Economic Climate Changes Banks’ Relationships With Hospitals

Originally published on HealthLeaders Media.

The difficult financial climate has not only hurt hospitals’ ability to borrow, but it’s also caused health systems to rethink their banking relationships and forced them to deal with new banking partners.

The partnership between hospital chief financial officers and bankers historically has been cordial and built on trust, but as capital funds have dried up and the financial sector has seen much upheaval, hospital CFOs are facing a situation with fewer available dollars and new bankers and institutions.

Mike Rowe is senior vice president of finance and CFO of Sisters of Charity of Leavenworth Health System, a Lenexa, KS-based system with nine facilities in four states, with 2,054 staffed beds. He notes that the hospital banking community is much smaller than a year ago. Many bankers who built strong relationships with health systems are no longer in the business, which has caused hospitals to forge ahead with new people and banks.

One example of the changing dynamic is at Crouse Hospital, a 439-staffed bed facility in Syracuse, NY. Kimberly Boynton, CFO, says her hospital uses a regional banking institution that has cut back on the hospital’s credit line.

“When things are good, the relationship just kind of coasts along and you don’t have the kind of scrutiny that goes on now,” says Boynton.

Investment banker Jeffrey Cohen, managing director at Jefferies & Company, Inc., in Albany, NY, says commercial banks are asking his hospital clients to reevaluate their capital structure.

“Hospitals have to wait it out. The hospital industry—like other industries—got spoiled when credit was so cheap and credit was so easy to come by,” he says.

So how are hospitals handling the situation? Here are three ways they are surviving the current capital crisis.

Rethinking banking

Banks are looking across all of their letters of credit with hospitals and shrinking lines of credit. Hospitals, in turn, are looking at how to cut costs and whether to move their business to other banks.

The result is that banks are now offering broader relationships with hospitals.

“They are looking for an opportunity such as your primary cash management functions, to do lockbox services, to do patient receivables financing. They don’t just want to write you a loan,” says Rowe.


Hospitals have responded to the changes by looking to other banks.

“We are broadening our relationships with banks in general, simply because one of the big lessons you learned from this economic recession is you can’t afford having too much of a dependency on one bank or one banking institution or one vender to provide you with everything you are going to need—no matter how strong you are,” says Rowe.

Moving to new banks comes with positives and negatives. Community and regional banks could provide more face-to-face interaction but smaller credit lines. And each institution has different requirements. So the more banks a hospital deals with, the more reporting and analysis a CFO will need to submit to satisfy each bank’s requirements.

“When you start to do things like that and you start answering to three institutions rather than one, that makes a big difference and takes a lot more time,” says Boynton.

Rowe thinks the move to diversification will continue even after the capital climate improves. “This is probably a permanent change. You are not going to see hospitals maintaining a one-on-one banking relationship,” he says.

Getting creative

Boynton says hospitals are looking at different ways to have access to capital. One idea is rather than having bank letters of credit for self-insured programs, such as workers’ compensation or medical malpractice, hospitals are finding insurance bonds that allow them to go through the insurance vehicle, which can be a more favorable option now.

“You have to go out and look at these kinds of alternatives,” she says.

With this greater scrutiny has also come greater inquiry.

The reason is twofold: Banks are more interested in how healthcare institutions are dealing with the capital crisis, and they have refocused efforts to review rather than sell.

“They are not selling as many new products, so I think there is more of an opportunity to really look at what they have already sold,” says Boynton.

Though many hospital CFOs have gotten more proactive and diversified in dealing with banks, there are still questions as to whether CFOs will continue that approach as the capital climate improves. Boynton wonders if CFOs will go back to simply searching for the lowest rates again once business returns to normal.

“Ultimately, the hospital’s job, the CFO’s job, is to save money for the institution, and that’s when reducing the risk and saving the money is most important,” says Boynton.


Brown’s Senate Win Creates Health Reform Dilemma for Democrats

Originally published on HealthLeaders Media.

In what many are calling one of the biggest political upsets in American history, Republican Scott Brown beat Democrat Martha Coakley in the special Senate election in Massachusetts Tuesday, which ends the Democrats’ super majority in the Senate and could allow Republicans to filibuster health reform legislation.

Brown garnered 52% of the vote compared to Coakley, the commonwealth’s attorney general, who picked up 47% of the vote. The Republican will complete the final two years of the late Edward Kennedy’s Senate term.

With his victory, Brown will become the 41st vote against health reform, which opens the door for a possible Republican filibuster on health reform—or at the very least, it could force Democrats to give the GOP a place at the negotiating table.

