month, the agency proposed to scrap it altogether. The comment period on elimination of the rule runs through next month, after which CMS will announce its decision.

The initial proposal to weaken the rule generated plenty of opposition. Among those objecting were hospital and physician organizations, groups that advocate for health care access for all, and organizations created to support those living with certain diseases and to raise funds for research into those conditions.

Among the latter was the Epilepsy Foundation, which warned in its public comment that weakening the rule would deprive CMS of information it needed to monitor and enforce Medicaid beneficiaries’ access to care. State reimbursement rates, the foundation said, are crucial to ensuring enough willing providers are available to treat Medicaid beneficiaries.

Shawn Martin, senior vice president of the Academy of Family Physicians, said scrapping the rule would make states more likely to set reimbursement rates too low, prompting practitioners to stop taking Medicaid patients or cut back. “A low reimbursement would affect how many beneficiaries providers are willing to see.”

Just as adamant on the other side, however, are many states that complain that the Obama rule is cumbersome and ineffective at ensuring access for Medicaid beneficiaries.

At the Maryland Department of Health, Tricia Roddy, a research director, said the rule doesn’t do much to help gauge the fees’ effects on access to care.

Similarly, at the Colorado Department of Health Care Policy and Financing, Marc Williams, a spokesman, said his state uses other strategies to ensure Medicaid beneficiaries’ access to the health services they need.

According to Salo of the Medicaid directors group, states of both political stripes, red and blue, are delighted that the Trump administration is moving to abolish the rule.

“It was creating many bureaucratic burdens without accomplishing anything concrete,” Salo said. The rule, he said, “is insanely micro-managed and overly bureaucratic.”

The 1965 law establishing Medicaid has been amended through the years to ensure that enough doctors, nurses and other providers are available to serve beneficiaries. Congress in 1989 passed an amendment making clear states’ obligation to pay providers enough to ensure Medicaid enrollees have access to care.

Medicaid pays doctors about three-fourths as much as Medicare, the government program for senior citizens, according to a 2017 analysis by the Urban Institute, a nonpartisan think tank in Washington, D.C. And Medicare pays much less than private insurers.

When Medicaid and Medicare payments, or reimbursement rates, go down, research shows that patients make fewer doctor’s visits and more trips to the emergency room.

According to a 2017 Kaiser Family Foundation report, only about 70% of office-based physicians accept new Medicaid patients. The results vary from 39% in New Jersey to 97% in Nebraska. By comparison, the study found, 85% of doctors accept new patients with private insurance.

The 2016 rule required states to tell the agency every three years how providers from various geographic regions and specialties were participating in Medicaid, and how reimbursement rates were affecting that participation.

 

 

 

 

Anthem again irks docs with latest changes to reimbursement

https://www.healthcaredive.com/news/anthem-again-irks-docs-with-latest-changes-to-reimbursement/559747/

Anthem is again ruffling the feathers of providers, this time over a new reimbursement policy denying payment for certain follow-up office visits the same day a procedure is performed. 

The policy could impact many specialists and primary care doctors. Dermatologists are particularly upset over the change, which they call punitive and unnecessary with the potential to disrupt patient care.

“It is a nuisance. It makes absolutely no sense,” George Hruza, a practicing dermatologist and president of the American Academy of Dermatology, told Healthcare Dive.

It’s the latest in a string of controversial policies from Anthem. The Blue Cross payer that insures 40 million people has taken steps to rein in costs by enforcing different payment policies based on site of care and other factors. 

In the past several years, the Indianapolis-based for-profit said that it would no longer pay for emergency room visits if patients show up with minor ailments like the common cold. It also stopped paying for certain imaging tests at outpatient facilities owned by hospitals due to the unexplained wide variation in costs compared with freestanding imaging centers.

And this year, Anthem cut rates paid to hospital-based labs in an attempt to align them with independent labs, a strategy that garnered extensive discussion on lab giant Quest Diagnostic’s second quarter earnings call.

