Universal Health Insurance. What About…?

 Authors McLure, Enthoven, and McDonald make a thoughtful argument about good health is a good investment. We are all pushing a rock until the incentives change to reward doing more with less.
One point, and one question.
The point. Our system is NOT ready for effective price transparency and education. That will be a major undertaking of a generation. Even simple stuff is difficult. Just this morning I took my son in for what looked like (another) strep throat. I did not have a say whether a throat culture was taken (he was alone with the PA), and had no idea what all this would cost going in or coming out. I asked, what’s the cost for today? “Oh, you’ll have to talk to billing. They open tomorrow.” Good grief. This is just a minor illness. Last time we did this it cost us over $700. How do I shop if I don’t know what I’m buying?
The Question. Will a medical (restorative) system and a preventive (public health) system unwind the wasteful market forces driving prices today? If I’m a hospital CEO what incentives have changed so that I would  NOT invest in upgrading my cancer center even if my regional competitors expertly meet quality and capacity needs of my community? Today, competition is so fierce I’ll refer my patients 100s of miles away just so my cross county competitor won’t get the business. Won’t I still invest the $30mm even though it provides zero improvement in outcomes and would be better spent on preventive care, or say, on public transportation for better access to food or jobs? If we changed the incentives to pay more for preventive care and less for restorative/specialist care, don’t I still need to compete?

Fake Plan in Repealing ACA

Here’s a writer that butchers the repeal of The Affordable Care Act with this piece last week.

Upon repeal of the ACA, she suggests addressing the loss of guaranteed issue (i.e., can’t deny coverage for those with pre-existing conditions) with the use of high risk pools.

The concept of high risk pools is not misplaced at face value but the costs are underestimated and more importantly not financed.

Kaiser Family Foundation reporting suggests that 27% of the adult population have pre-existing conditions… that’s 52MM people. These are not only patients suffering from chronic conditions, these are people who would have to disclose an elevated PSA, a family history of arthritis, has lower back pain, or is pregnant… some of these may develop into an expensive conditions, some will not.

It is important to clarify that 52MM represents all adults in the US. Only a portion of those will need access to individual (non-group) insurance. Nonetheless, it is still millions of people.

So, unlike the writer’s math, we aren’t talking about 500 Alaskans or $16B for a national high risk pool. It’s not clear what the number is in the absence of some actuarial diligence, but here’s some very rough math:

There were 12.7MM enrolled on the individual market in 2016. The portion with pre-existing conditions in this population is higher than the national average (it is the sustainability problem with the exchanges after all), so let’s say it is 40%. The average medical cost among those on the exchanges is about $350 per member per month; but again, this group will trend higher, call it $6000 per member, per year.


12,700,000 * 40% * $6,000 = $30B per year

This $6,000 figure does not include the cost of the most acutely ill. Frankly, whether it is $16B or $30B or higher, the problem is the same. What is an effective way to finance this?

The ACA had a multitude of funding sources (individual and employer mandates among others), but many were not thrilled with that. So if not mandates, then what?

Is it unreasonable to assume there is no protection for pre-existing conditions until that question is answered? The writer clearly had no plan (“fake plan”?). Her assertion throughout is that high risk pools are the answer. Fine. Yet, high risk pools won’t happen until there is a viable plan to fund them. OK, what is it?

What Would I Prioritize to Reform Health Care?

Last night at a gathering with friends I was asked what best addresses the problems in healthcare. I’m writing this now because my answers left me feeling like I had not done my best.

My first response is a good one… “it depends on your goals.” Financial sustainability? Improved health of a community? Lower death rate? Adequate preventive and chronic care? Access and equity for the vulnerable/uninsured? Your goals depend on your vision for society. Social justice? Respect for personal autonomy? Promote public best interests? It’s very hard to debate healthcare policy without addressing our underlying interests and vision for our society.

My subsequent replies jumped too quickly to point solutions. They’re not wrong (invest in non-medical determinants of health, move healthcare financing to capitated and value based payments where possible) but are perhaps too wonkish to be persuasive. This is a hard subject to address given the complexities of the healthcare economy.