Brown’s victory is also being seen as a possible harbinger of things to come in the 2010 Congressional elections and may force Democrats to change their strategies in the fall elections. It could also push Democrats to back away from some provisions in the health reform legislation.

During his acceptance speech Tuesday night, Brown made it clear that he is against the current health reform proposals. He said people don’t want a health reform bill that will destroy jobs, hurt Medicare, and run the nation deeper into debt.

“It is not in the interest of our state and our country, and we can do better,” he said.

Brown’s victory in “the bluest of blue states” didn’t seem possible only a week ago, but Coakley’s sluggish campaign coupled with an unpopular governor, growing discontent with the State House and Washington, and a new face in statewide politics that connected with voters created a powerful combination that led to Brown’s win.

The victory leaves Democrats in Washington with the difficult choice of what to do with health reform. They could:

  • Rush through legislation, such as the Senate’s bill, in hopes of passing the measure before Brown takes office.
  • Utilize the reconciliation option, which is a complicated process that could allow Democrats to remove any threat of Republican filibuster.
  • Work with Republicans in hopes of coming up with a reform proposal that would garner enough GOP support to pass without the filibuster threat.
  • Step back and start over on health reform.

Massachusetts health leaders react

Political pundits and politicians have had their say about Brown’s victory, but what do Massachusetts health leaders think of the win and what will it mean for health reform.

David C. Harlow, principal of The Harlow Group, LLC, a healthcare law and consulting firm in Newton, MA, says, “Is the pending health reform plan perfect? No. Better than the status quo? Probably. Will doing nothing ensure further cost and quality meltdown? Almost definitely. Will that meltdown lead to some form of public option down the road? Entirely possible.”

Harlow says the election may be a referendum on health reform in Massachusetts, which created its own reform that was seen as the basis for much of the national proposal. Though the state’s experience has shown “impressive coverage figures,” Harlow says, reform has also brought about costs that are more difficult to support during a recession.

“What are the implications for health reform? While Brown’s victory enables a GOP filibuster blocking a Senate vote, Democrats have at least two options: House adoption of the Senate bill or the informal reconciliation process. Leadership is already exploring both options. The better approach may be to go back to the drawing board—but only in the unlikely event that the GOP can act as a true partner,” says Harlow.

Meanwhile, Joseph C. Kvedar, MD, director of the Center for Connected Health at Partners HealthCare System in Boston, says Massachusetts voters may have been “short-sighted” on Tuesday, but healthcare delivery reform is inevitable. “If Brown is good to his word and won’t cast his vote for the health reform bill, it will be a short-term setback. However, all of the discussion, and all of the thinking, have propelled many in the industry to a place where they will be moving in the direction of care delivery reform because it seems inevitable. We won’t be waiting for the federal government to get their interests lined up,” says Kvedar.

Mario Motta, MD, president of the Massachusetts Medical Society (MMS), says his organization shares similar viewpoints with the new senator. Both supported the state’s universal health program, believe all Americans deserve healthcare coverage, and they agree healthcare costs must come down.

“Physicians share these concerns. Affordable insurance, reducing costs, preserving access to care, liability reform, primary care services, and fixing the Medicare payment system for physicians are some of the major issues facing providers and patients. We look forward to working closely with Senator Brown, as we have with the entire Massachusetts Congressional delegation, to resolve the issues facing our nation’s physicians and to improve healthcare access and quality for all patients in Massachusetts and the nation,” says Motta.


4 Ways Health Reform Could Spark Wellness Programs

Originally published on HealthLeaders Media.

Nearly everyone agrees that prevention and healthy living can help slow the nation’s healthcare cost spiral, but actually getting people interested in fitness has always been the problem.

Wellness advocates and population health management officials say Congress took a small step toward a healthier nation by approving health reform.

Here are four ways that health reform could increase and improve wellness programs:

32 million more insured

The legislation will provide health insurance for an estimated 32 million more Americans, which in theory should help improve the health of the currently uninsured. Insurance companies with wellness and disease management programs will enroll the previously uninsured into these programs, which are often run by population health management companies, such as Healthways, Health Dialog, and Alere.

Whether the newly insured can find a primary care physician who can spend time helping them improve their health is in question though.

There are also the issues of how the federal government will implement the broad legislation. Does it invest more in community health centers? Does it invest in demonstration projects and pilots that involve health plans and population health management companies? Or does it fund educational programs?

Though population health leaders are pleased that the legislation could lead to better health and more business, there are still a lot of issues that the feds will have to work out before regulations are implemented.

“This can’t be bad, but how will it be shaped in the next round of the process?” says Bob Stone, vice president and co-founder of Healthways. “I would expect people in the [population health management] industry to be fairly active in determining how that gets shaped as it is turned into regulation.”