Anthem contends the latest change to office visit payments will prevent duplicative billing for similar visits. The change took effect March 1, according to a previous provider alert. Anthem told Healthcare Dive it’s an update to its claims systems and does not describe it as a new reimbursement policy.

Despite conversations with Anthem, Hruza said his organization hasn’t been given an explanation on what triggered the change and whether it actually addresses a problem or an abuse of the system. He said he understands the need to cut healthcare costs, but wonders how much savings the change will generate as some of the visits are below $100.

The payer proposed an almost identical change last year but later decided to pull it back after intense pushback from the American Medical Association and other provider groups. The newer policy is worse because doctors would receive no payment, and it’s more narrowly tailored to the same diagnosis, Hruza said.

‘Appropriate settings’

Anthem argues the policy is needed to move care to more cost-efficient settings.

“Our efforts to help achieve that goal include a range of initiatives that, among other things, encourage consumers to receive care in the most appropriate setting and also help promote accurate coding and submission of bills by providers,” Anthem said in a statement to Healthcare Dive.

Hruza is worried the latest iteration would cause patients delays in care.

He gave the example of a patient with acne prescribed a medication. He would want to see them for a follow-up in a few weeks. At that second appointment, if he saw the treatment wasn’t working well, he might prescribe a different medication. At the same time, he may drain an acne cyst, a minor procedure. That would trigger a denial, he said, because of the two visits revolving around the same diagnosis with the same-day procedure.

AMA is aware of the policy and has had meetings with Anthem about its concerns, a source for the organization that represents the nation’s doctors told Healthcare Dive.

For providers, the big fear is the change will result in unjustified claim denials and encourage other payers to adopt similar measures. Hruza said there is no recourse for contracted providers, particularly those that work in smaller practices, when these changes are made, given Anthem’s size as the nation’s second-largest insurer.

As deductibles rise and patients are shouldering a greater burden of the cost of care, insurers may be feeling the pressure from employers to wring out costs from the provider side, Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University, told Healthcare Dive.

“Employers are getting more and more wise to the fact that the reason we have a cost problem in this country is because of provider prices,” Corlette said. 

 

 

 

Healthcare Executives See a Mixed Outlook

https://www.jpmorgan.com/commercial-banking/insights/healthcare-mixed-outlook

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In a recent survey of healthcare leaders, most were confident about their own organizations going into the new year. But respondents expressed concern about a range of evolving industry-wide challenges, including costs, technology and talent.

A majority of US healthcare executives surveyed by J.P. Morgan said they were optimistic about the financial performance of their own organizations going into 2019, as well as the national and local economies. But most were less positive about the outlook for the industry as a whole, with 28 percent expressing pessimism and another 31 percent merely neutral.

National economy 71% optimistic, 20% neutral, 9% pessimistic
Healthcare Industry's performance 41% optimistic, 31% neutral, 28% pessimistic
Your organization's performance 62% optimistic, 13% neutral, 25% pessimistic
Legend - Optimistic, Blue
Legend: Neutral Gray
Legend: Pessimistic, Green

Respondents to the survey, conducted Oct. 16 to Nov. 2 of 2018, said their biggest concerns were revenue growth, rising expenses and labor costs. The executives said their organizations plan to invest the most in information technology and physician recruitment.

Healthcare Changes Shape Perceptions

The pessimism about the industry likely stems, in part, from regulatory uncertainty and an ongoing shift from a fee-for-service model toward a value-based payment system, said Will Williams, Senior Healthcare Industry Executive within J.P. Morgan’s Commercial Banking Healthcare group. “Healthcare is going through the most transition of any industry in the country right now,” he said. Amid this upheaval, healthcare organizations face a combination of challenges, including lower reimbursement rates for Medicaid and Medicare patients, increased competition, and higher costs for labor, pharmaceuticals and technology investments.

