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Posts Tagged ‘medical utilization’

Generous health insurance plans encourage overtreatment, but may not improve health — ScienceDaily

June 5th, 2017 No comments

Offering comprehensive health insurance plans with low deductibles and co-pay in exchange for higher annual premiums seems like a good value for the risk averse, and a profitable product for insurance companies. But according to a forthcoming study in a leading scholarly marketing journal, the INFORMS journal Marketing Science, such plans can encourage individuals with chronic conditions to turn to needlessly expensive treatments that have little impact on their health outcomes. This in turn raises costs for the insurer and future prices for the insured.

Srinivasan (study co-author) noted that health insurance has unique challenges compared to autos and home insurance when offering a menu of insurance plans. Said Srinivasan,”People won’t go out of their way to get into accidents or burn their homes, simply because they have more comprehensive insurance, but they do tend to get more expensive treatments with more comprehensive coverage.”

Source: Generous health insurance plans encourage overtreatment, but may not improve health — ScienceDaily

This goes to the heart of the problem of treating medical care as an insurable risk. Consumers don’t necessarily see it that way, particularly when it comes to non-catastrophic care. Rather, the study suggests, they can view their medical plans like a menu of pre-paid care. The more generous the plan, the greater number of items and more higher priced treatments are on the menu for ordering. And worse, it reinforces the mindset that health can be bought through higher cost medical care.

As the study authors note, the findings point to a strong need for better health literacy among consumers so they choose medical care wisely based on value and most likely outcomes. I would add in lifestyle changes to alleviate chronic conditions most amenable to health promoting behaviors that might have prevented many chronic conditions from developing in the first place.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

One year after jettisoning single payer, Vermont now looks to control medical costs via expanded “all payer” ACO

January 28th, 2016 Comments off

One year after Vermont abandoned its plan to move to a single payer health finance framework amid concerns over the ability of tax revenues to cover rising medical utilization costs under that payment model, the state is rolling out an alternative aimed at reining in those costs. It would do so through a proposed “all payer model.” The model builds on the Patient Protection and Affordable Care Act’s Medicare Shared Savings Program Accountable Care Organizations (ACO) model in which providers share risk with reimbursements tied to the overall cost and quality of care provided rather than discrete medical procedures under the traditional fee for service model. Reflecting the pervasiveness of costly, chronic health conditions no longer largely confined to the Medicaid eligible population, the Vermont proposal would expand that model to all forms of reimbursement, including Medicaid and commercial plans:

The State would agree to coordinate with Medicaid and commercial insurers, and in return the federal government would allow Medicare to participate in the ACO value-based payment model. As is true today, health care providers’ participation in ACOs is voluntary; the ACO must be attractive to providers and offer an alternative health care delivery model that is appealing enough to join.

The goal of the proposed all payer model is to limit the annual growth of statewide medical spending to 3.5 percent with a maximum spending growth of 4.3 percent:

The goal of this financial target is to bring health care spending closer to economic growth. When health care costs grow faster than Vermont’s economy, Vermont families find their premiums rising faster than wages. This is also true in the state’s Medicaid budget, which grows faster than the revenue sources used to fund it.

The board’s authority to regulate reimbursement rates exists under current state law, according to a term sheet outlining the proposal. Vermont will seek any necessary waivers from the federal government to operate the all payer model, noting the state has jointly developed a policy framework and the needed waivers in consultation with the federal Health and Human Services Department’s Center for Medicare & Medicaid Services.

The fee for service reimbursement model is no longer suitable and is “antiquated” according to the Vermont proposal:

When the fee-for-service health care payment model was devised over 50 years ago, the average life expectancy of Americans was significantly shorter than it is today, and the burden of chronic disease was smaller. The Centers for Disease Control and Prevention (CDC) reports that treating people with chronic diseases accounts for 86 percent of our nation’s health care costs. Health care reimbursement was designed to pay for acute medical conditions that required a single visit to the doctor or a single hospitalization. By contrast, persons with chronic conditions require regular, ongoing care across the continuum of traditional medical services and community-based services and supports. Fee-for-service reimbursement makes it difficult for innovative health care providers to adapt to the changing needs of the population that they serve. The antiquated system provides clear financial incentives to order additional tests and procedures, yet it does not reward doctors and other health care professionals for providing individualized and coordinated care for complex chronic conditions. In the end, patients may receive care that is expensive, fragmented, and disorganized.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Individual premium increases point to worse than expected statewide risk pool profiles, medical utilization

September 2nd, 2015 Comments off

The chart below appeared in a Wall Street Journal article updating plan year 2016 individual health insurance premium rate filings across several states. What’s noteworthy is the upper half of the states listed indicate rate increases in excess of the seven percent “trend” of recent years. While the Patient Protection and Affordable Care Act restored the risk spreading function of insurance to the individual health insurance market by mandating statewide risk pools for plans established after the law was enacted in March 2010, the article suggests the risk profile of some statewide pools is poorer and the rate of medical services utilization higher than expected. Also consider the law’s premium stabilization programs (reinsurance, risk corridors and risk adjustment). They are designed to moderate loss experience among health plan issuers so that any one issuer won’t experience adverse selection requiring large rate increases of the magnitude shown here.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