Let’s say the goals above are as good as any to get started. A more coherent answer is this:

Moving healthcare forward depends on a few guiding ideas:

  1. Healthcare is local… what is best in one community may not be in others
  2. Discovering “what works” is difficult to find, but critical to use
  3. Healthcare is a highly interdependent system… individual solutions fall short
  4. Non medical determinants influence health more than medical care does

It’s one thing to have ideas about what you’d do, it’s another to put them to a test. The ReThink Health Model allows such experimentation. The model draws on evidence based interventions (“what works”) cataloged here and summarized here. The best outcome achieved prioritized the following interventions for Anytown, USA is:

  1. Enable healthy behaviors (eating, exercising, smoking, drugs, alcohol)
  2. Improve hospital efficiency (processes to reduce length of stay and improve quality)
  3. Recruit primary care providers to FQHCs (supports most disadvantaged)
  4. Create medical homes (strengthen primary care, use evidence based medicine)
  5. Coordinate health care (avoid redundant care)
  6. Gather innovation funding (gets the process started)
  7. Reinvest healthcare savings (only a portion goes to medical care)
  8. Global payments (removes volume incentive of providers)

The model graphs how the interventions performed against your goals. The answers may be different when data unique to your community is used. It was quite striking how unbalanced/uncoordinated investing would create a “pitfall” in the model: shortage of primary docs, unsustainable financing, or runaway chronic health conditions. Back to the drawing board. It takes dedication to find a sustainable solution without “pitfalls.”

The non-medical determinants—healthy behaviors and reinvest healthcare savings—have the largest ROI. The measures for justice include the % uninsured and the % disadvantaged. There is evidence that good health is a precursor to moving out of a disadvantaged position in a community. While one can’t achieve everything, all at once, now, steady investment can move many of the objectives forward over time.

The last part of this is crucial. None of this works unless a community works together to prioritize where the investments go… and stay until outcomes are sustainable. How best to do that? It is my belief it can come from any stakeholder, but surely anchor employers, in particular, have a unique catalytic role in mobilizing commitment to prioritized interventions.

Are there other areas besides the above that clearly need work? Of course. Some of those areas can be addressed concurrently; for example, leadership development and governance reforms for provider organizations, and medical school reforms (greater emphasis on primary care and non-medical interventions) come to mind.

Ultimately, we need to develop our own understanding of the issues and the interventions. We need to determine for ourselves what works in our community, what policies are needed at all levels of our society, and most of all, get involved and learn how to influence others effectively to move it there. And when you’re asked what you’d do, you’d be ready.

Billing a Trivial Case

My teenage son presented at a local hospital-affiliated express care clinic complaining of a persistent sore throat. The nurse examined him and ordered a throat culture to test for strep.

He was sent home with no prescriptions, only instructions to get rest. It seems to have been a mild case. Indeed, we heard a few days later that the culture did not indicate strep.

We subsequently received charges for $361, adjusted to $254 (after a $107 adjustment) and further discounted to $203 if paid within 30 days. Some weeks later we received a statement with an outstanding balance of $354, adjusted to $268 after insurance, related to the same service date; it’s not unusual for balances to move as insurance claims are collected and processed. We believed these charges were on the high side for a sore throat examination, but we paid the $268 amount

Four months later, we received notice from a collection agency that charges for $254 were due. We tried to reconcile the charges, but were sent back and forth between the facility and the physicians group. Upon closer inspection, the first charges, $361, were facility charges, and the second, $354, were professional fees (the nurse). This means the total amount for a sore throat examination totals $715 less a $107 adjustment. That is $608.

This billing practice was unexpected for a walk-in clinic. The amounts are astonishing.

We tried to get the procedure (CPT) codes from the clinic, but they would not provide those over the phone; they will send by US Post. We also asked that these charges be reviewed, which they agreed to do. We called our payer and asked for the procedure codes. They outlined professional charges (CPT 99204) for examination and management (E&M) for a new patient comprising: 1) comprehensive history 2) comprehensive exam and 3) medical decision-making of “moderate” complexity. Interestingly, the facility charges were treated differently (CPT 99213) which is E&M for an existing patient and the three components outlined immediately above, but for medical decision making of “low” complexity.

