This week I listened in on a webinar sponsored by HHS. This was a day-long session where a number of people spoke about the implementation of PPACA and some of the barriers that need to be addressed in order for the regulations to be fully implemented. One key area that I did not give much thought to prior to hearing this webinar was the state’s ability to implement the required healthcare exchanges with its current IT infrastructure. We all know how challenging it is in the private sector to implement a major strategy shift within our own business and the need to line up the appropriate IT resources and structure to handle the changes. Multiply this exponentially when the public sector is involved. Some of the speakers were from states that are responsible for IT. All agreed that most states will need tremendous resources (people and money) to get their systems up to speed to handle insurance exchanges.
I remember back to the times when the state and federal governments required a substantial amount of additional funding just to get computer systems to be Y2K compliant. Think back to that time and remember how many consultants, new IT infrastructure and dollars were required by each state and federal agency to get their systems to recognize the year 2000 correctly.
Now fast forward to where we are today and each state will have to create a system that will be able to handle enrollment, family change status, billing, online tools, customer service, etc. This is to be done within the next three years. Oh yeah, we still don’t know what the final regulations look like. I thought getting through Y2K was a challenge. States…get ready.
I came across a white paper produced by Dan Rickard a consultant at McGriff, Seibels and Williams, entitled “Throwing out the baby and the bath water.” Dan does an excellent job outlining the challenges that exist within the healthcare environment and how our current structure is not sustainable. Thanks Dan for producing a thought-provoking paper. Nice job.
Article: Throwing Out the Baby and the Bath Water
Sometimes the grass is not always greener on the other side of the fence (in this case, the other side of the pond)
The reality of sweeping changes made with the passage of PPACA is now happening. Some will argue it’s for the better and others view the passage of PPACA as the beginning of the end to healthcare as we have known it in the USA. I personally believe the delivery system and the payment structure to support the healthcare system needed to change, however with the passage of PPACA, be careful what you wish for.
Covering 30 plus million additional people without the means to increase the structure of primary provider care, absolutely no effective rational payment methods to balance what a provider charges, and the fiduciary responsibility of the employers to manage assets of the healthcare plan … and now the added bureaucracy to implement all the provisions of PPACA as they exist today, with more bureaucracy to follow.
So what have we done? We looked at our neighbors in Canada and across the pond to the UK and said, “We should do what they do.” The grass sure seems greener over there. Is it?
I find it interesting that as the debate around healthcare reform occurred last year, many looked to the Canadian system and UK system as success on how to provide access to all and still deliver care in a cost effective way. As one of my mentors once said, “Truth over time prevails.” Just this week in a July 25th New York Times article, the headline read, “Leaders plan to turn healthcare upside down.” At first, I thought this article was another long list of articles detailing the new PPACA plan. On further review, the article announced that Britain’s healthcare system would need to be totally revamped or it would go bankrupt. Yes that’s right…bankrupt.
The British socialized program is in for major changes. The new coalition government has enacted substantial cuts in health spending. Although not all the details have been made public, what we do know there is a new focus on switching from a highly centralized control of their health system to allow the care and decisions to be made at a local level.
As mentioned in the New York Times article a document produced by the National Health Service (NHS) of the UK states, “The current architecture of the health system has developed piecemeal, involves duplication and is unwieldy. Liberating the NHS and putting power in the hands of patients and clinicians means we will be able to effect a radical simplification, and remove layers of management.” As the article goes on to say, “Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trust – all of which would be abolished under the plan.”
It seems as we are heading (at least in my opinion) from a highly decentralized system to one that is highly controlled at a national level. While we are moving in this direction, the British system is moving away from a highly centralize to a decentralized system.
Sometimes the grass is not always greener on the other side of the fence…in this case, the other side of the pond.
In the July issue of Managed Healthcare Executive there was an interview with Karen Davis, President of the Commonwealth Fund, a private foundation based in New York that supports research on improvements in healthcare. In this interview I was struck by her comments relating to payment innovations. She is quoted in this article “But the bigger issue is whether the public and private sector can work together on payment…Some states may be willing to use their convening skills to bring different parties together to identify a payment model that is more rational instead of having so many different ways of paying. It’s consuming so much in administrative costs.”
I wholeheartedly agree with her assessment. With the recent passage of PPACA all eyes are focused on providing access to 32 million uninsured/underinsured people. However, there has been no attention to developing a rational payment approach to support this added burden on states and individual employers. For years, we have operated on a payment methodology created by Medicare which today is broken, or a system based on contracts based on discounts in return for volume that is no longer advantageous to employers. What do we do? Our current system is not sustainable. Anyone in the business realizes this and we need to change this quickly.