The optimism that executives feel about their own hospital or healthcare group may come from a sense that an individual organization can adapt to industry changes, said Jenny Edwards, Commercial Banker in the healthcare practice at J.P. Morgan. “You can control certain factors, and make adjustments to compensate for the headwinds.”

Biggest Challenges for the New Year

Growth Strategies

For 61 percent of respondents, the focus is on attracting new patients, followed by expanding target markets or lines of business (53 percent), and expanding or diversifying product and service offerings (44 percent). Hospitals, for example, have worked to add more patients to their broader healthcare system by opening clinics for urgent care or physical therapy, Edwards said.

As patient habits change, hospital systems have needed to become more consumer-focused, Edwards said. Patients are more likely to shop around for their care, expect transparent pricing and review healthcare workers on social media sites. This “retail-ization” trend in healthcare is accelerating, Edwards said. “You can shop for healthcare like you would a new pair of jeans.”

Skilled Talent Wanted

The talent shortage is top of mind for many healthcare executives, with 92 percent of survey respondents saying they were at least somewhat concerned with finding candidates with the right skill set. For 35 percent of respondents, the talent shortage is one of their top three challenges.

For those respondents who expressed concern, the most difficulty arises in filling positions for physicians (52 percent) and nurses (46 percent). To address the challenge, 76 percent said they expect to increase compensation of their staff over the next 12 months. According to 37 percent of respondents, the talent pool’s high compensation expectations factor into the shortage.

Most Challenging Positions to Fill

52%
46%
38%
29%
21%
21%

The talent shortage is an issue across the industry, Williams said, and burnout among doctors and nurses presents an ongoing problem. One contributing cause could be evolving changes in daily practice, with considerably more time today spent on electronic medical record entries and less on patient care. Williams said, “Doctors are getting frustrated. The problem is trying to replace those doctors as they quit practicing.”

Healthcare executives are particularly concerned about shortages of primary care professionals. “Rural communities already have these shortages,” said Brendan Corrigan, Vice Chair of the J.P. Morgan Healthcare Council.

Labor costs tend to be higher in healthcare than in other sectors, Williams said, as a hospital must have coverage for all of its major roles 24 hours a day. When asked where they struggle with workforce management, the survey respondents cite staff turnover and its associated cost (47 percent), the ability to flex staff based on patient volumes (41 percent), and the cost of overtime and premium labor (36 percent). These workforce issues not only represent specific challenges; they all contribute to labor costs, which, as noted above, rank in the top three challenges for 2019.

Investments for a Changing Industry

A majority (51 percent) of organizations plan to invest in IT over the next 12 months. Other areas for investment included physician recruitment (44 percent) and new or replacement facilities (36 percent).

Since healthcare organizations manage a large amount of private patient health information, data security remains a large part of IT expenditures. “It’s a huge focus—they’re spending a lot of time and money on preventing a breach,” Edwards said. She goes on to note that the transition to patient EMR systems brings another big IT expense—more than $1 billion for the largest healthcare systems.

Overall, the survey showed healthcare executives grappling with rising costs and structural changes that affect the entire industry. “Healthcare is trying to figure out how to fix themselves,” Williams said.

 

 

 

Hospital price transparency push draws industry ire, but effects likely limited

https://www.healthcaredive.com/news/hospital-price-transparency-push-draws-industry-ire-but-effects-likely-lim/557536/

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Far-reaching rules mandating industry price transparency could mark a major shift, but experts are skeptical the efforts will meaningfully lower prices for patients without a more fundamental system overhaul.

President Donald Trump’s executive order signed Monday directs HHS and other federal departments to begin rulemaking to require hospitals and payers to release information based on their privately negotiated rates. Providers would also have to give patients estimates of their out-of-pocket costs before a procedure.

The moves come amid efforts from the federal government and Congress to push the healthcare industry to address patient anger over high prices, particularly regarding what medical bills they can expect to receive.