CalPERS 7.2% HMO plan premium rate increase in line with historical utilization cost trend

June 18th, 2015 Comments off

Citing higher drug prices, the California Public Employees’ Retirement System said its HMO premiums are rising by 7.2% next year. Rates for PPO, or preferred provider organization, plans are going up even more at 10.8%, on average, for 2016.This marks a departure from two years of more modest increases of about 3% at the giant pension fund. The agency’s rate hikes are a key barometer since it’s one of the largest healthcare buyers nationwide after the federal government.

Source: CalPERS approves 7.2% increase in HMO rates as drug costs climb – LA Times

The 7.2 percent average premium rate increase for 2016 HMO plans — which cover two out of three CalPERS members — aligns with the underlying medical utilization cost growth trend of recent years of about seven percent. As the story notes, CalPERS health plan rates are viewed as a harbinger of the cost of health coverage in the coming calendar year given the large size of its pool of 1.4 million active and retired state and local government workers.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Early reports on 2016 individual rates suggest larger increases than 2015

June 1st, 2015 Comments off

Health insurance experts say it’s tough to draw broad conclusions about prices from the requests released Monday. The health care law only requires insurers to report proposed hikes of 10 percent or more. That’s only a partial picture of the market that tilts toward a worst-case scenario.”It’s hard to generalize, but that said, I think all signs are pointing to bigger premium increases than in 2015,” said Larry Levitt of the nonpartisan Kaiser Family Foundation, a clearinghouse for information on the health care system.Levitt said part of the reason is that insurers will be basing their 2016 premiums on a full year’s worth of cost or claims data. That’s the first time that has happened for plans sold on the overhaul’s public insurance exchanges, which started enrolling customers in the fall of 2013.

Source: Many health insurers go big with initial 2016 rate requests – Yahoo News

As the story notes, it’s still early going and more rate filing data will be needed over the coming weeks to ascertain exactly where the individual market is headed for plan year 2016. But as the Kaiser Family Foundation’s Levitt points out, plan issuers now have a full year of medical utilization costs for plan year 2014 — the first year of modified community-based rating rules — to better inform their pricing for next year.

According to some insurers and analysts, plan year 2014 saw high utilization costs due to pent up demand from new plan members who had previously been denied coverage or were placed in state high risk pools under medical underwriting that was permitted prior to the 2014 reforms. That means 2014 medical utilization may have been skewed upward, consequently putting pressure to boost premium rates for plan year 2016 that could moderate in later years. Provided of course medical utilization declines to a lower level over time.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Are high deductibles truly a barrier to necessary medical care?

December 4th, 2014 Comments off

One of the goals of opening the government exchanges was to enable more Americans to get health insurance to help cover the costs of needed medical treatments. While many Americans have gained insurance, there has been no downturn in the percentage who say they have had to put off needed medical treatment because of cost. This may reflect high deductibles or copays that are part of the newly insured’s plans, although separate research has shown that most of the newly insured in 2014 are satisfied with their health coverage. (Emphasis added)

Variation in the pricing for medical treatments, not to mention differences in how much insurance plans cover, could be confusing Americans or making them fear a needed treatment is too expensive. And while the costs of medical procedures aren’t rising as rapidly as they once were, it is still too early to tell if that is an effect of the Affordable Care Act and how prices may change in the future

via Cost Still a Barrier Between Americans and Medical Care.

 

This excerpt is from a Gallup poll released last week. Being that this is a public opinion poll, a more nuanced view of the results is called for.

First, it is important to distinguish between individual health plans sold on state health benefit exchanges and employer-sponsored plans. Many of the latter category are increasingly coming with high deductibles. The distinction is important because employer-sponsored plans do not come with premium and out of pocket cost sharing subsidies for low and moderate income households like those sold in the exchange marketplace.

Second, according to the poll, 22 percent of Americans say they have put off medical treatment for a “very” or “somewhat serious” condition in 2014, the percentage having increased slightly since 2013. This is based on a subjective but undefined “serious condition,” so it’s not clear as to the nature of the underlying “serious” condition. If a serious condition was defined in terms of having a serious adverse affect on daily life functioning, it’s unlikely care for the condition would be deferred due to out of pocket costs so this is probably a highly subjective measure.

High deductible plans are being cited by the U.S. Health and Human Services Department’s Centers for Medicare & Medicaid Services (CMS) as a contributing factor to slowing spending on health care in 2013. (Click here for news release). This is based on the conventional wisdom that health care is like other consumer goods and services is subject to the economic principle of price elasticity: demand falls as cost increases and vice versa. But is it really? Do people reason, “Oh, I’ve got a low deductible plan. I think I’ll schedule a few medical appointments?” Highly doubtful since going to the doctor isn’t as an attractive form of spending as, say, going shopping at a retailer to take advantage of a sale providing an inducement to shop. 