Help for employer wellness programs

The legislation promotes wellness and health promotion activities, including requiring federally qualified health plans to create programs like health risk assessments and allows employers to use more incentives to spark greater employee participation in wellness programs.

Jaan Sidorov, MD, MSHA, FACP, an independent consultant for Sidorov Health Solutions, says reform allows employers to link a higher dollar amount to fitness program participation. Prevention advocates say using that monetary approach can lead to improved fitness participation.

Though he’s pleased that many large employers will be able to create more wellness options, Sidorov says he’s disappointed that Congress couldn’t find ways to help small businesses improve their prevention programs.

Innovation Center

Population health management leaders are especially excited about is the proposed CMS Innovation Center. The program will research and develop care delivery and payment models, which Tracey Moorhead, president and CEO of DMAA: The Care Continuum Alliance, says is an opportunity for the industry to take what has been learned in the commercial and Medicaid markets and replicate in the Medicare setting.

The fee-for-service payment model is often a barrier for wellness programs because their preventive services are not reimbursable. Moorhead says a “more closely aligned care delivery model” would allow wellness companies to have a more active member in the care team through such programs as health coaches and disease management.

Moorhead points to successes, such as the medical home Medicaid programs that have focused on care coordination in areas such as maternity, chronic disease management, and obesity management. These programs feature collaboration between health plans, physicians, and population health management companies to develop alterative reimbursement models and provide support staff, such as health coaches. They have led to better health outcomes, patient satisfaction, and quality, she says.

The Innovation Center will test integrated care in the Medicare population and the legislation also provides grants for state Medicaid programs that create new payment models. She says those provisions are positive steps.

Medicare and the pre-Medicare populations are areas in which population health management programs can help improve health, says Stone.

Keeping middle-aged and seniors healthy will save the country long-term health-related costs and will lead to a healthier Medicare population. This will be especially important as baby boomers move into Medicare.

“It doesn’t take a lot of risk reduction to equal real dollars,” he says.

Changes to CBO scoring

Another positive for population health is a provision that asks the Congressional Budget Office (CBO) to work with Congress to develop “better methodology to score wellness programs,” says Moorhead.

Industry cynics question whether wellness and disease management programs actually save money. CMS highlighted these concerns last year when it alleged a Medicare project that tested disease management programs didn’t meet necessary savings requirements. Though population health management leaders point to CMS’ project design and patient selection as flaws that doomed the project, the aftershocks from that project remain in the minds of some industry insiders.

The CBO provision could prove important for population health management companies because savings associated with their programs may take years.

Currently, CBO can’t look beyond a five- or 10-year window when estimating the cost of legislation, she says. This change within health reform could allow CBO the flexibility to gauge cost savings for longer range programs, such as obesity initiatives.

Though wellness advocates are pleased overall with health reform, Sidorov says there were also missed opportunities. One example is refunding $250 to Medicare Part D beneficiaries. Instead of refunding the money, Sidorov says Congress could have given $300 vouchers to exercise programs with an option of $200 cash for those who didn’t want to take part. Those kinds of options are flexible enough to allow people to take advantage of community-level wellness programs.

“That is an example of flexibility that DC and the mainframe thinking is unable to accomplish,” says Sidorov.


Insurers Must Push Employers to Reward Value

Originally published on HealthLeaders Media.

When healthcare stakeholders and officials talk about reducing health costs, they usually look to three areas: providers, health insurers, and patients. Another healthcare stakeholder—the employer—has a huge influence, but it’s often an afterthought in the public debate.

As part of a three-part series profiling the health plan of 2020 that I wrote for HealthLeaders magazine, I tackled how insurers and employers need to become more innovative in terms of benefit design.

Some employers are already leaders in this area, most notably Caterpillar and Marriott. These leaders are already investing in benefit design that is based on value and quality and looks to reduce overutilization of services and medications that are not top value.

While other employers keep dumping more premiums and copays onto the backs of their employees, other leaders are finding new ways to avoid a future of $10,000 deductibles.

The average health plan deductible is now about $5,000—and that’s not just consumer-directed health plans. That includes PPOs and HMOs.

In my magazine article, I profiled Jack Friedman and Providence Health Plans in Beaverton, OR. Friedman, who is the company’s CEO, has been a leader in bringing value to benefit design.

His health plan, which serves more than 380,000 people in Oregon and southwest Washington, is working with employers to create a three-tiered system that takes into account value, prevention, chronic illness care, and overutilization of services:

  • Tier 1: No copay or low copay for ambulatory care for those with chronic conditions, as well as preventive services to help people from becoming chronically ill.
  • Tier 2: This would resemble the current healthcare system and would ask consumers to chip in 20% coinsurance for normal healthcare.
  • Tier 3: This tier would require consumers to pay more out of pocket for services that do not provide a high clinical value.