Many details must still be worked out as HHS and CMS craft their proposals, but providers and payers were quick to condemn any notion of making negotiated rates public. A legal challenge to the rules is also likely.

Many policy analysts and economists said that while price transparency is good in theory, current evidence shows patients don’t take advantage of pricing information now available, said Ateev Mehrotra, associate policy of healthcare policy and Harvard Medical School.

Patients are wary of going against a doctor’s advice to undergo a certain procedure or test, and to get it done at a certain facility. A difference in price may not be enough to sway them.

Also, the healthcare system has so many moving parts and unique elements that understanding a medical bill and how the price was calculated is daunting, to say the least.

“That complexity hinders the ability of people to effectively shop for care,” Mehrotra told Healthcare Dive “It’s not like going to Amazon and buying a toothbrush or whatever.”

What the order actual does

The executive order has two main directives:

  • Within 60 days, HHS must propose a regulation “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.”
  • Within 90 days, HHS and the Departments of Labor and Treasury must solicit comment on a proposal “to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.”

The order also outlines smaller steps, including a report from HHS on how the federal government and private companies are impeding quality and price transparency in healthcare and another on measures the White House can take to deter surprise billing.

It also directs federal agencies to increase access to de-identified claims data (an idea strongly favored by policy analysts and researchers) and requires HHS to identify priority databases to be publicly released.

The order requests the Secretary of the Treasury expand coverage options for high-deductible health plans and health savings accounts. It specifically asks the department to explore using HSA funds for direct primary care, an idea Senate HELP Committee Chairman Lamar Alexander, R-Tenn., said he “especially like[d].”

Industry pushes back

The order itself wastes no time in pointing the finger at industry players for current patient frustrations with the system. “Opaque pricing structures may benefit powerful special interest groups, such as large hospital systems and insurance companies, but they generally leave patients and taxpayers worse off than would a more transparent system,” according to the document.

As expected, payer and provider groups slammed any attempt to force them to reveal the rates they negotiate behind closed doors, though they expressed appreciation for the general push toward more transparency.

The American Hospital Association shied away from strong language as details are still being worked out, but did say “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”

The Federation of American Hospitals took a similar tone in a statement from CEO Chip Kahn. “If implementing regulations take the wrong course, however, it may undercut the way insurers pay for hospital services resulting in higher spending,” he said.

Both hospital groups highlighted more transparency for patient out-of-pocket costs and suggests the onus should be on payers to communicate information on cost-sharing and co-insurance.

Mollie Gelburd, associate director of government affairs at MGMA, which represents physician groups, said doctors don’t want to be in the position of explaining complex insurance terms and rules to a patient.

“While physicians should be encouraged to talk to patients about costs, to unnecessarily have them be doing all this education when they should be doing clinical care, that sort of gets concerning,” she said.

Practices are more concerned about payer provider directories and their accuracy, something not addressed in the executive order. Not having that type of information can be detrimental for a patient seeking care and further regulation in the area could help, Gelburd said.

Regardless, providers will likely view with frustration any regulations that increase their reporting and paperwork burdens, she said.

“I think the efficacy of pricing transparency and reducing healthcare costs, the jury is still out on that,” she said. “But if you have that onerous administrative requirement, that’s certainly going to drive up costs for those practices, especially those smaller practices.”

Payer lobby America’s Health Insurance Plans was quick to voice its opposition to the order.

CEO Matt Eyles said in a statement disclosing privately negotiated rates would “reduce incentives to offer lower rates, creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.” He argued that current tools payers use to inform patients of cost expectations, such as cost calculators, are already offering meaningful help.

AHIP also said the order works against the industry’s efforts to shift to paying for quality instead of quantity. “Requiring price disclosure for thousands of hospital items, services and procedures perpetuates the old days of the American health care system paying for volume over value,” he said. “We know that is a formula for higher costs and worse care for everyone.”