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

NCHC recommendations for reducing health care spending overlook schedule control as key to adoption of healthier lifestyles

November 9th, 2012 Comments off

The National Coalition on Health Care has issued its recommendations for bending the relentless rise in health care costs, Curbing Costs Improving Care the Path to an Affordable Health Care Future.  The bulk of the report focuses on treatment and payment reforms with one section devoted to “Prevention and Population Health.”  A key recommendation is sin taxes to deter the consumption of tobacco, alcohol and sweetened beverages.  That’s hardly a prevention and wellness strategy.

Conspicuously absent are meaningful recommendations to give people more control over their lives and schedules so they can spend more time engaging in healthy behaviors like getting adequate exercise and sleep and eating a nutritious diet.  Achieving it will involve nothing short of a transformation of how we conceptualize knowledge and information-based work and when and where it gets done.  We no longer need to commute daily to an office to do it, thanks to the widespread availability of information and communications technology.  Here’s how one blogger described this arguably obsolete work routine:

1 – Wake up earlier than you want to.
2 – Get stuck in traffic on the way to work.
3 – Feel stressed all day at work.
4 – Go home, throw a frozen dinner in the microwave because you’re too tired to cook.
5 – Plop down in front of the TV because you’re too exhausted to do anything else.
6 – Go to bed later than you meant to.
7 – Repeat.

This is a toxic societal lifestyle that over time sets the stage for the development of chronic, preventable conditions that drive much of the health care spend.  A 2011 University of Minnesota study found when people are afforded control over when and where they perform their jobs, they got more sleep and exercise. Bravo. That’s true, low (negligible) cost prevention that can go a long way toward maintaining health and reducing medical utilization and spending.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Report: Utilization of health care services declines — but spending higher

May 21st, 2012 Comments off

The Health Care Cost and Utilization Report: 2010 found that while medical care utilization declined by more than five percent from 2007 to 2010 for inpatient admissions, emergency room visits, primary care provider office visits and radiology procedures, prices rose across all categories of service with outpatient services experiencing the fastest growth.

“Unlike other recent reports on health care spending, we find that the increased spending is mostly due to unit price increases rather than changes in the quantity or intensity of services,” the report concludes.

The report by the Health Care Cost Institute (HCCI) is based on a review of health insurance claims for more than 33 million individuals covered under employer sponsored, private health insurance from 2007 to 2010 including both fully insured and self-funded benefit programs.  The dataset represents about 20 percent of all individuals younger than 65 with employer-provided coverage, according to the HCCI.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

The daily commute to the office: Is it really worth price to health?

April 15th, 2012 1 comment

In an information intensive economy, those who create, process, analyze and add value to information can do so from anywhere thanks to the proliferation of Information and Communications Technology (ICT) over the past two decades.  Yet paradoxically, many Americans still engage in a daily commute to the office as if it were the 1950s of Dagwood Bumstead or the 1980s that inspired the more modern day office place comic strip, Dilbert.  In those days, commuting to the office was necessary because that’s where the office equipment was — telephones, typewriters (and later, dedicated word processors), photocopiers and fax machines.  Not anymore.  Today, nearly any setting can function as an office where a knowledge worker can concentrate and be productive.

Nevertheless, on average Americans spend nearly an hour a day getting to and from an office that ICT has effectively rendered obsolete.  That adds up to a lot of wasted and often stress filled time piled on top of an increasingly sedentary culture that battles the rising health care costs of lifestyle-induced chronic conditions linked to a lack of exercise, poor diet, and inadequate sleep. For the time crunched trying to balance family obligations with work, avoiding these adverse health impacts is even more challenging.  Just look around any traditional office setting and chances are you’ll see plenty of stressed out, sleep deprived, and overweight people who are more likely use medical services and in turn increase their employers’ health care utilization costs.

What’s needed is a new model for traditional office-based work that can free up time for exercise, healthier home cooked meals and sleep that would otherwise be wasted on daily commuting.  Fortunately, such a model better suited to today’s highly connected, information everywhere economy exists: ROWE or a Results Only Work Environment.  A ROWE values getting the work done over daily office attendance.  Early indications are that workplaces that adopt ROWE can achieve better health status at a time when workplace wellness is getting increased attention to slow the nation’s unsustainable rise in health care costs. A University of Minnesota study issued in December 2011 found workers in a ROWE realized increased health-related behaviors of more sleep and exercise — behaviors that can go a long way toward maintaining health and reducing medical utilization.  ROWE is poised to become the successor to traditional “workplace wellness” programs that have been slow to demonstrate tangible progress in reducing employer health care costs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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