A rational payment process is needed and will be central to the success of a sustainable healthcare system. Since 2001 we have worked on ways to bring rationality to an irrational payment world. The spotlight of the sustainability of healthcare will be squarely on this word “rational reimbursement.”
Recently the President convened a group of insurance executives and business owners to the White House to discuss the current state of healthcare and to reinforce his desire to provide healthcare to more Americans. In a recent post on June 22
nd by Inside Health Reform stated:
"All sides in Monday's meeting involving President Barack Obama, health insurance executives and state regulators agreed that more needs to be done to confront rising health care costs, including addressing pharmaceutical costs, but the conversation did not produce concrete plans, participants said. One participant said the president balanced promises to hold insurers accountable for their rates with acknowledgments that some cost drivers are outside of their control."
Now reality is starting to hit. Renewal rates for 2010 are starting to surface, and again we will be facing double-digit increases. We can yell and scream at the insurance companies for increasing their rates but if we step back and see the big picture the insurance companies are in a no win situation. If providers continue to increase their billing rates the insurance companies have to increase rates to cover the increase in billing costs. When this happens guess who gets the blame - the insurance company, not the healthcare provider.
If we are going to truly have health reform we need to have the employer, payer AND provider at the table to discuss what a RATIONAL reimbursement should look like. Until we establish a rational reimbursement approach, we will never "bend the curve" in healthcare. We will continue to view insurance companies as the evil empire while increases in healthcare charges go unchecked.
As NCN we believe you must have a rational reimbursement that is fully transparent to the provider, patient and payer. Until this is fully adopted there will be more meetings with the president at the White House scolding the insurance carriers who have little control on cost drivers.
This question is asked by millions of people each day. Whether getting their car repaired, home repaired or getting a simple haircut. This basic question allows the consumer to sort out a number of options before them. Are this person's services going to fit within my budget or what I have in my bank account? If not, I need to check around and see if someone who performs like services is able to offer those services more cost effectively. It is the way we do business today...except for healthcare. There is an exception to this rule and it is for procedures that typical not covered by health insurance plans such as plastic surgery. I was driving into work and listening to the radio when an ad came on for LASIK surgery. This facility is located in Dallas, TX and is a leader in this type of procedure. What was interesting about this ad was this statement, "We will beat any price in the metroplex." Hmm...I wasn't listening to an ad for an electronics store or a big box retailer. I was listening to an ad for a very sophisticated procedure on the eyes.
Let's think about this for a minute, do you hear ads for maternity care based on cost...come to our hospital to deliver your baby and we will beat any prices in the metroplex. We will even throw in 12 months of free baby check-ups and a lifetime supply of portrait sittings at any Sears photo studio. No we don't hear these ads because most people aren't paying for this care out of their own pocket. In these examples of LASIK or plastic surgery the consumer is paying for the procedure themselves. Price competition occurs and a decision about whether a procedure is truly necessary happens. It's interesting to note that in 2009, Americans received 18 percent fewer plastic-surgeries. The recession is likely to blame but all indications are the cost of surgeries have come down as well. In one report, I read that LASIK surgery charges have come down nearly 50% (refer to my comment about the radio ad). Competition entered the market along with consumers having "skin in the game" AND an understanding before the procedure is performed what the charge will be. Transparency is a beautiful thing.
Yes most people have a deductible and coinsurance to pay but the consumer has no idea what the provider is going to charge. Why, because there is no reason to ask. Once the consumer signs the paper work of the provider allowing surgery to take place, a copy of your insurance card and driver's license is taken and you are told what you owe for your deductible or coinsurance. Outside of this, you are completely removed from the interaction of the provider with your insurance company. You have no idea what the total charges will be for the procedure because someone else is paying the majority of the charges. It's like going to restaurant and paying $10 to enter the establishment. Once seated, you are given a menu with a listing of all the entrees and dessert but with no prices listed. Someone else is picking up the tab so you just order off the menu or select what the waiter suggests (not asking of course what the selection costs) and enjoy.
NCN believes that consumers need to know and understand what the charges are for procedures and more importantly what the true costs are for procedures. We must start working from a "cost plus acceptable margin" verses just reviewing what people charge. Even though just getting a handle on what people charge is a good first step. "Well beat any price" will become more in more prevalent as consumers take greater control of their healthcare dollars. Until then, costs will continue to go up, premiums will continue to rise and more and more people will wish they asked "What will this cost?"