As you might expect, healthcare stakeholders—including patients, doctors, employers, and health plans—like the first two tiers. Prevention and chronic care would be covered at 100% so there are no cost barriers to that care and consumers in Tier 2 would have a stake in their day-to-day healthcare.

Stakeholders fret about the third tier because:

  • Doctors worry how insurers may define “high clinical value.”
  • Patients don’t like the idea of insurance not covering some services that the individual believes are valuable.
  • Employers don’t want an angry workforce demanding to know why their insurer refuses to pay for services that the individual may find valuable, but the insurer (and research) finds is not worth the money.

Oregon already has experience in this model. The state’s Medicaid program has had a similar tiering design in place for 20 years, which Friedman says has controlled costs. The state found the three-tiered program costs about 10% less than the traditional PPO benefit design.

The leaders in benefit design have already stepped forward to test out innovation programs. Innovation usually comes from the private sector and then public programs try it later. (One only needs to see that value-based insurance design — also known as VBID — is part of health reform, though leading employers have incorporated VBID into benefit design for almost five years.)

Though the private sector often leads, there are still plenty of employers not willing to test out new programs. Instead, they often look for more arcane ways to save on healthcare, such as shifting more costs onto the individual.

But that way of thinking is not sustainable.

Health insurers should help educate employers that trying benefit designs that reward value is the way to go. Yes, making these changes require employee education and will likely cause some employee pushback, but in the long run adding value is a possible way to avoid the $10,000 deductible.


3 Steps to Lower Insurer Overhead Costs

Originally published on HealthLeaders Media.

Medical loss ratio restrictions may not be the best way to reduce health costs, but federal and state lawmakers are increasingly turning to legislating MLR as a way to contain expenses.

Forcing insurers to maintain a certain spending percentage on medical care is an easy win and on the surface sounds like a fair plan. However, it’s not that simple.

For instance, individual insurance plans usually have to invest more on marketing, consumer outreach, and customer service than group plans so requiring both plans to comply with the same rules isn’t fair.

Nevertheless, that’s the world health insurers are living in and the recently approved health reform package will require some plans to spend 85% directly on patient care. This will have many insurers scrambling to find ways to reduce overhead costs.

“They are going to have to really put more effort around what that 15% looks like on the administrative side so they can maintain some level of margin,” says Ned Moore, CEO of Portico Systems, a Blue Bell, PA-based Integrated Provider Management solutions company.

Here are three ways insurers can look to reduce overhead costs and get into line with the new MLR requirements:

Know your MLR. Before understanding the issue and knowing how to respond, health insurers need to compute their plans’ MLR. There are great MLR variations depending on plan, region, and state regulations so all insurers can’t expect that they are in compliance with the 85% MLR.

If they are within a couple percentage points, a review of processes and streamlining systems could help reach the 85% goal. However, those a long way off will have to take a much larger approach.

“If I’m running a decent margin and my administrative cost structure is built around 83% MLR for a Medicaid patient, I now have to figure out how I am going to get into that 85% range while my membership opportunity and growth will come from those types of members. That will put more pressure on how to wring out some administrative costs so I can maintain reasonable margin levels, while also seeing the increased opportunity around membership with millions of members coming into these plans over the next few years,” says Moore.

Review and improve workflow. Health plans need to review their workflow and find what is labor intensive and how care can be provided cheaper. Automation can come in the form of administrative simplification, such as real-time claims adjudication that could lead to lower personnel costs, better efficiencies, and better relations with providers, who will appreciate knowing immediately which claims are being rejected.

Simplify provider contracts. Brenda Snow, executive vice president of strategic planning at Firstsource Solutions Limited, a business outsourcing company, says healthcare under managed care got very complex as health plans implemented carve-outs and tiering, which added costs.

By standardizing provider contracts and automating the system, health insurers could reduce labor costs associated with compiling and differentiating numerous provider contracts.

Moore says he’s seeing plenty of insurers reviewing their provider contracts and managing provider networks.

“We’re seeing a lot of innovative plans looking at the provider support structure and trying to figure out how can we maintain our competitive advantage without dramatically increasing our cost structure in the process,” says Moore.

Rather than simply looking for one magic bullet, health insurers need to first understand the issue and then realize that reducing administrative costs is more than just outsourcing jobs and responsibilities.

“It’s not just outsourcing, but improvements, automation, and a level of detail should be done. Don’t think a single solution will solve it. Insurers need to look at a number of different ways to glean these savings,” says Snow.