Limited effects

One potential effect of making rates public is that prices would eventually trend toward equalization. That wouldn’t necessarily reduce costs, however, and could actually increase them for some patients. A payer able to negotiate a favorable rate for a specific patient population in a specific geographic area might lose that advantage, for example, Christopher Holt, director of healthcare policy at the conservative leaning American Action Forum, told Healthcare Dive.

John Nicolaou of PA Consulting told Healthcare Dive consumers will need help deciphering whatever information is made available however. Reams of data could offer the average patient little to no insight without payer or third-party tools to analyze and understand the information.

“It starts the process, just publishing that information and just making it available,” he said. “It’s got to be consumable and actionable, and that’s going to take a lot more time.”

The order does require the information being made public be “easy-to-understand” and able to “meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.” That’s far easier said than done, however, Harvard’s Mehrotra said. “We haven’t seen anybody able to put this information in a usable way that patients are able to effectively act upon,” he said.

Holt said patients are also limited in their ability to shop around for healthcare, considering they often have little choice in what insurance company they use. People with employer-based plans typically don’t have the option to switch, and those in the individual market can only do so once a year.

Another aspect to consider is the limited reach of the federal government. CMS can require providers and payers in the Medicare Advantage program, for example, to meet price transparency requirements, but much of the licensing and regulations for payer and providers comes at the state level.

Waiting for details, lawsuits

One of the biggest questions for payers and providers in the wake of Monday’s announcement is how far exactly the rulemaking from HHS will go in mandating transparency. One one end, the requirements could stick close to giving patients information about their expected out-of-pocket costs without revealing the details of payer-provider negotiations. Full transparency, on the other hand, would mean publishing the now-secret negotiated rates for anyone to see.

“I think it’s the start of a much longer process,” Holt said. “It’s going to depend a lot on how much information is going to be required to be divulged and how that’s going to be collected.”

It’s almost certain that as soon as any concrete efforts at implementation are made, lawsuits will follow.

That’s what happened after Ohio passed a price transparency law in 2015 that required providers give patients information on out-of-pocket costs before a procedure — a proposal the executive order also puts forward.

The law still has not been enforced, as it has been caught up in the courts. The Ohio Hospital Association and Ohio State Medical Association sued over the law, arguing it was too vague and could lead to a delay in patient care.

 

The Lessons of Washington State’s Watered Down ‘Public Option’

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

A big health care experiment for Democrats shows how fiercely doctors and hospitals will fight.

For those who dream of universal health care, Washington State looks like a pioneer. As Gov. Jay Inslee pointed out in the first Democratic presidential debate on Wednesday, his state has created the country’s first “public option” — a government-run health plan that would compete with private insurance.

Ten years ago, the idea of a public option was so contentious that Obamacare became law only after the concept was discarded. Now it’s gaining support again, particularly among Democratic candidates like Joe Biden who see it as a more moderate alternative to a Bernie Sanders-style “Medicare for all.”

New Mexico and Colorado are exploring whether they can move faster than Congress and also introduce state-level, public health coverage open to all residents.

But a closer look at the Washington public option signed into law last month, and how it was watered down for passage, is a reminder of why the idea ultimately failed to make it into the Affordable Care Act and gives a preview of the tricky politics of extending the government’s reach into health care.

On one level, the law is a big milestone. It allows the state to regulate some health care prices, a crucial feature of congressional public option and single-payer plans.

But the law also made big compromises that experts say will make it less powerful. To gain enough political support to pass, health care prices were set significantly higher than drafters originally hoped.

“It started out as a very aggressive effort to push down prices to Medicare levels, and ended up something quite a bit more modest,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.

So while Washington is on track to have a public option soon, it may not deliver the steep premium cuts that supporters want. The state estimates that individual market premiums will fall 5 percent to 10 percent when the new public plan begins.

“This bill is important, but it’s also relatively modest,” said David Frockt, the state senator who sponsored the bill. “When I see candidates talking about the public option, I don’t think they’re really grasping the level of opposition they’re going to face.”