We appear to have a case of marketing an express clinic as a retail site for minor injuries, illnesses, and treatments, but billing with in-patient methods and rates. We also appear to have up-coding practices in play. My son’s condition should have been CPT 99212 (existing patient, and “straightforward” medical management) which would have been approximately $66 (facility + lab fees) instead of the $362.

We filed a complaint with our payer so they have some market feedback to negotiate rates next year.

It is not only a fee-for-service billing practice (and dubious coding culture to match) that brings us to a $608 sore throat examination. It is also a lack of consumer engagement, i.e., I should have shopped around first. But even that has its limitations… cost estimators provide only average claims expenses; it is quite difficult to get specific prices for specific sites. Estimators would not have foretold the billing complication of professional AND facility fees. Using payer cost estimators as well as exploring price lists at retail sites (CVS, Walgreens) is necessary, but time consuming.

For this case, the most obvious conclusions: 1) skip the visit altogether 2) skip the hospital-affiliated clinics, 3) shop around when possible, and 4) carefully inspect the medical bills and insist on the details.

So this is for a straightforward, trivial, condition. Consider the millions upon millions of people suffering from chronic or life threatening conditions showing up at emergency rooms thus beginning an endless episode of healthcare pinball. It is not a wonder so many face medical bankruptcies, and what must be a feeling of utter helplessness.

Integrity and Expectations

Michael Greeley’s post today “When a Unicorn Stumbles…” describes the ups and ups and downs and ups of unicorn ventures.

Zenefits is mentioned as an example of how the “up” may sometimes nose-over to a “down” quickly. In the Zenefits case he highlights, insurance regulators are looking into whether employees were licensed to sell group insurance products. Of course, it is for the regulators to determine what actually happened here. The claim is corners were cut in the interest of achieving big growth targets.

It should remind us that “Integrity” which so often headlines company values, is not a passive concept. Leaders must go out of their way to find examples, make examples, and promote examples of those who do the right thing, and those that cut corners. Weak or strong, the signals are there. My lesson learned on matters like this is to move swiftly, use data, and be candid, in a respectful way, about what has happened and how we are to act in matters that may cross a line.

Michael goes on to point out that many companies experience this “down” before having implemented sustainable practices. He illustrates his point in an elegantly simple way:

Screen Shot 2016-03-28 at 12.59.50 PM

Is there always this heartache of a big fall before sustainable growth is achieved? I would hope not if:

  1. There is true value in the offering
  2. Leadership and investors are honest about and agree upon a set of achievable expectations
  3. The company lives up to a set of values… every day

Expectation setting whether with customers, with investors, or with employees, teammates, and partners is an essential ingredient to sustainable success. Setting expectations is also an everyday activity just like integrity; we can not be too skilled at finding expectations, making (setting) expectations and promoting expectations.


What About Customers?

In Jack’s post today “Five Questions That Makes Strategy Real” he reminds us that strategy is a living activity, not a presentation to over-prepare and review at headquarters. Or as some have said, review over and over and over, ending in no action whatsoever. Instead, Jack says, “You pick a general direction and implement like hell.” Execution has always been the better part of strategy.

But something in his encouragement misses the mark. Of the five questions posed, there is considerable attention paid to the competition. Of course, situational awareness is important, especially in over-crowded markets where few will survive (Healthcare IT comes to mind). Isn’t understanding customers and their world more important? What could be more fundamental than experiencing their problems, seeing their opportunities and effectively, repeatedly creating real value for all parties?

One of the five questions to make strategy real has to concentrate on value at the customer:

Do we understand our customers and how we add value? Where do we add value, where do we not? Are we invested in opportunities that create sustainable advantage? Is our culture and our execution geared to seeing, feeling, and “implementing like hell” solutions that make their world better?  Are we creating new customers?

These questions are not to entirely replace those focused on the competition, but instead offer a different priority. If you can’t implement real value who cares what the competition is doing?


Rebuilding Site

January 2016

Please pardon the thin appearance of the Patagon Site. A friend signaled the site had been hacked. Since then the site is being simplified and made more secure. Thank you for your patience.

This was a lesson learned. I didn’t detect the hack because only those who visited via search engine (google, bing,…) would be redirected to an unintended (by me anyway) location. A user experience reminder then: follow the path users follow routinely, not the one of your own convenience.