5 Changes Health Plans Need to Make Now

Originally published on HealthLeaders Media.

Over the past three issues of HealthLeaders magazine, I wrote a three-part series looking at the health plan of 2020. I examined possible payment models, benefit designs, and member relationships in 10 years.

I started writing the series when health reform looked iffy at best, but with or without health reform, insurers need to prepare for a very different world by 2020.

Healthcare costs and the employer-based health insurance market are not sustainable in the long run. Forcing members to shoulder more of the costs isn’t going to work.

Eventually, we will reach a tipping point in which it will no longer make economic sense to buy health insurance and health insurers need to make sure they don’t reach that tipping point.

Here are five changes health insurers need to make now in order to survive in 10 years:

1. Invest in technology. A no-brainer, right? Some insurers haven’t realized this yet and are falling behind. With meaningful use an important issue for providers, insurers need to help them implement technology, such as EHRs and online portals. Insurers can benefit by creating computer networks that allow providers to have information about their patients, while also allowing the insurer with more clinical information from the provider. Insurers should also invest in self-management tools that are targeted to the individual and allows the person to improve his or her health with assistance—if needed—from a call center nurse or physician depending on health status.

2. Hire consumer experts. The individual market is one of the few growth areas for health insurers and this will only continue as most Americans will be required to have health insurance. The market is changing and insurers will have to switch focus. No longer will they be able to deal mostly with employers and benefits people. They will have to reach down to the individual level. As a way to get a better view of consumers, insurers should explore other consumer markets to see how they connect with customers. Step one is hiring some of those experts to help implement new strategies.

3. Design benefits that reward value and make sure you have doc buy-in. As I wrote in part two of the series, innovative health insurers and employers understand they cannot continue to pass more costs onto the individual. One other avenue is to create tiered health plans that reimburse doctors based on type of care and its value. Health insurers and employers should not design these plans in a vacuum. They need to get physician buy-in, which means having doctors help design the programs.

4. Design benefits for the individual. Rather than simply creating a handful of plans, such as a PPO, HMO, and POS, UnitedHealthcare recently created a health plan designed specifically for diabetics and prediabetics. Using aspects of value-based insurance design, the insurer is lowering or removing copays for value-based services and medications for members in those plans. As everything becomes more individualized, it only makes sense that health insurers will create plans that focus on the member.

5. Collaborate with providers to get more data. Claims data serves its purpose, but the holy grail for health insurers is tapping into providers’ clinical data. This is beginning to happen, but providers understandably are leery about how that information will be used. As quality contracts become more common, health insurers will have more access to clinical information, but the key is how they use it. This information should not be used strictly as a way to reimburse (or not reimburse) for providing a certain level of quality. Insurers need to also create processes and analytics so the information can be used to help care management programs.

Having the clinical and claims data together, health insurers will have a more-rounded view of the patient/member. So, rather than waiting a month or two or three for claims information that may or may not have enough data, insurers would have more specific information about the visit. They must also understand they have to share claims data and pay more promptly to providers through better technology, such as real-time claims adjudication.

Insurers are trying to figure out how to do business in a post-health reform world and there are no guarantees. But by taking these five steps insurers will be prepared for whatever the future has in store for them.


Healthcare Consumerism – Will It Catch On?

Originally published on Fiorente Media.

No one knows what Republicans on Capitol Hill will ultimately propose to replace Obamacare, but healthcare consumerism will likely play a critical role.

The idea of healthcare consumerism started during the George W. Bush presidency as a free market solution to healthcare. Consumer-driven health plans were a popular health insurance plan design back then. The idea was to give patients “more skin in the game” in making their healthcare decisions.

These plans featured high deductibles and health savings accounts, which members could contribute to tax-free.

Once Democrats took control of Washington in 2009, consumer-driven plans and health savings accounts fell out of favor. But that doesn’t mean high deductibles ended.

Out of the ashes of consumer-driven plans came high-deductible health plans (HDHPs), which have become a popular choice for insurers and employers as they look to cut healthcare costs.

HDHPs have become so popular that Kaiser Family Foundation’s 2016 Employer Health Benefits Survey reported that 29 percent of all health plans are HDHPs, which is up from 21 percent in just two years. PPOs, which are still the most popular health plans in the US (48 percent), dropped by 10 percentage points in that same time period.

Americans are paying more for their healthcare services in HDHPs. By paying more for services, insurers and employers hope that individuals will make better healthcare decisions.

By giving individuals more cost and quality information, healthcare consumerism advocates say patients will become better consumers. The theory goes that educating patients on prices for medical services will lead to healthcare savings and reduce unnecessary tests and services. It will also open up choices for patients and may get doctors to compete for patients.