During the Affordable Care Act debate, more liberal Democrats hoped a public option would reduce the uninsured rate by offering lower premiums and putting competitive pressure on private plans to do the same. President Obama backed it, saying in 2009 that such a policy would “keep the private sector honest.”

The public option came under fierce attack from the health care industry. Private health plans in particular did not look forward to competing against a new public insurer that offered lower rates, and fought against a government-run plan that they said “would significantly disrupt the coverage that people currently rely on.” The policy narrowly fell out of the health care law but never left the policy debate.

Congressional Democrats have started to revisit the idea in the past year, with health care as a top policy issue in the 2018 midterm elections.

“During the midterm elections, Medicare for all was gaining a lot of traction,” said Eileen Cody, the Washington state legislator who introduced the first version of the public option bill. “After the election, we had to decide, what do we want to do about it?”

Ms. Cody introduced a bill in January to create a public option that would pay hospitals and doctors the same prices as Medicare does, which is also how many congressional public option proposals would set fees. The Washington State Health Benefit Exchange, the marketplace that manages individual Affordable Care Act plans, estimates that private plans currently pay 174 percent of Medicare fees, making the proposed rates a steep payment cut.

“I felt that capping the rates was very important,” Ms. Cody said.“If we didn’t start somewhere, then the rates were going to keep going up.”

Doctors and hospitals in Washington lobbied against the rate regulation, arguing that they rely on private insurers’ higher payment rates to keep their doors open while still accepting patients from Medicaid, the public plan that covers lower-income Americans and generally pays lower rates.

“Politically, we were trying to be in every conversation,” says Jennifer Hanscom, executive director of the Washington State Medical Association, which lobbies on behalf of doctors. “We were trying to be in the room, saying rate setting doesn’t work for us — let’s consider some other options. As soon as it was put in the bill, that’s where our opposition started to solidify.”

Legislators were in a policy bind. The whole point of the public option was to reduce premiums by cutting health care prices. But if they cut the prices too much, they risked a revolt. Doctors and hospitals could snub the new plan, declining to participate in the network.

“The whole debate was about the rate mechanism,” said Mr. Frockt, the state senator. “With the original bill, with Medicare rates, there was strong opposition from all quarters. The insurers, the hospitals, the doctors, everybody.”

Mr. Frockt and his colleagues ultimately raised the fees for the public option up to 160 percent of Medicare rates.

“I don’t think the bill would have passed at Medicare rates,” Mr. Frockt said. “I think having the Medicare-plus rates was crucial to getting the final few votes.”

Other elements of the Washington State plan could further weaken the public option. Instead of starting an insurance company from scratch, the state decided to contract with private insurers to run the day-to-day operations of the new plan.

“It would have cost the state hundreds of millions of dollars just to operate the plan,” said Jason McGill, who recently served as a senior health policy adviser to Mr. Inslee. He noted that insurers were required to maintain large financial reserves, to ensure they don’t go bankrupt if a few patients have especially costly medical bills.

“Why would we do that when there are already insurers that do that? It just didn’t make financial sense. It may one day, and we’ll stay on top of this, but we’re not willing to totally mothball the health care system quite yet.”

Hospitals and doctors will also get to decide whether to participate in the new plan, which pays lower prices than private competitors. The state decided to make participation voluntary, although state officials say they will consider revisiting that if they’re unable to build a strong network of health care providers.

Most federal versions of the public option would give patients access to Medicare’s expansive network of doctors and hospitals.

Although Mr. Frockt is proud of the new bill, he’s also measured in describing how it will affect his state’s residents. After going through the process of passing the country’s first public option, he’s cautious in his expectations for what a future president and Democratic Congress might be able to achieve. But he does have a clearer sense of what the debate will be like, and where it will focus.

“This is a core debate in the Democratic Party: Do we build on the current system, or do we move to a universal system and how do we get there?” he said. “I think the rate-setting issue is going to be vital. It’s what this is all about.”