Consumerism is here; is healthcare ready for it?

Experts agree that healthcare consumerism is here. But a recent study found that health insurance companies, hospitals, and doctors aren’t providing the kind of information that patients need.

Kaufman Hall and Cadent Consulting Group surveyed executives from more than 100 U.S. hospitals and health systems. They released State of Consumerism in Healthcare report in November 2016, which found that most of health leaders “recognize the importance of consumerism,” but “most have not put consumerism into action.”

Health leaders surveyed found that healthcare consumerism is a “key to growth” and will be important “to succeeding in the face of competition,” according to the report.

Patient experience is both one of the most important and least understood areas of consumerism. There is resistance to change and a lack of urgency because of competing priorities. There is also a lack of clarity about how consumerism will fit into long-range plans and the lack of data and analytics, according to the report.

“At the end of the day, healthcare providers have to think: Who are my customers? What do they want? And how do I deliver on those needs better than anybody else?” Paul Crnkovich, managing director at Kaufman Hall, told MedCityNews. “It’s like any other business.”

Frank Hone, a healthcare engagement strategist who was the engagement officer for Healthx and Healthways, has been a leader in healthcare consumerism since the early days of the movement. In fact, he wrote a book on healthcare consumerism called “Why Heathcare Matters” in 2008.

“We’ve definitely seen a strong uptick in consumer interest to shop for various medical services. Price transparency was a foundational pillar of healthcare consumerism from the early days of the mid-2000s. Back then, the data weren’t available and consumer interest in price and quality comparisons was low,” he said.

Hone said “price transparency” has become more important with the explosion of high-deductible health plans, health insurers offering price comparison data, more price comparison vendors in the field and greater interest from the federal government and in the media.

“We’re definitely on a path toward broader availability of price information for consumers, and this is a big step forward for healthcare consumerism,” wrote Hone in his article, “Price Transparency Set to Unleash Market Forces in Healthcare.”

“Despite the market forces driving change, we’re still in the early days of this movement. Many have a misperception that higher cost equates to higher quality, which is generally not accurate. Many also have no real reason to shop if their insurance will reimburse all providers equally,” Hone told Fiorente Media.

Shopping for healthcare

Things have gotten better for healthcare consumerism, but there are still ways to go.

A barrier to greater healthcare consumerism is health literacy. Studies have shown a direct correlation between low health literacy and poorer outcomes and poorer healthcare decisions.

Another issue is that healthcare is not like buying a new car — no matter how appealing healthcare leaders try to make it. Few people joyfully research the cost of an MRI. Getting consumers to shop for something that doesn’t interest them can be difficult, especially for people who were not brought up on computers.

A HealthAffairs study found that the typical user of Aetna’s WellMatch price transparency tool is a “cost-conscious Millennial.” But the issue is how to get everyone else interested in researching the cost of a medical procedure or test.

McKinsey & Company surveyed more than 11,000 people about their healthcare wants and needs. What they found in Consumer Health Insights was that people want the same customer service from healthcare as any other non-healthcare company like Amazon.

More than half of those surveyed see “great customer service as important for non-healthcare and healthcare companies alike.”

McKinsey & Company found that healthcare consumers are not making “research-based decisions.” In fact, a minority of healthcare consumer are researching provider costs or researching information for their health plan choices.

Hone said lack of engagement is the biggest issues with healthcare consumerism — just like any other health behavior change initiative.

“Consumers need to be nudged toward action in this area. Better promotion can drive awareness and begin movement in the right direction, but it’s been hard to get traction early,” he said.

Much like every other new movement in healthcare the ultimate driver could be incentives. Hone offered one example — Vitals SmartShopper, which now offers payments to individuals who choose selected lower-cost providers for their medical services or lab tests.

As healthcare consumerism becomes more common, peer influence and patient testimonials will become important, he said.

“It’s taken a long time for healthcare prices to get as complex and opaque as they are today, and it will still take time to unravel the mystery and achieve real price transparency,” said Hone.

Patients care most about sound medical care

Tufts Medical Center in Boston is a 415-bed academic medical center based near Chinatown and the Theater District that serves a wide cross-section of the Boston area. Tufts patients include a large population of low-income, non-English speakers, homeless patients, and immigrants, which are groups that health leaders will need to engage if healthcare consumerism is to become popular for everyone.

Dr. Saul Weingart, MD, PhD, chief medical officer at Tufts Medical Center, said what’s most important for Tufts Medical Center patients is “sound medical care.” Though costs have become increasingly an issue because of high co-pays and deductibles, Weingart said patients aren’t looking as much for quality data.

Weingart told Fiorente Media that Tufts Medical Center provides estimates of costs of services when requested, but patients rarely request the information. The hospital posts quality information online and it’s also available on the federal government’s Hospital Compare and from the Massachusetts Center for Health Information and Analysis.

“It is uncommon for us to be asked about quality data, in part because the data is readily available and in part because patients assume that our quality is excellent based on their previous experience, word of mouth and reputation,” he said.

Cathy Feleppa-Camenga, MS, RN, CHCQM, director of quality and patient safety at Tufts Medical Center, said high-deductible plans are driving more consumerism. Patients are interested in cost data and may delay treatments because of high deductibles. They may also choose a low-cost option that will actually cost more in the long run.

For instance, a patient may call a Patient Financial Services staff member and ask about an MRI, but may not look at what is really cost effective.

“They will ask for how much each view costs. They may decide to go with limited views only to find that additional views are needed to make a diagnosis. In the end, this is not cost effective for the patient,” she said.

Patients have become more concerned about the cost of healthcare, but “concerns often surface after the bill comes in rather than in advance of needed care,” said Weingart.

Health insurers hop on consumerism

Health insurance companies are now providing its members with cost and quality data. One example is Blue Cross Blue Shield of Massachusetts with its “Find a Doctor & Estimate Costs” tool.

Beyond searching for a doctor by location, the tool includes cost estimates for procedures, the amount members would have to pay and quality data if it’s available for that provider.

Members can search by primary care, specialist, and behavioral care.

There is also a portion of the site that allows members to write and read doctor reviews — and members can compare doctors side-by-side. The tool provides prices for more than 1,600 procedures.

Deborah Devaux, chief operating officer at Blue Cross, said in a statement, “We are trying to make the healthcare experience easy, convenient and affordable. It’s all about putting our members first.”

For BCBS of MA, the tool is taking a page from consumer sites like Yelp, in which members play a critical part in rating and reviewing services.

“We know our members use information and reviews on sites like Yelp and to compare options and choose where they eat or stay. Our tool offers a similar experience to help them find the doctor or therapist that’s right for them,” said Devaux.

How may Trumpcare affect consumerism?

At this point, we don’t know what will replace Obamacare (aka the Affordable Care Act). But with Republicans in charge of both houses of Congress and the White House, healthcare consumerism will be a part of it. Republicans support the ideas behind consumerism — competition, the free market and putting more emphasis on the consumer.

“I’d expect that any revisions or replacements of the current ACA will support consumerism as Republicans favor smaller government and more market-based competition,” said Hone.

Hone said the consumerism trend has been percolating for more than a decade and it’s ready to explode.

“It’s taken awhile to align HDHPs, price and quality data, consumer engagement, and employers willing to move beyond their paternalistic view of health insurance benefits. The wellness trend has gotten many more employees to take actions to improve their health behaviors and to recognize their own role and responsibilities. The individual health insurance marketplace will also likely grow as more people buy their plans independent of a corporate sponsor, which may lead to a lessening of the traditional role of employer-sponsored health benefits,” said Hone.


Health Savings Accounts Likely To Change

Originally published by Fiorente Media.

More people have health savings accounts (HSAs) connected to high-deductible health plans (HDHPs) than ever before — and that number could skyrocket in coming years.

HDHPs, which now make up nearly one-third of US health plans, usually have lower premiums than a PPO and HMO with a higher deductible, which means the individual pays more of the actual health care services. Supporters view HDHPs as a way to keep employer health care costs under control and reduce unneeded medical services and tests.

HSAs allow people to put money tax-free into an account that remains tax-free — even when you remove the money — as long as it’s used for health care purposes. It is also a better deal than retirement accounts, such as IRAs and 401(k)s, which the government taxes either when the member puts money in or takes it out.

HSAs work this way: employees create the HSA and employers may contribute to the account, which stays with the individual regardless of employer.

Employees and employers can contribute up to $3,400 annually for single coverage and $6,750 for family coverage.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 created HSAs, which Republicans say puts the health care consumer in control.

HSAs on the rise

Since Congress created HSAs in 2003, HSAs have taken hold in the health care system as employers look for ways to cut health care costs. The Kaiser Family Foundation’s 2016 Employer Health Benefits Survey found that 19 percent of covered workers were in an HSA-qualified high-deductible health plan, which was an increase of four percentage points in one year.

The Kaiser Family Foundation found that employees enrolled in an HSA receive an annual average employer contribution of $686 to HSAs for single coverage and $1,208 for family coverage. However, the Kaiser Family Foundation also found that many employers don’t contribute to employee HSAs at all.

Devenir, an independent investment advisory and HSA consultant company, reported in 2016 that HSA assets increased by 22 percent year over year to $34.7 billion. HSA investment assets reached about $4.7 billion in June 2016, which was a 23 percent increase year over year, according to Devenir.

Devenir said the average account holder has a $15,092 total balance (deposit and investment account).

Devenir projects that the HSA market will exceed $50 billion in HSA assets with 27 million accounts by the end of 2018.

“Our data shows that consumers over time are accumulating savings for future medical expenses, but there are many account holders who have medical expenses that come up throughout a year and use their HSA for those expenses,” Jon Robb, senior vice president of research and technology at Devenir, told Fiorente Media.

HSA explosion on the horizon?

The Obama Administration didn’t talk much about HSAs, but with a Republican in the White House and GOP controlling both houses of Congress, health care reform will likely include more emphasis on HSAs and consumerism.

In fact, President Donald J. Trump included HSA expansion as a plank for his health care reform plan during the campaign.

Robb said he is “cautiously optimistic of the current political environment,” but also cautions not to expect immediate changes.

HSAs’ growth happened despite regulation changes that have made them less desirable. For instance, the Affordable Care Act required a doctor’s prescription for over-the-counter medicines or drugs for someone to use HSA funds. Previously, a health savings account holder could get over-the-counter medicines without a prescription. By requiring a doctor’s prescription, it is harder for someone to use HSA funds to purchase over-the-counter medication.

Those kinds of restrictions will likely end in a Republican Congress.

An example of a more HSA-friendly Congress is the Health Savings Account Act of 2016. Sponsored by Senator Orrin Hatch (R-Utah) and Congressman Erik Paulsen (R-Minnesota), the legislation would have:

  • Renamed HDHPs to a more positive-sounding HSA-qualified health plans
  • Allowed spouses who both reach 55 to make increased catch-up contributions to the same HSA
  • Made Medicare Part A (hospital insurance benefits) beneficiaries eligible to participate in an HSA, as well as allow those in the Indian Health Service, TRICARE plans, and members of a health care sharing ministry, people who receive primary care services in exchange for a fixed periodic fee or payment, and those who receive health care benefits from an onsite employer medical clinic.
  • Authorize over-the-counter medicines and drugs to be eligible for HSA expenses without a doctor’s prescription
  • Allowed people to use HSA distributions to purchase health insurance coverage
  • Amended federal bankruptcy code to exempt HSAs from creditor claims in bankruptcy

The legislation died with the end of the 114th Congress, but expect similar legislation — either separate or as part of a larger Republican-backed health care reform plan.

HSAs and retirement

Members are able to invest stocks, bonds and mutual funds in an HSA account. This is why some view HSAs as a retirement health care plan.

The members can invest each year tax-free and let their money accrue until retirement when they can tap into their HSAs.

An added benefit of that way of thinking is that the government doesn’t tax HSA funds at withdrawal as long as members use them for qualifying health care expenses. The government taxes any other expense 20 percent.

This is a better deal than a retirement account, such as a Traditional IRA, a Roth IRA, and 401(k), which the government taxes either at the time someone enters money into the account or a person takes it out depending on the plan.

One issue with retirees and HSAs is that Medicare is not considered a HDHP so that means Medicare beneficiaries can’t contribute to an HSA. That’s the case even if a person already has an HSA. They can use money from an HSA to pay for health care, but Medicare enrollees can’t add to it. The legislation mentioned above hoped to change that for Medicare Part A (hospital).

People with HSAs who are 55 or older can make catch-up contributions of $1,000 per year on top of the $3,400 for single coverage and $6,750 for family coverage.

HSAs and low-income people

Skeptics acknowledge that HDHPs with an HSA reduce costs and services, but they also worry that low-income and chronically-ill people won’t use health care services when needed.

A recent study looked at how HSA-eligible plans affect health care services use and spending among lower income workers compared to higher income workers.

The study found that the HSA plan led to a decline in non-preventive outpatient visits at all income levels, but the decline was twice as large for workers and dependents with incomes less than $50,000 than those with incomes of at least $100,000. Most of the decline was in specialist visits.

The study also found reduced influenza vaccinations and preventive office visits for lower-income people compared to higher income workers.

Another issue with HSAs is that “they require an educated and savvy consumer who can devote a great deal of time and effort to understand their plan and shopping for care,” wrote Kathryn Phillips for HealthAffairs.

“HSAs and other consumer-oriented reforms have an important role in improving our health care system, but without a better understanding of their actual use across populations, they are most likely to benefit those who need the benefits the least. Trump promises health care reform that will ‘Make America Great Again.’ We must make it great for everyone,” Phillips added.